On today's podcast:

1) The world’s debt market is on track to post its biggest two-month gain on record as traders ramp up expectations that central banks everywhere will slash interest rates next year.

2) Apple Inc. said it would put its latest smartwatch models back on sale in its US retail stores Wednesday after it won a court ruling in a patent fight, providing a quick reprieve for its $17 billion business.

3) One of Cathie Wood’s exchange-traded funds has executed a massive shake-up in its Bitcoin-related holdings as the cryptocurrency rounds out a blockbuster year.

Full transcript:

Good morning. I'm John Tucker and I'm Karen Moscow. Here are the stories we're following today, the massive year and rally in bonds. In fact, the world's debt market on track to post its biggest two month gain on record. Bloomberg's Cretigoda has more other reasons behind the move. It's a complete when eighty in the markets. As investors around the world become more and more confident that inflation is actually in the rare view mirror, it's creating a massive bet in the bond market that is really unseen historically. The momentum that you're seeing in just the last two months has really created this idea that maybe you might see rates go even lower in twenty twenty four, not just from the Federal Reserve, but from market participants as well. Swaps, the measure through which traders make bets on the Federal Reserve and other central banks around the world, well, they're pricing about one hundred and fifty basis points of rate cuts right here in the United States and the UK next year. It's almost one hundred and seventy five basis points in the Eurozone. As investor confidence bills, the central banks have done their job, RIGHTO brigs Quitty Goop, who says the Bloomberg Global Aggregate Total return indexes risen nearly ten percent over November and December. Well, we turned to equities now, John, and European stocks are hovering near a two year high after the rally seen across Wall Street in Asian markets, and we go to London and get the latest with daybreak, europe banker Stephen Carroll, Stephen, thanks, Karen and John. European markets started out the day with gains, but that positive sentiment has petered out for now. The stock six hundred has dipped into the red, along with the benchmarks in London, Paris and Frankfurt. Energy among the worst performing sectors, Oil majors falling as crude prices retreat. Now, trading volumes across Europe are less than half their thirty day average, but the European benchmark is up almost thirteen percent this year, and it's still hovering at its highest level since January twenty twenty two. In London, Stephen Carrol Bloomberg Radio, all right, thanks Steven. Oil retreating from a one month high. Traders say key technical gauges their flashing weakness amid thin holiday trading, supply risk posed by Yemen based hoothy rebels haven't abated, even as incidents in the Red Seas start to slow down. The shipping giant hapag Lloyd says it will keep its vessels away from the Red Sea, despite the launch of a US led task force to protect the key trade route. Sylvia Westall is Bloomberg's managing editor in the Middle East. This idea of having a protection for shipping in this region, it actually already exists, as actually already forces based there. So I think some of the companies are a bit confused as to what it will really entail. Bloomberg's managing editor, Sylvia Westall says spot rates for a container shipping have jumped twenty six percent over the past four weeks. As we check Brent Crue, the international benchmark, it is down thirty one cents at seventy nine thirty four a barrel, and John Bitcoin is about forty three thousand dollars. It's been quite a run for the cryptocurrency we get more with the Bloomberg's Eddie Vanderwald prices went up from about sixteen thousand in the end of last year to more than forty three thousand at the moment. That's a rally of one hundred sixty percent, which you know, in bitcoin land is not uncommon. We do see these big up moves, but usually that is you know, associated with a lot of excitement and a lot of media attention and so on. We haven't seen that this year. What we are seeing though, is as the expectation of lower rates in the US and elsewhere probably comes to fruition. Next year, money becomes cheaper and there's more speculative money around, and some of that can flow into into assets like bitcoin, and Bloombergy Eddy Vanderwald says optimism over our possible sec approved bitcoin ETF is also helping fuel gains. Meanwhile, Caaren Well Kathy Woods Exchange Traded Funds has executed a massive shakeup in its bitcoin related holdings. More from Bloomberg's Jeff Bellinger. The Arc Next Generation Internet ETF sold all of its remaining shares of the Grayscale Bitcoin Trust, according to data compiled by Bloomberg, and on the same day, our investment management data show that it bought more than four point three million shares of pro Shares Bitcoin Strategy ETF, making it the fund's second biggest holder. Wood has been trimming her holdings in the Grayscale Bitcoin Trust in recent months, even as bitcoin rose to its highest levels since April of twenty twenty two. Jeff Bellinger Bloomberg Radio, All right, Jeff, thanks well. Apple putting its latest smart watch models back on sale and its US retail stores a's after it went accord ruling pausing a US sales ban on its newest models. Mark German covers Apple for Bloomberg in California and sin So, what happens now the Apple stores in the US did, about two hundred and seventy of them began resuming sales of the Series nine and Ultra TiO that