♪ >> we just experienced one of the best two-year stretches for markets in history. >> all the positive yields are priced in. >> the u.s. growth situation is in pretty good shape. >> i'm looking for a bumpy year and a lot of those bombs are going to be occurring over the next two months. announcer: this is "bloomberg serveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: good morning, good morning. for our audience worldwide, "bloomberg serveillance" starts right now looking to build on friday's gains with equity futures on the s&p 500 higher by 0.4%. the nasdaq 100 up by 0.7. check out the bond market and

have a little look at the long end of the curve. the 30 year yield in america having the highest level since 2023, up a single basis point. going into a major week ahead with tons of economic data concluded with payrolls on friday. before we get to friday payrolls we need to talk about some dead options in america carrying just a little bit of weight this week. $119 billion of debt sales, a 30 year on wednesday. lisa: brought forward because of thursday, the day off for jimmy carter's funeral. the real question here about what the signal for the yield rise is, is it to the anticipation of an agenda from president-elect donald trump who potentially could deepen the deficit, or is this a signal of just normalization that is positive because we should have a dis-inverted yield? jonathan: speaker johnson looking to hit the ground running. one big, powerful bill and

looking to pass that by april. annmarie: they want to get this big bill out of the gate. there's been lots on this program between republicans in the house and senate, how they would go about enacting trump's agenda. for they do one immigration bill out of the gate, or are they going to do adjacent smith, one massive reconciliation bill? president-elect trump made it very clear, one powerful bill, immigration, energy and expanding tax cuts. he made a point to talk about no tax on tips. lisa: ultimately from a market perspective there is a real anxiety right now about how much momentum they have to actually do cost-cutting to offset some of the deficit expansion that a lot of people at this point are just penciling in? jonathan: morgan stanley's mike wilson saying rate of the most important variable to watch. the correlation equity returns,

the bond yields decisively negative. jp morgan last talking about this, the rates have decisively moved into what he believes is the danger zone. lisa: there is an alternative. if you take a look at some of the areas that people say have been the cheapest, there are the most leveraged. a key question here as we move forward, today is actually a great test. can you eat get gains at the same time the 30 year yield is at the highest level going back to november 2023 when you have a yield curve that is the most positive going back to 2022? jonathan: bonds down, yields up by a single basis point. coming out this hour, we catch up with lori on her favorite sectors for the year ahead. terry haynes a pangea policy as johnson pursues trump's agenda and james foley as the dollar pulls back from two-year highs.

stocks rising after a five-game losing streak on friday, getting a boost from big tech. laurie is keeping a close eye on the sector writing we remain market weight s&p 500 tech, our favorite sectors heading into 2025. a financial analogy along with communication services. good to see you. good morning, let's talk about a year and not just the sectors, let's talk about policy. have we got a better idea about how policy will look like down in washington, d.c.? >> i think we are optimistic we are going to get some clarity soon and chatting with annmarie earlier about the one big powerful bill, i instantly thought back to my european beatings in december right before the holidays when i was kind of doing the death march across the continent. in every single meeting people wanted to talk about taxes and tariffs and what exactly is trump going to do and what are we going to know? i had to tell them i think we got to get past the inauguration first but if you go back to 2017 what i remember about the tax

sale as i was trying to put out a forecast and i kept having to change my earnings estimate because the tax rate kept changing. literally up until the week they passed the veil it was driving me mad. so i kept coming back to that anecdote that the reality is markets did price and a lot of the good stuff ahead of time anyway, so i think just the promise of getting some clarity sooner rather than later and frankly just ripping off the band-aid and getting a lot of this done all at once, i think that is good for markets. one of my core beliefs about politics and markets, whatever it is, you have to go through some temporary pricings and those can be painful in some instances, painful for certain sectors. sometimes they are not but whatever it is, it tends to be rather short term and then you move on. jonathan: you mentioned 2017. do you believe we are going into something that looks like 2017 or something that looks like 2018 or something very different? >> i think it is a combination,

some rhyming and echoing going on. we didn't even know what the tax rate was going to be for corporations and we managed to price that in ahead of time anyway. if you look back at the big move we had over the summer when the market started to sniff out the trump victory into november highs, i think markets were kind of baking and a lot of the good stuff and maybe a lot of the challenging stuff still needs be filtered in. and then trump version one was kind of the good stuff in a 2017 and the challenging stuff in a 2018. but there was sequencing and maybe we are just not going to do that same sequencing in the market can have a better picture of have it all fits together, and then we can move on to whatever is next. there is some rhyming but i do think the timeline is a bit different. lisa: my head is kind of spinning, it always is when we talk about incredible volatility and some contradictory messages. how much is policy going to drive the returns outlook

against the bottom of estimates you're looking at in terms of earnings from companies that seem to be facing a bit more of a challenge? >> i always say when we are in these periods that my head is twisted into a pretzel. i think it is all about the transmission mechanism to earnings, and what are some of those other transmission mechanisms? even though it seems maybe kind of artificial, investors will still go off of the actual earnings are. another transmission mechanism is going to be corporate sentiment, investor sentiment, looking at things like the michigan consumer survey that is coming out later this week. so i think those all show up in the earnings at the end of the day, and i do think going back to that interest rate conversation earlier, i think that is another transmission mechanism that matters a great deal and they kind of agree with the danger zone comment. i think 5% is a problem for this equity market if we get there.

lisa: the question of how much policy is going to be the driver versus this, strong dollar and higher yields. strong dollar already reducing some of the international presence of companies. how much is this being accounted for and how much is this market really at the precipice of a bigger decline if we do reach the danger zone? >> it's been something curious happening recently which is that we've only recently started to see downward revisions bottom-up consensus estimates. normally you would have seen that a bit earlier and it is starting to show up in my data now. i think that is temporary, i don't think that derails the market as a whole, but if we see the 5% on the 10-year treasury yield, what i'm seeing modeling right now is that if we hit the 5% number of you're going to flip the data into a range to be followed by equity market declines. so we can sort of hang out, but if we hit that 5% you don't see

a big improvement in the earnings yield and it is going to be signaling a problem. and the other problem with 5% is i am not a technician, i am not a rate strategist, i just look at the charts. i think i'm going to have a lot of equity investors saying are we in a structurally rising rate environment, which will be a tremendously different thing than any of us have really seen in our careers? most of my career we've been in this structurally clean environment and i think that is where the muscle memory is. jonathan: this breaking from the washington post just now, president-elect donald trump's aims on export tariff plans would be applied to every country but only cover critical imports. this according to three people familiar with the matter. annmarie: what this says to me is that this is going to be a more narrow looking approach. further down the story they talk about things critical to national or economic security. when you start to get some color around what the terrorists could

mean, yesterday he said all will be made up with tariffs. is that enough to pay for this? >> i don't know, and i think they are trying to do this to the reconciliation process and i'm a little fuzzy on how all that works but i think that reduces with they can ultimately do in terms of tax cuts because they got to make everything balance out. on the one hand the markets will cheer a narrower approach to tariffs more targeted. there's been a real concern over the last six weeks that market has not been baking in a broad-based tariffs approach. on the other hand, are you really going to get anything much more than a renewal of existing tax cuts? how are are you going to get a bunch of new cuts if you don't have a lot of new revenue? annmarie: what sectors do you think would be the best in terms of making sure that they are the ones that are less vulnerable, potentially some of the retaliation we could see?

>> it is going to depend on that list but the two center thoroughly got smoked were industrials and materials. i've actually been sort of debating the industrials. there was a lot of enthusiasm in the states, not so much in europe and canada. when i've talked to some of the domestic investors they've assumed that this whole reassuring is going to benefit small to mid cap industrial. we are trading at three standard deviations on valuations and also looking at a sector that was really at the epicenter of these tariff issues the last time around. defensive did best last time, things like health care, consumer staples, utilities. rates and utilities came up a lot in the european meetings because they just don't seem effective either way. jonathan: headlines like these will open the door to have conversations about whether this allows people to think about international equities just a little bit more. the fear with the universal tariffs as high as 20% on everything that america was importing. when you see headlines like this, just a bit more euro

strength, just a bit more strength in the mexican peso, it is marginal stuff that starts a conversation. lisa: it starts a conversation about what the purpose of tariffs will be. will it be getting some increasing the menton, or will it be very targeted for international security reasons? these are key issues like critical supplies like steel, iron, aluminum, copper, rare minerals. there is a real question here about if these are targeted to national security and specific needs, they won't have as big of an effect on europe because strategically, it would make sense that they would not necessarily be as included in some of these. annmarie: how much pushback with are actually from democrats because this has been their whole approach as well especially when you think about going after china. also, is this because the incoming trump administration is concerned about higher inflation? they want to take a more targeted, slowing approach when it comes to tariffs.

jonathan: we should stress that no decision is ultimately been made. good to see you and catch up on a whole range of things going into the next year and beyond. if you are just joining us, donald trump a dark going tariff plans that would be applied to every country but only cover critical imports according to three people familiar with the matter. let's get you an update on stories elsewhere this morning with your bloomberg brief. >> staying in a d.c., congress is set to meet today to certify donald trump election win. president biden and but a group of new democratic lawmakers to the white house last night, urging them to commit a peaceful transfer of power. as trump repairs to return to the white house in two weeks, expectations are high that he will give swift clemency for the 1000 plus people convicted and hundreds more of pending cases related to january 6, 2021's insurrection. meanwhile in canada, justin trudeau is said to be preparing his announcement to resign.

the announcement could come as early as today and would trigger a race for the party leadership with the winner becoming prime minister. for dell has been under pressure to quit for months. scrutiny grew last month after his finance minister quit. people familiar say that italy is in talks of elon musk spacex for a 1.6 billion dollars deal providing encrypted telecom for the government over the next five years. the negotiations appeared to move forward after the prime minister met with donald trump at mar-a-lago. some italian officials are concerned about the impact on local carriers. it has been approved by italy's intelligence services and defense ministry. and that is your brief. jonathan: more in about 30 minutes. up next, one day become a beautiful bill. >> president trump is going to prefer as he likes to say one big beautiful bill and there is a lot of merit to that because we could edit altogether with one big up or down vote which

could save the country quite literally. we are targeting a vote in the house that may be in the first week of april. jonathan: live from new york city this morning, good morning. ♪ [city noise] investment opportunities are everywhere you turn. do you charge forward? freeze in your tracks? (♪♪) or, let curiosity light the way. at t. rowe price, we're asking smart questions about opportunities like clean water. and how clean water advances can help transform our tomorrows. better questions.

