Transcripts For BLOOMBERG Bloomberg Surveillance 20171212

Lets have a look at the stoxx 600. Falling for a second day. It is a big week for Central Banks. We are keeping an eye on oil and the dollar. The dollar, sixday winning run come to an end. Best winning run until early 2015. Crude high is the most in over two years. The big news in the oil market is what is happening to brent crude, 1. 3 higher, something above 65 a barrel for the first time in 2. 5 years yesterday. One of the most important pipelines in the world was shut because of a crack. Coming up, we are going to talk markets with Vasileios Gkionakis. Bluebellpeak to thomas , the chief executive of axa. Do not miss those interviews. Lets get to Bloomberg Business flash within the low. Ed walt disney may announce a deal. That is according to for some familiar. That comes after comcast, the other major contender, said it was no longer in the running. This thing was to acquire foxs movie and tv studio including fx and national geographic. Britain once a trading relationship with the European Union after brexit. This virtually identical to the one it has now. Speaking to the World Trade Organization meeting, the Uks International trade Organization Spokesperson fox dismissed Michel Barniers warning that the canada style is best written can hope for. Just is the best that britain can hope for. Donald trump says the bombing new yorkss Port Authority bus terminal injuring himself in three others. The department of Homeland Security spokesman said that the suspect was admitted to the u. S. From bangladesh in 2011 on a family immigrant visa. The people of alabama cast their votes today leaving candidates republican roy moore and doug. Ones is the democratic nominee the tight race is all the more extraordinary by the standards of the southern state. Chinas leadership is preparing plans to deal with any fallout for the nation stemming from u. S. Tax overhaul and the fed expected just rate increases. The peoples bank of china is prepared to use Interest Rates, controls on the flows of money across its borders and currency intervention to support the yuan is needed. The pboc didnt immediately reply. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. I am at ludlow. Mark brent crude jumping about 65 a barrel for the First Time Since 2015 after the most important pipelines was shut. The gains coming after they discovered a crack. It is expected to take two weeks to repair. Joining us today, Vasileios Gkionakis. Will,ould start with you, how long is this going to take . Will they are not sure. They are investigating. The best estimate, two to three weeks. Mark does that mean we have seen the gains in oil . Theres just bit will be this disruption . Will the markets will have time to adjust to it. They found out it is take longer to repair than it may have more of an impact. Mark why is it so important . What is really important is it is one of the greats. You look at several grades including brent and that means more than two thirds of the justl oil is being hyped being piped being piped. More importantly right now, it means that particular grade is being hit up which is feeding through to the futures. Mark does this have applications Monetary Policy wise . It Oil Continues to rise in a 2. 5 year high for brent crude today. Does, it willit start having implications at phenomenal side of the economy. Im not sure that it will continue rising. On one hand you have the very robust growth demand. On the supply side, imbalances seem to remain in place. I think the main thing i will take from that is at least over the next three to six months, we are likely to see a steep drop in the price of oil. We are probably going to stay in that range between 60 to 65 as far as brent. What Central Banks are going to start doing is this is headlining impact that there willing to see through. To the extent you start seeing through two inflation expectation, that may start having some secondround effects. I dont want to stress that much. The momentum is there. Seeing it going much further right now giving the imbalances. Mark it has impact on other energy markets. Natural gas and u. K. Surging the most in more than a year. Will it comes as you have this cold weather in the u. K. The demand is very high. That is feeding through to the u. K. Side, it is supply creeping in about the opec production deal. The uv suggested that if everything is fine, some sort of could happen by june. Is it too early to jump the gun . Will people should remember that the june meeting, every opec meeting look to production policy, there would be nothing unusual about that. It was always going to happen because they are going to have a meeting in june. It is interesting these comments. I do think the market should get to hunt up. Up. Get to get too hung this was bound to happen, whether we had that production shortages, because of what happened to north sea pipeline. Mark thank you gentlemen, stay there. 2017 end with a series of rate hikes . The world policymakers better to announce the final decision for the year as janet yellen chairs what is likely to be her penultimate fomc meeting. This is bloomberg. Mark you are watching bloomberg surveillance. Lets get the Bloomberg Business flash with at ludlow. 15 point 7 billion u. S. Dollars amid a consolidation of more operators worldwide from europes largest commercial 18 premium yesterday to closing the price. British seven involved in a gaseous residue ecommerce has squeezed traditional retailers. It seeks to create a european leader and technologies at the payment services. Different Companies Propose paying six euros per share representing injured 6 premium. Wantelivered on the to engage in discussions about the deal would to be the biggest of the. Disney may announce the deal as soon as this week to acquire a large piece of 21st century fox. That comcast, the other major contender for the fox asset said it was no longer in the running. Boeing has raise it dividend by 20 and announced 18 billion in share buybacks to replace a 14 billion program put in place a year ago. The costly dividend jump to 1. 70 1. 71 per share. Boeing shares rose and extending trade after the announcement. That is your Bloomberg Business flash. Mark. Mark the fomc begins as policy meeting today as it makes its final Monetary Policy decision of 2017. With a hike certain, investors will be focusing on the outlook for next year. Going chair janet yellen after raising the feds and smart by quarter of a percentage point. It is clear, it is done, tomorrow it is finish. Next year is more interesting. The market is barely priced into the what is going to budge . I guess my main question is, does it really matter if it is two or three rate hikes . When Global Growth is a strong as it is . When there are a lot of other fundamentals playing in the currency market. If we want to talk fx, think it makes no difference for the dollar whether it is good to be two or three rate hikes. The dollar is which i think. Mark the recent rebound is the last. Vasileios i dont think it is going to last. We had a rebound back in september. That was pretty much a cleaning up short positions. It fizzled out and came to an end. In november we had a selloff. Our Analysis Shows that december we do get additional rally in the dollar. Sometimes these things will play out. Sometimes they wont. I cannot find fundamental argument to buy into the dollar. Mark the other side of the equation is what happened politically, the taxcut. Maybe they are going to come through. If they come through, does that spill over to the fed . Does that change policy when it comes to boosting the economy . Potentially boosting inflation . Vasileios if theres going to be an effect, it is going to be very marginal. Let me say why. All of our estimates, including other Research Department estimates, these tax plan is not going to do anything to u. S. Growth. U. S. Growth is not going to go 5 . About a boost of 0. 8 . Money that will be given to people that dont have a large propensity to consume. They have a bigger propensity to save. To the extent that it doesnt affect sexually growth, it should have little impact doesnt affect structurally growth, it should have little impact. Mark the empty positions of the fed are being filled. In a years time, are we looking at a potentially more hawkish leaning fed and the implications of that . Vasileios i am not sure. It is 5050. Look, given the fact that weve fed. Owell driving the the u. S. Administration is sending a signal that it wants some sort of continuity in terms of a very gradual withdrawal of Monetary Policy foundation. Bebest bet is there will not meaningful hawkish shift. Were going to remain on this gradual rate hiking cycle. Maybe the fed goes for four hikes, does that change or dollar view . Vasileios it would start changing. Again, we are still talking about if they frontload it. We have to talk about for rate hikes for next year which i think is highly unlikely. It would have the potential to start changing our view towards the dollar becoming more constructive. Mark Vasileios Gkionakis stays with us. Bitcoins debut. Euphoria and out. We will discuss just euphoria and out. Euphoria and doubt. We will discuss next. This is bloomberg. Mark youre watching uber surveillance. Bloomberg surveillance. I am mark barton. The coin features had a busy day on wall street fda first 24 bitcoins futures had a busy day on wall street after the first 24 hours. The cryptocurrencies debut. The next it would be the introduction of further bitcoin derivatives. We are really pleased with the rollout. We are going to stick with the futures rollout futures contract. Youll see some buzz around the etfs. You will see that as the next frontier in the evolution of bringing the coin to an overall base of users. Mark Vasileios Gkionakis is still with us. Is the thought of further bitcoin derivatives fill you with euphoria or fear . Vasileios i think it is very dangerous territory. As a was saying, there will be people listening to what we are saying. Potentially big going to go from 17,000 to 20,000. This guy was talking nonsense. When you invest your money, you have to have an investment process. I dont see any framework within besting within investing for bitcoin. It is something that is not regulated or backed up by any credible institution. The whole thing is developing. At the beginning, it was very intellectually interesting. At some point, some people figured out the could be used to launder money or circumvent capital controls. The prices started going up. Now you started seeing a lot of speculative activity. The question is, mark it is going mainstream. It is not regulated but it is being traded on a regulated exchange. Isileios the issue for me if i am going to start contemplating investing, even for speculative reasons, i still need to be able to do that hin a framework that has that is as bulletproof as possible. It is something that is backed up. Hat is a big question mark if we move toward another