♪ this morning mario draghi will rescue your from deflation and delays. there will be questions and answers at his press conference. they adjust the euro and sterling as they adapt. the yellen dollar. opec meets to greet amid tense discussions in indiana. good morning. this is blue book surveillance. caroline hyde, good morning.

we've got ecb, janet yellen speaking once again. tom:will ecb unveil echo the announcement out of the press conference. all of surveillances morning, on television and radio. lift into difficult news, starting with news in new york city. >> good morning tom and caroline. the two suspects in california have been killed in a shootout with police. this happened several hours after 14 people were killed at a center for the disabled. the police chief spoke late last night. >> we put out we have information there were three shooters. right now as we continue to drill down information and the witness statements, it looks like we have two shooters. we are pretty comfortable that the two shooters that we believe went into the building are the

two -- farouk -- art site our site need farouk -- syed farouk and his wife. british warplanes have carried out their first strike on islamic state in syria. not long after parliament approved the action. the defense ministry says it would release details later. arrest in theof worldwide soccer corruption case. two executives were arrested at dawn. french authorities say they took bribes. an appeals court in south africa found oscar the story is guilty of murder today which overturns his conviction of the lesser charge of manslaughter. he killed his girlfriend on valentine's day in 2013.

u.s. and china are making slow progress in their fight against cyber crime. they wrapped up two days of meetings over cyber intrusion. a hackingina says attack on the office of personnel management was a criminal case. personal data on more than 20 million people were compromised. even get information on these on bloomberg.com. tom: a data check-in. data moving in the last hour. futures up 10. much more than what we were an hour ago. the euro 1.06 down. crude, $40.47. onto the second screen, looking at the vick. 15.91. that is brent crude. 44. i am buying

cocktails at harris for caroline. the headline story, the ultimate litmus paper for the draghi affairs. grinding down to two decimal points the negative 0.45. that is not in any of the textbooks. caroline: unchanged. yieldd do bring up the spread between germany and the u.s. in october.88 back tom: three standard deviations. caroline: this can go wider. .5%. out the euro, down draghi pull out of the back in terms of bond buying. check out minors they are the worst performing industry group. that was three date

-- tom: three days of iron ore down. we move to the mario draghi headlines and the press conference. -- let's speak to erik nielsen. he has been an optimistic voice to all of the financial crisis. you see the reports of profit. optimism, we see mr. draghi act today. i don't get the optimism of corporate europe. erik: part of the optimism is because of draghi. he is the only game in town in terms of stimulating the economy. you can argue whether he needs it given the fact that growth is above trend. the inflation numbers are nowhere near where they should be. tom: let's go a little wonky today. the output contrast

gap that draghi faces versus the output gap that janet yellen faces. erik: the easiest way to put it is looking at the unemployment numbers. that is one component and it is still very high in europe. people coming into the labor market and wants to work and therefore unemployed. in america you have the complete opposite. unemployment is down to an all-time low. the american economy has come out of the recession. they have closed up the gap more or less. she is behind the curve. caroline: you have said we are behind the curve. the market is behind the curve. let's see what janet yellen does after this. erik: you look to curve and all darts are setting up here. tom: can i ask you a dumb american question.

the ecb does not display the opinions of everyone. i do not know that. what else are we looking at. i know we are going to get headlines and we are going to see the deposit rate at what does a pro like you want to look at after the amount? as you go for questions into the press conference. erik: first of all look at what he says about interest rates which is the biggest problem. i have no issue with the balance sheet expansion. interest rates is deeply unnatural. i am worried they are going down that way. i am worried -- i am looking at the fx. ndm: caroline, what i fi amazing in -- and this goes to negative interest rates and shades of negative interest rates between denmark and a lot of of the city. switzerland, you have a 12 year negative yield.

very persistent. buying a 12 year bond at negative? you only do this if someone has a gun to your head. nobody in their right mind is trying to save money for pensioners and buying negative interest rates. caroline: germany was already doing well. ecb does not by greek debt desk ecb does not -- ecb does not buy greek debt. erik: germany does not really needed. the problem is in germany, the real issue is one agent who can borrow at now negative rates and they don't want to. policy -- their fiscal policy is all good. tom: if you can bring up the chart. this is a great op-ed from mark gilbert. when ecb was starting, i

interviewed some of their governors. erik nielsen, this is a one-year chart from jockey stimulus. that is a 12% weakness in the euro. it is amazing what people think. what is your call for the euro? it will turn around 1.05. it will grind higher again. tom: why is the weaker of crew wrong? erik: people believe in going through parity. that is what draghi wants. know how deep they ally wanted. if you wake up tomorrow morning or this afternoon and euro-dollar is an parity, i don't think they like that speed down. in europe -- americans have a deficit. outflow of america. the whole drive down.

-- the whole drive down is hot money. tom: i was amazed how the markets move. do you predict major moves this morning? we saw it yesterday afternoon. oil moved. caroline: gold. banks arekey central the agents of volatility. this cannot be good. we don't know what they really ought to. it seems like central banks have moved to the fact of exchange rate targeting. they have not said so. the markets are all over the place. tom: we have a whole set of smart gives to give you. didmart gifts to give you -- give you. the decision will be live with mario draghi. we will cover that extensively. stay with us. tomline hyde talked to

keene. bloomberg surveillance in london. ♪

♪ caroline: this is bloomberg surveillance. i am caroline hyde here with tom keene. we are going to be talking about central-bank policy divergence all morning. ofreat call about the story british pound could go another 50% lower. -- another 15% lower. >> thank you so much. the europeans into bank is expected to unleash a fresh batch of stimulus just a few hours from now. ecb will announce the decision at 7:45 eastern. five minutes later, mario draghi may unveil several measures. investors are expecting the ecb

to cut the deposit rate and officials familiar with the number says the center bank will lower its forecast. anheuser wish -- anheuser-busch will again his plan to take over sabmiller. regulators have expressed as it stands, the deal would hurt competition. the price of oil is higher after reports of saudi arabia may propose a cutback in opec's outlook. a 39% drop in oil prices. according to a report in energy intelligence, the saudi's will support a call -- a cut in production but not until late next year. let's stick with oil and head to vienna where opec ministers are gathering. ryan chilcote joins us now. ryan, is it posturing out of

saudi arabia or an about turn? ryan: it is posturing. they are not talking about in production cut. there talking about a production cut down the road. it would be conditioned on other people participating. outside of opec like the russians, mexicans. they say that is a nonstarter. i talked to the iranian oil minister he said -- minister, he said let's return to the market. get our oil production to where we wanted to be. this is an offer that the saudi's and make because they know no one is to take them up on it. approach, not an in my backyard. the saudi's can continue to produce as much as they want and it doesn't hurt them. ryan: no, it hurts saudi arabia, let's be clear.

