>> we have had some reports on inflation annexed -- inflation and expectation expectations that were not great. >> inflation will be sticky. we will basically be living with a high inflation. >> in our world slowly but surely, it is heading close to 2%. >> what we are seeing right now is the biggest cash up in history between soft data and hard data. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: live from new york city this morning, good morning. "bloomberg surveillance" starts right now. your scores look like this on the s&p 500. equity futures positive by just 0.2%, likewise on the nasdaq. check out the bond market, on a run of it consecutive days of rising 10 year bond yields, the

longest such streak going back to 2022. the mercy of the price action is all on this, the earnings a little bit later. . we will hear from j.p. morgan, citi, goldman, wells fargo, and in the u.s., cpi. >> we were at this point really supposed to forget about cpi, it was trending down, the fed was cutting rates, but not everybody is starting to worry about expectations of what trump 2.0 might mean for the inflation picture. we know the university of michigan, it is covered with politics. they are predicting inflation higher then the bike and prices in 2022 and that expectation is the self-fulfilling prophecy of attention the higher prices. jonathan: the most important data point this month, not payrolls, not cpi, inauguration on january 20. >> that's why i think the market

reaction to today will be so interesting. will it be a redux of ppi? all this is a jumping off point for inflation to come. we are more worried about the future. even if you get a number that's in line, you could still have a treasury market that refuses to rally because we care about what happens next. everybody says we need uncertainty to clear up, but who's to say uncertainty won't be sticking around, even after next week? >> the political economy for 2025 is were to be so important and we have seen the play out over the course of the past week. this market just whipsawed by different trades tariff stores coming out. is going to be gradual, narrow, is it going to be blanket? when it's uncertain, you have to start pricing that in. jonathan: we've had three over the last week, the washington post, cnn, only one voice matters and you will hear from that. the incoming president of the united states, donald trump. lots of earnings this morning.

this comes from blackrock. on assets under management, huge numbers, a little bit lower than expected, 11.5 5 trillion, still massive, the estimate, of 11 point. . 66 numbers on the s&p positive by .2%. we will catch up with andrew sheetz of morgan stanley ahead of fresh inflation data. james lucier and gerard cassidy of rbc. investors looking for clues on the fed's rate path. andrew sheets of morgan stanley writing we think cpi will see a down taken core inflation and support the case for a marsh fed rate cut. an elevated reading the put that view in jeopardy. andrew joins us for more. lots to get her this morning. bank earnings and data as well. had a big backup and treasury yields over the past month or so. do think we are in the so-called

by zone right now? >> yeah, so i think we are pretty close to that. certainly if we take a longer term view, our forecasts at morgan stanley are very much for global bond yields, including treasury yields, to decline. we have more fed rate cut's and our forecast than the market. we have them happening sooner. and we do think inflation readings in the first half of this year will generally be declining, and there are a variety of reasons for that, but part of it is our read on incoming trump administration policy. we think that policy might be announced quickly, but the implementation will be slower, so it will show up somewhat slower in the data. i think if you get all those factors, and again, today's cpi reading is pretty key that should lead to pretty good total returns on bonds in our forecasts and creates a pretty attractive case. today's cpi rating is important for that view. obviously, we need to see, we are going to get a lot more

information about the administration and the next week, so we need to keep an open mind -- in the next week, so we need to keep an open mind. but we think bonds are attractive here. jonathan:jonathan: i was reading through your research and you offered two choices. pricing is stronger for longer or are we discounting a greater fiscal premium? which one do you reckon it is? >> i would be in the camp and a lot of my colleagues are in this camp that we are pricing in a stronger u.s. economy for longer. you have had a steepening of the treasury curve, higher real rates, and some pretty good data. you had a strong u.s. jobs number. president biden is going to exit as the first president to never have a negative nfp number on his watch. at land the fed real-time gdp for the fourth quarter is exiting the fourth quarter pretty strong. i think you have had strong data, the curve steepening, higher real rates.

i think that's all i pretty internally consistent story of the economy is somewhat stronger than the market was expecting. the other caveat we have to remember here is back to last january. january can be a time when the market overreacts a little bit less january the market priced in with hindsight way too many fed cuts way too early. if i think about where the market is pricing versus our current economic forecasti we think the market is not pricing too little from the fed relative to what we think they will ultimately deliver. >> why don't you buy the idea that there is some sort of uncertainty premium built into yields? the uncertainty of what we might get on tariffs and deportations and that's commanding richer premiums? is that not part of the story? >> that's a fair point. that might explain some of the move. we don't. think it explains it all. i guess where we kind of have some difficulty with that explanation are that explanation explain the bulk of the move is first, we do not actually expect very large fiscal shifts very quickly in the u.s.

we just do not think the republican majority in the house is large enough to accomplish those things, are at least accomplish them quickly. i think those risks are somewhat two-sided for treasury yields. if you see more aggressive tariff war immigration policy sooner, that could drive up inflation and we would expect it to drive up inflation but it could also weaken growth. in an environment where growth is weakening because you have more disruption in the labor market, more disruption through trade, that could argue for yields being lower as growth is instructed -- growth is disrupted. we think those risks are a little more two-sided than the market is currently reading. >> that move higher in yields did have the ability to spook equity markets. the weird thing is that credit was not shaken at all. on monday when you had 10 year yields move higher, something that maybe should have disrupted, you still had $15 million worth of issuances. yesterday was much of the same.

why is this credit market not reacting? >> that's exactly how we see it. you have a very strong credit market. i think there are a couple of reasons behind that. this is a credit market that i think a lot of investors would describe as a good yield and kind of a good spread. yields are quite high, nominal real relative to history on the corporate indices, spreads are low. i think a lot of the buyers on credit at the moment are more yield driven. they are buying it because they like that yield, they like 5.5% on u.s. investment grade credit and they are not as sensitive, they are not buying it for the spread. i think that allows the market to be a little bit more independent from what's going on. i also think that you have still a backdrop where corporate aggressiveness is picking up what it is nothing too extreme. we have seen a mende pickup but we are not heading the levels we think are really get going to recredit investors. i think those are both quite

important factors. and you could maybe later on a third. we talked about there are two ways to read what's going on in the bond market. maybe it's concerns around fiscal uncertainty. maybe it is a stronger economy. if it is a struggle economy and a stronger from under economic expansion, that i think would be very consistent with her the credit market liking than being somewhat more relaxed. >> if i could just go back to the fiscal uncertainty, i hear you that the republicans have such a slim majority, the slimmest of they have ever had in the house of representatives. but if they don't move on tax policy, tcga does not get extended, they have no choice but to move. what are you baking and that gets done out of washington this year in 2025? >> we do think there will be an extension done. but ultimately, we see that as more of the status quo, i.e., you currently have those lower taxes, those tax cuts in place, they get extended. so yes, it is the deficit stays

wider. but it is not necessarily a large change versus current policy. that's one of the reasons why we don't think it might have such a large impact on yields or uncertainty premium. and then again, i think we ultimately think that the scope beyond that extension is may be somewhat more limited because you have, as you correctly mentioned, such a historically small majority. i think even within the gop caucus, there is not necessarily agreement on the level of fiscal expansion. we have to keep an open mind. i think we are going to learn a lot over the next month about where the majority actually sits and what is possible. but in our baseline, we don't have such a large fiscal change, and that's one of several reasons why ultimately at morgan stanley we are forecasting yields to lower on the horizon rather than higher. >> once they figure out the sequencing, there will start to

actually talk about what it looks like in terms of topline figures. i've heard anywhere from 2,000,000,000,002 as high as 6 trillion. do you have a forecast? you think there is a level where at some point this bond market cannot handle? >> i think this is a question that is, again, i think over the next several months we are going to get a lot more information and we are going to have to be adaptable. . as you correctly mentioned -- adaptable to the. as you correctly mentioned -- adaptable to it. and also what sort of revenue raising scenarios are realistic. i do think first, and i think this is the most important factor, it is less about the number but it's more about how the market sees the realism of either those cuts, spending cuts actually being enacted, or taxes actually being raised. spending cuts are difficult.

most of the u.s. budget is to the military and entitlement programs, both of which are very popular among the voting public. that's a reason why we are a little more skeptical that cuts can get done, and thus we are a little more skeptical that you can get large additional tax cuts. jonathan: speed kills. the fed moved fast and broke things back in 2022-2023 and the banking sector. the persistent -- in the banking sector. i wonder whether corporate balance sheets have the capacity to weather the storm. there was the conversation for a long time about surviving until 2025. 25 has arrived and people are talk about no rates at all. i am wondering from your perspective whether we can handle that? >> i think we can. part of that is because corporates have termed out there debt significantly. corporate interest coverage, their ability to pay for that debt has stabled out.

corporate's have had time to adjust. when we go throughout history, it's often been modest fed cutting cycles that have been the best for credit. it is much better to markets but a lot weaker growth. we don't think that applies to everything. we in our year ahead outlook at the end of last year, our u.s. credit strategists, they turned cautious again i u.s. ccc credit. that rallied a lot at the end of the year. i think a theme at morgan stanley generally coming even to my colleague mike wilson on the equity side, is quality is a pretty important factor in upping quality could certainly make sense if the prims to do so are reasonable. jonathan: andrew sheetz from morgan stanley on a big morning stateside. . 8:30 eastern time, u.s. cpi. earnings from j.p. morgan cityi, goldman, wells fargo all

coming up this morn. let's get you an update on stories this morning with your bloomberg brief. >> southern california faced another night of extreme critical fire conditions due to high winds and minimal humidity, leaving 10 million people at risk. the fires have already claimed a the lives of 24 people. the biden administration is planning to unveil more rules aimed at limiting the exports of advanced chips to china. the white house intends to announce the measures in the last few days of the biden administration. the new roles will target ship producers like tsmc, samsung and intel. volkswagen is bracing for another difficult year. sales for the german carmaker expected to decline in 2025 due to a lack of new electric car models amid delays in software to buckman. plus the company has struggled -- in software departments. plus the company has struggled to compete in china. volkswagen's ceo is working to

restructure the company but new models will not be available until later this decade. that's your bloomberg brief. jonathan: up next on the program, bracing for tariffs. >> in terms of economic policy, writ large, there are more questions than answers at this point. while transaction man is going to be there, tariff man will be very much present. we are preparing for increased tariffs. that conversation coming up next. -- jonathan: that conversation coming up next. live from new york city this morning, good morning. ♪