world where bitcoin is backed by some credible institution and fully regulated, then potentially im going to start considering and we are going to have forecast. E are not there yet mark the fact that this increases market transparency, it boost liquidity, that is not enough . Vasileios it is definitely not enough. The fact that we have futures trading doesnt mean that it is something, that the underlying instrument is being regulated are backed up by credible institution. Mark your clients . They must be asking you questions. Vasileios not at all. European clients, i think theyre mostly asking about things that are backed up by credible institutions as opposed to the bitcoin. No, i havent seen a lot of questions about bitcoin. Mark that is incredible. What is it going to take then . When do your clients really start showing an interest . What is holding them back . Vasileios i think you need to separate the various segments of clients. The corporate clients are not going to be excited by what is happening in the bitcoin. I dont see them being excited to expect with the community, if you make further step toward regulation, i would expect theyre going to get more excited. Mark was to say you put aside a very small portion of your portfolio, 1 , as a purely speculative move jack of vasileios speculative move . Ileios start working with as far as back tests, they are meaningless because this thing hasnt been in existence for a long time. Would be thing that i worried, even if i look at a small portion of my risk and he goes from 17,000 to 1000, who is to say one . It is not backed up by credible institution to reduce its supply. Areoes to 1000 and those investors they get a big hit in their post folios and their portfolios. In relative terms, although small, it will be a hit to credibility. Mark keep it here on bloomberg, theybitcoin investors will join us at 1 30 p. M. London time. U. K. Calls for adversely identical Trading Field with the eu. Can britain really have its cake and eat it . That is one of the Big Questions where asking today. We are asking today. This is bloomberg. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. Mark you are watching bloomberg surveillance and im mark barton. Reporter brent crude has jumped over 60 per barrel for the first time in two years. One of the most Important Oil pipelines in the world was shut. Crack was discovered during a routine inspection. In the u. S. , crude stockpiles will drop for the fourth week when data is published tomorrow. Donald trump said that yesterdays new york city bombing shows the urgency of tightening immigration laws. The 27yearold suspect was wearing a pipe bomb that exploded in a subway station naeear the Authority Bus tunnel. The department of Homeland Security spokesman said in a twitter post that the suspect was admitted to the u. S. From bangladesh in 2011 on a family immigrant visa. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. Ludlow. Inflation unexpectedly accelerated to the highest rate in five and a half years in november, forcing mark carney to explain why price growth is so far above target. So, Consumer Prices rose 3. 1 from the yearearlier, driven by the cost of airfare and computer games. Thats up from 3 in october and the highest since march, 2012. Economists were expecting it to stay at 3 , meaning carney is forced to write a letter explaining why inflation is more than one percentage point away from that official 2 target. On hiked rates to keep a lid price pressures. Core inflation, which excludes volatile food and energy prices, was unchanged. Inflation has been pushed higher sense the weaker pound, which has pushed up living pr ices. Sterling against the dollar, increasing on that news. Its letter time from carney to hammond after inflation overshoots. The u. K. Opposition labor party will not rule out a second brexit referendum if it wins the next election. Mcdonald said nothing should be off the table as talks move on to trade. We have got to reach, we think a traditional british compromise where you bring both sides together. Compromise, which means we try to get the best we possibly can in terms of protecting jobs and the economy. And that means the benefits of the Single Market and the customs union, but overcoming some of the perceived dis benefits. Anna opposition is devolving then, since the last vote. Is there an opportunity to remain within a Single Market . It is as close to the Single Market as we can get. Anna could you rethink the policy, though . The problem with staying in, is that that will reflect the views from the referendum. There were issues around the thedom of movement and Single Market that have to be addressed. I think those issues will be addressed anyway. So, things are moving. That enables us to have this relationship, which is as close to the Single Market as we can get. Anna but that would come at a price, perhaps. So, what would the price be . That would be subject to negotiations. The difference between us and the governments approach is we have always tried to have an atmosphere within our conversations with our european partners, which is one of recognition of mutual trust and mutual interest. That is the sort of relationship we want in the future, a collaborative partnership. Anna on the subject of the second referendum, is that is something that is evolving on, or is there a fixed position . The general view is, lets get into negotiations on trade. The key aspect for us though is there must be a final, meaningful decision in parliament itself. That is why within the withdrawal bill that is going through at the moment, i will insist on that. Anna so, could there be a second referendum . Perhaps on a negotiated, presented trade deal. We are not ruling anything out, but what we are trying to say is, lets get on to the trade negotiations and ensure we have a proper parliamentary vote. We live in a proper parliamentary democracy. Internationals trade secretary says the country would like a trade relationship with the eu which is virtually identical to the one it has now. Liam fox said such an outcome would ensure a smooth transition period that would be in the interests of both sides. However, the eus chief negotiator says a canada style deal is the best britain could hope for. Inflation, 3. 1 . Nobody was expecting that. They said we would peak and come down from the end of the year. That is right. The only welcoming thing is we did not see it 4 becoming . The bank of england between a rock and a hard place. They will have to write a letter. The most important thing the markets will be focusing on is what they do with the Interest Rate. I dont think it is such a clearcut conclusion to say even in theation did not peak previous month, that increases the probability of a boe rate hike further down the road. And i say this because at the end of the day, a Central Banks role is to do a fine balancing act to ensure that the economy is not overheating and that overheating does not lead to inflationary pressures. But what we have in the u. K. Right now is an erosion of real incomes. Four orook at the u. K. Five years ago, it was topping the list of growth in g7 economies. Right now it has fallen to the bottom. So, from that respect, i still think the boe will stay for 2018. That does not imply that the market will not start pricing in and be more aggressive, tightening and therefore, that could be supportive. Friday, does that remove some tail risk . Bit more hawkish, or not . Remove some tail risk, but we have to realize that that was the easiest part of the negotiations. Lets try to be realistic about this week as there has been a lot of reference to the canada trade deal discussions with the eu as some sort of similar framework. This has taken years between the European Union and canada and it only involves goods. Services,t involve which is where the u. K. Economy is really exposed to. So, answer your question, does it remove some of the tail risk . Yes, a minimum amount of tail risk has been removed. But still, the highly complex aspect of it is ahead of us. Mark sterling meanwhile, 1. 33 74. Vasileios i think there will still be room for a shortterm rally. At the same time now, you have a higher than expected inflation. But i still think that as we move into these trade discussions, sterling is again going to be disrupted. Having said all that, i think potentially we will full around with this 1. 30 to 1. 33 area. Idle think cable will fall in a sustainable fashion below that. Francine mark thank you for joining us, Vasileios Gkionakis. Up next, disney goes stocks hunting. This is bloomberg. Mark you are watching ananderg surveillance im mark barton. The author values them at an 18 premium. More operators have been involved in a wave of mergers and acquisitions globally as the rise of ecommerce has the squeeze traditional retailers. Create a european leader in cybersecurity, Digital Technologies and payment services. The French Company has opposed paying 46 euros per share. It delivertos said the friendly offer on november 28 and wants to engage in discussions about the deal, which would be the biggest in the year of two european technology. Companies. Disney would like to acquire a large piece of 21st century fox. That comes after comcast said it is no longer in the running. Disney wants to acquire the movie and television studios. Networks including netflix and national geographics, and sky. Boeing has raised its dividend by 20 and announced the in billion dollars in share buybacks to replace a 14 billion program put in place a year ago. Boeing shares rose in extended trading after the announcement. That is your Bloomberg Business flash. Mark we are just getting some breaking news. U. K. Gas futures surging on the norway outage. The explosion crossing the bloomberg terminal just a few seconds ago. Natural gas is already in the news. Development from a different story. Gas futures surging on this explosion and a norway outage. At the a gas explosion baumgarten hub. The hub will be shut down. Is now under control. We will keep an i on gas futures and oil, both of course, rising in the last 24 hours. Of next, we will speak to valdis dombrovskis. This is bloomberg. Mark lets get to paris. Business leaders in the french capital on Climate Change. Valdis dombrovskis, the European Commission Vice President for the euro, it also in charge of Financial Stability, joins us now. Commissioner, how is the eu mobilizing private funds to plug this gap of almost 180 Million Euros a year to meet the Paris Agreement goal . Valdis well, we are currently working towards an action plan on sustainable finance, which we are going to present in march. We are going to work on this part of sustainable finance. Ofa result, a number directions will work on nonFinancial Disclosures. Green investments, andeu taxonomy on green sustainable investment. And other initiatives today. Im also manifesting the case for banks, which are doing lending to the green and sustainable goals. This is a broad set of measures