francine: global leaders had to paris for climate talks. should it investors brace for a bigger regulatory headache? there is a new check system to slow refugees. to imf is deciding whether include the yuan. we will look at china's feature -- future on the global stage. good morning. we have tom keene. it's a treat. tom: we brought rain with us.

i was told this weekend there was no sun in london since september. what an exciting week in the end up in paris later this week. a few things are going on. jobs data onhave friday. it's going to be a very big week. here is vonnie in new york. vonnie: good morning. more than 140 leaders will try to reach the first company to deal to curb greenhouse gases. president obama and other leaders are in paris. there is broader support for a deal that was the last conference six years ago. one sticking point is how much power countries will cut their omissions. a demonstration turned violent. the french president and police were involved. police arrested more than 200

demonstrators. france had been demonstrations as part of security members -- measures. the eu and turkey have agreed on a deal to slow the flood of refugees to your. turkey will increase his poor control and the eu will give the turks $3 billion to help refugees. the university of chicago has canceled classes after receiving an anonymous threat. messagewarns an online warns a armed attack. just and is and even its two-year hiatus on hunting thees in the antarctic area killing of whales could not be justified for scientific purses -- to spirit they will take more you can get more on these and other breaking stories 24 hours a day at the

new bloomberg.com. tom: thank you so much. let's do a data check. there been some interesting movements in yields this morning. guy johnson showed me the yields exploding. the euro one of 579. can we go on to the next screen? you're not getting that warm of a welcome. we have lost your microphone. we will fix that. let me do your data check. this is dow jones industrial average. we also need to look at what european stocks are doing. they were up 13% since their low in september. let's take a look at my board. we are showing iron or.

ore is the most active iron futures. this is on a supply lock. we are going to paris. our guest host is alberto gallo. it's great to have you on the program. you have been coming on for quite some time. mario draghi has put himself in a corner. alberto: there is a lot of discussion on what he is going to do. he might increase the size of purses every month. by 20 basiset rates points. he might add what people can buy. they are going to run out of assets at something. is this going to be a sugar rush or is this sustainable recovery?

francine: is it a sugar rush? alberto: i don't see how this is going to change with qe two. the fiscal arm suspending the european level, you need capital in funding. you need entrepreneurs. --far, investment is coming not coming back to europe. qe'sine: will any of the translate to the economy? what is he trying to achieve? alberto: qe is not a bad thing. it's necessary, but it's not sufficient. thanks have mpl bad loans. are not able to lend a lot. there is a lot of regulation. many banks are not profitable. you have italy where there are more bank restaurants --

branches and restaurants. there is a lot of flow of credit in the economy. the lifeline is broken and has a lot of holes. the other issue is there's not demand now. entrepreneurs and companies have been stuck for a long time. companies don't invest because interest rates go down. they invest the economy is growing. the kickstart is the government doing something incredible. they can't agree on doing anything. tom: all of these important events are coming up. paris, weking at don't look at the real economy. how thean update on world. to the real economic effects for europe and the united states. alberto: we've got a lot of divergences. is the wealth effect

has come to part of the population and not others. there is still a lot of states in an sectors in recession. downside in cut the a distressed environment. you may cut some of the upside. i want to bring up a chart of the distortion. you showed me this chart. it's incredible to me, the 10 year yield, the german 10 year yield. we are in a completely new territory with your way up over three standard deviations. wrong, theyf i'm can't control this. is that right? francine: that is what we would think. governments are not using this to stimulate investment. they're not just talking about airports or highways. we are talking about tax breaks

favoring private investment. it has worked in ireland and spain it, but it hasn't the ball of europe. francine: i love that chart you did with the various deviations and metrics. to go to anstart area where we know what yields will do? it's so difficult to predict. alberto: i think qe will continue. sovereign disrupt the bond market for a long time. , thisernments don't take side to do something together, the ecb is the weapon of last resort. qe in europe is a lot bigger for markets. markets are smaller. the ecb is buying two euros of sovereign debt. one.

we are back to that situation. now, where isom mr. draghi. infinity,oing qe where is he a year from now other than under a stagnant economy western mark --? alberto: we are having a political crisis and the migrant crisis. there is a chance there could be a fiscal response. growth could increase. it's not enough. there is a chance something could go right. tom: alberto gallo is with us. we have good annual review. one of our themes this week is we are in london and then on to paris. it's the co-mingling of economics and investment. in our next hour, l weinberg will join us. we will speak on the remember the.

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tom: it is beautiful in london. we had pouring rain yesterday. i was out of that bridge yesterday. i was waving to francine. it was plus three. it's the millennium bridge. it is beautiful. let's go to new york city and here is vonnie quinn. vonnie: it's a little lonely here i have to say. the jailed billionaire has resigned at the investment bank. he was arrested in a corruption

probe last week. he will be in jail indefinitely. they are in an emergency talks to sell. putting pressure on its weaker competitors when it comes to bonuses. they are leaving it unchanged. europeans the end in competitors, which is cutting bonuses. some beer brands may be sold to clear the way for the deal between the two biggest breweries. familiar,to people the company may sell to of miller's brands. that may help reassure regulators who are concerned it could lead to less competition. francine: thank you so much. there is caroline hyde. we are talking with tom and four

coming on air. we are trying to understand if there is a chance we get a founding agreement. china was the climate deal holdout last time and now they are the leader. caroline: you're talking about two key points. both relate to two key individuals who just met. china, the leader of legally binding question, will an agreement come in? will it be legally binding? particular doesn't want a legally binding agreement. what kind of treaty could we have. china is playing a leading role. this is the difference between 2009. china is the number one polluter in the are spearheading the