better outcomes. t. rowe price (♪♪) (♪♪) 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: foreign-exchange waking up to some headlines already monday morning. euro-dollar session highs approaching 104 all over again. u.s. strength is read over the past month or so. the mexican peso strength as well in the mix. we are negative about 0.5% so once again, the stronger peso, the weaker dollar. all of this building in the last 10 minutes or so on the back of this headline from the washington post. donald trump's aid are exploring tariff plans that would be applied to every country but

only cover critical imports. this according to three people familiar with the matter. no final decision has been made but certainly some early murmurings that maybe some of the campaign promises might be watered down. lisa: there was a lot of preparation for the opening salvo that would be potentially pretty big and potentially pretty damaging shouldn't go through in terms of future tariffs on the likes of mexico, europe, and of course on china. the fact that the opening salvo is targeted is definitely sending a signal being heard in foreign-exchange. jonathan: this move can be undone just like that by a single post from the incoming president, so stay tuned. this morning, one big beautiful bill. >> we are 15 days out from the inauguration of president donald j. trump for his second term and we want to make sure that we are jumpstarting the agenda now over the next two weeks so that he is prepared and ready on funding. president trump is going to prefer as he likes to say one big beautiful bill. and we can put it altogether

with one big up or down vote which could save the country quite literally. reconciliation is the way to get done because you avoid a 60 vote threshold in the senate for targeting a vote in the house and maybe in the first week of april. jonathan: house speaker mike johnson laying out an aggressive plan to pursue donald trump's agenda. house republicans taming the cac priorities into a single bill and pass it by april. donald trump posting this, republicans must unite and quickly deliver these historic victories for the american people. get smart, gets out and send the bill to my desk to sign as soon as possible. terry haynes of pangea policy joins us now for more. on this film, how big is it going to be and how quickly could they pass it after mark --they pass it? >> the short answer is i have no idea and it's going to take a long time to figure that out. markets are clamoring for clarity, but i would urge people

not to engage in premature clarity on this generally speaking. speaker johnson is doing exactly what he has to do. the market signal from washington is we are serious, we are going to work on this as hard and as quickly as possible. that's all very good. the political signal is that the house always overcook everything. you want to overreach and then get pulled back by the senate a little bit. number two, what johnson is doing is engaging in the care and feeding of the other branch of government here, the executive branch. trump just helped him become speaker again with minimal fuss. it behooves him for political and policy reasons both to try to get as much as possible as quickly as possible, but also agree with trump right now. the reality is that johnson doesn't have everybody in the house in the one big beautiful bill strategy and more

importantly he doesn't have the senate at all. we are a long way away from determining what is actually going to happen. annmarie: over the weekend, senator thune, senator lindsey graham still all talking about one bill coming out almost immediately on immigration and then doing taxes. so are you saying that markets need to be prepared for potentially going back to two reconciliation paths? >> yeah, i am. under mentally what i'm saying is that the path year is not at all decided and it is not at all going to be decided for some time. i've tried to summarize the politics and the market signals in my last answer. hear what i would say is they've got a lot of barriers to jump over before they get to the size of the one big beautiful bill. you've got debt ceiling, debt limit that they need to decide upon. trump-pence to provide a budget. you've got a situation where

you've got to figure out the size of the deficit. and markets frankly are going to have a role to play as you were talking about earlier and bloomberg is reporting. the way markets are reacting to increased deficits and the like, particularly on the bond side may result in pulling back some of the more extreme wishes of johnson and the like. annmarie: i want to put two of these stories together. what trump came out and said in black-and-white that it will all be made up of tariffs, and then this morning we get a story from the washington post talking about tariffs that looked to be more narrow in nature. how are they going to pay for all of this if they are more narrow in nature, focus on national and economic security concerns? >> the answer is they don't know. but i can tell you is that another thing for markets here, 2017 is not like 2025 for washington or for anybody else. this is obvious on one level,

but it affects the size of additional deficit, it affects how many k force they are going to have and what they are, and all those decisions are months away. johnson i think is exactly right can trying to be as clear for markets and politically as possible, but at the same time all these hurdles in market reactions to how these folks get over these hurdles is going to determine a lot of the size of the tax cuts and exactly what they decide to do. the last thing i would say about this is that trump is going to ramp up defense and defense industrial base spending and supports, and that is going to have a piece to play here. lisa: i am wondering your take on this headline from the washington post about universal tariffs with one key change, the key change being that it only goes after certain key imports

including things like steel, iron, aluminum, syringes as well as batteries and rare earth minerals. is this a sign that this administration is going to take a more targeted approach with potentially national security consideration more than 100% tariffs on everybody unless they kiss the ring? >> i think it is another sign of that. my view on this all along watching these folks closely has been that markets have gone back and forth between this is all negotiation vs. the terrace will be about application. the answer is it is not going to be one or the other. it is going to depend on which products and which countries. and i think you can factor it out from there. jonathan: good to hear from you. terry haynes of pangea policy. check out the euro-dollar.

could be possibly the biggest one-day move for the euro going back the summer of last year. a consideration at least of watering things down a touch. lisa: watering things down and going after key supplies, most of which come from china. this is not the type of imports. the u.s. is not importing a dramatic amount of syringes from germany. this is coming from china so it is going after a very targeted group, basically alleviating some of the concerns that europe had. annmarie: one thing that is very clear to me this morning whether it is the washington post or what terry haynes just said, the markets will have a voice in the policy that is incoming and ministration tapes. whether it is those concerns about tariffs or how big they can really squeeze into this one or two packages of reconciliation and how willing they are to add to the fiscal deficit. jonathan: this is why semi people have come on the show saying brace for volatility. everything we are talking about right now can be undone with a single post from the incoming

president of the united states and we should repeatedly stressed every time we reference this story that no file decision has been made. it speaks to considerations taking place within the trump administration's that go into the power -- the power over the next two to four weeks. things could change very quickly, in the next several seconds when the president wakes up. lisa: heading into 2017 there was a low volatility, big asset again. or 20, high volatility, lower terms. jonathan: up next, leland miller of the china beige book. this is bloomberg. ♪

where ya headed? susan: where am i headed? am i just gonna take what the markets gives me? no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence... the answer is j.p. morgan wealth management lock in let's go. when you want to invest with 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.

jonathan: five-day losing streak for the s&p was snapped in friday's session. up by zero point 6%. nasdaq 100 up by one full percentage point. russell up by 0.7. 30 year yield up by a single basis point. now the highest going all the way back to late 2023. just a range of commentary coming from the south side including this, this morning. u.s. may finally start falling after strong claims in manufacturing last week combined with trump's fiscal plans.

5% is more likely than 4% in u.s. 10 years. going to talk about trade. this headline coming from the washington post moments ago, president-elect donald trump's aids exploring tariff plans with every country but only cover critical imports according to people familiar with the matter. look at this with the foreign exchange. some strength for the mexican peso likewise for the chinese currency. big headline. lisa: you rightly point out the volatility this introduces. if this headline is what actually comes to pass, it is a slightly negative and really positive for the rest of the world. if this is just some of the noise we could expect to hear, it speaks to how much volatility these headlines will introduce. annmarie: talking about the fact that this could just be noise. these conversations are happening in palm beach and they

are continuing to happen. the president-elect won't take office until two weeks time. we will see exactly what it will be. those ideas of blanket tariffs that ring around the united states, potentially that is out the window. jonathan: let's see what the incoming president has to say. as far as the market is concerned, inauguration took place early november. under surveillance this morning, the globe reporting canadian prime minister justin trudeau is likely to step down this week. it will happen before a keen national caucus meeting on wednesday after months of pressure from his own party to resign. his party 20 points behind conservatives in the nation. lisa: basically the question has been who takes over? one of the caveats of the non-sourced story is he hasn't completely decided. there is a bigger takeaway, the

shift to a more conservative approach globally. this comes with the threat of donald trump and also comes with what has happened structurally going on in canada with the liberal party really underwater politically. i also think about what's happening in austria, australia, how much are they prepared for that? annmarie: it doesn't matter if justin trudeau has made up his mind, he's hanging on by a thread. 20 members of the liberal parliament have said you need to step aside. even more when you take into consideration what they are saying behind closed doors. one member said time is of the essence saying it is not tenable for you to remain as leader. why? they are concerned about the economic threat from the united states and they need to prepare for that not hanging around with the lame-duck prime minister. jonathan: how embarrassing is it for justin trudeau the conversations about him

resigning in the currency is rallying? what does that tell you? that is the ceo story on steroids. lisa: some of the internal dissent from his own party, nonetheless the finance minister . there is a real question here, how quickly could they get certainty? will he allow that process to start sooner? jonathan: it is what is good for the country right now. italian prime minister meeting with president-elect donald trump in mero lago -- mar-a-lago over the weekend. they discussed a wide range of topics including tariffs and the arrest of an italian journalist in iran. annmarie: it wasn't just president trump there, incoming secretary of state marco rubio, national security advisor was there, you could see based on the people in the room what was likely going to be discussed with giorgia meloni. this was politically a very

smart move. president-elect trump is likely going to bash a lot of european leaders who were invited to inauguration and decided not to come. she got ahead of that and is able to stay away from the inauguration and show ursula von der leyen and other members of brussels that she could be a conduit with this incoming administration. jonathan: we had u.s. presidents talking for a long time talking about europe. now with europe you call giorgia meloni. lisa: how do you think germany feels about that? the face of stability is the italian prime minister at a time when it is unclear who will be the ruling party. who will be the face of germany? annmarie: what does the future look like in france? what is going on in the united kingdom? one thing is for sure, giorgia meloni is sticking around. it was talked about at the g7 meeting, she was the standout. jonathan: joe biden is still the

president, just to reiterate that. his latest decision has gotten some controversy. president biden blocked knipe on steals takeover of u.s. steel. they intend to challenge the order. this coming from richard haass over the weekend. it is bad economics in foreign policy. it encourages protections elsewhere and undermines what has been a defining alliance approach to the world. it is a stain on bidens legacy. lisa: many in the markets have trusted this to be serious when it comes to deals that are being done and actually protecting the u.s. from natural security concerns. nippon steel will have a press conference tomorrow. the wall street journal gets to the point this morning about that push and pull between

bidens domestic advisers concerned about the union jobs in pennsylvania versus those like secretary of state antony blinken on the fact that you might be damaging relationships when it comes to japan. how are you thinking about potentially investing right now in the united states? jonathan: on the way out the door. that list of people very long. china's central bank reaffirms support sending a stronger daily reference rate in hong kong to help stabilize the currency. investors remaining cautious due to china's economy under the threat of u.s. tariffs. happy new year and welcome to the program. lisa and i were talking about whether china would look to embrace the weakness of the currency to offset the threat of tariffs. are you seeing signs that point to the opposite? >> it is too early to tell. if china has a plan to use the currency it has to wait until