on which im currently working. Mark are you confident you can plug that gap, the gap i mentioned of almost 180 Million Euros . Valdis well, we are aware this be covered by Public Finance only. Our Asset Managers are managing around 75 billion sorry, 75 Million Euros of asse ts in the eu. Within theld be capacity of our Financial Sector. The question is, how we are actually diverting from private finance to green and sustainable goals. Mark theres so much to chat to you about. You recently warned some eu Member States were late in adopting method two. What would it mean for market morecipants ifone ore mo countries related transposing the mission two directive . Valdis well, indeed, we have a possibleghting assignment and the finance ministers on the deadline. So, clearly now its still a couple of weeks to go. So, we should concentrate to make sure it is finalized. There are consequences if measure two were not to be adopted. In someld result inconveniences or disruptions for market participants. Francine could you talk about those disruptions . How would it affect businesses . How should sue providers reactive one or more countries are late to implementing the method two directive . Itss well, of course, a concern for the obligation. And transparency. So, that is what would be affected the most. Potentially trade. Course, are now of working closely with the european supervisory authorities in the National Authorities to ensure as smooth a transition as possible. So, now we should concentrate on transposing the method two. Francine i want to ask you about brexit because liam fox, who will you know as the trade secretary here. He said overnight at the u. K. Would like a trading relationship with the eu after it leaves the block and i quote, is virtually identical to the one it has now. How realistic is that . A trade deal that is virtually identical to the one the parties enjoy now. Well, i would say we are moving towards discussing issues, but we are not there yet. The European Commission has concluded there on theicient Progress First set of issues, but it is euill to be confirmed by the summit later this month before we can move to the next stage. Francine are you concerned mark are you concerned by the sound coming from the u. K. Since that friday breakthrough . There seems to be a little bit of backtracking from various parties here in the u. K. Were you concerned at all by the sound coming out of the u. K. After that big moment on friday . Well, we have reached an agreement. We will stick with this an basisent and this is the upon which we are building the Council Later this month. We will move forward to the next ages in the conversation. Mark commissioner, last week we had a big announcement. Bind onstandards do not banks. Of course, until they are actually enshrined in national roles. Years anding to take that means the process opens the door to further changes. What changes are possible . Valdis well, first of all, from the eu side, we will be working on this. We now need to see the exact picture of how the agreement is potentially affecting Banking Sector in europe. On thesell be working measures. Would also like to say certainly our intention is to make full use of the transitional phase. Use of atend to transitional arrangements until 2027. Commissioner, given you are overseeing Financial Stability, i thought i would throw in a question on bitcoin because naturally, it is a hot topic right now. A, does it present any Financial Stability concerns . Eye are you keeping on Bitcoin Futures . Valdis as i said, we already have an announcement for the european supervisory authorities, indicating the cyclical nature of investment and currencies, which also holds bitcoin. Ok, thank you for joining us today. Valdis dombrovskis, the Vice President of the European Commission. Bloomberg surveillance continues. Nejra cehic will be here in london and tom keene joins us in new york. We will be talking to this man, the oec secretarygeneral. A busy two hours coming up on Bloomberg Television. This is bloomberg. Is this a phone . Or a little internet machine . [ phone rings ] it makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. Choose by the gig or unlimited. And ask how to get a 200 prepaid card when you buy any new samsung device with Xfinity Mobile. A new kind of network designed to save you money. Click, call or visit today. Tom this morning, let it go. The United Kingdom and europe, a phrase. Dont forget, winter is here. We talk about the winter on the u. K. Economy. They will raise rates tomorrow. Then what for 2018 . And then alabama, a u. S. Senate election. Jones against moore. King could have a modest turnout of 20 to it could have a modest turnout of 20 to 25 . It is lost inin is the theatrics. Nejrra, it is cold in the United Kingdom. Nejra we had some want on friday. Now questions are starting to come through on how easy this deal is going to be. The u. K. Wants pretty much the same trade deal after it leaves, but can that happen . David davis said he wanted canada plus, plus, plus. Tom there is a beautiful shot of our offices in st. Paul. But a cold winter across europe. A serious moment in new york yesterda. With our first word news and the emma chung. The bomb failed to suspecttonate, and the is the only person here who is dead. He is described as a 27 year old immigrant from bangladesh. He told police he is a follower of isis. The u. K. Once a postbrexit trade relationship with the thaeu that is virtually identical to the one now. Liam fox says that will ensure a smooth transition period. He says it wants full corporation with the eu. Has ordered the interior department to develop a new blueprint. President obama had ruled out moving that territory. More than 200 of the Worlds Largest companies have a greater to support the task force on the Financial Disclosures for Climate Change. The principal owner of bloomberg lp has developed voluntary recommendations on climate information, which company should disclose to help others make sound decisions. We will be joined by Michael Bloomberg, one of the ceos. Well also talk with mark carney. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. This is bloomberg. Day to checkt a equities, bonds, currencies and commodities. Curve flattening has sunk to new lows. I dont want to get into the details of eight or nine curbs. Still, equities move. Elevated in brent crude. Nejra has more on what is going on with that oil pipeline. Dow at, really the daily a high, but the interim record is not at the level i sell. Nejra european equities resuming their gains after failing to find direction yesterday. I put sterling up there pretty much unchanged. You asked me if the u. K. Was colder. It is unexpectedly higher, inflation, with 3. 1 . Mark carney will have to write that letter to the chancellor. The 10year gilts yields are moving higher after the drop seven basis points. You mentioned brent crude yesterday, up almost 1 . Above 65 for the First Time Since 2015, it is one of the most important pipelines in the world and is shut down because of a hairline crack. Tom ride up against the range of its last year. Here is the bloomberg, and it really can only be one. This is a chart that matters. Using bitcoin for the moment. Spot to out here, and laying out at almost 17,000. Heres the arbitrage cooking into the futures market on sunday. Maybe a note from these efforts doesnt kids. Will you come back a little bit, just under 18,000 as well. It is widely believed that arbitration over time will come back here to a normal futures guess. If you questions about what exactly bitcoin is. World and Business Leaders are gathering for the one planet senate. Emmanuel macron is working to show progress is being made by reducing global warning after donald trump pulled the u. S. Out of the agreement. The two the secretarygeneral, who joins us ris. Pai so, two years from the previous incident, and are we at fault . Absolutely, they were all the commitments by at least 200 companies. This summit today will provide the political muscle that is required. Remember 2018. It is the photo we take to take stock. Have a gps system to know whether we are making the some purpose in the problem we have is from the very beginning, even those commitment ceremonies were not enough to get under the two degree unit. We need to know better than that. I will go for more Ambitious Goals moving forward. That is why this summer is so crucial. Mark and have you bridge the gap between president macron on one hand and President Trump on the other . Because inrst of all the case of the United States, starryy starry decided they would lead the plantation. Cities andand the then the private sector. Schools, the universities, the culture, the people. There is such byron c and everybody is growing green. Everybody is going cleaner. Conditions are reducing in the United States. Basically, a scenario. The rest of the world is actively going in that direction, except for the chapel. And those that are taxed or below 10. 40 dollars toe 50 i have the voided poe 2 commissions maybe by 2030 and maybe in the second half, we need to go to 80, and then zero. Next commissioner. Yeah. What progress is being made on those figures . That is very important. There was this 100 billion fund availability. We determined we were on the way. This is for 2020. We are making progress and we are getting there. It is going to be crucial to get the Financial Markets on board. And to make the question of defending the climate a good theness, to make you know, fighting Climate Change a good business, a creation of jobs, a creation of investment, technology, etc. Spoken about have the paris collaborative, tell me how it can help a city as polluted as your mexico citry. Cities, mexico city has its own challenges of pollution. How has the paris collaborative actually improved the air in mexico city . It is about budgeting. It is about taking a hard look at every single allocation of public moneys and whether it is consistent with reducing emissions. The is going deep into budgeting process, making it greener for the sake of cleaning the air, not only in mexico city. France is also joining other countries. They will announce their considering joining the paris collaborative. It is a way of life, a state of mind, rather than a technique. Question, if i may. And as we do on bloomberg surveillance, im going to rip up the script. Your economist, i thought gave spirited value and really ewdirected oecd to a nr invigorated economics. What is it like losing Catherine Mann . Angel it is painful and it is tough. Importantr to a very private sector entity. She will in time, let you know. But, we are now actively seeking her replacement and just like we found her, we have a system which we hope will help us find a good replacement. Tom i am biased towards catherine man. Congratulations on her tenure there. Angel i know you are good friends. She will be difficult to replace. Tom thank you so much. He is the oecd secretarygeneral there. Coming up later, a