francine: bitcoin's big test. the25% rise triggers circuit breaker. taking a hike. markets gear up for rate decisions, with the u.s. expected to proliferate, we look ahead to a crucial week. and may's fragile truce as her deal faces scrutiny in brussels today as her cabinet meets. but are the eu and downing street on the same page? good morning, everyone. this is "bloomberg surveillance

," and i'm francine lacqua, alongside mark barton. the french ministry of finance is discussing funding plans to put a stop to climate change. we'll be speaking exclusively to the french finance minister in about 30 minutes. a little later t, we will be laurent to th mignon. mark: the stoxx 600, the best run since november 1. you look at sterling trading lower against the dollar. it fell last week, falling today as investors and analysts tilde into the agreements that took place on friday -- analysts delve into the agreements that took place on friday. any's to be rubberstamped by the european council this week.

we have got the fed, the ecb and boe all unveiling their ate decisions. only the fed is expected to move on policy, raising rates. it's expected by 25 basis poin ts. gold is rising today, up by .1$. let's get the bloomberg first word news. reporter: french president macron says donald trump's decision to recognize jerusalem as israel's capital is dangerous. he hosted the israeli prime minister benjamin netanyahu in paris. against the decision continue across the region, the ambassador to the u.n. said it was up to the israelis and palestinians to decide the future of jerusalem. president trump is planning the closing arguments for the republican tax cut for a speech on wednesday. he will speak in washington. yesterday the president

tweeted, getting closer and closer on the tax cut bill. shaping up even better than projected. house and senate working very hard and smart. end result will not only be important, but special. the u.k.'s brexit a secretary wants a trade deal with the european union that includes japan, canada and south korea, along with financial services. prime minister theresa may today will hold a cabinet meeting for addressing the house of commons to spell out the details of the brexit deal. >> what we want is a bespoke outcome. we will make a start with the best of canada and the best of japan and the best of south korea and add to that thebits missing from services. reporter: new zealand has named adrian orr is a new central bank governor. he will begin a five-year term on march 27, replacing the acting governor great answer. he's chief executive of the new zealand examination fund.

minister saysil opec and its allies, including russia, could end the production curbs before 2019 if the market rebalances. he also said opec will study an exit strategy at the midyear meeting. the cartel agreed to curb production until the end of next year. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. this is bloomberg. hits wall street with a bang, just after the cboe futures on the exchange. climbed more than 25%, triggering two circuit breakers. $16,000.ded above will these growing pains continue? joining us for more on

peter dixon. and if i could start with you, day one on the cboe. so far, so good? >> well, the demand is through the roof. we will see if the short-sellers come in. you would anticipate they would, given the skyrocketing performance of bitcoin's value over the last 90 days. but i think all eyes will be on that during the short term and in the long-term, people will look to see if there will be an exchange rated fund. mark: how long will it take before we find the answer to that question? ed: i think we probably will see that quickly, at least announcements towards that end. then it will fall back to the regulators. .he sdc has already nixed one we'll see if that has changed, now that future contracts are available. matt: is the door opened it for

institutional traders, mainstream investors, to join the fray, which consequently, might even push it higher? peter: well, it could. many institutional investors remain very wary. you know, we all think it is a bubble and we all think it will end at some point, and possibly end quite badly. i think investors will be quite cautious. they might want to step into the market wants some of the air goes out of it first. if bitcoin is the future, i'm far less convinced. mark: on the trading, they are offering the ability to trade with very high margin requirement. we mentioned in our story interactive brokers. it is not easy, is it? ed: no, it isn't. it takes a very special investor to become comfortable with

something this wild. how will they square all the anti-mining monitoring rules? -- all the anti-money laundering rules? we actually don't know what bitcoin is used for. there are a number of activities within the dark web it is used for. how do institutional investors get comfortable with that? lack of it the knowledge they are uncomfortable with? peter: the rules are at the forefront with how we are thinking at the moment. i think it would be very, very difficult for institutionalists to get on board this trend when it is moving so fast. we have no idea where it will end up. mark: the fta says the contracts will rush through without due consideration of the risk. surely people are listening. peter: it feels like there has

been this mad rush. we have seen these big exchanges out of chicago. people within the industry itself and the futures industry association are ringing the alarm and going, woah, hold on. is this a wise thing to do? but as you said, the train is moving very fast. mark: it is moving very fast. dixoninson, and peter stays with us. we will be live at the climate finance day in paris and speak with the chief finance executive of agence francaise de developpement, regarding how it is investing in solutions to global warming. maireen bruno lem joins us at 9:30 a.m. u.k. time. we also bring you an interview with mark carney at 10:30 u.k. time tomorrow, london time. this is bloomberg.

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francine: good morning, everyone. this is "bloomberg surveillance" and i'm francine lacqua in paris, alongside mark barton in london. first, let's get straight to the bloomberg first word news. the government of qatar has entered into a contract valued at 5 billion pounds for the supply of 25 aircrafts for the qatari air force. finance is subject to conditions. payment is expected no later than the middle of next year. samsung heavy is replacing the ceo following forecasts of a loss. shares fell last week after the shipbuilder announced a $1.4 billion share sale to reduce

debt. they say it is a short-term fix that might not be enough to support the company in the long run with the global shipping industry struggling with overcapacity and falling orders. and the time of chairman is in talks with lenders. a standstill.at he said he convinced lenders to not sell stocks until next year. shares crashed more than 80% last week after steinhoff said it was unable to publish its results. haveand european banks billions of dollars at stake. that is your bloomberg business flash. francine? francine: ed, thank you. we are getting breaking news from the secretary for brexit. he is mr. david davis. friday we had the breakthrough deal with the eu. he said the brexit deal is legally enforceable, but they will try to seek a frictionless irish border, even without a

deal. his absolute aim is to make sure the irish peace process is unharmed. remember, if you look at the backstory of what happened on friday with theresa may showing up in brussels during the early hours of the day, they agreed to agree on the irish deal, but effectively postponed any decisions. we will come back to the climate finance day in paris. is.of the leaders for020, the financing supporting a more sustainable world will be increased by as much as 6%. thanks for giving a little bit of your time on this busy morning. when you look at the challenges of climate change, and a lot of it had to do with finance. is the private sector ready to take this on? >> for the first time, the world of climate and finance met and

we were able to form an agreement. so, now, we are doing it again. and taking stock of what happened in the financial sector for the last two years. and we have good news. the market is extending and all actors are incorporating climate risk in their portfolios. so, this is what we will hear today on climate finance day. is it different how you do climate change business in the developed world than in the developing world? remy: this is the good news. i am chairing a group, the international finance club. it is a gathering of 23 international and national bonds. we are now committed for more than $160 billion last year for

climate. the significance increase from the paris agreement about 30%. and this is a financing project in the south mostly. francine: you have $12 million to spend. what will you prioritize? ofy: there's the co-benefit climate change. then we also, target africa. activities are in fac africa, from north to south. francine: does brexit affect your priority settle? i don't know if it changes the roadmap. remy: you mentioned the deal. we don't know the exact consequences. haveis true is that we strong institutions in europe -- in germany, italy, sweden and

france -- and we certainly will regroup. but the consequence is to do more. francine: since the climate change two years ago, the u.s. said they will not sign it. what does that mean for private banks? does this allow them to go even further and take the backing from the u.s.? o my: president macr invited the whole world in december. hopefully, i think a lot of american actors, players out the private sector. francine: you know president macron like no other. you actually spoke to him on a daily basis. how do you quantify his

reforms so far? remy: i was in africa two weeks ago with him and what is striking is, he's first french president with international cooperation. this is a loop gaining strength in europe and the world to transform france. it's always significant to be strong in europe and the world. francine: does that help, transforming france from within? >> for sure. for sure. we need to be proud of ourselves and do the reforms we need to. francine: is there something you could hope for in the next two days? is it more transparency? of frameworkoort that requires companies to publish their research. >> there is a very important pr

op next year in poland. so, we are not negotiating here. the idea here is to have at the end of tomorrow as many initiatives, can create actions, protections that now expose and highlight for the whole world to realize, this is investable and we are gaining momentum. but we have to do more. francine: thank you so much for joining us. that is the ceo and chairman of agence francaise de developpement. we will be speaking to bruno le maire, the french finance minister. this is bloomberg. ♪

mark: you are watching "bloomberg surveillance" and i'm mark barton in london. francine lacqua is in paris. we get the fed's latest rate decision on wednesday. the market sees a 90% chance of a hike based on fed fund futures. economists see the mpc voting 9-0 in favor of keeping rates on hold. we also get the european central bank's latest decision today. they could reveal how the qe program will be

reduced. peter dixon is still with us. given this week's fed rate hike is pretty much come to the priced in, peter, what are the questions within the meeting that matter the most? peter: well, i think the question really is -- and to one extent, policy is on autopilot. the question is, to what extent will markets start to get concerned about the policy being implemented? the markets are suggesting two maybe three rate hikes next year. they say, we have a balance sheet reduction down the line -- it is not going to be huge, but it could be one of the things that starts to, if not derail markets, starts to impede further gains. mark: why is there such calm about this balance sheet unwind, and this golden path of rate hikes. certainly within that lies so many perils, peter.

