>> with baited breath, investors wait to find out if the fed will scale back stimulus today. >> russia goes shopping in ukraine. >> and what is the store with everything except happy workers? another day of strikes over wages. we're going to be live with some of those striking workers. good morning, everybody. welcome to "the pulse" live from bloomberg's european headquarters in london. i'm guy johnson.

>> i'm francine lacqua. we're just getting some breaking news. this is the i.f.o. just breaking in line with expectations. the expectations for the future are a little bit higher. germany is strong. >> they are certainly outdoing french. you look at the p.m.i. numbers. >> not difficult. >> you got some 47's from france and mid 50's from germany. another piece of fairly strong data, pretty much in line with expect aations. a little bit of weakness maybe at the fringes but nevertheless germany still showing signs of strength. >> we have a guest hose for you this hour, jim o'neill. a columnist for bloomberg view. very quick reaction on this i.f.o. number. going strong. >> actually the latest i.p. numbers were not so great in

germany. the surveys are strong. the current assessment is -- it is not the first time current assessment disappoints. it has gone on for a long time. kind of boring. >> let's move on. our markets editor, manus cranny has more on how prepared the markets are for a possible december taper. >> pricing in a taper tonight, probably not, but maybe a set-up. >> i think infinity could take on a whole new meaning. it could have an end date. that is what will come through in the tone and the intoneation possibly from the fed. i'm sure jim will add into this debate. they are all basically saying look, 90% of it is already priced in. have a look at the 30-year bond

market. that is the critical one. the bond traders perhaps are better positioned and ready for this move than indeed are the -- than are the equity traders. the point is this. can the federal reserve avoid a 1994 repeat? this is what they talk about. a 30-year government bond market rising give or take a couple of basis points. one year money, five-year forward. that is what they want to avoid. how the market underanticipated what was going to happen with the fed funds and when. that is sticking around 4%. the skittish equity traders have a different view here. there is a definite positioning here. people are willing to pay a little bit more for protection on event risk. i think the markets have accepted this as coming.

it is a question of timing and a question of what else we are told that comes with it. would the fed really move with liquidity not at its normal position? back to you. >> manus cranny setting up the taper story today. >> would they really do anything ? will we get anything from the fed today? >> i suppose there is a possibility. >> how strong a possibility? >> again, going back to the facetious answer i gave you. ght months since i left my previous incarnation. all people have talked about in those whole eight months. not exactly a surprise if they do it. at some point it is going to happen. my strongest takeaway is particularly with -- from bernanke, it will be a dovish tapering if they dot today or if they do it in january. because they don't want to have

a significant -- of financial conditions. that is probably why they didn't do it in september, to deliberately shock the market. the housing market started to slow down. they can't really afford to have all of that sort of thing persisting. i think it seems a reasonable call. if they do, they might offset it with extended guidance, lowering the unemployment threshold. inflation has come down quite a bit recently. the idea that the fed wants to do a 1994, which i'll never forget either. it was the only big bear market been nds that i've ever through. i se interest rates until --

think unemployment. they are that committed to try to get lengthy periods of growth. don't worry what about what those playing around with the marginal monetary edition means for interest rates. >> asset allegations? >> -- allocations. >> people are fearing so much of it. i went through 1994. there was a lot of consequences all over the world. >> in september, we have been discussing it for five months, four months. the market price, everything to a certain degree. but we didn't expect to see that massive level of outflow through emerging markets. we didn't expect to see the market reaction in the developed markets.

>> in some ways, everything outside the u.s. is an emerging market, whether it is the u.k. or indonesia. i will never forget being in australia the week after the fed started in 1994. australian bond yields raised 100 basis points in three days. nothing was going on in australia. if the fed does disappoint or doesn't handle it well and it is een as hawkish and you get the domestic rates reaction, fallout is everywhere. it will be everywhere. whether it will persist given what the fed's intentions are and given, you know, there is a lot of quite positive things going on, i don't know. i don't know. i'm clearly not that close to it anymore. >> yeah, you are. you'll stay with us for the

next half-hour. the ukraine faces the biggest protests. ryan chilcote has the details of this deal. there are ukraine cran president comes back from mosque with two things. -- moscow with two things. cheaper gas. russia is going to sell ukraine natural gas. it gets about 50% of its gas and energy from russia at a price that is about 30% less than what they were paying this year. that should help ukraine get through its financial troubles, at least in the very short term. the real question here is you pointed out is what duds russian president vladimir putin get?

ukraine is is not signing up to join russia's trade union. the opposition in kiev is skeptical thinking there was a hidden kind of deal. this is the biggest bailout that russia, which let's not forget itself was on the receiving end of bailouts in the 1990's. it raided the cookie jar and wealth fund. it is going to use about 1/5 of that. the real question. is it creating problems for itself back at home? >> ryan, thank you so much. workers at am zon's german warehouses are on strike. hans? >> francine, this is a test of will and a test of organization. protesters here, there are a

couple hundred of them just moments ago. they went inside to warm up. they said they are going to continue through the week and are going to try to effect amazon and pressure them into paying them higher wages. .50 is what they start out here and they want closer do 12 euros an hour. there is a concern our fear about what about happen if they open new distribution centers in poland and the czech republic. they have planned two in poland and three in the czech republic. there has been a polish speaker talking about the importance of having labor solidarity across borders to force amazon to pay higher rages. not said the -- it has affected the ability to ship

packages and they say holiday deliveries in germany will be on time. >> what else is on our radar this wednesday morning? -- bit coin --n silver lake is said to buy i.m.g. worldwide. >> generic viagra hits the u.s. market more than two years earlier than expected after tmp eva reached a settlement. >> we will have special coverage of today's fed announcement. that is at 7:00 p.m. u.k. time. >> we will bring you what will

ben bernanke's final news conference. ♪

>> welcome back to "the pulse." we're live on bloomberg tv, streaming on bloomberg.com, your phone as well. >> let's bring the focus back to the fed.

still with us, jim o'neill. a columnist for "bloomberg view." everybody is talking about it and maybe even overanalyzing it. it is a big, big story that is going to have implication beyond u.s. monetary policy. when you look at how central bankers are acting at the moment, do you get a sense on they have a handle on what's happening? we're getting into a world -- well, we have been in a world for quite sometime. is getting in easier than getting out? we're now getting into the difficult bit of this monetary policy and experiment. any sense that yellen, carney, any of these people. >> an event, i was out for mervyn king's retirement. the only time central bankers have really mattered the past 70 years is really when circumstances are nothing that any of them have been trained for. he's kind of right.