conversation with Michael Bloomberg, bloomberg lp founder and majority stake owner. Alone ongoing climate. This is bloomberg. This is bloomberg surveillance. Lets get to the Bloomberg Business flash. There is a big takeover in the Shopping Mall business. Rodamco has agreed to purchase westfield. For the first time into a half years, brent crude has risen above 65 a barrel. Futures rose after a crack was discovered in one of the worlds most important pipelines. The pipeline will be closed for about two weeks. Its the biggest Tech Acquisition in europe this year. Purchase greed to gemalto. The price represents the 36 premium for gemalto yesterday. Tom thank you. Trending news going on right now. Of course, no more than the fed meeting. Right now in london, derek. Derek cook, i do everything i can not to play the parlor game. Im going to bring that over the next 48 hours in the silly gaming in guessing of how many rate increases after tomorrow. How much is everyone on the same page . Is everyone clustered around three or four rate increases . Um, well i would not necessarily say three or four. I think you need to argue a range of two to four. Certainly, if you look at me fomc meetings on the meeting of the first of november, they were definitely signs of an intensified debate in relation to the factors behind lowinflation, whether it is transitory or something more structural. I do not expect a change tomorrow. But certainly, if you do not get evidence that wages picking up, we dont get evidence of inflation picking up for the next couple of months. The fed are going to have to change their tune. Jerome powell is on record as essentially, credibility of the central bank is crucially important and at some point, you have to acknowledge the fact that inflation is not lifting towards targets. I suspect we could be going into a pause during the first half of next year. In the actual rate increases could be two. Tom bring up this chart. This is a chart a rarely show because it is a little misleading. It is Service Sector inflation, not goods. The Service Sector, and here is the United States. This is not the United Kingdom. And in realu. S. Wages, you rolled over, derek, given elevated Service Sector inflation. Is there lower general inflation, but they really do not have real wage growth to raise rates in two, do they . Agree. I would i would lean towards the point when the market appears to becoming the most optimistic about growth. If we get 3 growth in the fourth quarter, we will have three consecutive quarters of growth for the First Time Since 2005. But some say we are making them go into a. But some say were making them go into a period of three acceleration. I take your points. I certainly think in the context there is the chance we could see a slowdown of growth. And of course, a lot of this is based on the tax reform program. We simply dont know the full details yet and it could be very much a 2019 story, rather than a 2018 story. Might be fed have to reassess its hiking policy, based on the persistent flattening of the yield curve . Derek again, when you look at and thee of the curve wait is moving, they are signaling the fed that they have time on their hands and there is scope for more patience. Certainly, there is not scope for sure. Nejra what about the dollar . Will we see any kind of recovery next year or not . Derek our view is we get more of what we had earlier this year and the focus, in terms of centralbank expectations is more about what potentially is happening outside of the night rates. Out of the United States. And i for one, do not buy the Forward Guidance of the ecb, and the ability to keep telling the market they can keep rates at 2. 4 . I think that blacks credibility. Lacks cat that credibility. Nejra certainly come other Central Banks are keeping an eye on this. Derek halpenny stays with us. And coming up, we speak with ceos live from paris. Look for that at 6 30 a. M. In new york and 11 30 a. M. In london. Nejra i am nejra cehic in london with tom keene in new york. Lets turn to oil. The effects of a hairline crack of a pipeline in the north sea is rippling through the crude markets. Above 60 per braille for the First Time Since 2015. Earlier today, we spoke exclusively to the director. Thee dont have a feel for actual number because it really depends on the alternative arrangements that are made. Clearly, most alternative arrangements are dependent and v ary from one ship to the next. It is tough to put a figure on that. Nejra with us is Derek Halpenny, european head of Global Markets research. So, how does this translate into your world . Derek in terms of correlations between oil and crude oil prices, the correlations have been pretty poor this year. The norwegian krone, you would not believe it is at these levels, in terms of how it has underperformed. We did have a big appreciation of the Canadian Dollar but that was more related to the bank of canada and most of that rim has reversed. Those correlations have not been as strong as they have in the past. And i would say that would potentially continue. Although, if this move was to really power ahead and really become a theme in the market, you could have a period in which those correlations could come back, especially when the fundamentals are not so bad. In canada for example, you could see the correlation come back into play, suggesting the Canadian Dollar could outperform again. There are domestic factors for example, in norway. The market has been a bigger focus in terms of the direction of the norwegian krone. See thef we continue to game that you mentioned, the Canadian Dollar might continue to outperform. What would be the least beneficial, do you think . One thatdia would be tends to underperform. In that context, looking at high imports, current account deficit countries would be your area of underperforming. Nejra Derek Halpenny stays with us. Coming up, we are joined from paris with Michael Bloomberg. And mark carney, boe governor. This is bloomberg. Tom good morning, everyone. Bloomberg surveillance. Two days of fed meetings. Fed coverage for you tomorrow. In new york city with our first word news, here is emma chandra. Emma coburn today in alabama, voters will decide whether to elect a senate and it split the public and party. Heore was accused of is backed by donald trump. Trump wants the u. S. To send astronauts back to the moon and to mars. The presence directed to nasa thates a single paragraph mr. Obama had called eMissions Beyond the moon by 2025. President trump eliminated the deadline. In washington, conservative activists are demanding that republicans hold the line on the Corporate Tax cut to 20 . Someone because just some lawmakers have proposed cutting it from 25 to 20 . Faced morekers tightening in 2018. Drop. 5 . U. K. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. I am emma chandra. This is bloomberg. Tom with us, Derek Halpenny on the many Central Banks. Wicked assume just we can assume they are not coordinated. They are speaking with different places. We hope to speak with mark carney. We will let you speak for the governor of the bank of england. There is elevated inflation in the United Kingdom. Does he have to write a letter . Derek he does have to write a letter. That was a little bit higher than expected. He is going to have to do that. When you look at it in terms of q4 projections that were published by the bank of england, there are a million miles from where they should be. It may come in higher than expected if you assume we get some modest tickle in the december print. A lot of what pushed hard today was still induced by sterlings depreciation which is changing. As we sit here, the pound is the second best performing g10 currency. That is to start to be reflected in import prices. Today, the biggest increase since 2013. That is not going to last. That retracement of the currency induced inflation should reduce should result in inflation. Tom are these bankers managing social policy, labor, unemployment . Is chair yellen would say slack in the economy . Is the pendulum swung too much away from monetary work . So. K i dont think i still think that is their focus but the big conundrum is what is happening in labor markets. All the major developed economies across the world, the fact that wages are not picking up. I think theres a number of Different Reasons behind that. Very few of them are being result through central bankers. Resolved through central bankers. Large monopolies that are being created in tech firms, these giant tech firms, is meaning they are able to dictate wages to a greater extent than 20 or 30 years ago. I think we have the great financial crisis in terms of greater caution, and therefore less demanding workers in terms of wishing for higher wages. There are other factors. Nejra the reaction in sterling, a popup higher inflation. I dont think we have seen a significant repricing in expectation for rate hikes from boe. What is it going to take from mark carney for traders to reprice those expectations to the upside . Derek we had the statement this week. If there was any indication that they may have to raise rates more than what is priced into the market, that would be the catalyst for a readjustment. Nejra will we get that . Derek i do think it is coming. The muted response to the Development Last week in terms of the brexit deal doesnt mean what happened last week is not important. I think it is crucially important. There is a degree of skepticism in the market. I think it opens the way for relatively quick transition deal being reached. That, to me, is massively important. It is going to improve business and sentiment. At a time when the rest of the economy is not doing too bad. Whats more resilient than many people expected since the brexit referendum. With the transition deal in place in the risk of 2019 gone until 2021, that opens up prospects for better performance for the economy. Nejra if you look at sterling into 2018, does it perform well against most of its peers . All of them . Stronger. Have it we had a very bullish year. We have done pretty good. We think there is more to come next year. Over 140. Ble, we have eurosterling with lower as well. The bigger move, the dollar because we are dollar bearish. It can still strengthen against the euro. It is good news for europe. The big economies that export a lot into the u. K. Next line u. K. Bitcoin, we are obsessed with it. It is a store thats it is a store to value is a store value . Medium it is a derek it is a medium of speculation. The divergence tells you a lot. It is another avenue on which you can speculate on bitcoin. There is a lot of appetite for speculating. In terms of rushing in for it to be a restorative value, i would question that. We are going in because it is going up. Tom the white line, very clear. Good morning, radio london, listening to us in the frigid south of the United Kingdom. Bitcoin in the red line. The futures market. We are going to operate charge we are going to arbitrage this