peter: i would have thought so. it is like we are sailing into uncharted waters and we don't know how deep it is. there could be rock out there. the idea of qe in the first place was to help people and markets. the logical argument is, if you want to endorse qe. but it has the opposite effect on markets. i'm guessing markets have gotten so complacent to central banks supporting communism over the decades. they almost cannot conceive of central banks turning the opposite way. don't forget, we have got the boj and ecb still active. it is not like we are seeing considerable tightening. mark: we know about the yield differential between the two and 10. we know how narrow it is. we have asked many a guest what it signifies. when will the bond market start reflecting the risks you talked about? peter: in the first half of next

year, i would expect to see a sharper move at the long end of the curve. what would drive the longer end, i think, are signs of higher inflation. admittedly, that is happening at the moment. maybe if you saw stronger wage inflation coming through. certainly, i would expect to see bond markets moving because at the moment, as i've said before, they are too complacent. mark: if you had to pick the most interesting one out of the two, the boe is probably smiling given the announcement on friday. their forecast is based on a soft brexit. which is more interesting? peter: i think the ecb. we would want to care more from the ecb. we are looking at the tapering process and how it will.

proceed. certainly, there will be questions about whether the ecb will end its program in september of next year, as is currently being suggested. we are not going to get an answer to that, but that is the interesting questions that markets will be asking themselves next year. what will be in amusing, and i don't expect the ecb to talk about this, but the idea that they might have to buy more italian or french bonds next year to prevent this from going over. mark: peter dixon stays with us. up next, we speak exclusively to bruno le maire, the french finance minister. .hat conversation, next this is bloomberg. ♪

mark: you are watching "bloomberg surveillance" and i'm mark barton in london, alongside francine lacqua in paris. let's get the bloomberg first word news. ed: french president macron says

donald trump's decision to recognize jerusalem as israel's capital is dangerous. he said this as he hosted president benjamin netanyahu in paris. the u.s. investor to the u.n. said it was up to israel and the palestinians to decide the status of jerusalem. president trump is said to be planning the closing arguments for the republican tax cut in a speech on thursday. he will speak in washington as house and senate teams tried to iron differences in their two plans. the president we did, getting closer and closer on the tax cut bill. chipping a better than projected. house and senate working hard and smart. end result will not only be important, was special. came asvis' comments

prime minister theresa may will today hold a cabinet meeting before addressing the house of commons to spell out the details of the brexit deal. >> what we want is a bespoke outcome. we will probably start with the best of canada and the best of japan and the best of south korea and add to that the bits missing, which is the services. reporter: new zealand has named adrian orr as a new central bank governor and he will begin a five-year term on march 27, replacing acting governor grand t spencer. he was previously a deputy governor at the rbm fed. and kuwait's oil minister says they could end their production curves by 2018 if the market rebalances by june. strategy study in exit at the midyear meeting. the cartel and its partners agreed to curb production until the end of next year.

global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. ludlow. this is bloomberg. francine: thanks so much. the french president seeks to br eathe new life into the fight against climate change and sway the debate away from skeptics. the meetings are meant to preserve the landmark paris agreement we signed two week years ago. i'm pleased to be joined by the french finance minister. minister thank you so much for giving a little bit of your time to bloomberg. let's start with some of the initiatives you want to see within the next couple days. what needs to be done. >> i think we need to accelerate the transition towards low carbon economy. k that finance has a cure to play to reach that goal.

so, we will take some initiatives today. friends, to -- funding m re transitions. we will provide more transparency. we have two explict to the people that some activities are not the right ones, and these activities have to change. he plans have to close down. we also that, but we have to be more transparent. we also want to put new financial tools on the table between the helpers, the financing, the transition to a new album. for instance, we have been the first state in france to put on the dable green bond the.

they proved to be very efficient. we tended to move that way. are efficient, this challenge of climate change. public investors will commit moreelves to provide financing for the fight against climate change. guestare the swedish that will speak today. sfrancine: what is the question that you get the most about private investors? do they ask you about the trade 's transparency. i think transportation is a key because people have to be aware that once again, some activies thatt have us to meet commitment of reducing the labor of co2 in the world, and we have to be more transparent. we have got to explain also that some activities are not relevant

anymore. they need more transparency and they need also new tools. that's why the greenbound is for me. while evan's tool is a bit more. macron ispresident calling for a carbon price war. it is unclear if this will be adopted by germany. >> we are doing our best to convince our partners, and especially germany, that the crisis of co2 has to rise. when you are looking at the level of prices today, in between five and 10 years, we think we should reach soyear-olds for this year, businesses will emerge and a

theirents to improving proposals and improving their answers in a fight against climate change. that is the right price for the co2. 's now between five and 10 years a term. a little bitalling behind, compared to all of the asian countries. what more can be done? what incentives can be taken? >> innovation is the key. one is why the price is answer for the part against climate change, but the second ancwer is to provide more financing for innovation. if we want to keep on the rates of innovation.

and especially disruptive information. what do we want? u do we want the -- do we want the u.s. or china to take the toal back, or do we want use more finances for disruption, like the batteries. that is why we have asked mr. macran, and he'll stay. francine: president macron's is very ambitious plans for europe: the years of budget, more degration. what does it mean in terms of

timelines? anything foro two to five years. it takes time. but i think that is the key point, we will put it in the goal. we want the eurozone to remain we want thenion, or government.become a ca weare also the view that have to vote step-by-step. the first step i think, that we reach the banking union and try to converge the unions is fallin as long as gers

fallen. corporate taxes concerned, by the end of 2018 the second step of thebe the improvement european monetary farm, which of youo barbecue all the last step should be the creation of the open budget with a finance minister. but we think it should be the last step. this is a three-step report. president macron wants to nersain why he is part before the end of 2017. francine: is there a danger that by focusing too much on europe, you are distracted. >> no. on determination reforms i set

out. i think they still can work out. on the one side, you have to accelerate the reforms in france , to reduce the public expenses and to create more jobs for french people. the second track is more degreaction. and your european partners welcome you? and foreign integration? >> i think everybody is now aware. we have to look forward. we have to improve the functioning of the eurozone. we have to put more solidarity among the mes of the eurozone

thee got to show eurozone. europe? what for? more integration for the eurozone should be more troubles for the people and more growth for europe. francine: minister, do you think this has been triggered by brexit? reallyink the brexit had very important effect on the also, eople and quite onebe you will

day, and disappeared. need a very quick answer. we can no longer explain that europe is a tease. we need to be informed of your obstacles for the sake of the better situation for everybody. i would not think the brexit has had a very strong affect on your awareness of people. francine: after the initial breakthrough deal, we will get a deal that is good for both parties. >> i hope so. it was explained that i'm not in favor of the hard brexit. i'm stable. i think it is in the interest of anybody, of the u.k., but also all the embedded people

across the u.k. know we are on the right track. mischa barnier is making a good job. ridee we get one more >> my top priority will always remain jobs, jobs, and jobs. everything we are doing now or , thedone, for instance is now free.