saudi arabia in the station that's in distinction -- and distinction to other countries has the reserves to sustain for longer. the saudi's can handle that. the iranians clearly can't. that is why they are the architects of this policy because they can deal with the pain while they squeeze out the higher cost producers. >> you have been talking about iran. we speculation about saudi arabia. how much does the world economy into the decision around the opec conversation tomorrow? how much does janet yellen play into the conversation? ryan: become session about the world economy and the minister'' concerns play a much bigger role than people think. they're concerned about manufacturing in china. the fact that if you look to pmi, 11 out of the 12 months, we have seen a recession in china.

that concerned about the united states. they have seen in the imf number. they are concerned about that. they need to have demand. if you have a global recession, they don't have any pricing power. tom: macro economics with ryan chilcote. i look at the terminal and i see iran saying some opec members want to leave the oil market. that sounds like a frightening idea. where does the meet and greet vienna field the market price is for oil. i am guessing lower? they are concerned that prices will go lower. we talked to some of the biggest independent traders out there. they say it could take as long as 2017 for prices to rally. that is longer than it took the last time we saw a crash here that is longer than those same traders a few months ago. there is a feeling that things might be getting out of control. the strategy the saudi's

put/year is not working. tom: ryan chilcote, think he so much from vienna. erik nielsen, the formula is why equals c plus mx. oil photos right into the export -- oil filters right into the export import demand. erik: it is quite important you'd it should not be, but it is. ms. in that's right. tom: it shouldn't be but it is. erik: the word is very confused about this right now. tom: we are going to come back and talk about the many different calls on the euro. it is friday tomorrow. i will be training to paris. we are live tomorrow.

francine lacqua and myself with the lori all chief executive officers. that will be most interesting. the day of draghi. this is bloomberg surveillance. ♪

tom: good morning. bloomberg surveillance. the gorge yesterday of new york. he talk about global warming, it has been a perfect autumn. say that no ice on the

streets. tom keene in london with caroline hyde. this is been the topic of london and all of the united kingdom. caroline: indeed. syria. it is phenomenal. u.k. has voted for bombing within syria. overnight islamic state -- we have had the first airstrike. favorers voted 397 223 in to join allies in the fight against extremist groups. where joined by then you oh donald. it looks like a success for david cameron. >> it was a triumph. 66 labor and pe voted in favor of that motion. the big question is for labor leader jeremy corbyn. caroline: he is the shadow

leader. he is the head of the labour party. them.the tractors amongst you're seeing this is not a david cameron prime minister that went up. this is the shadow foreign secretary time to shine. a: absolutely. he gave the speech of his career. theet out triumphantly opposing view to his leadership and he was applauded by both sides which is something that happens rarely. it was really a triumph and a very moving and impassioned speech. tom: tell us about that emotion. -- four americans it is completely different anything we know in washington. tell us the emotion on the floor. the back story. several mps who to setgainst the motion

up his reasons against. it felt like people were laying out their conscience. both sides were heard. it was significant by being a very polite argument. people respected this was a moral choice. tom: how much was the shadow of tony blair and brown within this. -- within this? how much did that play as an overarching theme what we see? nja: the shadow is always going to be present. this is why two years ago david cameron lost that vote. paris, he sawr what the stakes were very different. there is -- caroline: we had john mccain -- spitting out for us. how important is it for the u.k. lending in support?

nja: this is absolutely key. standing shoulder to shoulder with allies. solidarity, not letting other people carry out the defense of the u.k. next line -- u.k. sven you and i do not disagree on anything. outlier bank with an dramatically weaker euro off of a euro bluff. must watch. good morning. ♪

caroline: this is bloomberg surveillance. i'm caroline hyde joined by tom keene and -- joined by tom keene.

a beautiful evening. let's get straight up to bloomberg's first word news. vonnie quinn. vonnie: police in southern -- the leftill not 14 people dead. two suspects died in a shootout with police not far from the center for the disabled with the killing took place. the suspects were identified. he attended a celebration and then returned and opened fire. the two were described as being dressed for battle. british warplanes entered the fight against islamic state in syria. he carried out their first strike not long after the parliament gave its approval. at least for royal air force jets took off from a base in cyprus. in south africa, an appeals court have found olympian oscar pistorius guilty of murder. it overturned the manslaughter

conviction. he faces a minimum 15 years in prison. sayustralia, authorities they have narrowed down the search area for the missing malaysian airline jet. they used a new analysis of the plane. the plane disappeared in march of 2014 with 239 people on board. ben carson has slipped in the latest poll of republican presidential candidates. a month ago he was tied with donald trump. now he has fallen in a tie for third. byp leads with 27%, followed --trump leads with 27%, lullaby marco rubio and ted cruz. -- followed by marco rubio and ted cruz. tom: here is the back story on the draghi meeting today. i am thrilled to have erik nielsen of unicredit with me. ,lso joining from deutsche bank

george saravelos with foreign-exchange. let me cut to the chase. you two don't agree which we love. george, i look at the focus you have on flows versus relative interest rates or real interest rates. why does deutsche bank so much focused on the glut of euro that is going to flow and make for a weaker euro? george: the two are interrelated. it is helping the flow but the isortant -- the importance understanding the global habitations. he had the euro weakening and the weakness is not as contagious as best as contagious around the ecb announcement. it has applications. we see a lot of those flows going to the euro. tom: d.phil. lonely on this call

