Transcripts For BLOOMBERG Countdown 20151221

Look at oil prices. It has been one of the keys to working out what is happening in the markets at the moment. The oil route continues. I have a wti chart here. In the far righthand corner, we see 34. 59. Arab opeca meeting of members in cairo over the weekend. The Iraqi Oil Minister talking about how we do not need to be pessimistic about oil prices. A similar message coming from the qataris. Spain faces unchartered Political Uncertainty this morning after the Prime Minister lost his majority in an inconclusive election. Thety lost a third uncertainty may see spanish bonds open lower today. Brent crude fell to its lowest level since july 2000 or amid the speculation that supplies pricesacerbate a global are down 37 this year. Iraqs oil minister says oil well bounceback because the current price is hurting reducers. He did not say when that would happen but insisted that market fundamentals are strong. Toshiba slumped the most in seven months. The comments came after the nikkei said toshiba may post a 4 billion loss. the bond market in europe debt from livable is prime to excel once again as European Central bank extensive its unprecedented bond buying. Fox has become the most senior conservative mp to say he will campaign for britain to leave the eu. He says it is time for the u. K. To recover its birthright. For me, two things have to happen. A fundamental change in britains relationship with europe and the change in the direction of the European Union itself away from ever closer to union and tort independent and looser associations of sovereign states. That is clearly not going to happen. We all have to make up our minds and the next few months. The new star wars movie has smashed ticket sales records in north america. The seventh film in the star wars ranch has collected 238 million during the weekend topping the 208 million taken in june by jurassic world. The force is strong globally. Overseas was also brought in. We will be speaking to disney chairman and ceo rob eiger at 1 00 p. M. Here on bloomberg tv. Anna i do think we have reached peak star wars pun level. Lets check in on the market action. David, talk us through what is going on. Making wayr trade is for a slightly brighter picture. David absolutely. This is how asia looks. If you look at this across early on in our session, everything was red. In the last 30 minutes, this is down to japan coming into the lows of the day. Some of these big sectors have actually turned green but that means that most of stocks are still on the way down. Roughly, we are just about flat. Slightly higher yield on the regional benchmark. Asia is looking like this. Most markets higher. Most stocks are down. Japan, 4 10 of 1 . It was actually much worse than that earlier on. In the last 30 minutes, the japanese yen started to weaken against the u. S. Dollar. Ecodata, not much to note there. Nothing much is moving the markets at this point. Asia from you see some weakness across southeast asia. Shanghai is on its way up. 2 . The hang seng, up to tens of 1 . The big story on friday was all of this confusion on the boj. There is a flattening in the yield curve. Shorter term is on the way up. As you go further along, those yields are still on the way down. That is your market grass from asia. Fairly uneventful. Flat on the regional benchmark. Anna we have an update on what recordening in the asian south korea is nominating the new finance minister. A new finance minister in south korea is the top line there. Other new appointments as well as far as ministers go. A new trade minister as well. The new finance minister being picky. I have a three day chart of the korean won. We will keep an eye on all of these key Market Metrics with that in mind. Let us move back to your. Spain faces a period of Political Uncertainty. Has the firstster shot of forming a Coalition Government but lost one third of its seats. Head out to Tom Mackenzie. In madrid. How has the Political Landscape changed in spain . Party politics. This was talked about as the most uncertain election for spain since its return to democracy in 1978. It has lived up to that billing. The party of the Prime Minister, the Popular Party has come out with the most number of seats but they have lost their majority. The surprising thing that came through was the strength of the antiausterity vote. That came in third. In promarket party coming fourth. One of the new upstarts. Many thought they would be third or even second place. Of, we go days or weeks orchestrating among the parties as they try to form a government. Partyime minister and his have been given the first shot at that but it is not clear if they will be able to do that. A couple of different scenarios, possibly the Peoples Party and the socialist could form some sort of grand coalition. We spoke to the socialist last night, he said that was ruled out. Then coming you are the possible theles party and promarket, Smaller Party and that was a combination that was favored by investors that that is looking very difficult as well because they just do not have the numbers to make it. Another option is the socialist and the other party but they need to rely on regional votes. Out, thererio comes are a lot of differences that need to be ironed out among the parties. All of this uncertainty has significant market implications. The markets were relatively sanguine heading into this election. What will they do this morning . That is the key question. Ahead asncertainty these agreements are worked out here in madrid. Of investorsr saying already overnight that the inability to put two parties together and to reach something that looks solid and stable could put nervousness into the market. Let us get more now from the chief economist. She will be with us for the first hour. Good morning. Let us start with the subject of spain because even going into this, people said it looked uncertain and we could end up with the ruling party losing a lot of seats. That happened. With them having difficulty forming a government. It looks even more difficult than people suspected. The power is not with the Prime Minister to extend that star wars on. The most interesting element of s looks that the podemo like they could be part of the arithmetic in a new cap lycian government. That was a in a new Coalition Government. They were the wildcard. Not part of the populist platform. As they get into the compromise process. Not get a government of professional unions and that means the driving cap lists, the structural reformists are no longer there. Anna is that your assumption that we will not see the pt and the socialists socialist coming together in a grand deal. It seems unlikely. Politically, it does look like the likely option because the other options are not working out in terms of the numbers. What is clear from an economist point of view is that the end result here is going to be a structural reform program. Whatever uncomfortable combination. We will not get a government of national unity. It takes a great deal of Political Capital which usually