half-full.lass fed chair jay powell says the u.s. economy will rebound strongly in the second half of next year. of england the bank prepares for his final rate announcement of the year. policymakers are set to leave stimulus unchanged with a brexit deal yet to materialize. and bitcoin deal. worthsays it could be 400,000. good morning, everyone.

welcome to "bloomberg surveillance." i am francine lacqua here in london. let's get straight to the markets. a lot going on with bitcoin. it is interesting to hear that conversation with scarlet fu and tom keene on bitcoin, scott saying he sees a going to as much as 400,000, and we could go to that level because of policy, the fed could start printing money. hope of aaining on vaccine, the dollar strengthening, labeled currency manipulator's, and then overall, the pound actually climbs, with officials cautiously predicting a brexit deal within days. now let's get to the bloomberg first word news in london with leigh-ann gerrans. hi, leigh-ann. leigh-ann: good morning, francine. the u.k. and eu are heading for a final brexit battle over fishing rights. it is a sign the two sides have largely settled their differences over the other major obstacles to a trade agreement. officials are cautiously optimistic a deal could be reached within days, but are

still warning large differences remain and talks could fall apart. now, the eu is pushing to expedite the approval process for the covid-19 vaccine from pfizer and biontech. sources tell bloomberg the move could enable a roll-out on the continent before christmas. if the vaccine wins the backing of regulators on monday, the commission could sign off the same day, with the first shots being shipped on wednesday. european car sales have fallen 14%, as countries have imposed new restrictions to stem the surge of coronavirus. apart from a small gain back in september, sales have declined all year and are down 25% over the first 11 months. electric cars could be one sales for the very first time this quarter. global news, 24 hours a day, on air and at bloomberg @quicktake, powered by more than 2700 journalists and analysts in more than 120 countries.

i am leigh-ann gerrans. this is bloomberg. francine? francine: leigh-ann, thank you so much. now, we are just getting breaking out of nor just bank. interesting to see what they are doing. so the key rate is unchanged. the governor, andrew bailey, holding a decision. the only thing i would watch out for monetary policy, and it is monetary policy heavy today, as rumors or talks that the pboc could go at it alone, so tightening, and that could actually change the trajectory going forward. now, the fed staying the course on the u.s. economy until it sees massive changes.

the fed chair, jay powell, sounded the most optimistic he has been since the coronavirus crisis actually began. chair powell: it means we will be looking for employment to be substantially closer to assessments at its maximum level and inflation to be substantially lo closer to our 2% longer run go before we make adjustments to our purchases. >> that is a long time to be very accommodative, but that is basically the horizon that we are talking about here. now, everyone knows how uncertain everyone macroeconomic forecast can become a particularly in this sort of an environment, but nonetheless, it was quite an admission. ofir powell: any unwind these programs, or even stopping leaves the fed and the economy vulnerable, specifically of concern is the corporate bond purchase program. bill: we can buy more bonds, and we can buy longer maturity bonds, and that can put more dollar pressure along with interest rates, but that is not

really the problem facing the economy right now. a lower interest rate is not holding the economy back. meanwhile, they hope a spending legislation will pass by the end of the week. joining us today to talk monetary policies is paul donna graham, -- paul donovan, global chief economist at ubs, also the author of a book which came out earlier this year, and i have to say, paul, it is fantastic. we will get onto that in a second, but, paul, when you look at some of the concerns out there and what we heard from the fed chair yesterday, jay powell, it is a difficult task. did he achieve the right balance? we are here, we are supporting, but not everything will get better. did get and large, he the right message. the message, essentially, we

will continue to invite liquidity as long as the economy needs liquidity, and that is basically all the central bank can do in this situation. also, the fed was making clear this is not a fed problem, this is a fiscal problem. the u.s. government took money away from you, essentially, locking down the economy, and it is up to them to give it back. the other important point to take away is other people have been worried central banks are printing money, this will create inflation. welcome it will not create inflation. printing too much money will create inflation. now they say they will not print too much money, they will be guided by the liquidity needs of the economy, and they will match those needs, and that, i think emma a very reassuring signal. francine: paul, what kind of recovery are you expecting? the vaccines are starting to be rolled out. are we going to cad pan sustained recovery as soon -- to