-- do you feel lonely on this call? george: i feel lonelier -- i don't feel as lonely as last year's call. tom: the yellow circle, caroline hyde may discharge. job.id a phenomenal we go to 0.85 which is a weaker euro. theory.u go i get the what will staunch european weakness? erik: euro weakness, you mean. tom: euro weakness, i mean. the warrenalance and buffett purchases of european companies and inflows into equities which is not cheap compared to america. tom: it will keep a lid on the weakness to see warren buffett's

and positions coming in and instead of buying heinz. caroline: there is a longer-term question of are we insane? bloomberg view written by mark gilbert, he is saying remind me of what the insanity is when you do the same thing again and again and expect a different outcome. are we going to get a different outcome? what will it-- take for mario draghi to unleash? george: one point to make is inflation is already rising. we are not that far away. the problem is speed. we are not going up as fast as they would like. what they want to do is do a bit of a supercharged. the euro going down a little more. will they deliver today? i personally think they will. a huge package of measures we have to look at qe, rates. what i call the plumbing.

a whole, that package will deliver. tom: when they act and if we see the weaker euro, there has to be a price. is it a poor europe because it is a weaker euro? euro if thes a poor prices are going up. thehe way we have looked at euro weaker this year is a good deal to offset the external factor weakness which has not happened in the u.s. euro --i get a databank exporters of italy? single global --erik: they help.

i should review that in 2015, that was a stimulus to some extent. but to the extent that you would've thought. there is a risk that if you were to wake up tomorrow and you get the euro-dollar at parity, only get is more extensive oil and that's expensive oil and expensive commodities. caroline: if we are looking at the short, i want to see today's reaction. how many more compile and to the mess against the euro to make it not .85? driskell and that is a great question. -- george: that is a great question. we built in q1 and got paired back in 23. those are a lot more persistent. tom: we did a jargon alert there. in a ug hc.

other side of this, janet yellen has to deal with this. 0.92 euro with a strong dollar that gets into the way of the u.s. manufacturing? a it is a manual -- it is fascinating question. it is about the speed. it is really about how quickly. if you look at our forecast, we're looking for a smaller pace dollar -- smaller dollar. it is all about the speed. we got a two-year forecast in terms of the 85%. it is not really that dramatic if you look at it over two years. 80.85% -- i would say --o point 85% is a called

george saravelos of deutsche bank. in the 9:00 hour, adam will be on bloomberg . that is an important voice. caroline hyde and tom keene in london. this is bloomberg surveillance. futures up 13. ♪

tom: good morning. bloomberg surveillance print nielsen.rik he will translate the breaking headlines. nfl thinking about expanding -- five foot considering expanding

to 40 teams. more matches and you get more commercial revenues. tom: they go to 190 nations. --o what would help caroline: would help his those their companies. tom: it does go to the seriousness of the recent arrests. caroline: out to folks in on the downside. where the worst performers are, mining. the less, check the only industry group falling here in europe. it is the gold producers of by 1.8%. gold glover on the back of janet yellen's speech. she will be facing speaking about the economy. she will be coming up in front of the congressional lawmakers today. will it be more hawkish tones coming from janet yellen? down goes gold. --nd oil

tom: i am glad you brought this up. australia down 71% from the people. d have it cathartic balance sheet of adjustment? i have not observed that yet and commodity, have a? mistaken, since the crisis, is the second worst performing sector. single by recreated. down with thee whole commodities. tom: are you looking for them to clear the market? --hey need down she adjusted don't they need balance sheet adjustments? no sukkot there was a good cushion.

-- erik: there was a good cushion. what hurts them is beneficial for you and i as producers and buyers. caroline: there is one central bank in the mix. is china. they are playing into this commodity spectrum. when will we see after we get ecb action today china once again starting to--starting to cut those rates? think that's my hypothesis is what we are moving moved central banks have to de facto -- the chinese are sitting uptight. i think through today they are little bit nervous about the reaction. caroline: imf has gotten what they wanted. -- do they need the

market to act freely? erik: it is a political decision. a usual currency like the dollar or euro. tom: to frame the debate, you're suggesting they are not using currency as a weapon. we will see a continued depreciation of 27.00. -- up to 7.00. what is their tool to adjust the economy to the new reality? cuts toey should do tax consumption. tom: really? act like a normal economy. how could they do that? erik: if you give more tax cuts to lower income people, you'll consume more. ,hina is investing way too high

consumption way too low. stimulating by investing more is crazy. -- are building a better building a bigger bottom. tom: the idea that the death there, private and public. at some point you have to clear it up. we have not cleared it out here at all. caroline: which we sit, bringing it to the central bank policy decision. when will we start to see demand helping from a commodities side of the equation? erik: it is helping already. it is helping the united states, not as much as europe. this exchange rate targeting is going to hurt the americans. when you don't coordinate exchange rate targeting as we are now, yellen is going to have a problem if you get parity. that will start to change. tom: is that the danish janet

yellen? erik: your greek names. tom: that is a first here on bloomberg surveillance. yellen. [laughter] we have so much to talk about. we go to the draghi press conference. most exciting day for monetary economics. as well for environmental economics. all of that happening in paris. i will be tomorrow with francine lacqua in paris. a very important meeting sponsored by bloomberg philanthropies. willayors of the world provide a solution. stay with us. ♪

caroline: good morning. this is bloomberg surveillance. i am here with tom keene. tom keene is getting up to paris. croissants. the ftse 100 coming out of the red. where in the green. -- we are in the green. let's focus on business. vonnie:u so much --

investors are expecting reaction from central banks. speaks 45mario draghi minutes later. investors have priced in a wanted to percent probability that the ecb will -- a 100% probability that the ecb will cut interest rates. federal reserve chair janet yellen is a student -- is suggesting a change the way fans look at rate hikes. on -- the fed needs to be confident that prices would rise. ellen testified today before the congressional joint committee. --ndard & poor's has cut jpmorgan, goldman sachs and bank of america. the u.s.rade -- government is less likely to provide aid in a crisis.