comes with the Mainstream Party and its politics. That is exactly what we have seen disintegrate in europe this year. The rise of nationalism. And fringe parties. Have come to the four. We saw it in greece, portugal, and in france. And the rise of nationalist Movement Even here in the u k in terms of popular support. The capitalists desiring to read patriot repatriot. The launch of the campaign. Finally, we have got the new inapitalists growth and high unemployment. The structural reform. From the markets skeptical reaction to the ecb announcement come money printing alone is not enough. Announcement, money printing alone is not enough. From howking of yields our markets going to react . The spanish elections producing something even more uncertain than we thought. Yields may go higher on nervousness of investors in spain. On the other hand, does it change the debate around the ecb, as it have input does it have implications there . Risk that the Political Risk is being underpriced. Because we have a combination of supply, and the European Central bank. If it was not for the ecb buyers of last resort function, the stress we put on the eu two would probably some of the smaller nations like greece. It is the lesser of two evils. Withes mean that nationalism rising and fragmentation on the rise and it being aggravated by the gdp has beens so disappointing. We are holding less returns and reward for the risk. Anna thank you very much. Here is your day ahead. German Producer Prices at 7 00 a. M. U. K. Time. And brazils details are due to be released. Chicagos federal National Activity index. Crude hits andnt , some optimism suggesting that prices are expected to rise. When could we see a rebound . More on that, coming up next. Anna welcome back, you are watching countdown. Let us bring you uptodate with some breaking news. Toshiba, the Japanese Business that makes everything from laptops to nuclear business, giving an update on their losses. Of ¥550 billion. That looks slightly higher than what had been suggested by newspaper reports. Shares are down more than 9 . This is a three day chart that shows the fall in the share prices. This statement coming at the end of the trading day. They havey is saying a ¥550 billion loss. Laos, sales of assets. All of this going back to the accounting scandal. , very diverse, is facing an uphill structure. You can see the reaction happening to the shares earlier today. Bloomberg sources say chemchina has upped its bid for the biggest pesticide maker. 472 per share on syngentas last Closing Price and about 5 higher than the previous offer. Beit goes through, it would the biggest acquisition by a chinese company. Comcast the u. S. Firm is considering an 11 for thepound in bid u. K. Broadcast business. Bhp and have been suspended by a judge following last month collapse of the dam. 60 people were killed and hundreds more left homeless in the disaster. The brazilian government is seeking 5 billion in damages. Westfield has sold five Shopping Mall in the u. S. Sunday hyundai is poised to to sell less than analysts said an unlikely demand from china continues to weaken. Head to the bloomberg terminal for more on the stories. Anna brent group has fallen to more than an decade. The drop comes amid speculations that era producers will exacerbate the supply glut. Elliott joins us now. Arab producers meeting in cairo did not do much to suggest that prices were set to recover. They said quite a lot. The qat we had it from ari oil minister that we should not be too pessimistic. Actionse one thing and are quite another and there are not any actions being taken by middle east producers. Era producers met in cairo over the weekend. Nothing is suggesting that there is any plan to reduce output to try to reduce the supply glut that is out there and thereby tried to help prices rise. They are at their lowest level in 11 years. There is some indication that some in the middle east might be throwing in the towel when it comes to trying to get prices to rise. The minister also said they were focused on cutting costs to it and not to leave themselves. Rather than hoping for higher prices at the sales and. Anna in the u. S. , producers have been adding to the supply got supply glut their. There. Elliott they were trying to shake out higher cost to producers. To suggestvidence that was working. There was a peak of something diploide than 1500 rigs in the United States and that declined precipitously along with oil prices. Later data showed that in the u. S. , they are adding more rigs. Rigs in theover 540 United States. Coupled with that, the u. S. Stockpiles are of other fiveyear average. On friday, the u. S. Lifting its 40 year moratorium on oil exports. Throw that all in together and you have the ingredients to suggest that there is no reason to believe that oil prices will be rising anytime soon. They may even decline further as that supply glut gets bigger. Anna thank you. Opecs refusal to cut Oil Production and curb the global oversupply has been to squeeze rivals. Russia is not succumbing. The second Largest Oil Producer and is pumping at near record levels. No one really saw rush up behaving in the way that russia has behaved in 2050. No one expected them to increase output. What does that tell us about 2016 . Analysts forecasting russian production would fall this year not because of any decision being taken by the russian government but because the industry is very heavily reliant asia and on fields in they felt that the industry would not be able to invest. It is not happened. We have had new post soviet records in four much of this year. It is noticeable that opinions for 2016 are changing. Two months ago, the International Energy agency was forecasting russian production would fall by close to 100,000 barrels per day. Last month, they forecasted that it would remain flat. Two weeks ago, forecast that russian output would grow in 2016 by a small amount but it is a big change room. Big players in the oil market trying to play for oil shares. That was a big theme in 2015. The glut was a result. Does anything change that dynamic as we go into next year . Observe striking to that oil has been supplyside structure story. It is a market story. Expectations are that bined with Dollar Strength it depresses oil such as oversupply in emerging markets in terms of industrial capacity and deflationary pressures keeping the ecb money pumping. Is that through the positive reaction function, week oil becomes its own driver of deflationary expectation. About thisof fear location of Market Pricing way beyond oil. Anna it does seem to permeate almost every conversation. When you look at what opec has been doing, would you say that their strategy of playing for market share has failed when you see what russia has been doing and the u. S. . Ian it is an easy market to make. Here we are, more than a year on, prices down at 11 year lows. That does not seem like success. One has to look at what the alternative was. Particularly, what the alternative was for saudi arabia and the other arab Oil Producers. As they saw it, the only alternative was to cut production to maintain prices which would have created the another bigto allow year of growth in u. S. Production. They get cut further and further. We have to remember that the that for the last three years, u. S. Reduction was growing at over a Million Barrels a day. Next, Money Managers are having a hard time picking winners. We will take you through why. That is coming up next. Anna welcome back, this is countdown. Let us get the bloomberg first word. Toshiba has forecast a record net loss of 4. 