charge to cut emissions. they want to reduce emissions by 65%. tom: how much has already been done? how much is preplanned, prepackaged and they are showing up to sign on the dotted line western mark --? caroline: this is frontloaded. we are seeing the pledges from out of 195 countries. more than 180 have already signed and laid out what they promise to do. 65% of peak emissions by 2030. india will slash their admissions by 35%. korea, mexico, south they've got the most challenging areas. they will make hard promises. manyess knows how

omissions are being made by the leaders flying in. they are trying to spark catalyst for the next two weeks and iron out some of the issues, there are 50 issues that need to be negotiated. the money that needs to go to the emerging markets. how they keep improving the targets. tom: and the london times this morning, the idea of protests. president ollanta has to deal with that. they were having remembrances for the people that were killed by terrorists. -- francine: this is a huge deal. we are getting live pictures. to find ans this win agreement. believers and

climate change want a 2% within the agreement. whether have some explicit target. is that loan of the water? is there still a chance? light -- i think your right. the worst effects of climate change don't occur, they increase the temperature two degrees. this limits it to 2.7 degrees. we're not there yet. see sea, miami, if we levels rise, these cities could be under threat. we are seeing 4000 chinese nationals die because of air pollution. that's a phenomenal statistic. will they agree that the pledges frontloaded the moment? how can they do more? tom: thank you so much greatly

appreciated in paris. i think about a wonderful thing i read. not toic idea is degrees. we need a lot more. scientists say we need a lot more effort for global warming. we can't do that because it will diminish gdp. our economy is linked to what we do about climate change. alberto: there is an opportunity. aina has been talking about green stimulus in the past. they have not done anything large-scale. has not been spending a lot, they have been spending on energy. they want energy and dependence. they are a country with the highest green energy. the ability to transform jobs lost in shale energy into green energy.

there is an opportunity for governments to do something here. it's not incompatible with growth. some economies need stimulus at the moment. tom: high hopes, hot air. that says a lot about it. we will be in harris for cop 21 on friday. this is where a lot of people think things will be done. the business climates of cities and what mayors can do away from global leaders. ♪

francine: welcome back. i am with tom keene. we are so excited to have you in london and we go to paris on friday. i brought in newsmakers for you today. the air ofrtesy of biggest fortunes in italy the controls for our eight. if you had to say about car manufacturers. >> my feeling is there is going to be fewer and fewer car manufacturers. the competition is far harder, or brutal, more difficult than what it used to be. the new rules and regulations in terms of omissions and how

engines will have to be our forngous investments investors. the rules will change. francine: the future of the car industry, we've seen so much can dollars -- consolidation and --. tom: it does, capacity. idea of where we are in the supply curve of the european economy. is that the next four years a shrinkage of the economic? everything is slowing down? alberto: there is some upside. people have been shrinking their persons during the recession. there is a lot of demand for cars. we are long.

the long-termat, picture is one of consolidation where you have less players. car manufacturers that are innovating toward more green it models are the favored ones. francine: how much is this a draghi play? he will be able to set the tone. buy new car because we feel more comfortable. alberto: that is part of the story. there is some physical stimulus as well. there could be a car related stimulus in germany. it is a cyclical story. you need more economies of scale and regulation. tom: i think i will ask a dumb american bastion. can i get a car loan in germany with a negative yield? why not?

one of the reasons why the car industry has done well is the car loans are growing. the amount is the highest in history. americans are buying more and more expensive cars. there is a lot of room for upside in europe. so much. thank you alberto gallo stays with us. we are getting structural reforms. i love it. coming up, the managing director joins us. francois hollande is now addressing. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. tom: decades ago to copenhagen and the disaster that was, another try in paris. all this week for a lengthy

moment, discussions on climate change. the president of france is greeting world leaders, i mean every world leader is there today and tomorrow. this is north of paris. francine: about an hour and a half. him, he staked his presidency on this. can you imagine the distractions he's facing? francine: he may get more support. there is more solidarity. tom: there will be a lot of symbolism in the next two days. we will get that to you worldwide from london. here is vonnie quinn. vonnie: thanks, tom. moment of his groin for a deal on climate change in paris.

140 leaders from around the world are there including the chinese president and they will be speaking over the next few days. the goal is to come up with the truly global deal to curb greenhouse emissions. -- somech president pollution readings in beijing have reached 17 times the level considered safe. obamaight, president visited a memorial outside the theater for dozens were killed. french president aland joined him. european and turkish officials say there should be a solution on cyprus. they are being led by advocates of reunification. in.ey invaded cyprus there are still troops there.

suspect in colorado makes his first offense in court today. three people were killed in friday's attack. the suspect made a quote about no more kb parts, he was up was to a portion. you can get more on these and other raking stories 24 hours a day. thank you so much. there is so much going on it. the jobs report is on friday. that's an important ecb meeting on thursday. talked about that earlier. argentina, we have some wonder coverage. there is a sea change in argentina. is that an opportunity in the yield market? can i go to argentina? .lberto: it's very risky it's one of the few countries with a heart yield. has an improving political

situation with the new elections and april oh market candidate. he has announced some reduction in taxes. there is a lot of hope. tom: you talk about being a yield hog, alberto talks about the bond hazard area --. alberto: it's one of the few things that has a high-yield and could be safer going forward. it's not dependent on china. the dollar. on there is a pro-reform candidate. the question is, it takes to to tango. he does not have the senate. he needs cooperation from the other parts of parliament. argentinians have been used to a lot of spending. they want reform. they want change. are they going to be willing to pay for it?