from london, our focus on tomorrow. no, not in the paris talks. erik nielsen on what he will be looking for in the report. what will you focus on? erik: are we going to see another good number? i am not too worried about the monthly number. the trend is so nice and so strong. tom: with growth seems to be the key thing. jessica in britain we see it already. -- erik: in britain we see it already. caroline: you're thinking the market is behind in terms of how many rate hikes will have after the first lift off. how many will we have next year? erik: three.

i think we have got to get three next year. caroline: no more increase in terms of dollar stink. what currency do we focus on erik: sterling would be my guess. caroline: sterling? by how much? that is tough. you get 5% to 10% easily. tom: let's get to vonnie quinn. banca -- vonnie: post numbers. any concern about the weaker economic data we have seen in the last month? pmi's for example. 2017 --ession goals for the recession goals for 2017? erik: we are coming into an election year in the states.

the service numbers were good still. into they about midway recovery. you can roll for a year or two more in the states. monica does this bring uncertainty to the markets and election-year? does this bring uncertainty to the markets, and election-year? no.: tom: spheres of interest. tell me about the economic spheres of interest. we make light of the divergence of draghi, yellen, carney. erik: we are close to the worst spot we can be in where --

because central banks do not cooperate in a time when they are starting to mess around with the one effect they should cooperate on, the exchange rate. in your, we are worse off because essential banks don't seem to coordinate with the fiscal authorities. we talked about it early on, in germany you have negative rates way out of the curve. the government says i have no idea. tom: the cyclical question. are negative rates substituting for currency adjustment of a time like the plaza accord? that is an 40 question. rates and thetive exchange rates have a lot of affect on the private sector. the policy does not want to move. caroline: how much farther can these negative rates go? five years? 10 years?

erik: i guess, but how crazy can the world get? it is hurting the financial just sector.t tom: it kills retirees. erik: absolutely. the exchange rate is firm. you cannot go abroad and by thinking you can get an exchange rate for it here no interest rates -- negative hurts a lot. it has been going on for a long time. find a pension fund in europe today, it is tough. negative rates are there. caroline: where do they go then? for yields? d go to corporate bonds? -- do you go to corporate bonds? erik: yet to decide -- you have to decide. do you think we normalized? i think we normalize. yet to buy equities in real estate.

tom: i hope to see you in new york again. unicredit.n with we have some much to talk about in our next hour. virginie mattson that's the jenny miss enough -- virginie mass enough is joining us on the equity markets. is there value in europe here -- in europe? a rate decision with announcement at seven: 45. hyde and tom keene, another hour of work surveillance coming up. ♪ .

tom: this morning again, mario draghi will rescue.

there will be hard questions and careful answers at the press conference. markets adjust. they adapt. the euro and sterling are weaker as all adapt and adjust to the yellen dollar. every degree matters. can 190 nations get beyond coal in paris? good morning, this is "bloomberg surveillance." we are live from our european headquarters in london. thursday, december 3, i am tom keene with caroline hyde. so much going on in this important day. what i would notice the last hour, markets continue to move. caroline: the divergence trade the continues, the fact we have u.s. ready to dish meanwhile, ecb -- tom: we saw yesterday. i was surprised at the move off the -- caroline: gold. tom: it continues this morning. let's get you briefed on our first world news.

>> fighting terrorism in russia is having feud with turkey, the state of the nation speech today. the russian president called for international teamwork. he cited turkey saying the country buys oil from islamic state. tension between turkey and russia escalated when turkey shot down a russian warplane. putin called that "treacherous war crime" and said turkey will pay. british warplanes carried out there for strike on islamic state in syria. the planes took off from a base in cyprus. not long after british parliament approved the action. the british defense ministry said it included heavy damage on the oil operations. police in california say they know who killed 14 people at a social services center, but they don't know why. the man and woman suspected in the shootings yesterday were killed in a shootout with san bernardino police hours after the attack. investigators say they were both in their late 20's.

17 people were also wounded. the fbi says it could be a case of or side violence or terrorism. the attack was the nation's worst since 26 people died in the newtown shooting three years ago. according to statistics compiled by "the new york times," shootings that left four or more people dead or wounded happen an average of once a day in the u.s. this year an appeals court in south africa has found oscar pistorius guilty of murder from overturning his lesser charge of manslaughter. he fatally shot his girlfriend on valentine's day in 2013. the double amputee olympian faces a prison sentence of at least 15 years. police in switzerland make more arrests in the worldwide soccer corruption case. too few vets executives were arrested in zürich. bribesties say they took .

to expand,fifa plans the world cup field to 40 teams as part of its reform plan. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. tom: markets on the move, equities, bonds, currencies, commodities. let me get through this quickly. 10 year yield, 2.19%. higher yield today. onto the next board, quickly here, the idea of the vix, theling, german yield stuns -0.45. caroline: that two year yield, highest since 2010. i want to show you the spread. look at it. 1.39. tom: the u.s. german what? caroline: 10-year. telling us from pimm:, this will

go wider -- pimco, this will go wider. we will bring you the ecb meeting live. gold up. janet yellen really pushing that lower yesterday, she speaks once again. 600, the metals feeling the pain. tom: that spread speaks of the distortions that are out there , america,ithin europe but across the atlantic as well. we thought we would bring you a voice of sanity. virginie maisonneuve has been .xtremely important full disclosure, i am a member. she has provided a public service to all of those in the so-called long only by side of advanced -- investment. extremist square through ups and downs through the equity markets. career through ups and downs through the equity markets. do or one of our

mayor mortal viewers? what do you do in the stock market given the history? >> you want to be careful because clearly, we have the appeal of a short-term positive, --qeis european kiwi and and the beginning of the normalization in the u.s. however, what we don't know is the path beyond that. if we look at growth in the u.s., yes, it is better than the rest of the world, however, it is not that strong and you should look at different components. some of the components are still a bit week. i think you put all of this together and it is safe we are in a new phase, a new phase of many cycles, as i call them. zombiecles or the u.s. a the tightening path, europe is clearly trying to lose and target that inflation. that is going to open up opportunities. tom: the opportunities are there, but to my point on what

