Transcripts For BLOOMBERG Countdown 20151211 : vimarsana.com

This is in seven days time, we will be waking up where the meeting with bond traders face off with the equity traders, who is prepared for the fed . That is the question, the longest losing streak in six months. Is it oversold . The relative strength index is below 30. But we are seeing the msci index, trading 11 times the 12 month earnings index. It is being punched as Global Growth concerns and of course worry about the fed next week. Theave day number eight of decline in emerging markets. The shanghai composite hitting a fiveweek low. All eyes will be on the yuan. Let us do you up to speed with a bloomberg first word. After decisions from new zealand, switzerland, and the u. K. Yesterday, it is the turn of Russias Central Bank to announce policy today. The governor is excited to keep rates on hold, despite battling the countrys first recession in six years. Bloomberg sources say argentinas new president is kicked off talks with several wall street banks for one year loans of up to 10 billion, as he tries to shore up Central Bank Reserves at their lowest in nine years. Share suspended in hong kong, after the Group Chairman has gone missing. The company owns club med, Cirque Du Soleil, and other commodities. Chinasrman, fosun, is richest man. David kamran has delayed the decision again on whether to allow another runway at heathrow airport. His government says more time is needed to carry out research into the environmental expects. Chief executive of iag, which runs british airways, says it shows Party Politics takes precedence over the economy. And the addition to have donald trump banned from theu. K. Has received a lot of signatures. Any petition with more than 100,000 signatures is automatically considered for debate in parliament. That is your bloomberg first word news, for more on these and other stories, had to the bloomberg terminal and bloomberg. Com. Manus let us get an update on the equity markets in asia. Chinese stocks are at f5week low, there is the folson story. Asian markets under pressure again today, as we close the week. Manus, i wish we were going into the weekend with a better future. But really, this is the asiapacific region, investors would rather forget. You spoke about the story, and it is having a widespread sentiment, impacting across the chinese markets, it is chinas largest privately held conglomerate. It is high profile, and it hits every sector of imaginable. The chairman, he has been out of contact, he is chinas warren buffett. He is idolized. For this to happen certainly has a lot of people questioning. This is a crackdown that is gone beyond just beyond financial and government, and no one know when the zero point will be reached. Somewhere gains out of the u. K. , there is sense that perhaps investors there are perhaps happier with evaluations after the selloff. In particular, we saw gains across the pharmaceutical space. Their recommendation particular, when it comes to cancer drugs japan being an aging population, pharmaceuticals are critical. Up by 7 , surging the most and eight months. This is despite the overall thai market on the cusp of the bear market now. He saw gains for airlines, with expectations the 20 16th be another record profitable year for them. That is how we are looking, a few gainers but really a negative picture in the friday session in asia. Manus thank you very much. Now to the bank of russia, expected to keep Monetary Policy unchanged when it meets later today. That is despite the countries battles, recession. Ryan chilcote joins me now. So it looks like the thinking from the economists that we appalled the majority of said we will see rates left unchanged. Ryan we talked to 34 economists. And the bank of russia will keep rates exactly were they are, at 11 . A handful of them think we will see a cut. What is interesting, we have seen a real migration on views of the economists. A lot of the median views what is a few month ago, was the central bank would cut. The central bank itself has indicated more than once that would like to cut. That is because of the situation in the economy, everybody says rates in the double digits, that is choking the economy. But the bank is concerned about Interest Rates. There are two reasons to be concerned about inflation. One, of course, is the depreciation of the ruble. Some say it should have depreciated more than it has created we can talk about that later. 6 on the back of the falling oil prices, and that creates a concern about inflation. Russias import a lot. And the weaker the currency, the more you have to pay for the imports. The second factor is of course russias ban on turkish imports. That particularly its food inflation, because you have less competition on the shelves and you end up with higher prices. This is a big concern, not just for people on the street, but also for Vladimir Putin. That is one of the reasons why people feel that, you know what, even though the central bank would really like to cut rates right now, takes below that 10 and get into the round of somewhat normal rates. It may not happen this time. But she does have a penchant for surprise. Manus she does, indeed. You have met her several times. We have the ruble falling, that is all in syncopation for the majority of the year. Iew of the market is that it has been dislocated somehow or another. Ryan absolutely, it is traditional to think of the relationship between the ruble and the bread price as an inverse one. Or as i should say, as the bread price falls, so does the ruble. We have see the