are at the very center of this patent dispute with Massoow Thursday about noon Pacific time, the Apple Watch Ultra TiO in series line will return to the online stores. You could buy the model that you'd like from their online store and then staring on Saturday, all Apple stores in the US nationwide will begin car the alteratt series sign again, and Bloomberg's Mark German says the ruling now buys the company sometime and it's ongoing patent dispute with medical device maker Massimo. In geopolitical news, the Biden administration that is announced to another aid package for Ukraine. Bloomberg's Baxter has the story. It is two hundred and fifty million dollars in weapons and equipment and the final package of the year. It's drawn from Pentagon stocks, including ammunition for artillery and air defense systems, as well as anti armor munitions and more than fifteen million rounds of small arms ammunition. The DoD as well says that Javelin anti tank systems and Stinger Ata aircraft missiles will be offered. Secretary of State Anthony Blinken, in a statement, said it is imperative the Congress act swiftly to advance our the US national security interests by helping Ukraine defend itself. Ed Baxter Bloomberg Radio. All right, John, thanks time now for a look at some of the other stories making new around the world. And from that we're joined by Bloomberg's Amy Morris Samy. Good morning, Good morning, Karen. A coalition of mayors is asking the federal government to provide more support to manage the influx of migrants arriving by bus or plane from Texas. Mayors from New York City, Denver, and Chicago all say they need help as Texas Governor Greg Abbott sends more migrants to Democratic led cities. Chicago Mayor Brandon Johnson all of our cities have reached a point where we are either close to capacity or nearly out of room. Without significant intervention from the federal government, this mission will not be sustained. In addition, New York City Mayor Eric Adams has issued an executive order which requires thirty two hours notice from charter bus companies transporting migrants to the city. President Biden is justifying US attacks on targets in Iraq. Bloomberg's Nancy Lyons reports. In a letter to congressional leaders, President Biden says that Christmas Day attacks on three installations linked to an Iran backed insurgent group were necessary to prevent further attacks on US military personnel. Biden writes that the strikes were intended to quote degrade, and disrupt attacks on the US and its partners, and to deter Tehran's proxy forces from conducting further attacks. The US and its allies are trying to keep the Israel Hamas conflict from escalating into a broader war. In Washington, Nancy lyons Bloomberg Radio residential candidate Nikki Haley is refusing to say that slavery led to the Civil War. During a New Hampshire town hall yesterday, a voter asked Haley what was the cause of the Civil War, and the former South Carolina governor and ambassador to the UN gave a lengthy response about the role of government and the rights of the people, but she never mentioned slavery. What do you want me to say about slavery? I love, argued my question. Next question, the voter who asked the questions that he found it astonishing slavery wasn't even mentioned. US Representative Lauren Bobert says she's changing districts in Colorado. It's the right move for me personally, and it's the right decision for those who support our conservative movements. Alberta Republican announced on Facebook she'll move to the fourth congressional district, trying for the seat vacated by Ken Buck, who won't be seeking reelection. Global News twenty four hours a day and whenever you want it with Bloomberg News. Now, I'm Ami Morris. This is Bloomberg Karen right Amy, thank you. What we do bring you news throughout the day right here on Bloomberg Radio. But now, as Amy said, you can get the latest news on demand, and that means whenever you want it. Just subscribe to Bloomberg News Now to get the latest headlines at a click of a button. Get informed on your schedule. You can listen and subscribe to Bloomberg News Now on the Bloomberg Business app, Bloomberg dot com plus apples, Spotify, and anywhere else you get your podcasts. Time now for the Bloomberg Sports Update. Here's Dan Schwartzman. Dan, Good morning, Karen Stunner in Denver. As the Broncos have decided that nine time Pro Bowl quarterback Russell Wilson will be benched starting a Sunday's game against the LA Chargers, Jared Stidham will get the start. Head coach Sean Payton says it's all about getting a spark on offense, rather than get into the specifics, because I think that would be unfair today. It's more about what we're We weren't doing effectively enough offensively, and you know, when we were getting two or three turnovers. It's one thing, but you know. Ultimately our job is to get the ball in the end zone, and we've got to be more efficient doing that, all of us. That's Curtisyebroncos dot Com. Wilson starts the first year of a five year, two hundred and forty two point six million dollar extension next year at thirty nine million bit guaranteed for twenty twenty four. If Wilson can't pass a physical in early March, thirty seven million more will be guaranteed. Week seventeen of the NFL season gets under way, the Jets on the road in Cleveland facing the Browns. Cleveland is ten and five, Jets come in at six and nine. Trevor Simeon gets a star for New York Joe Flaco. He is a quarterback for the Browns. The finalist for the Pro Football Hall of Fame class at twenty twenty four half in announced. First time candidates include