you explain, are we in a draghi -yellen bubble? >> absolutely. what i think is really important is you should look at inflation numbers yesterday at .1, it seems to me that liquidity is not the only thing that we must use to help inflation. inflation in europe is coming also from structural issues. caroline: we are expecting the ecb to downgrade once again. >> yes. ll we had that wi magic 2% number? >> it will take sometime. gaps are very large. tom: i look at this, caroline, and the tension of year it --, you did not write a year and note. caroline: not yet. of: the backdrop, thinking goldman sachs, the consensus view or more flight is to come. give me some optimism after a

flat year. >> i think the optimism has to be -- it is a global world, but there is a lot of fragmentation within a global world. and the opportunities are on the issues that we see. we see geopolitical changes. we see security issues. we have just written a piece on consumer and how the u.s. consumers share of wallet is shifted. people are spending more money on of care and pensions, for example. the dollar amount on clothes and transportation, etc., is coming down. there is a readjustment. in that global world, you must look at the fragmentation and see where opportunity is. other areas that we really like is what we call the industrial internet application because the impact that it will have on inflation, but also efficiency, climate change, etc., a lot of opportunities. tom: let me bring up one of the gaps in this has been in

interview after interview in the last few weeks, the idea of the cap between europe and the united states. the white line is america, s&p 500, and the one below. there's a given gap that everyone speaks of. caroline: but do we start to pile in returning? we have euro cheaper. tom: draghi helping us. the think that is one of big things, the big segment of the divergence is the translation for currency. i still like some of the companies in the u.s. market, -- clearly, the valuations evaluation in u.s. market is quite fair while the european market is quite weak. exporters in the u.s., if they are exporting to the right place, might be interesting. however, in the u.s. financials, i be in a better spot if you think rates are actually going up because, clearly, that is a better environment to them. it is not about regional

allocation possibly bottom-up, finding opportunities where you and whereentation specific him at his can do better. tom: i want to tease to speak into later in the hour on use of cash. does it continue? >> i think so. i think so. i think the next 12 months are going to see the same, even if rates go up by .25. tom: it won't change anything? caroline: m&a. tom: virginie maisonneuve with us and we have a set of other guests this hour to make you smarter about economics, finance, and investment. our full coverage on bloomberg television, bloomberg radio, and the ecb rate decision, the at seven: 45. all of those headlines across the bloomberg terminal. michael and i will have for you after a -- 830, the press

conference of mario draghi and the effect on the market. caroline hyde and tom keene from london, it is "bloomberg surveillance." ♪

caroline: this is "bloomberg surveillance." live pictures now for you from athens, public, private sector work is out on strike. you'll see them taking to the streets today. greece action to continue's to be the big loser in europe, talking about stimulus coming from the ecb. response can't they buy? they are protesting because wantone point 850 -- they .85? caroline: is the ecb helping the

wrong economy? tom: there it is from athens this morning. we need to get to our business flash. >> the european central bank is expected to unveil more economic stimulus this morning, announcing his decision on interest rates at 7:45 eastern. ecb president mario draghi might throw words afterwards. they expect the bank to cut rates and lower inflation forecast. janet yellen's suggesting a change in the way the fed looks at interest rate increases. the federal reserve chair says the pace of interest-rate increases may depend on actual progress in inflation. in the past, the fed says italy needs to be reasonably confident prices would rise. she testifies today. the price of oil is higher onward that saudi arabia my proposed a cut back in opec production. saudi arabia has been the most outspoken proponent of not cutting output, despite a 39% drop in oil prices. a report from energy intelligence says the saudis

will support a cut in production, but not until late next year. that is our bloomberg business flash. will she or won't she? resilient president rousseff will not be impeached as the government scrabbles together to get another votes to avoid that process but brazil's fortunes are to generating. our bureau chief will join us in a moment. dilma rousseff is pro-austerity and it is an economy hemorrhaging jobs, losing them hand over fist. inflation running close to 10%. goldman sachs in brazil is an outright depression. i wonder if the country needs a recession and pitchman? tom: you see the economics, to be critical, i would go to the most sobering idea, which is currency adjustment within the unique experience of brazil. down andut -- we came we improved. it is really going against dilma rousseff right now with a spike up in the last few days to get

through four would be critical, i was adjust. >> let me bring up that chart and we see where dilma rousseff 2010.o power back in we will have that in a moment. this is u.s. dollar and brazilian riel. weakness from there. it is steadily a dollar story, too, but the stronger dollar's or li na helping the fortunes of brazil. caroline: we cannot escape central banks because we have the talk of ecb, talks of fed, but also we have the brazilian central bank weighing in as well saying maybe next week we could see a rate hike just to try and tame down inflation amidst this economic instability and political instability as well. >> exactly. we go to our bureau chief. what are the prospects for impeachment? it looks perhaps the government might scramble together enough votes together to avoid it? ofthis is just the start very, very long process, and we don't know what is going to happen.

there is still no clear outcome on the process. the government is likely to appeal it. but it is sort of removing this uncertainty that we have been waiting on for months. turmoil andat the to mull. do you look from brazil -- is the brazil political economics to be a discrete and separate linked tos her future the rest of the global economy? >> i think of the biggest economy in south america -- latin america, we are very link to the global economy. adjust the prospect of more disruption and brazil is already dragging down emerging-market growth, so certainly, it is a global story how quickly and how much present is falling. caroline: goldman sachs is saying brazil in an outright depression. does it feel like that? .ond yields a past 15% now investors can't be too pleased. >> the contraction is very, very, very much an on the street

you can see stores closing and everything is for sale, black friday, black november we had in some stores. it is very clear how much the economy is contracting. at thee: looking economy, looking at with the central bank might do in response to the economy, yet political instability. will we see a rate hike next week? >> we could see a rate hike in the next meeting. it is still unclear. the central bank changed the wording on their minutes from last weeks meeting and the minutes are just coming out today, this morning. so it is unclear. there are some calling for a rate hike. a couple of directors wanted a rate increase to try and stem inflation, which is running at 10% a year. tom: julia, thank you so much from brazil with the tensions that they see within a political economy. tomorrow, i will be in paris with francine with the climate

