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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Daybreak Europe podcast. Good morning, It's Wednesday, the thirty first

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Speaker 1: of December. I'm Stephen Carroll in London. Coming up today.

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Speaker 1: Stock markets close in on another bumper year of gains

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Speaker 1: as analysts predict further upside for twenty twenty six. Channel

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Speaker 1: tunnel troubles, Eurostar delays continue as passengers are forced to

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Speaker 1: spend and I trapped on trains. Plus why Bulgaria's big

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Speaker 1: euro moment faces being tarnished by political turmoil. Let's start

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Speaker 1: with the roundup of our top stories. Global equities are

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Speaker 1: a touchweaker on the final trading day of twenty twenty five,

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Speaker 1: after a year that saw markets ride out a series

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Speaker 1: of shocks to deliver repeated record highs. The MSCI All

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Speaker 1: Country World Index has risen by more than twenty percent

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Speaker 1: this year, supported by interest rate cuts and huge bets

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Speaker 1: on AI. Precious metals also had a bumper year. Gold

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Speaker 1: and silver boat set for their best annual gains since

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Speaker 1: nineteen seventy nine. Silver is more than one hundred and

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Speaker 1: forty percent surge, standing out among global assets, but according

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Speaker 1: to Anna Rathbun CEO and founder of Grenadilla Advisory. There

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Speaker 1: are three areas of concern heading into the new trading year.

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Speaker 2: Tariffs, We're not done yet it certainly with China, our

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Speaker 2: largest trading partner used to be. Secondly, I think we

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Speaker 2: have to pay attention to the growth factor of the

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Speaker 2: US economy. The uptick in the unemployment rate that we

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Speaker 2: saw last I know a lot of people took it

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Speaker 2: with a huge grain of salt, but wouldn't be surprised

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Speaker 2: if that continues on an upward trend. And Lastly, I

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Speaker 2: think geopolitics it's hard to price in. It's difficult to

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Speaker 2: understand exactly how it's going to impact investing, but that

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Speaker 2: is something that could scare the markets, especially when valuations

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Speaker 2: are already high.

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Speaker 1: Despite those notes of caution from Anna Rathbun, none of

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Speaker 1: the twenty one Wall Street forecasters surveyed by Bloomer is

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Speaker 1: predicting a decline in the SMP five hundred next year.

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Speaker 1: Their average year end projection is for a nine percent

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Speaker 1: rise in the US benchmark. If correct, stocks are heading

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Speaker 1: for their longest stretch of annual gains since the lead

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Speaker 1: up to the global financial crisis. China's factory activity staged

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Speaker 1: an unexpected recovery in December, bringing an end to the

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Speaker 1: sector's longest slump on record. The official Manufacturing Purchasing Managers

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Speaker 1: Index rows to fifty point one in the final month

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Speaker 1: of the Europe from forty nine point two in November.

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Speaker 1: A reading above fifty indicates expansion. The data defied Economist's

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Speaker 1: forecast for continued weakness and came as president cheating paying Decloud.

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Speaker 1: China is set to meet its economic targets for twenty

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Speaker 1: twenty five, with growth expected to reach about five percent.

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Speaker 1: Addressing the country's top political advisory body on New Year's Eve,

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Speaker 1: she said the economy had demonstrated resilience despite challenges. Rail

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Speaker 1: services between London and continental Europe have resumed after a

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Speaker 1: power issue in the Channel Tunnel led to mass cancelations yesterday.

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Speaker 1: Some Eurostar passenger trains did manage to leave London, but

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Speaker 1: ground to a halt before entering the tunnel, forcing hundreds

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Speaker 1: of passengers to spend the night stranded on board. Francis

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Speaker 1: Collings spent the night stuck on a train outside Folkstone.

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Speaker 3: The power was turned off, so we have lighting, but

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Speaker 3: it's low lighting. But this seems affected the toilets which

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Speaker 3: don't seem to want a flush. We're getting information, but

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Speaker 3: it does seem to be a little bit all over

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Speaker 3: the place. The staff, who are very attentive, don't really

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Speaker 3: know entirely what's going on.

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Speaker 1: Francis Collins speaking there as Eurostar warrant of further delays

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Speaker 1: and last minute cancelations today due to knock on effects

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Speaker 1: from the power issue. The shuttle car services with the

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Speaker 1: tunnel are running with delays of up to six hours.

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Speaker 1: Thieves have stolen valuables worth millions of euros from safety

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Speaker 1: deposit boxes inside a German bank vault. Images released by

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Speaker 1: police so a large hole drilled through a wall and

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Speaker 1: the vault left ransacked. According to Sparkassa Bank, around twenty

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Speaker 1: seven hundred customers were affected by the theft in the

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Speaker 1: city of gelsen Kirk. Authorities estimate the stolen items could

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Speaker 1: be worth between ten and ninety million euros, making it

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Speaker 1: potentially one of the largest thefts in German history. European leaders,

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Speaker 1: including Finnish President Alexander stub and European Commission President or

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Speaker 1: slavonder Lyin, have spoken to discuss Russi's announcement that it

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Speaker 1: would toughen its negotiating stance over Ukraine. The news follows

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Speaker 1: claimed from the Kremlin that Ukrainian drones had targeted the

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Speaker 1: residents of President Vladimir Putin. Ukraine's foreign minister has maintained

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Speaker 1: Moscow has no plausible evidence for the alleged attack. The

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Speaker 1: former US Ambassador to Ukraine, Stephen Pifer, says the Russian

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Speaker 1: president is attempting to stole peace plans.

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Speaker 4: Putin is clearly trying to derail the progress that appears

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Speaker 4: to be may be made in conversations between Americans, Ukrainians,

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Speaker 4: and Europeans. And it's unfortunate that President Trump took Putin's

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Speaker 4: word at face value.

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Speaker 1: Stephen Pifer was speaking there, the former US ambassador after

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Speaker 1: They're called. Dutch Prime Minister k Shuff said the work

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Speaker 1: of Europe's so called Coalition of the Willing to ensure

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Speaker 1: security guarantees for Ukraine remains unabated. In his first New

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Speaker 1: Year's addressed, Germany's Chancellor Fredrick Martz urged trust in the

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Speaker 1: country's ability to overcome challenges, including mounting Russian aggression. Warner

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Speaker 1: Brothers Discovery is planning to reject to take over bid

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Speaker 1: from Paramount after the company amended the terms of its offer.

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Speaker 1: Bloomberg understands the Warner Brothers board will meet next week

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Speaker 1: to make a final decision, but are concerned that Paramount

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Speaker 1: hasn't increased their offer, which was earlier rejected as inferior

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Speaker 1: to one from Netflix. The news comes after Paramount when

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Speaker 1: public with a thirty dollars a share cash bid, three

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Speaker 1: days after Warner accepted the deal with Netflix. Our managing

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Speaker 1: editor Lucas Shaw says, the deal will come down to compensation.

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Speaker 5: Money's the biggest thing they know. The Paramount offer and

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Speaker 5: the Netflix offer are fairly comparable. A lot of it

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Speaker 5: depends on how much of value you assigned to the

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Speaker 5: cable networks at Warner brother zones. That's you know, cnntn T,

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Speaker 5: among many others. Warner Brothers thinks they're worth more than Paramount,

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Speaker 5: hence the disagreement.

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Speaker 1: Bloombergs Lucashaw there speaking. Since its initial bid, Paramount has

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Speaker 1: altered its offer twice, most recently by including an assurance

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Speaker 1: from billionaire Larry Allison that he would personally guarantee over

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Speaker 1: forty billion dollars in equity financing and other commitments. Those

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Speaker 1: are your top stories on the markets. The MSCIAS specific

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Speaker 1: Index outside of Japan is flat this morning, the Old

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Speaker 1: Country World Index a touch weaker. The Hangsang and Hong

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Speaker 1: Kong is down by nine tenths of one percent for

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Speaker 1: two one hundred futures are three tenths lower. Big moves

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Speaker 1: again in precious metals today, golds down over one percent,

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Speaker 1: silver down six point seven percent, trading at seventy one

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Speaker 1: dollars and fourteen cents. In a moment, we'll bring you

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Speaker 1: more on the year in markets, plus why Bulgaria joining

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Speaker 1: the euro tomorrow won't be the moment of celebration that

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Speaker 1: some had hoped for. But another story that we've been

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Speaker 1: reading this morning, in a day when we're reflecting on

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Speaker 1: the year that was, Bloomberg's Ellen McCoy is looking into

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Speaker 1: her crystal glass to see what the world of wine

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Speaker 1: looks like next year. Her conclusion cloudy, and that's not

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Speaker 1: just the wine. She writes that there are some certainties,

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Speaker 1: like the continuing effects of climate change on grape growers

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Speaker 1: and the rise and the popularity and production of non

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Speaker 1: alcoholic wines. But on the question of younger people drinking less,

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Speaker 1: she points to survey evidence showing the consumption of wine

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Speaker 1: is actually growing among Gen Z drinkers, largely in line

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Speaker 1: with what previous generations did as they got older. As well,

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Speaker 1: some fun trans that ares also identified in her piece,

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Speaker 1: more sparkling wine we should be expecting, even though champagne

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Speaker 1: consumption is declining. She says this is because this is

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Speaker 1: now a lifestyle wine for every day that people are

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Speaker 1: drinking with things like Chinese takeaways. She expects there will

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Speaker 1: be an upper rising popularity of people visiting wineries, experiences

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Speaker 1: being more important to younger customers, and she says the

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Speaker 1: key things to watch this year will be affordability and value.

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Speaker 1: Of course you've got the trade issues to consider there

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Speaker 1: as well, but also how climate change is going to

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Speaker 1: affect production. She says this will open the door to

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Speaker 1: the rise of more wines from places like Eastern Europe, Greece,

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Speaker 1: also Portugal and Spain offering some interesting value as well,

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Speaker 1: and she has a couple of tips and some of

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Speaker 1: the grapes to look forward to too, and those where

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Speaker 1: you might get some bargains and quality wine in the

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Speaker 1: year to come. You'll find the piece on Bloomberg dot com.

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Speaker 1: What would link to it in our podcast show notes well,

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Speaker 1: it is the final trading day of twenty twenty five,

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Speaker 1: after a year that's seen massive upheaval from trade, tariffs,

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Speaker 1: AI and Central bank moves. Our market support of Valerie

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Speaker 1: Titel has been guiding us through some of the wildest

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Speaker 1: days of this year. She's joining us this morning to

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Speaker 1: reflect on exactly what happened. Valerie, Good morning, Good morning.

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Speaker 1: I presume you're exhausted after the year that we've had.

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Speaker 1: Let's start with equities, right, third annual year of gains

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Speaker 1: MSCISLE Country World Index heading towards twenty one percent gains

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Speaker 1: For this year, We've had lots of all time highs.

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Speaker 1: We've talked about those. What was it that drove investors

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Speaker 1: to look past things like the tariff headwinds which were

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Speaker 1: such bigger issues.

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Speaker 6: I know, who thought we'd be sitting here after the

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Speaker 6: events of April Second Liberation Day, Tariffs, the global equity

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Speaker 6: market swings back in April are going to go down

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Speaker 6: on the history books as some of the most jarring

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Speaker 6: for financial markets. You know, on par with what we

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Speaker 6: saw in COVID, what we saw in two thousand and eight.

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Speaker 6: But here we are back at all time highs in

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Speaker 6: global equities, and a lot of that is down to

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Speaker 6: this craze over artificial intelligence. The best performing stock in

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Speaker 6: the MSCI World Index is actually a Japanese memory chip

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Speaker 6: maker that rallied nearly five hundred and fifty percent a

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Speaker 6: year to dates the tech industry's booming demand for chip products.

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Speaker 6: That's really driven a lot of global equity markets this

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Speaker 6: year as hyperscalers really rushed to build out this AI infrastructure,

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Speaker 6: lifted South Korea's chip heavy index the costs up to

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Speaker 6: seventy five percent gains for the year. Here in Europe,

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Speaker 6: though the catalyst was a bit different. European stocks outperformance

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Speaker 6: really had much more to do with Trump lighting the

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Speaker 6: fire under European defense stocks, which saw Germany drop its

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Speaker 6: debt break and invest hundreds of billions in infrastructure products.

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Speaker 6: That was really the big catalyst in Europe that led

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Speaker 6: to those double digit gains and the outperformance in the daxis.

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Speaker 1: Here, bond markets dominates, of course by the right cutting

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Speaker 1: for likes the FAD and the ECB rate hike from

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Speaker 1: the Bank of Japan too to think about there too,

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Speaker 1: but rising fiscal worries and places like the UK also

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Speaker 1: causing some gyrations.

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Speaker 6: Look I think for the bond market, it's really cemented

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Speaker 6: that the bond market is now trading off of different factors.

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Speaker 6: We had multiple fiscal dominance events, you know. We saw

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Speaker 6: it in the treasury market when it balked at the

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Speaker 6: higher government spending. We saw it in the guilts market

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Speaker 6: as well. We see these these fiscal dominance events happen

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Speaker 6: all over the world. There was actually one yesterday in Colombia.

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Speaker 6: Colombia announced a hike to their minimum wage and we

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Speaker 6: saw Columbian bonds sink. We had yields rising seventy basis points.

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Speaker 6: So I think this is going to becoming a reoccurring factor.

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Speaker 6: How bond markets really are the I guess the direction

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Speaker 6: of how governs are going to react instead of the

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Speaker 6: opposite way around. The other thing to add to that

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Speaker 6: is Japan added a lot of fuel to this fire.

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Speaker 6: We saw a very humongous rise in JGB yields. If

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Speaker 6: you look over past history, the volatility in jgb's really

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Speaker 6: some of the most brutal bond moves of the last

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Speaker 6: twenty years happened in jgb's, especially in the long end

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Speaker 6: of the curve, with JGB yields rising around one hundred

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Speaker 6: bases points in quite jarring fashion.

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Speaker 1: I have to mention though, precious metals as well, the

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Speaker 1: bumper year that we've been talking about, but again volatility

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Speaker 1: heading into the end of the year, Silver down over

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Speaker 1: six percent today.

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Speaker 6: Yeah, I know it's going to be an interesting year,

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Speaker 6: I think for metals generally precious metals, because I think

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Speaker 6: we're still going to see this continued diversification away from

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Speaker 6: US treasuries into things like gold for central banks. China

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Speaker 6: has been doing that in last year. That's something that

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Speaker 6: could be a long term trend which could keep a

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Speaker 6: decent floor under gold. The other thing to mention just

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Speaker 6: with metals is just the AI race copper silver used

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Speaker 6: in data centers, likely to if this data center demand

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Speaker 6: still continues next year, likely to still cause some supply

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Speaker 6: issues for many of these medals.

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Speaker 1: Okay, Valerie title, thank you for everything this year, for

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Speaker 1: helping to guide us through those mega moments we've had

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Speaker 1: on markets, embracing us for what's to come in twenty

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Speaker 1: twenty six. Stay with us. More from Bloomberg Daybreak. Europe

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Speaker 1: coming up after this. Tomorrow, Bulgaria becomes the twenty first

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Speaker 1: country to join the euro but it's happening at a

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Speaker 1: time of major political turmoil there. The government resigned earlier

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Speaker 1: this month amid massive anti corruption protests, leaving the country

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Speaker 1: with no up to date budget heading into twenty twenty six.

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Speaker 1: Our Bulgaria reporter at Slavokov joins us now for more so,

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Speaker 1: have good morning. Given all the protests, then, how much

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Speaker 1: support is there in Bulgaria for joining the Euro? Now?

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Speaker 7: Good morning, Stephen. Now, Bulgearians are divided over the Euro.

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Speaker 7: Nearly half of them currently don't want it, mostly because

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Speaker 7: they fear inflation. But that said, there are two things

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Speaker 7: to mention. First of them, the first thing is there

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Speaker 7: have been studies showing that countries have had similar fears

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Speaker 7: before joining. Once the Euro is introduced, this mood usually changes.

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Speaker 7: As we speak, the Urine enjoys the support of more

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Speaker 7: than seventy percent of the people in the EU, which

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Speaker 7: is close to a record high. The other important thing

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Speaker 7: is Bulgarians are protesting against the EU adoption right now.

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Speaker 7: Thousands are on the streets in December demanding rule of law,

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Speaker 7: which is a long standing issue for the country. It's

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Speaker 7: regularly ranks among the European Union's most corrupt members, and

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Speaker 7: this has reflection in every aspect of everyday life.

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Speaker 1: How significant a moment then, is this for Bulgaria's economy.

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Speaker 7: It is not supposed to bring much of a change

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Speaker 7: in terms of policy making. Bulgaria has had a currency

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Speaker 7: board for almost three decades now, which means that its

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Speaker 7: currency has been pegged to the Euro at a fixed rate.

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Speaker 7: Bulgaria has a history of low public deficits in one

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Speaker 7: of the lowest depth levels in the European Union. The

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Speaker 7: Euro is expected to lower transaction costs for businesses and

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Speaker 7: help tourism and foreign investment. Most importantly, it's a moment

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Speaker 7: that completes the country's integration into the European Union after

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Speaker 7: joining almost twenty years ago. It also means that Bulgeria

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Speaker 7: will now have a voice in the monetary policy of

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Speaker 7: the euro Area.

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Speaker 1: Yeah, of course that's going to be interesting to take

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Speaker 1: consideration of as well. Put these stories together for us

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Speaker 1: slav we're talking about a major moment of milestone foot Bulgaria,

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Speaker 1: not only for its economy but in its membership of

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Speaker 1: the European Union. But how does this relate to the

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Speaker 1: current political turmoil in the country. Is there any resolution

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Speaker 1: in size well.

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Speaker 7: Finalizing the Urine negotiations was among the government's main goals,

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Speaker 7: but still completing this goal didn't save it. So Bulgaria

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Speaker 7: has been in a political crisis for five years now,

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Speaker 7: and this crisis actually started with the previous wave of

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Speaker 7: antich corruption protests back in twenty twenty. So the country

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Speaker 7: has had seven elections since twenty twenty one without a

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Speaker 7: conclusive result, and now an eight election is the most

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Speaker 7: likely outcome. So honestly, no, I don't see a resolution

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Speaker 7: coming anytime soon. This instability, however, is not supposed itself

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Speaker 7: to be a problem for the euro Area unless it

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Speaker 7: brings higher deficits and more indebtedness.

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Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the

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