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♪ jonathan: got a big couple of hours coming up. looking for numbers from j.p. morgan in the next 40 minutes. equity futures positive by 0.2%. check this out. eight days without falling yields on a 10-year yield. this morning they are falling,

down by two basis points. the 10 year, 4.7698. bracing for tariffs. >> in terms of the economic policy, writ large, there are more questions than answers at this point. don't underestimate president trump in terms of how deep-seated this ideology is. while transaction man is going to be there, tariff man will also be very much present. we are preparing for increased tariffs. jonathan: world leaders in business preparing for donald trump's expected tariffs. trump proposing an external revenue service to collect tariffs on foreign imports, writing their foreign sources will finally pair their fair share. james of capital alpha partners joins us. can you make sense of that? doesn't make sense -- does it make sense? >> it is typical trump riffing. he is trying to upset people and

set things up for whatever transactional bargaining strategy he has. we already have customs and border protection. think about the jerusalem embassy, formerly the jerusalem consulate with a new sign on the door, think about the space for switches, another office in the pentagon, with a new sign on the door. so he can call it what he likes but the reality is there's nothing really changing. >> this is a branding exercise, is that what you are saying? >> it is a branding exercise. it is also something of a mind game. with regard to texas, i can tell you there is no -- taxes, i can tell you there is no $10 billion tax cut coming. it might not come until december or october. market expectations are out of whack there. similarly, there is going to be no across-the-board tariff. i expect some term from trump. i expect probably scary tariff

memo when he does is day one executive orders but will probably see more selective activity, sector specific tariffs from trump. >> he did not come out like he did with the washington post article about tariffs and say that is fakeness when it comes to the -- fake news when it comes to the reporting from my colleagues in washington, d c about a gradual approach to tariffs. he did say external revenue service will be this new department that collects our tariffs and duties. there is still a lot of emphasis on tariffs at the moment from trump. what you think you can read between the lines is that this is going to be more narrow and targeted and smaller incremental increases? >> i think there is more bark than bite here and i think just as the narrow, rickety house majority limits what can be done on taxes, frankly, that also

limits what trump can sustain politically across-the-board on tariffs, too. >> can i ask about this tension, the ideas we will get a scary tariff memo. danny to be a seriousness from trump for europe -- there needs to be a seriousness from trump for europe, china to pay attention. investors are kind of like, we are smart enough to see through that, we can see through the bark, but for some reason, the european officials and policymakers will not be able to? is there not somewhere where rubber needs to meet the road that in order to be serious to his partners, he also needs to be serious to the markets? >> i can tell you the japanese attitude towards trump's tariffs is much more pragmatic and similar to the attitude in new york, where it is let's wait and see how much of this is bluster. we really don't know. it is remarkable, or at least on my last trip to london, it was remarkable the extent to which

u.k. and european investors i was talking to were taking every word literally and preparing for a massive trade war. trump has particular target in mind, it is china, it is not the european union, it is not the u.k. you should bear in mind that they are ultimately going to be the center of the strategy, whatever that strategy emerges to be. >> what is this goal in europe? because we have her trump talk a lot about it to the extent of trump speaking to bloomberg saying he's potentially worried about some allies more than others. >> if you go back to trump's early career, trump once took out a full-page advertisement in the new york times excoriating mercedes-benz or importing cars into the u.s. at very low tariffs. that's a long time theme of his. i think in washington, there is just an intense feeling of irritation, even outrage with european regulatory programs, whether it is ai, whether it is

privacy, whether it is international taxation, whether it is a a whole host of other areas where the european view that the eu can be a regulatory superpower is going to start facing serious blowback in washington. i would see the use of tariffs as a way to start deterring things like the, overreaching regulation, digital service taxes, or similar proposals. >> there is one deadline they need to deal with or it can have serious market consequences, and that is the debt limit. based off a few days reporting in palm beach, the sense i got is that trump wants this out of reconciliation. will they have the republican votes or are they going to have to rely on democrats to get this through? >> i don't think they have a plan. obviously, in washington this week, the republican leadership are briefing members and conference meetings trying to come up with a plan. they have members like chip roy and tom massey who have never voted for a debt increase. i think it is something of a

desperate effort to say that we are going to tie the debt limit increase to the, you know, aid for fires in california. the reality is they do not know what they are going to do. i will make one prediction. i think we are seeing the last days of the debt limit. this is a completely an acronym stick -- anachronistic, irrational policy. i'm not going to recommend the debt limit is eliminated or abolished this year but i don't think we will be singing very much longer just because it's a retractable problem. you will see a republican president come out, as donald trump has a ready has, saying we should simply abolish the debt limit, or restructured the debt limit the way david malpas proposed in the pages of the wall street journal last month, making sure there is no default and making a number of

other commonsense reforms to make sure we are focusing on managing the debt and not just political theatrics every time this debt limit needs to be raised. jonathan: appreciate your time. james lucier of capital alpha partners paired mentioning m alpas making that argument. >> i think a lot of democrats would welcome this idea of abolishing the debt limit. it always ends up being this 11th hour deal. financial markets care about a pair they always end up raising it. but it's all this negotiation for something they know they are going to. trump wants to get rid of it. i will say i think there is some individuals in washington irked by the fact that they are dealing with this in 2025 and the decks were not cleared for trump. jonathan: in just a moment, about 20 minutes away, we are looking for numbers from j.p. morgan, expecting earnings from them about 7:00 a.m. eastern

time. after we get through the bank earnings this morning, we can shift our attention to cpi. inflation in america at 8:30 eastern time. going into that, equity futures positive on the s&p 500 and bond yields just a little bit lower. up next on the program, we will catch up with gerard cassidy of rbc as earnings week kicks off on wall street. from new york, this is bloomberg. ♪ lling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one. susan: where am i headed? am i just gonna take what the markets gives me?

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jonathan: a lot to get through. plenty to get through in the next 30 minutes. earnings from jp morgan on wall street. two hours for now, cpr in america. two days of gains on the s&p 500. up again by .2%. mastec up by .2%. the rustle up by .4%. turn the page and get to the bond market story. two-year, 10-year, 30-year. we've had an eight-day run where yields have not fallen on eight 10-year treasury -- a 10-year treasury. dani: it is no longer about pricing out cuts. no longer about economic strength. it's about pricing in inflation. prices paid on ism? because airlines were higher on

ppi? do we not care about the current environment and looking forward to it happens after next week? jonathan: we talked to andrew sheets. the price of uncertainty. this is something that david kelly will talk about later. not knowing what the policies will be his higher bond yields. dani: i have seen so much, terry saying the way the bond market settles is post inauguration when we have some certainty. there the idea that unpredictability is a feature of trump's policy. higher premiums from that. annmarie: that was the buzz word in palm beach. unpredictable. he wants to keep everybody on their toes. whether it is this time mark -- stock market or the bond market. just because he's swearing on the bible that we will have clarity, think again. jonathan: unpredictable for the next four years. euro-dollar is going nowhere.

sterling, good news in the u.k. inflation comes in softer than expected this morning. the pound, 122.58. dollar-yen, 156.90. jordan said he think the next boj meeting is a live one. they might hike interest rates. officials are lining up behind that idea. dani: i wonder if they are certain until after today and after the inauguration. yueda maybe wants to get that done but will not do it until we get figures from the u.s. and greater clarity of what's happening in the political situation. it is dominating the yen, gilts, pound. jonathan: under surveillance, investors counting down to the cpi at 8:30 eastern time. a bloomberg survey showing

rising .3%. the data expected to boost the case for an extended pause in rate cuts after payrolls on friday. dani: i think it will be interesting litmus test for the market. will bonds actually rally if we get in line or little softer? if we don't rally, we have been talking about that we always don't care about the present environment. as uncertain as it might be, it's just a jumping off point for more inflation. you need a much bigger downside surprise than just .2% to actually get treasuries rallying. annmarie: i wonder what kind of inflation print we get. instead of saying the fed is on pause, they say the fed might have to hike this year to tame inflation. that would go back to what adam posen told us about six month ago. jonathan: more on inflation through the next two hours. the report drops 8:30 eastern

time. the sec filing a lawsuit against elon musk claiming he she did twitter -- cheated twitter shareholders as he prepared a takeover bid. his lawyer say the lawsuit is a sham and musk did nothing wrong. annmarie: he had 10 days to disclose this. he waited 11. chair gansler is exiting stage left and then we will have paul atkins coming in. given the proximity that elon musk has the power, to the white house, to the president-elect, he will likely act the incoming chair to withdraw the case. i think this is a tbd situation. jonathan: another story waiting for a conclusion. santa ana winds and dry conditions threatening to expand wildfires across los angeles with 10 million people at risk. 88,000 remaining under

evacuation orders and almost 85,000 under warnings. heather zehr, welcome to the program. what is the latest on this front? heather: winds have not been stronger than yesterday which is to say that most of the wind gusts have been between 40 and 60 miles per hour. a little bit of progress to contain the fires. the interesting thing with the wind has been we had around the palisades fire offshore winds in the vicinity of malibu. on the eastern side of the fire the wind has been a little onshore. that helped firefighting efforts there. dani: the wind is one thing and the expansion of the fires. what about the starting of new fires? that's one of the features we have seen of this. everyplace feels like a ground for a new fire. are there more threats and more conditions that could cause that to happen and more growth in the

area under stress? heather: that is still the case for today. we are expecting an extreme fire risk. it remains very dry. there's very little rainfall over the course of since last may. that had only 0.16 inches in downtown los angeles since the beginning of october, the start of the wet season. that has allowed the fuels that are prevalent after a couple of winters of good rainfall to be able to really dry out. then you kick up the winds, low humidity, and it does lead to these extreme conditions where fires can start and quickly spread. jonathan: heather, appreciate your time. heather zehr of accuweather. they are still waiting for a big break. dani: listening to heather, it does not sound like it will come from the rain. . it is the unfortunate thing of the wildfires and the other weather events this year.

because it is an unpredictable path, people seem to be often caught off guard by this. the warning signs, the flags, the particularly dangerous situations the issue don't really help. there's confusion and how they actually communicate this. the risks are still there. people don't realize until the moment the calamity of how big it could get. jonathan: we will be following this story on bloomberg tv and radio. turn back to the financial markets. 830 eastern time -- 8:30 eastern time we get inflation data. kicking off the big bank results on wall street in the next couple of moments. both expected to report by 7:00 a.m. eastern time. gerard cassidy welcomes us. love doing this with you every quarter. let's look at j.p. morgan first. what are you focused on in the next few minutes? gerard: how strong the investment banking capital markets businesses are for j.p. morgan.

second, and maybe more important is the net interest income guidance. in the fourth quarter banks like j.p. morgan will give us the 2025 guidance. the key number for the guidance number for j.p. morgan chase is net interest income. a positive slope yield curve is positive for net interest income for all banks, including j.p. morgan. dani: it is going to be the first time in almost five years we've had banks reporting results with lower rates already in hand. any immediate impact we will have seen from the cuts done by the fed? gerard: i think there are. you will find some of the asset yields will come down for -- like corporate loans. offsetting that is the fixed income instruments purchased in 2020 and 2021 as they did rollover in the fourth quarter.

they will continue to rollover in an 2020 six -- 2025 and 2020 6. most important link, funding costs, deposit costs are coming down. what we will hear is those costs may be coming down faster than affected. dani: that's one portion. the other big bonanza is trading. the firm sales and trading team had its best ever quarter. are we expecting that across wall street? gerard: generally yes. the rising tide raises all ships. often times when juan comes out and talks about the strength in trading, the others see it in their numbers as well. i think you will find we will have robust trading results for all the big banks. how will that play out into 2025 ? increased volatility is

something that's always positive for trading results. jonathan: gerard, stay close. waiting for numbers from j.p. morgan and wells fargo in the next few seconds. look out for those numbers. on update on stories elsewhere. yahaira: israel and hamas reported the agreed in principle to a draft cease-fire. cbs news sites arab, israeli and u.s. officials saying the deal could be finalized this week. president biden and donald trump said they were optimistic the truce was close. officials say the first phase would include a 42-day cease-fire, the release of some israeli hostages and palestinian prisoners, and a buffer some in the gaza strip. u.k. inflation on effectively cooled in december, slowing for the first time in three months. the data caused market jitters around the economy, sending yields lower. while traders raised their bets on interest rate cuts this year.