tariffs are in play until it does that. there is weakness in large part because the dollar is superstrong. everybody looks at trump's plans and see a stronger dollar there too. the yuan, they will be moving it around based on what they need to do. this is an expectation of what trump policy will be. annmarie: how much are the chinese authorities preparing for what trump will do with the idea of a bazooka versus other measures we are already seeing with cybersecurity issues popping up all the way through the government as well as telecom companies in the u.s.? leland: markets love the ideas of bazooka because it makes problems go away. the chinese are not looking at a bazooka unless things fall apart. one of the things we have been stressing is you have a very

weak economy, the chinese economy has plenty of problems with it is not collapsing. in the most extreme china tariffs an area, you can certainly see chinese leadership wanting to go bigger. i don't think they are anticipating doing that. i don't think that is what is likely to happen in the near term. the chinese economic leadership getting ready to react to what they see. bazooka is stretching it. lisa: is it fair to say the chinese authorities are not as interested in propping up the economy? maybe putting a floor under how far gdp could fall but not necessarily propping up as they are countering in an offensive way with the u.s. might be trying to do? leland: i think that is exactly right. that's what markets continue to get wrong. in the old days we know beijing

love to see high levels of growth. look at our leadership. that is not the way the chinese economy runs anymore. what they want to do if they have more economic problems is counter that with some stimulus that will stabilize the economy, put a floor on the economy. they are not reaching for higher growth. what they want to do is make sure the economy is not doing too poorly. they could focus on what they really care about, not high levels of growth. lisa: i not -- annmarie: i know you have written a ton on what they will do in china. the washington post saying this will be only covering critical imports. you talked about the two approaches that seem to be much higher in broad-based then critical imports. what do you make of this latest reporting and what is it telling you about what the incoming

trump administration may levy on china? leland: this is sausage being made. you have the china tariffs and you have a discussion of global tariffs. global tariffs were never going to be levied. you will always have exemptions if it was 10% global tariffs you have to have certain exemptions. 20% global tariffs you have to have enormous exemptions. it is reflected on the washington post, they are saying instead of starting with a base tariff rate and we will just chop out exemptions here and here, we talk about a handful of sectors that will get this global tariff rate and we will add on to that. a lot of this is simply the approach and what happens when a transition becomes the administration. the president saying we have a different approach on this. this is actually still a work in progress. annmarie: how much of this is

natural security -- national security versus dealmaking? leland: there are certain things that are dealmaking. the tariffs threatened on mexico and canada, these are a threat, take care of the drug problems, legal immigration. when you look at china and some degree the national tariffs, a national security issue and it needs to be dealt with. bilateral trade deficits are problematic with china. global trade different -- deficits are problematic. they helped to push back on american workers. a lot of this is extending beyond dealmaking. tariff revenue being used as a paid form for the tax bill. the broader takeaway is markets have been underestimating how much the trump administration likes tariffs. they see it as something structural they could use to restructure the domestic international economy.

we will see a lot more tariff talk. jonathan: i would love to finish on the domestic economy in china away from the tariff story. autos, luxury brands, foreign brands looking for a cyclical upturn in the economy. are you seeing signs of them suffering from a cyclical downturn or is there a little shift towards national champions away from foreign brands? leland: we have been seeing a structural slowdown for a long time. that is not what we have been seeing. we have been seeing manufacturing for a couple years has been the growth leader. they are under extreme pressure right now and will be even more so in 2025. we have not see that balance of retail services. even after the suppose it list at the end of september. enormous pressure on domestic

demand, not a lot of reason to believe this will turn up unless you are a person that thinks china will push that button, restructure the economy and it will all be well. jonathan: those people do exist. appreciate the clarity. the latest in asia. let's give an update on stories elsewhere this morning, here is your bloomberg brief with dani burger. dani: a new report from the washington post suggests donald trump is exploring universal tariffs but they would only cover critical imports. people familiar with the matter told the post trump's aides are discussing the plan and imposing duties on every country. the most sweeping plans from trump's 2024 presidential election. a rare sunday ceremony for president joe biden signing the social security fairness act to increase benefits for 2.5

million retirees. changes the formula that had been used to reduce benefits for certain beneficiaries including retirement plans for police officers, firefighters, and teachers. it will boost payments by an average of $360 per month. in south korea, investigators have asked the least -- police to execute the warrant to arrest president yoon. the initial attempt was unsuccessful and led to a standoff with his security team and thousands of supporters. it is unclear whether or if a second arrest attempt may take place. jonathan: more from dani in about 30 minutes. the dollar rally taking a breather. >> it's not about better growth in the u.s., it's about the u.s. asserting itself. of course this is good for the dollar. jonathan: that conversation up next. live from new york, you are

watching bloomberg tv. ♪ why choose a sleep number smart bed? i need help with her snoring. sleep number does that. thank you. it's our lowest price of the season on our most popular smart bed. save $1,000. plus free home delivery with an adjustable base. shop now.

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.

jonathan: snapped a five-day losing streak on friday's session. look to work towards those gains this morning. some dollar weakness out there, euro-dollar, 1.04. under surveillance this morning, the dollar rally taking a breather. >> it's not just about better growth in the u.s., it's about the u.s. asserting itself strategically. of course this is good for the dollar. i don't think the u.s. is trying to effectively dissolve the european or destroy europe. having europe make that choice. jonathan: here's the latest this

morning, the dollar rally taking a breather after climbing to multi-year highs. expecting further strength in the future. progrowth inflation policies in the u.s. starts to boost the greenback weeks before there is -- the election results was resolved. the risk of this target could be achieved a lot earlier. i would love your reaction to the story that came from the washington post about 45 minutes ago. president-elect donald trump's incoming games are exploring tariff plans with every country, universal tariff. only to cover critical imports according to three people familiar with the matter. we have yet to hear from the incoming president himself on the record. no doubt we will hear from him at some point. your reaction to that headline, for the euro-dollar to get down to parity. >> there's a couple of different

ways to answer that question. we don't know what is meant by critical imports. the uncertainties we have, we have been uncertain about the tariffs, how many or how much they will go through, which countries will be affected, all of these uncertainties have been out there for some time. this is perhaps a different slant on some of those uncertainties. we still have the basic uncertainties about where this will happen, how soon will this happen? a lot of those uncertainties will be in place to some degree. although tariffs are seen as a strong dollar policy and instrumental part of that, that they would bring to the u.s., you look at the euro-dollar, the other side of the coin. the euro in isolation. the story of parity is in part

because of the weakness of the euro. a large part of the last year, the resilience of the euro, through the first half of last year was one of the biggest unsung stories of 2024. the euro buckled in the last quarter and gave away some ground. that i think is because the market recognized the ecb was dovish. it took away the protection the euro had the and opened it to the issues of the structural issues that germany has. france's issues, the political problems italy has. that has been demonstrated over the weekend by the collapse of the coalition talks in austria which have parallels to what is going on in germany and france. annmarie: to get to parity it's more about european weakness than dollar strength, when do you think we could see the

euro-dollar hit parity? jane: i think it's a story of both halves, we need to look at the euro story as well as the story of dollar strength. it is fairly your reversal -- fairly universal. in the second quarter of this year, anytime between march and june. look at the way the euro-dollar has performed over the christmas break. if we look over the last quarter , the euro hasn't been the worst performer. various other currencies have underperformed the euro. the fact that it is so close to parity draws our attention to the weakness of the euro and the strength of the dollar versus the euro. i do think it would happen certainly by around march. for that to happen, we would have to be sure that inflation is or has become a lot more benign.

we do have key cpi data for the euro this week. if that is the case the market will retain this view that the ecb has turned a lot more dovish. that could really continue to expose the euro political with germany's structural issues. lisa: let's say natural gas prices go up making the disinflation story more complicated, is that good or bad for the euro? jane: the market has already priced in a lot from the ecb. you could argue there's enough ammunition in the euro. we have seen a little bit of that today. the market would have to take out some of that pricing in of rate cuts and that could strengthen the euro. we are not calling the move below parity at least at this moment. they are nearly there in terms

of the battle against inflation in europe. not quite. there are still those resilient uncertainties that we need to get through first. if that happens we start to talk very seriously about sustained parity. jonathan: how much control does the european continent have over its own destiny at the moment? jane: at the moment, we are lacking strong leadership in many parts of europe, it is slightly reduced. tariffs is a big threat to european trade and therefore we have strong leadership in the u.s. in the form of trump and his tariffs. weak leadership in germany, very weak leadership in france. that is a concern. the far right in austria is pro-russia. we have the ukraine war on the doorstep in europe.

at a time where trump is putting extra questions about nato where europe is on the back foot trying to catch up in terms of spending on defense, the budget is very stressed. this is a time when you could really do with strong leadership and doesn't really have it. it is a risk factor for confidence. jonathan: appreciate your time as always. euro-dollar, 1.0420. we talked about how little needs to go right to engineer big moves with the currency. a little story out of the washington post, a big maybe, some of these tariff efforts get water down. lisa: get ready for the next couple of months. jonathan: up next in the second hour of "bloomberg surveillance," we will catch up with the head of trades department, former world private

-- world bank president david malpass. ♪ . rowe price we let curiosity light the way. asking smart questions about opportunities like clean water. and what promising new treatment advances can make a new tomorrow possible. better questions. better outcomes. susan: where am i headed? am i just gonna take what the markets gives me? no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence...

the answer is j.p. morgan wealth management

>> we still see a lot of challenges. >> we have come into this year with no bond rules. >> the big divergence right now between disappointing economic data coming in and the 10-year treasury yield having higher. >> we will see the data play an even bigger role. >> this is "bloomberg surveillance," with jonathan ferro, lisa abramowicz, annmarie hordern. jonathan: two days of gains on

the s&p 500, higher by three quarters of 1%. the nasdaq 100 up by a little bit more than that. the headline of the bond market earlier on in the session came from the euro -- yield curve. yield since then declining a touch. we are down a single basis point on the 10 year maturity. the big move right here in foreign exchange. the dollar is weaker. stronger mexican peso, euro, stronger chinese currency as well off the headline of the washington post. donald trump's aids exploring tariff plans applied to every country but only cover critical imports. lisa: the whole thing baked into the foreign exchange market is this means a more tempered target approach from the trump administration. the bigger take away me is how much move we saw on this headline about what even is being considered in proposal

before we even get to january 20. annmarie: the market has pretty much christ in the day after the election. weeks before the election a trump administration. the market picking up on the fact that this might not be the universal tariff that he was promising. there is more narrow, that is great for other countries. this is the sausage making in real time. we just don't know yet exactly what the incoming president is going to decide on. jonathan: i don't know what critical imports are, it is kind of important at this point. that would be rather subjective, i will leave that one there. it is pretty bullish. talking about one big hill for republicans down in washington, d.c., we have a report from the washington post that the tariff effort is diluted. lisa: this is sort of the key

tension right now. the implicit message from this super bill, it is deficit expansion. a question about how much debt would have to get issued. we have 30 year notes on wednesday. a real question here about how in check the bond market will be. everything is fantastic move we have gotten in equity markets. annmarie: terry haynes says 2025 the bond market has a voice. terry haynes, even though donald trump saying it will be one powerful bill, potentially it might end up being two reconciliation bills in real time. we definitely have some markers in the sand. right now, we still don't know for sure. jonathan: bond market's down on the front end, the yield up by three basis points, dollar weaker against pretty much

everything. we will catch up with dan greenhouse as stocks look to build on fridays gains. former world bank president david malpass on how congress could fix what he calls the fake debt limit. stocks rising to start the first full trading week of the new year. dan greenhouse saying nvidia and ai are still the dominant story given the size of those company and the single biggest risk is the same as it was in 2024, disappointment or demand slowdown for this story. dan: good morning, good to be seen. jonathan: is this more important than what will happen down in washington dc? dan: nvidia? i think so. this is not to dismiss others on the tariff story, another coronavirus pandemic, there's always things we should worry.