in their. It is still a speculation. Derek yes. I think so. It really is. The Technology Behind it, i think definitely has something to it. That is not going to go away. , 21e is a limited supply million coins. Beyond that it is not going to be my supply. Nor other coins that could evolve. It is not particularly clear how this evolves. The codes around that going to change which could then result in supply increasing. Theres a lot of uncertainties there. To put a value on it is next to impossible. Tom someone to strategy, theres something called death to market. In the other observation, theres not really much debt to the market. The bosses will be with Bloomberg Television data today there is a depth to the market. Absolutely. The cost of going in and coming back out, ive spoken to somebody who is going from cash to bitcoin back to cash. It is not a particular cheap transaction in terms of a medium of exchange, it absolutely isnt. As you have mentioned, the liquidity on uncertainties are there as well. We know that a very small number of people on the relatively large portion of the market. Nejra lets turn to 2018. Im sure this is going to be one of the big compositions. What are some of the biggest risks on the horizon . Derek what happened very recently, we should bring oil into the equation. If oil were to continue to shoot into the upside, that could become a negative drag. Thats something to look at. Tying into that is saudi arabia and what is happening. Relationing risks in , theudiiranian conflict fact that we have this rocket launch from yemen at the riyadh airport was a very direct example of potential conflicts. Im not saying we are going to go into conflict but we could see an escalation of tensions. That, to me, is something that could emerge as a risk. Tom the last thing i want to do is look at the dollar. Bring it up. I dont have a banner for it. This will be out on tv. The surprise of 2017 across the summer, the weaker dollar. This is the good math of the bloomberg dollar index. It is really good math. Up we go. Derek, as you know, it is an indeterminate dollar right now. What will be the force that will move the dollar next year up or down . Is it flows . Is it industry dynamics . Does have how does the dollar get out of the soup that it is in right now . Derek when i look at the correlations, i mentioned this shorttermfinitely Interest Rate differentials have not. The best performing currencies, two of the top three is the euro in the Swedish Krona running negative Interest Rates. Interest rates differentials on the short end, no. Of the longer and, there is a stronger were consistent correlation. I am bringing in the flattening of the yield curve in the United States has been correlating white closely with movements in the u. S. Dollar. To give you one variable it would be crucial. The yield curve starts to steepen, perhaps inflation is a crucial element. If inflation the start to pick up and back up with the fed is doing, that certainly will be a catalyst for the dollar performing better than i expect, which im expecting inflation to remain lower. That is my justification for the dollar being weak or. Nejra interesting, because i want to show this chart. Bund spread. Asury saying with what you are. Look at how that is widening out. The correlation at the front end with the dollar is just not there. Why is that . Derek it comes back and play at some point. One of the big stories of 2017 was after years of crises in europe, the debt crisis and spreading to different countries, if you go back to the great financial crisis through 2014, we were in the midst of crisis after crisis. Since the growth story has now started to emerge. As some officials have mentioned, we are now in a situation we have the most broadbased robust Economic Growth. Not just since the great financial crisis, but going back to 1999 and 2000 and what has emerged in 2017 is you have had a huge inflow from Foreign Investors into eurozone equity markets. Theres been a huge underperformance between the equity markets in europe and the u. S. Markets. If youre looking for evaluation growth story, investors are being more attractive. Theres been a big on a sixmonth rolling basis, a record inflow. I think that is been a big story. Nejra absolutely. We will keep watching it next year. Derek halpenny stays with us. One into hundreds of the Worlds Largest companies have committed to support the task force on the Financial Disclosures. The task force is led by Michael Bloomberg and this includes over 150 Financial Firms the responsible for more than 30 trillion worth of assets. The announcement was made this morning and we now go live to paris. Caroline connan is joined by ago bloomberg. Joined by Michael Bloomberg. Caroline i am very happy to be joined by Michael Bloomberg. [indiscernible] and the access you promised, committed to the please let me start with you. You just made a big announcement here today in paris at this summit. What are so Many Companies joining the tmd . Michael there are a couple hundred companies that have joined. The answer to that is there investors want to know what we are doing in regard to the climate. Why do the companys care . Employees want them to be environmentally friendly, their customers want them to be environmentally friendly but their stockholders want them to be very environmentally friendly. Through this organization, they can show what they are doing on a competitive, comparable basis, them versus their competitors. If the investment public likes what they are doing, it will get a higher violation, the stock will go up and their bonuses will be bigger. You are a member of ttmd. You announced that ask it will begin investments in pipelines. What motivated this decision . Company, largece investor but also a large insurer. Does thehat role effect have on our clients, when you see climate related issues have a massive impact on climate risks, if you look at the picture of the hurricanes in the u. S. , you see over the last 40 years that the cost has quadrupled and there is a protection gap between what is insured and what is not insured. If we dont stop letting this continue, we will have a bigger issue. You see people getting health cost increasing, getting unhealthier through Climate Change. In order to get the equation investinghave stopped in pushed investment in green energy and at the same time, relateduring the [indiscernible] caroline mike, when you came forward ahead of the Paris Agreement, we lived on a very different planet. We had a different u. S. President , a different french president. Since then, we have donald trump who has decided to leave the Paris Agreement. Then we have the french president who is going to be here today with you. He is trying to fight back. Can you tell us about americas efforts you are helping to lead . Michael the first thing to realize is federal government in america dont have a lot to say regarding Climate Change. It is the public and corporations that use the energy. If they were to use less energy they would help reduce pollution , use more they create a bigger problem. That is where you start. Number two, it is in america the private sector that generates most of the electricity. There are some public organizations that do. Generally, it is away from the federal government. Regardless of what our president who is obviously at the moment, maybe he will change his mind, President Trump doesnt have an interest in president obama passed a law, the Clean Air Act which has been held up in the courts but never been implemented. The federal government doesnt have a lot of say. It is the private sector and local governments private sector meaning individuals and corporations. One corporations go out and try to recruit young people your age, the young people want to know what the company is doing for the environment. It is a Competitive Edge in recruiting the best and brightest which is every Companies Main assets. When you look at individuals, individuals want to reduce their costs. They paint their roofs white which means they reflect off the heat and energy bills are less. They dont use incandescents. These compact fluorescent bottles fluorescent bulbs. They are fuelefficient cars and all those kind of things. Thatll government really doesnt matter. Trump has been helpful because he has at least brought the issue out and those of us who think there is a problem and hope to convince him that there and theallied together do then public, if you polls, they are away in favor of doing something. The public says if the government doesnt want to do something, we will get together and do it. We pull together the money through philanthropy. We are doing the reporting that the federal government has an obligation to do. Groundactually on the reducing the pollution. We brought down pollutants we have marty gone have to weigh we have already gone have to weigh to our goals. Caroline what do you think of all of this . President macron tweeted in june after this decision of the u. S. ,o leave the Paris Agreement make our planet great again. Tweeted tweetst ever. Can others help . Can a private sector help . Thomas it is very important to have the alliance of the political leader to push the topic forward. I personally really appreciate the tweet is it shows that macron is really convince, committed and also wants to spearhead the development. I believe there is a real big chance macron to take over the leadership, the but this would mean he also needs to have a federation of over of other political leaders to push this through. The political leaders are being helped by society, because today the topic is not exclusive topic. It is wide everywhere. Our employees, our customers, organizations every day, we are being asked. It is positive to be challenged and to really move along. I do believe when you look in the world going forward, danish to be a better balance between the political push and the private sector push. Ceos need to be more in the public the fight for the good cause of society. Michael i think it is interesting the way you phrased it. President macron talks about making the earth is good as it used to be. President trump talks about making America Great again which implies that it was better before and the truth of the matter is, it has never been as good as it is today. It is different ways of coming at it. Caroline as i was on my way sayinghere is a big sign , there is no planet be planet b. Do you think the private sector is plan b . Michael in america, the way the american system works, it is the private sector that creates the pollution and the private sector that can do something about it. Our system government doesnt have a lot to do with it. At the local level, the city town to uset the more fuel efficient garbage trucks and things like that. They can pass some regulations which helps clean the planet and stop polluting. Fundamentally in america, it is a private sector issue, both the creation of the problem and the solution. Caroline last month, you