will they go through a little bit of austerity? francine: it takes two to tango. will they back him and his reform plan? do i believe this guy can muster enough support to actually change western mark to argentinians want it? alberto: there is always a honeymoon it. we actually had in russia with vladimir putin. is it sustainable? will they be able to do the reforms? i think argentina has better fundamentals. it has some chances of improvement. in latin america, we have brazil did they areing the recipient of a lot of investment. they haven't unstable government.

storyis a falling angel and a rising store -- star story for argentina. tom: you had the courage to buy italian debt or in --. between five and 7%. what is the now look? what is trade for next year? alberto: we want to be very focused about next year. it's about capital preservation. tom: can you find someone optimistic? that's what we would like to see. alberto: you have to be cautious. next year, you've got to look at u.s. high-yield. it's too early. there are a lot of energy companies that can default. commodity prices will go down. i think it will be interesting next year. tom: coming up, a trusted

source. ♪

francine: we have just heard from francois hollande. we are expecting something. no country must be able to opt out of this pact, he hopes leaders will sign. we heard from john kerry that's

probably not going to happen. we show up on friday. tom: they had to shut down beijing because of pollution. what else do you need to know. francine: the chinese leaders want something done. bloomberg philanthropies. i know we've got a bias on this. look at the knowledge on it. it's educational by beijing is shutdown today. i learned a lot going to it. francine: it's a great read. this goes to emerging markets. the refugeelth with crisis the eu has open the possibility of turkey's ownership. we are joined by the managing director of the think tank.

it's great to have you on the program. thank you for coming in. this gets more complicated. now you have russia involved in turkey. is this an agreement? it's just the first step. given the opposition that remains in france to any membership turkey in the eu, the credibility of the agreement -- quid prok boko quo is suspect. that is going to be tested. we don't know what the implications of the $3.2 million fund will be. -- $3.2 billion fund. we don't know if this is a one-off reward. all of the elements of the deal,

which is a good starting point, the deal could fall on any one of those. one of your advisors with forgroup, he is calling outright global recession. whether it's global session or not, the cause of this is economic slowdown. does a resolution have to await for it? if you look at the price of oil and the economies like saudi arabia, the links between the economics and the geopolitics are extremely clear. nowhere nor so than that. is in the itself process of potentially collapsing if oil prices don't pick up. if the contract that has held saudi arabia together, you get a

massive transfer of resources, if that contract is no longer sustainable. on: you have a tipping point that crude. is that changing the equation for the saudis? sony: i think they've got a few years. semesterure the estimation. it's credible and they might have more. with the austerity that is setting in, within the next 10 years or so, unless they change the economic model or the oil price picks up to 50 or 60 at the least, we are in for big geopolitical spillovers. there is an article that says signs are damaging businesses.

why in terms of what we are , is this apec political standoff between saudi arabia and iran? the price to go higher because they don't want iran to benefit. sony: it was linked to developments in the u.s. it they wanted to change the market share. the assumption is being questioned, that saudi would ramp up production once again. they would be sucking producer. it's not clear that given the loss of control to the u.s. and iran it coming back and new oil reserves in africa, they don't play a pivotal role anymore. tom: we will talk about this in the next hour, what is the obvious call on dollar strength? do we see a further investment of the dollar?

we will see the euro-dollar through one. the euro weakens even more. out 0.59?re modeling this feeds right into international relations. been thele there have whiled the tensions, sweden, switzerland, denmark have negative interest rate decisions to their exchange rate, that's the biggest reason why the ecb will further react to these -- these qe even more. tom: you see world leaders gather in paris. can you imagine if they were having all the emotion of the terror attacks? i could afford a martini.

i could. it would be great. for them it's a serious thing. francine: they are trying to figure out negative rates. we were not even talking about this two years ago. tom: i have not looked at my rate chart over the weekend. francine: this makes it so difficult for the banks. i look at the swiss 15 year yield as my bench mark of negative. that's extraordinary. alberto: it are governments start spending or the ecb will buy more and more of the same assets. the ecb at something could say let's try something else. let's buy loans or stocks. that's very far away. for now, they only have sovereign bonds and some

corporate bonds to buy. they are buying a lot of them. gallows world is bizarre. that's why he is leading off our coverage. hour, carl weinberg will join us. china is coming up. we will advance our discussion on economics. stay with us. the surveillance. ♪

tom: good morning. new york city is looking beautiful this morning. there is a little bit of chill in the holiday air. london is a bustling. we hope you are worldwide. we are in london today. we will be in paris on friday, looking forward to that. the mayors will discuss how they can affect climate change. world leaders are in paris this morning. here is vonnie quinn. vonnie: regulators have handed

out a number of record fines. ernst & young says regulators have find corporate wrongdoers $3.7 billion. adele has set a record for album cells in the u.s.. three to 4ought million copies of her album 25 in the first week of release. the imf is expected to approve china's request that the yuan the considered a reserve currency. it has been recommended it be added to the drawing rights basket. our bloomberg business class. francine: we have to look at the imf in china. let's turn to our guests.

the you onhow you chart it tom made a great term. it is rebounding. just when the imf will vote on included in the basket, we hear of intervention. this is something we have seen before. right before central-bank action. we saw this before the fed meeting and the fed did not do anything. it creates a currency war. if they do something today, this could push the ecb to do even more. tom: there is a single point estimate of seven you on the dollar with a much weaker. this is the circle. i don't know if we get to seven. what is that depreciation affect on the rest of asia western mark

alberto: china has a debt overhang problem. they doubled that in the last eight years. they have some dry powder, but it's leaking every month and they have to use a currency as a safety valve. we are looking at more depreciation. we think a rally has been temporary. markets the emerging borrowers. have been corporate's earning dollars in brazil and russia and other countries. many of them have 50% of their debt in dollars. francine: if you want to get included in this basket, it looks like a done deal, does it mean that investors can trust the chinese economy? the timing of an intervention seems odd.

