Welcome to countdown. I am mark barton. It is 6 00 here in london on a tuesday morning. Moberg reports are standing by ready to deliver the stories that will drive your day. Bloomberg reporters are standing by ready to deliver the stories that will drive your day. Why it is chilcote will talk about the possible data Ryan Chilcote will talk about the deal. Le activis Jonathan Ferro has more. We are looking ahead to car sales figures next hour. Another month of growth would keep the industry on track. Since 2000expansion seven. News overnight from the bank of japan that boosted Lending Programs a while sticking to the plants unprecedented asset purchases. Zeb joins us. Good morning to you. The bank of japan is signaling to the market that the stimulus perhaps is on the way after the disappointing gdp report we got yesterday showing a slowness and weakness in terms of the economic recovery. The third arrow of abenomics may not be working as planned. The bank of japan said it will double the size of funding facilities and a loan programs to ¥7 trillion. This was a bond markets have been watching very closely and will extend the loan the program by one year and will continue the easing the campaign until two Percent Inflation target is a staple. They said they will continue to watch the situation for risks. Surveyed expected no change. The bench mark arent is no change benchmark rate is no change. They have referred and from a forecast for 2015. What does it mean . It avoids signaling a specific time. Maximum flexibility given the runs t the stock of and the run of stocks seems to have lost steam in recent months and investors are asking will japan and deliver on abenomics . Latest u. K. Inflation figures should confirm that Consumer Prices are at 2 which is the Central Banks target. Our exclusive interview, the bank of england policymaker talked about inflation. I think the crucial thing is perhaps a not so much aware inflation is now what to wear our expectations are but where our expectations are down the road. Probably has, it its main impact on inflation and not a few months for probably 1224 months or beyond. The crucial factor will be where does a like the inflation is 12,g and where it might be 18, 36 months down the road . Is said to be near a deal to buy a rifle. Ryan chilcote has the story. It could get a word or confirmation of the deal later today. Or not. Saying the journal deal could fall apart. If it goes through, good for fourth lapse. The stock will good for forced forest labs. Acquisition cost would be 25 billion. That is over 25 making carl icahn a happy man because he has the second Biggest Holding in forced forest labs. And get a scale, activis, two drugs. One is alzheimers and the patent expires quite soon. And a height pressure and a high Blood Pressure drug. Both of the companies have been busy in acquisition. The inquiry also pretty busy ree the a choir the acqui pretty busy. It would be the biggest deal after comcast and time warner. Who would lead the new company . Labs wouldof forest lead of the company. He has been there for under four months. Like i said, he did lead in acquisition and the four months at a Nutter Company for under 3 billion. They said it would boost earnings. From another company for under 3 billion. It is an attractive target. Carl as well. Of he is happy all the way around. He is. It follows a longer fight wrangling that he had with activis after he took his stake. It stems the fight. They came to a bit of an agreement and we are seeing the fruits of his labor. Thank you. More on that. Sinceosted is best start 1980 three. Will the winning streak last the year . Yeah, look. The best start since 1980 three. Last year was a big move lower. The long term chart of gold never ceases to amaze me. Concern that qe would increase and we could get higher inflation and that concern are really throws the gold higher through the years. From 2008 two last year, we see the expansion of the arrow reserve balance sheet. It is been quite remarkable. The problem is it has not generated higher inflation. It has struggled. I remember back in april of last year, they released a very bearish report. It was about 1600. The following week, 1400. 1050 by looking for the end of the year. As the World Gold Council has issued. Where is the demand . 15 . Is down it is down from 20 tepid levels. We saw it is down from 2012 levels. The decline. Some Strong Demand from consumers. The summers and in china and india, still a big appetite. Consumers in china and india, still a big appetite. They cut back. This year, it is gold for sure. As all reserve its bases safe haven. Going forward, the underlying storage the drove entire, it is not there right now. Thank you very much to stop thank you very much. Miss it. The third interview of the day. For a preview, lets go to hans nichols. He is in berlin. We will he about an hours time looking at european auto sales for the month of january. It is supposed to show the fifth month of the growth. One thing we will drill down to is country by country. A little bit of stimulus and a spain but we will look closely at france. Very important with what is going on with peugeot. Thank you. Well focus on the u. K. And the bank of england and another policymaker has a spoken. Our next guest will way and all policy makers behind the Inflation Report that came out last week where Forward Guidance was retargeted. Time for todays company news. Activis is said to be nearing a deal to buy forest labs. It could be announced as soon as today. The ceo is expected to lead the combined company. The chinese carmaker is in talks to buy a stake in peugeot. They prepare to vote for the proposal that would raise 3 billion euros for the french carmaker. Alcoa will close its unprofitable plant in southeast australia. Reducer set producer set it is unsustainable. The closures will reduce capacity by five percent and will result in the loss of 1000 jobs. Welcome back to countdown. I am mark barton. Get minutes from the bank of england meeting from early. The next guest said after the publication, the rope toward, policymakers the report, the policymakers will try to justify. Lets welcome richard jeffrey. Good morning. Joining us. R another policymaker has spoken. He spoke to us yesterday. To havethe economy has more Spare Capacity than the bank of englands main population has shown. They said the capacity is 1 1. 