lizzy: good morning, this is bloomberg daybreak: europe, i'm lizzy burden in london and these are the stories that set your agenda. the yen strengthens and japanese bond futures fall as comments by boj governor ueda fuel bets on an end to negative rates. traders see this month's meeting as a live event. leaders from the european union and china meet face-to-face for the first time in four years. but sluggish chinese important data dashes hopes of a rebound. the heads of wall street's biggest banks take a swipe at washington plans to force them to set aside cash as a buffer against losses. good morning, it is a busy day. it's just gone 6:00 a.m. in the city of london. there is a lot of political news and markets news to get you up to speed on. let's check on our markets. euro stoxx 50 futures down 0.5 percent, ftse 100 futures down

0.6 percent. both and send pe minis and nasdaq futures down 0.1%. if we flipped over the crest as a picture, this is where it is happening. the 10-year jgb yelled has risen by the most in a year on comments from the governor of the bank of japan. we will have more analysis in a moment from our mliv team. until then, the story was of stronger dollar and lower u.s. yield. this being a reaction to fresh signs of softness in the u.s. labor market in those adp numbers. more data on jobs today and tomorrow, but currently you are looking at the yield on the 10-year treasury currently at 4.17%. and while, the bloomberg dollar spot index pretty steady at the moment. but the town in town until the governor spoke was commodities. the spot index has been at its lowest level since 2021, partly

driven by china's debt burden. moody's cut its ratings on a number of local companies. that bellowed of the downgrade of chinese sovereign bonds. you have had concerns about the oversupply of oil, looking at brent crude trading below $75 a barrel. this is likely going to have implications not just across bond markets, but because of that, also on ethics and emerging markets. therefore, that could feed into stocks as well. we want to get back to the main story of the morning, the bank of japan, traders see its december policy meeting is a live event. after comments from governor ueda and his deputies spooking traders. we will have more on this from mliv team, mark renfield joins me now. we have had this news out of the boj. just talk us through the ramping up of rate hike bets in response. >> suddenly, what's happened is

traders think the bank of japan meeting in just under two weeks suddenly could mean something. until today, everyone had written up the next bank of japan meeting, thinking nothing was going to happen. everyone was comfortable with the idea that the bank of japan when they finally tighten monetary policy would probably not do so until at least the second quarter of next year. suddenly, that's all changed. in the past 24 hours, we have had the deputy governor and the governor of the bank of japan both speaking. some of their comments indicate that they may be a lot closer to changing policy than everybody thought just 24 hours ago. certainly, all these things coming together. we have had in the futures contract, we're switching to the march contract which is also causing volatility. there was a 30-year jgb auction which went extremely badly. it had the worst tail on record for a third year auction. that's all come on the same day as ueda giving these comments. suddenly, there is a lot of speculation that traders need to

be prepared that there could be a surprise at the december meeting. don't forget, exactly a year ago, it was that december meeting where the then governor of the bank of japan decided he would change yield curve control completely out of the blue. we know that the bank of japan is fully capable of providing huge shocks to markets and that's what we're seeing today. at one stage today, the japanese 10-year yield rose the most in the face of the year. it's been a significant day and it's beating through to treasuries, to australian bonds, all starting to reverse. the rallies have been huge over the past month, so it's only a partial reversal, but a very big day considering nothing was expected at the start of it. lizzy: you can count on the bank of japan for a christmas surprise. we will keep across the picture at the boj, but let's also talk commodities. does this drop in oil prices shift market expectations for when the fed will cut rates?