correlation weakened. And with the price at 40 bucks a barrel, we should see the ruble at 80 to the dollar, not just shy of 70 where he are. If you look in the last three days, the ruble has actually strengthened, despite the fact we have seen oil fall over the last two days. Manus, russia gets about half of its money from the sale of oil and gas. Traditional logic is that it does not really matter because the ruble and central bank has a free float, they will still get a lot of money for the budget. Theyre not getting that much money right now, and that puts pressure on the budget deficit. That is a big issue out there. But again, the governor of the Central Bank Says if she allows the ruble to weaken, that creates inflationary pressures. And that is not would be very popular on the street or in the kremlin. Manus ryan, thank you very much. We will see what they do later in the day. For more, we are joined by allen higgins. Welcome to the show, good to have you in here. Ryan was just filling us in on terms of the conundrum for the russian central bank, which is rather idiosyncratic really but they are so closely linked to oil. But the swiss had a hawkish cut them a im sorry, new zealand went with a hawkish cut. The currency is overvalued. And there was no shift the bank of england. Central banks are all really waiting for the fed. Is that a Fair Assessment . Alan when it comes to russia, i think a couple of points. A big consensus on the short position, that we invest in bond managers and Equity Managers in general. Russianthe short equities and bonds. So there is an element of short covering. The other currencies in the spotlight, other emerging market currencies the brazilian. Manus i had a couple of people come through this week and said this quarter has been a bit of a reprieve, except for the rand, which had a near record low. When you look of the whole specter of Central Banks, and as i say in seven days time, we will wake up and have the equity traders, whether the quiche or meat is another discussion. But the emergingmarket discussion, readying themselves and almost seems, the fx markets are almost more fascinating read the euro has rallied by 3 . The new Zealand Dollar has had with the biggest rallies and almost a month. Is the fxondering, market where we will see perhaps the immediacy of impact, rather than the bond and the equity markets . Alan ive also been intrigued in the street by the aussie, having a good employment numbers. And the aussie dollar is being resilient, relative to commodity prices. So, maybe a bit of a leading indicator. But also, especially this time of year, positioning to be quite important a lot of these currencies we are talking about have been consensus shorts. And of course, the eurodollar has been a classic consensus position. When the ecb wanted to avoid the spike, that will make the fed so interesting. Any nuance of disappointment or tightening, im looking for 1 8 . Manus really . Alan not really, a quarter is baked in. But would not rule it out, and the feds are doves. Back to be one interpretation. The terminalld be rate for state funds is so much lower than before, we are not going back to 5 anytime soon. So you move in smaller interest, compared to 1994, when we were going from 3 to a 6 very quickly. I just want to say, just in case it happens. Manus you does want to have the clip a few more times. The other argument is money going into long bonds, the 30year bond. Jpmorgan to the survey. Investors are most bullish on treasuries since they have been in 2013, and the real return is in Government Bonds. Alan anyone bullish on treasuries, im very surprised. Im talking about consensus, one of the biggest positions, as well as to be underway in the other massive assets. They are bullish on treasuries. Where you might be picking that up on is getting into the bond world of curb flattening, that is a big tray. Avoid the short and. End. There is more money in the longer end of the curve, a small amount of money in the bond geeks duration markets. Manus the headline that you have on your report is follow the facts are not your feelings. It reasons to be cheerful in 2016. We are looking at energy and mining later, but the top line is that Global Equities are big. You said it will be better next year than it was this your. It was a cracker of a first quarter. Alan get me on twitter, i will send it to you. Manus this is a shameless plug. Alan reasons to be cheerful . One. Now, that is but we have a few of those. But ifinancial markets, think we will talk about this later, with inflation being so much yesterday was a good example with glencore who are the winners . The reality is there are no real corporate winners. Airlines to a certain extent of course theas companies you are talking about are generally long commodities. But the Global Economy is a winner. And that is what we talk about here. We have kind of forgotten that, it is positive for the Global Economy. Reasons to be cheerful . Growth and markets. Manus stay with me. S, we will get a final reading of german inflation. Then later in the morning, a Rate Decision from the russian centralbank read and this afternoon, it is all about the shopper. U. S. Retail sales, up next on countdown. Cheers to that. How the Beverage Industry is amongst one of the winners from the commodity crunch. Manus it is 6 17 here in london. Let us get the Bloomberg Business flash. Nejra a brazilian prosecutor has filed a civil action against the company after the dam month. Ed at a mine last they did not properly comply with state recommendations, and 13 people were killed when billions of leaders of liters hit the town. By that will likely acquired debt, taco bell intends to give billions of dollars back in dividends. Share suspended in hong kong, after a magazine reports that the groups chairman has gone missing. He owns club med, a state insert issalai, and the chairman chinas 17th richest man. Investing 4. 