it is enormously challenging time for them. >> do you have faith in these people? you know some of these guys. do you have faith in their ability to navigate? >> they are human. >> so mistakes are going to get made. >> of course. they are really talented people but a lot of them are economists. i'm one of those myself. we're not exact think most broad-minded human beings in life. they are talented people. we're going through a highly uncertain thing. one cannot know what the consequences are. particularly with yellen, they are going to try to be dovish hen they do the first steps. one of them went through 1994. it was a tough year. 1994 was a tough year for

government. anybody involved would remember that. i think they are going to try to be as dovish as possible about saying this is not -- this is not the end of the world, guys. we want to keep monetary policy and importantly financial conditions super easy to help in the recovery. >> what do you make of stanley fischer? >> he has a really good sense of humor. >> would he be the right man for the job? some say he is too iconic to work in the fed? -- were my -- that would depend. i think stan is a really talented person. >> he has done some fairly extraordinary things with monetary policy in israel and the experience, the level head, the experience, the wise old head. >> a pretty important position

at the i.m.f. during the asian crisis. >> i'm trying to get a sense of how challenging you think the next few years are going to be. you talk about the dovishness that most central banks are going to have to remain on the dovish side. >> at some point, if we're going to get back to a normal world, short rates in the u.s. are going to have to get close to nominal g.d.p. potential. close to 5%. try to minimize the dangerous consequence s of it in whatever form they are. it is definitely not going to be easy. as i side earlier, i was with a group of people at the time and we kind of now we were really confident in the fact that we were going to start doing what we were doing and the consequences that happened, we got those wrong. >> 2014 is going to be the year where the e.c.b. and the b.o.j. will go against the fed. >> you would hope so with the e.c.b.. >> it is going to be much more difficult. do they have to do q.e. ? >> well, one of the really

amazing things, looking at some slightly more distant position these days. you look at oil, 137 and change? it is kind of crazy, isn't it? at some point, there is this i suspect growing notion about that background, you have to be sure -- >> how many are doing that? >> it is reminiscent of the -- at the end for a couple of decades. >> precisely. should rethink about it in those terms? >> a little bit. foreign exchange marks are not the same as equity markets. currency doesn't go up because it is doing the right thing. it reflects the overall balance of payments. one of the big things that really caught my eye this week is the latest u.s. current account balance. how much is the u.s. shifting here? going into the crisis?

more than 6.5%. in the big picture, the fundamentals of the dollar are definitely from my 30 odd-year perspective improving. if you get the fed going that way in the e.c.b. being slightly bolder than you would think the circumstances for the u.s. to turn around would be growing. >> stay right to there. we're going to be talking banking union next. another long night in brussels as they met to discuss terms. meanwhile, the german chancellor merkel is urging them to get on with it. >> david tweed has more from berlin. talk about the progress that has been made and the merkel comments and how it all fits together. >> all right. i'll wrap that up in a minute. angela merkel just gave her first speech in the third term as chancellor and she has

outlined the banking union will happen in 2014 and she has also said that more e.u. integration is going to be the aim of her four-year term. that is really what she wants to do with her guide to europe. she is talking about the contractal agreements that germany wants e.u. members to line up for, to actually sign up for so they can do further structural reforms to make their economies more competitive. that is a longer term goal. as for banking union, we got a little bit of progress in brussels last night. they made some progress on the financial backstop. the backstop to the resolution fund which after 10 years will have about 55 billion euros in it. if that is not enough, they will need a backstop. we think the backstop will involve the permanent rescue fund although the ministers didn't want to talk about it too much last night. thethat said, we heard from

german finance minister that he is going to have a finance press conference in brussels. watch out for some headlines there. we might get some further details. >> all right, david, thank you so much. david tweed, our european editor. the global p with appetite when we come back. ♪

>> welcome back to "the pulse." live on bloomberg television and radio and streaming on your tablet, phone and bloomberg.com. >> how are the markets trading this morning? let's talk about what else is going on besides bitcoin. >> a spirited attempt by these equity markets to gather up some of the losses they made yesterday. confidence rising in germany. we all talked about 1994. i want to put it in context in terms of the next 24 hours. in 1994, the federal reserve raised interest rate business 3% in a space of 12 months. that is not what the market assumes will happen next year.

at the same time, 10-year government bond yields rose by 2%. 30-year government bonds rose by 2%. so far the 30-year bonds in the united states of america have barely -- they have moved about 1% in preparedness for tapering. does that say we are fully prepared or in for a little bit of a shock? also on the agenda, how do you trade the fx markets on the back of any change in language from the federal reserve? there is the u.s. dollar. the dollar index among six major currencies. if i'm telling you the market wants to take on more risk outside of america, or they are looking to other assets outside of dollars for taking risks. back to you. >> coming up, the unemployment numbers. the new key benchmark for the about that with jim

o'neill and look at pfizer. it is losing poet ensy. the deal that -- po tensey. the deal that puts viagra on the market. ♪

>> welcome back. the vote was 9- 0 for the interest rate count and bond purchases. >> further gain in the pound would weaken the recovery so clearly very much onboard with the idea that the depreciation of the pound needs to be maintained and it will be a problem. the november -- the august to october unemployment rate, 7.4%.

below estimates. near the threshold level the bank of england set itself at 7%. jobless claims have fallen. more than expected. >> still with us is former goldman sachs asset management chairman jim o'neill. the unemployment rate better than expected but also what they said about pounds. what do they mean for thresholds? >> very strong data. it is becoming a bit of a consensus view. nobody wants to -- these things really. i don't know if it is not easy for them to stop it going up. if the numbers keep being strong unless they do something else. it might well be if the fed

blows their threshold on unemployment, it makes it easier for us to play around with. >> make it more acceptable? >> yeah. it might be something they flirt with. if the pound keeps rising, that is going to put them in a competitive position. there are worse things in life. this looks like a nice day at the fai >> sustainable? >> i suspect so. i have a particular interest because one of the things that is new in my life is i'm showing -- chairing a commission on rowth. maybe there is nothing you can do about it but it will be nice to see it based on a number of different things and different parts of the country which might be asking for too much. >> is the bank of england doing or can it do anything to help

with that? >> i think there is very little. >> it is something we have to try focus on. there are so many interest things going on in small businesses for profit and nonprofit. in so many parts of the country. this might be something that we'll only be able to look back at this hindsight and say what a big structural change that was. it sort of feels that that's different. there is stuff going on in nottingham and rochester. of course the bank can play a role in that. >> mark carney is making it very clear, talking about the thresholds in the unemployment number that we're getting very close to. he thinks he can handle it with the new tools they have acquired. how effective do you think those tools are and how good do you think carney is going to be at

achieving those aims? >> out of his relative strength, what he brings to the table, i think it is that stuff that mark is really good at, the conventional geeky economic stuff is not really his forte. i think his instinct and aware rns particularly good. i'm impressed. if you look at other central is s, the fed in particular reluctant to use that. i'm quite impressed with that. i think it is a good move. >> jim, we only have a couple of minutes left. we want to get your thoughts on bitcoin and china. your thoughts? >> bitcoin is a bit of a joke in my opinion. maybe i'm too much of an economist. the idea this thing is going to become some great super thing. it is not backed by the central ank.

i don't understand the attraction. >> before we talk about china, i want to talk about all of this in context. inflation, deflation. it seems that maybe next year is going to be a year where we need to talk about the inflation or lack of it. what is interesting is so difficult for these central banks to get to their inflation targets. whether there is not enough growth or something to do with global competitive wages, it is hard to tell. that is really interesting, in the u.s., europe, of course japan, inflation just isn't appearing despite all of these incredibly aggressive things that central banks are doing. what it does mean is they are going to be pretty relaxed about trying to do that broad q.e. for longer. >> are you also worried about deflation in europe?