a hot dauge thank you. francine: that was the french finance minister joining us for an exclusive. we have plenty more throughout the day. theresa may tries to keep everyone on the same side after the fragile brexit talks were discussed. we will discuss it all, next. this is bloomberg. ♪

mark: you are watching "bloomberg surveillance" and i'm mark barton in london, alongside francine lacqua in paris. the fragile truth at the heart

of the government is being tested as some of the promises grow weaker.prime minister may tries to maintain the front. david davis is among the sending signals that the u.k. might not be up to what it signed up for. what do officials have to think of davis' comments. well, as you can imagine, they are not amused by comments like that, after tough negotiations to get to that deal, announced here in brussels on friday. in fact, ireland came out pretty quickly and pointed to another section of the text, which says this phase one agreement needs to be looked to under all circumstances.

they are saying ireland pushed for this, push to have it in writing, that the u.k. would maintain a no hard border on the island. i feel like they got into this agreement and here is davis, acting like he is walking back on that. francine: interestingly, davis just spoke to lbc, jones, saying, of course the brexit being used. is the eu looking like calendar plus, plus, plus? or just calendar. >> there's more than one plus on that. if they wantedd to have financial services because of that. the complexity of the deal just grows and grows. it does not seem possible that they could get that by march of 2019, when the u.k. is going to

leave the eu. at the very least, they will have to focus on a transition arrangement that will allow them to have the time to actually finalize a trade deal. hayden,cquarie jones joining us from brussels. peter dixon here, joining us. the pledges started to unravel over the weekend, maybe less given his comments to lbc. it just shows the difficulty with mayor has in balancing the project. >> yeah, i am obviously the political landscape changed last election. it was not very easy before hand because you clearly have a large chunk of mp's who cotevoted remain, and said we should have the softest practical brexit. and balancing those two is

actually the impossible tax. i think what the government does is to appeal to the week, economic influences in the country. that perhaps the agreement, such as it was, achieved on friday, went too far. you'ret hisis, that's all going to get. mark: you mean move on to the harvest part of the deal. sterling, we heard from everyone. sterling's assent will, for now, come to an end. >> it makes sense. investors were looking to berlin for some kind of positive news. but what is there to shoot for

now? it's hard to see what will drive sterling higher. i think over the last two to six months, you'll see a lot of volatility in sterling. once thing i'm keeping an eye on is investor positioning. at the moment, it is completely flat. mark: the boe, which we did not discuss in the last section, meets this week. will they just sit on their han ds? >> i think so. the economy is not doing great, but it's ok. and until we have a clear sign into what is happening with brexit, it does not seem like a sensible strategy to type further. mark: was it your idea to have it downgraded today? more and more looking glass half-empty than glass half-full.

theh camp are you in for next couple years? >> given the winds we have faced, i'm looking at $1.7 million. in that sense, it should be seen very negatively. but if we can continue to move on without any cracks in the economy, glass half-full. mark: we heard. finance minister was clearly happy we got behind the first hurdle. this is likeeed t second two brexit. is that process now moving ahead or with the fact we don't have a german government in place. and the hurdles we have seen over many years. is that wishful thinking, or is this a real opportunity? give the cycle, the ecb to ma

ining those eyes that are obnoxious. is suggesting they want to move more towards this comment room. lookedhink we have behind us, and we wanted to see problem all together risk that about the is italy? this year we had australia, france, germany. we had big stumbling blocks. >> i think italy will be difficult for a government who

has to come out of his process, because he is always in. of 20nt the better part years not really growing, but there are indications that the economy is about to turn the corner. that would make life a little bit easier on the next government, or the formation of the next government, come next year. we would need more signs of a recovery pack before the election, but it is entirely possible. >> and the economy, the eurozone, is not enough to lift inflation. situation where he next door girl goes to work, what are you going to koalahis into a i think when you get to neck

september are one of artists, the economy is growing nicely. that will be a good policy to say we will stop here and rely on the economic pickup to generate. mark: next year globally will be the year of inflation. i am just going to put that out there, given that the fed is wanting more inflation to justify its actions. will we see more evidence of inflation? >> i think you would like to see more inflation. i don't think you'll get it. i think we could talk about this for 2019, but 2018 will have modest inflation. mark: thank you for joining us, peter dixon, global financial economist at commerzbank. francine, what have you got planned for the rest of the day? francine: first of all, it will be a very busy day as "bloomberg surveillance" continues. we bring you an exclusive interview with the pboc advisor. we talked to him about climate financing in china. i've been looking

forward to this interview. mark, if you look at the concerns, it is how the private sector can influence all the financing -- maybe it is the private and public spending. we'll ask laurent mignon about trading within his bank. we also have an exclusive with mark carney tomorrow at 10:30 a.m. here in paris. that's actually the u.k. time. we have a really good line up for you guys. it is all about i'm a change for finance. -- it is all about climate change for finance. this is bloomberg. ♪

francine: bitcoin. futures trading with a 25% rise

that trips a circuit breaker. the wild ride continues. taking a hike. markets gear up for rate decisions with the u.s. expected to lift rates. we look ahead to a crucial week. and mays fragile truth. facing scrutiny in brussels today as her cabinet's. but are the eu and downing street on the same page? good morning, this is "bloomberg surveillance." tom keene has the morning off. we are live to talk about climate change but we will take a different angle. we want to talk about financing and the initiatives that we can actually push ahead with the interviews this morning. we just spoke to the french finance minister, bruno le maire. and we will also speak to --

shortly. it is a packed show. guy: absolutely. and tomorrow, we will be talking to mark carney. that will be an interesting conversation. make sure we don't miss that. let's get a bloomberg first word update. taylor: it is all about bitcoin. it has begun on wall street. it rose as much as 25% on the first session. initial volumes were higher than expected and traffic from the website was so strong it caused delays and outages. theresa may's brexit truth with the eu and her own cabinet is being tested. davis was among the people sending signals that they are not committed to the deal they signed on to last week.

still, davis came out saying the agreement is legally enforceable. the senior -- has called on voters to reject roy moore. roy moore has been accused of inappropriate behavior with teen girls when he was in his 30's. and kuwait says the global oil clutch could and early. the oil minister tells bloomberg that russia wants to end the output deal as early as possible. opec and the allies have agreed to extend until the end of next year. global news, 24 hours a day. powered by our more than 2700 journalists and analysts, in more than 120 countries. i am taylor riggs. this is bloomberg. up and talkick about what is happening in the markets this morning. talking a lot about bitcoin. let me show you numbers. mildlyures pointing to a

positive start this morning. continue to see steepness in the curve. that number picked up a touch. it is still sub 60. the euro-dollar is 1.17. 63.42.rude is trading at and the big story is it coin. the euro, it interesting inflation data overnight. the price action on friday i thought was absolutely fascinating. the markets have priced in where we are now. and we have the stoxx 600 trading flat in line with what we are seeing in the states. i want to highlight something for everybody. as we talk through the morning of the arrival of futures for it coin, you can access them on your bloomberg. hit the currency button and you get the contract table for the

it coin futures. look at the volume on the right-hand side of the screen. it is quite minimal at this point in time but i expect the number is going to pick up. francine: we need to talk a little bit about bitcoin. overall, we need to talk about trading. whore now joined by a ceo is participating here in france at this one-day forum on a session with the bank of france called "risks and opportunities related to climate change, transparency and more." ,ne question investors ask us is there real opportunity? can you make money trading bonds in climate change? the green bonds are trading at a similar level than the gray bonds but there are more and more going into the

funds. as the offer is still lacking, the power is getting stronger and stronger so i think it is an attractive potential investment where is an investment people take a long-term view and goodink that is a very industry and market. toncine: what is that doing help the public-sector invest in climate change? laurent: we have try to incorporate green bond. first of all, we have gone from many of the financing. two years ago, we went from the goancing of -- and today we to the financing of any oil

exploiting and the oil in the arctic. it elements where we think is too damaging for the climate altogether. and we are taking an initiative that is in discussion today where we will apply to ourselves. green positive factor to the financing of any positive fracture. the green one will have the benefit associated with that. which will be more interesting those that money into elements. so that is something we want to apply and we will do that i the end of 2018. others will follow. francine: do any initiatives need to be mandatory for other banks? laurent: it is something where all banks are moving in the same direction today. takes a position