change talks on cop21. there will be any number of discussions with mayors from around the world. one of those, boris johnson. always interesting, always smart , from london. joining us as well, jean-paul agon. stay with us. this is "bloomberg surveillance." ♪

caroline: this is "bloomberg

surveillance." here are some of the great stories you can check out right now on bloomberg.com. and that will explore the sale of sab premium brands. selling assets is set to help alleviate antitrust complications. the takeover and could fetch as much as $1.2 billion. meanwhile, china spring airlines has signed an agreement to buy 60 airbus a320 points to greet -- meet growing demand. price ofmbined list $6.3 billion. no into the football scandal, two fifa executives have been arrested. they are alleged to have taken bribes for "selling marketing rights in connection with football tournaments." fifa says they will expand to 40 clubs. onto the morning must-read. tom: tailored from virginie

-- onneuve advises tom: this is an incredibly timely article about the future of what you and many others -- i want to go to the bond market, which is where we have a new terminal value. saying the fed is going to come down, yields are going to come down. tell me, that means she's have to come in. >> just look at the level of .ates, the level of growth she's have to come down. you also have more and more passive products. -- fees have to come down.

you also have more and more passive products. they will still be pricing power, but the general fee will come down. tom: virginie maisonneuve and myself will now have a moment of silence for the cfa candidate taking the exam this week and. is there a future in the business of managing money? when you look at the cfa institute, the various firms you ever get over the years, can you tell a 24-year-old going to plastics? >> i think there is definitely a future. i think the role of analysis, as the world is getting more global is more complicated, it absolutely crucial. i think it is possibly how we package our products that might change over time. if you think of the next 10 years, we've had quote -- why so far a bucket approach. i think over times, clients want to be able to exploit opportunities, business

opportunities, but be more agnostic about where you get it. caroline: but can you do this in a new way? you have disruption going on. a great piece but on internet. what about the efficiency in the asset management? i can go out and pick my own stocks now via the internet. >> you can, but you still need some advice. the other important thing is what it is doing to our industry, paying for research, paying for good research i think is definitely something that will continue. it is just shuffling. caroline: research in terms of the big old -- >> no. tom: caroline hyde is day trading off her desk. she is next to guy johnson, in an outdated trade. that is the risk of new investing, isn't it, over trading? sure, butading for also time management. you can do a few traits on the side, but people spend 15, 17

hours a day understanding trends and companies, and that is something that is a skill that you will have to pay for. it is a mix that has to change. tom: i think i can speak for virginie maisonneuve, we was -- wish the best of luck for the exam takers. good luck to one of our "surveillance" taylor riggs has sprung her first gray hair studying for level one. coming up, we will live to paris. this is the smartest thing i ever read on climate change. kevin anderson of the university of manchester. this is must watch, the science behind coal stay with us, "bloomberg surveillance." ♪ sure, tv has evolved over the years.

it's gotten squarer. brighter. bigger. it's gotten thinner. even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. welcome back, this is "bloomberg surveillance." hyde with tom keene. you're looking at pictures of

hong kong. it was a down day, off by almost three tens of a percent. brightly lit today. still across the world am jewel politics, the focus -- geopolitics, the focus. made a not sotin veiled threat against turkey in a state of the nation speech. foraid turkey will be sorry shooting down russian warplanes. he called it a treacherous war ofme and accused turkey supporting terrorism by buying oil from islamic. he calls for international teamwork to stop the militants. the associated press is fighting russia's -- reporting vladimir putin has begun delivering defense missile systems to iran. citing the arms trade advisor to vladimir putin. investigators in california are trying to determine why a man and woman opened fire at a social services center, killing 14 people. the couple were killed in a

shootout with san bernardino police hours after the attack. police say they were both in their late 20's. 17 people were also wooded. the fbi says it could be a case of workplace violence or terrorism. the man was a restaurant inspector and worked with many of those attending the event that was attacked. president obama says new laws to control guns are long overdue. >> we should come together in a bipartisan basis at every level rarevernment to make these as opposed to normal. we should never think this is something that just happens in the ordinary course of events, because it doesn't happen with the same frequency in other countries. >> the attack was the worst since 26 people died three years ago in newtown. shootings that have left for more people dead or wounded happened an average of once a day in the united states according to "the new york times." in south africa, an appeals oscar pistorius

guilty of manslaughter come overturning his manslaughter conviction. the stories killed his girlfriend on valentine's day in 2013 and faces at least 15 years in prison. you can get more on the stories and others point for hours a day on bloomberg.com. tom: one of the hallmarks of what we are done over the years is try to find you the smartest people on the block. in climate change, one of those people is at the university of manchester. name anderson is not a known well in the united states, but he is iconic within the united kingdom are trying to get out front with a rational science on climate change. he joins us now from paris. the fessler, we are thrilled to have you on the program. how close are we -- professor, we're thrilled to have you on the program. how close are we away from even what paris is talking about, which is a two degrees centigrade warming? towarde on the pathway the four degree c temperature,

but at the moment, we've only seen one degree c of warming but clear if we carry on as we are going, even with the voluntary submissions from the different countries to paris, we're headed toward a three or four degree c increase in temperature over the century. that would have devastating consequences for our planet. tom: are the many meetings among the 190 nations, are they jumpstarting some form of negotiation with people that flat out disagreed about climate change and global warming? do you see a sea change, no pun intended, in paris? there is a sea change, but nowhere near the level that would be required. i think what we're seeing now is a very wide acceptance of the science. we're not yet prepared to accept the scale of the challenge for us to keep our temperature rise increase degrees c over the century. we see a sea change in terms of