everybody is intervening directly or indirectly into the china doesn'tand look that on anymore. the tables have turned. i think there is a short-term question from day zero two day one. it's not going to change because of this stamp. this leads to rebalancing of foreign exchange reserves. this will change the asset demand mix. government bonds will be more in demand. the longer-term question is completely. into thea's entry global financial system have a significant impact? that's going to be huge. we don't know what the direction will be in the end.

the flows will be huge. speeches and the ballet of diverse, people bump into each other. is this a changed chinese message? are they a different chinese government? is it a different dialogue? cleari think it's very the divergence. become even bigger. the indian foreign service is smaller than that of new zealand. china has been a constructive partner. it has been seen as one in international. including in the climate talks, china is going to most likely green the global financial system. tom: they are shutting down beijing.

nothing has changed. there is a stock problem and a flow problem. they say that. sony: the chinese government has recognized that it comes from breathing unprintable air. they have to act. they have to be seen to be acting. look at that. look at those shots. francine: that's why they have to get people on board. a final thought on china. you are gloomy about 2016. you say china will be steady next year? alberto: the slow down next year

will be managed. they need to readjust. reform is the number one priority. if the economy slows down, they can do a mini stimulus. , the satellite economies will suffer. tom: this has been fabulous. thank you so much. we have headlines from nato. they come out strong in support of turkey. border is highly volatile. it's sovereign. with us. bloomberg surveillance ♪

tom: global leaders converge in paris.

global warming is the agenda. the reality is jihad, and turkey and russia are front and center. . price decline in commodities in this hour, carl weinberg. ,nd it will be dollar-euro yen-pound, as china joins the party. this is "bloomberg surveillance ," live from our european headquarters in london. i am tom keene. i have the pleasure of being here with francine lacqua. it is just such a busy week of international relations, but the gauze of this is commodities find a bid. onncine: and we have the ecb thursday. this is probably the big one. tom: it is a done deal. they are going to act. francine: if you do not deliver, you can see the markets -- that is the main concern. tom: nato is coming in to support turkey.

mr. putin is in paris this morning. francine: and friday we have not only opec but jobs data. it is a busy week. tom: let's get to our first word news. here is vonnie quinn. vonnie: thanks, tom. the sweeping u.n. climate -- presidentlimate xi jinping saying -- there is broader support for the limiting of greenhouse gases than there was at the last effort three years ago. they still have their sick points. -- they're sticking points. a demonstration in favor of a global climate deal turned violent. french police arrested more than 200 people. demonstrationsed as part of security measures imposed after the terrorist attacks. an israeli court today found two

jewish teenagers of murdering a palestinian yo use last year. the defendants confessed, saying they were avenging the killings of three israeli youth by hamas militants. pope francis met with muslims at a mosque in the war-torn capital of the central african republic. he also visited six children in a hospital. violence between muslims and children has escalated since the country overthrew its christian president. and kobe bryant is calling it a career. the lakers star says he will retire at the end of the season, his 20th in the nba. he has won five championships and ranks third on the league's list of all-time scorers. tom? francine: equities -- tom: equities, bonds, currencies, commodities. francine, i want to get your

screen. the euro, 1.0577. the two-year yield moved up a little bit off the swedish news. francine: if you look at overall equities, they are nearing a three month high. ore in singapore. 39.67. iron ore,t shanghai it is singapore iron ore. francine: it is one of the most active iron ores. tom: we will talk about china in a bit. us --now, our guest with also, jonathan. he said i really do not want to do it, but he is with us this morning with trusted sources, truly one of the atlantic region's experts on all things china nature.

we will get to that. the history of modern france -- you have written how many books? jonathan: 18. tell us about the friends that receives world leaders. jonathan: it is a france that is very troubled. obviously because of the terror attacks and because of the charlie hebdo attacked earlier in the year. uncertain been quite about what it is and how it goes forward. that is partly because of the economy and partly because of high unemployment and its place in the world. tom: is very generational shifts that the next set of french leaders have to deal with? : there should be. they are all vaguely similar and come from the same kind of background. they have not been very good at connecting as a country as a

whole. front, withs a huge those who feel left out. francine: this is a point that when you speak to americans," a lot of them ask why you have not heard from marine le pen. it looks like she will sweep up the elections. to say is,ll she has i warned you about terrorism, ,undamentalism, police security, legal system, and look at what has happened. she just has to sit back and count the votes. tom: how do you link in our world on settlement into the many cautious calls? , dashingto run money around and all that. this is the time of year where everybody releases reports. so manyever seen cautious major houses. what does that signal to you?