>> i think -- i was rather hopeful that the german coalition would put pressure on germany to become more expansionist and less open minded in a way. unfortunately it doesn't look like it. the germans really need to accept that they should have 3 psht inflation in order to stop -- 3% inflation in order to stop everybody else from deflating. by persisting with it, they are not accepting the core criteria why it exists and it is the one area where the e.c.b. is the only thing that has worked so well. they have to be tough about this. they have to stand up to the germans and say we're there for the average, not just you guys keeping inflation under 2. it doesn't make sense. to me that is one of the core philosophical issues. >> talking of credit, let's talk about china. the credit environment in china. it is an incredibly difficult thing to get right.

>> you know, i sometimes think i must be missing a beat because i see so much said about this and i was just there briefly. i went to give a speech and everybody is talking about this. at the end of the day, if you look at it nationwide, this is a country -- personal savings, 15% of g.d.p.. this notion there is a credit problem in china is rubbish, i think, in isolated areas. given how bad -- big the place is. of course it is an issue. the idea that it is going to bring the whole of china down, i just don't get it. most of them don't even use credit. they need to use more. a lot of local authorities have got problems with credit but that is being curtailed anyhow. can they imagine all of these problems they always find they

need to deal with? they do a pretty good job on it. it is an isolated big problem but i don't think it is -- it is not a systemic problem in my opinion at all. >> are you bullish on china? >> i'm bullish on the new china. >> the politicians have a -- >> it is just so clear what they are trying to do. they are really focused on the quality of growth. nowhere near as obsessed with the quantityy. the old china, i think one of the great trades this year has been and i think it is a great trade for next year is to be long old china and short new china. >> just very, very briefly, when do we get a floating currency out of the country? >> i'll bet we'll have another chance to discuss that. >> >> seriously, what i think, i don't dismiss that we'll do

enough reform in order to have the o.m.b. as part of the f.d.r. by 2015. that is not a floating curnspifment >> jim o'neill. former goldman sachs asset chairman. have a great holiday. >> the fastest rise in house price according to goldman sachs. elliott gotkine reports. >> on tel aviv's best known boulevard, it will soon be israel's tall eths residents rble tower and most expensive. the apartments, some with private plunge pools start at $1.5 million. prices that a few years ago would have been unthink bt. between 2009 and 2012, israeli house prices rose 55%. faster than norway and

switzerland and every other member of the oecd. house prices have been rising so far especially here in tel aviv, and many israelis find themselves priced out of the markets and they would love for prices to come down. >> developers say they also want cheaper homes. showing me around the $50 million penthouse, he said the current situation helps no one. >> rising prices in the short term may be good for some, in the long run, may be good for everyone. it is much hard to get an apartment. even for developers, up to a certain point, it becomes too risky to buy new land and go into new construction. >> he may soon get his wish. goldman sachs says israel is the most likely country to see a house price crash. israel's finance minister doesn't see that happening.

>> i just think houses g is way, way too expensive. you make sure that the supply of new houses, new construction is much bigger than -- and it will enable us to be more helpful through the whole process. >> israeli governments have repeatedly failed to build nough homes. >> that was elliott gotkine reporting. >> coming up, a case of supply, demand and a serious, serious sweet tooth. we'll tell you about the chocolate crunch that arrived just in time for the season of overindulgence. ♪

>> tis the season for overindulgence. europeans are likely to consume plenty of chocolate over the holiday season but the continent getting the attention these days is asia. caroline hyde is following the story from none other than a chocolate shop right here in london. there appears to be plenty where you are now. you're learning great skills. >> yeah. i'm trying. i'm decorating. this one is called is it burning

embers? crackling embers. there is chili. it is the only handmade chocolate company in the whole of london. i've been eating far too many of them in london. the reason is the demand for these types of quality chocolates with plenty of cocoas in them is escalating in western europe. demand to this surge in asia. we're seeing an imbalance in supply when it comes to cocoa. that is forcing the price up. we have seen a 25% surge in cocoa so far this year and it is expected to rise 15% next year. there is a key concern there. in fact, this stat amazed me. 70,000 tons. the same weight as 10,000 elephants is what is going to be lacking in supply for just one year. that is going to continue for six years.

that sort of level of imbalance and supply and demand. that is what is driving up the price of cocoa at the moment because of our taste for these high-end chocolates that we're having in london. >> what is preventing an increase in cocoa supply? >> well, i think at the moment, we largely get the cocoa supply from the ivory coast. from ghana. that makes up about 70% of overallco ko supply. they not only have a lack in rain but also have a lack of pesticides. they are coming down. they can't get the handle on so much. that is denting the overall growth and the overall product supply. notably, also, the amount of money they can put in and invest, at the moment, we have 25% increase in the price of cocoa but only a 3% increase is going to the farmers. they are not being able to invest enough at the moment. >> caroline, are chocolate makers now trying to cash in on

that escalating demand? >> certainly. he is saying look, i'm seeing volumes of asian people coming into london into the stores. this year in particular, they are seeing a phenomenal amount of more people coming from the likes of china. we have seena rap in growth acss the board. they are seeing growth throughout the recession. they have four stores so far in london. there is one by our office in the royal exchange. if you look across the pond, in fact, american companies, the likeses or hershey, rer investing significantly. they have opened a plant, hershey has in indonesia to try to increase the supplies. chocolate makers are looking to cash in. we have seen a record amount of chocolate sales expected for next year. many moment, there are

providers. saying we need to start giving back some of this money to the farmers and growers so they can invest and bring newer, better upplies, cocoa plants, start planting them and be able to meet that surge in demand that we're seeing at the moment. i had better keep up. >> thank you so much. good work there, caroline hyde. guy, you have more on chocolate. >> very few people can make those blue hats look good. i think she just achieved that. we have a new spa that allows you to enjoy the benefits of chocolate without apparently the calories. therapists say it is just the right treat to get you into shape for the party season. what am i talking about? angus bennett reports. >> these are filled with fine, dark chocolate, but you're not

allowed to eat any of it. instead, they are destined for something altogether more decadent. a chocolate full body wrap and facial. >> very luxurious. one other treatment. first we do the massage and then we mass weather channel the chocolate. -- massage with the chocolate. >> she works at the melody spa london said the chocolate treatment is gaining in popularity, not just in london. >> they enjoy their luxury treatment. >> an hour-long chocolate facial, that will cost you $130 and the full body treatment which includes being sealed? in sheets for at least 30 minute also set you back $155. does it work? it revite lates and revitalizes. the evidence may be a bit light.