given how much the broader equity markets have been driven by that ai story, not just in the chip names but in the derivative plays, the industrial names, the rac companies. it permeates so many parts of the market. jonathan: you just assume the underlying growth will be ok, things will be ok? dan: that is separate from the economy. the gdp seems to be doing fine. we are talking around 2.5% for the fourth quarter. whether it is 2.7 or 2.3 i think is largely irrelevant to the market. from an economic standpoint at least right now what derails that, i'm not quite sure. lisa: you don't really care about bond yields? dan: it's not that i don't care, i didn't say that. lisa: i guess i'm wondering, the big sticking point is good

economy, everything is fine and then there is this real anxiety creeping into the bond market. everything is fine because of fiscal expansion. maybe inflation is not going to be hurt by rates where they are. dan: the inflation will not be killed by rates where they are. the inflation has normalized, is it 2%? no. mi disappointed by that? sure. as an investor, which i am, whether it's 2% or 3% is largely irrelevant to me. in the context of policymaking, from a broad market standpoint 3% inflation is an opportunity. as we have seen the equity market largely speaking doesn't care. breakevens are basically unchanged. i don't think there is any -- i don't think there's any explosion of inflation. certainly the risk is we don't

get that consensus agreeing that we don't get back to 2% relatively quickly. the fed told me that two years ago. they said two years ago inflation was not getting back to 2% until 2026. they were not willing to do the work on rates to get it back there sooner. as an investor i like inflation normalizing and a bank not stepping on the break as quickly as they think they need to. i think that stays in place for now. annmarie: when you overlay that with policy prescription from washington, d.c., it will increase the deficit by anywhere from $1 trillion-$5 trillion. i wellpoint do you start to worry about real yields? this idea that bond vigilantes are having a voice at the table and they are not happy? dan: i don't think you meant to

do this but i take issue, it will not increase the deficit, it will increase the debt over the ten-year period. i think most assumptions take into account that the tax cuts are going to be extended in the short term. 7% deficit to gdp ratio is astronomically high and to use the scientific word gross. it's not like the bond market will be surprised when we passed that reconciliation bill this year. we know all the private estimates are somewhere in the $3 trillion-$5 trillion range. with respect to yields, we have clearly seen risk assets struggle when the 10 year gets up. we are not quite there although equities are already moving.

if we were to move higher it will elicit some type of response. the push-pull is you will see yields start to come back down from that level for whatever reason, there are numerous ones we could discuss. as long as the economy is doing fine, i think it is your baseline with that upper move. annmarie: president-elect trump said one powerful bill will be paid for mostly by tariffs. the washington post said it will be narrow targeted tariffs on critical imports? dan: john put it perfectly at the start, we are watching sausage get made and i'm not sure the administration knows what the final set of tariffs will look like, on who. what is a critical material? one person's critical material is another persons industrial import. i don't know how to model or think about this. i don't know by whom, how much,

how long? we put tariffs on china, what good does that do me if i ship my goods to vietnam and ship out of there. we have seen our imports from china is lower today than it was five years ago. look at our imports from vietnam, indonesia, they are higher. that said, one big beautiful bill, he could say that i think as you know congress will probably disagree with that. lisa: what is your base case for what actually does get done? dan: on tariffs? lisa: the proper tax rate, immigration policy? dan: my personal opinion, i don't see any way the corporate tax rate is lowered any further. i would be shocked if it's lowered by one percentage point. you know better than me, i don't think there's someone on the hill, i don't think there's room

in the budget for them to do that. i don't think they will. tcj will be extended, those tax cuts will be extended. i'm less concerned about this from a market standpoint than other people. housing and industries leisure, hospitality, they rely on importing undocumented or illegal immigration. i don't know if it's the broad inflation disaster some people are making it out to be. that's my working view of things. from an investor standpoint, we are looking at companies doing quite well that have clean balance sheets that are good stories. the stuff we are talking about is all super important. from an individual company standpoint, most companies are immune. not all. jonathan: when you find those

companies you like are you more likely taking equity risk or credit risk? where do you find opportunities in fixed income or equity markets? dan: probably equity. i think right now the problem right now with the credit market is the issue you have in the credit market is the lower rated credits where you might get a much more attractive yield, 13%, 14%. the yield on the triple c index, they are just a group of companies in one index. triple c's are yielding 300 or 400 basis points lower than a couple months ago. a lot of that attractiveness is coming out of the market. i think if you're going to get paid, you are taking up equity -- effective equity risk in some of those lower rated credits. you might as well get the potential of equity returns by taking that risk in the equity

market. at the qui are seeing more opportunities in the equity market right now. that's not to say there is nothing to do with credit. jonathan: equities up this morning by 0.7%. dan, good to see you. dan greenhaus, i want to bring you this headline from u.s. steel steel and nippon steel, calling it deal interference. lisa: the -- annmarie: the interference from president of the united states, joe biden, talking about political concerns versus is this really a national security concern given japan is an ally? we should also be hearing from nippon steel tomorrow. jonathan: we talked about this last week, closing the chapter, we are not closing the chapter on anything? annmarie: it sounds like they will back it nippon steel with regards to their lawsuit against the u.s.. get ready for a lot more of the

same. jonathan: let's get you the latest elsewhere with your bloomberg brief. dani: a new report last hour from the washington post suggests president donald trump -- president-elect donald trump is exploring universal tariffs covering critical imports. three people familiar with the matter told the post trump's aides are looking into the plans. he called for tariffs as high as 20% or 10% on everything imported to the u.s. united airlines expressed using starlink for in-flight wi-fi in the spring. in earlier than expected rollout. united said only members of the carriers loyalty program will get the service for free. it was a departure from the original plan that would offer all passengers the service free of charge. the u.s. are united cup champions once again after coco gauff and taylor fritz took down

their opponents from poland. gauff took down iga swiatek in straight sets. fritz beat his opponent in a tiebreaker in the men's singles. that is your bloomberg brief. jonathan: up next on the program, donald trump's expensive agenda. >> i don't think the market fully has embraced how much deficit spending i think we are about to do. jonathan: that conversation up next. good morning.

jonathan: equity futures right now on the s&p 500 up by 0.7%.

euro-dollar back at 1.0416. not much needs to go right in europe. given the selloff we have seen. the president-elect donald trump exploring tariff plans that would apply to every country but only cover critical imports. i have more questions then answers right now. lisa: you say this has to do with not much has to go right for the euro zone. this is broad-based showing volatility. the expectations baked in about tariffs and what we have to see to ignite a lot of volatility. jonathan: just waiting for that headline, the post from the incoming president when he gets to read this, this morning. lisa: he will say critical infrastructure is everything under the sun. good morning. annmarie: we get the hearings

from jamieson greer where they talk about broad-based tariffs. sausage being made. you will see the debate as we saw during trump 1.0 played out very much in public. jonathan: looking forward to another four years of this. inauguration, january 20. donald trump expensive agenda. >> i'm shocked i don't think the market fully has embraced how much deficit spending i think we are about to do. we will have $6 trillion, $7 trillion in deficit finance spending. jonathan: president-elect donald trump sharing the republican congress is working on one powerful bill that will bring the country back. it will focus on the border, energy, tax cuts. warming to prepare for a giant deficit number. we expect federal spending to reflect inflation.

the total deficit increases in curve could easily exceed $5 trillion. henrietta, as you know, that is a big number. that is just the baseline. upwards of what? how big could that number be? >> to get to your point on the earlier conversation, that is absolute deficit spending. the reason the tax cuts expired at all was because 2017, that was used and thoroughly exhausted. this is 100% adding to the deficit beyond what is the existing baseline. extending the tcj is $4.6 trillion. they do not have the votes to maintain the soft cap. that is the single largest revenue raiser. if you have to raise that to 20 k, or even further beyond that

to get those members, you were going to make the bill even more costly. you will run into issues beyond the inflation reduction act. they disproportionately go to red states and job creation. republicans will have a hard time voting for those as well. the tariffs will not be voted on by congress. they will not be included in the score that we get for the tax bill. this will be massively deficit increasing number on the reconciliation bill before we take into account military spending of at least $200 billion. annmarie: president-elect trump gave a shout about to extending the tax cuts and talking about one campaign promise that even democrats welcomed, no tax on tips. you actually think that gets done? henrietta: definitely not because of the problems it occurs with medicare.

spending from the payroll tax and other taxes goes towards funding. annmarie: why is he then putting it in black-and-white? henrietta: i think he's not in congress yet. he's saying a lot of things that will be difficult to get through such as raising the corporate rate to 15%, which is a nonstarter as well. public and staff says we don't have any interest in reducing the corporate rate. it just doesn't have support on capitol hill. it's a giveaway to nevada, the way a lot of members think about it. annmarie: who is the voice we should be paying attention to? is it the trump tweets, is it speaker johnson? henrietta: i think you should deftly focus on the house and senate members as the president doesn't have the authority to write tax legislation. it is jason smith, mike crapo,

those are the senators that will be working on the details of this bill. more importantly, think about the members who are up in 2026. that is every house member and some key senators like thom tillis in north carolina, susan collins in maine. those will be your deciders when it comes to any spending cuts they might want to see. they will hold the phone and say we are not ready to take those cuts yet. lisa: how powerful those members be behind the bloomberg terminal trading 10 year notes? henrietta: that is definitely the least powerful member in the room. not a lot of senators or congressmen are necessarily focused on what the market does. there's a perception that trumpcare's deeply on what the market does. lawmakers will make the legislation that they see fit. it will continue to rise every single year. we are talking about $5 trillion

in spending on the combinations tax bill, hiking the debt ceiling by $1.5 trillion. they will be increasing the deficit. lisa: if that member doesn't necessarily have the same clout, how much does increase based on yields versus basis points last year on the 10 year, they are continuing to rise into 2025. at what point does that become a limiting feature on what they could do? that rate alone is a deficit. henrietta: i don't see it having an impact in d.c. it is a conversation and boardrooms in new york and i wall street. when you go to d.c., they talk about the danger of the expiring tax cuts, the need to keep the government open. there's not a brake on federal spending. this is the one year that republicans have majority control over all three chambers.