are in germany and you made this ouncement to extend the why is it so important . Michael in america, it has been working. We have close more than half of the cold 500 power plants. It has gone up since donald trump was elected resident. We have closed more power plants per month than we did before that. Down the road is what is going to continue to happen but we want to say if it works in america, graspable work in europe and asia. Bloomberg philanthropy has put into americann organizations like the sierra club who help close coal powered power plants by convincing the power plants that it is the right thing to do. We want to see whether that will work in europe and asia. We have committed 50 million to start in europe and to the extent that works, we will increase that it will get others to help us. The same thing for asia. The strategy works in asia. Lets see if it works elsewhere. Caroline are you trying to convince others to join . Youre talking earlier that the course of natural disasters what are you doing to convince others to join . Thomas we wanted the first institutions to be there to help to make sure it becomes we are the less investor. Where a longterm investor. You want to invest in longterm technologies. You need to be sure that you invest properly. Therefore, a clear governance and transparency on how this is going to evolve. One of the what are the Financial Risks . I will push for it as my competitors will go the same way. You always need one party to lead the way. I am happy to do it today and tomorrow. Michael congratulations on doing it. Maybe that is why youre the biggest Insurance Company in the world, doing the right thing. Caroline thank you very much. Nejra . Nejra arylene, great job. Caroline, great job. If we get back to brexit, what we have heard is the International Trade secretary liam fox says the u. K. Elected trading relationship with the eu that leaves the block after it leaves the block but virtually identical to the one it has now. How realistic is this . There perhaps not that realistic derek perhaps not that realistic. In canada trade deal could be what is on offer for the u. K. Canada, europe identical trade deal and that is the negotiating positions. I dont think we should be hugely surprised by that. Those are the objectives but theres going to be something in between. That is what we should expect. That was laid out by theresa may. No way is too much, canada is too little. We want something in between. Nejra we have talked about sterling. You are bullish on sterling. When we saw yesterday was the 10year gilts year just gilt yield dropped. Gilt yield dropped. It is a little higher today. What is your outlook . Derek week that to rate increases for 2018. Not so much a negative inflation story, but we think the positive implications i spoke about earlier in terms of getting transition sorted, moving to trade negotiations will be very supportive for Economic Activity. That will be the justification for the bank of england moving more rapidly than markets are expecting. In terms of 10 year, i think we are going to see a move up by our forecast for the Third Quarter of next year. It is about 40 basis points on top of that. We are looking for a move higher taste on a broadly optimistic view on economic conditions. Nejra as we look into next year, one of the things that still hasnt been fully solved is the issue around the irish water. That is something that could irish border. That is something they could we are its ugly head. Is that something that could be really are bullish outlook on sterling . Debra i read the 15 page document that was released. Agreements friday from 1998 appears to take residence take precedence and that is the fullback. That is we have the regulatory alignment. The u. K. Has to stick to it. That means it is difficult to say there isnt a uniqueness about Northern Ireland when you compare it to wales and scotland. The good friday agreement from 1998. That was recognized in the deal that was reached last week. Nejra do you think theres any chance we could get some sort of a softer brexit . Or even perhaps having Northern Ireland treated differently . The objective is to have as much as possible similarities across the whole country. They have to recognize the u. K. Line the deal does raise the probability that the direction in which the government is going in is going after breakfast after brexit. Nejra that is one of the reasons you are bullish on sterling. Of course, we have heard from the bank of england that their outlook is very much tied to brexit. Is that a dangerous way to set the Monetary Policy . Derek on such a big economic issue, you have to to give you. They have taken the view of the government. The objective of the u. K. Government is to seek as close relationship as possible to the eu that is as least disruptive to Economic Activity in the u. K. Mark carney is correct to assume that. Sums istary policy going forward. There is no other way they could of done it. Nejra this is one of the political risks going into 2018. Earlier we talked about other potential geopolitical risks on the horizon. When you look out to 2018, what are your key ideas from where people should be putting their money into the fx pace . Derek we have a broadly dollar bearish view. Japan could be a story that comes to the fore. We could be reaching the limits in terms of the current monetary stance. We think there is to be tweaks in the 0 yield curve control aussie in terms of limiting movement. They are going to start along that to adjust tire. Just hire. And just hire. It is the action itself, just like this year, the actions of. Cb were very important modest actions for the boj and in8 could be quite important terms of losing the japanese yen. The yen could perform better than market expectations. Everyone is assuming the dollar yen is going to go up. We disagree. Nejra what a great weekend. Tom a wonderful way to end this our. In this hour. We welcome all of you. Our special coverage in paris of what we will do about two degrees and Climate Change. It is the one planet summit. With the leadership of Michael Bloomberg. We were thrilled that mr. Bloomberg could join us. Now, especially parents with some guidelines. He is the one of the 20th governor of the bank of england, mark carney joins us. He judges with a strict quiet period as he is a small meeting on thursday which we will not discuss. With any major central back or the appropriate rules and we speak this morning on Climate Change. Governor carney, when you look at Climate Change, i think the obvious question is why is a Central Bank Governor involved . Why have you taken an interest in paris . Reasons. As a survey governor, the bank. F england is a regulator the fourth largest insurance in the world. If you regulate the market, you know about the liability and asset side of the Insurance Company, they manage climate risks. These are most sophisticated managers of climate risks. The second reason, i chair the Financial Stability board and we have been asked by g20 leaders what should regulation do about Climate Change . Our answer was not regulation. This is about making sure the market works as well as possible for the market to work, it needs information. Were not making a judgment on market change. We want the market to be in the position to where they can ,xpress a view, positive negative, on risks and opportunities around Climate Change. That is what Mike Bloomberg and the private sector has done. They delivered the guidelines for financial exposure. Tom your institution goes back to 5094. The evolution in london 1594. The pollution in london has been horrific. We always improve it with economic incentive. What are the economic incentives of private enterprise . Done . What is the actual incentive to do good . Mark there are two incentives. The first are a series of policies that have been put in place in some countries. It is a carbon tax. Some countries it is regulation. In some places it is a combination of two. Incentives set of are around how does a company does itisks and how manage opportunity for creating longterm value . The thing thats interesting today is climate is coming into the mainstream in those conversations. Let me give you a couple of facts. You have eight of the 10 largest Asset Managers in the world signed up to support these recommendations. You have 20 of the globally systemic banks, young the worlds leading sovereign what funds come all the major insurers and many of the major engine funds in total more than 50 trillion of assets under management and more than 80 trillion of Financial Sector Balance Sheet that are looking for this type of disclosure. We saw overnight just one example with exxon mobils announcement on enhanced disclosure. The capital chain is looking for this information, including the two major shareholder proxy Voting Services which are responsible for 90 of that market. They are looking for this information and now they have the framework to get it. It tells the provider of capital who is thinking about risk, who is looking at opportunity and it was managing it well. Tom it would be inappropriate for you to make her comments on the Trump Administration and america, theved in polarity of the debate. I want to go back to your thesis at oxford. The dynamic advantage of competition. Speak to the doubters about the dynamic advantage of Climate Change action. How do we get the needle to migrate over to a better understanding of urgency . Two things. One, there are two tutors at tomrd, my mother and you who read the thesis. , who sees risks at opportunity echoed and it was managing a properly . Banksors are looking and you go from hsbc to jpmorgan to others, they are looking for which companies, not just disclose their Carbon Footprint but see how the governance processes and the strategies to address risks but sees opportunity. Let me get to the point about opportunity. The scale of investment required are trillions of dollars per annum for decades to come. I think at this point, i want to stress, with the bloomberg recommendation, they provide information for the market. You can be on either side of the market. You think that governments, whether in europe or u. S. And asia can take longer to put in place policies. It could be a bigger believer that there is one of the huge technological change. You could think that science is off or it is to negative. For all of those views in the market is an expression of a married of use. For those views, you need information to express them. Timeis doing is it is at a when is a mainstream demand. The major global systemic banks, they want this information. They wont all have the same view about the timescale, the urgency but that is ok. Those in market functioning as a market share. Tom you mentioned exxon mobil announcement. What is the incentive for big oil for speak to mark carney about Climate Change. Mark we do speak to the energy companies. They are all in. The first disclosure under these guidelines is php builtin