not all about the science. for chocolate lovers. >> i'm not quite sure how to follow that one at all. seems like a waste of good chocolate to me. i'm sure it is worth it. let's talk about company news. said to have picked bank of america goldman sachs and hsbc to work on its retail arm. watson can be valued at more than $20 billion in an i.p.o. groupis partnering with a to enter india. foreign companies need a local partner to run a supermarket chain in india. and now some sad news. &b miller said chairman graeme mackay has died. they appointed john manslaughterer as chairman --

mancer as chairman with immediate effect. >> new data suggests financing risks may hold these plans back. we'll have details for you when we return. ♪

>> good morning, everybody. welcome back. you are watching "the pulse" live on bloomberg television, the radio, streaming on your tablet phone and bloomberg.com. the u.k. government is hoping to encourage offshore wind programs. analysts have shown the financing risks may hold those plans back. i'm joined by angus. good morning to you. big plans. lots of aspirations. but potentially a credit issue. >> with a number of different risks that maybe the government needs to look at more closely. at the moment, the u.k. is the world's leading offshore wind market. about 4.5 gigawatts of capacity being constructed. that is in the bag. the government wants to get to 10 gigawatts or more by 2020 in order to fulfill part of its

renewable energy target. in order to do that, it has to provide the right frkt incentives but also give people enough comfort. the various risks for these projects sort of manageable and are not going to bite them back. >> and this is critical because we need to meet the 2020 targets? >> that's right. there are other options that may come into play like the deal th ireland to import 3 dig watts of -- gigawatts of irish wind into the u.k.. there will have to be a lot more offshore wind capacity in order for the u.k. to meet that target. >> the u.k. is a leader in this area. how does it compare with other nations? >> it has more capacity commissioned or being built at the moment than anywhere else. the main players, germany, where there have been projects and also belgium and the netherlands.

some other countries are going to do it too. the french are going to have a large program at the end of this decade but they have taken a view that sensibly they will do it a little bit later when the costs have come down rather than doing it straightaway. the chinese were going to get involved soon but it looks like that is going to take a bit longer than they thought. >> angus, nice to see you. francine, over to you. >> thank you so much. for those listening on bloomberg radio, "the first word" is up next. for viewers, the second hour of "the pulse" is coming up next. amazon staff take to the streets. plus it is all about the fed today. time for taper. we'll discuss that with the consults g director. in the meantime, you can follow guy and i on twitter pism i'm at flacqua. guy is at guy johnson tv. we'll see you in a couple of minutes. it is all about the fed

decision. we have a guide for you about what to watch out for coming up next in the second hour of "the pulse" for our viewers. ♪

>> is it taper time? investors wait to find out if the fed will scale back stimulus later today. >> chynna deals another blow to bitcoin, the nation's largest operator of the virtual rrency says it can no longer accept anymore deposits. >> it's a store with anything, except apparently amazon workers. another day of strikes over wages. >> good morning to our viewers in europe and a warm welcome to those of you just waking up in the united states. i'm guy johnson. >> and i'm francine lacqua.

>> for our top story -- let's talk about the fed's decision day. our markets editor, manus cranny, joins us now on how prepared the markets are for this possible december taper. what's priced in, what's not? >> a lot of it's priced in, guy, according to the people i've read, goldman sachs. you had the former chairman with you there, mr. o'neill. you've got them saying 90% is priced into the market. of course, what's priced in and reaction are two very different things. nobody really knows how the market will absolutely react. could it be a day's reaction and brushed off in six months' time? i want to draw your mind to 30-year government bond yields. could it come today or january or february? what the federal reserve wants to do, the reason why is mortgages are price up there, we're hanging around that level, and that's critical.

this is about avoiding a 1994-style event where it really begins to unravel, which is where the fed raised interest rates, and 10-year and 30-year government bonds rose. they rose by 200 and 300 basis points. 30-year bonds haven't done that yet. it's who's afraid of a december taper. equity traders. have a look at this. the v.i.x., buying some protection. there's just skittishness in the equity markets as volatility rises for 14 out of 16 days. don't forget, $162 billion was put into exchange funds in 2013. will we get a clarity of message in terms of what and when tapering is coming? if you don't get it together, the choice is yours. >> our markets editor, manus cranny. >> another blow for bitcoin. china's largest operator says it can no longer accept any more deposits.

this is just another blow that china has dealt to the bitcoin. >> the announce am comes from the c.e.o. of b.t.c. china, the biggest bitcoin exchange in china. he said in that announced, he had just been informed by a third party payment provider they would no longer provide deposit services, so he said we have no ability or people no longer can actually deposit money on to the exchange. that's what happens when the chinese can't use their currency to buy bitcoin? surprise, sprirkse the value of bitcoin has plummeted, fallen by as much as 35% since the announcement came out. it's 50% down from just a couple of weeks ago. i mean, really interesting. they said we think this is because of government regulations, we have no choice here, we have to abide by the rules of the bank of china, the government of china. >> we've had the chinese in on the story, plenty of other central banks as well making it

very clear how they feel about this new virtual currency. just give us a background, the context that's behind the price job we're seeing and some of the news we're getting. >> the clamp down began a couple of weeks ago when the people's republic of china put out a statement that was interpreted to mean that financial institutions in china can no longer handle bitcoin transactions. in addition to that, several people were arrested for being involved with bitcoin transactions. there's been a little bit of a runup to this, and we've seen that reflected in the price of bitcoin. effectively, the government and the central bank of china have been concerned about two things. one, that people could use the bitcoin to skirt capital controls, and two, that there could be a bubble. that's something that a lot of eople have also agreed on. we heard alan greenspan saying the fact it's risen 11-fold since october indicates that.