accepting the science, but not in terms of what it actually means for his as a global community in terms of reducing our emissions. caroline: what it means for the industries, coal, gas, oil, could forfeit 34 troy in dollars worth of revenues -- could forfeit $34 trillion worth of revenues. we're talking about carbon capture. you're saying this isn't the signs we should be using, we should stop using fossil fuels, not trying to rein in some of the emissions. >> carbon capture is that are then just using the fossil fuels without it, but even with it, we're still going to get a lot of carbon dioxide from burning fossil fuels. we have to be clear, we need to get fossil fuels out of our engine system by around 2050 globally at the latest of we're going to hold with a reasonable chance of this two degrees c rise, which all of our leaders have signed up to. that is a huge challenge for the energy company. tom: i think back to 1957, not

that i'm old enough to remember was a dr.but there strangelove movie, professor, you put that into your writing on jury rigged engineering solutions. you make it clear, dr. schrage left want to get it done. -- dr. strangelove want to get it done. what is the applied science that will get us to a better world? think we have to be careful, science and engineering are going to solve the problems for us. i find that quite a sad statement to have to make. the first thing we have to do is dramatically reduce our energy consumption. those of us who are a high energy consumers. that gives us a longer window -- a longer time, a larger window. renewables, possibly nuclear, those sorts of things we need to be doing. tom: so you go to vienna with ryan chilcote this morning, leave from paris, what would you tell the opec leaders, what

would you tell saudi arabia about the new hydrocarbon world? , ithe new hydrocarbon world was a world of the 20th century. we are in the 21st century and we need to open our eyes to the challenges we are facing. if they want to remain as energy companies, energy countries, they need to find ways to make a rapid transition from the. fuels to a lower carbon future -- from the fossil fuels to the lower carbon future. this year made clear the subsidy to fossil feel companies will be the equivalent trillion this year alone , global subsidy, to the fossil fuel companies. caroline: are you positive, optimistic, about the fact that now china, the world's biggest polluter, seems to be hearing the call from the move to a cleaner climate and less emissions? >> china is really important in this.

china has been brought into climate change issues for a long time for but at the same time, it is a rapidly growing economy and all of us are dependent on the goods they produce. we buy lots of things from china. it is good have china on board, but i don't think china is yet prepared to accept the scale of changes that need to be made. having said that, they're going to peak their global emissions by 2030. if it could be five or six years earlier, that would be a move in the right direction. it is a step in right direction from what china is saying. tom: can a smart guy like you shift or amend or adjust the thinking of republican climate critics in the united states? is there any hope for that? for you just say, there is always going to be this difference of opinion? the little i know about the republican party, they are going to be real challenges in trying to collectively accept changes. the one bastion of not accepting

the basic science of climate change, and it is fairly basic. this science has been around for the last 200 years. is wellhink evolution understood by science, we should also think climate change is understood. some of the republican party don't like the idea of easily or climate science, either. i think they're going to be a real problem for us. tom: kevin anderson, thank you so much. on the paris talks and the science that is behind it. i cannot convey enough how a read of this 40 and 50 page powerpoint on some of the mathematics and dynamics, thermodynamics of what is going on with our atmosphere will make all the little bit smarter about this debate. virginie maisonneuve is with us on her france. what a moment for france. i was watching the president of the republic of france the other day going, i can't imagine what is 24 hours are like with all that he is dealing with. what do these meetings mean to the city of paris? >> the climate change meetings.

tom: the climate change meetings, the backdrop. >> identified that all of it has so gone forward is very good. tom: just doing it. >> absolutely. the key thing for me, and as you know, climate change has been a long-term theme of mine for many, many years in terms of influences, growth, and economy of less. it is really important, but really what we have to do is find a way to combine the long-term ambitions that climate change needs to have to be successful, to curtail climate change, and the short-term political -- you have touched on political issues as well in short-term political cycles because it is an economy of less. climate change is about consuming less, consuming better, being more efficient. our world is not used to an economy of less. i think that is a psychological shift that is very important. caroline: and the shift of an investor, get out of oil, is it now?

34 train dollars and 25 years will come out in terms of revenue. >> the way to look at oil, what is the carbon cost in terms of reserves that an oil company might have in the ground, and say, how do i put that into my valuation? and actually, if you look at it this way, the sector is not that cheap. tom: very good, virginie maisonneuve with us on france. we will be in paris tomorrow with a wonderful set of guests. we are thrilled to bring you a set of mayors as they will be meeting to discuss local efficiencies, including the mayor of rio de janeiro, scared -- scheduled also, jeffrey sachs. we're thrilled he will talk to us about the economics, the cost and benefit analysis of trying to get to less global warning. we will be in paris tomorrow. right now from london, this is "bloomberg surveillance." ♪

caroline: welcome back, this is "bloomberg surveillance." u.s.,reaking across coming off of yesterday's selloff. getting over what janet yellen said toward rate hikes for the future. first, let's get on to our bloomberg business flash. >> an hour from now, the european central bank is scheduled to announce his decision on interest rates. surely afterward, mario draghi is expected to unveil more steps to boost the economy. investors think they will cut by 10 basis points. deutsche bank is among the leading skeptics about the pound sterling. protecting it will fall 15% more by the end of next year.

that would put the pound at its lows level in 30 years. the pound was trading earlier at less than $1.50. cutting the credit ratings of a large u.s. banks from among those lowered one notch, jp morgan, goldman sachs, and bank of america. s&p links the dow grace to the prospect the government is less likely to divide -- provide aid in a crisis. that is our latest. tom: thank you so much. single best chart. you can see these at facebook on bloomberg television as well. i throw them out there as well. brian belski with us. we look at too big to bail. the fact of the matter is the of banks from the bottom outperform the broader s&p 500 as well. bail dotoo big to better in 2016? will.think they good morning, by the way. at the end of the day, we think we have a major shift coming

with respect to private client investors, some point, moving away from bonds and into stocks. that is a pretty profitable and longer-term fee-basin asset-based business for the banks. i think this downgrade of credit is "noise" that anything. the long-term viability and cash reserves and balance sheets of these banks have never been stronger. i think this is just headline noise. tom: you see it at line. our their boards of directors restricted in dividend growth and share buyback by the new regulation, the new dodd-frank of the new volcker rule? do you have a diminished view? >> we don't, tom. on a one-year go forward basis, lookly, the financials among the strongest with respect to dividend growth. but at the end of the day, where we're seeing were consistent dividend growth in terms of american sectors and industries