5 billion. The restructuring of its Lifestyle Division affecting 6800 jobs. Shares slumped ahead of that and arement are and down about 60 for the year. Spain faces and uncertainty in its politics. The Prime Minister lost a third of its lawmakers even at it as it be out the socialist. The result may see Spanish Government bonds open lower today. Brent crude has fallen to its est levels since july 2004 a record glut as they continue to fight for market share. Prices are down 30 already 7 this year. Directs oil minister has said oil will bounce back because the current prices are hurting current producers. He did not say when that would happen but insists that market fundamentals are strong. Money managers think diving is the way to go in 2060. Pimco and prudential say debt from the peripheral, less credit worthy countries like portugal and greece. They are timed to excel once again. As the ecb extends its unprecedented want to buy. Fox has become the was conservative mp to say that he will campaign for the u. K. To leave the eu. It is time for the u. K. To recover its birthright. A fundamental change and britains relationship with the European Union. More importantly, the change in the direction for the European Union itself away from the concept of ever closing union and towards a looser association of sovereign states. That is clearly not going to happen. We all have to make up our own minds in the next few months. For me, it is clear the direction i think we should take as a country. The new star wars movie has smashed ticket sales records in north america. The seventh film in the Star Wars Franchise collected 238 million during the weekend theing the top topping 208 Million Dollars taken in june by jurassic world. Further 279 million was brought in from overseas, and that was without china. We will be speaking to bob iger at 1 00 p. M. London time here on bloomberg tv. Story onead in that the terminal that there are at least come up or there could be five further star wars films already in the mix. Amazing. No escape. Me to see. E for i have not seen a single one yet. Anna you have some work to do. The pacifick at index at the moment, it is pretty flat. That is a benchmark for asia. You have to deal with the. Ational benchmark indexes you see the chinese tax are of the shanghai composite is up 1. 8 , the hang seng is up 3 10 of 1 . The shanghai composite has weather to a threeweek high. Investors are betting that the government will accelerate reform of state owned enterprises. Youre seeing japanese stocks trading lower. The nikkei is down by 4 10 of 1 . Cancer 1 . T buy for a stronger yen. To see but dragging down the topics as the worst performer on there. The biggest loser tumbles on that report that it will post a record loss. The equity markets across asia, and how they are performing. A mixed picture. A divide between china and japan. There is a feeling that attention is turning back to Global Growth after the hype rate rise. Ed and the now, there is more concern about Global Growth money is moving into gold, a safe haven asset. Commodities are still underperforming. Copper is down. Brent crude has fallen to a 2004 low coming in at 86 a barrel. Wti at 34 a barrel on speculation that suppliers from the middle east to the u. S. Will exacerbate that lets. Iraqi foreign minister said that those prices would rise but not when. Is ending up much rosier for shorts than how it started. Short sellers may not be household names and they have sometimes been vilified as outlaws. For the first time, they are being portrayed as the good guys in the new film, the big short. The whole World Economy may collapse. Bank senses the greed. No one is paying attention. The banks got greedy. We can profit off of their stupidity. Fraud is never a good word. Ed, we are still competing with the sound. Is this year turning out to be ok for shorts . Market is year bull coming to an end. The first time s p 500 is on track for its first down year since the 2008 financial crisis which is perfect for short sellers. Anyone with a twitter at cap can be an armchair analyst and see stocks humbling. It is not stocks tumbling. Anna what about the detractors . This should not be allowed to happen according to them. It is not ethical. Do you draw a distinction between those who do this professionally and those who do it from their armchair . It is not easy. Then bill ackman would call Herbalife A Ponzi scheme. The stock went up 44 since he first said that. Wandorts have some magic over the market i would like to borrow that for a day. It is not that easy. The vilification i do not think is fair. Not only are they canaries in the coal mine but they are the garbage men of the market taking out the litter and that trash. Anna most recently, quite a high profile of business in france. Casinos. Happy and iss not trying to defend themselves and take action against him. If youre going to make these public statements about a company, you have to make sure you are right. The casino share price happen just this week. He does not have a magic wand. The market could have ignored him. Had some duds in the past. He is usually very good and knows what he is talking about and that is what investors were responding to. Anna a lot depends on the credibility of the voice. Thanks for joining us. Lena, let us talk about the post fed rate hike that we live in. The first type. You call this a triumph of policy communication. That seemed to be a lot of the commentary that i was hearing. That this was a well telegraphed notification. No one was caught off guard. Some days later, do you still think that . Picture marketg economics perspective, whether markets market are so sensitive to any momentum changes. If i could step back and look at the market environment now and compare it to where we have started in 2008. 180 degrees. We have gone from one extreme to another. Liquidity. Oil priceswe had over 140 a barrel and now we have oil prices below 40 a barrel. We have moved into an environment that is much better control. To medicationds was received by the market is a reflection that Central Banks are hedging risks in the market. It is not a riskfree environment. The markets are preparing now to discount is another potential financial shock that could have a discount anna where do you see that coming from . Highyield credit or somewhere else . Ena what we have seen in the last year is that markets have long risk and short volatility and everyone is looking to hedge at the same time. We have periodic air bursting. We started with investmentgrade bond yields. Then come we got the emerging market turmoil. Etfs. Have advances on all of this is a reminder that in the last couple of days markets are looking back at the evaluations sing we do not like emerging markets here and we do not like commodities there. Yuan one fluctuations fluctuations. Is that what you are asking for . Hills is most famous as a largehplace of company known as bhp billiton. Broken hills is also changing. It is going green with the second largest solar farm in australia. Bloomberg has gone for a look around. 