5 of gdp stop it shows a greater debate going on within the bank of england on this specific matter. I think Spare Capacity is a difficult concept in economics. It is rather nebulous. I would not want to put policy on estimates. Whats in bank of england did say is just about everything and the economy is taken by surprise. The strength of the economy and the pace of which unemployment has fallen, it has grown up. All of those sort of things, the bank is saying we do not expect that. Why do we look at the Inflation Report now and put any faith in it . Theyre forecasting a record is poor. They are wrong to tie it to Spare Capacity in part. You have to be very careful. The range, that is an incredible he tight range. We cannot be certain to that degree. I would say in statistical terms, it is probably not very different from zero. Unless they are saying it is five percent or 10 , that is a pretty meaningless analysis. You said investors expectations for a hike for the rates to be 2 by 2016 is unreasonable. Themarkets are ahead of bank of england because many anticipating a rate hike this year not next year. Talking are some people about into this here. I do not think the mainstream expectation. What people are sent toward the end of the year we will be talking about rates rising next year. That is perfectly viable to take at the moment. Well wait and see how things pan out. If you look at the contrast between the bank of england forecast between growth this year based on Market Expectations and growth of based on no change, it is quite a bit of difference. If there is no difference, forecasting three. 8 . That seems an astonishing figure to me given they told us they do not expect Interest Rates to change this year. That seems to be the case. Se forecasts look very will we see more balance in the economy and business and investment will be getting benefit from the trade . Mark carney has almost admitted that. Will it be, more balanced . I hope we will see that. We saw a drag last year in the trade position. Somereflects problems and of our main overseas markets. It is still disappointing that in the u. K. Has not managed to get close to balance. We still have a significant level of access and demand. I think policymakers need to reflect on that estate and and think about longerterm implications. Not only an improvement in trade is what i would like to see but a rebound and capital investment. That will probably come through. We have not seen it so far reflects a high level of uncertainty. Want to see that rebound and capital investment. Through, it will lead to better productivity growth. We should see better margins. And we should see better wage growth on that basis. The wage growth at the moment has been pretty low. Exceptionally low. Added negative in real terms. The growth in income will come from increasing the employment rather than growth in capital. Ande see investment productivity, we are not going to see unemployment come down so quickly. And inflation is not such a worry, is it . Cpi on an annual basis should remain at 2 . That is but joe had a korean mood. , inflationime being is subdued. What we do not know is what the policy makers do not have a clue as how inflation in the longer term among quantitative easing. That could be everybody has all types of elephants in the road. That could be the real elephant in the room. In the longer term, we see more pressure because of quantitative easing. It currently seems likely. Refer richard jeffrey. More from richard and next on equity markets. Three gained all of his losses for the year. Will see what richard has to say. Regained all of the losses from the year. Welcome back to countdown. I am mark barton. Richard jeffrey is here. Richard has risen for 10 days. Longest winning stretch since june 2010. The early year jitters, have they been anywhere eight, are they behind us had they been anywhere east have they been erased, are they behind us . We do not know. In the short term, we talk about reaction. We can begin to understand what is happening in financial markets. We are likely to see higher volatility going on than we have experience in the past few years. One of the benefits is to reduce and one of the objectives of qe is to reduce volatility in financial markets. It is slowedce of down, we can expect more volatility. What people are going to be focused on is not additional liquidity but performs underlying. That is one of the things that is because of a dilemma and the last few weeks because wouldve seen the tapering and at the same time, we have seen disappointing numbers out of the u. S. Economy. But a lot of it has to do with the weather . Is it whether or something more fundamental . Peoples expectations have run ahead of the reality of things. Yes, the u. S. Economy is growing probably about two percent of more. It may pick up more momentum this year. People are start to produce heavy forecast in 2014. They may have to bring those in a little bit for the early month figures have not looked too exciting. Does it mean a gain of 30 like we saw last year . Will it repeat . It cannot be repeated. We have to see validation and Earnings Growth which has inentially been an expansion the markets. The market is going up because it has been anticipating growth. If you and adjust it, it is looking quite high. Margins in the United States are looking very high. We need to see more earnings momentum. If that comes through this year and we start to cds and, positive surprises on corporate earnings, yes, the market has a more scope. I