south korean president yoon suk-yeol has been arrested. authorities launched a predawn operation to bring him in for questioning over his short-lived martial law declaration. the arrest came after yoon defied a summons to appear for questioning. confess gators abandoned their first attempt to detain him on january 3 after a six-hour standoff due to resistance from his security team. that is your bring -- bloomberg brief. jonathan: next, thanks earnings -- bank earnings on deck. >> give will allow margins to rally both in the quarter part of this week and next week and what the alec will be for the first -- outlook will be for the first half of the year. jonathan: from new york city, you are watching bloomberg tv. ♪

jonathan: live from new york city, good morning. 8:30 eastern time, u.s. cpi. posited by about .25% on the s&p 500. before we get to the inflation data, under surveillance, bank earnings on deck. >> overall pricing is favorable for banks, which will allow margins to rally both in the quarter this week, next week and the outlook for the first half of the year. that combined with growth accelerating from the fed data from november-december is positive for the sector at this point. jonathan: big bank earnings kicking off with results from j.p. morgan and wells fargo do out momentarily. standing by with us is gerard cassidy of rbc, sonali basak as well.

i want to talk about succession planning. the news and how you are reacting to that. gerard: it was not too surprising. daniel pinto, when he was moved over to this officer rowley year ago from the head of -- office role a year ago, he was never considered the heir apparent. they were the leading horses. now jen will be the chief operating officer. lake runs the largest division, the consumer banking business. a couple of the other executives heading up the commercial investment bank will maybe consider heir apparents as well. jonathan: just getting wells fargo so hold on a second. i want to cross over from manus cranny.

manus: a beat for wells fargo. the estimate out there was for 11.7. it's about reporting in the first series of rate cuts we have seen for five years. always an interesting one at $1.21 billion. that is there net charge-offs. the guidance for 2025 for net interest income is expected to be about 1% to 3% above 2024. that is a comfortable beat on the net interest outcome at wells fargo and guidance of 1% to 3% above 2024. let's dive into j.p. morgan. j.p. morgan, the fourth quarter. i will jump straight to this charge-offs. it's in line. $2.36 billion. this is on j.p. morgan.

the fixed income sales and trading. this is the bulwark of the street focus. a number of -- fixed income, $2.04 billion. that is just a small skim lighter. trade and revenue on the overall revenue side, $5.01 billion. the estimate was for $4.37 billion. you had election, volatility is ratcheting. a blowout on ficc. dimon says on employment remains relatively low. this is the core of the bifurcation with the consumer. you are sitting there with sonali. let me give you the credit losses, $2.63 billion. a couple of lines coming

through. i will handed back to you with the jamie dimon comments on the flow and health of the u.s. consumer. jonathan: appreciate it, sir. j.p. morgan higher by 2%. sonali, what stands out to you? sonali: from wells fargo, one big question has been loan growth. they expect that growth in the naii this year alone. for j.p. morgan, fixed income blowing it out of the water. up to $5 billion for the quarter in fixed income and currencies trading over here. you have equities following -- falling like of excitations. there's an affected ipo rebound that will lead to more supply for the trading desks. they are below expectations. competitive business right now on wall street. goldman looking to take more share. they are looking to finance hedge funds to build up business even bigger. morgan stanley has been the king of the castle.

we will see what the rat race looks like. charge-offs in line with expectations. that is good news. jonathan: stocks trading higher in the premarket about the commentary. manus was talking about from jb jamie dimon. unemployment remains relatively low. consumer health state healthy and the holiday season. businesses are optimistic about the economy and encouraged by expectations for a more progrowth agenda and improved collaboration between government and business. however, two significant risks. ongoing and future spending requirements will likely be inflationary and therefore inflation may persist for some time. additionally, annmarie, geopolitical conditions of the most dangerous and complicated since world war ii. annmarie: you can expect that from jamie dimon who wants to opined about what is going on in the world. we are going into a year where we have two hot wars. we will have some potential tit-for-tat when it comes to trade with china. the idea of inflation higher.

if you are a consumer, even at the university of michigan, you think expectations will be higher. this could end up being a self-fulfilling prophecy. for the banks, jamie dimon previously said how they view trump's victory was bankers dancing in the streets. jonathan: gerard cassidy alongside us. let's start with j.p. morgan. equities not so good. what explains that? gerard: it drives right to your comments earlier about what has happened to the 10-year government bond yield. what you see in trading is increased volatility leads to better trading results. when you think about how the 10-year has behaved since the fed started cutting rates in september, that they contribute in factor. the steepening of the yield curve helps. it is the volatility that drove the fic numbers.

the equity markets were a little light. the equity markets going into the end of the year did not have robustness we saw throughout the year. dani: can i go back to comments from jamie dimon talking about a resilient u.s. economy by bringing up fears of geopolitics and inflation? it rhymes with what we heard from david sullivan that the economy is in a strong place but it's fragile in the moment because of the same concerns. how much of these comments tailored to an audience of one? how careful are the banking executives going to be in their statements and on earnings calls with the knowledge that perhaps it gets back to president-elect donald trump? gerard: not so much wondering if it's really directed to the president trump. these are global companies. big global companies. these types of uncertain times and unfortunate situations in the middle east and ukraine

really could have -- could get out of hand. what made a material impact on the global operations. in the united states, for the consumer on main street america, yes. we see it in the nightly news and it's tragic. it does not necessarily affect their day-to-day living. inflation is far more important impacting the consumer. annmarie: when it comes to the idea of deregulation, the idea that trump 2.0 will have a lighter touch, jamie dimon talked about this. regarding regulation, we have said regulation should be designed to balance promoting economic growth and maintaining a safe and sound banking system. how excited are the banks for this part? what they would call the good parts of trump to point out? -- 2.0? gerard: very excited. i suggest the resignation of the vice chair of safety and

soundness was a positive event to have regulation less onerous for the banks. basil free endgame would force the banks to carry higher levels of capital even though at the outset when it was being designed it was inspected to be capital neutral. with him stepping aside we think banks could see a capital neutral basil 3 endgame even that was full about what they need to be. as you look forward they will replace the head of the control of the currency, the fdic, the consumer protection bureau, and now barr. you look at trump's first term, people in those seats were much more realistic and business friendly and bank family. that will be the case the second time around her as well. -- around as well. jonathan: gerard cassidy,

getting the outlook. $94 billion. the estimate was $91 billion. sonali: the street was expecting this to be a lower number. the fact that they came in at $94 billion expected this year, this is a number they have raised over and over. this is the idea you will not see interest rates lowering as much as expected and you still have loan demand from consumers. jonathan: when we get the call later, one third on the numbers, one third on trump, one third on succession? sonali: yes, yes and yes. with the trump expectation, fine. lighter regulation means one thing. they have been hoarding capital in for those rules. how much of the capital can be unlocked and how much of it goes right back in the hands of investors with share buybacks and dividends? jonathan: later on, 35 and it's a way from goldman sachs.

30 minutes later, numbers from citi. getting number some j.p. morgan in the last few moments. fic income is strong, equities are light, the outlook looks good. dani: it does look good. it's also a credit quality picture that's improving. it looks bright and sunny. jonathan: look out for calls later. we will see how bright and sunny jamie dimon is on that call. up next, ken leon, edward yardeni, jen flitton, and gregory peters. this is bloomberg. ♪ -honey... -but the gains are pumping! 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. susan: where am i headed? am i just gonna take what the markets gives me? no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence... the answer is j.p. morgan wealth management let's go boys. wh the way that i approachth work, post fatherhood, has really been trying to understand the generation that we're building devices for.

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>> forward inflation readings will reassert the downward trend line. investors will be able to breathe a sigh of relief. >> we have to see improvement in cpi as well for the bond market to see yields push lower. >> the inflation rate is not getting to 2%. there's an argument to be made it is stalling around the height two's. >> this is the issue we are dealing with. the fed, the market. there are different details of the data you can look at and tell a different story. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: an important two hours coming up. cpi at 8:30 eastern time.

numbers from goldman sachs in about 30 minutes time. after that, numbers from citi. following number some j.p. morgan and wells fargo. equity futures up by .4% on the s&p 500. similar on the nasdaq. yields are lower. giving a helping hand to risk. following eight days without a single day of falling years on the 10-year that yields on the 10-year -- yields on the 10-year . the outlook from jamie dimon pretty good. dani: for interest income in particular very good. that might be attributable to the fact of what the market is grappling with. rates are going to be coming out as much as we thought. as lisa would say, it is not a toxic cocktail. she's not here. it is the perfect cocktail. a delicious cocktail of rates higher, volatility in markets because of president trump, m&a coming back because of president trump, and the regulation that unlocks all the capital. jonathan: nothing toxic now

about this brew which is why lisa is on a ski slope over in europe. there are some questions about risk. jamie dimon acknowledging this morning two significant risks remain, ongoing and future spending requirement will likely be inflationary and i can persist for some time. lookout, washington. geopolitical conditions remain the most dangerous and complicated since world war ii. annmarie: as always, we hope for the best but prepare the firm for a wide ranging scenarios. donald trump is going to be enacted as the 47th president on monday. everyone on wall street is preparing. we talked about regulation. everyone excited about deregulation. he said trump victory met anchors were dancing in the street. when it comes to fiscal spending, inflation rising and how to deal with the geopolitics and trade environment when it comes to the tit for tat with washington and beijing, that is

where everyone's eyes will be peeled. jonathan: focused on three things. the numbers, the outlook, and succession planning a j.p. morgan. it's back and forth all over the any skull later. dani: maybe this is gamesmanship. if you are someone who wants to be the successor to jamie dimon, you need to say i don't want to be the successor. i just want to be his right-hand man. we have seen people who have been more vocal and wanting to be the next person have not lasted a j.p. morgan. i don't think we will get into the nuance of that. jonathan: jen ruling herself out? dani: there's a theory she is making herself the most likely candidate. jonathan: up across the board. j.p. morgan up by 2.6%. well for -- wells fargo by 2.4%. we will catch up with edward yardeni as j.p. morgan caixabank

earnings, jen flitton with cabinet picks on capitol hill, and gregory peters as we count you all down to inflation data at 8:30 eastern time. 86 minutes away. stocks rising ahead of cpi data. better than a spect result from both j.p. morgan angles fargo. joining us to discuss is ken leon. you've had about 15 minutes with the numbers. what you make of them? ken: outsized gains last year. what the results speak to is the ability to earn to your valuation. i would spect the street will have over earnings revisions for 2025. look at 22 any s -- 2026. what is the delta for driving earnings? for j.p. morgan, net interest income. it is not just rates. it's also volume which speaks to the u.s. economy growing about 2.5%.