52 megawatt project. Second largest project in australia. One of the largest projects in the southern hemisphere. It took about 912 months to construct. 450roject is valued at million. It has a long History Associated with mining. As a function of what has been happening in that industry, they have been hearing down in Job Opportunities in Community Growth and so this is a fantastic opportunity for broken hill to really embrace a new adustry and what we think is new and exciting source of job creation. 100200ect had about jobs created during the construction. As the construction winds down from the Operational Presence will be less. Since the change in leadership at the federal government level, we have started to see a proactive reach out from an f agencies than previously. We are well supported. If you look at all of the factors that you need for a largescale the blame it in all still you, we are number two globally. There are reasons why solar should be intervening. It has been a function of policy uncertainty. We are confident that with the right policy and private sector commitment that we are now seeing, largescale solar will be off to the races in australia. Anna up next, uncertainty reigns in spain. Analysisnister is next. Anna welcome back, this is countdown. Let us get to bloombergs nest flesh. Bloomberg sosas sake bloomberg sources say chemchina syngentas last Closing Price and about 5 higher than the previous offer. If it goes through it will be the biggest acquisition by a chinese company. Itbast has met with executives for preliminary talks. The u. S. Firm is considering an 11 billion pound bid for the british broadcaster. Than 20 thismore year. Voters in spain have deserted the two main parties leaving the country with no clear government. Peoples ministers party claimed the most seats. It confirms the fragmentation of the politics. We have live pictures coming in from las vegas. From the city where one person has been killed and six left in Critical Condition after a car crashed into pedestrians on the sidewalk. It was in the northbound lane. Broadersee if it has significance. In the spanish political story. Let us return to that subject now. Let us get further analysis. David, great to see you. Does this outcome looked even more uncertain than you thought it would be on friday . David yes. What we have now is effectively with a rights block including the Peoples Party and a centerleft bloc with and it united left guard they have the same number of seats and neither of them is sufficient to win a majority. It is effectively a deadlock. The support of a leftwing coalition as possible. Where will will the regional parties come into play . Will we see something more left leaning or rightleaning . David we cant say that. We are nowhere close to having a government. At the moment come it is looking more difficult for the rightwing side to get there. Allies they have fewer among the smaller parties. Earlier this hour, you were saying that whichever way it fall stomach it looks like this will whichever way it falls, it looks like it will not be as free market friendly. Lena Political Uncertainty has been a nagging reoccurrence. Case now is the result of Political Risk incapacitating the ecb in the case of greece. Spain is at the other end of the credit spectrum. With Political Risk, creating more uncertainty. The worry is we are getting more fundamental risk for less rewards. Are in the world of liquidity glut. While there may be some trading today, thehe markets longterm investment prospect for europe and this is where the growth the story has to come from. Anna antiestablishment parties on the rise. Voterssionment among the with the same old options. We have seen that played out in europe and further afield. David it is true to an extent. The underlying narrative to that countries,a lot of the antiestablishment countries have done pretty well but they have not managed to displace the traditional parties totally out of first place or second place. What we are left with is a situation that is uncertain. Spain this weekend is the best example yet. Anna for all of the problems that spat economy the spanish economy have, there is something of a recovery story taking place. David effectively, it has polarized the electorate even more. The people who thought we are seeing a recovery. Downloyment is quite a bit but it is still high. But also a familiar narrative about how the recovery is not being felt on the streets and that has played into the podemos rise. It is the tale of two recoveries that we have seen across europe. Anna what about the catalan question. The socialists are more able to do a deal with the catalan leadership. Favors they are more in he has made play at keeping spain together. This is a complex picture. If we look at the come awn of the parties left leaning cut salon this adds to the deadlock and it is difficult for anyone to make deals with either of those parties at the moment given that their policy number one is going to be a separation referendum and the main two ies, anna where are we going to see reforms taking place . Where will we see fiscal stimulus coming in . In danger of expecting too much from central bankers are not enough from governments . Lena the limitations of Central Banks. We have even more negative rates. We have qe. We are now going to get qe for even longer. Seen there is a limit as to how much inflation we can import. It has to come from organic, domestic growth. With christmas just a few days away, we are in for mince pies season. Where can you find the best ones in london . We have teamed up with the executive chef at the ritz for a taste test. Im here at the ritz in london for the annual bloomberg high tasting. Pie tasting. I love mince pies. Welcome to the ritz. I am a bit of a traditionalist. I look for things that have a beautiful taste and a wonderful filling. Not too sweet. That is the secret. It is buttery. It has good texture. Six out of 10. Cinnamon is very prominent. It is a different way of looking at mens pie. In every way. It is very nice. I would Say Something like an eight. That is why it is so different. The fruit looks a little bit like a puree. Fruit is underneath. I am not happy with the filling itself. It is very sweet. Acidic, citrict acid background taste. Im afraid i would give that a 3. 