Julius Peppers and Antonio Gates. In the NBA, the Philadelphia seventy six ers remain hot. They knock off the Magic in Orlando one twelve to ninety two. Meanwhile, Milwaukee a big one forty four to one twenty two win over the Brooklyn Netsianna Santa Tocompo thirty two points, ten rebounds and eight assists. That's your Bloomberg Sports Update. I'm Dan Schwartzman from coast to coast, from New York to San Francisco, Boston to Washington, DC, nationwide on Syrias, exam, the Bloomberg Business app and Bloomberg dot Com. This is Bloomberg day Break, and I'm John Tucker. Good morning. The world's bomb market on track to post its biggest two month game on record. Meantime, SMP five hundred flirting with a record. Let's get you set up for the trading day ahead. We're joined now by Tim Craighead Bloomberg Intelligence Senior equities strategists. Hey, equities guy, Let's start off with Yeah, the debt market. Investors seem convinced central banks have won their battle against inflation. What could possibly go wrong? Tim, Well, I'll tell you it's very apropos to start off with a bond market if you're talking talking about stocks, because that's what striving stocks right now. There is no doubt about it. To the degree that we've seen, whether it's US, whether it's Europe, around the globe, a big rally since late October he had equities. It's all about bond markets. And if you look at expectations of central bank policy and use the FED as the bell weather, we've gone from expecting no rate cuts over the course of the next six to twelve months to where now you're looking at fifty basis points in six months and one hundred basis points in a year. And this is the issue. John. If this doesn't play through, if we have a change in reference for some inflation spike or something along those lines over the course in the next month or two, then this run we've had into year end across all asset classes is due for one of these abrupt, volatile changes like we saw a couple of times in twenty twenty three. That's the risk. Hey, looking back on history, how unusual is it to see bonds and equities rally at the same time and what does that indicate. It is interesting in that if you look whether it's in the post pandemic period where you can really dig into this microscopically over or longer term, quite often you do see one versus the other. And it's the same in the equities market, where you see either earnings driving equities, or you see valuation driving equities, and you know the corollary there is valuations quite often in stocks are driven by what's transpiring and interest rates. And you know the point that you're making here, it is unusual. We've seen stocks and bonds rip over the course of the past two months, and granted we're from a depressed level where you remember back into the depths of the cell off in October, it was all about uh longer for a higher for longer from a from a policy rate standpoint, and then all of a sudden we started seeing better inflation prints and that whole psychology changed, which allowed the run up in bonds, which allowed the run up and valuation. You look at the pe on either US or European markets and they've they've ramped up a couple of points. That's a big move, and it's all because of the change in bonds. So I think you can find narrow points of time like this where you see a big swing and interest rates that does have an immediate impact in the equities market. And it's all about the valuation connection, all right, specific to equities, what right now is the bar for earnings moving forward? It's a pretty low barrow, I would imagine in the US. Yeah, and I think you're right, and it is a difference between the US and the European markets. From a US perspective, we had an earnings recession through late twenty two into first half of twenty three, and we've started to see positive revisions coming over the last six months as we went through the mid year earning season into the third quarter reporting season, and estimates are still ticking up in the US. If you look over here where I'm at in London and Europe, we actually had much better earnings performance over the course of twenty two into the first half of twenty three. You'd be surprised. If you look to the chart on forward earnings expectations for Europe versus the US. Europe far outperformed over the course of the last eighteen months, but the last three months it started to change. We've had negative estimate revisions here in Europe and that's likely to continue into the next year. We think that's a big risk factor for the first half of the year where we are seeing a tick up in the US, and a lot of that's because of the TMT space, which was really the cause of the earnings, recession in the US starting to actually come alive, and we don't have that crutch. Here. You're listening to Bloomberg Daybreak today, your morning brief. The story is making news from Wall Street to watch Hington and beyond. Look for us on your podcast feed at six am Eastern each morning, on Apple, Spotify, and anywhere else you get your podcasts. You can also listen live each morning starting at five am Wall Street time on Bloomberg eleven three to zero in New York, Bloomberg ninety nine one in Washington, Bloomberg one O six one in Boston, and Bloomberg nine sixty in San Francisco. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty plus. Listen coast to coast on the Bloomberg Business app, serious XM, thee iHeartRadio app, and on Bloomberg dot Com. I'm John Tucker and I'm Karen Moscow. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak. He

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