>> that certain vulnerabilities have been brought to fore, and people try to lock in returns. people are taking a step back. there is a lot of uncertainty. in, funds they're pricing and 80% chance of a rate rise in december. tom: it is a single digit world. barclays, alberto gonzales was just on from rbs -- cautious, cautious, cautious. that tells me to go long. whereas certain parts of the world are becoming more cautious, others are still being supported. it shows that first of all, it is very hard to find areas that can protect the risk. but also the growth. if you focus on the consumer and more domestically at pent-up demand, there are fantastic stories. they have to be specific. these long-term, broad-based plays --

francine: if you put the fed against the ecb, what does mario draghi do thursday to not disappoint? he has already shown his hand. he has to do something. it does not have to be that big, it is just a form of extending his buying program. when we talk about the u.s. starting to raise rates, that has been the trigger point for months and months. this element of the 30's, jonathan fenby, the discussion of lower nominal gdp, is there an element of pre-thatcher england? jonathan: there are. people rather belatedly have woken up to the fact that china is slowing down. the great question is, how fast is it going to slow down, and can the authorities control that ? that is all the china story is

about. headlines wesome are going to break in on, on nato and turkey as well. turkey with a strong defense of what their response will be to russia. turkey says the military it's doing its job -- the military is doing its job of protecting airspace. great readt was a over the weekend. the israel prime minister said that when russia was getting involved and they had a direct channel of communication, something that probably russia wants to have -- tom: a theme for the week is flag. here's a shot of the turkish flag and the nato flag. before that, we had a shot of the u.n. flag and the french flag. mixinternational relations in the world of finance is remarkable. francine: unprecedented, when you look at central-bank versus

-- when you look at central banks versus geopolitics. coming up, we will have president obama's remarks on terrorism. that is coming up at 6:30 a.m. in new york. 11:30 a.m. in london. this is "bloomberg surveillance ." ♪

tom: good morning, everyone. the president and president xi of china meeting right now. we are looking for president obama to make comments here in this hour, i am guessing in the next 15 minutes. world leaders gathering in paris this morning. away from the meetings is the climate meeting -- away from the meetings, the climate meetings,

is the discussion of imf and also the fallout of the russian plane downed over turkey and syria. here's vonnie quinn. say sab miller grolsch onroni and the block. selling the two brands could ease the antitrust concerns of regulators. he jailed billionaire is quitting his post at brazil's largest independent investment bank. andre estevez was arrested last week in a correction investigation -- in a corruption investigation. more than ever, holiday shoppers would rather be online than in line. the research firm says in-store sales for thanksgiving on black friday this year fell 10%. that is our bloomberg business flash. francine: thank you so much.

the imf meets today to make china's yuan one of its reserve currency. our chief asia economics correspondent, enda curran, joins us from hong kong. gemma godfrey and jonathan fenby are all still still with us. -- are also still with us. what does it mean for china and investors? can we have faith that it means that china's economy is better, or is it just a first step? big symbolics the victory for china. it will encourage them that they can win arguments against the conservative side against the chinese government. it comes after a pretty tough year for policymakers in china. they had the stock market debacle, then the exchange --

then the change they made did not go too well. and now they are stepping in and saying, hang on, it is merely a bump in the road and china is on the right path here. it does not change the economic picture at all, it is just more symbolic in the near term. i look at what china is going through right now. there is going to be a meeting at the imf. what will you look for next? enda: well, it will be interesting to see if it is only conditional, if it applies to what they grant china, whether or not there are any clauses or further barriers set up to entry. but at this stage it looks like it might be a rounding -- a resounding victory for the pboc and those pursuing this agenda. if they do get across the line now, it is a big ticket for them. elements are really -- it will

not turn around the debt story or the gdp growth, but it is a victory for reformers. presuming any last-minute conditionality, it is a good victory for the imf. enda curran from hong kong this morning. this is, of course, the photo opportunity. help me out here, francine lacqua. live.ne: it is i have never seen a live photo opportunity. this is rather exciting. moon witheban kin francois hollande. this is the biggest gathering of world leaders in france. since 1948, in france. i believe, jonathan fenby, this is the largest photo op i have ever seen. jonathan: they need a very wide lens here. tom: it is so telling, the pakistan minister, meeting with

the afghanistan minister. francine: there are sideshows at the same time. tom: jonathan fenby, what is the -- tell us your knowledge of china's military might. movingn: china has been up with its military power. he is rightly say, pursuing that in east asia and also using china's financial muscle with all kinds of schemes , the asian infrastructure bank, the soft road policy, the brics bank. china is going out in all kinds of ways, and his presence at this summit is symptomatic of that. tom: is it a hard power or a soft power? they want to be resilient, but there is such a history of a chinese way that gets in the way, doesn't it?

jonathan: chinese soft power has not worked that well. but at the same time, xi jinping wants to engage with the rest of the world, and the other -- the ultimate goal is to be number one. francine: when you look at the role that china is playing in paris, in 2009 when we had a copenhagen, a total flop, china was very reluctant. the chinese, if they do not want -- or if they want to stop the social revolt, they need to be on board and sign an agreement. jonathan: absolutely. when the paris meeting takes place, we have air pollution in beijing or you cannot even measure it now. one of my colleagues was calling in and saying he cannot see not just across the road but to the middle-of-the-road. tom: should we talk to a physicist? i think we should. francine: we have one here. tom: the ozone and the combination of pollution, hydrocarbons, and solar energy is really difficult, isn't it?

really difficult because also the time in which you have to rein it in gets harder and harder as time passes. that is the reason why there is so much pressure. jonathan: and you have about 20% of the world's steel being produced around beijing, most of it by outdated steel mills. francine and i will join you from paris on friday. important meetings with people who can actually get things done. paris up, we will speak at 6:00 a.m. starting on friday. coming up, jonathan fenby and gemma godfrey as well. it is "bloomberg surveillance." ♪

francine: we brought the sun out. no, we did not. it is raining. sorry, tom. it is time for tom's "morning must-read." it was windy and musty, and henry viii went under the bridge while i was there. the university of manchester, in preparation for the paris meetings -- professor anderson of manchester, these are some of his recommendations.