5. Mistaking which one this is but the taste is very crumbly. You can see the crumbs there. I think that is a very good sign. Honestly, a lovely flavor. Do you think i should try it . Without a doubt. Sweet but not over suites. A nine out of 10. Anna sprinkles on a mince pie. 6 56 a. M. In london. We will take a short break on countdown. The spanish Prime Minister is scrambling to form a government. We are keeping an eye on the bond market. What kind of reaction might we see . We will see if there is any reaction. We will see if the yields get a little higher as we enter todays trading day. Anna uncertainty reigns in spain. We will be on the lookout for the bond Market Reaction. Trent at brent at a sevenyear low. Toshiba troubles. Shares plunge as they forecast a fullyear loss of more than 4. 5 again dollars. Star was action at the box office. Disneyrg will speak to ceo bob iger later today. Welcome to the program, i am anna edwards. The picture of brent oil, sliding to an 11 year low over the last session. 36. 39 on brent right now. A meeting of the arab opec countries in cairo over the weekend. We see the oil price continuing to trend the lower and this mornings training session. The Iraqi Oil Minister saying they are set to increase. Any tot any kind of timescale. Lets have a quick look at the futures to see where they are opening up. It looks as if we are going to have a slightly negative start to the european trading session. We will be lower at the start of the european trading day. Skip the first word news with nejra cehic. Nejra spain faces uncertainty yfter Prime Minister reportedl lost his majority and an election. Even if it beats out the socialist and earns the most votes. We are monitoring bonds at the open. Brent crude has fallen to the open intraday level since july 2004. That is amid speculation that supplies exacerbate a record let. Prices are down. Set for a Third Straight annual loss. Iraqs oil minister says oil will bounce back because the current price is hurting producers. He did i say when that will happen. Toshiba has forecast a record fullyear loss of 4. 5 billion. It announced a restructuring of its Lifestyle Division. Toshiba shares slumped ahead of that announcement. Liam fox has become the most senior conservative mp that says britain topaign for leave the eu. He says it is time for the it is time for britain to recover its birthright. Britains a change in change a change in britains relationship with the European Union. Look towards a much more independent association of sovereign states. That is not going to happen. We have to make up our minds possibly in the next few months. As for me, it is clear the direction i think we should take the country. Nejra the new star wars movie has smashed the smashed smashed ticket sales. It collected 2030 8 million. Collected 238 million over the weekend. In china, it is due to open january 9. We will be speaking with bob iger here on bloomberg tv. For more on the stories and others, had to bloomberg. Com. Anna i saw you in the audience, nejra cehic, thank you very much. Lisicki and other markets in asia. Sessionspart of the session seems to be quite negative. Ourngs turn around things turn around at the end of the day . Youre right. When we got early on was continued strength in the japanese currency. Some of these stocks in japan opened up, took on where everything left off on friday. There was a continuation for the most part of our trading session. 90 minutes back, thanks started to pick up. Weaken weekend the yen ened. We are just about flat. Youve got the bank overages. You have these big commodity producers in australia. The rest, mild losses. You everything together, about. 1 . This is a broad look across asiapacific. Most markets were fairly substantially in the red midday, close higher. The bestperforming markets right now, shanghai composite. There is speculation that we may get a breakthrough. Some tangible market moving news when it comes to the reforms. That contains is to be we did see money flow into the likes of consumer discretionary. That market is up 2 at the close. 25 . Eng is up. E skip through brent where is my chinese currency here . The chinese off currency. Back to you. Anna david, thank you. Joining us from hong kong. Ofin faces a period Political Uncertainty. The jobles party has of these are two new parties that took 100 seats between them. Lets got to Tom Mackenzie. Tom, how tom, good to see you. How are markets reacting . The bond markets are the ones to watch because they looked pretty relaxed leading up to this election, despite all of the noise. Yields on the 10 year sovereign spanish around 1. 7 at the end of the day on friday viewed they on friday. Story,ack to the yield up more than 7 at the height of the crisis. They are much lower now. What plays out today is going to be crucial. Clearly investors had hoped for the party of ram boy now it is looking increasingly unlikely. Possible new elections have not been taken off the table here that could happen in 2016. Oy might position himself as a force of stability. Anna as you were speaking, we got some movement on the spanish markets. The spanish 10 year bond falling. The yields rising to 1. 74 . Four basis points. The reaction the spanish 10 year bond. Talk is 30 broader picture, the economic challenges talk us through the broader picture here, the economic challenges. Out, int to point portugal, when the socialist stand, the volatility in the box set off their. It was only shortlived. The economy is picking up. The fastestgrowing economy in the eurozone at the moment. That is expected to continue. Jobs are a huge challenge, 21 unemployment. That is come down from the height of 27 . 90 of new jobs are being added under the Prime Minister of the Prime Minister ship of mario rajoy. People not able to borrow and houses. It the budget deficit is being kept under some control. The European Commission is concerned about 2016s budget. You have the effect the ecb has been buying around 50 billion euros worth of spanish sovereign debt. That helps. The Lower Oil Price as well. People have been saying the growth is picking up and is eu qeto continue, program. That has helped. There are major structural reforms, particularly on the unemployment. Anna . Anna Tom Mackenzie live in madrid did what seems to be a complicated picture. Lets discuss it with kevin lilley. As now. Kevin, good morning. Thanks for coming in this monday morning. I little bit of reaction in the bond markets. A little bit of reaction in the bond markets. Do you think markets will take this uncertainty in stride . Or will markets become nervous . Kevin it depends on how long it will last four. If this had happened to her to use ago, the market would have been off 50 aces points. It shows how much has changed in europe. We have the experience of greece and the turmoil. We had the reaction of the European Central bank of the last few years which is underpinning the European Equity markets. The Market Reaction is understandable. Looking back over the last two years, investing in peripheral bond markets in europe, it looked like a Winning Strategy in 2015. If you look back over the last five or four years, european bond markets certainly for the returns on the greek bond markets. Does that look to be a trend that will continue . Kevin go on