and sustained recovery estimates we see herd immunity? paul: we have a fascinating situation from an economic view, this is a really exciting time, because we are seeing a very unusual cyclical recovery for a large part of the economy. a very rapid cyclical recovery for parts of the economy. then we have sectors of the economy that need to wait for the vaccine -- travel, entertainment, leisure -- need the vaccine in place to get normalization. and then we have got the accelerated structural changes of the economy, which, in the long term, are good, but create a lot of friction, a lot of distortions and problem in the short term. so we have got these three sources all coming together. i think the span of cyclical recovery is going to be very good. i think the vaccine is essential for a key part of the economy to get people back into planes and restaurants and so on and so forth. but then we are still going to

be left with the sectors of the economy that are in, frankly, terminal decline as a result of structural change, and that is where the real policy challenge is going to be, particularly later next year, i think. like ae: paul, there's million questions on different stories i need to ask you. the swissch it up to franc, the swiss national bank being labeled a currency manipulator. is there anything that they could have done not to get that label, and how problematic is that label? the issue here, of course, is you have got this very, very rigid formula for assessing what is a currency manipulator, and it does not involve a great deal of economics, frankly. i mean, it is all fairly ridiculous stuff. i do not think the snb could have done anything. you can try to game the system, if you are setting certain

parameters that cannot be moved, certain circumstances mean you cannot avoid those parameters. the swiss national bank of course has been presiding over the appreciating swiss franc, so it is not like, you know, dramatically reducing the value order to gainn huge, competitive advantage against the united states, and i am not sure the united states be quaking in its boots at the competitive challenge the swiss lender is offering. so i do not think there is a great deal else that the snb could have done in this situation, and i think we will have to see what the incoming administration's approach is going to be. of course with former fed chair being nominated treasury secretary, we do have a proper economist coming into run the treasury, and her view may be perhaps a little more grounded in economic realism. francine: are you expecting less of a hard line from treasury under biden? be surprised if

they were going to continue to be so aggressive. and of course circumstances will change as we move out of the pandemic, this eighth haven bid for the swiss franc will fade away -- safe haven bid for the swiss franc will fade away. you will see shifts in demand patterns, the u.s. trade provision is likely to adjust as its own domestic production comes back from the current shutdown. so there's lots of things going on here, which i think will change circumstances relatively quickly in the early part of next year. you soe: paul, thank much. paul donovan from ubs wealth management, we will talk about the bank of england, pboc, and i hope to get to stoxx shortly. hour, we later this talk about the state of european banking and his outlook for 2021. this is bloomberg. ♪

francine: vladimir putin, russia's president, at his year newsd of the conference. this is an annual event. we can see a bit more socially distant reporters attending inappropriately masked. have speaking engagements this year, a remote one, due to the pandemic. of course, journalists will be appearing together, as you can

see. what we are expecting, you know, or a lot of questions on foreign affairs, on joe biden, the new administration, and maybe russia's handling of the coronavirus, as new cases, i believe, have surpassed 25,000 today. bank of england making a final positive decision of the year today. the central bank is expected to see policy unchanged for now. still with us, paul donovan of ubs wealth management. brexit,en you look at what does it mean for negative rates in the u.k.? first of all, it is actually unclear whether we have a deal or not. how much damage or how much disruption will we see come january if there is no deal? think we will do get to a deal. we are now at the stage where prime minister johnson and president macron are slapping each other around the face with wet fish. i think it is unlikely that

fishing is going to stop a deal in the end. for oneor -- but if reason, we do not get a deal, there will be a lot of disruption. challenge for the medium term is, ok, if we do not have a deal on the first of january, when will we get a deal? because brexit goes on forever. we are just starting another round of negotiations with or without a deal. in either case, there is a limit do,hat the central bank can because the sort of disruption that we are talking about, with a deal, without a deal, is not something that is about liquidity in the system. down to dover go and start directing traffic. this is something the government has to solve. central banks don't really have that big a role in this situation, i don't think. francine: the governor is so