>> from the fed's point of view, and the other central banks, they will be very relieved that oil is coming down. it feeds into their inflation narrative. they think they have it under control. it will continue to make sure that inflation is very well-kept. if you look at the u.s. in particular, the employment situation is still strong. talking about 3.9% unemployment, that's not a scary number. it still shows you that the situation is strong there. the effect is probably no rush to cut interest rates, even though the market is pricing more than a hundred basis points' worth of cuts. the fed will try to keep them backed off for some time. they want to hold as long as possible to make sure everything is under control. but they will stand the pressure. the markets will continue to price because that's what they do. they are convinced already but the fed has finished raising rates, so the next logical thing is for the fed to lower rates.

and the markets will stay that way for a long time. but you can expect that the dot plots next week will be a little higher. that will push the market back slightly. in terms of where they go, it's about the employment rate. once we see 4.5 to 5%, then the fed will feel comfortable they can lower rates. lizzy: bloomberg's mliv's mark renfield. other data this morning is out of china. china's imports unexpectedly shrank in november from a covid hit period one year ago, and that has dashed hopes of a rebound in domestic demand. china exports rose on the month, the first time since april. let's get analysis from jill disis. what's driving this expansion in exports? >> i wouldn't put a whole lot of stock in that slight expansion we're seeing in exports year on year. as you said, this is comparing to a period in november 2022

when a lot of the country was dealing with a lot of movement curbs, we're still dealing with pandemic outbreaks, that kind of thing. even if on the headline number, that 0.5% growth might feel better than recently for exports -- they have been tricking so many months in china -- it doesn't tell us a whole lot of good news about the health of global demand for chinese goods. this is a period where you presumably would want to see bigger uptick in exports because we are gearing up for the holiday season as china is shipping things overseas. the fact of that underwhelming number is a big concern. it indicates we are continuing to see china growth challenges. trade, formerly a massive driver of growth for china's economy. we're not seeing that pickup in foreign demand that you want to see for china right now. lizzy: what does the shrink in imports mean? >> the shrink in those imports

numbers is especially concerning. just because it compares to that pandemic lockdown period in 2022. what that's telling us is domestic demand in china is still under a lot of pressure. remember, this is a year when we were kicking up 2023, we were thinking the recovery in china was going to be driven by consumption. people emerging from the pandemic spending more money. we have seen a pretty decent pickup throughout the year in terms of spending on services, as people started traveling more, spending out of restaurants. but goods purchases have been under a lot of pressure. a lot of this does come down to the property crisis. people less interested in buying things like furniture and goods for their homes. concern about the health of the property market is weighing there. what this drop is telling us is a lot of that domestic demand is

under pressure as we get into 2024. lizzy: jill disis is in taipei today. i want to get to the drama on capitol hill yesterday. what a day, you had wall street bosses taking their most direct aim yet at washington's plans to force them to set aside more cash as a buffer against losses. executives tried to reassure lawmakers that americans are safe in their hands. >> we had 10 years to do this. it's shocking, after 10 years, talking about what it's going to do for small business and we have to analyze it today. >> more impact than people think. >> wholly unnecessary. >> every element of the basil three and game would make lending and financial activities more expensive. >> would increase the cost of capital in borrowing across the economy. >> it could create volatility in our funding treasuries, in the treasury market. >> it will diminish mortgages

for lower income people. >> ultimately punitive to economic growth. >> it was not thoughtfully done. i'm not sure it was shared fully among the regulators. let's bring in jenny surane from our finance team for analysis. what are your main takeaways from this blockbuster session? >> you got it right. basel was the main nemesis of the day. these banks were coming out swinging. they are keen to get these rules either rolled back or postponed, or done away with entirely and they weren't pulling any punches. you saw a lot of that anger. really a lot of the banks trying to say to these senators, if these rules go forward, we will be constrained and not able to do as much lending. you do not want this. lizzy: speaking of not pulling punches, jamie dimon did not mince his words talking about crypto. >> have always been deeply

opposed to crypto, bitcoin, etc. you pointed out the one true use cases criminals, drug cap occurs -- drug traffickers, if i was the government, i'd close it down. lizzy: turns out that's not an unpopular opinion in washington. >> that's exactly right. you had an interesting exchange where senator warren it was one of the ones expected to go hard on these banks may be push back on their opposition to basel. she took kind of an interesting stance where she was calling on banks to support her efforts to further regulate crypto. a very unusual time where senator warren and big banks are on the same side. lizzy: unusual indeed. it's a very busy day both for geopolitics and eco data. at 7 a.m. london time, the latest german industrial production numbers for october. should give us insight into the