this is something that is not coming out of nowhere. >> right, we'll leave it there. ryan covering the latest on the bitcoin story. >> let's move over to germany, where workers at amazon's warehouses are on strike for a third day at the height of the christmas season. we go to germany for more on the story. what's going on at the moment? >> well, right now the protesters were here this morning, and they've moved down to city hall in the center of the town. they want to bring their protest there and have both the business component, and that is crimping apple zphron's bottom line, preventing them from shipping out packages in a timely manner, and then also have a political component so that you can have some sort of a momentum from government officials to try to increase the wages here. here's what we're talking about. it's 950 euros per hour, and they're at the top end of the logical scale. amazon workers want to be

classified as on the retail side, and that would put them more closely to 1140, 1150, in that change. let's do the numbers. about 5% of germany's workforce has been striking the last couple of days. the first day, there's 1,100 workers out of 23,000 here. the next day, it tapered off. yesterday, down to 930. now today, organizers here, they promised about 400, 500 protesters. we counted at moment 200, maybe 250 on the generous side. now, there's some fiery rhetoric. jeff bezos was on the receiving side of that. and what amazon is saying in response to this is not actually affecting their logical ability to ship packages on time. here's what they're saying. majority of our employees remain focused on delivering the best customer experience. amazon did not see any impact on customer service. that's the line from amazon. they're working around this. they have nine distribution centers here in germany.

they say even with continued strikes, packages will be delivered on time. francine, guy? >> hans, thanks so much. hans nichols with the latest on amazon. >> ok, from germany to the united states. america is getting a cheaper version of the little blue pill. the news follows a settlement between pfizer and the israeli-based teva pharmaceuticals. we're following the story from tel aviv. elliot, was it a complete victory for teva? what's going on? >> well, not necessarily. in fact, some people could even see this as a defeat because teva wants more than it got. but basically this states back to 2010, and it dates back to when part of pfizer's patent for viagra was deemed invalid because it closely resembled a between ease medicine, known here as horny goat weed, randy

lamb herb or randy beef grass. now, because of that, teva has been fighting to get the rest of pfizer's patents invalidated. yesterday we got the decision in the u.s. courts. they threw out teva's request, but it's part of a broader agreement between the two companies. teva will start being able to sell generic versions of viagra in the united states from december 2017, so in four years' time. under some conditions it could even be earlier than that. from 2020, it will be able to sell generic versions without having to pay any royalties to pfizer because the patent will have expired by then. it's also worth noting the patent for viagra expired in europe earlier this year. in fact, since june, teva has been selling generic copies of viagra in many countries in the european union. >> elliott, it was really a rare bit of good news for teva, but the stock didn't get much of a lift. >> no, investors have been a

bit despondent with teva. we saw a 1% spike in the u.s.-traded shares, and that's pretty much what they're doing today on the israeli-listed shares, teva being israel's largest listed domestic company on the stock market here. as you look at a five-year view of teva, you can see that investors face in this company, the world's largest manufacturer of generic drugs has been ebbing away. a big reason for that is teva's own blockbuster drug. with revenues of some $4 billion, this is actually twice as valuable a drug as viagra is to pfizer, but if you look at it that way, you can work out that generic copies of viagra are not going to make up for any lost revenues that teva suffers if generic copies of a multiple sclerosis treatment is allowed from next year. a whole host of other problems, they're looking for a new c.e.o., as well as laying off 10% of its workforce, this is a company going through change right now. guy, francine?

>> elliott, thank you so much. sheer what else is on our radar this wednesday morning. >> microsoft says it expects to complete its c.e.o. search earlier in the new year. they're speak seeking a replacement for steve ballmer. some candidates are microsoft executives. >> s.a.b. miller says the chairman has died following an illness. that news came out in the last hour. the brewer has appointed the acting chairman as chairman with immediate effect. >> and civil lake management is said to be buying talent agency i.m.g. worldwide for more than $2 billion. silver lake went in on the deal with i.m.g.'s rival, william morris, an agency that represents hollywood's biggest stars. >> still ahead -- asia's new sweet tooth is boosting demand for chocolate. will there be enough to go around this holiday season? we're live from london with more. >> but first, amazon's german headache is day three of worker

protests. how hard will that hit holiday operations? we will find out when we come back.

>> good morning, everyone. welcome bask you're watching "the pulse" live from bloomberg european headquarters in london. let me show you what's happening with the sterling this morning versus the euro. later on we're going to get the fed, but that is the euro versus the british pound during

this session. the simple reason for that is that we have got a better than expected unemployment number out of the u.k.. this is the threshold or close to the threshold that mark honeycutt has set at 7%. that's happening faster than people anticipated. that means rate hike could come through earlier. that would strengthen the pound, and that's exactly what you're seeing this morning. it's interesting the m.p.c. minutes did talk about the valuation of sterling as being something of an issue moving forward from here. so maybe not the reaction that they were hoping for, but nevertheless, a fairly logical reaction when it comes to the rate of the pound. right, let's move the conversation on and return to the issue of amazon's holiday headache in germany. hundreds of workers are on strike this week in a long-running dispute over pay. the demonstrations come at the busiest time of the year, the online retailer. joining us is the director of additional retail insights here in london. our international correspondent, hans nichols,

joins us again from the amazon site in germany. hans, set the scene for us, if you will. >> well, the protesters are in their third day of protests. there are two other cities they're protesting in. they're vowing to go through the week when all these distribution centers are going to be at their full capacity. now, amazon says they can rely on temporary workers. there will be no package delays. it's really a test of logistics versus will, who can hold out longer. unions are saying they're going to do it. amazon is saying they can do it. we'll see how this ends up, especially when they end up having more factories in eastern europe, poland, and the czech republic. guy? >> steve, they need to get this kind of stuff right. the problem is we do business a little differently over here. >> absolutely. they're always going to struggle a little bit with labor here and there, but they

can leverage all the different networks they have within the e.u. they have lots of different distribution centers. they do have nine in germany at the moment, and i think it's only three that are currently having protests going right now. but they do have six others in germany, but they can also leverage the network they have outside of germany, so they already have a very robust system in spain, france, spain as well, and they can leverage that. >> the sense is amazon actually has the upper hand here? >> not necessarily the upper hand, but i don't think operationally they're going to be impacted as much as people would think. >> ok. hans? >> well, what the fear here is, the concern here is that there are going to be new factories in poland and the czech republic that will pay them even less and that they can work around sort of whatever problems they have in germany. how feasible is it to outsource germany's amazon to eastern european countries? is that possible, or do you just get killed on transportation costs?