that drives net interest which is significant for j.p. morgan and other banks. the other delta is investment banking. the ability of a risk on environment for mergers and acquisitions and equity underwriting means we will be moving further up from the trough of the market or the cycle about 18 months ago. additionally, when you look at net interest income -- j.p. morgan is a diversified bank. it is getting that for many types of services. the only negative in the print was community banks a little slower in terms of their net revenues. mostly this is a monolithic global bank, well-placed, trading at an expensive valuation. our take away his stay the course and they will grow into the earnings and valuation. dani: fourth-quarter provisions

for credit losses. the estimate was higher at just over $3 billion. similar story for wells. what is that say about credit quality? are we getting close to normalization? ken: for j.p. morgan and the industry. bank analysts are a nervous lot. the risk is credit risk and major right offs. -- write offs. we are nowhere near red alert in terms of significant need for buildup of credit reserves. looks like we will have a good year for the economy. when you look at the consumer, you see increases in allowance for bad debt. it is mostly because the volumes are much higher today than they were two or three years ago. ultimately, and we did not speak about this which is whether it is credit risk or trading that black swan event.

jamie dimon mentions geopolitical risks. the third is some liquidity squeeze in a complex trading product that upsets the market and maybe the bank stocks. we have not seen it here. you go back to 2023, that was credit suisse. jonathan: appreciate your time. we get goldman at about 25 minutes. what kind of companies should we be owning this year on the banking side within the sector? do we need to higher capital market concentration or stick with traditional names? ken: a strong delta for goldman sachs. we have a strong buy on goldman sachs. 15% of total net revenue comes from net interest income. it is on face service revenues across all its businesses. i like the announcement where they are trying to get a front row seat for private credit. we will be speaking about that more this year. i like what goldman is. the rearview mirror was

consumer banking. goldman will define. jonathan: we will talk on the numbers drop around 7:30 eastern time, 20 minutes away. stay close. ken leon. joining us to extend the conversation is edward yardeni. welcome back to the program. equity futures up on the s&p. does this give you the all clear on the economy. -- economy? edward: i think so. bull markets are not sustainable unless the banks are doing well. they seem to be doing very well. the economy is growing in loan demand is growing. as you have pointed out. -- pointed out, the new administration will be easier on regulations. as a result of deregulation the banks will benefit. the most obvious beneficiaries immediately from the new administration. dani: it is easy to make the

argument so many people -- as so many people do that it's overvalued. everyone wants to own the u.s. is the fact that banking is justifying valuations and pushing higher estimates negate arguments we have heard to start this year? ed: everybody believes valuation is to allege extent determined by -- is to a large extent determined by the situation. there is belief in reversion to the mean. right now we have forward pe on the s&p 500 running around 22. the peak right before the tech wreck in 2000 was 25. it was making everybody nervous. what drives the valuation multiples is perception of how long the expansion is going to last. witches hat in the past for years the most widely anticipated recession of all times that did not happen. it made sense we might have had a recession because the fed tightened.

the economy has been resilient. i think it demonstrates might be able to continue to grow through the end of the decade. if that is the case, earnings are not going to be able to grow and basically meet expectations of some of these high pe's. i'm not concerned about that. get the economy continues to grow and if earnings continue to beat expectations, which i think it will because productivity is making a comeback. annmarie: one of the keywords was growth in the next decade. pricing in forward earnings is not about next year. it's about the forward longer-term outlook. does that mean any of these gyrations you see at the moment from concerns about fiscal policy or yields are today that this is an equity market that can look through it because of the resilience for some time to come? ed: i think the big hurdle now or challenge for the stock market from going higher as the bond market.

everyone is talking about 5% and maybe higher on the 10-year. the 30-year is just about their. -- there. 5% is awfully good when inflation is close to 2%. we may see some rebalancing out of stocks and into bonds. all in all, with the economy likely to grow better than expected because of productivity, that is good for earnings and good for the stock market. it will take a little while here to get some clarity on what this administration's policies will add up to. on balance i'm optimistic they will be positive for the market. annmarie: that is one of the risks jamie dimon talked about. inflation may persist for some time. ed, if this is the environment and inflation does not start to weaken, is there a chance we could see the fed have to come

out and not just be on pause but maybe hike? ed: i started to hear people raising the possibility of month or two ago. we went from the market thinking several rate cuts at the end of last year and that was fueled by comments from fed chair jerome powell, the 50 basis point cut back in september 18 for the federal funds rate was the beginning of several rate cuts. they started to walk it back. everybody expects a long pause. i don't think they will be raising interest rates. i think inflation may be a little sticky, maybe a little hotter at the beginning of the year but we will continue to moderate because of productivity and china is depressed. if we have an inflation problem from tariffs it is a one-off situation and a not -- and not an ongoing inflation problem. put it all together, no, i don't

think the fed will be raising rates. jonathan: you coined the phrase bond vigilantes. we talk about that. people wonder if they have returned or we are just pricing in better outlook for the u.s. economy. when we look at two's, kids in line with fed funds. about 40 basis points north of that. that looks fairly normal. is there evidence the bond vigilantes are out in the united states and have made a comeback? ed: you make a good point. it is not completely clear about the bond vigilantes. the bond yield is back to normal in my opinion. back to where it was before the great financial crisis. let's take a wide range of 4% to 5%. that is where we are. that is fine. it is the speed at which we get these things. back on september 16, 3.65%. now we are -- everyone is

talking about 5%. i think a lot of it is in fact better than expected growth. stickier than expected inflation. this has meant the fed is on pause. the bond market has reacted to that. i think there is some bond vigilantes him out there -- vigilantism out there. i hope trump's advisors do what robin rubin did -- robert rubin did for bill clinton and one we need fiscal discipline to avoid the bond vigilantes taking over law and order and the capital markets. jonathan: we have not had much of that in the past few decades. we appreciate your time. ed yardeni on the bond market and return of the bond vigilantes. welcome to the program. jp morgan numbers came out about 25 and its ago. the outlook was pretty decent. quite solid for 2025. trade in the fourth quarter was a record. the stock higher by about 1%.

gains fading a touch. let's get updates on stories elsewhere. yahaira: southern california remains under severe fire threat. an army of firefighters spent yesterday putting out small fires before they got out of control. they continued building containment lines on the larger palisades and eaton fires. the fires are respected to be the most costly in u.s. history, destroying what officials estimate could be more than 12,000 structures, including many homes. in china, the distressed developer country suffered losses in 2020 three. the builder -- 2023. country garden says it still has more than 3000 projects left to sell with inventory worth more than $82 billion as of mid-2020 for. 2 -- 2024.

spacex had another launch. both satellites are carrying lunar rovers, one from firefly aerospace that will attempt a moon landing in 45 days, and the other from tokyo's ispace, its second attempt after a failed attempt last april. jonathan: thank you. up next, trump's nominees get a grilling on capitol hill. >> what we came evident to us -- became evident to us from the beginning is there was a core needed smear campaign orchestrated in the media. it is time to give someone with dust on his boots the hell. -- helm. jonathan: that conversation up next. good morning. ♪

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jonathan: bank earnings so far pretty good. jp morgan, wells fargo. goldman dropping in about 12 minutes. equity futures rising by .4%. bond yields a little lower, down three basis points. later this morning, cpi in america. look up for that later this morning. trump's nominees get a grilling on capitol hill. >> what became evident from the beginning was there was a coordinated smear campaign orchestrated in the media against us. it is time to give someone with dust on his boots the helm. a change agent. someone with no vested interest in certain companies or specific programs or approved narratives. my only special interest is the war fighter. jonathan: president-elect donald

trump's pentagon pick on course to win confirmation. marco rubio among those speaking on capitol hill this morning. treasury secretary nominees scott bessent will appear on thursday. joining us to discuss is jen flitton. any reason to believe some of the nominations might be in trouble? jen: i think what we saw yesterday is that a lot depends on the hearings. objectively, pete hegseth did a good job and it's now taking him on the path to confirmation. i think he will skate through the committee approval. he will be on the floor probably sometime next week. the other more controversial pix like tulsi gabbard or robert f. kennedy, jr., the hearings are going to matter. if they have some of the same

showing as pete hegseth did, they are well on their way to confirmation. dani: if the going up for the hearing, the trump campaign lawyer think they have the votes for these individuals like tulsa gabbert and rfk junior. -- tulsi gabbert. jennifer: one thing that's a through line with all these nominees is their strong ability to communicate. i think you will see that with tulsi gabbard and robert f. kennedy, jr., with patel for the fbi director. if they have strong showings at their hearings and i think the faith is with them from the transition, i think they are well on their way to confirmation. what we are hearing behind the scenes with the meetings happening with the senators is that they are gaining a lot of support as they move along. annmarie: that is what sources

close to trump tell me. being able to communicate his agenda is just as important as being able to do the job he's putting some of these nominees in place. can you give us a sense of what is so different from trump 1.0 and how they worked with nominees and under secretaries? are they moving faster now? jennifer: they are definitely moving faster. the vetting was a little slow because of how they decided to do it and when they brought in the fbi vetting and started finally -- filing with the senate. they are well on the path to getting folks in immediately as soon as the president is inaugurated on day one. i do see a much stronger bench in the sense of the ability of trump and the trump transition team and susie wiles at the top as the chief of staff to get folks in who are really speaking

the message of trump and trump 2.0. in 1.0, you saw the mechanism in washington really working to influence trump. now trump has a very strong position and has a whole team of folks who were there to push that position, to push the agenda. annmarie: beyond the ability to get these various cabinet members confirmed, does it speak to a cohesion within the republican party that will benefit trump as he tries to do things like pass one big beautiful bill and a slim majority? does it help these are getting through? does it speak to that ability? jennifer: absolutely. we have seen in the transition period. mar-a-lago is a very busy place right now. not just with ceos from the tech industry. you see washington basically flying down to mar-a-lago. he has been entertaining members

of congress, senators, entire caucuses and factions of the house of representatives. i think going forward, especially within the first six months you will see a very hands-on white house really working there agenda and working with the members within the house who might be the most difficult to get on board. jonathan: jennifer, appreciate your time. jennifer flitton of invesco. with regards to the tech sector, mark zuckerberg and the podcast with joe rogan took aim at the regulator on both sides of the atlantic. particularly the europeans but talked about the united states and this administration, giving them cover to go after them in places like europe. it's intriguing that at inauguration you will see zuckerberg, you will see bezos and musk. i wonder how the story will change and how much you will see the incoming administration support these national champions and then go after the european regulators that have been polishing them -- punishing them in the last two years. annmarie: that is why you see

zuckerberg making trips to mar-a-lago because of things like what he would call overregulation in europe. they are not showing up. zuckerberg will be hosting an inaugural ball reception for trump and jd vance with miriam ellison and others. this is not just someone who will show up and "kiss the ring." i'm going to celebrate this. jonathan: goldman numbers showing up now. fourth quarter net revenue, $18.7 billion. fic something like this. lookout trading has been doing it goldman. 2.74%. the estimate was 2.44%. the stock is up by 3%. dani: it is good at continues to be the trading bonanza. fic coming in strong like it did it jp morgan. i'm interested in the look forward. what net interest income

looks like. jonathan: so far, so good on wall street. numbers from jp morgan descent. wells fargo as well. the first look from goldman too. will get analysis from ken leon of cfra. and greg peters of pgm. this is bloomberg. ♪

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jonathan: 60 minutes away from u.s. inflation data. two hours away from the opening bell. equities with a little bit of a lift. up by 131% on the s&p 500. similar on -- one third of 1% on the s&p 500. similar move on the nasdaq. manus: they carry through with this flex in ficc in jp morgan. it comes in at $2.74 billion. that is quite significantly ahead of what was slated in the estimates at $2.44 billion. you think about the deregulation and the trough and investment banking guess have talked about. investment banking, $2.06 billion. the estimate was $2 billion. it looks in this set of numbers the trading side on equities was a little stronger than the

market had anticipated. still strong within the actual rates division. one small point i would point out is on the advisory. fourth quarter advisory. looking for a number of over a billion. if you are at the trough and the deer in terms of ipo and capital markets business and the upswing is coming, that is not much of a spoiler effect in these numbers. fourth-quarter net revenue, $13.87 billion. estimate on the street was $12.37 billion. flex and muscle for ficc across wall street. jonathan: flexing hard. the hope is that will change big-time in the next 12 months under the incoming and administration. i am most laughed when i read that number. 13.8 7 billion dollars versus the estimate of $12.37 billion. stunning. sonali: what is more stunning as they brought in a -- i'm

laughing -- they brought in one 1.5 billion more than wall street expected. jamie dimon came in light. they are gaining share. this is coming from the way they are financing. they have record financing fees and record equity fees. goldman is going back to being goldman. they are beating at trading. no one will cry about being just under $1 billion. they respecting the deal rebound in the underwriting rebound. they had created a new unit this week called capital solutions. that is telling the street they are going to be on the front foot and make sure their clients can go out and borrow as much as they would like. they are working on the underwriting, whether it is traditional or private markets. dani: the profit that doubles is really stunning. so much of the strength coming already from an increase in m&a transactions even before the expected boom we will see next year. i forgot what year your end. -- we are in.

how does this set us up for 2025 ? sonali: they are cautious still. there is still higher interest rates. they expect growth to be above 10%. 12% to 15% maybe when it comes to m&a markets. yes, rebound. private equity has not really come back yet. that's about the cost of financing. for the goldman story in particular, they are so close and just shy of their medium-term targets. when it comes to return on equity and when it comes to if they were able to return in terms of profits, that's the big question. can they get sustainably over the 13% to 14%? annmarie: how much is this colored by politics? whether it is volatility around the election and the hopes and dreams of this really light regulatory touch from the trump administration. sonali: if you think about how much the banks have risen since the election, it's extraordinary. in many parts of this market you

have seen goldman shoot above its rivals because of the expectation. they have been number one in m&a for years on the lead table. at least that part of the rebound should be best for goldman sachs. the rest of it, higher interest rates, if they stay that high, doesn't it dent some activity? it was interesting to see jp morgan not only raise the interest income expectations. part of that is the thing auto loans are coming back. with longer-term interest rates higher, mortgages don't get down below 7%. many big banks are already not really doing much of that anyway. that will affect the regionals much more. jonathan: they have not been in the mortgage business in the same way for quite a while. wells fargo, numbers were good. trading the reset of goldman pretty stunning. any weakness across the three banks? sonali: a little more strength. the thing that is surprising

about the goldman numbers and jp morgan, goldman's head count rose while keeping expenses lower-than-expected. jp morgan in their statement said they will be investing in bankers and advisers across the country. they are hiring again. that is a story we have not seen for some time on wall street. jonathan: goldman sachs with some stunning numbers across the board, particularly overall net revenue beating by 13.87 billion dollars against an estimate of total $.37 billion. the stock is up by 1.7%. cinelli will be with us when numbers from citi cross. ken leon, i asked you what kind of business you like. ken: there's more dynamic story for goldman. and under promise and over delivery for most of 2025. the traditional businesses are

going to get the benefits of positive trend. m&a with $1 trillion of private equity investments that have to be monetized in the next 24 months. ceo confidence is coming up. we are seeing higher equity market values. great trading. if i was goldman management, i would be talking about their pivot to having durable recurring fee revenue businesses. that would be an asset in wealth management. also, the easing of regulation in washington, you will see goldman be more of a principal actor besides just an agent for transactions. that means getting to be more of a participant in private credit. we saw that is part of the announcement earlier in the week of blending some of these businesses so they can partner or compete with apollo, ares and

others. dani: it's a different model. the way they have been approaching private credit is partnerships. goldman for the announcement to your point shows they can compete with some of the big names. which of the models do you think will ultimately win out? ken: goldman can play offense. they can be principled and compete. for asset-backed loans they can be there to provide funding for the private equity firms. but traditional banks have a different game, particularly regionals or midsized. loans or syndicate loans competing against a corporate who wants to just get immediate attention with direct borrowing from a private equity firm. it is a change because it's moving up the size of the deals from small and mid-cap -- midsized companies to much larger deals over $1 billion. it is a multiyear trend.

i think goldman -- you have to go back over 10 years. goldman could not competing with blackstone and kkr because of regulation. we will see easing of regulation but they will be smart. they want to have the right strategy and execute. annmarie: do you see any weakness in any earnings? ken: the weakness is related to any sharp change or shock in the markets that affects volume but also affects their books. i mentioned before the black swan event. some complex derivative product that has a ripple effect, whether it is in asia or europe but it impacts goldman. the other one which jamie dimon speaks to is a geopolitical event. that has usually been if there's

any selloff of buying opportunity. we are seeing confirmation of the 2025 stay the course and we will stay -- consensus and street analysts raising throughout the year. jonathan: i think what speaks louder than anything is the other from jp morgan. the outlook is pretty decent. incoming policy changes aside, the outlook is better than good and the stock is up in the premarket. i want to look to citi. you've had a decent read on a cross-section of wall street. numbers from wells, jp morgan, goldman. what should we spec from citi? --expect from citi? ken: they have the highest percent of total net revenue. we want to make sure there's a good print. second, from jane fraser, the ability to show their moving through on the transformation and restructuring and we are seeing concrete evidence in the

results. jonathan: appreciate your time. ken leon on some of the financials and earnings we have had this morning. cinelli, what quick -- sonali, what questions have you got? sonali: they talked to us first. i want to know where they think the rubber will hit the road. not only is ken right with the black swan event, i'm talking to all these executives about risks. we were talking about how jp morgan increased value at risk for equities book while the book missed expectations. they took on more risks. equity markets still pretty close to all-time highs. then they were beat by goldman in the same business. there is still a lot of competition going on. the banks want to scrape every dollar out of their balance sheet to make sure they are capturing that share. jonathan: bank stocks up across the board. we are higher by one third of 1%

on the s&p. numbers from citi in about 20 minutes. with your bloomberg brief, here is yahaira jacquez. yahaira: we are seeing a strong start due to it bonanza. jp morgan traders scoring the biggest fourth-quarter hall ever -- haul ever. they are forecasting an increase for 2025 . goldman sachs earning per share beating estimates, coming in $11.95 per share, much higher than the $8.35 expected. donald trump says he will create an external revenue service to collect tariffs on foreign imports. in a post on true social, he says he will set up the agency as soon as he takes office next week. democrats and analysts have pointed out tariffs are already collected by u.s. customs and border protection. meta is cutting roughly 5% and a staff.

mark zuckerberg says he's raising the bar and plans to move out low performers faster. given his current staff move, it could affect 3600 jobs. affected workers in the u.s. will be notified on february 10. workers in other countries will be informed that a later date. new hires to fill the roles will take place later this year. that is your bloomberg brief. jonathan: thank you. more in about 30 minute time. changes at meta and elsewhere. jp morgan saying get back to the office five times a week. neil. assange these are not things that happen when the labor market is super tight -- neil dutta. dani: they are capping 401k payments. microsoft pausing hiring. it is happening in a lot of different industries which presents the idea that the labor market may not be a strong as it seems on the surface. jonathan: he has concerns about

how the economy is going to start the year and finish it in 2025. up next, u.s. bond traders hoping for some relief. >> we have seen a relief rally in the bond market because the market needed it. clearly we have got to see improvement in cpi as well from the bond market to really start to see yields push bloomberg. -- yields push lower. jonathan: you are watching "bloomberg surveillance." ♪

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just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah. jonathan: stocks on the s&p 500, equities looking good up by .4%. numbers from jp morgan, a solid outlook from wells fargo. peace and numbers from goldman. really strong on the trading side of the business. next up for the bank earnings we hear from citi in about 15 minutes time.

under surveillance, u.s. bond traders hoping for some relief. >> we have seen a relief rally of the bond market because the market needed it. clearly we have to see some sort of improvement in cpi as well for the bond market to really start to see yields push lower. what's affecting the 10-year portion of the curve is supply. the concern about treasury supply. not just because of future deficits but because of prior deficits. jonathan: u.s. bond yields moving lower ahead of the december cpi report due out less than one hour. gregory peters writing, "odds favor stable to lower yields ahead which bodes well for fixed income returns, whether they come from carrie or from total return. -- carry or total return." let's talk about this backup and bond yields. what is driving it? a lot of it is about supply. do you think it is? greg: there are a multitude of

factors. it is part growth. it is mostly been real yields. that is a growth change, which i don't quite fully comprehend. some of it is productivity through ai and other means. other is supply with the deficit. some of it is the policy uncertainty and factoring in more inflation. it is a combination of those things. what is driving the move ultimately is the change in the fed. if you look at the pricing and probability of rate cuts and rate hikes, it is completely flat. if you go back to september, the probability of a rate cut -- sorry a rate hike was virtually zero. now it's all most when he 5%. the fact that the front end is being repriced is allowing yields to move higher across the curve. this is a global phenomenon. it is not a u.s. story. jonathan: we see that play out

worldwide. what gives you the confidence they are coming back down? greg: it's a far field thinking about cpi today, inflation generally. i don't see the prospects of a rate hike here over the near term. on balance we are slow and restrictive territory. the fed in this case wants to get to neutral, a starting point of four. i see scope for that to move lower. it feels like a little overdone here. dani: you pointed to the shift in the fed. you had a fed that was guiding the market to a certain destination. what feels like it changed as we are back to a fed that is very data point dependent. does that not concern you, the ability to get back out to a guiding fed that is going somewhere bloomberg? greg: i wish it was a data-driven market.

-- market. it is the exact opposite. how do you incorporate tariffs, immigration, tax cuts, deregulation? some would vote for rate cuts -- bode for rate cuts. others for hikes. we are beholden to policy which is not a great place from an investment standpoint. investors like the data and want the data and we are beholden to these factors we don't really fully understand. dani: what happens if we have for this year in the next four years a trump that is unpredictable in his policy? he likes to be. what is that mean for markets that want that certainty? a lot of market participants believe they will get some form of it after next week. greg: i'm surprised by that. to me it's interesting. investors seem to be amplifying the potential positives, which

are tax cuts, reforms and deregulation. completely dismissing the negatives of tariffs and the impact of immigration. it is very much of a trust me trade, particularly into next week. the items that are more market negative are immediate and don't require congressional approval or involvement. the items that are more impactful from a positive standpoint require congress and other items. that will be harder and will take longer. we will be in this vacuum where the negativities are up front and we are waiting for the positivity. i'm surprised the markets are taking it so well. my suspicion is that the markets will continue to be quite volatile as a result. annmarie: jamie dimon leaned into these two risk, geopolitical and what happens on the fiscal front. he talks about inflation basically staying and persisting for some time.

do you foresee that under a trump administration? greg: i do. everywhere i look i see more inflation, not less. even though the cpi print is important today, it almost misses the point because so much policy is on the changing that is potentially inflationary. you look at tariffs, it's inflationary. you look at the growth dynamics, it's inflationary. immigration policy becoming more restrictive, it's inflationary. we are out of the zone of disinflation. i think inflation will be stable to slightly higher. annmarie: the fed wants to get it at a 2% target. how far off are we from that? i don't see 2% anytime soon. 2% is a made-up number. there is no magic number around the 2%.

my strong suspicion is we will be above that 2% for quite some time. that's ok actually. if it comes with growth, the challenge is if you have this stagflation there he type of backdrop. that is the one we worry about -- stagflationary type of backed up. jonathan: would talk to your protege about strong corporate balance sheets. if you're expecting a more inflationary environment, do corporations have the power to pass on price hikes in the way they did a couple of years ago? greg: distant surprising. margins have been really sticky on the high side. i have been calling for margin decline for seven years or so now. i'm still waiting. i think you will see it come down. the pricing power is quite strong, quite real. my suspicion is that some of it will be absorbed through

margins. a lot of it will be passed on to consumers. consumers also have the option of moving away from those products into cheaper products and that is what we saw in the tariffs last time. jonathan: this will keep interest rates higher for longer, a phrase we mentioned was survive until 25. companies were trying to survive until 2025. the fed would cut rates and things will be ok. who is in trouble? what parts of fixed income would you not touch? greg: the challenge i find is that valuations are priced for perfection. i look at credit as an example. the credit markets are in pretty good shape fundamentally. balance sheets are strong. cash flows are high. you have parts of leverage in the system for sure. it points to a strong macro. my challenge is that it's priced that way and then some. i look at the fixed income

markets, at the equity markets and the concern i have is we are pricing in this productivity miracle, which is down the road and the immediacy of that impact is quite disappointing. jonathan: correct me if this is the wrong interpretation. you seem to have relative confidence in treasuries. is that fair or the wrong interpretation? greg: i slightly agree with that in a way. jonathan: i'm running with it. greg: that's why i'm here. my concern is that the credit spread you get is negatively coming back. if you are wrong around the economy, that benefit really goes away. the extra spread you are getting which is quite paltry, the richest decile we have seen in the past 30 years, you are not getting paid for that risk. all else equal, i would rather

have duration risk in my portfolio. to provides the balance. if things go pear-shaped economically, you have the duration. if you have duration in credit, you are fighting the weakness in the economy through the credit spreads and not getting that duration benefit. jonathan: smart. always good to see you. greg peters on fixed income. looking ahead the u.s. cpi inflation data 34 minutes away. four minutes time, numbers from citi. we will catch up with peter tchir, david kelly, and aditya bhave of bank of america global research. the third hour of "bloomberg surveillance" is just around the corner. ♪

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♪ >> we've had some reports on inflation expectations that weren't great. >> inflation is sticky, growth is strong. >> inflation will be sticky, we will basically be living with a high inflation target. >> slowly but surely it is heading close to 2%. >> what we are seeing right now is the biggest catch-up in history between soft and hard data.

announcer: this is "bloomberg serveillance" with jonathan ferro, lisa, and annmarie hordern. jonathan: in 30 minutes time we get u.s. inflation data, an absolutely stacked our ahead of us. equity futures at the moment elevated by one third of 1% on the s&p. the nasdaq one by zero point or. numbers from jp morgan, the outlook is good. numbers from goldman sachs, trading numbers absolutely stellar and just moments ago, numbers from citi.manas us: citi has delivered ficc sales trading at $3.48 billion. the estimate was just under three poin -- $3 billion which shows you the good volume you had in that fourth-quarter into the election and afterwards five act, $20 billion. this was the missing piece on the chessboard according to some

of the analysts, a slight promise by the bank just before christmas in terms of the narrative from there. mark mason hinted that this would be $20 million in a buyback. and investor banking revenue, that renaissance, that change enacted across this bank would be rewarded. the market was looking for 896. that is a comfortable reefer jane fraser. jonathan: thank you. citi up, sonali basak with us around the table. is that a clean sweep across the board? sonali: the numbers themselves are pre-decent. really strong results here in terms of net interest income as well, above expectations. what investors will also be looking at, remember this bank is in the middle of a turnaround story.

they did lower their return on a common equity targets. the new target for 2026 is expected to be between 10% and 11%. that used to be higher between 10% and 12%. 11% and 12%, so they are lowering that for next year. by comparison, goldman is expected to be bringing up above 14%. jp morgan puts up 17% like it is no problem every quarter. that is going to be the number for citigroup that investors are going to be looking to because really, with regulatory that citi still faces, how can they bring expenses in line to the probability up? annmarie: at least for the moment we are able to get some decent level of a rally despite the fact that they lower their return on tangible equity. mike mayo had said that he didn't think they would get to the 12% target until 2027. it's this something that

investors will be ok with, with jane fraser who is just so under pressure right now? >> maybe, because at least you know where they are going right now. they are giving credible targets while beating on expectations with the revenue they are bringing in if they are bringing in revenue and steadily beating, maybe it is ok. the point you made earlier about the models, the business models, they could take on less risk while they partner with private credit bring money in the door and gain client share. they have a new head of investment banking that will change the game for citigroup. but remember, the other story for this is they are the cheapest jp morgan goldman sachs eats trading well above two times book value. citigroup is still well below that but they have a gap to close it investors are looking for them to do it. jonathan: let me go through them just briefly. revenue for 2025, range of $83.5

billion. the estimate was $83.2 billion. net interest income to grow, modestly. does that do enough to offset this morning just rolling back the profit target just a little bit? >> the "modestly" part is a little hardwood jp morgan said they are going to bring in $1 billion more. they both have massive businesses. when you hear mark mason talk to journalists shortly but also both of them will talk to analysts soon, today see something different in terms of credit quality? are they more cautious than their large rival jp morgan? is part of this pressure international, if citigroup has that special concern that a lot of other banks don't have as much of? this is the question. jonathan: look out for more in about 55 minutes when she leads the show into the opening bell alongside matt miller. we spoke to you about 30 minutes ago.

you gave goldman sachs a+. what do citigroup get? >> i haven't seen the details of the return on equity now in the range, they took in $1 billion restructuring charge, so the ability possibly to reduce cost might be able to help them on our oe. they are also an event driven stock of the large banks. they are finally, this year we hope, moving to monetizing, selling in mexico, which was by far the largest consumer bank they had outside the u.s. so that is significant and event driven. they also have stable businesses with more transparency that is called services, it is treasury and trade solutions. a dominant position in the corporate treasury market. certainly they are more on the fixed income side vs. equity

across banking and trading. i think they are going to be fine, and there are still trading below the intangible book value, all of the gap has narrowed a bit. we need to see results improve through 2025, but i think myself and most analysts would advise they think that they can execute. jane fraser is still on course. annmarie: that gap maybe even narrowing more this morning. another headline that they see their expenses for 2025 slightly lower than the $3.8 billion. that is the high-end of the rains that they had already given to this market. does it concern you that they aren't bringing in expenses quicker in the midst of this restructuring? >> it ties in with my earlier point but what they are doing is reducing management layered and also realigning businesses that

weren't really responsive to the markets for customers. so i think it is a timing issue, and one where you will see accelerated improvement perhaps in the second half of the year, but you will see improvement. it just doesn't happen in one or two quarters. jonathan: appreciate your time. stock up by 3.6%. we had numbers of jp morgan, citi, goldman and wells fargo. tomorrow we hear from bank of america and morgan stanley. equity futures up just a little bit going into a huge data point in about 20 minutes time. coming up, we will catch up with peter tear and david kelley on why he thinks inflation will slowly tick lower, expecting the fed to stay on hold all year. we begin this hour with stocks 30, investors in waiting -- awaiting cpi.

what if markets reacted so poorly to payrolls because no one believed the data, but everyone believe that the fed will need to react to the data, for the fed is forced to rely on official data, but the data isn't reflective of reality? does that lead to policy mistakes? peter joins us now for more. i love this quote over the weekend. i shared it with the audience as we kicked off the training week. are you suggesting the number we got on friday overstate reality to mark -- overstate reality? >> i do think so. only four out of 75 were over 200 jobs, so they missed by a lot. so either we believe the official data is so much better, for the official data might be wrong and the trend for the last two years has been the data has been overstated especially in january and lori, so i think that is why we are in this awkward position. the economy doesn't feel that strong, but the fed seems to be

responding to that. jonathan: so good news is bad news. >> if you don't believe it. i think people are starting to believe cpi has been understated, so as it starts catching up, the fed is going to have to react to that. i think they've got themselves in this kind of quandary where they missed a lot of you go back into cpi, they missed housing on the way up because the official data time to reflect, they had been missing on the way that down and now it is all normalizing. everyone in the markets is trying to figure out what the economy really looks like and what is the data-dependent fed going to do if they are relying on the official data which people seem to question more and more? annmarie: isn't this a bit of hubris on the part of markets to think that they know the data better than the that does? why would the market have a better insight into within the federal reserve? would they not have some understanding that perhaps the data is skewed? >> perhaps 10 or 20 years ago

the bls had more computers than everyone else. these economists are using ai and all sorts of tools, whereas the bls has a lot of rules they have to follow. they chose to use covid in their seasonal adjustments. whenever i look at charts i tried to wipe out the covid years because it was so much noise. it's things like that but i think maybe people aren't bound by rules and are actually getting closer. adp, which shouldn't react pretty good real-time data came nowhere close to the official nfp either. those other questions i think everyone has to ask. the problem is even if you have the exact right number you are still going to have to trade off with the market comes up with. annmarie: how much noise is political uncertainty making? >> think a lot. a lot can change in the next two months. i think we probably have a bead on cpi, probably because i think people have been buying things at a potential tariffs, so you

are seeing demand full forward and we will go through a lot of information in the coming week of what is trump really want to do, what can he get done. in terms of tax cuts, people have been overplaying that a little bit. to me just keeping tax on is not a tax cut. if everyone is not going to change their spending, no one who i know is thinking i have to pay higher taxes. jonathan: to be fair it is a tax cut if i believe that four months ago taxes were going to go up. >> that is fair. and if they could get the salt deduction, that is an official tax cut. jonathan: you mentioned the bank earnings. the didi earnings call just ticked off of jp morgan and about an hour ago we said this call with be one third on the numbers, one third on the trump administration and one third on succession. jamie dimon had this to say. management changes don't change the succession timeline at all. i'm not familiar with the timeline. are you familiar for the timeline with succession of jp morgan? sonali: all i know is that he stopped saying five years.

there is no succession timeline. the note about this, he says i'm confused on who the next successor is if she takes her salt out of the race. jonathan: are we getting closer to the point where this becomes a problem? this is an individual widely celebrated by wall street. how close are we to this becoming an issue? sonali: speaking of inflation, we are in the second week of january, goldman sachs already, jp morgan and now changes at blackrock as well. people out the door and people up the ranks. you had better give them another title if you can't pay them a much more right now because right now people are asking for more and you have to keep the next generation happy if they can't rise as high as the ceo spot. jonathan: any more headlines, we will bring them to you. peter is going to be sticking with us, going through the cpi. inflation data is about 17 minutes away. equity futures higher on the s&p.

here your bloomberg green. yahaira: staying on the banks earnings season on wall street, kicking off on a high note, jp morgan traders scoring their biggest third-quarter hall ever while wells fargo beat estimates and forecasting an increase for 2025. goldman sachs earnings-per-share came in at $11.95 per share, much higher than $8.35 forecast area citigroup rounding out for the day posting market revenue that beat estimates and announcing a $20 billion stock buyback. shares are up 3.8% in the market. southern california face another night of extremely critical fire conditions due to high wind and minimal humidity, leaving 10 million people at risk. the fires have already claimed the lives of at least 24 people and have burned down more than 12,000 buildings including many homes. and the washington post reported elon musk won't be joined by jeff bezos and mark zuckerberg

at donald trump inauguration on monday. the three tech moguls will sit on the dais alongside former presidents, trump's family, cabinet picks and lawmakers according to a trump official who spoke to the paper on the condition of anonymity. that is your bloomberg green. jonathan: more in the next 30 minutes or so. up next, the morning calls and later, david kelly and bank of america reacting to cpi. more recently dropping their call for any rate cuts in 2025. that debate is just around the corner. from new york, this is bloomberg. ♪

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♪ jonathan: so this is the set up going into cpi in just a moment.

inflation data just around the corner. equity futures up by one third of 1%. yields lower by three basis points. the 10 year, 475.75. time now for some morning calls. bank of america cutting its price target on blackrock, citing declining month over month net flows. stockstill posited by 3.2%. second call from jp morgan raising its price target saying it is any good place to hide if the macro narrative turns worse. that stock is up by 0.1% and finally, barclays raising its price target to three and 25 saying it's narrative command has gone in the hyperdrive is u.s. election. that stock is up by another three quarters of 1%. inflation data just around the corner and inauguration five days away, peter is still with us. inauguration is for many people the most important data point of the month. what kind of changes are you expecting on day one? >> markets might be a little

complacent on the tariff slide. for people who worked under the past trump administration he really does feel that xi did not live up to his promise so there is a degree of caution and a lack of trust, so i think we are going to see a little bit more bumping us from the tariffs, so that is why negative. on the immigration side i'm fairly comfortable trump is going to go more for what we are calling easy wins. identify targets something like a roosevelt hotel that has grown onto a life of its own, the criminal organizations and some of these cities and law and order. we don't see this evolving into some sort of door kicking, pulling black restaurants. i think he's been told by a lot of small business people leave good migrants alone, let them work, so going for high-profile wins. i don't think that is going to be too disruptive and ethically see some good news on the geopolitical front. israel has prosecuted the war so well that from the military

standpoint, we think there's a possibility, and the rest of the middle east is really trying to move on to westernize their economy and i think there is a decent chance he pulls off some sort of negotiated settlement with russia and ukraine. jonathan: trade, immigration, and geopolitics. first of all, who's approached you think the incoming president is going to run with, the treasury secretary scott bessent , incrementally negotiate month on month, what kind of approach are you expecting? >> part of this depends how many easy wins he gets. some easy immigration winning easy on, maybe he can afford that. one thing we've been watching very closely is his change on tiktok. to me, tiktok was very interesting because you had bipartisan agreement that china had to sell and trump seems to be walking that back a little bit. we all thought there was going to be this real degree of virtue between trump and sign a -- china and it is real concerning to me that all of a sudden he is saying tiktok might be ok because you can't tell whether

he likes it because it is good for him or whether he has not read the riot act once national security truly gets in. annmarie: tiktok making a huge splash this weekend, potentially just pulling the plug. how much is that a negotiating tool for the chinese based on our reporting that they are willing to hand over the reins if it is elon musk and handpick who could potentially take on this company with trump trade negotiations? >> of all people i think elon musk would be great but do you want him to be in control of yet another media outlet? they are throwing a wrench into this. it's kind of interesting. that is what we are really watching. in the end we start seeing more pressure on china that once he becomes president, once he is every single day forth to listen to national security people, i think we redevelop that friction and the things that biden has been doing these last few weeks in terms of chips, i think that just continues. i think there's going to be real pressure with us and china.

i don't think that is getting better. we might get some short-term deals that let that work but i think longer term china is trying to work with the autocratic resources to sell their brands and we are separated from them and we are going to bring a lot of things home and we are going to do a lot of not just drill baby drill, but refine, baby, refine. china still process is over 90% of the world minerals. we have to have a decent subset of that done domestically or with close friends. annmarie: as we get the various headlines of him going after china, of the tariffs, how do you understand the market's ability to actually react and absorb it? the moment it is a market that has been interpreting things as positive. 2%-5% incremental increases and says this is a good thing. is this a market that will continue to discount any of the negativity? >> the bond market has been getting worse every day, looking

at some of these things. you're starting to see some of the value come through. you are going to get increased volatility and bonds and equities. trump likes to create noise. anytime you think things are going to be really smooth, expect noise. anytime you expect a disaster, expect some reassuring comments. just expect trump to the unexpected if that makes any sense. jonathan: what is your favorite investment idea off the back of all this? >> anything that is going to be part of this refining process or processing. and a lot of the big equipment manufacturers. i do like an overweening commercial real estate. commercial real estate is going to be one of the big beneficiaries of this whole year. by the end this year we are

going to before, 4.5 days. there is this huge push in what i like to see is we to law and order. shoplifting is now a crime being punished again. we see mayor adams change a lot. to me, every federal employee this still work from home. must will change that. watch for a resurgence in downtown d.c. as those buildings will start filling up. the bottom floors will start reopening with starbucks and all the other stores that go in there. jonathan: so you see a net positive. >> i do. in two years we are going to forget a lot of this work from home type thing and again i think it's even coming with younger employees. they want to be mentor. they are realizing it is hard to have career growth if i'm not in the office. jonathan: we are seeing this across various companies right now. do you think it is ending virtue signaling or replacing it with a kind of different virtue

signaling or actually getting back to core companies? >> every ceo was pounding on the table and being told by hr you can't do that, people will quit. i think this has just been pent up. no ceo or very few ceos have wanted this to go on. i think san fran is going to be a slightly different area only because those companies in and around their, they benefit from the work from home, so i'm not sure they are going to push people to the office. i am in little bit worried because i think on rates we are not going to get as much data on commercial real estate and some of the property still to revalue but i think that is going to be the big surprise. everyone pushes for this work from home office, you see around here the bottom floors start reopening. i'm excited for that. jonathan: two ceo's, one is the head of hr, one of the actual ceo. annmarie: in 2025 the hr ceo is

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♪ jonathan: caret comes, the big data point of the week, u.s. inflation data just around the corner. going into what your scores look like, futures positive by 0.4%. the nasdaq 100 up by a similar amount, 0.37. in the bond market after a consecutive days, eight day run of yields not dropping, they are dropping this morning by five basis points. your economic data looks like this. here is mike mckee. mike: looks like economists have done their jobs again because we are coming in almost paying on the numbers with cpi up 4/10 during the month of december. that is higher than november, and it is right on with the consensus year-over-year basis putting us in 2.9%, up to tenths from november. the core is of 2/10, a little bit less than last month which is some good news for the fed.

three point 2% on the year-over-year basis, that is down from 3.3% the month before. overall, some reasonably decent news. let's take a quick look at some of the biggest numbers that we normally get in these things. gasoline prices down, or rather up by 4.4%. we saw that impact in the ppi as well. new vehicles up half of 1%. used cars up 1.2%, so a little bit lower than the 2% last month but still not great news. apparel of only 1/10 of 1% and the one number that everybody always wants to see is owners equivalent rent. what are we doing in terms of the overall housing market in owners equivalent rent up by just 3/10, higher than last month? maybe some of the progress goes away. i will let you see what is

happening in the markets and we can come back with more in terms of categories. jonathan: look forward to it, stay close. coming in just a bit softer than expected at 0.2% month over month excluding food and energy. and a move looks like this. talked about this yesterday when we got ppi, this market is so jittery around inflation, you get any sign that things are a little bit better than expected and we are off to the races. equities of more than 1% on the s&p. on the russell, the small caps up by 1.8. check out the bond market. yields dropping by seven basis wins, down eight. that unlocks a bit more dollar weakness, factor 103. and i'm thinking of you, the u.k., i'm always thinking of you in the u.k. yields a whole lot lower, inflation surprise to the downside a little bit earlier this morning. no doubt this move stateside just takes a little bit of

pressure off foreign authorities as well. down close annmarie: annmarie: to 14 basis points. they were already rallying because of that better cpi number, but the rally is taking on a life of its own. these numbers are so important. it is not just the u.k., it is also japan, it is a boj that seems like it wants to hike but in order to do that, it needs to have inflation. at least these kinds of figures coming in, a fed that isn't hiking rates. the yen up more than 1%. so many different international markets were waiting on these numbers, and they will have big consequences for central banks. jonathan: david kelly is with us around the table, good to see you. softer inflation prints in the months ahead? >> i think it is important to recognize that the year-over-year, two point nine, that is going to look a lot better by april because the first four months of last year

we saw pretty strong inflation. that makes it very easy to get down to the low twos by april and overall, this is not inflation for the economy. the economy was just choking along, steady growth, a little over 2% growth, and inflation gradually coming down. the economy itself looks pretty good right now. a lot coming up on the plate here, but overall feeling pretty good about it. jonathan: and seeing you talk about incoming policy changes. you've written about this. sources of inflation, labor, energy goods and services. where do you have the most confidence now? >> the most important is the labor market. american workers just one asked for a raise. it's remarkable. we saw production on supervisory workers, wages up 3.8%. we've got 8 million job openings. everybody knows it is hard to find a good employee and yet quitting rates are below where they were before the pandemic in either american business is

great at saying why they are not getting people arise or american workers are just woefully bad at asking for one. without that, you cannot get sustained inflation. annmarie: to that point on the labor market as we are digesting cpi, you have these individual announcements from companies when it comes to benefits about reducing hiring. not hiring, or even letting people go. do you look at that and say these are idiosyncratic company events, or does it suggest that something has indeed shifted in the labor market in terms of who has the power and overall represents some form of softness? >> i think it is good messaging. there's nothing like announcing layoffs to quiet down the labor force. i think it is a way of suppressing wage gains. there's no evidence in gdp. if you want to figure out where employment is going, look at where gdp has been. the last four quarters, the current in the current three, i

know this economy is capable of generating 150 to 175,000 jobs for month year. there really isn't any softness in terms of the overall economy, but they focus on margins and deficiencies, how to be more productive. if that means having to lay off a few people, that actually works in terms of maintaining cost control. annmarie: john mention energy and that was a big part of this inflation story for the sprint, 40%. overnight they were seeing they see a smaller glut next year. how concerned are you that fighting energy prices, higher oil and gasoline prices is going to be a concern for 2025? >> if you look at the global compass you got a global economy that is kind of mumbling forward. the u.s. is doing very well in places like india and italy doing well, but a lot of europe

and china are pretty soft here. that's not going to generate a lot of demand. meanwhile i think with the change of administration, you may get a key settlement in the middle east, which could dampen down tensions and concerns, and secondly you are going to have a very pro-drilling policy which could increase u.s. production and some deregulation which could help the energy sector. so overall i don't think energy prices for fossil fuels are likely to go up significantly over the next few years. jonathan: if you are just joining us, welcome to the program. inflation data dropped, coming in a little better than expected on core cpi. coming in at 0.2%, the median estimate was 0.3. of course, we are trading off the back of that downside surprise on core cpi and it is unlocking much lower bond yields across the curve.

the 10 year now lower by two basis points. that unlocks some dollar weakness and euro strength. and equities, italy they left to stocks. up by 1.4%. likewise on the nasdaq and on the russell, the small caps are absolutely flying. he talked about the incoming administration. you think it is high yields, and that was playing out in the bond market? >> absolutely because we don't know how far we can push the global bond market. friday we are going to get some new numbers from the congressional budget office. if we don't do any tax cuts, don't even extend the ones we've got, i think they will still show the debt to gdp ratio rising to about 125% of gdp by 2035. the budget deficit for this year

could come in over $2 trillion, and half of that is interest. that is a negative feedback loop actually pushing up the deficit. the question is how much can the government borrow from global capital markets at very cheap rates? annmarie: you said the most dangerous three words in economics are wait and see. what do you do in this environment where trump wants to be unpredictable, that is part of the policy. >> it works well in football, it works well in military maneuvers. it does not work well in macroeconomic management. that is why the fed spent so much time saying we are looking for 2% inflation and just tries to telegraph their punches all the time and that is really what you should do in macroeconomic management. so yes, i think there is uncertainty to this, absolutely because the problem is if you don't know what the administration is going to do in terms of taxation or deficits, what is the easiest thing for a business to say? we will just wait and see. but everybody decides to wait

and see, it is seen as not good. so i'm not concerned about the economy accelerating a lot this year at all. i would be more worried about decelerating. jonathan: to her point though, the incoming president values unpredictably. is this going to be a permanent feature. >> also we are going into uncharted territory. the biggest borrower in the world borrowing more than they've ever borrowed before. we are at a delicate point here because not only do we have to have a sensible plan in terms of revenues and spending, but we need a certain amount of pretty debility. if we push through a budget plan which suddenly pushes us to a $4 trillion deficit and everybody says it is ok, we are going to grow out of it, we are not going to grow out of it. we have to do some sensible budgeting here. yes, that could push of

long-term interest rate that is a feed left -- feedback loop that pushes the ratio up to 7%, 8%. those numbers make it very hard to find that. jonathan: david kelly of jp morgan. the right kind of downside surprise on cpi, unlocking it a rally in this equity market and driving yield a whole lot lower in fixed income. mike mckee is back with the details. mike: a lot of people care about this super court all of a sudden again, the housing number. that has gone down, up 4% on a year-over-year basis, but that is the second consecutive decline and it is significantly off its highest as that continues to move. we mention housing up 3/10 for owners equivalent rent, something people will keep an eye on because they want to see it going down. motor vehicle insurance was up 2/10 after a 1/10 decline last month, so not progress, but not

bad. airline fares part what is really going to catch eyes. of 3.7%. up about 8% in the ppi, and then just because we have to throw politics in for annmarie, egg praises were up, but not all that much. just 3.2%, down from 8.2% increase in november. jonathan: mike, thanks for the coverage, driving things on the economic side of things. bank of america global research. you made a call in the last week off the back of payrolls, no more rate cuts in 2025. does the data point this morning change things on the margin at all for you? >> i don't think it changes really. it is a good number, 0.2% on the core pce. we have consensus at about 26 basis points, this was even softer than that. what is different this month relative to previous months as we already have the ppi data.

so we can very quickly go from reacting to cpi that during the readthrough pce, which is what really matters at the end of the day. and if you look over the last three or four months we are basically running around 2.5% which is where the fed thinks we will be at the end of the year for the core pce. so by their own admission, inflation is stuck around 2.5% and then also on top of that the labor market seems to have stabilized, and that with the primary reason they were cutting. so we don't see any reason for them to keep cutting. annmarie: that same call you also said that should core pce coven somewhere about 3%, would start talking at heights. even if this data does not change her call when it comes to know cuts, does it at least move us further away from having to talk about hikes? >> i think that is fair. we were pretty upfront about the fact that the bar for hikes is still quite high, so getting to 3% is not a trivial thing.

even setting aside this latest data print, we are going to go down on the year-over-year rate over the next three months most likely to get the base affects are very favorable. to go from there to 3% is going to be very challenging. it will probably take some sort of shock which could get hikes really into the equation, but equally are point for now is getting from there to 2% looks quite challenging which is why we don't see a rationale for continued cuts. annmarie: is there some degree where we should look at these data points as a jumping off point? that is to say we are going to see the true inflation pat coming forward moviepass inauguration, when we hear different policy for donald trump. is this only the beginning of something that again could be an inflationary path? >> if possible. we will really have to see. he talked a lot about policy uncertainty as well in the previous segment and i think there is a lot of uncertainty so we will see how things play out.

we've made it clear we think the risks are skewed toward more inflationary policies, but nobody really knows what is actually going to happen. we will have to see how things play out. it is worth noting that last time around there were a lot of expectations that tariffs would be super inflationary but the dollar ended up absorbing a lot of the shock. there were a lot of exclusions, so that tariffs didn't actually end up being that inflationary. annmarie: going to david kelly's point, talking about this policy uncertainty, does this basically mean paralysis as you wait for this unpredictability, because the incoming and ministration want a lot of optionality when it comes to how they are going to enact some of these things like immigration policy and tariffs. >> right, sorry i lost you for a bit. i'm not sure the question was. annmarie: are we going to have economic paralysis, could the wait and see hurt the economy? >> we are pretty optimistic on the trajectory of the economy to be honest. economic paralysis is the our

outlook. we think we are going in with significant momentum. we are above consensus on growth for this year, primarily because of structural growth. we see productivity as a big driver of growth over the last couple of years. we think back to continue going forward. we think we can grow at 2.3% this year with tariffs maybe putting some downside on growth, but that equally if we do get some fiscal stimulus, back in be the growth environment. jonathan: appreciate your time as always. of the back of disinflation prints, changing the call in the last week, do not expect any interest rate cuts in 2025. this inflation print just makes a little more chance that we do get an interest rate cut through 2025. we are only about two weeks into this. this was a three-part story in january. payrolls really good, great news. cpi, downside surprise, that is two out of three.

the third drops on monday, january 20. the biggest data point of the month is inauguration and over the next few days, whether this move in equities higher, body yields lower sticks into next week when we are all expecting a lot of executive orders. annmarie: there's going to be a flurry of executive orders. one thing i think we still are waiting on, we are going to have executive orders on energy, immigration. what does dollar trump do when it comes to tariffs? there are two competing factions with this incoming administration, not even all of these plans have been put in front of him, so he has yet to make a decision. is it going to be what he, sans the campaign trail, like iteris, -- blanket tariffs, or is it going to be the incremental approach that scott bessent on this program has talked about? then your adversary lets you know when it is starting to bite and they are going to make a deal. >> and who is to say we are going to get that anytime soon?

i keep seeing commentary that this bond market is waiting for clarity and that we will get it when we get those executive orders coming through. unpredictability is a feature, not a bug of the trump policy outlook. if you are waiting for some kind of clarity that might be a problem and it is this idea that longer-term yields are going to continue to be higher because we are not getting the clarity anytime soon. jonathan: we are getting whipsawed data point to data point and we get another data point next week from the incoming president. and with a earlier this morning, inflation came in a little bit lower than expected. core inflation month over month, it comes at 0.2. the estimate was 0.3. much lower bond yields across the curve. the 10 year we are down by close to 10. off the back of that move pushing through foreign exchange, the dollar is weaker. in equities on the s&p 500 up by 1.6%, the russell is flying. as we sail the time, this is the

first move. it is the obvious move. let's see if it sticks into the closing bell later on this afternoon. let's get you an update on stories elsewhere. breaking news from apollo moments ago. yahaira: apollo announcing management changes this morning according to a company statement. the ceo agreed to a five-year contract extension. meanwhile, jim seltzer was elevated to president, which is a newly created role. the head of credit will take his place as copresident of the asset management business. meanwhile shares of the biggest u.s. banks are rising in the premarket after reporting better-than-expected fourth-quarter results. jp morgan triggered their biggest fourth-quarter hall ever while wells fargo boosted its net interest income forecast. goldman sachs earnings-per-share handily beating estimates and citigroup announcing a $20 billion buyback. and bloomberg news has learned that u.s. health officials plan

to ban the artificial food coloring red dye number three. the announcement could come as soon as today according to people familiar. it has been linked to cancer and is in products from candy to cold medicine. that is your brief. jonathan: check out apollo, that stock up by 3%, one of the best management teams on the street. a new five-year contract. >> this also comes after some speculation whether he would be going into the trump administration. this is the kind of succession planning make it's the market excited. maybe not ones like blackrock or jp morgan. jonathan: i wasn't going to name names, but you went there. at least this one is cleaner. setting you up for the day ahead, opening bell with equities up right now quite nicely. from new york, this is bloomberg.

♪ jonathan: if you are an equity poll and you woke up this morning asking for a couple of things, good outlook from jp morgan, record earnings from the traders over goldman sachs in the fourth quarter on the equity side of the business, solid numbers from wall street, you got that. then you asked for a little bit more. >> that is a great backdrop for risk, jane fraser had a high bar to deliver. stock just under 6%. it is the buyback which is there and in terms of the flight in the ointment, return on equity.

wells fargo cutting cost, the cost cuts are in the early stage. they come from $272,000 down. i leave you with a look at blackrock, the vacuum cleaner is on. they have sucked in assets under management, up 50% on the year, and that was lighter than estimates. jonathan: stock is up by 5% on blackrock. appreciate it. what a morning. more still to come. the calendar looks a little bit like this. tomorrow, more earnings from bank of america and morgan stanley, plus retail sales and another round of jobless claims, plus donald trump secretary nominee scott bessent on capitol hill for his hearing. look after that. on friday, more data, housing starts and building permits. inauguration on monday and the

world economic forum kicking off as well. the incoming president is going to be calling into the world economic forum from washington, d.c. >> it will be very challenging for him to get here considering he has this america first agenda. he's going to do all these executive orders and then probably lecture the global elite you will be hanging out with. jonathan: and then i will be asking him questions, how confident are you about your head? and the answer will depend on whether you're based in america or elsewhere. >> and you might just say actually we don't have enough information yet so it is a lot a very unbreakable optionality. jonathan: up next tomorrow morning, we catch up with cameron dawson of new age wealth, david leibowitz of jp morgan, frances donald of rbc and richard clarida. thank you for choosing bloomberg tv. ♪ at morgan stanley, old school hard work meets bold new thinking.

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matt: we are off to the races. 30 minutes until the start of trading. sonali: bloomberg's open interest starts right now. matt: a slowdown in consumer prices brings bats back at the fed will be able to cut rates. earnings season starts off with jp morgan, goldman sachs and wells fargo all reporting robust results and blackrock pulls in a record $641 billion in client cash. what larry fink saying that is the beginning. futures up, looking at 1.5 percent gains on s&p futur