they have a massive to do list. what will happen is what usually happens. as we get closer, everybody starts to clutch their pearls again. we have the conversation around basic federal spending. the government efficiency provisions are expected on july 4, 2026, four months before the midterm election. it's just not realistic to anticipate politically. you will hear the conversation starter in 2026. 2025 is all about spending. jonathan: appreciated as always. are we 50 basis points away from a different conversation? 100 basis points away? how much higher do they need to be? lisa: she was saying that's not really the focus in washington, d.c., at a certain point it has to become. frankly it comes under this

question of the debt ceiling and other issues. it is a good question. at what point do the vigilantes get the main seat at the table. jonathan: david malpass joining us shortly. the outgoing government is leaving a tailor-made debt crisis for mr. trump. that conversation around the corner. equities at session highs. bond yields a little bit lower. the dollar weaker. the euro-dollar, 1.04 positive by .9%. ♪

jonathan: equities closer to session highs on the s&p 500. two hours away from the opening bell, with your morning movers, here is manus cranny. manus: kicking off with boeing, they've decided to go overweight at barclays. this is the first time they have turned up bullish on the stock since 2019, upgrading to $210 from the considerable uplift. why turn this way for the first time since 2019? they shored up the balance sheet and it's no longer a overhang

with sustained positive momentum being critical, the story of boeing. when will they reset max production? where did we get to in 2025? nvidia, the mag seven, up 2.6%. adding on the rest in there you have it, friday that gives you a nearly 7% in the space of two days. foxconn has seen a 15% jump in revenues. that's involved in the story. microsoft saying they will spend $80 billion in the coming fiscal year. last year they spent 50 million so the mega capex story remained and it is emboldened again that microsoft for the fiscal year. gm, the deliveries in china jumped by 40%, quarter on quarter, 600,000 year end. china, complete in the year end they sold 50% of those sales in china in the ev space and half of their annual sales were in there. just a fact for the day in the

u.s., toyota sold one million hybrids in the ev's last year. this company sold 114,000 and they don't have a hybrid. go figure. jonathan: manus cranny, thank you. lots of news to get through. under surveillance this morning, antony blinken hoping to broker a cease-fire deal in gaza before the end of the biden administration, telling reporters that they want to bring this over the finish line in the next two weeks. elsewhere, new york city drivers paying nine dollars to enter the busiest part of manhattan, the first regular weekday of the countries first congestion pricing program. trump and murphy of new jersey vowing to fight the toll. our very own cohost from queens with strong feelings on the matter. >> trump has called it a regressive tax and i have heard officials for years on the outer boroughs calling it their constituents who have to go into manhattan that have no choice

but to take their car, it is going to hurt them the most. the mta is desperate and needs money. many say is this really the best way to fund it, when more people have a lot of anxiety these days about getting on the subway because of safety concerns. >> there's a little bit of chicken or the egg, right? you can say it's badly managed in terms of the mta and subway system, but if they need more money to make it a better option to make it safer and a better option for people to come in, how will they do that so ultimately that is the question, how you thread the needle, good month. jonathan: there's a story that they believe, the story that europeans believe is that americans don't really pay taxes and they come to places like new york and they see the infrastructure and say they aren't paying taxes to invest. we pay lots and lots of taxes, believe me, it's how they spend the money and how much has been wasted that speaks to what's

happening right now with the incoming administration and elon musk saying do we need to give them more money or do they need to spend the money they get more efficiently? lisa: i would agree with that but can you do both at this time? all the subways were shut down on certain lines this weekend because they had to repair signals that were put in place in 1967. at what point do you incentivize the political will to be more efficient by actually charging money to people that suddenly care about where the money is going? this is a larger question about how politics is run and i'm not the want to have it but i will say it's an important point. annmarie: as a new yorker you pay federal, state, and city tax. i also lived in london, where i paid a ton of tax, similar to what you end up paying when you put it all together in new york, but you saw your money put to work. i never felt unsafe taking the underground or walking around the city.

never saw garbage on the streets . very different in terms of how they use the money and where the tax money is being spent. jonathan: this debate is not going away at it has turned to this, the weather, freezing outside, winter storm across united states, millions bracing for freezing rain and sleet as the day begins with 60 million people under winter alerts nationwide. alex da silva joins us with the latest. is it as bad as people feared? >> it certainly is, a widespread storm from the center of the country to the east coast. 6, 12, even 18 inches across kansas and missouri with up to three quarters of an inch of freezing rain with downed trees and power lines across missouri, kansas, into kentucky. where's the snow now? added towards the big cities. baltimore, washington, d.c., four or 5, 6 inches of snow, with more on the way throughout the day, as well as freezing

rain down here. gotta watch out in richmond and roanoke, they could pick up .10 percent -- 1/10 of an inch of rain. jonathan: bias, when do i need to call in sick? thursday, friday? >> new york city we are keeping a close eye out for. the snow probably gets there late in the morning into the afternoon. doesn't look like a lot. maybe up to an inch, but i think most of the heavier snow will be to the south. jonathan: got it. we will get another update from alex as well, i hope. lisa: one inch, go out with the flu? jonathan: that's a very british thing to do. one inch. [laughter] lisa: maybe they don't know how to handle it there, but i would hope we could do better. annmarie: ndc it's actually a huge problem, they don't have the infrastructure, everyone freaks out when it snows, and someone saying that the news is not matching what they are seeing out the window. jonathan: we slated to subway

system in new york earlier, but when it snows in manhattan it is quickly how things go a lot -- go around and clean up pretty fast. lisa: this is impressive, saying something nice about the subway? jonathan: not the subway, the street clearing. lisa: ok, ok, it's the fastest way to get around when it snows, let's say that. jonathan: donald trump calling for the debt limit to be abolished before he returns to the white house. the former world bank president saying that trump was right last week when he raised the red flag of the debt limit that the outgoing government is leaving a tailor-made debt crisis mr. trump to complicate his work to cut taxes quickly and rebuild u.s. strength. david joins us for more. always good to catch up with you, david. that one line in the op-ed, tailor-made debt crisis. can you explain that a bit more? david: that's right, this has been coming on for two years.

they kind of planned it so that the new president, the next president would have the problem . congress spent all the money. it's tailor-made for a crisis. if you don't raise the debt ceiling, you have a default on the national debt. what i wanted them to consider is rewriting the debt limit so that it actually works. you've got to stop the spending before it happens rather than after you have already spent it. lisa: over the weekend we heard from mike johnson that there will be one big beautiful bill in april and it will be put through by reconciliation in order to get all of the trump agendas in place. this could reportedly expand the traffic -- deficit by $5 trillion. is there the will to start to revise the debt ceiling debate and these other issues to structurally reduce the deficit under the trump administration? david: i think there is a strong

will to reduce spending. one of the things going on is biden is leaving the covered bear as he leaves office, meaning they have spent up as much as they can on the current fiscal year and have also -- they are in the process of obligating every day that goes by huge amounts of money that can't be gotten back through the rescission process. to make a grant and obligate a bunch, you can't get it back. another way that they, the cupboard is bare and it is showing up in the bond department, they kept it, the issuance of debt short-term. one of the biggest decisions facing the new administration will be what maturity to issue that and does the fed to purchase all the long-term debt back? the fed is this giant hedge fund that owns all of the long maturity big chunk bonds. i think that over the last three

months they have lost maybe $650 billion just on having a bad bond trade. yields have gone up. they are the big holder of long-term yields. the consumer feels ok, but the government itself is losing massive amounts of money until they find a way to slow down the spending machine. lisa: just to build on that, david, do you think the reason we have seen the rise of longer-term yields is because of the deficit? is this truly the bond vigilantes coming back to the table? david: there is some of that. the market looks ahead and asks if there is a mechanism to control yourself. the bond yields are having multiple problems. one, the fed models are really broken. the fed is basically saying that if you have more growth in the economy, we assume that it will be inflationary and so we will have higher interest rates. it's a broken models problem.

second, as i mentioned, the duration of the government was held down, the fed was buying, the treasury issued some longer treasuries but then the fed bought them back. this is a major problem. you have to get over the hump. you can do it through confidence , meaning are you able to repeatedly over and over again cut spending? do you have a mechanism to actually control what washington spends? it's yet to be seen but i think they can do it. annmarie: i don't see any restraint from the incoming trump administration. yesterday trump talked about one powerful bill, renewing tax cuts, energy policies, making them better to include no taxes on tips. we are talking about a president who spent atrial -- you added $8 trillion to the deficit in trump 1.0. where do you see the appetite of

trump to want to cut spending? david: it's going to be a combination of increasing growth in production within the economy and making the existing spending more efficient. if you get more from it and have fewer people and fewer obligated funds, that is going to be the trick. i want to really put emphasis on this idea of markets being forward-looking on the output of the economy. if you can change the energy system, the production and transmission of energy, that will have a big downward effect on inflation. the fed doesn't have that in its models. each of the fed models are broken. one is on how you set interest rates. the other is on how you use the balance sheet. they have used it very harmfully in terms of the lost money. third, the regulatory policy. the fed has this massive control over lending to small businesses

and that hasn't been going well, but that can be repaired and fixed. you get more output, less inflation, you can bring interest rates and bond yields down. jonathan: something you have talked about a few times, david, i'm sure we will have this conversation again in the future. in the bond yup -- bond market, bonds are lower on the front-end of the curve. with an update on stories elsewhere, here's dani burger. danny: joe biden said that he's determined to peacefully hand over power later this month, writing in an op-ed published last month that he is determined to do everything he can to respect the peaceful transfer of power and restore long respected traditions in america, adding that he's invited the incoming president to the white house on january 20 and i will be present for his inauguration in the afternoon. shares of u.s. steel are higher in the premarket. according to a statement from

u.s. steel and nippon steel they jointly filed lawsuits to register the interference on the company, and they said they are confident that they have strong cases and will look rightfully close the transaction. the new england patriots fired head coach jared mayo on sunday after they went for out of 13 in his first season as a head coach. the move came soon after their victory over the buffalo bills, which costs them the top pick in the draft. the 38-year-old had played linebacker in the past and his one-year stint as head coach ties for the shortage -- shortest in franchise history. jonathan: up next, fed data dependence. >> i think we will see a year with the data plays a bigger role. we already know it can create a lot of unnecessary volatility. it's hard to measure a $30 trillion economy in real time with a lot of accuracy.

jonathan: that conversation, up next. you are watching bloomberg tv, live from new york. ♪

i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one. so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management

has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management.

jonathan: another leg higher for stocks. the s&p 500 is higher now. under surveillance this morning, fed data dependence. >> we will see a year where the data plays a bigger role and we know that that can create a lot of unnecessary volatility, because it's hard to measure a $30 trillion economy in real time with a lot of after -- accuracy. part of the job of the fed is to try to get things to remain calm. things are not as common the labor market as they seem to view it.

jonathan: the san francisco fred president spoke with kubler over the weekend saying the fed much week -- must reach its 10% inflation target. we will have full fed coverage this week and we will get minutes from the december meeting. jim, welcome to the program. happy new year, sir. when you think about the risk of 2000 25, how do you see it? is the bigger risk a stumble or re-acceleration? jim: it's reacceleration. economists like the term called potential growth, which is not measurable, but what did they think the economy would grow if we didn't stimulate or slow it down? eight of the last 10 quarters the economy has grown at that level and it looks like it might do it again in the fourth quarter, when we get the numbers at the end of the month. add to that and inflation rate

that isn't getting to 2%. there is an argument to be made that it is stalling if you measure by cpi. because we are at the same levels near cpi that we were seven months ago. this all just suggests that the acceleration story is going to be the bigger issue. there is always concerned that the labor market could have problems, but right now most of the data, claims, unemployment, or payrolls, are not really reflecting the concern, at least not yet. lisa: how much does this matter to jen-hsun huang? can he keep delivering a stock market that is on the margins even with rates going higher and the concern that maybe the fed was mistaken to cut rates? jim: first of all, everyone should care about jen-hsun huang, he's the most important person in 2025, no matter the market you are invested in.

nvidia is the driver of everything. as far as he is concerned, it should matter at the margin because it will costs his customers with the ability to buy his products. not necessarily his ability to deliver the products. that is what we have to be careful of. ai expansion will be unbelievably expensive. energy needs will be unbelievably expensive. the power companies will need to borrow a lot of money to power it. it will matter if the economy accelerates and we have to pay higher interest costs in order to finance the bloom. lisa: i guess the larger question is tech outperformance. the only thing that can rescue a market with yields where they are given how much they climbed last year and continued to climb early this year? jim: the s&p friday close was within one point of the close the day after the election.

the s&p hasn't really done a whole lot, you know, since the election, other than the initial surge on the day after the election. why is that? i think that interest rates are getting in the way and we are at levels that are problematic for the stock market and if we continue to see any kind of growth or reason to keep the rates up, it's going to continue to get in the way of the story of higher stock prices in 2025. annmarie: speaker johnson says that we can get it done by may. with the fed and then wait -- with the fed then wait on the sidelines? jim: i hope they don't. chairman powell has talked about the concept of fiscal dominance and to put it in very simple terms, it's their problem, it's not mine. my problem is employment, inflation, and i will set policy based on those.

if there is a deficit, a bigger or smaller deficit, we just had an election, it's their problem to deal with, not the problem of the fed to try to accommodate higher levels of spending with larger deficits. annmarie: if that's the picture that eventually emerges, does that mean that risk appetite can get worse? jim: it can. going back to 2019, we use to use the phrase that there is no alternative, but there is now, 5% yield to 6% yield in the bond market right now, 4.5% risk free money market. i know nobody thinks of those as alternatives because we are all stuck on momentum, so therefore it must mean we have another 20% coming with another in 2026, but the alternatives do exist and that is going to become a big hurdle for the market to get

over. jonathan: i mentioned the team at mizuho looking for five being more likely than four in the u.s. with another looking for 475. nothing about this administration despite pointing towards fiscally conservative, what other numbers are you looking for? jim: probably they will take out the october 23 high. that's when we hit the 10-year note. in other words, a higher high then we saw 15 months ago. that will continue the trend we have seen since 2020 that we are in a secular interest rate rise. it didn't end 15 months ago. at this point, that's 40 basis points away. maybe 50 basis points away. it's not that far away when you think about the scope of an entire year to potentially reach

that target. jonathan: close to 460 this morning, jim. appreciate your time. moving through the next several months and into next year. lisa: the danger zone according to a lot of people around equity returns, you just wonder whether it will be a response, as dan greenhouse talked about, the buying mechanism coming in at five or if there is more concern. annmarie: and terry hands this morning, bond market may decide the deficit. how will that regulate stocks and trump 1.0? jonathan: and they were quick to say that the biggest risk this year came from nvidia what you heard there from the most important man for the year ahead, not the president, not chairman powell, but jen-hsun huang. lisa: the rockstar coming in with a black leather jacket, is that what we hear from dan every time he comes on? jonathan: it's like 50% of

investor sentiment. lisa: especially because this has been the story that has empowered this equity rally, the ai transformation. can it continue? in is that the haven trade at a time when yields klein? annmarie: i don't want to be doom and gloom about nvidia but the companies tethered to their chips being made in taiwan, have a really realized what's going on in terms of espionage between china and the united states? just this morning, the breaking of a subsea cable? is anyone in washington going to wake up to the fact that there are geopolitical concerns growing out in the open? jonathan: that story from the journal over the weekend, pretty concerning. annmarie: it actually kept me out, i want to know what people are doing about it. jonathan: pretty concerning. coming up, the former new york president -- former new york fed president. from new york, this i

blo ♪

let's go boys. the way that i approach work, post fatherhood, has really been trying to understand the generation that we're building devices for. here in the comcast family, we're building an integrated in-home wifi solution for millions of families, like my own. connectivity is a big part of my boys' lives. it brings people together in meaningful ways. ♪ ♪

>> we just experienced one of the best two years stretches for markets in history. >> it is hard for me to compare u.s. equities. >> i'm looking for a bumpy year.

a lot of those bumps will be occurring over the next two months. >> this is "bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the first full training week of 2025 looks absolutely stack. nasdaq up by more than one full percentage point. this week, jampacked. it includes payrolls friday. the estimates, 160,000. before we get to that, we have to talk about $119 billion, the 10 year and 30 year maturities. lisa: starting with the notes, bonds are still going to be traded part of the day. the idea here is how much demand is there at a time when we have seen yields creep up

dramatically, this has come from the real yield sector. is this just something that is normal? that we are getting back to a normalized yield curve? jonathan: on the debt front to your point, the amount of supply we get through, we have speaker johnson talking about one big bill being passed by april or may. we talked about tariffs as well. we go back to what we talked about this morning from the washington post, donald trump's aides exploring tariff plans that would apply to every country. they will only cover critical imports according to people. annmarie: you think about things that are detrimental to national security. we need more details. this is the sausage being made in real time. my question would be to the

president-elect, he put out a truth tweet last night there would be this one powerful bill order, energy, reviving the trump era tax cuts including no tax on tips, all will be made up with tariffs. lisa: get ready for your head to spin with all of the potential proposals. this goes to a point you brought up earlier today. 2017, low volatility, big promises, big expectations, or is it 2018? high volatility with all of the potential implications coming in leading to actually negative return. that will really be the key and big takeaways from the moves we have seen in the fx markets. jonathan: there is the potential to be whipsawed by all of this.

turn this market in the other direction. i think this morning is an important stress test, the way the market responds to it. headlines around trade and tariffs are more important to the likes of the europeans, canadians, mexicans, chinese. annmarie: the u.s. catches a cold and everyone else catches the flu when it comes to tariffs . they reinforced the u.s. exceptionalism. tariffs could be immediate. donald trump could go to the white house and talk about tariffs and have executive orders. when it comes to the big, beautiful bill, that will take months of negotiation. the main issues trump wants tariffs, at some level, you can't have both.

jonathan: some of that came from how smoothly things went down in washington. speaker johnson sending it through pretty smoothly. lisa: let's pause, take a break, came back, let's remember what happened with kevin mccarthy. 15 times he was rejected. jonathan: equity futures near session highs up by 0.8%. coming up this hour, stocks recover after a shaky start to 2025. former fed president on what because the communication problem and michael gave been from -- gapen from morgan stanley. futures after snapping a five-day losing streak. writing 2025 could be positive for business or less room for runaway stock returns at these valuation levels.

reevaluate the opportunities, there are plenty out there. liz joins us now for more. let's talk about the opportunities elsewhere, where are they? liz: when you look at the earnings picture, there are reversals and investors need to pay attention to that. we get so obsessed with this text trade and whether we should be in a handful of tech names or certain parts of tech, the best sector is expected to be health care this year. you look at things like materials, industrials that will see these reversals from what the results were last year. lisa: how much are these opportunities torpedoed if yields don't come down? liz: we know there is 4.5% level has been really critical to the

equity markets at large. we get to that 4.5% level, markets at large, indices at large start to struggle. when you look at the straightforward growth trade, that will get hit first and hardest. a lot of those multiples have expanded so much over the last two years. this is rational for markets. what you are willing to pay for a stock today is lower than what it would be if that discount rate was lower. they should put pressure on some of the names. investors are going to start looking for opportunities in different places and some of those places might be pharma, biotech. there is a lot of bad news priced in, bad expectations priced in. the price for a good opportunity

if investors need other growth options. lisa: how receptive are they to this message? you have big tech continuing to outperform people will get nervous everything has gotten a little bit elevated. how much are people willing to look into the nuance of the time where some people are worried about peak sentiment? liz: that probably happened post election. without policy clarity. we have gotten to a more rational level. we ended the year on a bumpy note, started the year on a bumpy note, we need more clarity and answers to actually trade those stocks for the long term. how much are people looking into the nuance? i don't think so much yet. between now and when the cabinet goes in place when we have the

clarity on these big policies. when you look at a market that is so driven by momentum, we are looking at the momentum trade, where sentiment is driving things. in those environments you have that attitude, that does ignore a lot of the nuances. as time goes on and aztec continues to come under some pressure, a slowdown in the optimism, it doesn't mean the pullback, investors will start to look outside and the more nuanced about it. profit margins and earnings will be a really critical factor in investing this year. annmarie: have you gotten any clarity over the past 48 hours of washington and mar-a-lago when it comes to that one big beautiful bill and getting it done by may act out -- by may? liz: we have got a little.

it is no surprise that we will see more tariffs this year. we don't know when that exactly is going to happen, how much it's going to happen and all the different places it might impact markets. it reinforces that we are in this waiting game. they are not signed in, they are not affecting stocks at this point, as they become more realistic, the stock market will price that in ahead of time. we know there will be more tariffs coming, maybe it's a little bit different than it was two weeks ago. we have to wait a little bit longer. annmarie: is it now time for companies to eventually raise prices? liz: i don't think they will get away with raising prices as much as they have. consumers realize inflation has come down.

it was easier to pass through those price increases when inflation was rising. now we have cooling wage growth, cpi and pce numbers that most people understand at a lower level than they were. it is more difficult to justify a pricing pass-through with a tariff change. lisa: could you help us with the week ahead? we have the key labor report that comes out on friday, the expectation of 160,000 jobs printed in december. of those three, which are most important for you? liz: i'm focused on the jobs report. when you look at what the market had been focused on for 2024, we focused on the jobs market. it seemed as if inflation had

been largely defeated. we have this environment where jobs are still very important. this week the story is going to be about jobs. i don't expect there to be any big surprises yet. what everybody is watching for is to make sure we are expanding the labor market and one of the tenants of the outlook is we have low term in the labor market right now. no hiring. people are not moving around quite as much. this idea of adding a ton of jobs i don't think is something investors are looking for. we are looking for no real deterioration in the labor market. the labor market is still resilient and it is pretty well-balanced. we need the labor market to stay stable while the bumps in the road figure themselves out. jonathan: we will get the jobs data tomorrow. appreciate your time.

looking at the fx market, five weeks of dollar strength. that is the longest run of euro weakness going back to february of last year. euro-dollar up by more than 1%. the washington post story, really can't get around that this morning. lisa: a targeted approach on tariffs that europe would be spared at least a significant headlines some people were worried about. jonathan: equity futures up across the board. with your bloomberg brief, let's crossover to dani burger. dani: details from that report from the washington post, exploring a universal tariff, it would only cover critical imports. trump aides are still discussing a plan to impose this on every country.

it would include the presidential campaign where he called for tariffs as high as 10%-20% on everything imported to the u.s.. prime minister justin trudeau set to announce his resignation it could come as early as today. it would trigger a race for the leadership. justin trudeau has been under pressure from lawmakers in his party. scrutiny grew after his finance minister quit. at the golden globes, brutalist and amelia perez were the big winners. brutalist start adrien brody. brazilian actress fernando torres won best actress for her role in i'm still here. in the tv awards, show gun cleaned up winning best lead, supporting actor, best actress, and best series. jonathan: show gun deserve to win it all.

i apologize to those who had the ending ruined a number of months ago. lisa: congratulations to them for a record showing. jonathan: up next, the morning calls plus former new york fed president and the communication problem. you are watching bloomberg tv. ♪ and i need it a lot of cool. sleep number does that. sleep up to 15 degrees cooler on each side 9 out of 10 couples sleep better. the queen sleep number c2 smart bed is only $999, our lowest price of the season. shop now.

jonathan: payrolls on friday. this from citigroup posting 120,000, that's what they are looking for. the unemployment rate rising to 4.4% reminding markets, the labor market is not stabilized and continuing to soft and.

this i think plays into what we heard from j.p. morgan last week on this program. the asymmetric payroll this week. it will be back on the table. lisa: the idea is a downside surprise could have a bigger reaction in the bond market as people reassess just how aggressive the fed might have to be. jonathan: equity market up by three quarters of 1%. rallying here to kick off the first full trading week of 2025. raising its price target on american airlines to a high citing improved pricing in the return of business travel. the second call upgrading boeing seeing new momentum from production and deliveries. finally raising its price target

to 4.92. that stock is up by more than 2%. trade is looking ahead at a rate decision at the end of the month. bill dudley calling for the central bank to improve its communication writing the better the quality, the more accurate the market participants could assess how likely it is to change. it increases the speed and pursues and of monetary policy, transmission, welcome to the show and a happy new year to you. where do you think the fed is struggling to communicate? bill: there was an uproot to the inflation from 2025. it was hard to explain the sources of that. he noted the participants don't

operate from most common sense assumptions. we are assuming the trump tariff and deportation policy. each of the protections has a different set of assumptions which makes it very hard to anticipate what the fed thinks will happen and how we will react to it. lisa: is the issue communication or not necessarily understanding what direction it will go in? bill: both. they are having trouble communicating how they will react to the trump policies. the tariffs are broad-based. it has a different implication. the fed is going to perform. key issues with the fed is is the labor market continuing to labor or not. it is still weakening.

that is why friday's payroll was so important. lisa: what is sort of the scenario analysis the fed is doing and how could we respond to it, do you think they have that scenario analysis or by default it is becoming a data point for the reserve? bill: there is definitely analysis that takes place. there is a baseline forecast and also these alternative simulations which suggests how the economy might evolve if things happen differently. it is a modal forecast. what will happen if things turn out differently if the fed efficiency is better. it will actually have a consensus forecast you could

actually start to publish the staff forecast. there is a staff forecast available before every meeting and you have a better sense of what the baseline assumptions of the fed are. annmarie: one of the things that columns problems is they don't want to or can't be seen talking about fed policy, should they be more open about talking about policy? bill: what happens on deportation will have a great effect on the economy in 2025. i don't think you could avoid thinking about that in terms of your economic forecast. the fed is reluctant to talk about it because it doesn't want to get discussed with this political discussion. they are trying to think about it without talking about it at the same time. annmarie: would you do anything different on policy? bill: think they are in a pretty good place.

they understand the economy is doing ok. inflation is a little bit sticky . it makes sense to wait. there's a lot of uncertainty and what policy will be forthcoming. it makes a lot of sense. the big disconnect between markets and the fed is where is it heading over the medium to long-term? the market says we are heading to 4% federal funds rate. the fed thinks the mutual monetary policy is easier. the market thinks it is slightly easier. jonathan: what did you do with your own forecast when you had trump coming in during volume one? did you react once the policy was introduced? bill: i thought there was more risk in the forecast. the biggest change for me was talking about risk and uncertainty going up.

the big transition from biden to trump is we knew exactly what the policies were. there hasn't been much in terms of new policy initiatives. there will be a lot of changes in policy. you don't know what they are going to be from my period of lower to higher, that is what has to get priced into markets. one reason i think the bond market has done poorly. jonathan: appreciate your time as always. the former fed president looking out to 2025 and beyond. this information, the federal reserve gets together and puts out a forecast. the policy in the incoming administration, good fallback. you get the washington post, the administration dilutes some of the tariff efforts on the campaign trail. equities running about three

quarters of 1%. the euro stronger. the front end of the bond curve, yields down affecting federal reserve against a.j. little bit more. this story could change again. lisa: how did they come out with some sort of reaction function were a lot of things could be changing. if they want to have some sort of strategic communication, how are they strategic at a time where people do not agree. talking about a labor market that is falling off. stability, it is all just fine. is it a communication issue or a lack of clarity? annmarie: a lot of questions and to jonathan's point could change every 10 minutes, you slow down when there is policy uncertainty. you have speaker johnson putting out the timeline for made for this one big beautiful bill. would you stay on the sidelines

until you see that policy become a reality? jonathan: the apparatus is no longer valid in this world. the staff forecast would be a good idea and getting ahead of the individual members which makes it more difficult for the chairman to sit there and the consensus that doesn't exist on the committee. lisa: how do we get a sense of the longer-term parameters and expectations that the market could understand when they will cut, why they will cut. jonathan: up next we will get the views of morgan stanley. from new york, this is bloomberg. ♪

jonathan: 60 minutes from the opening bell. up by 0.8%, and nicely on the nasdaq 100. let's cross over to manus cranny. >> magical moments of volatility let's kick it off we have an upgrade to overweight for the first time since 2019 basically the balance sheet is in a better shape. how much of this will they get back to production this year, they are demonstrating sustained positive momentum for production and deliveries. uber rolling over and all hail

the buyback. they had a $7 million buyback program. the accelerated share repurposed program. scaling up free cash flow significantly. these are the messages this morning. investing in growth, our stock -- all ceos would say that, let's close it out with barclays just off -- on citigroup i should say. citigroup is at an inflection point. they go to overweight on some of the stock trade the lowest evaluation. morgan stanley trading at three times. so there is more breath in this stock on the upside because of the lower valuation that they have despite being up 32% over the past year. so big call from barclays. jonathan: appreciated, the opening bell, just to mention

europe again. off the back of that story from the washington post indicating perhaps a consideration of the incoming administration to dilute the tariff effort. we will see if we have any pushback from the incoming president later on today. a sense of where the bigger moves will be. euro-dollar is up by 1.2%, the biggest one-day move back to november of 2023, so in more than a year. pointing again to the factor european assets they are at the mercy of u.s. policy right now in a major way. lisa: do they have any control over the destiny and you ask this question about the potential lack of leadership there. we had german december harmonize cpi. inflation came in hotter than expected in germany. 2.9 percent versus the estimate of 2.6%. you would think that would negatively impact these assets.

really these headlines from the trump administration took the oxygen out of the room. jonathan: the dax in frankfurt up one percentage point. traders on the side of the atlantic, december payrolls on friday cpi falling on the 15th the fed's first rate decision of the year at the end of the month. writing the fed may be hawkish today concerned about inflation persistence and policy uncertainty returning dovish tomorrow. the same policies weigh on economic activity and labor markets over time, michael good morning. congratulations. good to see you pray right happy new year to you. what would it take, how would this change this story to get them talking about rate cuts quickly. >> i think it's a combination of you probably need payrolls below 150. something that may be below 140 and you probably need an uptick in the unemployment and i would

say our forecast is on the edge of that. we are at 150 on the headline if you think your employment rate takes higher to 4.3 and honestly there's four components to this report the really interesting to me. one is retail. retail was down november despite strong spending by households we are looking at a snap back there. that happened last year. some of the seasonality issues persist. second is construction payrolls they were strong in september and august. basically flat in october. is that a weather story or is the house -- third i would say manufacturing. down 60,000 jobs. 25 over the last four months so what's happening there. so there's a lot of risks around this. and finally immigration its low -- he did slow into the year end expected to slow further which should give us a weird mix over

time of lower employment growth and low unemployment. there's a lot of crosscurrents. the labor market schooled. but there's kinda four or five risks going around the labor market right now. lisa: this is going to be the final jobs report for 2024. the expectation is 180 thousand jobs being created every month. that's down from 2021 when this was the rebound from the pandemic. what are the key linchpins to help you understand whether this is a cooling, or something more pernicious. michael: it's all about the policy outlook. vigil -- fiscal and regulatory policies will take time to come to fruition but trade and immigration are on the forefront. both of those could have adverse effects on activity and labor markets. lisa: which is the more

important question here? the idea of trade and tariffs which is certainly with markets today, frankly immigration and what gets past the first couple months of the trump administration. michael: markets would tell you tariffs and trade and we were remind everyone we think immigration is just as important. jim was on saying potential growth was running around 2.5, completely agree. if you pull back some of this immigration your slower growth in trend hours, slower growth in the labor force and potential growth can come down. that won't be a robust labor market. the labor market with him will have two flavors. how do you take that signal and understand what to do with policies. we would say both are important. i think it's focus more on the near-term effects of tariffs. annmarie: we could see executive orders almost near-term when it comes to immigration as well. do you have a base case of a