>> well, i think amazon is willing to take the additional cost for logistics and transportation for getting speed of convenience to the shopper. amazon is very focused on investing money in getting as close and as fast to the shopper as possible, and they're willing to take the hit on overall margin and profit if they can guarantee that the shopper is going to get that product that they ordered as fast, if it's one day, two-day shipping, as fast as possible, and they're actually using some of the eastern european centers to expand the assortment they can do that with, as well as potentially expanding to actual amazon platform into other eastern eastern european regions as well. >> should we think of europe in a similar way? is that how amazon looks at it? this is a single market, essentially called the single market, the countries we're talking about are all part of that. are they just recommend lately the model they introduced in the united states over here,

and therefore, actually, while we get freaked out about this is here in europe and we think it's a long way from germany to poland, it's really just across the border and not very far. >> absolutely. amazon, from the operations, i feel like i've done this in different ways, the operations, as well as the platform that the shoppers interact with. they're rolling that out in a very consistent way. usually what they consider, heir premium, top-tier features, this usually hits u.k. and germany first, and after that it will spill out to the other regions after that. when you look at the operations perspective, they have the ability to flex and leverage the entire system they have of distribution networks in all countries, and then do cross-border shipping when necessary to fill in the gap, whether that's in out of stock in the u.k., in stock in france. >> that's fine when it's a kindle, something like that that doesn't have a shelf life, but amazon is talking actively about doing groceries. that changes the model. that's much more on your

doorstep, and that needs to be on your door step. >> absolutely. they're doing that in a couple of markets right now in the u.s. likely we're expecting it to eventually hit probably london and paris will be the two obvious bets, i would think, over the coming time. >> yep. >> it's t completely changes the way the shopper thinks of amazon. right now they still think of them very much as a one item, two items, get it as fast as possible. it changs because you need fresh distribution facilities, where you can actually start having refrigerated products as close to the actual large distribution center as possible. they want to package both. they coast want two separate separate chains where you have a van that delivers produce and then taking the royal mail to deliver everything else. you're going to have different facilities going down the road. >> hans? >> well, yeah, that's my question on produce, how far is amazon, fine they are going to have distribution centers all across europe, how far away are

they from doing produce in germany, the united kingdom and france? it seems you need to be pretty close for that. >> do you need to be very close, and they're very, very tight-lipped about when they want to launch that new product or lanche the new service. i anticipate that in 2014 we're going to see something along those lines start to come out in the u.k., probably as well as france, germany. amazon wants to get the profitability of that delivery model right first, so they're going to be a little bit more cautious and take the long-term approach rather than flood all the different operating markets that they're in with this new business model on delivering fresh produce. >> when you look at amazon, you think of it as a tech company or a logistics company, because we've seen tech companies in europe have these challenges as they sort of adjust to privacy regulations, data regulations. is amazon just having traditional tech problems in europe, or is it something different?

>> i'd say it's actually a very good point you make. we often think of amazon as a retailer, a retailer with a lot of product that they sell. but when they actually think about how they're going to market, it it's still very much a technology and a big startup. they're very much focused on how can i leverage all the traffic that comes to the amazon platform. how can i leverage that to better serve television to the shoppers on the platform, how can i get them to buy as much digital content as possible. they're thinking that through as a technology platform. as do you start doing that, looking at new ways to monetize the traffic that comes on to their site, through things like advertising, privacy is always a concern. i think the difference with amazon that they have the ability to connect all of that data to actual purchase data, which is very, very compelling. when you start doing that with shoppers, they kind of opt into that as they buy the actual products and they transact. >> guy, leaf it there. ank you both indeed, steve

nd hans. >> still ahead -- the $85 billion question investors wait to find out, will the fed finally scale back stimulus? we'll break it down ahead.

>> welcome back. let's focus on the efforts to hammer out a deal on a eurozone

banking. finland saw another long night as they met to discuss temples >> yeah, the finance ministers, we should make that quite clear. nevertheless, the german chancellor, angela merkel, is urging them to get on with it. our editor, david tweed, has more from berlin. david, you've been watching the press conference this morning, the germany fin mifn. >> that's right, and he's just been talking in brussels. he's been talking about this common agreement they got on a backstop of the resolution financed. that was apparently agreed to last night, but we don't get much in the way of details. he says that still a little bit detail there to be sorted out, but it should continue today, and he's hopeful they get some sort of agreement on this. he made some other remarks as well. they want to get the special, the single resolution mechanism up and running and agreed, and that will be agreed with an

intergovernmental agreement, and they want that to be done by february. and he pretty much talked about how germany is going to keep on urging greater e.u. governance of economic policy, something else he's pretty fond of as well. >> and what were the main points that the chancellor, angela merkel, made in the first speech of her third term? >> she's setting up her trip to brussels for the e.u. leaders meeting. one of the points she made was this banking union is just too complex, i really wanted this to be thought out so the leaders don't need to get into the nitty-gritty. she also made comments about the contractual agreements germany would like to see european union countries undertake in order to do further structural reforms. we'll hear more about that this week as well. >> david, thank you. our europed for, david tweed. >> a case of supply and demand and a serious sweet tooth. we're going to tell about you

the chocolate crunch that arrived just in time for the season over in belgium. >> and still ahead -- ben bernanke gives possibly his last news conference preview next.

>> welcome back to "the pulse." live from bloomberg's european headquarters in london, i'm francine lacqua. >> and i'm guy johnson. these are the bloomberg top headlines. >> ben bernanke will hold his last scheduled news conference later today. that's after the fomc releases its latest policy statement. the central bank has pledged to continue buying bonds until the labor market improves. today's statement comes after u.s. payrolls jumped more than expected for november. bank of england governor mark carney is pushing his message on keeping interest rates at record lows. he says britain's recovery needs to be sustained before it can withstand a rate hike.

>> the recovery has some way to run before it would be appropriate to consider adjusting the exceptional level of monetary stimulus that we continue to provide to the economy. >> and it's another blow for bitcoin. china's largest bitcoin operator, befment p.c. china, it says can no longer accept new deposits. chinese officials hold third-party payment service providers to stop offering clearing services to online exchanges for the virtual currency. china regulates bitcoin for the first time this month when it banned financial institutions from using it. now let's take a look at how european markets are trading. our markets editor, man us cranny, has more. >> very well can't would be the description for markets ahead of the fomc, federal reserve, tonight. unemployment is falling in the united kingdom, and they said it's the strength of sterling,

it could undo our recovery. you've got slightly better equity markets with that news. let's have a look at the risk the bank of england are referring to. guyoff son showed you euro-sterling, and this is dollar-sterling. you can see a nice little peek higher. this is the key risk. i'm actually reading a few bits and pieces on twitter that are saying that the british monetary policy committee could be forced to raise rates before the end of 2014. so that could really upset the apple cart. no, when it comes to the dollar, what is driving dollar-yen? i'll tell what you, it's very unlikely to be the concept of tapering. it is much more ado with the fact they have a clear deficit, much more to do with the fact we have sources say the bavepk japan will go for more stimulus. that's what's driving dollar-yen, not so much the concern over taper. with that in mind, a quick move, see that swish? let's have a look at futures. they're indicated about a quarter of 1% higher as we go

to probably one of the more important fomc meetings of our time. this flies in the face of the fed on equities. back to you. >> swish. manus, thank you very much indeed. manus cranny joining with us swish. russia's president putin and the you're rainian president have struck a deal, channeling russian financial aid to the ukraine. this comes as the ukrainian president gap he wills with the biggest process in the country since 2004. ryan chill coat has the details. we can't know what ukraine is getting. what's russia getting? >> it's not immediately clear. what obviously president putin would like ukraine to do is join russia's trade union, and, you know, they were asked about that at the press conference after they struck this deal, and they both smiled and said e dent even talk about it. a lot of people on the street are skeptical of that. they say there was a deal n.

