2025 Market Uncertainty; Trump Tariff Proposals Spook Businesses
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Good morning. I'm Amy Morris. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin with the markets as 2024 draws to a close. Futures are lower as we close out the week. This comes a day after stocks were little changed on Wall Street. Still, for the year, the S&P 500 is up more than 26 percent and Nasdaq is higher by more than 33 percent. David Katz is president and chief investment officer at Matrix Asset Advisors.

We think that over the near term, there's more exuberance to come. The market is really charged on the day that it's happy. It's up a few hundred points on the day that it gets spooks. It's down a few hundred points. So we would not look at the short term trend as continuing. We do think things are going to change a little bit when you enter 2025. There are

big gains this year. So a lot of people can't sell stocks right now because they'd be paying a lot of taxes. That changes January 2nd. You have a new administration take office late in January. They expect to put a number of the policies they've talked about in place. We think the market could get spooked by that. So we would not follow the significant rally of the last few months and expect that to continue.

Matrix Asset Advisor CIO David Katz says while he expects some market exuberance, now is not the time to increase risk because he expects slower growth in the coming year.

Well, Amy, a big focus for investors in 2025 will be Fed monetary policy. At his last policy meeting of the year, Jay Powell signaled fewer rate cuts in 2025. Drew Mattis, chief market strategist at MetLife Investment Management, says the Fed is in a tricky position. You never want to be too close to the edge if you're the Federal Reserve. And I don't understand this fixation on kind of ratifying market expectations, uh,

which quite frankly are absurd at times, right? I mean, markets get ahead of themselves. And then particularly with regard to the Fed, the last thing you want to do is ratify an expectation for something now that's going to create an even worse expectation later.

And that's the game the Fed is playing right now. And it's one that could end badly, particularly if inflation reaccelerates for a period of time. Matt Livestream, Mattis, says the Fed may be forced to actually raise rates next year.

Investors are also looking ahead to some economic data coming out later this morning. We get those details from Bloomberg's Denise Pellegrini. Economists say advanced retail inventories for November likely rose three-tenths of a percent, following just a one-tenth percent gain in October. One thing to watch for is whether motor vehicles drove the inventory build again. As more cars sit on dealer lots, we'll also get government numbers on wholesale inventories increasing.

Economists expect the build along the manufacturing line eased slightly to just one-tenth of a percent month-on-month. That could suggest a slight economic pickup, but the numbers could also be skewed by buying or hoarding ahead of possible new Trump tariffs. Denise Pellegrini, Bloomberg Radio.

All right, Denise, thank you. In Asia, Nissan Motor shares declined the most since August due to investor concern over the terms of its planned deal with Honda Motor. At one point, the stock tumbled as much as 15% before pairing its loss to nearly 8%. The ailing Japanese automaker aims to establish and list a joint holding company with Honda by August 2026. The exact terms of the arrangement are yet to be decided.

And now the latest on that Azerbaijan plane crash. Media reports say it was hit by the Russia air defense. 38 people were killed. The plane was en route from Azerbaijan to Russia's city of Grozny when it changed course on Christmas Day. Neither Russia nor Azerbaijan offered any suggestions of what might have happened to cause the crash. We get more from Bloomberg senior reporter Henry Mayer. No one is suggesting that it was deliberately attacked.

In the area where this happened, which is in the vicinity of Grozny, the capital of the southern Russian region of Chechnya, as the plane was approaching, that is when the incident happened. And at that time, there was a lot of Ukrainian drone activity in the area. So it looks very much like

This was a mistake, but of course, Azerbaijan now wants some kind of an explanation from Russia. And also, you know, once the plane came under fire, it was not allowed to land at a nearby Russian airport, which could have actually saved lives. Bloomberg senior reporter Henry Mayer says 29 people survived.

The turmoil in South Korean politics continues, Amy. The country's parliament has voted to impeach acting President Han Deok-soo. It's the latest blow to a government already reeling after President Yun Suk-yool's suspension less than two weeks ago for his martial law decree. The impeachment was sparked by Han's refusal to appoint three judges to the Constitutional Court, which could finalize President Yun Suk-yool's removal from power.

President-elect Donald Trump's threat of tariffs has set off a global supply chain freakout. The uncertainty and potential costs of those tariffs are causing widespread concerns, with many businesses expecting to pass on increased costs to customers and bracing for higher expenses and potential disruptions.

Businesses worldwide are rushing to prepare for potential tariffs and trade wars, leading to a surge in imports and supply chain disruptions. Companies are taking preemptive measures, such as front-loading orders, seeking new suppliers, and renegotiating terms.