caroline hyde knows all of this. she is in paris this morning for the beginning of a good 11 days of meetings. i get it, caroline. what do they want to do on day 5, day 7, and day numeral line at the paris meetings? caroline: compromise, compromise, copper mice. the great ineady the good, the glitz and the glamour today. leaders, therld biggest on record in one day, that many world leaders. phenomenal when you are in a country that is in a state of emergency. but in the next few days, they are trying to accelerate agreements because they need to somehow clamp down on world 4mperatures, not rising by degrees, but less than 2 degrees.

of climatelities change, some 50 issues they need to find compromise on. what is the reality, caroline, about whether we include any targets? we will not have any binding agreement. what can we get? is thee: what we can get pledges already laid out by almost all of the countries visiting. more than 180 out of the 195 countries, gathering here in paris, have already laid out what commitments they will make from 2020 onward. you have the chinese saying they with flash their overall emissions -- they will slash 65%r overall in nations by per unit. brazil, mexico, south korea have signed up for the most tough climate change promises at the moment. clearly there is more to do, but we expect they will not be

anything binding, but they will be held to account. tom: caroline hyde, thank you so much, in paris. we will be there on friday to join her. gemma godfrey and jonathan fenby are with us. there is no game theory in europe with 25 countries. how do you have game theory with 100 some nations? gemma: it is about the meetings going on behind the scene's that are most interesting. when you have that number of people in that one area, the amount of different negotiations going on that we do not hear about, that will be the interesting story we will hear from this conference. francine: we are not going to have a legally binding agreement, right? when you look at emerging markets, they seem to be getting more on board. what does the western developed world have to promise emerging markets to get something? china will not sign up

for any legally binding agreement. it prizes its own sovereignty too much. wantthe emerging markets is a sign that the developed countries will do something. they probably want financial aid of some kind. and there may be some kind of trade tie-in with this to make it easier to sell goods if you produce them in an environment -- tom: stay with a spear jonathan fenby with his wonderful short must read, and i read it. his book on china. and gemma godfrey is with us as well. coming up, the president speaks in paris. stay with us. "bloomberg surveillance." ♪

tom: good morning, everyone. the president will speak in moments. we are waiting for that. the kremlin out with a headline maybe an hour ago, saying vladimir putin may meet with

obama today. we will see about that, as world leaders gather in paris. vonnie quinn has our first word news. vonnie: he has also said he is with erdogan of turkey. xi is saying china is on hand along with president 100 40nd leaders of nations. still major obstacles to an agreement on controlling greenhouse gases. among them, how much support industrial nations will give poorer countries because of their in emissions. missions.f their e china is the world's leading polluter. visited theama memorial last line outside the theater where dozens of killed in -- where dozens were killed in the paris attack.

francois hollande joined president obama. be heldhearing will today for the man accused of killing three people at a colorado clinic. robert lewis dear will appear through a video hookup. he was arrested friday after a killing in a clinic in colorado springs where nine people were wounded. he has an antiabortion and antigovernment view. hillary clinton will campaign in nebraska next month with warren buffett in omaha. he says americans are not paying their fair share in taxes and you can get these stories 24 hours a day at the new bloomberg.com. tom: the headline this morning is stability and commodities. stability in commodities. you can see that, months and months of sharp declines. ther prices in copper and

bloomberg commodity index. this is something carl weinberg is watching. carl weinberg, without question, wrote the research note of the weekend, not on unit dynamics but price change of commodities. carl, your piece is must-read, and basically what you say is prices fold right into domestic economies. how will lower commodity prices affect the united states? carl: it affects everybody, tom. that morning. i hope you are enjoying london. people with reduced commodities make less money than they did before so they are poorer, and these people are customers of u.s. exporters, buying our airplanes, consumer goods, technology, and all the things we are trying to sell overseas with the stronger dollar. this is part of a headwind. somewhere between 2% and 3% of world gdp by my estimates, and that means we will see them buying less stuff from the

developed world. tom: a young guy like you has seen only three commodity fair markets. markets and commodities clear differently? carl: we are seeing a slow clearing because of excess supply, periods of low interest rates and high commodity prices. that is a perfect stew for over investing and production. it is iron, copper, every commodity you can imagine. will take a few years to work it off, and in that time we will see lower incomes in emerging markets. it is a record drop in world trade, and we are going to pay the price for it. francine: so far it has been catastrophic for countries like brazil and so forth, where a stronger dollar is helping in terms of commodities and what they can get from commodities. will that change and when?

carl: lowering the exchange rate just shifts the burden away from exporters to importers. take canada for instance -- they depreciate the currency and offset the pain, which is good for oil producers, but everybody in canada who want something from the united states has to pay more for it. it shifts the pain to the consumer, so the oil companies are hanging in there in canada, but consumer spending is going down and the economy itself will grow below potential in the third quarter. vonnie: canada is obviously a strong economy, as much as it is suffering. what about countries like brazil, which are really in danger? carl: this is the big risk. priceop in commodity destabilizes these economies and causes a global drop in gdp. they and up buying less stuff from us.

francine: ok, so they buy less stuff from us. at the same time, we are benefiting from lower oil prices because it means that the stuff a nice filter to the real economy. so how does 2016 work? are we benefiting more for lower oil prices than we are from a lack of people spending in our country? carl: right out of the box we feel great. we pay less for gas and for one our incomes like have gone up and we have spent faster. but when we moved to the second year, oil prices are still low. oilave lost growth because prices are down. so we lose the benefit, but people in those countries are still making less money for doing the same amount of digging. they are still poorer, and they are buying less stuff from us. initially we feel great, it at the end of the day we are worse off for it. worlds a 14% job in

exports, the second-biggest drop we have seen percentagewise. it is between 2% and 3% of gdp. the income effects are slower to come forward, but they are huge. gemma: we are saying that companies over the next couple of years, they could benefit from a greater relaxation in terms of their margins because they are not just talking about oil prices, where talking about commodities in general, which have push-up that cost to input. do you think this gives a little bit of a breather? carl: somewhere down the road there is a windfall for prices in all this. materials -- when you look at the cost of making things, about 85% of the cost of producing our economy, it is labor costs, not materials costs. asthe windfall is not nearly

important as good wage performance would be for them. im: the wage performance -- have never asked this question. will we adjust to china? they have better inflation. we do not have rising wages yet. do they? jonathan: they do indeed. 22% inshed up wages 2010. it is policy. tom: like bloomberg! [laughter] jonathan: you had this wage increase, which put pressure on chinese exporters, and as carl was just saying, the labor wage versus chinese prices is relatively small. francine: welcome to london. tom: this is just unbelievable. carl weinberg is with us from high frequency economics.