y case, what president putin is getting is an ally. there's an election there in 2015. it would strange of him to take $15 billion off the russian president and not pay it back with some political allegiance. the ukrainian president gets the $15 billion bailout. russia is going to start buying bonds this month, and he gets cheaper gas. >> russia likes to push influence around the world. we've certainly seen that of late. how would you describe this in terms of sort of normal calls of diplomacy? you go from one extreme, which is sort of soft power all the way to obviously sort of very hard power, and where would you put slashing the cash in that spectrum? >> i think this is soft power. people talk about russia using the, kremlin uses gazprom as a political weapon, as a stick to sort of beat the consumers, their country's client states, into making them do what it wants. but here we have the russian

state using it as more of a carrot. this is actually the first time that the russians have really backed a big bailout, if you think about it. cyprus went to russia for money last year, didn't get any. what's different about ukraine is ukraine went to the european union, didn't get any. it went to china, didn't get any money. putin saw his opportunity here to really, you know, it's lot closer to home, former soviet republic. this is a place where russia, without perhaps being perceived in a bad light outside of the former soviet union and outside of the streets of kiev, as extending its influence, but not using that nasty tactics in the process. >> ryan, thank you very much indeed. ryan with the latest on the ukraine. francine, a swote story for us now. >> i certainly do, or caroline does, really. tis the season for overindulgence, but unprecedented demand for chocolate in asia is making a

big dent in the cocoa trade. our european business correspondent is following the story from none other than a london chocolate shop. there appears to be plenty where you are now. i bet you're getting quite good at this. prices are shooting up. >> they are. cocoa up 25% in prices this year, expected to rise 15% next year. this, francine, is where it gets messy. we are about to pour a vat of 55% vens william chocolate, and we're going to temper it. so it's about stopping too many crystals forming. apparently what we do is spread it with this trusty spatula all over the corners, and then when it cools down, i'm going shave it into a big old mess in the middle. but this deliciously smelling -- i mean, really, you've got to be here to smell it, so deep, so intense -- this cocoa is what the western europeans want to eat.

we want better quality chocolate. we want more intense chocolate. we want 55% milk chocolate, not just 10% milk chocolate. that means it's more expensive. that means you need more cocoa, of course. that is why we're seeing sales of chocolate reach record highs . and add to that asia, the chinese, they are starting to buy chocolate in large supply. we're going to see record demand for chocolate next year, but not record supply. supply is actually falling away. we're seeing an increase, some 70,000 tons of cocoa beans are going to fall short next year. 70% tons, that's enough to make half a billion bars of chocolate. that is the displacement we've got, francine. >> i'm a little bit nervous about it falling off the table there, right on the side, but you have it completely under control. >> i'm keeping an eye. >> it's difficult. you're working and talking at the same time. what's preventing an increase in cocoa supply, caroline?

>> well, i think at the moment we've got 70% cocoa coming from the ivory cost. ghana, they have problems with rain, so supply is slightly lacking. but also, we've had a lack in investment. the farmers themselves aren't able to invest enough in future supply of the plants. they need to plant new plants that are going to give higher yields, but they're not able to invest because they're not seeing that much of the increase in cocoa bean prices coming their way. they're only gaining 3% increase in prices. so they're want getting the investment, and equally, they're not getting bigger subsidies to help. >> all right, caroline, thank you so much. our european business correspondent, look at her go. caroline hyde there. looks amazing. i hear it smells amazing as well. in just 20 minutes from now, it's "bloomberg surveillance"

with tom keene. you're look in depth at the fed. >> no, francine, i'm having chocolate. are you kidding me? caroline hyde looked lovely there. this is lindor chocolate from scarlet fu's desk. >> how much chocolate does it have? if it's anything below 70%, then don't even quantify t. >> it's a dark chocolate trestle. that's what i know. we got a big day here. we won't be talking chocolate. we're talking about the bonn bonns they're having at the second day of the fed meeting. of course, ben bernanke will have his press conference after the 2:00 p.m. announcement. jim rogers will join us, james rogers, the c.e.o. of duke energy. duke energy, one of america's great companies. we'll talk to jim rogers about washington, about the future of the utility business. ellen will join us from morgan stanley. she'll give us their erspective, the perspective of

zentner and mr. rhine hart on the fed. we're looking forward to that as we go to the 2:00 p.m. meeting. we're going to have a special bloomberg coverage at 2:00 p.m. this afternoon with some smart guests on the future of the fed. >> all right, tom, thank you so much. i'm looking forward to all your coverage. tom keene there with "surveillance," eating chocolate. >> pretty brave man to take them off a desk, to be honest. right, what price of fame? let's talk about today's pulse number, 2.4 billion. that's the reported price silver lake and william morris have agreed to pay for a talent agency, i.m.g. e.m.g.'s roster includes taylor swift, justin timberlake, peyton manning, djokovic, gisele, all on the roster. that's add to the existing talent pool of william morris, which includes heavyweights ch as matt do common ben

affleck. and you've got a mega agency, once you pool all those guys together, it's quite a list. sources say the company's intent to announce the deal later today. i'm sure we'll cover it right here on bloomberg. we're going to take a short break and be back. ♪

>> it will be a dovish tapering , if they do it. they're doing it in january, because they don't want to have

a significant signing of financial conditions. that's probably why they didn't do it in december, so deliberately shop positively. forget all the international issues, but one of the most interesting things is the housing market started to slow down, and so they can't really afford to have all that sort of thing per sigs. >> that was former chairman of goldman sachs asset management, jim o'neill, on what he thinks the federal reserve will do today. nobody's making big bets on today's fed decision in the u.s., not after september's surprise when central bank crossed up, why they expected the start of tapering. michael mckee joins us now from new york with what outlook there is at the moment. mike? >> well, fran, everybody here in new york and in washington and in london and around the world is playing the parlor game, what would do you if you were the fed? you look at the most recent data, the jobs picture seems to be improving significantly.

hiring has picked up over the last couple of months in rather dramatic fashion. and then you look at the strength of retail sales and say maybe the economy has turned a corner, starting to get better. we could start to taper. the problem you is step back a little bit, and look at retail sales over a longer period of time, say year to date. hasn't changed all that much. neither, for that matter, has hiring. take a look at that picture. you wouldn't get a picture of an economy ready to take off. it's hard to see the fed tapering and not tapering. nobody really knows at this point what they're going to do. wall street sort of priced in the possibility of anything. >> actually, mike, if they don't taper, what else do we see? could k they talk about fresh holds? >> there's talk they should change the threshold particularly with the end of

emergency insurance looming at the beginning of next month. but most people think that would be accompanying a taper, trying to talk the market, a big backup in market rate. however, there is some concern about the size of the balance sheet. it will go over $4 trillion this week, and the amount of excess reserve being parked at the fed, all the money the fed has been giving out, it's possible they could announce a cut in the interest they pay on excess reserves, basic equivalent to your deposit rate. that's a possibility, although not perhaps as much of one as a taper at this point. >> mike, thank you so much. now let's continue the conversation on today's fed statement and what are you expecting from the fed? >> well, there is a chance they could move it. we're not expecting to see anything. i would agree with that. it would be a major surprise, and part of that whole communications strategy is to try to guide the market, and there's been very little evidence that they're going to do it as soon as this week.