the bond market side, not my area of expertise. Side, what we have to watch is what happens to u. S. Treasury yields. Hopefully on a rising track because of the reactions of the fed which will then bring up the european bond yields with them. That is positive for European Equity markets which is my area, because we need that. Europe,re improving in economies are recovering. The stock market should recover with that. Anna the distinction between europe and the u. S. Lots of people have talked about playing at the eurozone a recovery. That is your plate. Kevin took the european economy is way below what it was in 2007. Economy the european is way below what it was in 2007. That is where the opportunity lies. Anna that is some of the move we might see from european governments . With the elections on the horizon, it could be interesting going in. Kevin kelly have major elections coming up in 2017. In 2000 kevin cole we have the benefits of the Lower Oil Prices and those three areas will continue into 2016. Plus you get the gifting size ahead of the election. On top of that, you get an area of stimulus, particularly in countries like germany, where you have had migration into germany from wartorn middle east. The economy will be boosted as as a result of that. Boosted as a result of that. They need to be fed, watered, housed. 64, it was her to contribute to the economy going forward. A singular boost to the german economy. Anna the positives that you point out, you think outweigh the negatives . Kevin the negatives in a sense it and that they are drawing up finances. Germans finances are very strong. They have a surplus. That is going to be a lot of public spending. Anna kevin, thank you. Next, oil bears. Too soon as brent hits and 11 year low. What is next for crude. We will discuss. Anna welcome back, you are watching countdown. Lets get to bloombergs business flash with anna. Has upped its bid for the was biggest pesticide maker, syngenta. That is a 26 premium on syngentas last Closing Price. If it goes to, it will be the biggest acquisition by a chinese company. Comcast have met i. T. Executives for talks, that is according to the uks mail. It they are considering an 11 pound bid itbs shares price is up this year. Hyundai may miss estimates for the First Time Since the Global Financial crisis. It is expected to sell less this year. Thatsts we surveyed said is unlikely as data from china continues to weaken. Has . Anna brent crude fallen to its lowest level in a decade. Error producers could exacerbate the supply got arab producers could exacerbate supply glut. They did not do they did not do much to suggest that prices could recover. They did, they said we should not be pessimistic about oil prices and where they are. The iraqi oil mr. Saying oil prices will rise from the current low levels. Words are one thing. Actions are another good there were no moves to take any action actions are one thing. There were no moves to take any action. There is some suggestions are they may bethat in. Wing the talent towel they are focusing on cutting costs. That could be one way these Oil Producers have been suffering so much as a result of these declining prices. Little managed to get a bit more money out of every barrel they produce, rather than rely on rising prices. Anna u. S. Produces have been adding to the supply glut. Part of the reason saudi arabia started opening those figures to produce as much oil as they could was to shake out higher cost producers in the United States. There was evidence that was working. Rigs in the United States have been idled. Reached gasquet came as an uptick in a surprise. Are more than 540 rigs in the u. S. If you couple that news with the fact that Oil Stockpiles in the u. S. Are at a fiveyear average. Passed legislation on friday lifting its 50 year moratorium on oil exports. The barrel should continue to see a decline in prices. Maybe theres nothing out there that suggests there is would be some thing to make those prices rise. Anna . Anna Elliott Gotkine joining us there. The oversupply has continued to squeeze rivals. Producerd largest oil is pumping at near record levels. We are joined by kevin lilley. Julian, lets come to you on a russian story. Maintain . Julian indeed. The consensus is that they cannot continue to grow as strongly as it did this year, but we are seeing a gradual shift in next dictation. As recently as two months ago, the agency was forecasting that russian output would drop in 2016. Now, in his latest reported forecasting, it is reporting an increase. It has to be said that it was also at this time last year, forecasting quite a big drop in 2015. It is evolving its view as we go forward. Anna kevin, what is your best Case Scenario . The world that you invest in . You assume it will stay roughly where it is right now . We see valuations is being priced very low levels. In previous crises, as far as expectations for oil prices concerned, it rises slightly from here. It is hard to judge when production is at record levels. You wont see it falling too much more. Do you think opec looks at the strategy put in place . They went out for market share and they continue to hold market share. It has taken its toll on the price. That was the intention, wasnt it . That was very much the saudi policy. On the way that opec could survive in the lower in the longer term was to see a lower price of oil that would not take out the high cost producers but slow down the rate of growth from higher cost production. U. S. Output was growing over one Million Barrels a day every year since 2012. They had to slow that down. They have done it. What hasnt happened is it has not gone into reverse. We have a large amount of oil in storage. Too much still production. Possession is still running ahead of demand. It has not helped by this very mild winter we are having. Certainly the first part. It is not just europe, this is across north america, asia. Temperatures in japan and south at decadeat least highs. Anna what has been the motivation for them keeping up their production . Is it for market share . Are they insulated . This desire to be one of the big dogs. It doesnt want to take the political decision to step back. It is difficult from a technical point of view to shut in a well in west siberia and staff it up again. A lot of workcing with the oil. If shutdown, you may never be of to started again. If you shut it down, you may never the able to start it up again. The Oil Companies have been protected of the falling oil prices, because most of their costs are in rubles. Their export oil is in dollars. The value of the ruble has fallen. More rubles to spend. Also because of the taxation system. It is really government that is taking the hit in russia on the falling prices, rather than the prices. Anna julian, thank you for joining us. , European Equity fund fund manager, thank you it to you as well. It is time to look at what is happening at the spanish bond market. We action to the uncertainty surrounding the spanish selecting spanish election. 1. 