hands-on, you know, he would probably do that. when you look at, you know, what it means for pound, paul, we underestimating the longer-term consequences of what it does to debt and pound dynamics? paul: so i think the sterling is starting to reflect, more and more, the prospects of a deal. the prospects are basically looking for this. you would obviously see a lot more weakness in sterling in the event of no deal. clearly, the movements in sterling have a certain amount of impact in the short-term. not a huge amount. we do not tend to get a huge amount of import prices in the u.k., things like food prices and so on tend to be independent of sterling. over the longer-term, the further we move from brexit and the changes in the economy, the global economy, the less relevant this will all be -- the

global economy start to come through, the less relevant this will all be. it will be labor and so on, which will be driving the relative position of the u.k., rather than the argument about fishing quotas and small amounts of tariffs. francine: i want to talk to you about bitcoin, but before we get to that, paul, what do zero do from here? investors are finishing the year the most bullish toward the euro in more than seven years. when is this a problem for ecb? the euro isi mean, still undervalued as a currency, so in an absolute sense, this is hardly a strong currency choking off recovery in the euro zone. and a lot of eurozone traders ishin the euro zone, so it for a lot of the transactions that go on between the different countries of the euro area. the ecb has always signaled that it is more focused on the speed of the currency moves, so you get a very sudden moves in the currency, that can be quite

disruptive to businesses and because some short-term problems. so i think the ecb should be more focused on the speed. the level at these levels is absolutely not a problem. i mean, the euro has been undervalued for quite some time. it should not be a problem, but it is gradually drifting back in the direction of fair value. francine: paul, bitcoin started to record highs right now, i right now.0 scott minerd of guggenheim says it has way ways to go. here he had is -- here he is. scott: we made the decision to the coin when it was at $10 and -- when bitcoin was at 10,000. it is close to 20,000. amazing over a short period of time how big of a run-up we have had. but, having said that, our fundamental work shows that bitcoin should be worth about

$400,000. francine: paul, what is your take on bitcoin? paul: well, it is not a currency. it is not an asset. people are reluctant to go to casinos and gamble, so they are finding another asset. francine: meaning that 400,000 is crazy or you do not want to be invested in it? what are your clients asking you about bitcoin? paul: not very much, to be honest. a couple of years ago, there was a flurry of interest, but that has largely died away. the thing clearly is not a currency. it is not a stable store of value. you cannot reduce supply, which means it is subject about of, for lack of a better term, hydro inflation. it is not a currency. it is not an asset. it does not generate a future income stream, and having it in your portfolio does not achieve diversification of lower risk.

theoin just piles on portfolio, it does not reduce it. i do not think investors will look on this as anything other than speculation. and we have been in there in the past. we were member the dot-com bubble, the beanie baby bubble, you get these periods coming through. i narrative on social media and so on and so forth, but this is not a currency, and i do not think it is something that has a particularly good role in terms of an asset portfolio, because it is certainly not going to help your volatility. francine: paul, i wanted to get your take on a story. report, came out with a draghim rajan and mario talking about solvency.

paul: we do have corporate solvency, created by government action, and companies should not be affected by that. you need to keep going. at the same time, we are seeing structural change in the global economy, which means some business models that were quickly viable five years ago were not -- are not going to be viable in five years, so the trick is to distinguish between these two different groups about keeping solvent companies that are temporarily suffering, that have perfectly viable business models, those have got to be kept alive. but if you are a business that does not really have a future, if your business, you know, is having its model turned upside down, keeping that business alive is going to be very economically damaging, and you need to be instead focusing on how to transition workers in that business into parts of the economy that have a future.

so this is going to be a really difficult exercise over the next few years, but it always is. whenever we have these structural upheavals, these are always the challenges we face. much,ne: thank you so paul donovan, global chief economist at ubs wealth management. i want to get you back to talk about prejudice in economics. coming up, the chief executive anlamborghini sets optimistic note for the second half of 2021.