bhp billiton. The reason they look at this is where this in error is, people of different scenarios. There is a transition. The transition from certain types of also fuel to cleaner fossil fuel. There is a lot of value along the way. Theres risks to be managed. It is in their interest to get that information out and that an intelligent conversation with debt and Equity Investors about where are we in the transition. Who is. Who is wrapping up alternatives. That is part of the reason why those leaving the companies are part of this. Tom in our elite world, live on airplanes. I mentioned big oil. Give me the incentives for airlines and the entire transportation in a test fuel,ry to figure out jet airplane pollution and Climate Change. This seems to be an inch to be a niche. At onen, you look of the conversations around the virgin group is a part of this. Virgin airways that you have flown on. They look at what other fleet . Are they knowing more efficient aircraft . Suppliers . All of those aspects are relevant to this. In the end, where nap all of time where the question is time where theof question is as it becomes more expensive, whether in terms of a carbon price or in terms of Consumer Attitude, because there are Consumer Attitude shifts that happen as well. What is your plan to improve efficiency . Manage these risks better . Take the opportunity. You do see it. In the consumers that space, and the electronic space, there are Certain Companies that are way out in front on this. They get a benefit from consumer demand. Tom Governor Carney, thank you so much. Mark carney. Well speak to Governor Carney or least listen to Governor Carney on thursday with the bank of england. We say good morning to all of you today. This is bloomberg surveillance. Im tom keene. Nejra cehic is in london. The frigid United Kingdom. That we do a data check before we get to our esteemed guest and where opening differently in the 6 00 our. Equities. Optimism up. Crude oil, it left off that hairline crack. The next screen please. Dow in a. 37 with the place. There is bitcoin down below. I know you couldnt ask governor mark carney anything about this week but weve got the inflation data. The weather might be cold but inflation is hot. Sterling barely budging on its own. The 10year gilt yield with higher after dropped more than seven basis points yesterday. That was on concern about the progress of brexit. You can equities up after struggling to find direction yesterday. We have been talking about brent. Causing concern and pushing the price of brent higher. Tom thank you so much. It is a joy to speak to howard ward, one of the great optimists of wall street. What a year it has been. You and i could go for one hour nonstop on the miracle of this bull market. Did you participate . When you see 22 on the dow, do you feel like you got your fair share . How did you outsmart everyone . Howard i would like to take credit for that of the truth is Growth Stocks have performed similar to what ive done. Theyre all up in the high 28. Ive competitive with this group. It has taken a large those technology stocks, software stocks, stocks like facebook, google, microsoft, apple. It has taken some of your stocks, some consumer the scripture stocks. Industrial stocks. Boeing is up 83 you to date. Tom what do you do now . Do you go to cash . D. C. To the banks and say that is all i can own . Everybody wants to know what your strategy is for next year . Howard im not a market timer. We are paid to play. Latei do believe this is a maybe the top of the eighth in terms of the bull market run it just bull market run. Bull market run. Times for earnings on the high side. I do think we have to be prepared for more to go times ahead. The period of complacency we have been enjoying is going to come to an end. The fed is tightening. It is to tighten again tomorrow. Were going to get some real turbulence. I would be on the more defensive side within my portfolio position. Tom how do you play it . D go to the banks . Just do you go to the banks . Howard the banks have had quite a run. The flooding of the euro curve which i think will continue. I dont think banks are going to be an area about performance for the next year. Because we dont see an acceleration in Economic Growth. I think this is important because even with the prospects of the tax cut, the mainstream consensus does not show any acceleration in Economic Growth next year. We have to bear in mind that the growth of your stocks, the of your stocks should continue to perform well. Pretty much saying. Tom lets bring in nejra cehic. Nejra howard, im glad you brought up the flattening of the euro curve. I want to know what relationship you see between where the 10year yield goes into performers of equity that you are invested in . Howard the amazing thing is this fed tightening cycle began two years ago. It kind four times. It kind four times. You wonder what is going on here . The only answer is the ultra low rates in europe and asia courtesy of the quantitative easing that still going on has kept a lid on rates here in the United States. Europe and asia, they are still doing qe. The fed as it tightens, i dont think youre going to get much of a lift. The yield curve is going to stay on the flooding side. It is similar to the conundrum that greenspan faced in the early 2000s when he was trying to push up long rates by tightening and it wasnt happening because of the asian demand for treasuries. It is similar to that now. You end up with really an extra turbo boost to a soft market. The difficult times that this stock market might have encountered with the fed tightening, it is all being postponed. We have had a stay of execution and were getting more speculation in the market that may be expressing itself in the form of the coin, but it is there. That is the byproduct. Tom did you bring up bitcoin four minutes, it is two seconds into this interview . Howard how could you not . Tom how would on bitcoin, are you kidding me . Howard first of all, we dont own any bitcoin. Im not recommending bitcoin. I have been wrong on bitcoin. Back onwill come bitcoin. [laughter] nejra howard ward stays with us. Coming up, we speak to john we show son live from paris. This is bloomberg. Tom good morning, everyone. Bloomberg surveillance. Nejra cehic and for francine lacqua. Alabama is not only a special election but a special election as you know it which is been hugely contentious. He is outside of the Alabama State capital. This is the building that Jefferson Davis was it not graded front of an 1851. Kurt Kevin Cirilli joins us. Kevin, i want to know the buzz this election day morning. I read it all last night. It is usually fluid. What is the single thing you are focused on . Khiem good morning. It is going to come kevin call it is going to come down to turn out. In a state that has never voted for democratic senator indicates. Bannonre act by steve and they are focusing on getting up to the rural vote as much as they can. This vote here in alabama with pulse set to open in under two hours. Lawmakers, Business Leaders as well as athletes and media elite have really dealt with the fallout of an ongoing Sexual Harassment and Sexual Misconduct cases that are really capturing the attention of american culture. Barkley showed up in support of mr. Jones last night. This is the band of black voters , how do you get the blackbaud out today . Is it doortodoor . Tevin coleman it is Charles Barkley just kevin kevin it is Charles Barkley. Ifpporters as well as you dont think i have the right character for this, dont vote for me. I spoke with several undecided voters that said they are sick of both candidates. Steve bannon delivering a more than 30 minute speech ahead of roy moores comments. Really hardly mentioned roy moore pretty talked about how he come to meance has much more than roy moore and that it is a defense of President Trump it on the right, they are digging in and doubling down. On the left, doug jones trying to walk this line. This is a conservative state. Givees barkley trying to that lastminute hope in the fourth quarter. Tom and all of this is how mr. Bannon was received. He is a lightning rod for controversy. Exactly how was mr. Bannon received . Kevin he was warmly received. In addition, there were other several conservative folks who spoke. They lambasted the allegations of sexual against judge roy moore. They been unfairly gone after by the media. I spoke with a lot of undecided voters last night including republicans in this deeply conservative state that are bothered by these allegations. If youre outside of washington, this means is it could present present more of a. Olitical theater tom the results will be interesting. More to continue this hour on bitcoin. Also, weve got to go to bitcoin. There is the mandate for central bank. There is the we go by, 8 00 central time 8 00 new york time. This is bloomberg. Nara francine is up for the morning. We have a beautiful shot of london. It is looking great, but feeling very cold. Emma lets get you caught up with headlines. Today in alabama, voters will decide if they can elect a republican candidate that split the party. He is backed by President Trump, but opposed by a number of republicans including richard shelby. President trump once the u. S. To send astronauts back to the moon. The president s directive to nasa changes a single paragraph. Mr. Obama had called for Missions Beyond the moon by 2025. Conservative, activists are demanding republicans hold the line on the Corporate Tax cut to 20 . Some have proposed cutting it to 22 . The difference would use to offset other tax cuts. More helprkers face tightening in 2018. According to a recruitment firm, wages will drop. 5 next year. Many british workers of seen their incomes squeezed by inflation and tiny pay hikes. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Nejra thank you so much for that. Just a quick line crossing the bloomberg about the bank of scotland. They will leave a bonus pool flat for the First Time Since the crisis. Thats an important scoop. Tom we are with howard ward. He has done better than good this year as he has with optimism on the markets. I want to go down to methodology. What is tim cook going to do with all that money . Do you assume youll get a check written out by hand from tim cook . Howard some of that money will continue to build their share buyback. I would imagine they will give some bomb to the dividend. Bump to the dividends. There will be some m a. It is some the smaller stuff. There will be a combination of uses. Tom they have disney and fox in the mix when it comes to mergers. Are we doing transactions . Are we consolidating . Is that a good thing for portfolios . Howard if you are lucky enough to own it. I dont know. I think its part of capitalism. Cycle ofngoing Companies Getting bigger and buying others and merging and adapting to rules and changes in Tech Knowledge he. Its part of the landscape. Tom since there is no growth at the top, there is a dampening revenue. Frame your view of revenue for next year. Is it doubledigit numbers . Are there good at singledigit revenues western mark isnt unit dynamics . Will price be a challenge . Howard i think with really important to know here is we are going to have about 13 used in s p earnings this year. It is around 10 next year. You are looking at topline growth weston 4 . Its a huge gap. Nominale, we know that gdp has equated to earnings and the share price change. Weve got to close this gap between earnings and revenue. If earnings were always growing it double digits, earnings would exceed revenue. That really doesnt work. We are in a lower nominal gdp world. The historical model for the stock or could has been ticks percent nominal gdp. Now we are in this for percent nominal gdp during good times. We are not expecting an acceleration presently. You need productivity improvement. The labor force is growing at less than 1 area the only way to boost gdp is with productivity. They have not had the investment because they have not had the demand. Companies of not needed to make the investment. They been doing share buybacks and mergers. This is continuing. Hopefully, with a Corporate Tax deduction there will be more money that will filter its way into investing for the future and we can boost productivity. Youve got to boost it a lot to get back to 7 nominal gdp. Got a longterm commitment to these. For those who dont have to have that, should they be invested in equities . Could be the top of the eighth inning. The easy money has been made. This is the second biggest bull market in history. The nine Year Anniversary is march. Only one bull market was longer, in the 19 90s. If you have the need to pay tuition bills, i wouldnt try to convince you to not take the money out of the market. You have to have the commitment. The complacency has been remarkable. The stock market averages corrections every year. This year we have had none. This cannot continue to be the case. We are going to have turbulence ahead, not only with the fed tightening, but also as they withdraw stimulus in europe, our rates are going to go up. That will let be the friend of the stock market. That could be a situation that presents itself sometime next year. If youre not fully committed to this market, take some money out. Nejra with the turbulence you mentioned, if we look at the vix below 10, how damaging it could the unwind the . Be . Zero attention to the vix. I dont study it. I dont have any investment in it. I dont know what to tell you. Tom very good. Thank you so much. We are going to paris right now. Ons is what we can do bloomberg surveillance. Greeting world leaders. Mr. Gates made an appearance in paris as well. Theresa may, this is for the one planet summit. This is what you do as a leader. People are wheeling in with their cars. This is what we have right now. We are watching a little diplomacy in action. We say good morning to all of you as macron goes through the diplomacy. Good morning, everyone. This is bloomberg. The bloombergt to business flash. Europes largest commercial landlord has agreed to buy 15. 8 billionor dollars. They own 35 malls in the United States and the u. K. Westfield is one of those premier brands and platforms we believe fit seamlessly into what weve been doing, focusing on innovation. This is a strategic transaction for the first global premier retail in the best cities in the world. Emma they have been trying to repurpose shopping centers. Disney is closing and to buy a big lease of 21st century fox. A deal may be announced this week. Acquire the film and tv studios and some cable networks. Blackrock says bitcoin prices are after a rally. Blackrock says the higher the bitcoin valuations go, the more likely we will see more volatility. Thats the Bloomberg Business flash. Nejra thank you so much. World and Business Leaders are gathering for the one planet summit in paris. The twoYear Anniversary of the harris accord on Climate Change. Emmanuel macron is showing progress being made toward reducing local warming after donald trump told the u. S. Out of the agreement. Lets talk to the ceo who joins us from paris. Its great to have you on the program. I spoke to the secretary general earlier. Are we making progress on solving the issue . He said yes. Where do you see the actual concrete progress in the fight against pollution and Climate Change . I would like to say that in my view there is no doubt on the fact that temperature is rising and Global Warming is there. We have to take action. We in paris are convinced we have to take concrete action. We welcome mr. Macron and his initiative and the decisions that will be taken at the state level and also with cities and companies. Nejra how much of a concern for trumpss president attitude toward Climate Change . Involving water and waste management, to be able to provide water to everybody worldwide is something we are involved with. General,at water in also volume is it stake. In my view, if we dont take initiative to make sure resources are available for the population, its going to grow up to 10 billion people in the coming 20 years. If we dont take care of that, we are going to face very difficult issues in the coming years. Nejra what is the worst Case Scenario you see in terms of water scarcity lovely . Globally . Take seriousot measure in order to contain the Global Warming below two degrees, we will see more and more Serious Problems such as hurricanes that the u. S. Has seen in the last three months. We will see very high strong winds. We will see these types of events coming in different forms. Some countries will run out of water. Thatis due to the fact there are a lot of droughts coming in in australia, africa, the middle east. We have to take action soon and rapidly if we want to make sure that by the end of the century, the planet will have a temperature. Nejra which countries are affecting a good example in terms of how to deal with water scarcity . A good example of what can be combinemy view is to what can be done in the cities with what can the brought by companies. They have to Work Together in order to make sure that cities living in aions reasonably good condition. , but alsorms of water in terms of energy and mobility. I think one of the major subjects we have to solve in the coming years for the big cities are big polluters. One of the big opportunities for sewers in this environment . You mean for a company . Nejra exactly. The revolution. It means we are becoming a provider of new resources. It could be second to the economy. Methods. Be bio it could be reused water. There are a lot of options. Solutions torovide what is becoming a warmer planet today. Nejra thank you so much. Tom . Ern mark tom let me bring up tv. This is the briefing you can see every morning on your terminal. This is very valuable. Far more importantly, you can come over here and scroll down. You can go back and look at an interview with our conversation with the governor of the bank of england, mark carney, that we did earlier in this hour. Stay with us. This is bloomberg. Nejra come up shortly, it is bloomberg daybreak. David nejra we seem to lost david there. Lets get your single best chart. Tom we will get those wires fixed. He has an important interview come up with bitcoin. It will be there it is. The winkle voss twins. 8 00 hour. E in the cameron and tyler, how about that . Look for them on bloomberg daybreak. Its an important interview today. Just as important, this is the chart that matters. Bring up the single best chart. We are honored to show it with howard ward. This is 2000. This is the boom in the dow. Because this is a logarithmic chart, i can take this dimension and drag it over here to where we are right now. 2000, arehere near we . We are nowhere near the stupidity of 99. Howard you have a lot of companies that have no earnings that were trading at ridiculous prices. Are ateight teams 18 times forward earnings. We are multiple points higher. That excludes the craziness that was taking place in other parts of the market area and there is room to run. Here is the question. Is this the new normal for equity ratios . As opposed to the historical average which is 15 times forward earnings. Youve got to tell me that the long tenure rates are going to say stay south. Tom you mention this earlier. This is 4 revenue growth. Here is the margins down here, which are double digits rid to Corporation Still have the efficiency to generate this double digit magic out of a single digit topline . Howard its difficult. Peaking,e margins are have peaked. We see wage pressure and more difficult meetings. Skilled labor is in short supply. I think its going to be increasingly difficult. S a headwind area headwind. Nejra you were talking about earnings per share. When you talk about tax reform and the impact that could have on earnings, once more important . The tax cuts impacting the consumer . Howard its certainly a combination. The effective change for Corporate America will probably add five Percentage Points to earnings. Aroundective tax rate is 25 . Someu lower that to 20 , companies are paying 35 . Average of five Percentage Points of improvement. It would appear much of the middle class will be getting some sort of tax cut rid if you are a high income earner in a blue state, your taxes are going up my friend. Maybe thats deservedly so. Thats the reality. You have a Republican Administration that is imposing higher taxes on one of their core constituencies. Im not sure that is ever happened before. Thats just the way it is. Maybe they will change and bring back the deduction before the bill becomes law. It doesnt look like they are inclined to do that. Else you might add into that mix in 2018 western mark howard the under weights are important. I would not be a fan of commoditybased businesses, especially if china is slowing and it appears to be slowing. On can move daytoday shortterm supply disruptions, thats not good news for oil. Its not good news for commodities if china continues to slow. That has ramifications. In Corporate America, youre getting a nice lift with industrial stocks. I dont know how much thats going to last. Businesses great. Its up 83 year to date. Pretty impressive stock area stock. Tom this is been a great briefing. Exchange a foreign report right now. Theres radio. The euro is 117. This is bloomberg. Alix a fiveyear high, u. K. Inflation jumps over 3 forcing mark carney to explain rising prices in a letter. Yellens swan song as the fed kicks off a twoday meeting in the busiest week of the year. Climbing 55 a barrel for the first time in two years. David welcome to bloomberg daybreak. I am david westin with alix steel. Alix we are two hours for me cash open here. The s p closed at a record high yesterday. Euro dollar flat, its a weaker dollar story emerging. There is not a lot of action in the treasury market area the move is in brent. Take a look at my chart of the morning. Its a huge move over the last two days of 65 a barrel. David you are not excited at all