79 is what the spanish 10 year bond is currently yielding. We have seen in the first drop in the bond price in four days. Interesting to keep an eye on this as it seems the Spanish Government tries to pull together some kind of coalition. Many, this is going into the weekends election looks difficult. How long it takes. 30 minutes away from the start of the european trading day. We will put you into on the move gear. Every thing you need to know for the start of the trading day. When youre on hold, your business is on hold. Thats why comcast business doesnt leave you there. When you call, a Small Business expert will answer you in about 30 seconds. No annoying hold music. Just a real person, real fast. Whenever you need them. So your business can get back to business. Sounds like my rides ready. Dont get stuck on hold. Reach an expert fast. Comcast business. Built for business. To discover the best shows friends together and movies with xfinitys winter watchlist. Later on, well conspire as we dream by the fire a beautiful sight, were happy tonight watching in a winter watchlist land, watching in a winter watchlist land xfinitys winter watchlist. Watch now with xfinity on demand your home for the best entertainment this holiday season. Francine welcome to on the move. We are counting down to the european open. I am anna edwards. Here is what we are watching. , oil surging and oil searching for a bottom and doesnt find it. Uncertainty triumphs in spain. Rajoy loses his majority. Toshiba tumbles. The Japanese Firm forecasts record loss. 10 shares fall 10 . Lets consider where the markets might be heading. Handover from the European Equity session was a little bit mixed. Lower and japanese markets. Higher in chinese markets. Things are getting a little bit brighter a little bit better. It is a seem like the european trading day is going to be lower lease from the ftse 100. They look a little more neutral. Bresky to bloombergs first word news, nejra cehic is here. Nejra spain faces Political Uncertainty after Prime Minister mariano malloy mariano roy lost his majority. Spanish Government Bonds are sliding in early trading this morning. Brent crude has followed to its lowest since july 20,004. Amidst the galatians that supplies will amid speculation that supplies will fall. Toshiba has forecast a record for you not loss of open 5 billion. They announced plans to cut 10,600 jobs in its lifestyle and corporate divisions. They are down around 50 this year. The news start test the new star wars movie has smashed ticket sales in north america. Millionected 238 during the weekend. Jurassic world. The force is strong globally. The movie broaden 2070 9 million overseas. The movie brought in 279 million overseas. That is your bloomberg first word news. For more on the stores, head to number terminal and bloomberg. Com. Anna lets check in on some of the Asset Classes you need to keep an eye on. 3437. Is at a move lower. The brent crude price 36. 28. Continue that story of all of weaker oil prices. Eurodollar, 1. 08. , 1. 8 . Nish 10 year bond this is all to do with the uncertainties surrounding the result of the spanish election. Lets turn to spain. Spain faces a. Offaces a period uncertainty. Voice people party has the first shot at reforming the government. Rajoys people party has the first shot at reforming the government. Uncertainty being reflected in that bond yield. Expectedarkets had that uptick in the spanish 10 year yield. Investors have been hoping for his accommodation in the new government of the people and the partyrket put them most. Podemos party the political arithmetic in spain is going to be a big struggle. Apple investors are good looking at the ecb help spain with this. They borrowed around 50 billion euros up until around november 30. The uncertainty and the trading over the next few days that investors are going to watch. Whatever government is formed, it is going to be the physical policy that people are going to be reacting to. Anna what are the economic challenges that a new Spanish Government will face . Unemployment is still a big problem. A hugeemployment is problem it seems for spain. 21 unemployment at the moment. Sat down over the last few years. The vast majority are shortterm contractors for less than a week. That is a challenge for any new government. We know growth is expected to top 3 by the end of this year. Most economies expect a growth cycle for spain. Any new government could benefit from that. We know the budget deficit has been under some kind of control over European Commission. It is a, manic [indiscernible] overruledats rain around 3n 2007 trillion euros. Significant challenges for any new government. As we said, we dont know what any government is going to look like. It could turn out to be a the markets are not going to like them very much. There is a possibility of another election. More uncertainty. Anna . Anna a defense on how long the uncertainty last. Lots of possibilities. Bill. Bring in local to the program. How focused are you on the spanish election . It seems things look more awkward than last week. Leslie people were saying this is going to be on uncertain election. Last week people were saying this was going to be an uncertain election. It leaves us in a situation where we have more proof that europes National Governments are going to be increasingly moldable to pressure movements. The destabilizing effects of podemos. The middle ground. Conservative anarchism. That is one of the issues. This is a trend that will see continue throughout the European Election cycle for the next two years where the established government do come under pressure from groups of special interests. We have the same thing here in the u k, where we have the exit votes the brexit votes next year. That is going to raise similar kind of threats. Anna what you make of the Market Reaction . We have the 10. Ear spanish bond yielding 1. 8 spiking up a little bit in yields. Presenting a little bit of nervousness from investors. We dont know how long this is going to take. Whether we wind up with new elections. To put those in perspective, the spanish tenure back in 2012 2012,ack in 2012, do you think the market is contained the . Bill they see spanish bonds continue they become a buying opportunity because nothing has yet changed. The ecb is still the buyer of last resort for these bonds. There may be reasons to heighten Political Risk profile, that is true. Where likely to get another election next year. And go through this all again and it becomes increasingly difficult to see how i spanish Coalition Government comes together it comes together. The ecb is still out there buying. It starts to raise questions about the rest of the economy. Spain is the poster boy for european recovery. Pardon. They have a weak recovery going on. That is better than the zero recovery that the that than the zero recovery of the countries have going on. Toovernment that is unable govern, does that change . It is a good thing from the economy for the economy, as long as things stay on track. We saw it for years in belgium. Anna what the ecb is doing has far more applications