francine: this is "bloomberg surveillance." this is where bitcoin is. i have the interview that tom keene and scarlet fu did yesterday with scott minerd of guggenheim. it sent shockwaves across market participants. it was 10,000, then i went to 20,000, now it is 23,000, and in between those levels, scott minerd of guggenheim says he think that will go to 400,000. i think he was talking about possible scarcity and fed policies, that these will not stop people printing money. baning up, the ecb lifts its on dividends. this is bloomberg. ♪

francine: breaking news out of france. the french president, emmanuel

macron has coronavirus. he has tested positive for covid-19. i imagine like many leaders, they get tested periodically if not daily or at least weekly. this is in the context of infections rising in france. it was only two days ago that the lockdown was lifted, but mr. macron decided restaurants and bars would be closed and france during the christmas period. -- closed in france during the christmas period. we heard that the french president, emmanuel macron, has tested positive for covid-19. i imagine in the next 15 to 20 minutes, we will exactly find out and see which other world leaders, if any, he met. there was a euro group meeting, but with finance meters -- finance leaders meeting in brussels, we will see if he had been tested before then. i guess it is a matter of containment. we assume the president will self-isolate, but we also need to find out exactly who he has been meeting

and see what that means for a possible transfer of power. we are not there yet at all. speculation about what will happen. there are always contingency plans in place for things like this. emmanuel macron, positive for covid-19. we will bring you any breaking news as we have it. leigh-ann: to support the economy through the pandemic, germany with a record amount of debt next year, over 470 billion euros. the federal reserve is planning to keep supporting the economy well into the future, maintaining its massive asset purchase program until it sees progress on employment and prices.

speaking at yesterday's policy meeting, chairman jerome powell says he expects the economy to bounce back in the second half of 2021 but is warning the next few months will indeed be challenging. the u.k. and e.u. are heading for a final brexit battle over fishing rights. it is a sign the two sides have largely settled differences over the other major obstacles to a trade agreement. officials are cautiously optimistic a deal could be reached within days but are still warning large differences do remain, and talks could still fall apart. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm 120 countries, leigh-ann gerrans. this is number. francine: european banks underperformed after the ecb lifted its ban on dividends. >> we are enabling banks to

within a certain threshold, within a guardrail. and these change with respect to where we have been up to today. opening, supported by this advisory board, recognizing that we are moving slowly back to normal. there yet. are not francine: the move underscores the challenges for banks. the sector has lagged behind the broader market this year after lenders repeatedly warned about being unable to return cash to investors, risking cutting them off from capital markets. one of those demanding a return for payoffs was lorenzo bini .maghi from societe generale. are the conditions too stringent? well, it is a first step in the right direction.

not exactly what other supervisors have done. it is not clear why there is a different treatment, but things are slowing -- things are slowly going back to the malady, which to performg banks like any other sector during this crisis. i want to come back to dividends, but in the last five minutes, french president emmanuel macron has tested positive for covid-19. we will talk about who he has seen and what he has seen. what are your thoughts on covid right now? are we weeks away or months away from vaccinations reaching the critical mass of the population? what does it mean for the economy? are people relaxing too much, is there a danger of a third wave, or will 2021 just get better? difficult tos

debate. what we know is in the second half of the year, certainly the economy will get better. there is light at the end of the tunnel. there are a few months to aansition towards a return to more normal time, and we have to -- ifze in a way that is you shut down everything, when you open, people want to get out, so there is a risk of stop and go, if i can say so. that may hurt the economy. but the important thing is that we now are organizing ourselves to getting back to normality within a few months, and that is the key issue for the economy. francine: i know i am kind of jumping around to do with breaking news. as you go back to the dividend and the conditions, do you believe that european banks,

french banks such as yours, are at a disadvantage with u.k. banks, u.s. banks, and swiss banks, because of the dividend policy? well, the supervisor has not given reasons why the european rules, continental european rules are different from the u.k. or swiss or other rules. so banks have addressed this crisis from a good starting point. they have a lot of capital compared to the past. they are looking very carefully at all the impacts of the crisis , and the impacts of the interventions by the policy ,uthorities in particular regarding what has been provided to borrowers, and banks put the capital issues, if this capital is enumerated.

if they want to support the economy, they have to allow banks to have dividends. if they will not allow banks to distribute dividends, this will work against a sharper and quicker recovery. investorswhat are telling you about dividend policy? are waitingestors and seeing. they understand that this is the anst step and they expect adjustment to the other supervisors within the next few months, so that there is really no reason why europe would treat , dependingifferently on whether the put their money in banks in europe or outside europe. i think it is a transition. i expect everything to be leveled. within a few months.