that is more in line with what they have as a bank itself. but i think that this will be it the green factor francine:. is the the bank that most exposed to the u.s.. willis help with you with the revenue, stateside? laurent: whatever is positive for the u.s. economy is positive for business in the u.s. so we do view that positively. we also view it positively for ourselves because we will take benefits on that. so that is two positive elements that we see from this deal. francine: guy johnson has a question for you. guy: good morning, sir. brexitiday's deal on reduce the incentive for financials to leave london and moved to frankfurt? laurent: i think the good thing

about having an agreement on brexit is that it gives some visibility. financial institutions hate situations where you have no visibility. it gives visibility and the fact that it is an organized process means that more people will stay in london or not, something we can't access today. betterotiating is a much agenda. guy: where do you think clearing will end up? do you think you will ultimately end up in frankfurt? there is a fragmentation argument that says it would be better to be in one place? the discussions are ongoing. ofis really a question making sure that any decision we make about clearing isn't going a be something that will give

this advantage -- give a disadvantage. so we need to find something that will help us have the most competitive situation tomorrow. that is what we are looking after. guy: let me ask you the question that everybody is talking about. bitcoin. the start of futures are trading, is it coming a legitimate project -- a legitimate product? laurent: when i look for the first time, i was surprised. i thought it was something specific in san francisco war in the bay. it has become a big thing. and whatever you may have as the condition today is something that you need to be thinking about. do tradingwant to with bitcoin, the answer today is no. whether we need to consider what is happening today? yes. we need to consider what is happening with that.

i would still be cautious and say that to people who want to invest in it, volatility is high. francine: how do you explain the phenomenon? -- therean asset tight is an appetite for an asset class that doesn't exist anymore? laurent: a lot of people are seeing that it has grown fast and they are attracted by the potential and opportunity it provides. that is why i say beware. volatile with low liquidity so it could move one way or the other, very fast. when this becomes a real currency, long-term, that is something that we need to assess. i would have said no two or three years ago but it is something we need to give more attention to today. have it as the sovereignty of

countries but for a long amount of time, we saw that money would not exist without old. today, money does exist without old. something to consider. francine: when you look at the trading business, and you see more opportunity there? laurent: we are trading only for the purpose of client services. if we were to see more and more clients that had interest, that is something we would start to consider but for the time being, that is not something that we see from our corporate's. francine: you outperformed a lot of your rivals in 2017. will you continue to do so in 2018? the output, we are very pleased about it. the old idea is to create more strategy wherea we are to have a precision plan. 40% of the to reach

return on equity and we hope that with that and a general steepening in policy, we can generate more value to our willholders and that we continue to perform right. francine: thank you for joining us today. that was laurent mignon. much more today, including an advisor to the pboc of china. guy: what have we got coming up for folks now? a conversation with robert schiller from yale university. ofhas an interesting view bitcoin. and he is not a fan of passive investing. 11:30 a.m.ing up at in london. this is bloomberg. ♪

taylor: this is "bloomberg surveillance." let's get the bloomberg business flash. abouton't have to worry more punishments for lapses in money laundering control. they reached a prosecution agreement with the u.s. justice department and it has expired. the government will ask that charges be dropped. they were fined $1.9 billion for helping mexican drug cartels to launder money. in talks about a standstill agreement on a one point $8 billion margin loan. according to people with knowledge of the matter, they want to agree not to sell stocks to back financing until next year. they dropped more than 80% last week after they were unable to publish financial results. and an offer that would create

one of the world's biggest real estate firms has been rejected. down for killned properties for a bid to acquire the stake. to repurposeng shopping centers. that is your bloomberg business flash. guy: thank you. let's talk about a subject that a lot of us are talking about. bitcoin and the fact that wall street just got a slice of the pie. futures kicked off last night after the cboe do view futures. and triggered a couple of circuit breakers along the way. beforet price dipped heading above 16,000 for the first time. nice to haven -- him on set.

let me start with you and get a sense of what is going on. futures kicked off last night. i was told that as soon as they got involved, they were going to short this thing and it was going to be incredible to watch but it didn't happen. why not? ed: we don't know. we need to talk to some of the short-sellers and find out why that hasn't occurred. it is still so early. it has only been several hours that this has been available. ad maybe everyone is taking wait and see approach to see how takings out before action on something unprecedented. a stock, ihort borrow it and then i sell it and i hope to buy back at a lower price down the road. contracts,se futures

if you sell the contract you are expressing a view that the price will go down. so you are making a play, that the price is too high. so right now that is the best expression, using that vehicle for skepticism. the arrival of futures useful? >> it gave it some legitimacy because the whole case against bitcoin was that it wasn't in the formal economy but listing it on the exchange formalizes it . for some investors, that makes it seem like a legitimate transaction vehicle. guy: but most of the senior are stillfigures remaining incredibly cautious about their approach. so this migration from the great -- from the grave financial transparency of global markets, how long does that take? how many more of these steps will be need to see?

the irony is that listing on the exchange begins to erode the underlying investment rationale for that coin. one of the points of it is to preserve privacy and anonymity. it eventually will need to provide a reporting requirement and will be subject to every other scrutiny. so it positive impact from listing it something intrusion allies but there is a long-term question about whether or not the whole privacy element will disappear at a future point because it is traded on an exchange. guy: do i need to worry about the portfolio effect? it is verying to -- unclear about who owns it and why they own it, will they sell it or would they sell it? with traditional financial assets, there is the portfolio effect with these practices that kick in and spread the story out. do you think that will happen

here? concern that is around the eventual unwind of the button is that the price will deflate substantially. isht now the project cap $300 billion. if you think about 300 billion dollars of debt disappearing overnight, it is a hit to investors but in the big scheme of things with the financial markets, it is not a big deal. double orce were to triple again in the next few months and reached a market cap you wouldlion then have to worry about what the wealth effect would be on consumers in certain places. so i think the value of it now is too small a wash -- too small a loss. it if it is bigger i think would be something to be mindful of. guy: the energy element to this is something that is beginning to come onto the radar screen.

if bitcoin carries on the way it is, energy consumption levels will be going through the roof. they already have. the nordics to cool the machines or china when you rely on the cold power and electricity that comes along with it. how much of a limiting factor will this be? way, it could become a self-fulfilling market. this price to go higher and higher to sustain all of the electricity that they are using to process and to mine the currency. you wonder if this is a self fulfilling cycle and if there is thathing strange about occurring? and it goes back to your point. the whole system, that is the nature. we don't know. bringhat is my effort to it back to the green theme. john normand will stick around.

more, pick up the latest issue of bloomberg businessweek. there is a lot of writing on this subject. this is bloomberg. ♪

guy: ok, let's talk about what is going on in paris. francine lacqua is in paris today. your big focus is what is happening with the environment right now.

what has happened and how big of a focus is there at the meeting right now on donald trump's decision to walk out of the paris climate story? francine: she is definitely the elephant in the room. nobody is really talking about u.s. but it is clear that other ones seem to be doubling down. a lot of talk about private investment. we are speaking to the advisor mestrallet. there are heavyweights focusing on real initiatives that could make a difference. this is bloomberg. ♪

♪ good morning, everyone. this is "bloomberg surveillance." i am francine lacqua in paris. we are focusing on climate change, the financing of climate

change. but first, let's get to first word news in new york. france's president emmanuel macron cause president trump's decision to recognize jerusalem as israel's capital threat to peace. netanyahu disagreed with macron saying that trump's decision would help. russia and egypt will sign an agreement to build the first nuclear power plant in africa. isdimir putin -- the project valued at $35 billion. u.s., the largest of the wildfires in southern california is moving north. hundreds of fled their homes in santa barbara county. so far, the fire has burned more than 270 square miles and forced the evacuation of 30,000 people and is only 50% contained.