for the spanish story than what the Spanish Government is doing. Bill i think that is one of the issues the Spanish Government just voted on. Anna 7 40 here in london. Such a banks cant do it all. Central banks cant do it all. Stay with us for on the move. Anna welcome back. You are watching on the move. Lets get to the morning mustread. The pages of wall street journal on japan. Economicr that japans fate rests with the Prime Minister, not with the central bank. Those words coming from the wall street journal overnight. Lets welcome to the conversation, bill blaine. This article critical of the central bank saying that they are losing credibility trying to create inflation and coming to the conclusion that it is the government that needs to step up. The fate rests with the Prime Minister. The cohan bill government has to carry the can for the thing that is not happening japan. The bank of japan did everything it can to turn around the situation. This is part of the three arrows policy that they introduced introduced. The third arrow which is reform within the japanese workforce. That is been much slower. We havent seen the kind of societal gains that accompany the way the market has been distorted by the bank of japan. The phrase the credibility of the boj, certainly it is the boj that seems to have done what it has done. That is why everyone is nervous. That said, there is some interesting things happening in japan did in japan. Watcher,hief japan martin malone, he is calling for massive gain in the nikkei. They continue to reap the benefits and of being in a very a continuing decline on the yen. Anna the decline on the yen is predicated by the boj. Bill switching the qe program theey bought has japanese Government Bond market. They are buying stocks. One of the interesting things from last weeks boj meeting is that by buying the new nikkei form, theand uts government is sending a clear message that they are supporting, not only economy through other qe, but supporting corporates that are doing the right thing in terms of creating societal change. Anna i was reading a story on this suggesting they want to buy uts that are tracking companies that are doing the right things. Oing lots of capex they Want Companies to invest in skills and infrastructure. Our story i was reading i was reading a story that they are that that there are not that many uts out there. Many etfs out there. Bill there are all kinds of. Oubts about the etf market how robust they can be if we did not see something going on. That one,ill park bill. Minutes away from the start of equity trade. 13 minutes. We will be looking at bond markets and the stocks you need to watch as we head to the European Equity day. You just suggest will be weaker on the ftse. Stay with us with on the move. Anna . Welcome back. You are watching on the move. Lets get to bloombergs business flash. The Worlds Largest pesticide maker. It is offering for just 72 per share it that is a 26 premium on syngentas that is a 26 premium on syngentas price. It will be the biggest ever acquisition by a chinese company. Has met forcomcast a m a talks, that is according to the uks mail. Itv share prices up this year. Shell and bg Group Shareholders are expected to vote on their proposed merger on genuine 27th and 28. The oil and Gas Producers got clarence earlier this month, removing the last hurdle on the deal which was announced eight months ago. Anna the European Equity markets are about to open. Ets stick with you nejra a lot of stocks to watch. A quick check on the spanish bond yield, because that is the big story. The uncertainty post spanish elections. Up 15 basis points at the moment. Spanish stocks will be the ones to watch this morning. Ive got a note from goldman sachs. The coalition would likely podemos. Risks. Uses downside the reason for that is both parties want to reduce subsidies for hydro and nuclear. Keep an eye on spanish utilities but also on syngenta which is che about cam china chemchina. It would require it would acquire 70 of syngenta. We got an announcement of that merger between dow chemical and dupont. Expected to spur consolidation in the industry. Syngenta will hold a Board Meeting before the end of the year to vote on that deal. Analysts are calling syngenta up as much as 5 at the open. Anna lets bring back bill blaine. It has been a heavy year of losses across many sectors. The mining sector. How convinced are you that we have reached the low point in that kind of Market Development . Bill im not convinced that we have convinced im not convinced that we have reached anything yet. They have not happened. There are many trades we are beginning to see an end to. On of them would be the shock for next year. Everyone is try to work it out. One of these shocks could be an upside shock. For the last couple of years, weve seen commodities struggling. We have seen the struggle off the back of a strong dollar. What if we dont see that strength. What if the dollars have made most of its gains. When youre in a heightened phase, you would be amazed how much the dollar continues to gain during that. If we see a more stable dollar , we could quickly see a turnaround. That is what a lot of people are ideag off the wall kind of. Hang on, maybe mining, the worst sector you can think about, reached the bottom of its curve and we are about to see a turnaround. To me, that view is reinforced when a here big investors say we are exiting everything from the mining sector. Its actually there are there is a bargaining there is it strikes me there is bargaining there. It would be excellent for the Global Economy if we see this turnaround start to happen. I think it is good to happen in areas where you are going to be up to see that occur. One of them will be global shipping. One of the most depressed areas you can think about, where you got ships steaming around the world as slowly as they can go to try and save money. If we start to see a stable dollar with the emerging market economies able to start purchasing Raw Materials again to produce, then maybe we see that uptick as well. My point is not to worry too much about the fact that the Global Economy seems to be dead. It could be a very interesting picture next year. Anna bill, thank you. Bill blaine stays with us. Next up, it is the market open. Futures point to a slightly negative start here in europe. We will be back after a short break. Anna good morning and welcome to on the move. We are moments away from the start of the European Equity trading day. Lets get straight to the morning brief. New los fows for oil year low. A seven an inconclusive election in spain. An accountings,a scandal and shares fall 10 . We are watching the European Equity markets. 100 is down. Se we sub hundred billion euros what out from the market. Expecting a down day across the board. Stability is mixed with concerns about the ongoing oil lows. We are likely to see a little bit of risk aversion today as we digest the political instability in spain. Ibex is nothe yet open. That will open later today. Oil continues its decline, down 2 today. We