francine: do you expect societe generale to pay dividends in the first nine months of 2021? lorenzo: we have a shareholder meeting in may and the board will make a proposal to shareholders consistent with the limitations of the ecb, and we will see where we have a second meeting during the second half -- in line when we with our dividend policy. francine: talk to me about the banking union. it does seem that we are due -- doing progress. progress has been slow for quite some time. how does angela merkel stepping down as chancellor next year affect that? -- weo: well, we have had made a further step forward, i think, with the adoption of the esm reform, which allows it to be used as a backstop. banks are continuing to

contribute to the single resolution fund even during the crisis, and they are paying even more because they share of their contribution depends on the size of the balance sheet and the size of the balance sheet is being affected by expansionary monetary policy. so the various feelers of the banking union are continuing to be built. a couplee are missing of key decisions. one is on the single insurance scheme for depositors, and the other issue is to eliminate national discretions, because there is still a lot of room for regulators to implement the european single rulebook in a different way. we have to move in that direction, and the other very important issue is the capital market union. whichat we have brexit,

will be outside the european union, we have to make sure that the european capital market is strengthened. this will be an important contribution also for banks and for the profitability of banks. aboutne: talking profitability, do you think the dividend ban has had a long-term impact on how investors view european banks? lorenzo: i hope not. if this was the case, then supervisors would ask themselves what impact they are making on decisions. i don't think investors will be looking at european banks differently than swiss banks. temporary,is a exceptional situation, that the supervisor would clarify. and i think they have said this is absolutely exceptional, and

until we go back to the normal rules concerning distributing dividends, which is basically the amount of capital that one has, i think the authorities will have a stress test in the coming months, so i don't expect that there is a long-lasting impact from these very exceptional situations. and i hope that supervisory clarify this quite quickly if there is. much,ne: thank you very lorenzo bini smaghi from societe generale stays with us. we also have breaking news, in the last six minutes, that we found out that french president emmanuel positive for covid-19. -- french president emmanuel macron has tested positive for covid-19. it is unclear exactly if he has any symptoms, because a lot of leaders get tested periodically, and i imagine in the next 15 or

20 minutes or so, we will also have a breakdown of who he has seen and who else in the government needs to self-isolate. we will have plenty more on this developing story, emmanuel macron testing positive for covid-19. this is bloomberg. ♪

francine: this is "bloomberg surveillance." big news, over the last 12 minutes or so, french president emmanuel macron has tested positive for covid-19. we also understand he was self-isolate for seven days but will continue working. what is interesting is that we from the a statement elysees palace that the president took a test as soon the first symptoms appeared.

we don't know exactly what symptoms macron has experienced, that he is self-isolating for seven days and will continue to work and take care of his activities at a distance. we will have a lot more on bitcoin, a lot more on of course the markets, the market looking at jay powell, get the bank of england later, and looking at news out of the pboc that they could actually tighten and go at it alone. plenty more on market stories coming up shortly, and this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. let's get more on this breaking news. the elysees palace says the french president, emmanuel macron, has tested positive for covid-19. .et's get the latest from paris what do we actually know? did the president experience symptoms? >> hi. we don't know much yet. we know the president did experience mild symptoms, according to an official at the elysees paris. he got tested as soon as he

experienced them and is going to self-isolate for at least a week and is probably going to get tested a second time. francine: do we know who he has seen in the last couple of days? has he had ministers meetings? is the cabinet also at risk? ania: he had a cabinet meeting yesterday. yesterday during a summit about green finance. he has been respecting social distancing measures. he has been wearing masks. when he saw him, they were both wearing masks, and he has been doing the same with most team members. we expect communication at any time detailing who else might be the first to self-isolate and test because they have been in