it gets better on bloomberg radio today. "bloomberg surveillance." edward morse of citigroup. that is 7:30 in new york. this is "bloomberg surveillance ." ♪

francine: tom keene is in london all week. and look at that. tom: gorgeous. francine: when you look at that, it is a big week for david cameron. he may ask the people -- well, not the people, but this is probably one of the only votes

-- there is a 20% chance. if it happens, this country will probably be in a mess. that's get to the bloomberg then this -- the bloomberg business flash with vonnie quinn. the international military fund is expected to approve china's request for an improved currency. the imf staff has been -- u.s. automakers are on the verge of breaking sales records this year. but they are leaving nothing to chance. they are increasing rebates and other deals so they can grab market share. a research firm says automakers spent 6% more than a year ago. --tish singer adele americans bought 3.4 million copies of her album "25" in the

first three weeks. i just want to point out as well pound has fallen down below $1.50. you will be interested in that, tom. the british pound circling around the $1.50 mark. tom: it says me and francine, , cocktails at harrods this morning. this aligns the new policymaker a little bit more with the dovish. tom: we have yet to mention this. the news flow is so great. we saw a real market moves off swedish gdp this morning. ofre are two great crosses that are gdp pushing against a lot of other economic works. fx, the name --

tom: our single best chart today is for carl weinberg at high frequency economics. we look at dollar dynamics, not so much getting back to the plaza court of the 1980's. maybe getting back to the rubin-dollar. look how we are getting toward where we were on a five-year moving average basis. about 2000, 2002. carl, tell me about dollar dynamics. isn't that always a solution for economic challenge? carl: i do not know if it is always a solution, but the dollar is going to be a big factor in 2016 both for u.s. exporters, and for people around the world. it will be a stimulating factor for the rest of the world. we do not know much about what the foreign exchange rates and what the model is or anything, but one thing we are sure about is if we get an exchange and interest rate spreads, that will affect the currency.

the fed lifting off the ecb is not, the bank of england is almost certainly not. anything on the yuan side, there is great potential there as well to make the dollar stronger against the yuan. tom: when we see a stronger dollar, there is always a pointy response because it politically becomes important. how close are we to where other nations start screaming? carl: i think they already have started screaming about the strength of the dollar, but i think the biggest scream is going to be domestic. it is going to be exporters complaining they will have trouble selling their stuff overseas. and we see that right now in our current forecast at high frequency for the u.s. economy. it is the exports sector dragging down manufacturing. right now trade is already a headwind because volumes are low from overseas, as we discussed before, with lower income in emerging markets and less stuff

to import. but a stronger dollar makes our stuff less competitive. francine: jemma, what is your take on this? when you look at the pound and the dollar next year, the market will be a little less binary if we get this fed liftoff. gemma: you have heard that you cannot fight the fed. you now cannot fight the currency move. if you are investing in a company in america, it will be more prudent to buy the shares of companies who are more exposed domestically because any overseas sales are going to be hit by a stronger dollar. francine: if you look at the investment world -- and this is something tom is extremely keen on -- when you look at the currency moves and what china's role is in this, we have currency and trenchant today. thathan: china mishandled completely. we have for intervention, control of the currency. we expect there will be a small

depreciation in the yuan next year, but you can bet your bottom dollar that the pboc and the political leadership will keep control of this. they are not going to open up a capital account. they are not going to allow a freely floating currency, whatever they do at the imf. gemma: i like that pun -- you bet your bottom dollar. today we are looking at 6.4 versus the u.s. dollar. where will we be after the inclusion? carl: there are a number of other things going on. i think we are looking for a period right now of yuan depreciation. vonnie: by as much as how much? some people are looking at 20%. rocco going back to december carl: going back to

december of 2013, the channel is around 6.41, 6.42, i think we will start moving back down into 6.30's.r i think they will manage it in that range. tom: carl weinberg is with us with high frequency economics. jonathan fenby and gemma godfrey are with us as well. in paris, the president of the united states is going to be in to speak. here is president obama. president obama: we have come to .aris to show our resolve we offer our condolences to the people of france for the barbaric attacks on this beautiful city. solidarity,ted in not only to deliver justice to the terrorist networks

responsible for those attacks, but to protect our people and uphold the enduring values that keep us strong and keep us free. and we salute the people of paris for insisting this crucial conference go on. provesof defiance that nothing will deter us from building the future we want for our children. rejection of those who would tear down that world, the marshaling of our best efforts yak of nearly 200 nations have assembled here this week. , for all the that challenges we face, the growing threat of climate change could define the contours of this century more dramatically than any other. ,nd what should give us hope