Malami, the business world mourning the death of Richard Parsons this morning. The executive was dubbed Captain Emergency for his record of stabilizing ailing companies. We get more with Bloomberg's Charlie Pellett. Those companies included AOL Time Warner, Citigroup, and Dime Savings Bank of New York.

Parsons was 76. He died at his home in Manhattan. The New York Times said the cause of death was bone cancer. Parsons was named chairman of CBS in September of 2018. He resigned less than one month later, citing complications from multiple myeloma, a blood cancer. Parsons was also chairman of the Rockefeller Foundation. In New York, Charlie Pellett, Bloomberg Radio.

It's time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. New York City Mayor Eric Adams is suggesting federal prosecutors take the case of accused subway arsonist Sebastian Cepeda.

Police say the suspect killed a woman by setting her on fire on the subway last week. The move indicates the mayor's increasing willingness to work with federal law officials to remove migrants charged with crimes from the city. The woman's identity remains unknown. However, a vigil was held yesterday at the subway station in Coney Island. Reverend Kevin McCall with Crisis Action Network criticized onlookers for not helping the woman. The slogan in this...

City is, if you see something, say something. But no one said nothing. No one did nothing. They just watched this young lady burn on fire alive. Reverend Kevin McCall with Crisis Action Network. A month after a stowaway on a Delta Airlines flight from New York to Paris, we're learning another attempt has been foiled in Seattle this week after a passenger got on board a flight to Honolulu without a ticket.

Officials say the stowaway got off the plane and was eventually tracked down inside an airport bathroom. The TSA confirms the passenger was screened at a security checkpoint, but was somehow able to bypass the identity verification process and make it onto the plane without a boarding pass. Aviation analyst John Nance. This has got to stop because there is a very definite security risk in having people get aboard without a ticket.

Aviation analyst John Nance spoke to ABC. Parts of Texas, Louisiana and Arkansas are under severe weather watches as the National Weather Service predicts a storm system in the Gulf of Mexico could bring high winds, hail and possible tornadoes to the region. More than 100 flights were delayed and dozens more were canceled Thursday at airports in Dallas and Houston.

Finally, tonight's Mega Millions lottery jackpot drawing is now worth over $1 billion. A jackpot that's been steadily growing since September. Many are ready to take their chance tonight like this man. If I win, I'm buying people out. I'm buying businesses. I'm buying up blocks. I'm buying an island.

Oh, my. Global news 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr. This is Bloomberg, Karen. I'm sure I can find an old toaster to sell them. All right, Michael Barr. Thank you. Thanks, Michael Barr. As criminal ransomware and state-sponsored attacks continue to escalate, a bolted-on approach to cybersecurity isn't cutting it. In fact, the more security tools an organization uses, the more security incidents it has.

According to new research from Google, companies that use 10 or more security tools average 14 incidents per year. That's more than double the amount for those that use fewer than 10 tools. To proactively manage cyber attacks, organizations should invest in productivity tools across email, documents, and video conferencing that are secure by design, hopping off the treadmill of software patching and lightening the load on their embattled IT and cybersecurity teams.

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Take your business further at T-Mobile.com slash now. Time now for the Bloomberg Sports Update. It's brought to you by Tri-State Audi. We bring in Dan Schwarzman for that. Dan, good morning. Good morning, Karen. The Seahawks keeping their playoff hopes alive with a big win in Chicago. Throws it up in the air and it is intercepted by Reek Woolman.

That's courtesy of Amazon Prime. With that interception, the Seahawks finishing off a 6-3 win over the Bears to improve to 9-7. Seattle getting two field goals from Jason Myers. Seahawks will be rooting for the Cardinals to beat the Rams on Saturday before the head-to-head matchup with L.A. in a Week 18 game. And that, of course, will determine if they make the playoffs or not. Cowboys shut down wide receiver CeeDee Lamb for the final two games. The All-Pro dealing with a sprained AC joint in his shoulder.

NBA action last night. Nets rallying in the fourth quarter to knock off the Bucs in Milwaukee, 113-105. Bucs are playing without stars Giannis Antetokounmpo or Damian Lillard. Elsewhere, Wizards knocking off the Hornets at home, 113-110, while the Heat slip past the Magic, 89-88. Dallas Mavericks announcing some bad news on guard Luka Doncic. As the team says, the All-Star will be re-evaluated in a month after sustaining a left calf strain in the Christmas Day loss to the Minnesota Timberwolves.