touch with the president. francine: thank you so much for the update. we are getting a couple of updates. we understand there was a working lunch with the portuguese prime minister wednesday. of course everybody knows that france has switched to a strict lockdown, to a curfew this week. let's go back to banking, a few weeks left of an unprecedented year. hold?ould 2021 still still with us is lorenzo bini smaghi of societe generale. it -- was pretty sanguine about the number of companies that could go bankrupt in 2021, which people could underestimate. what are your thoughts on that? are we underestimating the potential bloodbath for potential companies in the next six months? lorenzo: well, there is also the reason the g 30 reports on the possible impact of the price on bankruptcies, and calling

policymakers to be ready because it is clearly an environment with high uncertainty. how many companies will be able only through this crisis, with the need of liquidity assistance, and which ones will have to address solvency issues, and how will they address, and how is the regulation going to allow them to clean their balance sheets and to restructure and start again, and which ones will not be able to do that. so i think it is normal that themselvess prepare for outcomes that may be worse than expected. that they havean to change dramatically their policies -- their policy tools and instruments, but they have to think about it. that they surprised are all parties to be ready to react even more. so far the interventions have

been made to liquidity and helping banks to make sure that the liquidity was getting through to companies. but at the end, some may need more capital, and this is a capital market, which needs to get in at some point. francine: does it mean that banks will have to set aside more provisions? what does the measure of support actually stop? do you think societe generali will have to do that, or have you already made provision for that? lorenzo: actually, we are doing that. we also have very stringent accounting rules because the i fs, which actually is pushing atks to upfront provisions the start, so this year we will have a lot more provisions than last year. so it looks like -- i would not say everything is under control, but i would say the instruments to address a crisis like this one have been put in place, and

we are doing our part. when you look at consolidation amongst the banking sector in europe, societe generale was recently portrayed as a possible -- what is your reaction to that? well, i don't see that in the picture in banks right issuesnks addressing related to restructuring of the banking system. facing lower interest rates for a long period of time, so we just launched a major initiative to consolidate and merge our brand. we are restructuring our investment banking parts. other banks are doing similar things. consolidation has been

put forward for two or three years, and when this will happen, i think societe generali will -- francine: when you look at brexit, how different will financial centers look like 12 months from now, and do you worry that the u.s. will win business? lorenzo: fortunately, part of the business has been moved to the u.s., and this is not good for europe. part of the business has moved to continental europe. paris has benefited a lot from this. we will see more probably over the coming months, and in the end it will depend on how the collaboration with the authorities will work after brexit. there is a lot of dependence on the concept of equivalence and cooperation. they will depend on the authorities, on both sides of the channel, and hopefully there

will be convergence, and this convergence will avoid making issue shifts and creating problems of stability in the working of the financial system. francine: how significant do you see the hundreds of billions of assets being transferred from the u.k. to the e.u.? lorenzo: markets have coped relatively well, i would say, so far. i would expect that this trend will continue for some time, and we will see some stabilization in the course of 2021. on the assumption that nothing else will change. earlier, willaid we see tensions between regulators or divergences, then we could have additional flow to the continent which would not be very helpful, i think, for societe generale. much,ne: thank you so

lorenzo bini smaghi, chairman of societe generale, for a very wide-ranging interview. we are on top of the developing story, emmanuel macron, the french president, having tested positive for covid-19. the symptoms, we understand, are mild. all reporters in paris are continually calling his .esidence, the elysees palace the president was due to travel to lebanon next week. he did also meet with the portuguese prime minister for a working lunch on wednesday. macron tested positive after showing mild symptoms of the disease, and he will now self-isolate for seven days and continue to work, according to the elysees palace. we will have plenty more on this shortly. this is bloomberg. ♪

francine: glass half full. fed chair jay powell sees the u.s. economy performing strongly in the second half of next year but promises to keep supporting the economy. decision day on threadneedle street. the bank of england prepares for its final rate announcement of the year. policymakers are set to keep stimulus unchanged with a brexit deal yet to materialize. and bitcoin's rally. the cryptocurrency tops $20,000. scott minerd says it could be worth $400,000. good morning, everyone, and welcome to "bloomberg surveillance." i'm francine lacqua in london. tom keene in new york. in the last 20 minutes, we had huge news out of france. the story of the day, emmanuel macron testing positive for covid-19. yesterday he had a working lunch with the prime minister of portugal. we understand he also had various meetings with his cabinet but at all times the president -- or almost