that this is a turning point, that this is the moment we finally determine that we save our planet, is the fact that our nations share a sense of urgency about this challenge, and a growing realization that it is within our power to do something about it. understanding of the ways human beings disrupt the client -- disrupt the climate advances by the day. 14 of the 15 warmest years on record occurred since the year 2000. 2015 is on pace to be the warmest year of all. , large or small, wealthy or poor, is immune to what this means. this summer i saw the effects of

climate change firsthand in our northernmost states, alaska, where the sea is already swallowing villages and eroding shorelines. s and themafrost thaw's ♪ tundra burns. at anglaciers are melting unprecedented rate. it was a glimpse of our children's fate if the climate keeps changing faster than our efforts to a dress it. submerged countries, abandoned cities, fields that no longer grow. political disruptions that trigger new conflict, and even more floods of desperate peoples. sanctuaries of nations not their own. that future is not one of strong nor is it one where fragile states can find their footing. that future is one that we have

the power to change. right here. right now. but only if we rise to this moment. as one of america's governors has said, we are the first generation to feel the impact of climate change, and the last generation that can do something about it. i have come here personally, as the leader of the world's largest economy in the world's ter, to sayest emit that the united states not only recognize our role in creating this problem, we embrace our responsibility to do something about it. over the last seven years, we have made ambitious investments ambitiousnergy, and

reductions in our carbon emissions. we have multiplied wind power threefold, solar power more than 20 fold, helping create parts of america where these clean power sources are finally cheaper and dirtier conventional power. invested in energy efficiency in every way imaginable. no toe said infrastructure that would pull high carbon fossil fuels from the ground, and we said yes to the first ever set of national standards limiting the amount of carbon pollution our power plants can release into the sky. the advances we have made have helped drive our economic output to all-time highs and drive our carbon pollution to its lowest level in nearly two decades. but the good news is, this is not an american trend alone. last year the global economy

grew, while global carbon emissions from burning fossil fuels stayed flat. what this means cannot be overstated. we have broken the old arguments for in action. we have proved that strong economic growth and a safer environment no longer have to conflict with one another. they can work in concert with one another. hope.at should give us one of the enemies that we will be fighting at this conference is cynicism, the notion we cannot do anything about climate change. our progress should give us hope during these two weeks. hope that is rooted in collective action.

earlier this month in dubai, after years of delay, the world agreed to work together to cut the super pollutants known as a hfc's. that is progress. over 180 countries, representing 95% of global emissions, have put forward their own climate targets. that is progress. for our part, america is on track to reach the emissions targets i set six years ago in copenhagen. we will reduce our carbon below 2005 levels by 2020. last year i set a new target. america will reduce our carbon by 28% by 10 years from now. our task in paris is to turn

these achievements into an enduring framework for human progress. it is not a stopgap solution, but a long-term strategy that gives the world confidence in a low-carbon future. here in paris, let's secure an agreement that builds in ambition, where progress paves the way for regularly updated targets, targets that are not set for each of us that by each , taking into account the differences that each nation is facing. let's agree to a strong system of transparency that gives each of us the confidence that all of us are meeting our commitments. that thes make sure countries who do not yet have the full capacity to report on their targets receive the support that they need. paris, let's reaffirm

our commitment that resources will be there for countries to skipto do their part the dirty phase of development. i realize this will not be easy. it will take innovation and the capital to continue driving down the cost of clean energy. that is why this afternoon i will join many of you to accelerate public and private clean energy on a global scale. here in paris, let's also make sure these resources flow to the countries that need help, preparing for the impacts of climate change that we can no longer afford. we know the truth, that many nations have contributed little to climate change but will be the first to feel it's most destructive effects.

for some, particularly island nations, whose leaders i will meet with tomorrow, i'm a change is a threat to their very existence. that is why today, in concert with other nations, america confirms our strong and ongoing commitment to the least developed countries. tomorrow we will pledge new contributions to risk insurance initiatives to help populations rebuild stronger after climate-related disasters. paris, let'sin show businesses and investors that the global economy is on a firm path toward a low-carbon future. if we put the right rules and incentives in place, we will unleash the creative power of our best scientists and engineers and entrepreneurs to deploy clean energy technologies and the new jobs and opportunities that they create all around the world. there are hundreds of billions of dollars ready to deploy to

countries around the world, if they get the signal that we mean business this time three let's send that signal. we seek in these next two weeks. not simply an agreement to roll back the pollution we put into our skies, but an agreement that helps us lift people from poverty without condemning the thatgeneration to a planet is beyond its capacity to repair. here in paris, we can show the world what is possible when we in commonher, united effort and by a common purpose. let there be no doubt, the next generation is watching what we do. just over a week ago i was in malaysia, where i held a town hall with young people. the first question i received was from a young indonesian woman. it was not about terrorism or the economy or human rights, it was about climate change. she asked whether i was

optimistic about what we could achieve in paris. and what young people like her could do to help. i want our actions to show her that we are listening. i want our actions to be big enough to draw on the talents of all of our people -- men and women, rich and poor. i want to show her passionate, idealistic generation that we care about their future. i believe in the words of dr. martin luther king jr., that there is such a thing as being too late. when it comes to climate change, that our is almost upon us. but if we act here and now, if we place our own short-term the air thatind our young people will breathe and the food that they eat in the water they will drink, and the hopes and dreams that sustain their lives, we will not be too late. my fellow leaders, accepting

this challenge will not reward us with moments of victory, but -- our progress will be measured differently. and the suffering that is averted, and a planet that is preserved, and that is what has always made this so hard. liveeneration may not even to see the full realization of what we do here, but the knowledge that the next generation will be better off for what we do here -- can we imagine a more worth the reward for that? on to our children and grandchildren so that when they look back and they see what ere in paris, they can take pride in our achievement. let that be the common goal in paris -- a world that i