are really coming from technology, industrials, health care -- consumer areas. we think that is for all intents and purposes, a secular shift in america were companies are paying out dividends. in fact, dividend growth as a strategy, we continue to believe "bridge active equities" and in fact, we believe dividend growth should be part of the asset allocation side of the fixed income in question going forward. caroline: you just told me you are in day for the 15 city tour for the -- what is the main concern your hearing? >> the main concern, with a forecast that we're going to see a correction next year and nobody believes us. at the end of the day, people are still pretty defensive with respect as saying seeing a flat market next year, not really wanting to make the call. we think the fed has a ready made its decision and they're going to raise rates. that is a big change that investors have to deal with. we're getting a lot of pushback on we think the market is when

it hit a cycle high, cycle that started in 29 -- 2009, and then a correction and ultimately, a recovery. people are not on the same page with us because there been much more standoffish and very short-term oriented. >> what is the argument used to convince them? >> we think for the last 15 years, we ever aired an entire generation of investors that all they know is monetary policy drives stocks and quantitative easing. we think we -- we have three major changes in 2016. monetary policy. because of that, investment habits of strategy are changing. we have a presidential election. that is a lot of uncertainty to deal with. as we see the market, within between now and even your end, the next three weeks, rally higher because the majority of institutional investors underperforming this year, we will see that continue as everybody starts to believe their own you know what heading into the bid -- beginning of the year. we think the fed is priced to perfection and could have a misstep from here.

caroline: i want to just translate it back to the side of the atlantic. you have been talking about how the s&p downgrade is just noise when it comes to u.s. banks. how far behind you think a european banks are in terms of maybe appetite to start outperforming? >> issue we have had with europe, quite frankly, the reason why america has benefited from qe, we had a loss to get between 2000-2009 and we were able to apply change not only in the financials but across the majority of stocks industries and sectors. europe really hasn't demonstrated that. some certain banks have in europe, but we think it is in the early stages. as such, mario draghi has a big of him.b ahead we think the ecb and the recovery in europe will be a longer and slower than most people are anticipating. tom: brian belski with us. virginie maisonneuve, one hour from those important announcements from the ecb.

we will give you perspective through the morning. in the 9:00 a.m. hour. michael mckee, conversation with jean-claude trichet a. look for that this afternoon, new york, 3:30. must listen. ♪

tom: good morning, "bloomberg surveillance." we are within one hour to mario draghi. you see the u.s. dollar strength. i put up the russian ruble. we have seen weakness over the last three days. that is on a 70 watch. that is a big deal. to bloomberg , i know they have adam pozen with them. stephanie: mario draghi, we're going to be finding out really the action step into the next 45 minutes and who better to join us but bomb itself, rents fixed income at jpmorgan -- once fixed income at jpmorgan. it will be interesting what the action will be following this announcement and we will talk real estate.

i know you're going to love this, and exclusive sitdown with boon pickens and carl icahn. we will find out what the one and only carl icahn has to say. big morning. tom: take you so much. is with us. virginie maisonneuve with us here in london. brian, let me go to you on use of cash. buybacks and share a rising rate environment in a tired bull market. how will share buybacks ange? >> they will slow down, especially as rates move higher. your some perspective, right? rates will still be 1%, 2%, if you can go out on a curve and buy stock, it is been a useful use of cash with respect to earnings. but at the end of the day, we continue to believe this entire

bull market since 2009 has been driven by the this tradition of cash, doesn't matter if it is sure buybacks or return on invested capital. we see going forward, 2016, specially 18 and 19, we see the possibility of corporate tax changes and repatriation of cash and driven toward on in the manufacturing renaissance will be the next big wave. tom: that will be interesting to see. virginie maisonneuve, talking about the corporate bonds, lisa abramowicz as well, $2 trillion of issuance. is there a bubble and corporate ons because every cfo has a gun to their head saying, issue debt? >> there is definite a lot. if you go to buybacks, think the other thing that is very important as a level of growth that we see around the world. companies will use their cash to buy back if they don't see growth. for me, it is understanding what our company is doing, are they investing in innovation? investing in the future?

the technology today that will have an impact in five years. tom: d.c. capex improving next year? >> i think overall, the capex will not move very much but i think it is the granularity, which companies investing in what. if we look at the internet applied to industrials come internet applied to financials, jeanette applied to consumers, -- internet applied to consumers, disruption and innovation. it is less about the total growth and how it is applied and which companies are investing today to win in five years time. that is what i'm interested. >> will that help them win or should they be focusing on internal organic growth? >> it depends on the industry you're in, the output gap. do you do the m&a to gain a talents,are, to gain gauge size of -- take gain size of market? back on the buyback came, i think what is also interesting

is to try to understand what is going to happen in europe will stop this has really been a big u.s. phenomenon, not so much in europe. tom: thank you so much, virginie maisonneuve with us, wonderful her respective. we will continue with brian belski on bloomberg radio and a bit. brian, wonderful to have you in new york this moment. coming up within the hour, the important ecb headlines. we will see those across the bloomberg terminal worldwide. mario draghi with those headlines, he and his team of ecb. in a press conference as well at 8:39. paris, france in laquan myself at the cup 21 summit. stay with us. ♪

. sure, tv has evolved over the years.

it's gotten squarer. brighter. bigger. it's gotten thinner. even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. david: well mario draghi make hismove. pickens starts his

broadcast, his very first guest is carl icahn. what is worst, results shrinking economy or political system, the president facing impeachment. ♪ stephanie: so much news i am most got the day wrong. i will not get the show or my name, welcome to bloomberg , i am stephanie ruhle. it is thursday. david: i am david westin. it is a big day. the global head of jpmorgan fixed income. stephanie: no shortage of things to talk about. how about some news. ? vonnie: