5 Things You Need to Know to Start Your Day

Good morning. Goldman Sachs sees new record highs for US stocks next year, traders are defying the Fed’s caution and short-term debt is the [View in browser]( [Bloomberg]( Good morning. Goldman Sachs sees new record highs for US stocks next year, traders are defying the Fed’s caution and short-term debt is the new darling of the Treasury market. Here’s what’s moving markets.  —[David Goodman]( Goldman sees new highs Goldman Sachs has [increased its forecast for US stocks](after the Federal Reserve’s apparent pivot towards rate cuts last week, with the bank now calling for a return to record levels in 2024. The firm’s strategists, led by David Kostin, increased their forecast for the S&P 500 to 5,100 points, about 8% higher than Friday’s close. Goldman, which had set a 4,700 target for the stock index just a month ago, joins Bank of America and Oppenheimer Asset Management in expecting a fresh high in 2024. Futures defy Fed caution The exuberance from last week is showing few signs of fading on Monday, even after a[string of US officials]( tried to inject a degree of caution over the weekend.[US stock futures are in the green](, while stocks in Europe have erased earlier losses. This weekend, Atlanta Fed President Raphael Bostic told Reuters that he doesn’t see cuts starting until the third quarter, and Chicago Fed President Austan Goolsbee said it’s an overstatement to consider rate cuts until officials are convinced inflation is on a path lower to its target. New York Fed President John Williams kicked off the pushback on Friday by saying it’s too early to begin thinking about lowering borrowing costs. Loading up on short-term debt Meanwhile, the overarching sentiment in the Treasury market is that the [best way to play the Fed’s pivot]( is to load up on shorter-maturity debt that still provides a 4%-plus yield. That’s according to Bloomberg’s Liz Capo McCormick and Michael Mackenzie, who say investors expect the yield curve to steepen back to its more typical upward slope in the months ahead, putting the two-year Treasury is the sweet spot. The note offers a yield of around 4.4%, higher than any other maturity. Yen positivity The Japanese yen has had a torrid 2023, dropping 8% against the dollar and languishing as the worst-performing major currency. But market participants polled by Bloomberg say that three straight years of outsized declines look [set to end in 2024]( as the Bank of Japan exits the world’s last negative interest rate regime and its peers cut borrowing costs. The median estimate of forecasts is for a rally to 135 against the dollar next year, from about 142 today. Finding an heir to Dimon Finally, halfway through Jamie Dimon’s special incentive to stay five more years atop JPMorgan Chase & Co., insiders are predicting more senior leadership changes to help potential successors gather experience. As Hannah Levitt writes today, life under 67-year-old Dimon is more profitable than ever, and life after him is just as hazy. That means the question of who might steward the firm is one that looms over the industry. You can [read about some of the potential successors here]( or hear more about the story on the[ Bloomberg Daybreak podcast](. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - Hedge funds are getting [more positive on the pound again](. - Weaker UK [retail data]( puts risk of recession back on the table. - $1.3 trillion debt-fueled M&A boom [faces tough new reality.]( - FTX files plan to end bankruptcy, [pay crypto creditors billions](. - [China’s iPhone ban]( is accelerating across agencies. - Hong Kong comeback story turns into [awful year for investors](. - ESPN’s [playoff machine]( is back as the season reaches crunch time. And finally, here's what Joe’s interested in this morning For years, people have been talking about the boom in tech stocks as if it were all a mechanical function of monetary policy. The idea was that ZIRP + QE was having this major distortionary effect on markets, and that once the printing of free money came to an end, it would all come crashing down. You heard some version of this story thousands of times over in the last 10-15 years. Here's the NASDAQ-100 at an all-time high, with the Fed balance sheet having shrunk all year and policy rates at over 5%. Guess it's time to come up with a new theory. Follow Bloomberg's Joe Weisenthal on X [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Tell us what you want to see in the Five Things newsletter! Please [take our quick survey here.]( [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. 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