state of the economy in the final quarter of 2023. indicators suggest we are past the nadir but activity is expected to stay weak. at 10 a.m. london time, more from the market digest when the ecb will cut rates. we will have the finalized euro area gdp. at 1:30 p.m., attention turns to the u.s., and when the fed is going to cut rates. we will get that second installment of u.s. jobs data this week. it's the initial jobless claims. our economists expect slight decline because of the volatility around the holiday season. anecdotally, anecdotes being important at times of economic turning points, anecdotes suggest the labor demand is easing. you can get a roundup of all you need to know to get your day going in today's edition of daybreak, the newsletter. terminal subscribers can go to dayb . we've got plenty more ahead, so

stay with us. this is bloomberg. ♪

lizzy: is just gone 6:16 a.m. in london. the united arab emirates plans to present the un security council with a draft resolution on an immediate ceasefire in

gaza. this is backed by the 22 countries of the arab group, as well as the organization of islamic cooperation. for more on the conflict, we're joined by dana. just talk us through the rare u.n. action and this call for the ceasefire. >> the u.n. secretary general guterres invoke the most powerful tool under his disposal. that is to bring forward the issue of gaza in calling for immediate ceasefire there. this tool will allow the council, forces discussion on the issue. that's when we believe the uae plans to submit a un security council resolution calling for immediate ceasefire in gaza. that will be supported by the so-called arab bloc and muslim countries as well. lizzy: meanwhile, we have had the u.s. ramping up the rhetoric.

pressure on israel to act carefully here. what's the latest? >> we have five democratic senators asking the biden administration for more oversight on israel's use of american supply, or american-made weapons during its war in the gaza strip. the letter is based on one major report earlier this week from amnesty international accusing israel of using american-made munitions in airstrikes that wiped out entire families on two different occasions during october. the report says these attacks were indiscriminate and there was no war objective. and calling for investigation into what they believed was a war crime in the gaza strip. and you have senator bernie sanders calling for more

conditions to be placed on israel in the new round of military supplies from the u.s. lizzy: thanks to dana in dubai. the u.s. a big voice on the conflict in the middle east, but russia having a role. foil on the agenda when russian president putin made a trip to saudi and the uae. a rare occasion this, his first time sitting the lng-rich region since his invasion of ukraine two years ago. to tell us the readout, our emea news director ros mathieson with me in the studio. what were some of the talking points? >> interesting to see vladimir putin visit the uae and saudi arabia in a single day. almost three hours with mohammad bin salman talking about everything you can imagine, but stressing the breath of the relationship saying this is not just political ties with the uae and saudi, but also a trade

relationship, an economic, perhaps strategic relationship. very much as you say, an oil relationship because they are all key members of opec-plus. the idea was to show a united front with saudi arabia on the pledge to keep cutting production. saudi arabia has stuck its neck out and facing opposition from other opec members. russia shoring up saudi arabia. perhaps publicly, if not behind-the-scenes. stressing the depth of the relationship. that's a message both vladimir putin at home, but also very much out to the west. lizzy: is evident from our conversations with saudi arabia early in the week that russia and saudi saying from the same hymn sheet. what does this say about the role of gulf states in geopolitics broadly? >> we have seen saudi, uae,

turkey and qatar showing more desire to step up on the global stage and play that role of influence. we have seen it with russia's invasion of ukraine, mediating the release of prisoners, we are seeing it potentially with israel's conflict with hamas in gaza. showing again they are a force to be reckoned with. that's why you see not just russia and the u.s., but also china wanting to engage with these countries, seeing them as potentially important in their orbit. they are important players by all those bigger powers, setting them up for potential tension between russia and the u.s. when it comes to the middle east. lizzy: tectonic plates shifting as we speak. thanks to ros mathieson for that analysis. plenty more. more than 115 countries pledged to triple renewables by 2030 at cop28. but is that achievable, is it ambitious enough? this is bloomberg. ♪

lizzy: welcome back to "bloomberg daybreak: europe." the u.s. climate envoy john kerry says the world needs to phase out some fossil fuels to hit net zero targets by 2050. cop is rumbling on in dubai. john kerry says employee carbon capture technology is essential to reducing emissions. the clash over the fate of fossil fuels could set up a difficult second week in dubai. diplomats must negotiate a text everyone can agree on, and reach consensus on issues including climate financing. more than 115 countries agreed to triple the amount of renewable energy installed around the world by 2030, but can they do it? let's ask lead analyst in

bloomberg's solar team. given the urgency to get net zero emissions, is that the right target? is it ambitious enough? >> i think it is actually. we have modeled a pathway to net zero by 2050. a lot of other sectors need to be involved, but a big part of that is increasing renewables to d carbonized power grids. power grids are the easy bit to d carbonized. the total capacity in our scenario to 2030 is 10.5 terawatts, which is more or less 11 terawatts the tripling renewables goals would be. lizzy: clearly, not everyone is on board with this, at least, not yet. as meeting the target require everyone to do as much as each other? or can really on in some countries to do more than others? >> is a simple target, very

simply, some countries have more renewables already than others do. brazil gets about 85% of its power from renewables already, it doesn't need to triple renewables capacity. what would really help is if africa and the middle east and south east asia started building a lot of renewables. it's a global goal, not local. china, in fact, has the most renewables already and hasn't signed up to the pledge yet but we think it will triple renewables anyway. lizzy: yet there don't seem to be many details of how the target will be met. what would a world with triple renewables look like in reality? >> the target has the virtue of simplicity. as a solar analyst, we need to be building more wind. we expect the solar target to be met with no trouble. but solar has a lower capacity factor than wind. if you look at the numbers at the end of 2022, solar is a much

bigger block of capacity than it is of generation, because a megawatts of wind or hydrogen provides more power than solar. tripling capacity is great but it would be really good of a good ivanka trump of that was wind. lizzy: is this achievable? >> certainly, the solar bits. the seller will happen anyway. we need to build more wind, especially in seasonal climates like northern europe. go ahead, jenny. our forecast for 2030 is that we do miss the tripling capacity target, and specifically, we don't build as much wind as our net zero scenario would call for. [indiscernible] lizzy: jenny chase, lead analyst in the solar team, thank you for that analysis. china's president xi jinping tells eu leaders the two sides

must work on cooperation and political trust. more on that meeting in beijing ahead. we are looking at u.s. future is currently pointing to a slightly lower opening. just in the red, but euro stoxx 50 futures are down 0.5% as we look towards the start of cash trade. but the big news of the morning is the japanese 10-year yields rising by its most in a year off the back of comments from governor ueda ahead of that boj meeting. the yen currently trading at a 146 handle. this is bloomberg. ♪

dear moms and dads, what you have achieved here today is going to help us and our futures. it is why we're coming up on stage to collect your diplomas. mom, love you always.

vo: when you graduate, they graduate. visit finishyourdiploma.org to find free and supportive adult education centers near you. lizzy: good morning.

this is "bloomberg daybreak: europe." i'm lizzy burden in london. the yen strengthens anti-japanese bond futures fall as comments by doj governor ueda fuel bets on an end to negative rates. traders see this month's meeting is a live event. leaders from the european union and china meet face-to-face for the first time in four years. but sluggish chinese import data dashes hopes of a rebound. the heads of wall street's biggest banks take a swipe at washington plans to force them to set aside more cash as a buffer against losses. we will bring you their testimony. very good morning. it's just gone 6:30 a.m. in london. let's check markets, you have futures pointing to a lower opening on both sides of the pond. the real story is in the cross asset picture. you have these comments from governor ueda. they had sent the 10-year yield

up its most in a year, also, the yen has been flying against g10 peers. until then, the story had been of stronger dollar and lower u.s. yields in reaction to u.s. labor market data. we will get more on that today and tomorrow. currently looking at the 10-year yield that 4.16%. the dollars spot index steady as we's bait. the biggest show in town had been commodities. the bloomberg commodity spot index has been at its lowest level since august 2021, partly driven by the china story, china's debt burden, the moody's downgrade of chinese sovereign bonds and cutting ratings on local companies. but also, the concerns about the oversupply of oil. you have brent nearly $75 a barrel now, currently up zero point 6%. all of that will have huge applications across bond

markets, hence fx and em markets, that could feed into stocks as well. let's get back to the geopolitics. chinese president xi jinping has told european leaders from the eu that the two sides should step up cooperation. you have xi meeting with commission present ursula von der leyen and council president charles michel in the chinese capital earlier today. i've got the best team in town to discuss this with me. bloomberg's maria tadeo is in brussels. and rebecca choong wilkins in hong kong. rebecca, what did she have to say about this meeting? >> xi did strike a positive tone. he underscored the strong momentum behind the relationship between china and the eu. he underscored the progress that the two sides have made. what was interesting to me is he also tried to emphasize this commonality between the eu and china. specifically, he made this point

that both china and the eu are the two major forces that promote multi-polarity, diversity, and promote globalization. this is an important point because this is a framework beijing often uses, this notion of the multicolor world, to push back against the u.s. and what they deem as the u.s.-led world order. xi trying to set up a framework in which the eu is closer to china's approach to international relations, then it is with the u.s. lizzy: we were talking about the geopolitical tectonic plates shifting in the context of russia. china as well jostling for position. maria, what does the eu want out of this? maria: certainly, the european commission would disagree that the eu is moving closer to china. it has more in common with china

and the united states. if there is something this commission is known for, particularly ursula von der leyen, is this close relationship she has with the biden administration. to underline this point, both have gone for this new tagline, is not clear what it means, but we talk about this note to decouple, but yes to de-risking. that is the message from the commission. the european union believes that they carry out their own foreign policy. it doesn't mean they have to fall in line with the united states on every issue, particularly not when it comes to china, but they are certainly reliant on this idea of no to a decouple, but yes to de-risking the economy. to answer your question, the chinese are going to find a more assertive eu. that doesn't mean we will get any resolution to the trade irritants, as the european union will call it, but they will find a eu that believes there are

imbalances in the trade relationship between the eu and china. they point to that trade deficit which continues to grow. when it comes to russia and ukraine, the standard line from the european union is that chinese authorities could have done a lot more to influence vladimir putin to pull back. critics of the eu say they are naive when it comes to china and russia. if xi jinping wanted to mediate, he would have done it a long time ago. lizzy: top coverage from brussels and hong kong. that's bloomberg's maria tadeo and rebecca choong wilkins. i want to bring one of our top interviews. amd unveiled a new line of ai-accelerated chips as it takes aim at nvidia. the ceo spoke with ed ludlow on the red-hot market for chips and their forecast for the industry. >> if you look at performance, we are very competitive.

let's call it a tossup upgrade when you look at inference performance, we are 1.4 to 1.6 times better. if you are running these models, you can run more models, or you can run larger models with mi300 . right now, the key to a you -- to ai's gpu compute. we are here to provide lots of gpu compute. >> you have had the confidence to dramatically alter your forecast with ai accelerated. total addressable market of 400 billion u.s. dollars in 2027. just in august, you said it was $150 billion, what has changed? >> the way we look at face things as we usually look on an annual basis. when we were doing our plan for 2023 and beyond last year, we thought this year there would be about a $30 billion market, and

it would grow 50% compound annual growth rate, so about $150 billion in 2027. which frankly was very large. we can all see what's changed. people need more compute, they are installing more. the numbers this year are probably closer to $45 billion. when we talk to customers, when i spend time with our partners, what they tell us is that technology requires more compute. so we now believe the total market for this is upwards of $400 billion in 2027. there is no one-size-fits-all. there will be multiple solutions. there are lots of good ones out there today, but we believe the amd capability is very significant. so, we're excited about it. >> it was interesting to see on stage how mi300 manifested in the real world, but you have guided that it will be the quickest amd product to $1

billion. there were sections of the street that said your forecast of $2 billion of sales for mi300x in 2024 was conservative. if you say the total addressable market is now $400 billion, then is that forecast for next year specifically for mi300x as conservative as the market thinks it is? >> look at how this technology is evolving. we did update in our last conference call to an expectation about 2 billion in 2024 for data center gpus. it's an early estimate. we have clear line of sight to that. people ask, there is much more customer demand, definitely, and significantly more supply because we have had to prepare the supply chain so we are ready to ramp. we will update as we go along. we are on this path to ramp mi300, the fastest anything has