movie theaters are coming back to saudi arabia after a 35 year absence. it is the latest attempt by the crown prince to socially reform the country. the saudi shutdown movie as a partn the 1980's of ultra conservatism. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. guys? francine: taylor cup of thank you so much. finance to the french minister, and the thing is climate finance, so we are trying to figure out what is needed to get more private/public partnerships on board. onlso asked mr. mestrallet breaking issues. gerard: we have to go step-by-step. for the first up, i think, we should try to reach the banking

union, to reach the capital markets you again, and to improve convergence as far as the corporate tax is concerned. it is possible for france and germany to have a conversion bite --a conversion by the end of 2018. francine: that was the french finance minister. a lot of the focus on private partnerships. i asked him about some of the funding initiatives when it comes to climate change. let's continue the conversation on climate change with gerard mestrallet. thank you so much for joining us mr. mestrallet. there is a lot of talk about finance and climate change, but what do you want to see happen when it comes to initiatives

today and tomorrow? hasis it because the u.s. decided to move away from the climate accord agreement? gerard: that is true, it is a challenge and it is huge. after the position of the united states, you remember, two years ago, when we announced the first agreement? it was a tremendous success. it was a large number of bankers, insurers, asset managers. to. investors wanted capitalize on their portfolio with cold co--- portfolio with capitalize on their portfolio with coal mining , power generation, and that is

what we are looking for today. and for tomorrow because we are dedicated. possible to it completely out of the realm of reality that president trump comes back to sign the agreement, and that would -- and with that make a difference to the initiatives you are talking about? gerard: of course, it would be we are but nevertheless, identifying some states, like california, the large number of cities and corporations, continuing to fight against climate change. and to convince themselves to worldfrom the old energy to the new energy world. we can be optimistic.

the strategy is huge because we and $17ween $5 trillion reachn now and 2020 to the climate goals. additional commitments -- we need additional commitments. in the meantime, the finance is about changing their mindset. ago, the finance was not convinced by the initiative to fight emission. -- leaderse decided it forided to fight for them and their children. now, they have realized that it

is a percentage of risk and they had to do it in the best interest of their own company. francine: talk to me a little bit about nuclear. in belgium, there are seven nuclear plants. what could belgium replace this energy with? gerard: that is a question to be asked to the belgian government, of course. in belgium, we are investing energy. there is a competition, but we are investing in green power , andation, solar, wind offshore wind. that would be the task of the government if they confirmed that in 2025, the nuclear will stop. by what, it will be replaced? gasill be a combination of /power generation and the noble

energy -- and renewable energy. francine: when you look at the financing agreement, where do you think the next big thing is? gerard: yes, yes. the right tolls to finance the energy transition -- bonds are one of the right tools to finance the energy transition. thate very pleased today this is taking place in paris. is climate every day billion paris. we have created a program to accelerate wind bonds. francine: how do you make sure this is not just happy talk or a

good marketing tool for someone to came on? you have to make sure and force companies to diebold some of their -- companies to divulge some of their financials. gerard: more and more investors are actually asking for non-financial disclosures, and eventually, ratings. and i personally support this evolution. in order to check and to be checked by a certain party, what is going on and what a company is doing in terms of greening effectively. francine: i need to ask u.s. chairman, has the brexit negotiations, you're trying to lobby to get jobs out of london into paris. how is that going? gerard: it is going well. of course, we have had lots of

individual decisions. and with banks, it has been very concerning. the french bank, but there needs to be a critical decision to transfer from london to paris. [indiscernible] francine: there is a critical summit thursday and friday. do you believe there will be a proper deal on the table? gerard: i hope so. but i cannot pontificate will be decided. i would like to say that in paris, we have always had a very positive relationship with

london. established a long time ago, an agreement that has been reinforced. is to propose a partnership. theuse of the agreement and -- because of the agreement, we have to cross the channel and find the best solution in paris. francine: gerard mestrallet, thank you so much. we will have plenty of interviews. i am also looking for to speaking to the pboc advisor. economist -- he is a pure economist, and now he is looking at climate change and green financing. this is bloomberg. ♪

♪ 42 minutes past the hour. i am guy johnson and londonderry -- i am guy johnson in london. , already being tested. some of the promises, the agreement is starting to frail with a cabinet meeting taking place. the u.k. prime minister is meeting with a cabinet later this morning, trying to make a united front. signalsvis is sending not be up formay

what it signed to a few difficult. joining us is john norman at j.p. morgan. right?es the hard part, more complicated issues around goods and services and the fact that it took three months to negotiate three basic components on the first phase is not a good sign. guy: it was a plus, plus, plus, plus deal. how many more pluses do you need? who when one that? guy: but that is how you start negotiating, isn't it? >> you should. it only means is they think it is achievable.

concern is the government doesn't fully understand the trade-off. they preserve this section that they can return a high degree of market access. guy: how do you see the neck six months developing? the pound has been resilient. i am surprised at how resilient it has been. does it continue this way? the same way, plus or minus. the pound is very cheap? many clients still underweight that. there is a bit of good news around the bank of england. they appear to be joining the clutch of central banks that are tightening monetary policy and will do so over the next year. guy: you have another one expected next year. john: my concern is that these materialize, or

materialize in the context of a weak growth environment. my guess is that there is not a value opportunity in u.k. assets for the next year. it is going to going to a very withrd negotiation process the future trade agreement, but won't be sufficient clarity over the next six months. guy: some people talk about jeremy corbyn if he was to be elected. good that the the reality of the situation? john: you look at his public statements, and you think about the likely scenarios, then you should worry about a change in the policy framework. it would be a government with a looser fiscal policy. may make election people a little more optimistic about the possibility of a closer relationship with europe , andse of their connection

then the offset of fiscal policy that could undermine the bond market in the pound at the same time. guy: how does the market think about this -- there is nothing priced in for the administration. over the next year, do i need to start pricing that in more? how do i make this feature in my thinking? john: over the next year, it is far difficult for investors to price in extreme scenarios that are more than 12 month in the future. guy: two weeks to be honest. john: the planning cycle is too short for most clients to be able to think about what u.k. assets should be pricing of jeremy corbyn was prime minister. right now, it is more about bank of england policy. guy: john, stick around. john normand of jpmorgan is point to stick with us. you can access the functionality

on tv . you will get the radio stream, even coverage, and pull out some of the highlighted events as well as the bottom of the screen . tv . this is bloomberg. ♪

♪ is "bloomberg surveillance." i'm taylor riggs. if disney reaches a debra fox to buy some of its access, the movie studio could be scaled back. that is according to the wall street journal, which cites people with knowledge of the deal. the journal says the agreement between disney and fox will be the end of the era of the six major studios that has dominated hollywood for decades. explores inoducer the u.s. have signaled they are getting ready for a drilling search next year. dealers have risen for an eight week to a record suggesting producers are finding the upper $50 a barrel a time to lock in prices. and for the first time since 2010, sales by the top contractors has increased. almost up 2% in

2016. the maker of the fighter jet boosted its revenue by almost 11% from lockheed martin. and that is your bloomberg business flash. guys? , tim appear the fed is expected to raise rates by a quarter of a percentage is expected tod raise rates by a quarter of a percentage point. more yellen is signaling hikes in the next year. inflation may pick up. on thursday, the ecb and the bank of england will make policy decisions, although each is forecasted to keep rates on hold. with us now is john normand at j.p. morgan. this is a chart that pops up this morning first thing on my bloomberg. it was what you guys think about where real rates are, where real

rates go in the u.s. before they start having a market impact. and you think it is about 1%. ofare about half that level -- we are about half on that level. long it will take to see a real positive funds rate will happen next year because we are starting a slightly negative growth. nexte fed delivers a hike week and every quarter of next think the is what i risky markets could worry about whether the fed is moving into restricted territory. that could be the point of those risky markets -- guy: the market is nowhere near that kind of pricing. john: but i think the markets are thinking -- but i think the markets' thinking could change if we had the passing of fiscal easing. is an extremely fluid

situation. even though the price of the money market right now is benign, this can change over the next three to six months. the dtoots gos function. and 2018. is at 2.1 the market is 1.8. it is coming along, but you are talking about it coming in an awful lot. what is the ripple effects of that repricing? john: if inflation were to normalize because there is a big debate among investors that it will. that is understandable to me why we have a lot of underestimation in the money market curve. they given me inflation numbers are starting to print more normally and we will get another

read on cpi this month, to me, the cap has been laid -- the path has been laid of what the market expects. guy: will the market reprice wants we get -- will the market reprice once we get unemployment under 4%? dependents much more on actual price pressures. we have to have a breakout in earnings that we have not seen. or it has to be a highside encore cpe or cpi. but the economy is happening above capacity, and it looks like congress will add additional stimulus to that. we are in a wait-and-see mode, but the backdrop is lining up to cause inflation to moderate. guy: i am interested in what you said about congress. if i am a ceo, i am looking at the u.s. economy and thinking, is there enough demand to justify going out and spending my money. or do i going to share buybacks? john: the majority is share

buybacks. this has been expressly corporate america is given a tax cut. there will summary likely be some additional staff there will very likely be some additional -- there will very likely be some additional expenditures. it is going to add something. guy: every little bit helps. john, thank you. john normand joining us from jpmorgan. coming up in the next hour of surveillance, we will be back in paris. an advisor will be joining us. looking forward to that conversation. this is bloomberg. ♪

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20 5% rise trips up a circuit breaker and triggers a two-minute hold. will the cryptocurrencies wild ride continues? with the u.s. expected to lift rates. we look ahead to a crucial week. and treat -- and theresa may's deal faces criticism against brussels. are they on the same page? good morning. i'm francine lacqua in paris. this is "bloomberg surveillance." is climate finance day. the climatee to finance minister. and we will speak to ma jun who china people's bank of finance minister. climate change has moved on a

little bit not only talking butt climate change, talking about what can be done with financing. it is a big we, guy. guy: absolutely. it will be interesting if interest rate start to climb, to see if higher rates will be offered by some of those green bonds. they are eroding a little bit, francine. francine: yes. let's get to bloomberg first word news with taylor riggs. taylor: it is all about the claim. the bitcoin era has begun on wall street. futures rows as much as 25% during the first session on the exchange. initial volumes were higher than expected. and traffic on the website was so strong, it caused delays and outages. over in the u.k., prime minister theresa may's brexit truths and a cabinet is being tested. david davis was among those

sending signals that the u.k. is not really committed to the deal that they signed onto last week. but davis came out and set the agreement on the irish border is legally enforceable. has askedsenator people to reject roy moore in the special election. the senator says alabama deserves better. moore has been accused of inappropriate behavior with teenage girls when he was in his 30's. global oil cut a can end early in the market rebalances by jim carrey below minister says russia wants to end the output cap deal as early as possible. opec and its allies has decided upextend the curve to beef prices. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. die, francine? -- guy, francine? francine: thank you. we are back in paris focusing on climate change.

if that is speaking on climate change their radically, we want to talk about the financing of climate change. joining us from paris this morning is the chief investment thank you for joining us. when you try to convince him in your investors that it is a good idea investing in green, what you need more and 2018 to make it possible? >> we have taken a major aitiative and announcing major green bond fund dedicated to green bonds in the emerging market space with imc world bank. private,is to unlock trending towards climate-related products. the problem is very simple, actually. lowhe one end, you have the

yielding securities. on the other hand, you need investment. we have two problems to solve. one is the capacity to invest in the emerging space, specifically to manage risks attached emerging markets. the second is the capacity to invest in cross structure projects, question of assets insurance it originates in. and to basically bring the best of two worlds, this partnership between private and public sectors. the private sector is basically bring to the table capabilities financement.debt 10%ifc will bring a absorption mechanism. francine: but this is also true for developed -- developing countries?

pascal: yes. it is critical to be able to channel excessive savings at the world level towards developing world -- towards the developing world. this is a practical initiative we have been taking. banks toe using facilitate the origination and the issuance. are offeringt, we the green bond structure. this is a very practical example. francine: what kind of returns can we expect? pascal: around 4%. marketcreating the because it is a unique initiative. we are creating a market with impact, and offering investors 4% with an impact. this is an example. francine: one question also on european stocks and my cohost

guy johnson will jump in. when you are looking at european markets, you are expecting a renaissance in european stocks. you are looking at the high level of the euro -- a you worried about the high level of the euro hurting those stocks? pascal: i am not worried. brexit and trump approach uncertainties. europe is building momentum actually. we are in a sweet spot. i can imagine a cyclical recovery and the path towards reforms. the fact that the political uncertainties, thanks to the election of emmanuel macron, we in terms ofhip back reforms. there is still a gap for the rest of the world on the equity

side and dividend side. guy johnson also has a question. guy: good morning. do you think that green bonds would look ids attractive wants the end the qe phase -- do you think that green bonds would duringite as attractive the end of the qe phase? to the stoxx dissipate a little bit on the green side? pascal: i don't think so actually. there is still room in terms of therategy of allocation on side of the equation basically to put money in that space. green bonds buying in the emerging market space, killing onecally

bird with several stones, putting money in the emergency market -- putting money in emerging market space. we are talking about a relatively sticky investment for the first seven to 10 years. removal of the qe may be a problem for this type of investment. guy: can't i just bring you back to some of the issues you are mentioning as well? can i ask you a question about volatility? about what is happening in european equities, but global market and fixed income, or foreign-exchange have seen volatility incredibly low over the last period. do you think we are now coming out of that phase?

i would be curious to know what you think, kind of, what that means for investment strategies, like risk parity. are we starting to see a new era getting to a merchant next year, you think? pascal: i do not like generally speaking actually. i think markets are looking at volatility, behaving as if all of the unknowns were knowns, which is basically wrong. actually, i don't buy at all into this goldilocks story where low into awill stay new regime. i think volatility will be back in relation probably to monetary uncertainty. abouts what we learned uncertainties. there is many around.

i would not be surprised to see volatility striking back with a vengeance moving into next year. francine: overall, earnings growth in europe is expected to be about 8% next year. given the kind of growth we are talking about, and giving your comments, do you think the -- do you think that your under optimistic? do believe that we are basically embracing this sort of european renaissance. in europe is definitely back into the global posture, starting from a low position. but there is room to catch up in the global portfolios. i do not see many reasons pathally to see this towards this renaissance derail -- your european reasons

derail for european reasons. francine: thank you so much for joining us. that was pascal blanque, the chief investment officer of amundi. coming up, we have plenty more from paris. that includes my conversation with ma jun, the people's bank of china adviser. ♪ this is bloomberg. ♪

♪ guy: this is "bloomberg surveillance."

i'm guy johnson in london. francine lacqua is in paris and tom keene has the day off, well deserved. alabama senior republican reject royslated to moore in the special election. he says alabama deserves better barrymore he has been accused of inappropriate behavior with teenage girls when he was in his 30's. joining us is kevin cirilli, our chief correspondent. kevin: there is no question that this special election in alabama has really captured the attention, not just of alabama, but of the nation, and combined with the cultural reckoning going on in the u.s. across industries -- politics, media, the corporate sector as well -- this has taken on new meaning. the you just saw

announcement of his resignation without frank and, tomorrow's special election will be interesting. puts theore wins, it republicans in washington in an interesting spot if they will see tim. -- if they will seat him. guy: let's talk about tax because the market is obsessed about what level of detail we will get out of the bill that ends up on the president's desk. my sense at the moment seems that detail is almost irrelevant. just get this done, get it to the president's desk and we will do with the details later on. is that the correct way of looking at this? kevin: guy, it definitely is. as much of the sources i talked to both down here and outside of the city, they would agree with you in the sense that all of the momentum of some republican leadership as well as president trump's side to getting this done by the end of the year. i don't see the other potential political obstacles, such as the need to pass a partial government spending bill by december 22, would in any way,

shape, or form impact their ability to get tax reform. the are on two separate tracks. all systems are go and very little volatility in the sense of tax or getting them at the end of the year. guy: kevin, great stuff. thank you. .evin cirilli joining us big speech coming up on wednesday by the president in which he will close the arguments surrounding attack story. i suspect the argument will persist. joining us is simon kennedy. do the details matter at this point? simon: absolutely. this is a big issue for americans next year. a tax cut how much of this is going to fit into the economy. economists are saying it may not punch the needle by much, and it saidming about the

possibly raising interest rates. guy: let's kind of stick around the tax story, tried understand kind of when we are going to learn what is really going to be the economic impact of this. at the moment, there are still some big issues that are kind of howl being decided, that -- it will affect new jersey, new york, big, blue states. and how it will feed back into the lower city economic growth. that kind of level of detail, have economists build that into their models yet? or are they dealing with the headlines and plugging into the big numbers and worrying about the granularity down the road? simon: absolutely. get a tax timeout and you turn to economists and say, how much will this cost? [laughter] simon: they are talking about 0.3% from a little blip, and

that tends to be the consensus call. they say it will bring -- they say it will give the economy a little bit of a boost, but not much. corporate high earners seem to be benefiting the most. guy: it seems more aggressive and first anticipated. we will talk about the fed in just a moment, but let's deal with the payroll numbers from friday. what happens when we get below 4% for the unemployment rate in the united states? do the lights go on? does the magic happen? does the wage story start to pick up? everyone is beginning to wonder. then: you don't know what natural rate is anymore. of you say, the fed is unsure with the phillips curve, that suggested low unemployment rate we are seeing should've kicked in and started driving up wages. that is not happened. that is not happened in

economies around the world. there is this conundrum to see how fast wages will go up. next year is the year that we will start to see which growth go up. simon kennedy will stick around and we will talk about what is happening with the fed. and one of the central bank meetings will be in focused. shiller will be joining us as well. we will get his take on bitcoin and get a take on passive investing as well. not a fan.say he is robert shiller coming up. this is bloomberg. ♪

♪ guy: this is "bloomberg surveillance." i'm guy johnson in london. francine lacqua over in paris. tom keene has the day off and will return soon. the fed is expected to raise rates this week by a quarter of a percentage point. outgoing fed chair janet yellen also signaling more increases next year coming against the backdrop of a robust u.s. growth. vibrant,arket looks but have yet seen wages picking up, and that is a problem. i would not expect much from the

central banks. is still on the rails. joining us is bloomberg's simon kennedy. simon, the market does not really believe. you look at the end of 2018. 2.1.edia dots market said 1.8. it was a little wider than that, but the market does not believe the rates are going up. simon: what is interesting is that people who meet the market, the golden sachs -- the goldman sachs's are seeing the markets moving next year. so, you kind of have yet again, a breakdown in communication between the trading floor and withmists who have seen how fast inflation is supposed to come back. down that foring the forecast to raise twice next

year. even the fed says they will do it probably three times. jpmorgan saying they will move four times. guy: probably going to get clarity this week? it's trying to understand who's dots are whose? how important is that going to be because the rotation will get hawkish as well. you have jerome powell coming in february most likely. janet yellen having a press conference this week. there is one area that suggests the matter what jerome powell does or changes, it is janet yellen's fed for the foreseeable future and has put the fed on the path, and if powell wants to shifted, it will be a disruption talking about four hikes next year. you have to wait a little bit for jerome powell to find his

feet, but a great changes at the fed. waiting to hear if there will be a vice chair of the fed and looking for a nomination from the white house. there is a great deal of flux. and the dots could fall into different places. guy: bloomberg's simon kennedy will stick around. thank you very much for joining us. coming up tomorrow, we will carrie on with the central bank thing talking to the bank of england governor perry mark carney interview. this is bloomberg. ♪ is this a phone?

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choose by the gig or unlimited. and ask how to get a $200 prepaid card when you buy any new samsung device with xfinity mobile. a new kind of network designed to save you money. click, call or visit today. ♪ good morning, everyone. i'm francine lacqua in paris with guy johnson in london. tom keene has the morning. this is "bloomberg surveillance."

shortly, we are looking for to speaking ma jun, the advisor to the pboc, talking about climate change and financing and economics about that. let's get to first word news with taylor riggs. taylor: france's president calls president trump's decision to recognize jerusalem as israel's capital of threat to peace. prime with israel's minister benjamin netanyahu in paris who disagrees with a metal macron saint president trump's action will help the middle east. russia and beautiful sign a deal to build a first nuclear power plant in north africa. russia's president vladimir putin arrived in cairo today. the nuclear power project is valued at $30 billion. it will increase russia's economic presence and political influence in the region. the largest of those wildfires in southern california is moving north. let their homes in santa barbara county. so far, the fire has burned more than 270 square miles and forced

the evacuation of 30,000 people. and it is only 15% contained. movie theaters are coming back to saudi arabia after a 35 year absence. that is the latest attempt by the crown prince to socially reform the country. the saudi's shutdown movie theaters in the 1980's, a part of a wave of ultra conservatism. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. francine, guy? guy: taylor, thank you very much indeed. bitcoin is the most read story on the bloomberg this morning. on that note, let's be handed over to mike mckee back in new york. mike: thank you very much, guy. we are here with robert shiller, the nobel peace prize winner and professor of economics at yale university. good morning. you cannot get away from bitcoin this morning unfortunately. robert: it is the most exciting news for many people.

mike: but it is news media hype? should we be paying as much attention to bitcoin as we are these days? robert: interesting question. i have to say that bitcoin is back by some impressive technology, but the question is whether the underlying idea is really going to go. people coming brilliant mistakes. brilliantcan make mistakes. we have to wait and see. mike: you say we have to see if it will thaw. robert: the question is whether it will continue as predicted, become a medium of general use and revolutionize our financial market, or maybe another cryptocurrency, or if you generalize it enough, i am becoming optimistic. will bitcoin do that? i don't know. mike: you google robert shiller

and bitcoin, and a lot of people say you are wrong about it ever going down. if you have to ever argue the other side, can you do it? robert: yes. as they point out, where does anything could valued? those pieces of paper in our pocket, why is it worth anything? it is only because we have common consensus, and that is what bitcoin has banished to create for something -- and that is what bitcoin has managed to create for something completely different. a lot of investors and bitcoin are having fun. don't put her life savings in it, ok? [laughter] robert: that would be wrong from the fundamentals. bit around with it is like again, and that is what drives financial markets.

it is not all about, i have to get the money because i am hungry. robert: we are worth a lot here. it is interesting to see the entertainment factor. professor, would there be a portfolio effect and to other assets in bitcoin want to sell off aggressively? robert: yeah. is it is partit of our narrative, our story right now. are not justns economic connections, but psychological connections. it reminds people of other financial crises involving stock market crashes or real estate market crashes. it is just assumed tremendous psychological importance in our culture. i am trying to think about the limiting factors that could be a factor and the bitcoin story. one that strikes me is energy. what has been interesting is

getting an understanding of the amount of energy that is acquired to mine bitcoin, and that number is going up and up to which bitcoin is moving to low energy areas for the miners. could that be one of the factors that ultimately ends up acting as a limiting factor behind all of this? and how do you think the market would react to that? robert: it is amazing, isn't it? they created this artificial problem, too. and now, it is consuming a lot of energy and exhausting our natural resources. it is polluting the atmosphere, i suppose. it is kind of funny how these things interact. i don't have to figure that out. it is a factor. originally, bitcoin's devalue was the idea that you would have an electronic money that cannot be traced, and your transactions would be anonymous. do you see a future for

electronic currencies like bitcoin as a currency, rather than as a speculative vehicle that may or may not hold value? robert: there is -- the functions of money are stored value and means of transaction. those can be separated out. right now, bitcoin, i don't think, except for legal transactions, is not such a medium of exchange. it is a speculative store value. these things may change. the problem with it as a medium of exchange is that it is so volatile. we have to remember that we have central bankers who have for over 100 years, they have been carefully monitoring the price level and stability of the currency. we don't have that with bitcoin. robert: bitcoin seems to be making new highs every day, but total equity markets -- cannot let you go without asking you

that. do you think we are in bubble-like conditions on the equity side? robert: the u.s. has the highest priced stock market in the world. i am a little bit concerned about that. on the other hand, it could go higher. and these things are hard to predict in the short. the standard advice i would give is diversify. diversify around the world. diversify across asset classes. i know that is boring. [laughter] surveillance, you said you were worth a lot on this program. guy: we will wrap it up there. robert shiller, thank you so much of the young professor. and a noble -- and a noble laureate in economics. on bloomberg jun radio, bloomberg daybreak. it can be heard in boston, washington d.c. in the bay area on serious xm.

this is bloomberg. ♪

♪ taylor: this is "bloomberg surveillance." i'm taylor riggs. deal withreaches a fox to buy some of its assets, the fox movie studio could be scaled back according to the wall street journal some of which sites people with knowledge of the deal. the journal says the agreement between disney and vauxhall be the end of the era for the six major studios that have dominated hollywood for decades. shale oil explorers in the u.s. signaled they are getting ready for drilling surges next year. they have risen for an eight week in a row to a record.

and for the first time since 2010, weapon sales by the world top 100 defense contractors have increased according to the stockholm international peace institute, on sales of almost 2% in 2016. ,he maker of the f-35 jet lockheed martin, boosted their revenue by 11%. world'sany is the biggest defense contractor. and that is your bloomberg business flash. guys? taylor, thank you so much. we are in paris with a special edition of "bloomberg surveillance." joining us now is a special advisor to the pboc, and serves as the chairman of the green finance committee of the china society for finance and banking. thank you so much ma jun for joining us. you were talking about a carbon market. what of the other potential tools helping china to deal with green climate? 3.5 years ago, china began

to think about establishing a great financial system, which means focusing on specific instruments and viewing the system of uniting all financial instruments for greening the economy. for example, green lending, green equity, green insurance, green etf and so on and so forth. started a task force, which is green finance tassels in the pboc the proposed 14 recommendations to the central government. the second year, the central government endorsed much of these recommendations, and they document and a reform plan, stating that china needs to have a great financial system. and while later, we began to draft guidelines for the green finance guidelines now include 35 action points that covers all of these intranets that i mentioned. i will give you a couple of examples, one is on green lending.

standardgreen lending for five years ago, but until recently, that number extended. now, we are putting the incentive into the green lending process. the central bank will provide what we call the lending facility to green projects, which means the central bank will provide she financing to commercial banks. the banks will then lend cheaply to the green projects. fiscaly will put in incentives, asking local governments to finance green lots of paying a few percent of the entrance and guaranteeing the green projects. all of these are helping reducing the finance costs for the green projects. these are related to green bonds. the green bonds you mentioned were developed very quickly and the last few years. china became the number one green bond market in 2016. we are now putting additional incentives into that. shanghai government is now putting money into subsidize the

verification costs for green bond issuance and other places are doing interest payments for the green bonds. francine: when you look at the flows in these types of projects, how has the pickup been? for people interested thanks to the incentives in the tools you're talking about? ma: for green bonds, that is the most visible example. in 2015, green bond issuance was zero in china. to 200, it went up billion domestically and internationally. francine: and 2018? next year and has not started yet. francine: but how much can you estimate? ma: we can grow for many years to come given that green bonds remains only 2% of total bond issuance in china. , wetive to global average are two times, but the 2% number is way, way too low.

francine: is this one of the priorities? china is a huge economy that is changing in many ways. why is green financing at the heart of what you are trying to do? idea thatigin of the yearst of proposed 2.5 ago that the private sector has a finance the majority of the green projects. we were estimating that for trillion rmb is needed in investing in what we call the green space, including environmental remediation, clean energy, energy efficiency, green transportation and so on and so forth. the government could only provide 10% of financing. and that is why mobilizing private capital, using a great financial system is becoming king. francine: is china doubling up its efforts in green financing because the trump administration is pulling out of the agreement? itood it have -- or would have been that way either way?

ma ma: i don't think that has much impact on us. domestically, we are driven by the governing position to build a green economy with a green system, and also at the grassroots level, there are lots and lots of green projects waiting to be financed. francine: and is this for pollution? if you do not get the incentives for the government and the pboc, this came from who? ma: i would say it has top level in bottom level, they are joining forces to drive the whole change. the central government has repeatedly stating that green transformation of the economy is not a top priority. the grassroots level, the people , they eat food every day and drink water, and all of these people who are concerned about pollution. air pollution, water pollution, land pollution. the middle level is us.

within the government and within revolution, we have to make a change. francine: 30% growth is what you are estimating is a huge amount. to a lot of international investors look at your green bonds, or is it mainly for the domestic population? ma: the example i gave you in 2013 is a roughly 15% of the chinese green bottle issued overseas. so we are cleaning to offer -- we are leaning to offer those assets to others. pboc was issuing green bonds in europe. funds or is it pension banks? do you have a breakdown of where it is coming from? ma: the largest rest in pension, insurance, those of the primary sources of investors in green bonds. francine: can you give us an idea of the level of priority that green financing has for the authorities in china?

is it number two, number three, number five? space, it the finance becomes one of the top priorities. for example, and the latest document: 19 party congress, which has only a few incentives for finance, when incentives is green financing. francine: ma jun, thank you so much, the special advisor to the pboc, people's bank of china. joining us from paris today. our coverage will continue in paris tomorrow where we will have an exquisite interview with the bank of england governor mark carney, talking about some of the green initiatives and disclosures that he has been working on. look for that interview 5:30 a.m. in new york and 10:30 a.m. london time. this is bloomberg. ♪

♪ this is surveillance. coming up, is bloomberg a break with david westin, alix steel. alix is with us now. calling all things bitcoin with lots of angles. we're talking to the ceo of macro global advisors looking at volatility and the price. there is a lot

of speculative excess in the asset class and sees the same thing happening to bitcoin. we will talk about how you actually value that. we have pretty interesting calls on the show, guys. guy: looking forward to it. bitcoin conversation is continuing. i want to get back to equity markets. this is the truck that caught my eye earlier on. it is basically the out performance of growth versus value. wide as it hass been since the beginning of the bull market. professor, does this mean revert at this point? robert: i cannot see the diagram -- i cannot see the diagram. guy: in the oil market?

the oil market. robert: in the short run, these things can happen. it has a long history and grounded in human psychology. value. still bet on guy:the oil market. professor, one of the things they are watching carefully at the moment is what is going on at volatility. volatility continues to get crushed from foreign exchange volatility to the move index on treasuries, to the equity markets. do you see that -- how with the market react? how is the market set up for a doubling of vix on a single day? down and the vix doubled, will be the repercussions of that? robert: the vix reflects something underlined. you have to ask what the underlying is? why has it been so stable for such a long time? i don't think there is a good consensus on the determinations of physics.

-- determinations of the vix. determined over decades. but it has something to do with our emotions, are docents of -- our sense of the news. even of the stock market has been booming, that is not where the news is. bitcoin is extremely volatile as the stock party -- as the stock market is very placid. there is something about narratives, human focal points of attention that the sudden doubling of the vix would are movingt minds elsewhere, booming into a state worry about the state of the stock market. now we are in a complacent state. guy: i was fascinated by your with on what is happening active investing. that is why i asked the volatility question as well. you are not a fan of passive

investing in you made that pretty clear. do you think you will enter a phase in which we actually start to see active investing coming back, presuming that would require volatility to go higher? robert: yeah. i think those go hand-in-hand. think the low volatility -- people don't think they can pick stocks anymore. that anybody can pick stocks. but you have to reflect that the reason to the extent that is true, that is because there is a lot of active investors. mike: you're talking about human ing, butgy in investo how much is left for humans to do? robert: these of the problems of our time. my take on it is machines are replacing active investors. absolutely right. but that is going to take a long time to happen. all of these things are more slow and the imagine. at times like this when our imagination is running wild

about what technology will do, i think we still -- there is an advantage to having indexed-based investing based on rules. but people need to think about what these rules are in use human -- at this point in history, we still need human intelligence. [laughter] guy: professor, we will leave it there. we still need human intelligence. professor robert shiller, thank you very much indeed, joining us from yale university. mike will be filling in for tom on bloomberg radio. the conversation will continue. this is bloomberg. ♪

♪ . >> betting on bitcoin.

the trading triggered a valuey. 13 central banks meet. e.c.b. and b.o.e., a highlight. they tell you next year to brace for the steepest rate hike since 2006. a miracle, president trump said tax reform is special and will press congress to get it done. >> welcome this monday, december 11, i'm david along with alix steele. bitcoin day. alix: here's where we are 2 1/2 hours before the cash open here in the u.s. bitcoin futures are high but stable as we end the trading year over the next few weeks. the euro darr is firmer. who will win out, the fed or e.c.b.? where will the currency cross get traction from? and the spread a little lighter at 57 basis points between the two's and 107s as it continues to flatten and crude up by .