>> our base case is for episodic volatility. >> it is going to be delegate. some things that will be broken. >> that momentum is starting to just be a little broader. >> i worry about attend 20% drawdown this year if inflation doesn't fact look like it's being stickier moving up. >> i don't know if i look at 2025 and see another 20% return in the equity market. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. >> live from new york city, good morning. for our worldwide, bloomberg

surveillance starts right now. as we come into wednesday, equity futures looking for a little bit of a bounce on the s&p 500 higher by 0.3%. on the nasdaq 100 up by 0.4. firmly in the driver's seat this screen right here. check out tens and have a little look at 30's. closer and closer to 5% following some surprise economic data. the prices component spooking investors just a little bit going into more data later. adp jobs are portrayed jobless claims as well before the big one on friday. >> you talk about the prices paid component, the highest level from the ism services report going back to february of 2023. people looking at this in tandem with the upside beat to the job openings data with the headline figure some people saying what do you need of the fact that there's more momentum in this economy at the same time for every positive data point there was an equal and opposite aspect of that data that you could

point to if you want to be bearish. >> we get closer and closer to 5% across the yield curve just how much debt, this bond market absorb. later on today reportedly present elect trump headed to capitol hill. >> sitting down with republicans now. what is so interesting is that debate over whether or not we will get one big beautiful powerful bill. is still happening right now on capitol hill. all three journal editorial board says will the real republican legislative strategy please stand up and what might matter to this bond market is that clarity potentially we get more of that today. >> how much did we get in the news conference in mar-a-lago. here were the greatest hits. compelling candidate to become the 51st state. persuading denmark to give up greenland and taking control of the panama canal. quite a news conference yesterday. >> quite a news conference that throughout a lot of things. this is what donald trump does

he takes things where there is a nugget of strategic importance and puts it in a way that defies the norms of strategic alliances of the past and basically there is a question here of how much markets have become be numbed to some of the ways he discusses these things at a time when otherwise some people have said greenland does have a strategic benefit to the united states. annmarie: it does and so does the panama canal. what you have to think about with president elect trump is maybe not take everything literally but take them seriously. if you take him seriously on what he is talking about is he clearly wants a sphere of influence back for the united states when it comes to national security and economic security concerns. a lot of people this unnerved yesterday, but this is going to be i think he calls a great realignment. a man who talks about isolationism but yesterday was using imperialistic language. jonathan: inauguration is january 20.

quite a year ahead of us. equity futures on the s&p positive by 0.3%. we talked about foreign-exchange the euro trading through 103 last week. with threatening to do the same all over again getting closer we added 2/10 of 1%. joining us this hour we catch up on the latest bond market breakdown. we catch up with adam of the peterson institute on trump's latest threats and andrew looking ahead to payrolls. begin with stocks bouncing back following the seller fueled by losses in the bond market. russ of blackrock but have reduce the magnitude of the position we expect more volatility. and a headwind from higher long-term yields. he joins us now for more pride welcome to the program. just how strong is that headwind for this bond market this morning. >> i think it depends on how far you think yields will go.

470 on the bond market with a strong economy, decent earnings growth. it's not the end of the world the equity market can move higher but rbc people are worried about more of a melt up in rate sprayed that's not our base case scenario but clearly we are in an environment because of the stickiness of inflation, because of concerns about supply and concerns about tariffs, it is going to be a bumpier road and we are going to see the potential for yields to be higher range then we had previously. >> how much has changed since three weeks ago and this is a key question as to wire the bond vigilantes coming out now. >> i don't think that much has changed. as you pointed out it was one part of the service component on the ism that was higher. we know inflation of the service side is sticky. we know this part of the inflation picture is less susceptible to fed monetary policy so i don't think that number told us anything we don't already know. but clearly the bond market is

on edge. this is not just about inflation is also about supply so again we have to be prepared for an environment where the bond yields are not necessarily quickly reverting to a level that would make the stock market comfortable. >> at this point we are not particular optimistic at least not as optimistic when it comes to stocks as you had been buried you're still underweight duration so what you actually owning. >> we are overweight stocks and we should be clear about that. we maintained our overweight throughout this year paid we still think the next stocks go higher digitally in the u.s. and the reason for that is again yields are trading, broadly the 45% range on the 10-year. but you have that in the context of strong nominal gdp. you have an environment where earnings can grow once again in double digits, that is an environment where i think stocks can go higher. you have to pick your spots. we think there is room for some growth and we still think consumer companies are very well

set up, financials can go higher. it is not an environment in the equity market but i would moderate that overrate -- overweight. lisa: when it comes to gold you say you have a modest position, is that something you would want to add to? we've seen central bank's adding to that gold position like china. russ: i think we would. it's a position that gold you have to calibrate the right amounts. it has plans with no cash flow, it can be volatile but we do see a benefit in the portfolio and you think about what are the risks, inflation is still a bit of a risk, what fed policy will look like is a bit of a risk but the other one which i think has been impacting the long end of the curve is the fiscal situation. these large deficits that do not appear to go away anytime soon, in that environment the question becomes what can you own that governments cannot print more of. gold is a scarce asset. couple of the fact number

central banks include in china than adding to their positions that i think makes it attractive in small amounts in the portfolio over the longer term. >> when you think about the fiscal outlook does it matter to you or does it matter to the bond market that everyone is starting to think has now a potential vote whether or not there is one big bill, a reconciliation bill with a ton of spending across tax cuts to immigration or do you think it would be better to see this slow drip feed of the potential fiscal spending. >> i am not sure there is a huge preference in the market about how risk gets done. obviously the longer the fiscal's unresolved the more uncertainty, the more uncertainty the more potential for volatility. i think the bigger issue for the bond market comes down to supply. whether you do this in one bill or two, are you going to add substantially to the deficit or substantially to the supply. it's worth going back and remembering what can happen in the bond markets. a very substantial curve steepening and part of that is

really about the question of supply, how much the bond market can absorb and that's what i think investors are really can be now. what is the net add. >> when you say things like how much could the bond market absorb, i think which bond market, the u.s. bond market, of global bond market, it's really interesting to see how the price action played out yesterday if you look to the economic data, then you saw the bond yield move. we saw bigger moves elsewhere in places like the u.k. and gilt yields are up against them. from your perspective how much crowding out are you expecting, how much pressure we could see on markets elsewhere. >> i think it's a totally fair question. again the long end of the u.k. bond market also a very big move. and part of what going -- what is going on is the crowding out effect but there's also the reality that this is not just a u.s. phenomenon. in some ways the u.s. is seen more physical deterioration the

number of other countries. in general we've seen overall developed market debt rising and clearly we are not the only country that has a spending and a debt problem in the long term. >> how do you think that plays out in foreign exchange with all of that in mind. >> it is funny. we still have a little bit of a long dollar bias. i think is a lot of question about the dollar over the long term and that is reasonable. but if you think about where we are at, we are once again in a situation where it is unclear how fast or how much the fed is going to cut and you have a strong u.s. economy and the potential for more stimulus. i do think in the near term the dollar can hold in and particularly against some other currencies where you're not seeing the same type of growth you are seeing in the united states. >> before we let you go you were talking about how you are underweight duration and still overweight stocks. that does seem like the better bet. if yields rise at what point

does that switch? do you go overweight duration and underweight equity risks considering just the valuation proposition. >> i think that is fair. i don't know if there is a magic number. focused on 5% that number will keep coming up. it's a nice round number. i don't think you complete shifter allocation. clearly the backup and rates you get to a point where it starts to become more attractive. what i would say is the near term overweight to equities is really grounded in the environment of the regime we are in and that is an environment where valuations are not cheap. in the near term you have a world where earnings growth is likely to hold up. you're still seeing a lot of innovation by u.s. companies and i do think that still leads to overweight equities as long as yields don't melt on too much. >> good to hear from you, should you wait for yields to get to five before you buy. sing five would be something that we would think would be really appealing. this coming from evan brown of

ubs per u.s. treasuries now attractive, expectations on growth and inflation are no longer clearly skewed to the upside. the bond market a little bit later. equity futures firm or by about one third of 1% with an update on stories elsewhere with your bloomberg brief here is dani burger. dani: a fast-moving wildfire string homes and forcing thousands to evacuate. about 30,000 people were ordered to leave their homes after a brush fire erected in the pacific palisades community causing panic and traffic gridlock. ladies spread to a most 3000 acres and remains uncontained. the biden administration is shifting more than 100 million in military aid as it tries to bolster the cease-fire agreement with hezbollah. the associated press reported most of the money will go to the lebanese armed forces to help them deploy in the south of the country and supplement the u.n. peacekeeping mission. tencent has repurchased 3.9 3

million hong kong listing shares tuesday, it's biggest buyback in nearly two decades following a monday selloff which was sparked by the tech firms addition to the u.s. blacklist for allegedly's to chinese military. tencent denies the allegations and says it with the department of defense to address any under -- understanding. >> more from danny in 30 minutes time. trumps big plans. >> we will be changing the name of the gulf of mexico to the gulf of america. we needed for national security purposes pre-canada and the united states that would really be something. you get rid of that artificially drawn line and it will be much better for national security. jonathan: quite a news conference that's next. good morning. ♪

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>> live from new york city looking to bounce back from yesterday's losses with -- we are positive by zero point 3% on the s&p 500 in the bond market little change, bond yield at 470 per 84 6871. under surveillance this morning trumps big plans. >> we are going to be changing the name of the gulf of mexico to the gulf of america. we need greenland for national security purposes. people really don't even know if denmark has any legal right but if they do they should give it up. >> can you assure the world that as you try to gain control of these areas you are knocking to use >> military or economic coercion. >>i can assure you. canada and the united states that would really be something. you get rid of that artificially drawn line and it would also be

much better for national security. >> here's the latest and i'm not sure where to start and where to finish. president like trump taking aim at panama and greenland and canada and a wide-ranging news conference at mar-a-lago. refusing to rule out using military power to expand u.s. influence. bloomberg's tyler kendall joins us from the nation capital. what was the reaction to the news conference. tyler: president-elect trump used that news conference to try to shape what would be expansionist policy and frame it is potentially good for u.s. to mastic policy. we repeatedly hurt that hurt him hit on three themes. national security, economic security and competition with china. we know greenland is strategically planted for the arctic when it comes to countering wash -- russia. it's also home to the third largest oil reserves in the arctic and is considered rich in critical earth minerals, something the u.s. has been

trying to shore up in its competition with china. something in common in all of these places is leaders of the foreign lands say they are absolutely not for sale and of publicly criticize these plans from trump trade in terms of where we go from here, trump has been ratcheting up terror threats but it is unclear what those would look like particularly in these places. you heard him threaten potential military action when it comes to greenland and the panama canal. he would likely need some sort of -- from congress. jonathan: the geostrategic importance of greenland, i don't think that's going away anytime soon down. making canada the 51st state feels like a stretch. annmarie: but there might be economic coercion in the sense that he is serious when it comes to tariffs and places like canada. i would say on places like greenland of covered russia for a number of years. the arctic is so important to

rush i couldn't go through a single conversation talking about shipping or oil and gas, critical materials with a russian official bringing up how important the arctic was to them. jonathan: let's continue this conversation at the peterson institute for international economics. there is a chairman who has to set policy for upcoming policy changes from the incoming administration. you've warned multiple times that there is a real risk of re-accelerating inflation and perhaps even a federal reserve that has to hike interest rates. what do you make of the news conference with chairman powell to close out 24 and what would you expect to see in early 25. >> thanks for having me back. i think the horrifying aspect of the u.s. threatening even in the vaguest terms military action against peaceful democracies to grab land is beyond offensive

and irresponsible. and you cannot sane wash it. there is no excuse for the u.s. doing that. the prosperity and peace of the world for 80 years has come from the u.s. saying you can't adjust borders through military action. on the fed, if we assume that that was bluster, of the inflation risk is there and it's not just because of policies although it is primarily coming from the tax cuts that are online with whatever additions are made that are just going to extended a minimum the previous tax cuts under trump and their public and congress which will at a minimum raise the deficit by round -- around 1.5% gdp a year going forward, tariffs are inflationary, that they cause a recession. declining migration and deportations are inflationary unless you you cause a recession. so even if we assume the

moderate middle version of the trump administration proposals, it is an inflationary situation. and yes, powell and the fed should see this coming. before, they should have said loose fiscal, a bad trade, a is inflationary. and also they should've recognized they were just labor markets were much more resilient per that was already clear by last summer. i was already clear by last summer that they had not tighten financial conditions anywhere near as much as they thought. so there is a bunch of reasons i expect the fed to be announcing in march and april the the bias is neutral for tightening and i expect them to be tightening once the budget goes through. >> are you basically seeing a fed that could hike after we get these proposals trump is talking about be put down in legislation. >> i think that is what's going

to happen. and i think it is very interesting and as expected that they were able to push the necessary supervision's, but not get them to leave the role of the fed governor which is good he still wants to serve. that means you've got a very independent government. you have the federal -- so even though the fed got it wrong i don't think they were fundamentally wrong headed. they will face this. what is going to happen is they will be behind the curve because for political reasons since they did not get ahead when it was trump talking inflationary policies. they are going to be slow to react. they have more inflation momentum. is it can be possible for them to get it down, no. but it is going to require starting the second half of the

year. >> what's your base case considering the conversations. trump said to get his one big beautiful powerful bill through he will have to use those tariffs to offset when it comes to adding to deficit concerns. at the same time the washington post had a report that talked about more critical narrow targeted tariffs. do you have a working assumption at this point? >> i think it is roughly 60% likely that they will stick with the negotiable tariffs and give up claims about the revenue but give up having reliable tax revenue that can be used in the congressional scoring. i think there is a combination of too much desire from president-elect, from the commerce department and even state to do these kinds of leaning on is it denmark or panama or canada as well as with china. and a little bit too much rationality from the economists

in the administration that if we do across the board tariffs to get revenues we also get inflation. i still think it works this is a 25% chance which is worth worrying about, that they will push for what they tried to push for eight years ago which was destination based cash flow tax which is essentially a sales tax , but with added bias against imports and pro-exports. and if they do that, then they can put 10% across-the-board tariffs and say that there replacing corporate taxes with that. you get one point half -- on the ten-year across-the-board tax order of magnitude. and they can use that in negotiation so i think there is a chance, i think there is a chance they will try to do that and buy trump off that way. but my base case is they cannot

risk the inflation data. they don't want to give up on the bilateral bullying for so-called national security reasons and so let's stick with the really tough on canada with china and mexico though after a couple of industries and autos and then spotty tariffs beyond that. >> lisa: they might go hard on canada as well. i do wonder going forward what are the big difference discussions is where we are not just what will happen under some of these new administrations policies, you have a sense of where neutral is right now and how much higher or lower it is then what some people are assuming including the fed. adam: i'm sorry to keep harping on this, but this has been a discussion this been out there for a couple of years. i hosted an event at peterson where we had larry summers talking about the rise in -- and i've been arguing for year-and-a-half it's probably not to reach 150 basis points

higher than what the fed has been treating it as. this is because we have got ongoing physical -- fiscal deficits that have risen in the midst of full employment. this is because we are trying to grow productivity, this is because we have financial markets now that transmit monetary policy much less inevitably. this is because risk is, back in the economy. it encourages tolerance versus covid. and this is because you are getting less involved savings from around the world particular from china and non-china asia into the u.s.. jonathan: credit to you, adam there of the peterson institute. from new york city this morning, good morning.

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jonathan: a volatile start to 2025. equity futures positive by .1%. a bounce back from yesterday's losses. this coming from barclays. brazilian earnings and growth, central banks are in place to climb the wall of worry. that has been given a few bricks in the last 24 hours. one coming from the ism services data in america yesterday. it's about the prices paid component of the ism. a surprise to the upside.

really spooking the bond market yesterday. yields up again this morning, approaching 470 on 10s. lisa: it came with higher-than-expected services headline numbers. more robust activity and an inflationary and pull spooking people. the employment component of the ism services figure declined from the november read. you can look under the hood and find what you want to find. the headline data keeps coming in hotter than people want to see. jonathan: we said this 25 minute ago. don't just look at the u.s. bond market. look elsewhere. in the united kingdom, the 10-year yield higher by something like nine basis points on the session. the highest since october 2008 . when we think about testing the limits of physical space in america -- fiscal space in america. lisa: they are the creator of

the liz truss moment being hung over the heads of all sorts of bond vigilantes and government officials grappling with deficit spending. a question here, and you asked earlier, how much does higher u.s. yield suck the oxygen out of the room for countries that don't have the same fiscal dominance the u.s. on the dollar seem to have? jonathan: euro-dollar, 102.97. down on the session by .4%. dollar strength making a comeback on the session this morning with bond yields pushing higher. lisa: people are pushing back. how soon they think the fed can really cut rates has to do with the fact that given the inflationary impulse, the first rate cut have 2025 could come in july rather than june. that's according to market pricing. where else are you going to go? that is what is hanging over the market. jonathan: gold or bitcoin.

there's not a lot of alternatives outside the u.s. dollar. donald trump escalating threats against canada, greenland and panama, refusing to rollout using military or economic coercion to expand u.s. influence over the countries, including high-level tariffs on denmark to persuade it to give up greenland. annmarie: that is what everyone is focused on. the u.s. already has a base there. the military has a home base in greenland. please it to detect missile threats and monitor space. there's already cooperation. i have to think, mr. president, why do you need to take control of it if you pretty much already control the military aspects of it? maybe want more raw materials or there is a deal to be had. what struck me as the more conciliatory tone we heard from denmark. back in 2019 when trump first said this, this is absurd. now it is we are very excited the incoming president has taken a liking to greenland. lisa: this really shows how much

people understand the rhetoric versus the intent and how to handle donald trump. a lot of this is coming and highlighting how different it is now than 2016 when people were clutching their pearls at the idea the u.s. president would be having this autocratic speech. now it is a negotiating tool and we need to basically have some nice talk and that we can come to some sort of deal. that is how it is being treated on the global stage and that is the interesting departure. jonathan: i wonder if they are seriously underestimating that the administration was a serious realignment worldwide. annmarie: he said he wants a realignment when it comes to economic, security and national security. that is why he's honing in on these issues and he comes back to the idea of tariffs and trade. he thinks the u.s. is not getting a fair shot. jonathan: the story from nvidia. the ceo telling ed ludlow he has not been invited to visit donald trump at mar-a-lago yet, but he's ready to meet him. >> jensen: i would be delighted

to see him. congratulate him and do everything we can to help the administration succeed. jonathan: he's the last major tech ceo that has not been done to mar-a-lago to meet with the president-elect. annmarie: i was thinking there's no way he hasn't been to mar-a-lago but he hasn't. maybe one potential word of advice to the ceo, just show up. don't wait for an invitation. go say i would like to speak to the president. there was a follow-up that ed asked that was interesting. p give a diplomatic answer, saying we are happy to work with the administration and give them "as much insight as we can from our perspective." nvidia at this moment is already facing attentive restriction when it comes to the most advanced expensive chips that they want to sell the china. lisa: he said he welcomes the president seems to want less regulation. that might allow them to move

fast because we have to move fast. i wonder if that applies to the tech sector. jonathan: get back to the office is the message from j.p. morgan, bringing back staff five days a week. sources telling bloomberg the bank is set to announce the change in coming weeks, replacing a three-day mandate for many workers. the move marking your return to pre-pandemic expectations. things i don't usually happen when labor markets are super, super tight. lisa: that is the takeaway. a lot of companies are saying get back to work because they can. people can't just say i will even go to another company. they don't have the same kind of job openings. about 60% of the staff already come in five days a week. this is everybody else and the fact they are not worried about losing them, i think it's the right takeaway. jonathan: the employer taking back some leverage. annmarie: why now? jamie dimon was in washington, d.c. and chastising d.c. federal workers, saying washington, d.c. needs to get back to work. goldman had a full on office in

2021 and then reiterated and provided employees of that in 2023. why is it taking j.p. morgan until bang only know the culture at the top is you should be at your desk? jonathan: let's talk about corporate culture in america. i think the ceo and space between them is getting wider and wider at has been for much of the last decade. human resources. the head of the hr department and many companies has become incredibly powerful in the last several years across the host of different topics. lisa: this is the question of how to maintain corporate culture with a large company. that is being reassessed. i do think this is something that is increasingly at issue with the get back to office but also more than that what is corporate culture and how do you view that throughout the ranks. jonathan: listen to an interview with the ceo. an old-school ceo this been

around for a long time. listen to the talk about corporate culture. get an understanding for how things are actually functioning at how much human resources have changed the operations. you will get two very different views of what corporate culture is. lisa: you talk about the size of the company and the bigger the company the more that is true. the smaller the company the more you can create that. it's a bigger discussion about a lot of companies. i don't think we have time to lean into it now. jonathan: let's turn to big tech. meta announcing major changes with a focus on free speech. the company dropping third-party fact checking and overhauling its content moderation. stefan slowinski writing, "we view the moves as a complex political gamble with potential for near-term payback, but also median term risk, which investors need to weigh up." they are stripping out liberal

political influence. do you think they believe this will help user engagement? do they think it will lead to a re-think of tiktok from the incoming administration? how do you think about this shift from meta? stefan: thanks for having me on. as investors we need to look at it through a framework of what will advertisers think, what will users think and what will governments and regulators think. advertisers may be the most important because they drive the revenues from meta. the risk is they fear that it becomes twitter 2.0. will we see increased content that is not to the liking of brand safety for those advertisers? twitter reportedly has seen revenues fall from more than $4 billion in 2022 to just about $3 billion last year. that is the risk advertisers worry about, brand safety, as investors that can impact the top line for meta medium-term.

the potential could be upside if this helps decisions about tiktok moving in meta's favor. on friday, tiktok will pitch the supreme court to put off the ban. that is supposed to come to place on the 19th of january. that is a near-term event meta could stand to benefit from. lisa: go back to 2016 when meta first put into effect the third party content moderation apparatus that they seem to walk back in yesterday's commentary from mark zuckerberg, saying that was a mistake because those third-party content moderators were not completely independent and terms of their thinking. do we have a sense of how much advertising revenues increased, decreased, traffic increased or decreased after that move went into effect? stefan: third-party research shows a lot of moderation has been successful in terms of reducing harmful comments, harmful content on the platform.

when you look at meta's own business, the success, the growth it is currently to really -- delivery, it seems to be working or at least not holding the company back. that is the unknown here as they start to pull back some of those fact checking capabilities. will that have an impact on users? certain groups not feeling welcome anymore in moving elsewhere? will that create opportunity? it was meta through threads that took advantage of the trouble that x was having. we could see some others trying to come in here and take advantage of potential changes at meta to jumpstart their own businesses. that said, meta has 3.3 daily active users globally. it will -- 3.3 billion daily active users globally. it will be attractive. lisa:, is this a signal that if

you are in direct competition with elon musk business you have a target on your back with regulatory impulses with this administration? that was the speculation yesterday, that mark zuckerberg was trying to get ahead of that. how much of that is a real factor to take into account when having your policies of different tech companies? stefan: meta is in a tricky position. they have businesses that compete with donald trump and with elon musk. mark zuckerberg personally has had some challenges with elon musk and president trump in 2016. this could alleviate some of those frictions. i think with big tech companies is the desire to avoid regulation in the next four years. the main goal is to get the

person to move on. meta is trying to take itself out of the eye of the fire in the u.s. but this could ratchet up pressure for them in europe. meta is being investigated for being in breach of the digital services act. there was some aggressive tone from the company yesterday about trying to push back on european regulation around censorship with the help of the u.s. government. we have the upcoming ai safety summit in france, in paris on february 10 11. we are seeing this -- 10 and 11. we are seeing this as ai agents and ai assistants start to become more prevalent. these are important subjects outside of the u.s. while meta may have taken some heat off itself in the u.s., it might be ratcheting up pressure outside the u.s.. europe is 25% of revenues for meta so that matters.

annmarie: maybe he's trying to make sure he has the backing of the u.s. government as he deals with this regulatory environment in europe. stefan: i believe that is part of the messaging from the company. working more closely with the government on the pressure meta and other companies are feeling globally. that is something they are trying to put into place, a partnership with the u.s. government. again, these are sensitive times. this is a hot button subject in europe. we have the southport rights over the summer. the u.k. government imprisoning people for putting posts on facebook and siding those riots. elon musk right now accordingly far right party in germany and hosting them on x. leaders of these countries, leaders of france, germany, the u.k. coming out and trying to push back on some of the social media sites. it's a hot buttoa lot is being e

divide between the u.s. and china in terms of technology. that is almost a done deal. we may see more of a divide between the u.s. and europe as well. the challenge for europe is you don't have the home-grown companies to replace some of these u.s. platforms. that is the challenge for europe and always has been. jonathan: that challenge not going away anytime soon. stefan slowinski on meta, down about .4% in the premarket. with an update elsewhere, let's cross to dani burger. dani: nvidia's ceo at the center of an ai boom says he's ready to meet with president-elect donald trump and offer his help to the coming administration. he spoke with bloomberg's ed ludlow. >> have you been invited? >> not yet. i would be delighted to go see him. congratulate him and do everything we can to help the administration succeed. dani: donald trump said he will

impose trade tariffs that could impact companies like nvidia that rely on outsourced manufacturing. more on the interview coming up in a few minutes. novo nordisk is expanding a drug development deal with vallow health to find new obesity and diabetes and treatment using ai, pledging $1.9 billion to the partnership. the original deal focused on cardiovascular disease and was worth as much as $2.7 billion for 11 programs. donald trump has stated he would seek to prevent the construction of wind farms in his second term. trump has the authority to approve or reject multibillion-dollar wind projects off the coast of the u.s. on federal land. he criticized wind as expensive and harmful to the averment. that is your bloomberg brief. jonathan: up next, u.s. labor market and focus. >> we had a huge boom to refill all the jobs that were edged out and vacated at the worst of the

pandemic. it took several years for us to get back to that level. there's a lot of health of the market because the economy is very healthy. jonathan: up next, andrew hollenhorst of citi. ♪ ♪

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about opportunities like advances in healthcare. and how these innovations will create a healthier world tomorrow. better questions. better outcomes. -honey... -but the gains are pumping! will create a healthier world tomorrow. dad, is mommy a "finance bro?" she switched careers to make money for your weddings. oooh the asian market is blowing up! hey who wants shots, huh?! -shots?? -of milk. the right money moves aren't as aggressive as you think. jonathan: equity futures turning negative in the last 15 minutes. down about .08%. the incoming president is considering a national economic emergency declaration to allow for a new terror program. this is something the campaign talked about openly in the last six month or so. i'm surprised the extent to which markets have responded to it. i'm questioning what is new about the reporting. annmarie: that is my point. i'm not sure why this is news to

the financial markets. potentially what they are picking up on his this seems like the -- is this seems like the antithesis of the washington post story. maybe there will be a more narrow targeted approach to tariffs. jonathan: jittery about this story and we will stay on top of it. u.s. labor market in focus. >> we had a huge boon to refill the jobs are emptied out and vacated at the worst of the pandemic. it took several years for us to get back to that level. there's a lot of health and the labor market because the economy is very healthy. we should continue to monitor the un-employment rate for people who have been unemployed for 27 weeks or more. we are seeing that creep up a little. jonathan: investors looking to caps off a busy week with u.s. payrolls due on friday. the median estimate calling for 163,000 jobs added. unemployment the hold steady. andrew hollenhorst has a

different idea on things he's looking for. a very different under rate. andrew, good morning. let's start with unemployment. what is your call? andrew: we are calling for 4.4% on the unemployment rate, not as big a move as it sounds like. this is the silliness of what we are doing. i have to get into the hundredths of a percentage point. 4.24% unrounded. if we move up a little bit more than a tenth, you were up at 4.4%. lisa: why are you not dissuaded for you more bearish outlook on the employment data when the data comes in hotter than expected with the inflationary read through ism coming at the highest level since 2023? andrew: this is the issue we are all dealing with, economists, the market, the fed, there's so much noise in the data. there are different details of

the data you can look at and tell different stories. the jolts report is a great story. you look at the job openings, that stabilized at a higher level than we thought it would. that looks quite healthy. if you look at what people are doing, the more relevant statistics in that report, layoffs are low. that is good news for the job market. you see that the hiring rate is quite low. that surprised us to the downside. he got a lot less attention. it was low in october. we had strikes and hurricanes. in november, it continued to move lower. you look at the quit rate. are people feeling comfortable quitting their jobs? this goes back to what you were talking about with companies bringing workers back five days a week. people are not feeling as comfortable now that they can find a new job if they leave their job. those of the signs of softness we are seeing in the data we think will continue to feed through and lead to higher unemployment rate. lisa: talking about the quit

rate, 1.9%, tied at the lowest rate going back to 2020. how offsides do you think the market is? how much pushback do you get and what do you say to people who think you have been out of consensus for a while. why are you capitulating? andrew: it's been incredible in the last six months for the last three months. september after we had the weak jobs report and the fed was cutting 50 basis points and worried about unemployment picking up, we've had a run of better data since then. we are trying to look at the underlying trends and not change the view every month based on where the individual data point is coming in. i don't blame the market. there has been a lot of noise in the data. the fed is reacting to that noise. we have had 10-year treasury yields all over the place. two-year treasury yields all over the place. we are going through a phase

where we have seen better numbers. the unemployment rate. it would be 4.6% if not for the partition -- dissipation rate dropping. we would -- participation rate dropping. we would be having a different conversation. annmarie: could you change your mind on january 20? is the immigration policies he's talking about going to mean a tighter labor market? andrew: this is the issue with trying to do a forecast. his policies do matter quite a bit. that is why the market is moving so much on each of these headlines and will continue to move. it's not necessarily january 20 when everything is answered. we probably should get some answers on immigration. i'm interested to know with the reconciliation package looks like. what is in the fiscal bill. if it's just extending existing tax cuts, that is new a stimulus, it's just extending what is already there. if we get no tax on overtime pay

and other things that could push the deficit higher, that is more stimulus. that could change the fed's view and my view and let's see what happens. jonathan: quickly, if we get 4.4% on friday, is that sufficient to cut rates to the end of the month? andrew: they may still pause. they have to see something in addition to that the set them up to continue cutting later this year. it signals towards this pause in january. jonathan: wells fargo says if we get 4.4%, it would be ugly and we would see the 10-year yield falling 20 basis points in that scenario. we had a big move and the other direction in the past few months. andrew, thank you. andrew hollenhorst of citi. up next, mike wilson, rob casey, the new york congressman mike lawler and padhraic garvey with big moves in the bond market. from new york, this is bloomberg. ♪ ♪ ere ya headed?

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>> we are going to the point where rates are the things that pressure equities. >> markets are pricing that rates will stay higher for longer and we will not get all these cuts. >> it's always difficult. it is difficult for any institution dealing with uncertainty. >> the uncertainty factor really starting to rise at a more rapid pace. >> we are preparing for another year of a lot of uncertainty and a lot of volatility in yields. >> this is "bloomberg surveillance," with jonathan

ferro, lisa abramowicz and annmarie hordern. jonathan: the second hour of "bloomberg surveillance" starts with big moves in the bond market. equity futures just about unchanged on the s&p 500. on the nasdaq a similar move. the 30-year testing yields we have not seen going back several years. 2008 the last time we saw u.k. gilt yield this time. we have a 10-year getting closer to 5%. 4.6994. it is not just an american move. it's american-let. -- american-led. lisa: it is coming with supply anxiety. we have to keep harping on this. it's in the u.s. for the deficit is deepening. the u.k. you talk about the highest yield since 1998 in the u.k. 10-year

yields. a question about how much we have sucked the oxygen out of the room with u.s. yields being where they are for other countries to also finance deficits at a time of technological transformation and legacy programs that need to be financed. jonathan: they are losing fiscal space. maybe the american data and upcoming policies will make that more difficult. trade policy in focus as well. a report from cnn and the last 30 minutes. the incoming president is considering a national economic emergency declaration to allow for new tariffs. i have to put this out there. this is something we have heard from the incoming administration several times. annmarie: he threatened to use it in his first iteration as president. there's a story out this morning from jenny leonard, a fantastic trade reporter. she talks about trump always

playing his unpredictability is key to leverage. that is probably what you see a lot of stories. who was leaking to the washington post? who was leaking to cnn? you can see the rival factions in the incoming administration on this key point. there are different ideologies surrounding the president on how they think tariffs should be used. jonathan: the takeaway should be everything is on the table. annmarie: exactly. jonathan: fx market. euro-dollar breaking 103 again. dollar strength is making a comeback off the back of these moves in the bond market. off the back of the pushback to washington post stories this week about the potential watering down of tariffs in the incoming administration. lisa: all roads, economic data that's been surprising to the upside with jolts and i and him services -- isn services or tariffs that -- ism services or tariffs, investors are pushing back expectations that cut rates

later this year, reducing the space increasing inflationary pressures and that's why the dollar seems to be an ongoing haven for people. jonathan: the ism services print got this moving yesterday. adp at 8:15 eastern time. we get jobless claims 8:30 this morning. payrolls this coming friday. coming up, we catch up with mike lawson, rob casey and congressman mike lawler. we begin with stocks steady and investors taking stock of an equity and bond market selloff in the last when he for hours. mike wilson says equities are rate sensitive once again, another reason to stick with quality. rates are the most important variables to watch in 2025. happy new year.

let's start with the bond market and the importance of it. what is driving yields higher and how important is the wide to the equity market? -- why to the equity market? mike: lisa mentioned a few things driving it. some of the fiscal sustainability questions. we have a new administration. while it is second version of trump, it is still uncertain. there's a lot of new cabinet members. we just don't know. the first quarter after a new president, a new administration comes in, the markets typically don't do that well. we have these variables we don't know. the main risk we talked about a month ago was probably u.s. dollar strength and rates. that was our view going into the election, that trump would be good for stocks and not as good for bonds. that is what is playing out. we had this euphoria. we are getting a pullback on that. it's more about inflation and fiscal sustainability then it is about growth. that is the key and that is why the rate sensitivity now matters

for equity multiples. we track this closely, the correlation between multiples and rates flipped negative again when it crossed over 4.5%. exactly what we thought because that is what we experienced in april. it makes perfect sense. we don't know how it is going to resolve itself. until this does resolve itself in a favorable way, rates back below 4.5% and term premium comes down, the other part of the variable. term premium is up 77 to 80 basis points. that is a massive move in a short period. i'm surprised the multiples have not come down more. the high-quality stocks are where people are crowding into still globally. that is keeping the s&p multiple little higher than it would be normally. this persists, multiples will come in more. jonathan: it is toxic for risk appetite the way you have laid out things. we had torsten slok to raise the risk of a repeat of 2022. would you share that fear the year in which stocks and bonds

do poorly? mike: that is fair. i don't think it will be severe. 2022, they raised it 400 basis points and that is not happening. that's a little extreme to save -- say bonds. fonts will not sell off that much. multiples are much higher coming into this year than they were in 2022 relative to where bond yields are. i have been surprised and a lot have been surprised multiples have gotten this high in the face of rates at 4% to 5%. that is the single biggest miss by most people, that multiples could be this high. you have more give and multiples could come down. they don't have to go up 100 basis points for multiples to come in 10%. that is what we are trying to figure out. you still stay at the quality curve. if you look what happened in the fall, the low-quality stocks absolutely went bonkers. that has to come out of the market. that is where we would be

concerned or most -- the area we are most avoiding for the next three to six months. lisa: what's interesting is how much the narrative has shifted around which area of the equity market is most rate sensitive. at one time it was considered the highflying tech stocks that would be hit hard. now you talk about some of the rest of the index that will have to come in. is that how you would frame it? tech stocks are not nearly as rate sensitive as a lot of people used the think they were. mike: not all tech stocks are created equal. you have to separate the 10 magical stocks versus everybody else. you look at the average tech stock, the equal weighted tech index, it has been lousy. it has not performed well relative to the overall market. once again, we are talking about monopolies. monopoly businesses, high-quality businesses. not just tech stocks. there are 30 or 40 of these businesses.

they will typically hold up until growth becomes a serious problem. we are not in a recession, not in a situation where growth will disappoint like it did in 2022. that was the big difference versus today. 2022 had a massive earnings recession led by the magnificent seven. that is not what we are forecasting now. that probably keepsake bid that keeps a b -- keeps a bid. though stocks will get clipped the hardest. we are not at the threshold yet. lisa: torsten slok another guest were talking about how important it is to have an increasing allocation to cash at a time when there is going to be a lot of volatility in great uncertainty about rate sensitivity and fiscal policy in washington. do you agree with that? mike: cash is great right now. you are getting a real return with no duration risk. does not mean you have 40% cash

but we are still very much short duration. when i say cash, it's like two years and in. that is what most clients have been doing, having a barbell of equity portfolio, risk assets. within the fixed income portfolio they have shortened their duration. that is how people are positioned. cash heavy and maybe more risk in their equity portfolio. that barbell has worked quite well and i don't see why that will change. annmarie: one thing that is different now is the fed was raising rates. we just had adam posen on who thinks they will raise rates this year because of what is going on, the policies and sticky inflation. is there no chance the fed raises rates this year? mike: of course there is a chance. that is not our house call. if things move in this direction -- let's say we get an oil risk to the upside. it has been making a move. that could cause the fed to raise rates 25 basis points. we are not raising 400 basis points. that uncomfortable -- that i am

comfortable saying the chance is zero. i don't think there is much downside for rates but there could be 10% downside for stocks if rates stay at this level. annmarie: it is only the second week of 2025 and we've had multiple narratives on fiscal expansion, on tariffs. what is one things you would love to have clarity on to understand the market this year? mike: clearly tariffs will be the one that is the most -- for equity investors that is the biggest focus. that could affect earnings the most severely and growth. immigration is going to be a push and take. the other one is taxes. are they going to try to get more tax cuts or try to extend the existing tax cuts or the current tax law? i think that will affect rates. it is tariffs and taxes. i don't think we will know about taxes for quite a while. tariffs we will know quite a bit in the next month or two. we think the first half will be

choppy. the second half, if they can execute on these policies and we can get to a point with the markets get comfortable, the second half could be much better for equities. lisa: where are the opportunities? is there anything getting you excited? mike: the area we are most bullish on his financials. there seems to be a coalition around deregulation. there is pent-up demand for m&a and other capital market activities. i think financials, we think there is value. that is a global call. the second is probably energy and commodities and materials. we can't do all these things everybody wants to do like build data centers, add infrastructure, robotics and these things. you need materials and energy for that. those are areas that are overlooked and underappreciated by the market that can be interesting this year. jonathan: mike, good to see. mike wilson of morgan stanley, thank you. yields pushing higher on the

10-year. the spread between the two-year and 10-year, 341 basis points now. lisa: it is the steepest going back to 2022. is that a positive thing? is that normalization? it will definitely help financials. or, is this a negative thing? jonathan: i think mike said it well. the why is important here and it's not good. it's about prices paid on the ism, the fiscal trajectory of the united states. not good for risk appetite. lisa: it's really important test that comes on friday. how much the market has baked in a higher inflation rate they could be absolutely torpedoed if we get an employment report that underwhelmed and comes in light. how much we could see a rally. that's an important test. what that does to the entire narrative. jonathan: downside surprise on friday. the u.k. gilt market. if i'm a treasury, i'm sitting

there like this on friday, saying please downside surprise. the gilt market is running away right now. 10-year is up by 10 basis points on the session. pushing higher and higher. lisa: the highest levels going back to 2008 at a time when you had growth that is nonperforming. that is something else mike wilson said. this is on inflation and fiscal, not on growth. that is a toxic mix for a lot of countries. let's get an update on stories elsewhere with dani burger. dani: los angeles is ramping up evacuations as the palisades fire grows in size. the uncontrolled fire is spreading densely popular to santa monica, california. widespread and damaging wind gusts are respected to worsen, hampering efforts to contain the fire. the fire was at almost 3000 acres and two other blazes flared up overnight. x on protecting her oil prices that will hit their production division by about $700 million

in the fourth quarter. refining and chemical margins shrank in the final months of 2024 but were partially offset by higher u.s. net gas prices. x on's guidance -- exxon's guidance shows it was a tough quarter for big oil. cnn reporting donald trump is declaring -- considering declaring a national economic emergency. no final decision has been made but trump is fond of the measure because it would give him jurisdiction how to implement tariffs. that is your brief. jonathan: appreciate it. up next, trump heading back to washington. >> i like one big beautiful bill and i always have. if two is more certain, it does go a little quicker. i like the idea of the one big bill. i can live either way. jonathan: that conversation is up next. good morning. ♪

♪♪ ♪ three little birds ♪ ♪♪ ♪♪ ♪♪

jonathan: check out stocks and check out bonds. bond yields pushing higher on the 10-year. it's pushing of the u.s. dollar. equities down .2%. euro-dollar breaking through 103 again. under surveillance, trump is heading back to washington. >> i like one big beautiful bill and i how is have and always will. if two is more certain it does go a little quicker. you can do the immigration stuff early. we have a leader with a lot of confidence in. hopefully a great leader and speaker. i like the idea of the one big

bill but i can live either way. they will be coming down. the senate's will be coming down and ultimately we will be meeting in the white house. jonathan: trump heading to capitol hill to discuss his agenda with senate republicans, signaling he would accept two separate packages to push his agenda through. rob casey says the most likely path forward for the now seated republican congress is one massive, all-encompassing reconciliation package. the most significant issue for republicans is timing. speaker johnson's goal of april is ambitious." rob, good morning. canada becoming the 51st state, renaming the gulf of mexico, a range of issues including greenland, panama. rob: you have to see through a lot of that noise. canada will not be the 51st date. greenland will not be the 52nd state.

both said that clearly as if they had to. intermixed we were talking about 5% of a contribution to nato. we are talking about energy, the border, all these things that really are policy priorities. you have to ignore the candidate and the -- canadas and greenlands of the news conferences and focus on what matters. annmarie: and the panama canal. what is he getting at? rob: they are geopolitical trade flashpoints and chokepoints the u.s. has to ensure remain open. not only over the course of the next four years but into the future generally speaking. the panama canal is one of those. greenland is a vital military base for the u.s.. we have a base in the northeast of the island that is a lot for our missile defense system. there are all these necessities. the u.s. does not control these places. the u.s. will not control these

places but we have to have access to these places. and the more broad competition offense is the best defense. trump will talk about wanting to expand presences rather than eliminate them. annmarie: he cares a lot about national security and economic security. well maybe he's an isolationist, he's using imperialistic language because he cares about those objectives. if that is the case, how was he going to foment trade policy like tariffs -- implement trade policy like tariffs? rob: i would put tariffs in two buckets. the first is ideological and punitive. i would put europe at the top of that list. maybe not on day one but certainly before april. i would also put part of the china tariffs in that punitive bucket focused on decoupling from key sectors. i would honestly say the rest,

especially mexico and canada, has to do with wanting to get the best deal and incentivize eliminating drugs and migrants crossing the border. if i am europe, on tariffs i am worried. china, there is some room for agreement put in the second half of the trump term we will see efforts of decoupling. everyone else it is part of the conversation. annmarie: back to jon's point about negotiation on one big bill, tariffs will be the main means to pay for it. does he need to have a lighter touch on tariffs? rob: we don't know this for sure but i can almost guarantee we will not see tariffs passed as part of the reconciliation process. from the conversations we had in washington, d.c., congress numbers don't want to vote on tariffs because they don't want to be on the hook when they proved to be inflationary, when tariffs cause significant retaliation from europe and from

china which hurts farm and ag states most recently. members of congress really don't want to legislate tariffs. trump will have to do it by executive order. he can and will by executive order and maybe they pay for the broader republican agenda but they will not be started -- be part of the same package. lisa: i had not really seen the press conference. what did i miss? the most important thing you missed was that donald trump set interest rates are far too high. that's very concerning. when you cut through the noise -- jonathan: i'm sure the danish feel the same way. lisa: i'm worried about whether this is something donald trump can pay for and if he cares about with the bond market is saying and what the signal is from term premium that are climbing to the highest levels in a long time. how much of a signal is that? how much is that something you need to pay attention to outside

of what you call the noise? rob: they could be an important signal but at this point i honestly don't think the trump and republicans are right about paying for the bills. what we hear from d.c. constantly as the market will have to move before legislators take the bond market. i would say more importantly, the question of the deaf i -- deficit seriously. they can talk about the deficit. some are deficit hawks. when we come to trump's agenda, they will do it whether or not the deficit expands or not. lisa: people were saying one of the big checks on donald trump would be the stock market. since the bond market has a big impact, the bond market as well. are you saying what we are seeing in the opening salvos is the opposite? it is not a check at all and some of these larger issues he's trying to get that will drive what he does? rob: for one reason in

particular trump is less focused on markets in this term and will be than he was in the last term. he's not running for reelection. he has four years to enact his legislative agenda, the policies he has talked about for 12 plus years. any hurdle to that is less important than it was four or eight years ago. there's a huge significant market reaction, that's one thing. trump has talked about taking over canada and greenland. he's not answering to many folks. there are not many folks outside the administration or inside the administration who will curtail the trump agenda. congress might not be of the pass all of it but they will not put up any roadblocks. jonathan: how big is this one big beautiful bill going to be? rob: smaller than they would like it to be. not $7 billion. -- not $7 trillion. no tax on tips and overtime. jonathan: are you north of $5

trillion? rob: i think so. jonathan: north of $5 trillion. what goes on top? annmarie: they might have to extend tc j for three years and then because they do not want to end with that much debt. jonathan: user of this morning. 10-year, 473. 30-you're getting closer to 5% at 4.96%. we will catch up with republican congressman mike lawler. that conversation is just around the corner. ♪ (♪♪) (♪♪) what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like?

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jonathan: equity markets down across the board on the s&p 500. -5.4%. the nasdaq down by .5%. why is on the next board. get to the bond market story. 10-year yields higher for four consecutive sessions. levels we have not seen since november of 2023. on the 30-year, levels not seen since october of 2023. i think it's important. this is not just the u.s. story. it is global. check out the u.k. gilt yield higher by 10 basis points.

check out what's happening with sterling. you are not getting sterling strength of the back of this. 123.35. that is an ugly picture for the british authorities this morning. annmarie: they don't have what the u.s. has, a strong dollar and the fact that people want to invest in the u.s. at higher yields. how do they combat slower growth and high inflation? it creates a real quagmire for them. jonathan: what a ride 2025 is shaping up to be. here is manus cranny. manus: the conversation around bond yields plays into big tech and duration. that's not a ransacking of the long end. that is just mild bearishness. apple this morning -- some tech stocks will suffer these yields as they drive higher. apple promised indonesian they would spend a billion dollars making -- that is not enough. they say you want to be here, sell more here to 280 million

customers, build your factories here. samsung is doing it. we are on the back foot this morning overall on tech. down by half of 1%. how do you lose friends and alienate people? d-wave quantum up. 15 years away. that is when they become a possibility. that is how you lose france and alienate people. novo nordisk. talked about their summer. one of the new gop drugs -- gop drugs -- glp drugs. ubs looking to buy from neutral. the selloff is overdone. positive inflection point for glp-1s. i can hear myself rallying behind ubs. it's whether you think a wipeout

on that day is a sufficient entry point for you now. that is the trajectory for the moment. jonathan: manus cranny, appreciate it. an update on some of the movers this morning. we are down here by .4%. under surveillance, canadian political leaders firing back at present elect donald trump's comments about the u.s. annexing canada. justin trudeau writing, "there is not a snowballs chance in hell candidate would become part of the united states." "candidate will never be the 51st state, period." annmarie: i want to lean into the individual that will likely be the next prime minister of canada. he was talking about in his statement that trudeau did not do a good job of explaining how much canada helps the u.s. when it comes to things like oil and gas, agriculture. this will be an interesting one to watch. i think the republicans love trolling trudeau. i wonder if the

relationship will change with the new prime minister. lisa: if this is the goal for us to be talking about this with trump posting on true social. canada will loving the 51st state. what a great nation it would be. how much this is just trying to change the conversation to something that is not going to happen. jonathan: an important conversation on other issues, including the incoming president saying at mar-a-lago the native nations should spend the equivalent of 5% of their economic output on defense, escalating his demands on european allies to more than double the current target of 2% which many nations have fallen short on repeatedly over the past two years. i would post this. i think some of the bond market moves are a factor in what is happening here. they will have to spend more on defense and i'm not sure how much space they have to spend on defense outside of places like germany. lisa: they will have to spend more whether or not trump pushes

them to spend 5% of their budgets on nato. this comes down to national security that's being threatened directly by russia. you have to imagine in a place like germany if you look at bunds the highest levels since 2023. it poses that fiscal loop we keep talking about. annmarie: it's at 2% now and he's talking about 5%. they were eyeing 3%. not as much spending as 5% of gdp. definitely more than the 2%. he's going to make this a priority. jonathan: these are countries that failed to get to 2% and they will struggle to get the 3%, never my 5%. los angeles is wrapping up evacuation orders as the palisades fire continues to rip through the area. parts of northern santa monica now under alert as widespread and damaging wind gust threatened to worsen the situation. tragic pictures coming in overnight. lisa: evacuations orders all

across different places. i feel for them. it sounds like the winds will pick up so hopefully every buddy stays safe in this stops -- and this stops sometime soon. lisa: let's turn back to politics. republicans gearing up to negotiate an extension of donald trump's 2017 tax cuts. a group of house republicans were invited to meet with trump at mar-a-lago and i respected the push to include an expansion of salt tax deductions in congress's upcoming package. joining us now is one of those house republicans. congressman mike lawler of new york. i just want to know from your perspective how many friends you have outside of new york in the house that would be on board with this effort. rep. lawler: a lot more than people realize. new york, new jersey and california are three of the high tax states where this has most acutely impacted. we have a coalition. given our small majority in the

house, it is certainly a powerful coalition. there are other states and members across the country in which over the last seven years they have seen their own taxes rise. up against that $10,000 cap. quietly there's a few more members and people would realize. the cap on salt was a pay for for the 2017 tax cuts and jobs act. that's it. it was used to pay for other provisions within the tax bill. the $10,000 cap is woefully insufficient. it has had negative impact on states like new york. we can get into how new york excessively spends. they increased their state budget by $61 billion in the last four years. that needs to change. taxpayers should not be

penalized by living in a high tax state. this is double taxation. for those of my colleagues that say this is somehow a subsidy, the fact is new york contributes more to the federal government than it receives. more than some of these states in which my colleagues will claim they don't want their taxpayers subsidizing new york. the reality is, it is the other way around. annmarie: you don't have a friend and someone like lindsey graham, the senator of south carolina who said why should i from south carolina pay for what is going on in some of these blue states. he's pushing for this one big -- for the two bill approach. he doesn't want to talk about taxes. he thinks it will take too long and he doesn't want to sign up for salt. how are you going to convince the president this weekend you should do one build together to make sure salt is included? rep. lawler: respectfully, south carolina is one of the states that gets more back certainly

percentagewise the new york does. if we want to talk about subsidies, we can go chapter and verse through everybody's subsidies that they get. with respect to one versus two, the president may clear he's moving forward on one big bill. we need to deal with taxes, the border, energy, debt among other issues. the fact is given our small margin in the house, we will need everybody's vote and everybody on board. two track bills are going to make that harder. while it may take a little more time to get one bill negotiated, it is necessary if we are going to get all these issues addressed. i think the president understands that and that is why the president made clear last week one bill and that is how we are proceeding forward in the house.

ultimately our senate and house republican majorities are going to have to work together. nobody's going to get everything they want out of this. there will have to be a good-faith negotiation if we have any chance of passing a reconciliation bill. annmarie: i was one of those individuals who watched your grievances during the christmas week. you gave a little bit of a wink to your potential future, potentially becoming governor of new york. to make sure you can go down that path, do you need secure -- to secure a higher salt tax break? rep. lawler: this was a promise of mind and it's a top priority for my district. i represent one of the highest taxed district in the country, inclusive of westchester and rockland counties. this is critically important to lift the cap on salt.

$10,000 is woefully insufficient. this is something that i said i would deliver on and we are going to as part of this reconciliation bill. long-term for new york, this is critical. we lead the nation in out migration. our tax base is eroding because of kathy hochul and albany democrats. one-party rule has been a disaster. whether you talk about the affordability crisis or public safety, people being burned alive on subways. kathy hochul now scamming new yorkers out of $2500 a year just for the privilege of driving to work while spending billions of dollars of taxpayer money on free housing, clothing, food, education and health care for illegal immigrants. new york needs change, no question about that. from a federal perspective we should not be penalizing new york taxpayers because of the

disastrous decisions of kathy hochul and albany democrats. annmarie: when it comes to the salt cap, how high are you looking at it to be raised? rep. lawler: my marriage penalty elimination bill reintroduced to raise it to $100,000 for individuals. $200,000 for married couples. this is going to be a negotiation. my colleagues and i are looking forward to sitting down with the president, having a discussion about it, hearing what his priorities are as part of the tax bill. working to a consensus. at the end of the day, my objective is to provide tax relief to americans. it's a comment upon everyone to negotiate in good faith. if we do not pass the tax bill, number one, salt comes back unlimited. it is accompanied by the largest tax increase in american history. it is important we actually

negotiate a fair tax deal for the american people. annmarie: in august, you were one of the individuals that were the letter to the speaker talking about you did not want the repeal of energy tax credits. this is something donald trump wants. are you going to be trying to assuage him of your view over this weekend in mar-a-lago? rep. lawler: many provisions in the ira absolutely need to be repealed. what we signed on to a letter is that we were not going to just sign off on a wholesale repealed. there needed to be a discussion and a negotiation. companies make decisions based on tax provisions. they need certainty. there has been significant investment, including a new york based on some of these energy tax credits. we want to make sure that any changes are done smartly and not just wholesale repeal.

that will be the conversation as we move forward. i think the key here is to come up with a reconciliation bill that increases domestic production of energy, ensures the american people have a good smart tax bill to reduce their taxes, reduce the cost of living here in the u.s., and ultimately secures our border. a lot of important issues that have to be included in this reconciliation bill. able require negotiation -- it will require negotiation and ultimately require every republican supporting the final product. jonathan: as we speak bond yields are climbing and we have seen a significant move since september when the federal reserve started rate cutting efforts. we have new to 100 basis points. i don't expect you to follow the ins and outs of fixed income but i wonder whether you and your colleagues are sensitive to some of the pressure that is starting to build in the u.s. debt market. rep. lawler: no question.

our debt at $36 trillion and counting is a major problem. this is something that everybody in the republican conference is an agreement on. we have to tackle our debt. we have to reduce our deficit spending. we have to right size the federal government. spending is out of control. joe biden's disastrous first two years gave us record inflation, it spiked the cost of living, have to unwind a lot of this. you look at new york. it is floundering because of some of the economic pressures. just think about this. the mta has more debt than 80% of the states in the country. debt is a major problem. it is something we have to deal with across-the-board.

-- across the board. we cannot print and borrow money at the levels we have. jonathan: can we expand tcja? i would not push back against anything you said about the effort that needs to take place elsewhere. i'm wondering how much physical space you and their colleagues believe we actually have at the moment. -- fiscal space. rep. lawler: tax policy is critical to economic growth. we need to increase domestic production of energy which will help generate more revenues. energy policy is a critical -- is critical not just domestic for costs but for national security. you were talking about the threats to europe from russia. europe is still buying gas from russia. it is idiotic. it makes no sense they are helping fund the very war they are trying to stop. there a lot that has to be done here, including raining and federal spending.

-- reigning in federal spending. we are looking to offset some of the costs through spending reductions. this is going to be a comprehensive approach to how we right size the american economy. i think it is possible. people be one of most critical things any of us ever do -- it will be one of the most critical things any of us ever do in our careers and government. we have to be committed to the final -- jonathan: the next governor of the great state of new york. congressman, thank you. 10-year yield up by three or four basis points. lisa: a question about whether the mathworks for the bond market. people are -- math works for the bond market. you are not going to necessarily cut medicare or social security. this has been the deal that it's been heart -- needle that has been hard for people to threat.

jonathan: the u.k. treasury, the finance minister in france, they are watching payrolls on friday. they don't want yields to push higher from here. they will be watching the effort in washington, d.c. i do believe the crowning gap is a real forsaken place right now. lisa: they are watching at 1:00 p.m. when bonds are sold when 30-year yields are the highest level since 2023, pushing up against 5%. how messy is this? that will set the tone around the world. jonathan: the conversation continues. up next, hire for a lot longer. >> normally if you cut interest rates, long rates should be going down. it is unusual that long rates are going up when the fed is cutting. jonathan: that conversation is up next. ♪ ♪ what does a good investment opportunity look like?

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jonathan: another interesting move in the bond market. yields are higher bar three basis points on a 10-year. under surveillance, higher for a lot longer. >> normally the textbook would say if you cut interest rates, long rates should also be going down. it's unusual that long rates are going up on the fed is cutting. markets are pricing that it will stay higher for longer. the economy is still strong but the bad news is that rates higher for longer will continue to wait on balance sheets that are weaker." -- weigh on balance sheets. jonathan: we progress through 2025, the 10-year head towards the five to 5.5 range. what is behind this move for the last few months in the past few weeks? padhraic: a combination of things.

i think it's important to have context. one thing is we cannot just throw things out there. it is easy for me to say 5%. the starting point is -- when you look at the 10-year, neutral is around 4%. treasuries tray 50 basis points above that. that is 4.5%. that is the starting point. i have spent 18 months convincing people it is not a high level. you start at 4.5% and ask yourself, where should it be given all the other factors you have referenced? fiscal deficit. inflation issues not solved. the economy doing ok. ambition from the current -- incoming administration to cut taxes. that is in the mix and pushing yields. lisa: does this mean you're not buying today at 1:00 p.m. when the treasury sells $22 billion

of 30-year notes? padhraic: there was not much buying yesterday on tends or 3 -- tens or threes. let's suppose the auction goes well. it doesn't change anything. yesterday's auction was the big one. today is less important for me. we had a decent concession today based off very little. yesterday was based off some firm data. lisa: there's a real question of how much the increase in yields is tied to the potential supply that could come down the pike. how closely attuned are you to the size of the building is past and washington, d.c. to decide whether it is a good idea to buy 10 year treasuries at 5% or 5.5% or sit out entirely? padhraic: it's absolutely crucial. one thing we know with clarity is there isn't a credible plan out there at the moment to cut the deficit.

we are sitting in an economy with a 7% deficit. brazil is sitting at 7% and is getting crucified. we are the u.s. we have the reserve currency and we have closed our eyes. at a certain point in time it becomes important. we are beginning to see the beginnings of a creep of this type of psychology. jonathan: is it a problem for everyone else before it becomes a problem for us? is it a bigger problem for them then maybe it is for america? padhraic: it always is with the u.s. we have such a huge impact on the global scene. we saw gilts hitting local highs yesterday. significant highs. you can argue in the euro zone rates are higher than they should be under normal circumstances when you look at the economy. there is a huge correlation trade out there. yeah, for sure. it has to be said the u.s. economy has taken this rate hike

process remarkably well. we are cutting now but the rise in yields as well has not toppled anything. it continues as a path to continue. jonathan: we have handled these rates at these levels across the board at an aggregate level in a much better fashion the many anticipated all those years ago when the process started. lisa: it goes back to the ultimate question of is this really very restrictive in terms of policy from the fed if there isn't evidence of its restrictiveness in the outcome of economic growth? jonathan: good to see you. 10-year yields up by three basis points. in america, the u.s. 30-year, 4 .96. alicia levine this joining us shortly. george gianarikas, gregory daco and wildred cisar of credit sites.

that's all in the third hour of "bloomberg surveillance." ♪

>> our base cases for volatility, episodic. >> the trend is up but it's going to be delicate. >> top 20% of momentum is now

starting to just be broader. >> i worry about a 10% to 20% drawdown this year if inflation does look like it's being sticky or moving up. >> dew point know i look at 2025 and see another 20 odd percent return in the equity market. >> this is bloomberg "surveillance" with jonathan ferro, lisa abramowicz, and ann marine who are concern. jonathan: the third hour of bloomberg "surveillance" starts now. this hour we'll get the employment report at 8:15. about 15 minutes from now. 30 minutes we'll get jobless claims. brought forward a day because of the funeral of the late president jimmy carter. look ought for that number at 8:30 eastern time. the estimate inure survey, 215, the previous number 211. to get you up to speed on the price action taking place not just in the united states and worldwide, equity futures on the s&p 500 negative .2%. russell do you by three quarters

of one percent. in the bond markets, significant moves, not just state side but worldwide. yields are up two basis points on the 0 year. on 30's we are getting close earn closer to 5%. 4.95. we are seeing bigger moves elsewhere. look at the u.k., yields up by nine basis points. on 10's, up six. on 50's up nine. the long bond in the u.k. getting slaughtered. lisa: this comes at the same time you are seeing the pound losing steam versus the dollar because they don't have the privilege the u.s. has of being the fiscal currency of choice. the issue around the world as u.s. see yields creep higher, how much does that shift the entire global yield curve higher which would be based on growth and inflation in places like europe that right now are not seeing the same kind of momentum as you have in the united states. jonathan: these are place that is alreadydown have much fiscal space.

they are going to be constrained by u.s. data and upcoming policy. we'll see those conversations ramp up as we into inauguration. how big is this bill going to be? annmarie: bob casey said somewhere between $5 trillion and $7 trillion. that's how much it could costs. money for immigration, energy, t.j.c.a. getting extended. adding extras like no taxes on tips. we don't know how the sausage will be made. the president-elect said yesterday trump said, while he likes the idea one big beautiful bill, maybe two. this morning, will the real republican legislative strategy stand up. even if trump comes out i talked to the senators, i agree, this two track approach. he's meeting with a bunch of house reps over the weekend. by monday morning it to be different. lisa: one message is standing up this is message the bond market

is is getting that's what was said. there hasn't been a credible plan to reduce the deficit in any of the sausage making. and that is what's getting the attention. annmarie: you brought up a point earlier this week. how much money the united states paid only on paying off its debt. the interest payments last year was, one trillion to 1.5 trillion? unless you look at cutting social security and medicare, we are not going to get our fiscal house in order. jonathan: important point to make here. the united states of america will benefit from the deficit spending we do get from the upcoming administration. we'll see the growth in america. the issue the rest of the world has is the rules go up. if tariffs go up. you won't see the spillover in the europe and united kingdom. they'll sifer. lisa: that's why people look at the yields that might look higher on the absolute basis and say do i want to own that given

some of these extra concerns anti-fact it's not going to stimulative spending it will boost growth. jonathan: economic data later, the a.d.p. report. coming up this hour we'll catch up with alicia levine of b.n.y. wealth. we'll catch up greg dako of e.y. on the fed policy tight rope in 2025. stoxx steady recovering after a bond market selloff equities yesterday and raising recent tech fueled gains. alicia of b.n.y. wealth. we expect more volatility in 2024 but a positive year because the consumer strong. the fed, though pausing for nowrks still has accounting bias. good morning. how constrained is your view given the most we are seeing in this bond market? alicia: i think the bond market here is pricing for the worst

case scenario for what the upcoming administration could or might do. which isn't a bad set up for the rest of the year. in the end the talk about tariffs on everyone and everything, every border we might have, whatever those borders might be -- jonathan: some are imaginary lines, particularly that one in canada. annmarie: the truth of the -- alicia: that is the conversation. the anxiety about that is seeping into the bond market. i think just want to refer back to the fed press conference back in december which jay powell said some of the voting members incorporated future policy which is very rare because we never hear that from the fed. we never hear that they are chasing the puck of what policy is might be. the fed is baked in already in the plot and it's communication that is it's expecting a more difficult path for inflation.

the market has priced it in. on the policy side from the upcoming administration, we are going to have tariffs on everything front and center, even if they are negotiating tactics. you need it for the negotiation piece. it creates anxiety in the bond market. jonathan: it makes the feds more interesting later on this afternoon. alicia: that's right. we'll hear who -- perhaps who and what and why. will i say that the incorporation of future policy as yet unknown is very unusual. i think we should just take it with a grain of salt. jonathan: what are your assumptions on tariffs. we have conflicting reports from "the washington post," cnn. i struggle to 2350eu7bd the news in this the president himself is all fake news. he wants to get it done. what are your underlying assumes? alicia: our underlying assumptions is the china tariffs happen. and they'll probably happy right away. and that rest of world will be negotiating tactic. will sound very ugly and will

sound as if it's not great for the inflationary picture for the u.s. in the end, i think what we have to keep in mind that there is a fed put and there is a trump put on these markets. we know that the upcoming president cares very much about the performance of the market. and he was elected because of inflation. and he's got serious folks in the treasury department. i think we have to remember that. as the bond market is pricing in anxiety what policy might be or the better than expected growth so a no landing rather than a soft landing scenario, this economic team will have an eye on inflation. it's not just the bond market and investors. it's the administration as well. lisa: it feels as though are you in the market buying aggressively at a time when everybody else is feeling fear for the first time in months. maybe even years. is that the case? alicia: i love fear.

we know that is the worst place to be on the same side of the boat. i welcome the conversation that there is a two sided trade. what do we know? we know -- we have an administration that's going to cut regulations. that's going to keep corporate taxes low. individual taxes low. and has unleashed small business optimism. that's what i know. earnings are bent to be double-digits. we have a very rich multiple, i'll give you that. if earnings are in double-digits, we should have a pos tear year this year in the s&p and our estimates reflect that. lisa: just how contrarian are you. russell 2000? alicia: that's a tough one. i think giving up on rest of world and giving up on the small cap, again, is the one side of the boat trade right now. we would be -- we would welcome get ago little bit more exposed to these areas. you know we did not follow the small cap wave last year because

we felt that rates were ultimately going to stay higher. that's very difficult for the constituents of the small cap world because there's no earnings growth there. the small caps really need a change in fed policy. we didn't follow that. i'll say this. there is such -- disenchantment with the small and midcap space and such disenchantment with rest of world with the strong dollar. that's when it gets interesting. we have to be contrarian on some level. that's where we would be more open. the whole world hates it. maybe want to go to the other side of the boat. annmarie: you talked about the fact that negotiating part will sound ugly. amidst that is there a concern even if it's just language and threats there could be economic deterioration from it? alicia: i think we have seen some of that. think some of what we have seen in the data is prebuying before tariffs hit. i think some of the negative

data in europe is because of pricing in a more difficult trade environment. yes, it will have real world consequences. i think ultimately if you look over the space of 12 to 24 months i don't think tariffs at the border are going to happen because it's going to threaten the entire economic agenda. jonathan: how insulated is the snuns are there negative feedback loops from the rest of the world. chinese growth is struggling. chinese yields have fallen off the cliff. constraints across the board in europe and a whole range of issues. is there any feedback loop into the u.s. economy? alicia: in some ways the real economy, the u.s. economy, is something of an island. we learned that in 2018 with the tariffs which seemed so shocking at the time and actually did very little to affect the u.s. economy. the equity markets on the other hand are exposed to rest of world. you need the rest of world not

to be in recession to have the s&p hold up. the real economy is an island. s&p is not an island. we have always talked about the fact that the equity market is not the real economy. you need the economy strong enough to provide earnings. and the s&p of course is much more manufacturing based than the real economy is. if you have a reignitement of manufacturing in the u.s. and acceleration of reshoring, it should help earnings in the manufacturing sector as well. and we saw it with the i.s.m. numbers. new orders above 50. for the second time in a row. that's great. it tends to be an arbiter of future s&p earnings because the index itself is more exposed to manufacturing. jonathan: alicia, well framed at always. good to see you. alicia lavine there of b.n.y. wealth. for an update elsewhere this morning here's dani. dani: an throppic is said to be in advanced talks to raise $2

billion in a funding round giving them $0 billion -- $60 billion valuation. amazon also said in november it was investing in additional $4 billion to boost its stake. indonesia has decided to keep a ban on the sale of apple's iphone 16. they announced a $1 billion plan in the country that included building an air tag factory. indonesia said that was insufficient to meet local investment requirements. the government is willing to negotiate but may impose sanctions if the company does not comply with those investment rules. familiar face is is emerging as the candidate for the next head coach of the new york jessments rex ryan interviewed with the team on tuesday after lobbying for the job in recent media appearances. ryan coached the jets from 2009 to 2014 winning 50 regular season games and coaching the jets to the most recent playoff appearance in 2010. he's the third known candidate to interview so far for the job. that's your brief.

jonathan: mike muhammad the fourth. he was against the aaron rodgers move. turns out to be right. lisa: he's going to be coaching the jets. running the fed. what else is he going to be doing? get this on the table? jonathan: join this program. loip on friday. he'll be here. jonathan: up next, the morning calls. bus george gianarikas on conaccord genuity.

jonathan: the a.d.p. report out in a moment ago. bit of a downside. mike has details. good morning. mike: a.d.p. would see a disappointing result on friday. they see 122,000 jobs created during the month of december.

that's lower than the 146 they had originally reported for last month. we are looking for the revision on that. it's lower than the 140 that economists anticipated. right now they are saying private sector jobs, which is the 122, are much lower than anticipated by the bloomberg consensus for friday. the service providing jobs according to a.d.p., 112,000, goods producing only 10,000. a rather weak report from a.d.p. we'll see what we get friday. jonathan: thank you. helping to put a lid on this bond market, 10 year yoaldz dropping just below 4.70 on a 30-year yield. focused on the long end of the curve. levels we haven't seen for quite a yield. yield up by three basis points. lisa: this goes to the point that andrew is making that even though you are not necessarily seeing the layoffs, hiring. that's the reason why people are saying, wait a second.

maybe things aren't running away with growth and inflation for a hot second. not making a dent because a.d.p. doesn't tend to portend much for payrolls that come out friday. jonathan: the big one on friday, 163 is the estimate. andrew is at 120. he suggested to us the more important data point is unemployment. unemployment in our survey is to stay at 4.2%. andrew thinks 4.4. if we get that move, mike schumacker and wells fargo, he thinks you could have a yield move in the other direction, 20 basis is points on a single day. stay tuned friday for big moves. lisa: this goes to the built of how much is this an issue with fed communication. that raises the point of minutes we get later. the fed keeps reiterating we are not data point dependent. they shouldn't necessarily completely shift their call on one payroll support. the market is moving if you get 4.4% unemployment rate, could you get a rate cut soon.

later this month. yoip equity market on the move. improving a touch, down by a cup tenths of 1%. morning calls. next up, t.d. could youen upgrading coca-cola. and finally, hsbc, to reduce from competition in the ai-gpu market. lower. tesla down 8% since the start of the year as weak sales weigh on the shock. despite the recent turmoil, george gianarikas maintaining a bond rating rating they have a generation set of growth opportunities way ahead. including e.v.'s, a.i., and robotics. george joins us. welcome. good to catch up with you. deliveries in the past week or so. are we playing down the importance of them? just saying things elsewhere are

better than expected? why would you ignore those? george: first if you look at the delivery cadence for the year over year growth cadence in 2024, the stock sort of magically bottomed when the year over year growth rates bottom the in the first quarter of the year. you look at the next few quarters, that year over year growth right moved. what's important for the stock, super important, we expect that year over year growth rate to continue to accelerate into 2025 and 2026. mostly based on new products. elon musk has promised investors new products. hopefully sooner rather than later. that should impact the fundamentals probably in the second half of the year. and in 2026. what we have decided to do be forward-looking and look at the year over year growth rates that have really impacted stock performance over the last several quarters. lisa: how much does the potential for deregulating some of the parameters around full

self-driving technology really underpin the reason why you have a buy on this? george: it's very important. tesla's f.s.d., full self-driving, has o had not that great take rate so far. it means if you buy the vehicle, are you going to opt to pay the $8,000 to get their full self-driving. their gross margins have been terrible for the last couple -- several quarters because they cut prices. we see into 2025, 2026, 2027 and beyond is an improvement in those take rates. if you pay attention to what's happening on the internet, people are very excited about f.s.d. version 13.2. as people hopefully increase their penetration and their take away of that full self-driving software, the gross margin should get better. therefore the product becomes more sticky. what we have called tesla's strategy, with the current vehicles, is a razor razor blade. you sell a bunch of vehicles.

over time each one has the potential to upgrade the software and have very high margin take rates for f.s.d. in the future. lisa: some stocks are stories. tesla is one. curious about the parameters of this story for you in terms of one year, two years out. what are you en-- what do you envision in terms of the way we drive whether we have basically self-driving taxis that pick people up and a lot of people don't have driver's license anymore. can you give us a sense of what your time frame is for a full transformation of our imagination with with vehicles. george: as a father of two teenage girls, i am incredibly excited about a future where they don't have to drive. first and foremost we are very bullish on the long term of autonomy. we cover several stocks in the space. including tesla, mobilelie,

another called aurora. each one has the potential to be wildly successful. for different reasons. tesla has decided to take on a camera only neural network approach that's costing them tens of billions of dollars. aurora is in class a trucks. and mobile eye is trying to be what we call the android of autonomy. we see a future where people don't have to drive as much anymore. it will happen progressively. not going to happen all at once. we think that unleashes productivity from a passenger vehicle perspective. and from a class a trucking perspective, it increases resource utilization. trucks are able to travel 24/7 mostly. increasing -- decreasing shipping times. we see full self-driving or autonomy broadly as one of the generational investment opportunities there ahead of us. one of the most exciting tech opportunities over the next five to 10 years. if you listen to nvidia yesterday, the c.e.s. speech said the same thing.

lisa: you sound like my dad who refused to get in the car film' in the driver's seat. this sounds rosy and exciting. 2025 there are a lot of risks ahead. e.v. tax credit. what could happen with china wheps it comes to a potential tariff policy, new regime from the incoming trump administration. how are you thinking about that amongst your rosy outlook for tesla? george: you are right. e.v. tax credits are a risk. china is is a risk. it's a wild card. we have no idea if that will impact tesla. that was in 2024 we calculated about 37% of their deliveries. lots of unknowns. what we are counting on to help reaccelerate that revenue growth are new products. tesla has a tendency to deliver new product that is are very exciting. to the extent they introduce them sooner rather than later, and they start to positively impact the p.n.l. on the back half of the year, those are idiosyncratic things that can help tesla buck the trentd

regardless of what happens with e.v. tax credits in the united . jonathan: can this multiple survive in the face of 5% interest rates? george: great question. what we comp tesla is some of the large cap pierce. we looked to 2027, many of them or all collectively trading 23 times, 2027 earnings. they are growing at half the rate if not less than half the rate of tesla. if you look at earnings. if les tez la grows multiples of that and continue to based on opportunities and autonomy, energy storage, robotics, we think it deserves a hire multiple. it depends on what its comps trade at. deserves to trade at a hire multiple given what we see. jonathan: appreciate your opinion. thanks for the time. jonathan ferro of conaccord genuity. the bond market, yields off

session highs. we had this from governor waller early this morning speaking moments ago saying the tariffs are unlikely to impact his view on monetary policy. we'll support rate cuts in 2025. if the outlook comes in as expected. lisa: he wasn't one of the people who were putting this into their forecast. i wonder how that sets him up politically going forward? jonathan: i'm not going to question his intellectual honesty. some people might see an individual setting themselves up for a vacancy on in the years to come. watch this space. from new york city this is bloomberg.

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jonathan: claims data just seconds away. the estimate of our survey is is 215. the previous number is 211. we'll get the number in just a moment. going into it the scores look like this. equity futures on the s&p 500 ung changed. nasdaq recovering from losses from early on driven by different things. you can point to a headline from cnn or the bond market. check out the bond market. 10 year yields are off the highs. the 108 year 4.7 o 0. with stunning jobs claims data, over to mike mckee. high. mike: the numbers release add few seconds early show a big drop in jobless claims last week.

201,000 down from 211. the forecast you mentioned was for 215. this is the time of year when we get a lot of weird readings in jobless claims because of the holidays as the government tries to adjust for christmas hiring and hanukkah hiring and the holiday season. this does suggest that at this point there is as good a chance of a strong report on friday. this doesn't affect the -- this is way after that. the labor market's not in trouble. jonathan: it's stunning. just give us some historical perspective here. the low 200's on jobless claims is is one thing. 201. we are looking to break below 200 k, where does that come from? mike: at this point i'm guessing a lot has to do with the seasonal impact of the numbers were expected to be much higher. and if i take a look at the unadjusted number, the seasonal factors had expected an increase of about 35.6,000 from the

previous week. however there were only an increase of 21,000. the numbers were a push down by the seasonal expectation for a much bigger number. that's why you end up with this slow number. it is the lowest since february of last year when we hit 200,000. jonathan: thank you. looking ahead to payrolls. payrolls on friday. the estimate of our survey, a sneak peek, 163. the highest 274. the lowest andrew of city who was with us earlier, looking for 120. that number coming friday morning. lisa: here's the difficulty with this data. we got a.d.p. employment change. the underperformed. that's the slow hiring we have heard about. you are also seeing slow firing. this is sort of that stag nancy that people talk d you interpre. is this a positive healthy market? or is this one that just is is treading water before there is a big change?

this comes especially as continuing claims crept higher. you look at all of these different aspects and it's very hard to put them together with the cohesive narrative that can be consistent. jonathan: get the few of greg dako of e.y. how do you make sense of this in the labor marykd? greg: i think what we are seeing is a frozen labor market. one we are not seeing much hiring or quitting. if you look at the jobs report yesterday with the hiring rate and quit rate we are at a 10-year low. that tells me a lot of business leaders are hesitant to move in any direction in terms of laying off individuals or in terms of hiring. that means that a frozen labor market is unstable. because we could either see a further deterioration in labor market growth, which would directly affect income and consumer spending. or we could see resumption of stronger confidence which could lead to stronger hiring and stronger income growth. policy, direction over the course of the next few months will be key in determining which side of the ledger the employment market falls.

lisa: can you elaborate. which policies have the greatest potential to move the needle when it comes to defreezing the labor market? greg: i think we have a couple of policies likely to affect immediately. regulation and immigration. two key policy that is will have a key effect on the labor market. regulation because it could lead to a pro-business sentiment environment. you see greater hiring and investment on the back of this deregulation. immigration restrictions are likely to be hurtful in terms of the labor market because they will restrain labor supply which has been a key driver of employment growth over the course of the last two years. lisa: historically people look at the labor market and say it's lagging indicator. that it lags behind the business cycle by a good year, sometimes 18 months. are you saying this time is different? it's more of a leading indicator because of the fact it has been so dislocated post pandemic? greg: what's different is the fact that conditions today are very different. supply conditions are

increasingly driving economic activity. labor supply has been a key driver of employment growth. that's very different than in the past. in the past, demand factors were the key drivers of economic activity. but since covid we have seen supply be much more important. the value of talent is is much greater than it was prepandemic. a lot of the different c.e.o.'s, c.f.o.'s we talked to highlight the value of that talent. they struggled so much to hire the right type of individuals, to train them to increase productivity in terms of these higher costs and offsetting these higher cost that is they don't want to fire them. they are allowing attrition and performance-based judgment to guide their strategic decisions in terms of how to manage their workforce. that's really key. that's a key difference relatively to prior business cycles where the first resort for business leaders was to lay off massively at the first sign of a slowdown. lisa: what are you waiting for in terms of understanding the labor market is political economy. annmarie: what are going to be the policies that take place. when you think about fiscal

sustainability, what do you make in what we are seeing we have been talking about for three hours, the move in the bond yield. is that because of uncertainty how washington will enact trump's agenda? greg lon: a lot of uncertainty in terms of bond yield. you had the fed cut rates by 100 basis points. the extremely and too reactionary in my opinion. you have seen long-term bond yields rise. that's the expectation of higher inflation with deregulation, immigration restrictions, trade and tax cuts that are like to be inflationary, also the direction of the travel of the budget deficit. we have a situation in bye the budget deficit is around 6.5% of g.d.p. in good times. that is not normal. if you look out the next 10 years, we are going to be in an environment where budget deficits are going to average 6.5%, 7% of g.d.p. that will continue to pressure up long-term yields. and could be a catalyst that could be negative. annmarie: can the u.s. act that

way? greg: in terms of fiscal sustainability that's the key question. one of the three arrows is this notion of bringing back the budget deficit, the 3% of g.d.p. what does that entail? that entails cutting the deficit by over $1 trillion per year over the next decade. that's a massive reduction in government spending. this could be done if we think about entitlement programs. if we think about tax reform. i don't think that's necessarily where we are going. we are talking about potentially massive spending cuts. let's not forget if you cut spending you cut economic activity. you have to be consistent in your messaging in terms of ensuring that reduction in the budget deficit while sustaining economic growth. lisa: how concerned are you if there is a doge. fication and you get job cuts that cause people to quit in a massive way. some of the labor pictures people are looking at considering how much government hiring accounted for some of the recent job gains. greg: two points.

you are right. government spending has -- government hiring has been a key element driving employment growth. month after month after month. we have seen government sector hiring in terms of education at the state and local level. being a key driver of employment growth. but the other big thing in terms of what could happen when you have massive spending cuts is im pass massive spending cuts they might not be implemented. about 15 years ago the simpson-bowles condition had this intent to reduce government spending. the proposals were largely drawn down. you did have the budget control act in 2011 that led to a freeze of government spending with see quester -- sequester threats over the decade. that was less than initially proposed by the commission. jonathan: quickly, what's your reaction to governor waller this morning? tariffs unlikely to impact his view on money policy. doesn't plan significant impact

on inflation. greg: there is a lot of uncertainty in the economic predictions from the fed. the fed chair powell mentioned some policy is makers had included policy shifts in their projection, some hadn't. some weren't sure. there is a lot of uncertainty as to what is contained in these economic projections. that's a big issue in my opinion in terms of fed communication. a fed that is highly reactionary, don't you know which policymakers include what, is doubtful in terms of a trust can you put in these projections. jonathan: great to see you. thank you. mike mckee still with us. our economics and policy correspondent in bloomberg in the nation's capital. i want your thoughts on governor's headlines this morning. mike: i think, greg, tide the two together when talking about what we might see in the minutes being some explanation for why some people were looking for an impact from fiscal policies. and some people were not. that's confused a lot of folks

on wall street. what is it are you actually predicting here in your summary of economic projections. governor waller's situation you suggested it could be an audition and maybe it is, but on the other hand, in the past tariffs have not necessarily been inflationary. depending how they are imposed. they are generally a one-time rise in the price level. we saw donald trump impose tariffs on china. on steel worldwide in 2018. and there was no appreciable effect on inflation. it depends on what's tariffed. the time frame of the tariffs whether it keeps pushing prices up or not. he might be right about that. jonathan: appreciate your perspective. mike mckee in washington, d.c. i should joint out, mike knows this, governor waller appointed to the board by president trump in his first term. perhaps a frontrunner of people on the board to think about who could be the next fed chair. lisa: there is a broader point i

think we can agree on. at this point there is a question of how politically independent an organization can be looked at when there is a sort of speculation hovering over it and you have the president talking -- president-elect talking in his press conference in mara lag ao not about denmark and greeland but how the rates are too high. jonathan: set up the market with winifred cisar. a loft people came into the year thinking about credit. i'm bullish. they didn't like spreads. you weren't one of those people. what did you see that makes you see things are different. winifred: yeah, good morning. we are a little bit contrarian on the credit markets right now. we went risk off in that rally following the outcome of the u.s. election in november. it was based on a few things. first fundamentals are ok starting point. we do see the potential for fundamental erosion to start to

become more forefront of the investor concern. whereas really strong technicals were driving the ship last year. and really drove feds materially tighter to levels we hadn't seen since before the great financial crisis. that's helpful because you have seen a lot of inflows into credit e.t.f.'s and new two funds. that leaves credit more susceptible to volatility as some of those investors might get skittish if they see total return losses because of rising yields or equity market volatility or if any sort of recession or slowing economic narrative starts to come into the conversation. lisa: just to sort of underscore what you're saying. are you saying there is actually a fundamental deterioration that's been feeding into your bearishness. even putting aside any rate increase and that really is the reason why maybe are you shifting away even from the more exposed, more leveraged companies. correct? winifred: yes.

twofold. we have already started to see credit fundamentals shift a little bit to a weaker territory. they are still long-term average levels. especially for higher quality parts of the market. but we have seen interest coverage levels come down meaningfully. we have seen deepen growth across the credit market. it hasn't been ramping up or accelerating. even before the trump election victory, we had expect issuers would focus more or intentional relnching -- releveraging through m.m.a., buy back. exwith wit using incentives. they have been in balance sheet defense or preservation mode for so long. now it's the time to look to buy growth. that generally comes with a little bit more execution risk. it feels like we are seeing up to this perfect storm of potential challenges. lisa: what is the mature cycle given the fact we are looking at

all yields for 7% for high yield companies. if you rises materially, it could be punitive for some of these companies. how much are we seeing them have to incur the borrowing costs we are seeing? winifred: this is the interesting story. within the investment grade market there's always the constant maturity. in the next couple of years you see very lumpy maturities, especially for financial issuers. the good news is the feds are tight, especially for financials. and they tend to be a little bit more focused on spreads than all-in yields. from an all-in borrowing cost perspective side of financials, things have really been ramping up. there are a few key sectors that have lumping maturities. within the leverage finance market it's a different story. last year was so strong that we saw a lot of issuers, very proactively push out maturities. this is especially true of the

loan market where the amount of reprising and extension activity was staggering. it almost kept pace with the u.s. grade market in terms of gross issuance overall and much, much smaller market. we are not as concerned about the near-term maturity side of things within leverage finance. but we could see liquidity get more challenged if some of the growth expectations don't come in as strongly as people are currently forecasting. jonathan: credit sights, appreciate your perspective. what debt market we are hyper focused on right now. this move in the u.k. government bond market. 11 basis points. call it 4.80. the pound getting hammered. one to watch for the rest of today. update on stories else where with your bloomberg brief. dani: los angeles is dam --

ramping up evacuation orders. parts of northern santa mon yaik are under alert as widespread and managing gusts worsen the situation. the palisades fire was almost at 3,000 acres. two other blazes flaired up overnight. southeast of santa clarita. president-elect trump has asked the u.s. supreme court to step in and stop his hush money sentencing from going forward. the sentencing is due for this friday, january 10. the filing follows a verdict from a new york judge who rejected trumps' arguement to vacate the 34 felonies in light of his victory. the judge who overall the trial said he won't sentence trump to any time behind bars. former president jimmy carter is lying in state at the capitol rotunda. lawmakers came together yesterday for a ceremony to honor his life and leggacy. the former president's state funeral will be held tomorrow where president biden will be among those delivering a yule gi. that's your brief. jonathan: thank you.

shocking pictures out of los angeles. up next, we'll set you up for the day ahead. plus, we'll catch up with david rubenstein of the carlyle group in just a moment. from new york this is bloomberg. 'e types are still at it. just stop calling each other rock stars. and using workday to put finance and h.r. on one platform.

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indonesia, banned the iphone 16 sales. that's still in place. they want more investment from apple in the country. billion dollar investment to make it is not enough. dean wave lampoons the idea you'll have come pew computing useful to you. some tortured moments over the past couple months on hewn of the huge glp-1's. positive inflexion for glp-1's. they shaved back on the price tag $750 from $1,100. jonathan. jonathan: thank you, sir. appreciate t counting down to the opening bell. data points to watch. including the number we get from the fed later. the number of people that may be use the policy to change their

forecasts down in washington, d.c. lisa: basically. who among them is taking a look at the potential of tariffs and other spending. and saying, all right, just for that. we are not going to cut rates. forget about it. maybe we'll get names. jonathan: how many. several? few? 3 p.m. eastern time. thursday, tomorrow, equity markets closed for the national day of mourning for the former president jimmy carter. friday, on the data side of things, the big one we get payrolls. look out for that on friday morning. coming up tonight on bloomberg tv, a programming note for you, peer to peer conversation was david rubenstein. sitting down with david ricks. pleased to say david joins us for more. welcome to the program. we have all caught up with dave ricks over the year. fantastic leader. what did he have to say to you this time around? david: dave ricks is the c.e.o.

of eli lilly, started in 1876. a respectable drug company, pharmaceutical company. in the five years that he has been the c.e.o., the stock is up about nine times. that's in part because of the glp-1 drug they have called zepbound. they have mounjaro for diabetes. these are the weight loss drugs we have been talking about. it's amazing what's happened in the pharmaceutical industry. eli lilly was -- eli lilly was always a successful. it is now like tonight first pharmaceutical company in the world to have a market capitalization of $1 trillion. it's now about $900 billion or so. this is because people wanted to lose weight. roughly 70% of the people in the united states are overweight. and amazingly 40% are defined as owe bees. of -- obese. this drug tends to reduce your appetite and a beneficial impact. it seems it might also have a beneficial impact on other

related problems that people have. addiction, smoking. those studies are under way. no doubt people want to lose weight and using either the ozempic or disepbound by eli lilly. lisa: how much is the optimism in the likes of eli lilly dependent on the idea of the government actually covering the cost of some these drugs at a time where that's been one of the honest contested issues in that space. david: the government has gone back and forth on this from time to time. and private insurers are covering it to some extents, not all. if you have insurance and it's covered, your costs are roughly $25 a month for each person who uses it. that's affordable for most people. and many insurers are increasingly covering it because it does beneficial things for insurers. think about this. if you have people that lose weight, they are going to be having less health problems.

they have also health problems the insurers will have to pay out less to their doctors. there is a real benefit to insurers to getting people on this drug because in the end it lowers the cost of insurance. annmarie: i'm going to head down to washington, d.c., for president carter's funeral tomorrow. you actually were a domestic policy advisor under the carter administration. before we end, i would love to get your thoughts on what you want carter's legacy to be. maybe what the public didn't see behind the scenes. david:dy spend four years in the white house as the deputy domestic policy advisor. i worked for stuart who was the domestic policy advisor. it is ironic. jimmy carter came to washington in 1977 and conquering hero. he had beaten nixon, ford regime. and beat gerald ford. he came in with high expectations. people thought this man is going to change, washington, d.c. he tried many things. had he a lot of political problems the hostages in iran were another. he left washington very defeated. he was humiliated in the loss he

had to reagan. staggering loss. carter couldn't believe he could lose to reagan. now he comes back 44 years later as a man who is lauded by almost everybody for the things he's done in the 44 years since he left the white house. among those winning a nobel peace prize, doing things like election monitoring around the world. helping to eliminate river blindness. habitat for humanity. it's amazing how the turn of events has taken carter from someone who is very popular, not so popular, and extremely popular back in washington. jonathan: looking good to honor him tomorrow. congratulations for being awarded with the medal of freedom, the highest civilian honor in this country. thank you, sir. david rubenstein there of the carlyle group. and host of peer to peer conversations. tomorrow, look out for this. we'll be catching up with george and nina richardson of a.d.p. jim of apollo. former speaker of the house kevin mccarthy from new york. thank you for choosing bloomberg

tv, this was bloomberg "surveillance."

>> seems like traders just waiting to see whether we get aa list or tariffs. 30 minutes until the start of trading. i'm matt miller. >> i'm katie grie fellowed. bloomberg "open interest" starts right now. >> coming up, anything but a quantum leap. quantum computing stocks tumble after the c.e.o. predicts useful machines are still decades away. matt: albertson's raising the earnings outlook for the year. a positive sign for the grocery chain after its proposed deal with kroeger fell