ever ramped at amd. i view this as a multi year opportunity for us. lizzy: that was the amd ceo lisa su with ed ludlow. i want to stay with ai. we've got an update coming in just a few minutes ago, the eu council is postponing its briefing on ai rules, as the talks continue to go on. for the latest, we have bloomberg's tech reporter aggi cantrill in berlin. why the delay? what's holding up these talks? >> as you can see from that headline that just crossed, these are talks that are still ongoing. this is a very contentious issue. this is been in the works in the european union since 2021, so before the latest boom in ai we saw with the unleashing of chatgpt to the wider public. this is been in the works for several years.

still this debate is ongoing. this talk of 16 hours in at this point, and there is still a lot of points of contention. the scope of this negotiation is trying to establish the first comprehensive regulation for artificial intelligence in the western world. this is significant because this is something the eu is already known for. they set the gold standard for the rest of the world when it came to gdpr, when it came to data protection, and they unleashed the digital services and markets act, they want to stay at the forefront of this sort of legislation. and that the next area for them to put some guardrails within tech regulation is ai. they are trying to look through the context of how you assess the risk of certain applications. you have the sort of technology we see every day, that is seen as limited, or low risk applications. then you have these high-risk

applications like social scoring schemes, or facial recognition, that is still debated and in many cases will be deemed unacceptable technology. there is a broad range of applications between the unacceptable risk, and the very low risk, that's where a lot of that contention lies. lizzy: tech reporter aggi cantrill. thank you for that update. now the uk's top fraud authorities have arrested and raided the london home of an aviation industry executive in the early hours this morning. let's get more from kate duffy. >> the latest is, the fraud office said yesterday afternoon that they have raided and arrested an individual in association with a london firm accused by regulators of supplying engine parts with fake documents. the sfo said it has launched an

investigation, and the probe involves the supply of airplane parts in the u.k., and other countries as well. this person was arrested over allegations of suspected fraud. and is currently being questioned. the sfo said it is working closely now with the u.k. civil aviation authority and other regulators whilst it continues its criminal investigation into aag. this is an important step because it's the first public move by an agency to pursue criminal action of this particular scandal of bogus airplane parts. something bloomberg has been reporting on since the summer. really highlights how widespread and serious this issue could be. lizzy: thank you to bloomberg's kate duffy for that update. coming up, from geopolitics to climate change. we will discuss the driving forces for markets in 2024 with

j.p. morgan sheriff global research joyce chang. i'm sure ai will come up to. that conversation is next. this is bloomberg. ♪

lizzy: open back to "bloomberg daybreak: europe." asian stocks are in the red following declines on wall street. markets under pressure from weak oil prices and concerns about china's fiscal health. for analysis of this and the big picture, joyce chang joining me now, chair of global research at jp morgan. today you are at the global markets outlook conference in, is it frankfurt? as i mentioned, equities nearly at all-time highs, and we're pricing cuts.

is it a soft landing scenario, or do the markets have it all wrong? joyce: i think you have a softish landing scenario in the u.s. and europe, but we are still putting in 2025 at 60% what we are calling boiling the fraud, and 40% the goldilocks scenario. this could take a while to play out, that's one reason markets have been so strong. the near-term story over the next three months, there is not a lot of uncertainty. but that really changes if you look over the course of the year. just sitting here in europe, i think it's a softish landing but we see mild recession in the united kingdom. overall, global growth is falling below potential to 2%. that's part of the story is these positive shocks that we saw last year are diminishing.

we are calling it really a year of diminished conviction going forward. you will see the core inflation will get sticky in the twos, we think it will end up closer to 3%. the market is rallying because the next three months look more certain, but the next 12 months, is still a risk ahead that will build in the second half. lizzy: let's put it a different way, who cuts first? joyce: norgesbank and riksbank, then 100 basis points from the fed in the second half. for the ecb, its third quarter but could be more in play by june. the market is pricing earlier than that, but we have kept to the third quarter for that. i think bank of england last because you have more structural issues, stickier inflation. you also have wage pressures that are higher there, that that's also where you have the higher recession risk. depending on how this plays out,

that could have to be moved forward. lizzy: first quarter ecb cut science-fiction in your view as was put yesterday. i want to ask a big question. central bankers have been telling me the language of data dependence has been misinterpreted, what they really meant is they were looking at long-term trends, but markets are clinging to every blip in the numbers and that's why we're seeing this volatility. joyce: central banks have been clear that they need a sustainable trend. that's why i think first quarter ecb, or like that that has pivoted, it's too early to say the trends are sustainable. the hard thing about this is the way the market is looking at the difference between recession or soft landing is, is core pce at 2.5, or 3%, is u.s. on a planet at 4% or 4.5%

you are talking 50 basis point differences. that's hard to forecast a year out there. the point is what trend is sustainable at this point? and central bankers are saying, we're waiting to see if disinflation is sustainable. the issue is you probably will get stuck at some point. is it going to be close enough to comfort central banks? that remains to be seen. you are not looking to see cuts until the second half of the year. lizzy: andrew bailey didn't want to tell us when he was planning to cut rates yesterday. but he did say that ai isn't out of control in the sense of 2001: a space odyssey, but the problem is so complicated we might not understand what it can do. we have talked about the eu trying to regulate ai, if we can't understand what it does, how can governments regulate it? joyce: i think you are not going

to underestimate the transformational impact that it could have. maybe there is a call where you say there is a reason not to believe in it, but right now there is transformational impact there and the market will continue to look at that. the key thing is regulating it. it's all in the private sector's hands. it's not that the government doesn't have that much control, is the speed at which is moving. regulation cannot move that fast. we are seeing not just the impact ai is having on productivity, but also looking at geopolitical risk, we see the role ai can have on in the elections and how information is spread. it's very early to say that we can diminish the importance of this. when we look at it at jp morgan, where we have applied ai, we can see 30% efficiency gains. could that go to 50%?

the story will be one that continues to be where the market is looking at the overall potential going forward, rather than these regulatory risks that are going to be difficult to address. lizzy: we were listening to your boss earlier in washington. we have seen this massive rush into crypto. does the systematic adoption of crypto products legitimize cryptocurrency that your boss just said he would close down if he could? joyce: i still think it's really early to say it's been a systematic adoption. it's been a very small part of the market. it has rallied quite a lot. everybody looks at the history of what had happened with crypto and there is still skepticism. you are far from having this institutionalized right now. but overall, everyone is looking at it and saying, in an atmosphere where the rally could

continue into the first quarter of the year, where is this going to settle right now? i don't see a lot of the institutional demand. we are still far from saying this is systematically going to be introduced and taken up in a widespread way. lizzy: joyce chang, chair of global research at jp morgan. always great to have you on the program. this is bloomberg. ♪

lizzy: will come back to "bloomberg daybreak: europe." it's just gone 6:55 a.m. in london. i want to get you up to speed on the price action. we've got the yen currently at a 146 handled. we have comments from the bank

of japan governor ueda, he says the policymaking situation has been harder than he anticipated when he took the job, and it may be even harder next year. it's significant because previously, he only referred to the reasons for further easing, so the speculation is widespread now that the boj is going to lift negative rates in the first half of 2024. it looks to many in the market this is the bank clearing the ground for normalization. it sent the yen flying higher against g10 peers, and the japanese 10-year rising by its most in a year. staying with currencies, the swiss franc has reached a strongest level against the euro in 14 months on heightened expectations that the ecb is going to be the first central

bank to hike. markets now fully pricing six quarter-point hikes from the ecb next year, with the first coming as early as march. yesterday we also had the bank of england's financial stability review. it was the by annual report. if we take a bital look at the headlines, you have debt man as a share of household income falling to the lowest since 2002, but the boe stepping up warnings about hedge funds shorting u.s. treasury futures. an interesting report there. there is plenty more to come on bloomberg. checking you all the action from the boj up next. this is bloomberg. ♪

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♪ anna: this is bloomberg markets