2025 might mean for immigration. >> we have immigration slowing to maybe 500,000. i wouldn't say it's an overly restrictive situation, we have it hitting maureen 2026, but -- more in 2026 but that's a slow down from where we've been and if you look back to the slowdown in global migration as a proxy for where this could take us, that could easily take 50 to 75 basis points potentially. we do have things getting more restrictive. >> when it comes to the trade story which we've been saying things are very early now in these kind of debates and discussions and trump is not even inaugurated yet. if it is going to be potentially narrow and more targeted, does the fed need to be that concerned about the impact on inflation. >> the answer of course is it depends on how targeted. i think it is consistent with

what we are thinking. we never really thought the true universal tariff was on the table. and i think what you are hearing is the direction of travel on this is to try to mitigate third country trade into the u.s.. so if you target china and trade gets redirected, how do we set up tariffs to prevent that redirection. i note the article hinted this would be step one, we are not thinking that would be it, we have ramping up over the course of the year and peeking in the fourth quarter. it's broadly consistent with what we are looking for. so some opening salvos and initial steps and things that building gradually over time. jonathan: i think the fed minutes this week are quite interesting on wednesday what are you looking for in them? michael: bill dudley alluded to

some baked in policies, some higher uncertainty. anything that would give clarity on essentially how much was baked in and what, was it tariffs and immigration, i don't think we will get much clarity around that. >> do you think this could make things better or worse on wednesday. a lot of people walked away from the previous fed meeting pretty confused. michael: i don't think the minutes will help that situation a lot, if roughly one third put something in, i'm not sure how the minutes clear that up. >> maybe they give us the breakdown of hominy people chose to incorporate it. lisa: maybe it will give us a sense of who it was and maybe it will give us nothing. to your point, it could be interesting because they massage the minutes to the get more hawkish. are they taking a signal from the long end of the curve.

jonathan: wednesday what to watch. mike mckee is with us from bloomberg economics. this week stacked full of data and those fed minutes, what you looking for? michael: we are looking for a lot of potentially market moving data coming in as people try to figure out what's going on with the labor market because we get the precursors to jobs on friday with adp coming out and the jobless claims numbers. those will be released on wednesday because of the thursday memorial service for president carter. we have seen the treasury auctions rescheduled and wednesday and tuesday because of that carter funeral situation. you will have a lot of early data coming in that people will be looking at to see where we are set up for but then friday, friday will be a big day.

the focus on the week and by the end of the week everybody will be looking at that. >> 160 is the estimated survey, the previous was 227. this is what he's got to say per the global economy will grow the same rate as an 2024 print the u.s. economy is doing quite well. the biggest risk is a resurgence of inflation. if inflation rises we could return to the environment of 2022. 2022 was bad for stocks and bonds spread let's talk about that big risk and welcome to the program. what underpins that risk for you. where would that resurgence of inflation come from. >> it's not a base case by the way, but it is a risk and so looking at the pace of inflation , it seems to of moderated for sure. you are seeing the housing market still showing signs of inflation. the labor market still quite healthy.

so the seeds are there. i'm expecting kind of resurgence we saw back in 2022 necessarily. but the fact remains the market has really leaned into this disinflationary camp so any movement away from that i think is a shock to the system. >> given that, are you staying away from tuesday's $39 billion of 10-year note being auctioned off and the $22 billion of notes being sold on thursday. >> that is part of the self filling problem. you have a tremendous amount of debt deafening the marketplace. the supply just keeps coming and coming. i think all of this puts pressure on the curve and pressure on rates. so you have that coupled with may be inflation being a little more sticky or reversing moving higher, that puts more pressure on the bond markets so i think rates will be quite volatile and

if anything a little higher than what people envisioned. >> this seems like a shift for you. you were more positive on u.s. fixed income and even duration a couple months ago. what's changed? >> i think some of the policy items have changed. a very wide volatile range which professional fixed income manager doesn't like to have such a live range but i think that's the environment we are in . we are spending so much time talking about policy and that the end of the day we are investors spread we look at fundamental data and we are being driven by these policy factors which i think is a much more difficult task, so we look at tariffs and some other items, we look at resiliency in the economy and that probably points to more inflation, less fed moves and higher yields. annmarie: you are bearish on

energy per this is a priority for the incoming administration when it comes to drill baby drill also de-regulation which should make it easier for energy companies to do well. why so bearish on the sector. >> i think it's more of a factor like how much more capacity is there. so drill baby drill you know there's not a lot more that they can do and so if anything what drives energy prices this is the global economy, china as well and so we look at the supply side, moderating but then the demand side coming down as well so i think that's the driving force and it's important to remember this was back in 2016 as there was all this hype and excitement around the energy sector and it was the worst performing sector. just be skeptical and cynical around some of those

initiatives. annmarie: which sector do you think will benefit under the most -- benefit the most under the incoming administration? annmarie: -- >> one area we focus on that is the financial sector less regulation of the margin is quite helpful but fundamentals are really quite strong and so the financial sector should continue to do quite well. >> if we did get a resurgence of inflation and a repeat of 22. apollo -- what works? where do we hide when stocks and bonds are pretty dicey? greg: nowhere, that's what makes it so scary. it is so challenging and inflationary environment, that's were we relearned in 2022, but what should do better in the

commodity-based segments but there is no real place to hide which is why you're seeing gold being so resilient. that is an asset that investors rightly or wrongly like to hide in in those types of environments. i think the playbook if in fact the base case does, that risk to the base case does come to fruition, there is not a lot of places to hide from that. >> good to see you, appreciate your time. we spoke to goldman last week. goldman sachs looking for gold to get back to three k right now. jonathan: -- lisa: potentially inflation hedge and the banks have been buying so much gold. you put those ideas together. off of bitcoin seems to have been warmed up. whether people are actually going back to the physical commodity and if that will be the breakdown. >> i recall the conversation

with goldman last week. inflation, by gold. >> which is a reason everyone we talked to is a gold bug and it makes me wonder about the gold bars being sold and whether -- i imagine a lot of people especially, they had to put a limit on them. you can only buy so many. jonathan: by gold. >>, he gold bars do you have. for security reasons. not that i walk around with gold bars. what are the south african coins called. >> i have like a sack. >> let's move on. i don't carry gold. let's get you an update on stories elsewhere. here's your bloomberg brief with dani burger. >> the president-elect i'll trump is weighing in on the news

nippon steel and u.s. steel filed two lawsuits to remedy the "interference" with new bonds acquisition. trump writing what would they want to sign u.s. steel. making much more profitable and valuable company. wouldn't it be nice to have u.s. steel once the greatest company in the world lead the charge towards greatness again. it can all happen very quickly. elsewhere it's the first full week day where the new york city congestion pricing program takes effect. the first such program in the u.s.. 1400 cameras and e-zpass detectors were switched on sunday to catch every vehicle traveling south of 60th street and hit them with a new nine dollar toll during peak travel times. it's part of a plan to bring $15 billion to the mta to upgrade subways and mass transit. the nfl playoff picture is set. the bills will host a broncos. they will head to broncos to take on the ravens and texans and chargers in houston. the chiefs at the first round by

in the number one seed braided packers had to phillies. jaden daniels will face off against baker mayfield and the box. the rams and vikings rounding out. guaranteeing a home-field advantage throughout the playoffs. >> up next on the program, we will set you up to the day ahead and catch up at the nation's capital washington dc. from new york you're watching bloomberg tv. ♪

investment opportunities are everywhere you turn. but at t. rowe price, we're letting curiosity light the way. asking smart questions about opportunities

like advances in healthcare. and how these innovations will create a healthier world tomorrow. better questions. better outcomes.

jonathan: stocks rallying into the opening bell. about 37 minutes away. your trading diary for the second week of the year and the first full week of 2025 looks like this. u.s. pmi than durable goods 10:00. jobs data plus ism services on wednesday, adp payrolls in fed minutes on thursday. another amount of jobless claims. and on friday we get the payrolls report. let's catch up with bloomberg's candle with the latest on tariffs expected from president-elect trump trade welcome to the program we have a whole lot to talk about. we have this one big bill potentially passed by april and may on the one hand we have that

effort and then the trade story. what you make of the washington post reporting and what are people in d.c. saying about it? >> report saying he is considering this so pairing back what was a campaign promise for president-elect trump but he would impose universal tariffs across the board. here in washington i think the reaction would be it's really may be working towards appeasing to some republicans who had previously expressed concerns with president-elect trumps tariff plans. think midwest republicans such as mike round or even senator john thune the incoming senate majority leader. he expressed concerns with the policies and that was one of the sticking points when he was trying to become senate majority leader and did not outright get president trump's backing. when the biggest sectors is of course agriculture and many of these midwestern republicans had expressed skepticism of potential trump universal tariff plan for their constituents and

popularity on the ground. annmarie: a massive debate in congress on whether or not there be one or two reconciliation bills. the president-elect saying there will be one. is there thinking you have to cast a wide enough net to make her you can get every vote possible. tyler: it needs the simple majority to get through which means republicans can go ahead without any democratic support but they will likely need every single republican on board. we know house republicans stayed in d.c. partly because there's a huge snowstorm outside certifying electoral college results today but also because mike johnson said he needed to go out and start to get all of the points from his respective members because we know president trump wants to see this done as quickly as possible. president trump laid out he wanted energy, immigration and tax cuts to be the first three priorities he accomplishes pretty this will give this

all-in-one punch whether republicans can solve those fissures within their party particularly when it comes to spending cuts to offset the tax cuts remains to be seen but it's something they are already starting to discuss. jonathan: thanks for braving the snowstorm. from the nation's capital, a big effort there appeared that washington post story shaking up across fixed income and foreign-exchange and equities as well. >> the idea of pairing back tariffs having a huge boost some countries and thinking about some in europe as well as mexico whether it sticks like the snow we will see. >> let's see where we are this time tomorrow. coming up tomorrow, julian emanuel of evercore, jason thomas, and absently stacked show tomorrow morning looking forward to having you join us. thank for choosing bloomberg tv. brave the snowstorm, i hope you're all ok. this is bloomberg surveillance. ♪

where ya headed? susan: where am i headed? am i just gonna take what the markets gives me? no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence... the answer is j.p. morgan wealth management lock in let's go. when you want to invest with 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.

matt: good congestion pricing morning. 30 minutes of the start of trading. katie: bloomberg open interest starts right now. sonali: coming up, shareholders revolt. 2024 was a stellar year for corporate activist. the latest numbers with jim rossman. matt: the steel deal that won't die. nippon steel and u.s. steel file lawsuits. in an effort to preserve. katie: chuck e.