Both the NFL and the NBA did well ratings-wise on Christmas. According to Nielsen and the NFL, 65 million viewers in the U.S. tuned in to watch at least a minute of one of the two games. The Ravens-Texans game averaged 24.3 million viewers, while the Chiefs-Steelers averaged 24.1 million. The two games becoming the two most streamed games in league history. The NBA also doing well with its five-game schedule, averaging 5.25 million viewers per game.

its best holiday numbers in five years. NHL resuming its regular season after the holiday break with the Devils hosting the Hurricanes while the Bruins are on the road at the Blue Jackets. That's your Bloomberg Sports Update. I'm Dan Schwartzman, Karen and Amy. Coast to coast on Bloomberg Radio. Nationwide on Sirius XM and around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak.

And we are watching the markets as we are just days away from 2025. Want to know what to expect? Jeffrey, you of BNY remains cautious and he joins us now. Jeffrey, always a pleasure. Thanks for joining us. You are cautious, but are you bearish?

Not bearish. I'm just cautious. And the only reason for caution is positioning. We've been specifying this for quite some time now. If I look at the dollar, if I look at domestic buying of U.S. treasuries, if I look at equity positioning, the fact is people are really loaded up on U.S. exceptionalism. Not saying that shouldn't be the case right now, wait and see approach. But do you really want to be adding to already extendable

positioning, heading into year end and early phases of next year with new policies coming through. I think that's where the need for caution is, you know, rather than being bearish on the economy or anything. Right. Those new policies are coming in with a new administration that's coming in. There may be some uncertainty around that. So how do you work around that?

Well, it really depends on what we're looking for. Firstly, on the tariff side of things, I think that's pretty much in the price. A lot of economies, they are dealing with it. Your own reporting specified in advance of that as well. And could there be deals to be done? Will things be better than expected? I think that's much more manageable because we did get a dose of that a couple of years ago during the first Trump administration. Secondly, which is probably more important,

are problematic in terms of positioning. Again, is the US's fiscal position. That's where we need to look at a longer term plan. There's need for government efficiency, of course, but at the same time, something along the lines of debt sustainability. If markets were concerned about France over the last few months or so and its budget trajectory, the OECD notes that probably the only large economy with a worse budget track than France is actually in the US. And given the level of positioning

globally in the treasury market right now, and probably the lack of buyers up ahead because global surpluses are coming down, especially amongst the Asian savers. That's where, in terms of policies, we really need a closer look. Now, while there is some uncertainty, as you mentioned, President-elect Trump has been there before, and he's sort of foreshadowed what he wants to do. He's already said he wants tariffs in place, not small ones either. So how would you bake that into your positioning?

I think we need to look at the individual markets. If I look at, say, like China, for example, markets are very, very light in terms of their position, not just in China, but APAC in general. If I look at Canada, if I look at Mexico, there's been quite a bit of hedging coming through as well. If I look at the euro, euro hedging by our international clients, many of which are based in the US, that's at the highest levels, the highest levels of hedges against the euro since 2002. And back then, euro dollar was at 8%.

I repeat, at 0.8 or so. That's when the ECB was trying to prop up the euro. But then Europe reformed by itself. We had the Hartz IV reforms under Schröder. And guess what? In a few years, euro-dollar 160.

OK, so I actually see this less about the US, but more as an opportunity for Europe due to external pressures, an opportunity for them to change again, just as was the case 20 years ago. And if there's more of a domestic component rather than exports, then tariffs, big deal. Europe can manage by itself and certainly has the funds to do so. Well, we have about a minute here. What are you looking for from the central bank?

well from the central bank ecb more cuts um to come i think there will be a chance of a 50 basis points at one of the coming meetings also i think if i look at the bank of england for example markets are way too um i would say less than bear less dovish or even hawkish i think governor bailey's one cut per quarter view uh from a few weeks ago that still stands now from the fed um however uh the last cut may be the last one for a while market pricing you know right now very cautious season i think that's something that we can live with them for the time being but

Really, apart from the U.S., everywhere else, especially in the developed world, it's more easing up ahead and probably more the markets are pricing it. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning.

on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121. Plus, listen coast-to-coast on the Bloomberg Business app now with Apple CarPlay and Apple Music.

And Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Amy Morris. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

From hobby farmers to weekend gardeners and everyone in between, Tractor Supply trusts 5G solutions from T-Mobile for Business to make shopping more personal. Together, we're connecting over 2,200 stores with 5G business internet and powering AI so team members can match shoppers with products faster. You're all set. This is enriching customer experience. This is Tractor Supply with T-Mobile for Business. Take your business further at T-Mobile.com slash now.

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