>> but this is because -- you think they won't taper, not on fundamentals, but just because they haven't guided, or are the fundamentals still a little bit too weak to warranty? >> i don't think the tapering decision is very much to do with the macro economic outlook. it's lot more to do with asset markets and a lot more to do with distorting financial markets. where the fed is concerned is markets will naturally, as they always do, see this as the beginning of a process. even as the taper itself might be slow and modest, it's the beginning of a new paradigm. it's the end of the emergency and the beginning of the end of those measures. markets tend to take things to conclusion. remember, even with tapering, they're still adding electric quitity, just at a slightly slower pace. i'm sure that's a message they'll want to send out. >> what will they say, expect tapering soon or commit to something? we had this whole debate about

thresholds. will that be changed? >> the big unknown is change of leadership at the fed. and that i think has really thrown them into work in terms of the timing. i'm pretty sure that ben bernanke would like to say he began the process of unwinding before he left, but we know that janet yellen has reservations about the amount expected in the economy. she has reservations about the deficiency of demand. the bigger question might be, for markets to think about, is not whether it's december or january. we know the fed rarely moves interest rates in january. i looked at that time this morning, since 1971, the fed is hardly ever tightened to policy rates, six times in december t. ends not to do that. the big question is whether the economy is ready for the fed to begin inwounding its asset purchases or slowing them down. for that, we're going to have to wait to hear janet yellen's views as chairman rather than as a governor.

>> yeah, you're actually right. danny, in terms of thresholds, will they be lowered, and if so, will it be hinted at today? >> same as in the bank of england, they're very keen. it's want a trigger at the start of the word. so it doesn't necessarily mean anything. at this point, it is now consistent with their decision to taper. but we know that it's only a matter of when we're tapering. they can't carry on forever, and, you know, i do think there's obvious scope for the fed to ease back. i would disagree in terms of the slowdown. they're slowing down from double-digit rates. the housing market is clear. we've seen house price earnings ratios fall back to the 1990 level. we've seen new starts beginning to pick up. it's difficult to mack a case for federal reserve support for a market that's growing in double digits.

>> certainly s. danny, thank you so much for that. we're back in just a couple of minutes. ♪

>> welcome back. you're watching "the pulse." the pound is on a tear this morning. let's show you what's happening with euro-sterling. this on the back of better employment numbers. we're getting very close to the target that mark carney has set. we'll see whether we get

through it and what happens then. and also, we have the minutes from the bank of england this morning, talking about its concerns surrounding sterling. nevertheless, the pound making gains. >> israel has the fastest rising house prices in the eocb. it's also the country most likely to see a big correction. as our middle east editor reports. >> on tel aviv's best-known boulevard, what will soon be israel's tallest residential tower, and probably its most expensive. apartments in this richard mayer-designed residence, some with private pools, start at $1.5 million, prices that a few years ago would have been unthinkable. between 2009 and 2012, israeli house prices rose 55%, faster than norway, sweatserland, and every oer member of the eocd. prices have surged due to a strong economy, a lack of supply, and low interest rates. house prices have been rising so fast, especially here in tel

aviv, that many israelis find themselves priced out of the market. ov'dfor prices to come down, and in that sense, they're not alone. developers say they also want cheaper homes. showing me around the $50 million penthouse, he says the occurrence situation helps no one. >> rising prices in the short term may be good for some. in the long term, it's bad for anyone. for the buyers, naturally, with the prices going up, it's much harder to get an apartment. but even for developers, the prices are increasing on a steady state, and up to a certain point it becomes too risky to buy new land and to go into a new construction. >> he may soon get his wish. goldman sachs says israel is the most likely eocd country to see a house price crash. israel's finance minister doesn't see that happening. >> i don't think there's a housing bubble. i just think housing is way, way too expensive. i think the bank of israel is telling us, did you first, you make sure that the supply of

new houses, new construction is much bigger. >> if israeli governments have repeatedly failed to build enough homes, interest rates may fall further to boost the economy and weaken the she can he will, -- and weaken the shekel, giving israel's housing boom another lift. >> elliott and hans join you now. we'll get what you need to know for the rest of the trading day. elliott, let's kick off with you and these house prices in israel. >> yeah, they seem to be defying gravity. that building, you can't unfortunately see it behind me, it's just kind of over the other side of the road over there, and although goldman sachs says of all countries, israel runs the greatest risk of correction, it puts that probability very, very low indeed. even goldman sachs doesn't think that's likely to happen. they report on israel just

yesterday, saying that, look, if these house prices keep getting away from themselves, then the government would need to act, for example, by raising property purchase price taxes for people buying residences which are not their primary homes. they are trying to act to curtail these prices. >> let's talk a little bit now about what's happening in germany. hans nichol there outside the distribution center for amazon. this is really turning out to be a battle of wills, isn't it? >> that's a great way to put it, guy, a battle of wills and logistics. can amazon deliver christmas packages, holiday packages without relying on 5% of their workforce and will amazon continue this policy, and will the strikers go through this week, next week? when will they cave? we're also looking at the federal reserve in the u.s. just to see what they do in their key policy meeting today. everyone is going to be dominating. everyone has a theory. i do not have a theory on what the fed will do from outside of

amazon and line zig. >> i don't think markets do either, but we'll see. hans and elliott, thank you. that's it for pulse pusms >> we'll be back tomorrow. see you then. note

capitol hill. yes, virginia, there is a budget. it is the final federal open

market committee for the year after crisis, ben bernanke leaves behind a less independent that. did you know germany is amazon's second-biggest market? good morning, everyone, this is "bloomberg surveillance." it is fed they, december 18. joining me is scarlet fu and alix steel. there is a lot going on. >> we will start in the uk because unemployment help to 7.4% which is the lowest since april, 2009. it is nearing the threshold where the bank of england governor said officials might consider raising interest rates. japan, they had the biggest november trade deficit on record. u.s., it iso