do not think we will see total western markets like 2013. Those were abnormal returns and they were anticipated with good news to come. Any good news will be welcome in europe. Is it the year where we do see some proper Earnings Growth in the u. K. Economy . I think we will see some growth this year. Forecast 10 ys activity began at a year and they changed their forecast up and down from that. Will we see 10 . That would be a surprise if we were to see growth of that amount. I hope it will be positive. It comes back if we see companies starting to invest in getting productivity through, and that will help margins and we will see it growing the back of that. I do not think well see many earnings on pure volume. In japan, they Want Companies to invest. Shinzo abe certainly does. No change in the underlying policy of buying 60 choy indian word of at ¥60 trillion of yen worth60 trillion of access. It is keeping liquidity lose. It was half of what the markets expected. Is abenomics running its course . Undermineddata was by a very poor trade session like the previous quarter. Demand a look stronger. The bank of japan will be looking at that. They will be sent, it is not a favorable mix. What is happening and the domestic economy looks ok. Nonetheless, the policy what have to stay in easing mode. What we have is a tightening and consumer taxation. When that comes through, we will see a slowdown in household demand. Inmay see a further take up inflation as well. Thats sort of backdrop might be slightly uncomfortable for the bank of japan. It was try to put in the accelerator. Thank you for joining us. Richard jeffrey. Goals year and touche is a golds year to shine . We will talk to the gold council. That is after the break. I am mark barton. The top headlines. Bank of england officials said Interest Rates will only be used as a last resort for the housing market. In our interview, he also said the u. K. Economic slack may be in the forecast. On average,ind is it looks like inflation will stay close to target maybe a little beneath it. The slack in the economy will a declined gradually. Designated talks with Party Leaders. Renzi wants to win the support for his political program. The 39 year Old Democratic Party leader has pledged to overhaul the labor market and change the election law in the first 100 days of his administration. And the duchess of cambridge have been playing host to british film and theater stars. On the heels of their success. T includes Steve Mcqueen the evening was an honor of the industry. Welcome back to countdown. I am mark barton. Is it a bull or a bear year for gold . Forecast are conflicting. It has had its best start of the year since 1983. The fed continued tapering and a drop from the threemonth high. The head of the World Gold Council. Thank you for joining us today. When it came to demand in 2013 it was all about the consumer . Absolutely. We had a drop in the price and reductions in trading funds. The consumers stepped up and it was the year of the consumer. A record year of buying coins and jewelry all over the world. Largely concentrated in asia. The biggest gold maker in the world. It is. For the first time, china is the number one market. To give an example of where it was, it was 32 lower the previous year. The gold market in china was a lot smaller five or six years ago. It has tripled in five years. Up ine manufacturing kept china to cater with the demand . It has indeed. There is an interesting detail in the report we published. That are 600 tons of gold is not featured in demand. It is in stock flows or otc investment by banks. We think there are more tons in china. It is probably around 1400 tons last year. Works indias demand indias demand is quite high. Reports unofficial record in official imports taking place . Absolutely. It was trading at two different prices and the indian market. Gold throughy india from neighboring countries. We think the estimates are up about 50 tons a quarter. Inbe 200 tons of gold came last year through unofficial channels. Do you think it will continue to supplement official flows . Strictgovernment imposed controls on gold imports and exports and the summer and increase taxes making it very expensive. Naturally, this trade has grown up in india and we hope the restrictions will be relaxed with an Election Year and there is speculation in the markets they will, off around the middle of the year. Chinatalk about india and but there are other markets which saw sizable increases in consumer demand. Thailand and turkey. 2 countries saw above 50 in demand. That is true. Everybody focuses on china and india because of that are the largest. Was broadly spread across indonesia and vietnam and other smaller countries in india as well. Asia and a pickup in jewelry and in the United States. Just as the phones were selling out at Todays Exchange rate it. The consumer was the key. Upmajority jewelry picked here in europe. Lower than the eastern consumer. Why is that . The leverage to be really economy. If you go back to last year, European Assets started to do well again in the summer. Into managers moved back european equities because you saw better Growth Numbers in a eurozone countries. The eurozone has gone through a tough time. That correlates with a pickup in jewelry demand and countries. At last, some type of recovery is feeding through the countries that have been hit hard in europe. We have to talk about investors. The next outflow from the Exchange Traded funds, 180 trillion. That is continuing to reevaluate their portfolios in response to all sorts of matters. What do you think the market will remain polarized with the jewelry and coins demand on one side and etf outflows on the other . Not think it will. That polarization was a factor of last year. Funds mostly selling gold on the back of tapering. The longer and stronger economy. Huge consumer demand. What you are seeing now is a lot of the investors who were bullish on the dollar and u. S. E