5 billion in electric vehicles, electric hybrids make up 40 of its lineup by 2020, up from just 13 now. Hiring up to 20 Investment Bankers in the u. S. To address falling it is fo behind. Andlans to recruit bankers the technology, consumer, healthcare industry. For more on these and others, head to the bloomberg terminal and bloomberg. Com. Manus thank you very much. Quite a week for the commodities sector, as we have been telling you every day. Largest is set forth losing streak in seven years, minus glencore. They were having to answer tough questions from investors. But there are some industries, some that are having a bit of a chance in the commodity decline. Ryan chilcote joins us now. You have been digging into the terminal. This is, in some ways, straightforward stuff. Not everybody is losing. Ryan that is right, there are a lot of winners. We have spent a lot of time talking about how the Airline Industry is a big winner. That is a nobrainer. As a price of fuel falls, the prices we pay for our tickets on the airplanes do not fall as much as the price of oil, hence the profitability increases. But as you go into the terminal and look at the bestperforming sectors on the stoxx 600, the benchmark for European Equity, you will find a couple of surprises. That is the second bestperforming sector out there right now. Builders, a big winner fifth bestperforming sector. And finally, the car sector, despite all of the issues we have seen in the automotive sector this year year today, also up along with the others. Bestit in the 10 performing sectors, outperforming the stoxx 600, which has risen 6 this year, while basic resources, as you know, have fallen a whopping 34 . Manus no doubt about it, anytime you run a function on the bloomberg, you see a new 1988 low. Alan is still with us, let us bring you in. Part of the reason you wrote the report, reasons to be cheerful. One of those is, of course, you referred to this very, very key phenomenon the oil market. Why are we cheerful, how do we trade . Good ryan makes a very point. If the party domestic european better, theoing contrast of the Commodity Companies that are long commodities, they do not have any companies that are explicitly sure, just some beneficiaries. The we write about is eightold story that Lower Oil Prices in particular, lower than commodity prices, is good for the Global Economy. Reasons to be cheerful next year, with a lag, we expect better growth. Better Global Growth overall. To trade it . Argue that equity is somewhat depressed now, buying Global Equities is the way to trade it. And i dont see reasons why the sectors could certainly be winners. But i would caution that with these commodity sector so bombed out, i saw an interesting analogy, i will use russia. The bestperforming bond market this year in dollars is russian bonds. Theyre the bestperforming, by far. And a lot of these Commodity Companies are now run effectively for bondholders, glencore almost exclusively buying back. We could be sitting here next year saying the bestperforming sector were commodity bonds. You know, russian equities kind of held up in the equity space, it could be flat. I would not want to be short commodities here. I think commodity bonds are very interesting. Because nearly all of those companies are run for bondholders now. Ryan look at carmakers and car parts, you see the trouble in the industry, the weakness of vw and porsche, but up 12 year to date. Ever reasons you were just kind of alluding to, you have the consumer really benefiting from the Lower Oil Prices. They are out there in the u. S. , you have to dollar gas liter inng . 99 a this country. People are buying bigger cars. I was looking at fiat. Year to date share price is up 30 . One of their bestselling cars is the jeep. Would you agree with the idea that there is a double beneficiary, it is sort of twofold. A, consumers come back online. Driving is cheap, it is great. In addition to that, the more advantage you get from the lower input costs, in terms of all those metals in the cars. Alan i think you are spot on. Adding another factor, china auto Sales Holding a. Consumption manus you will see wage increases of 7 . Alan very important for volkswagen, of course. And the fiat. The luxury part of fiat, which is highly sought after. The ferrari, maserati component. Manus were you surprised yesterday when we saw the news that they had a stable of very unique propositions come in terms of those margins . Alan they have their financing, they just do not have a big loan, stable company. They do not need to. Theyre not like the Commodity Companies where they need to do the bridge. I am not too surprised. Manus just to circle back, you said in two years time, we will be talking about commodity debt as something that could be a cause for 2016. For our viewers, sitting there asking if you split the market into a couple of areas, you have the bhp, glencore. You have them beat, as it were, the markets. And you have the sort of tear two, this is the equity side that is bombed out for the year so far. Alan exactly, so if you are a private investor, tread cautiously. Individual waiting should be small. Because it is embedded into these bonds, the negative production essentially, it can go to 20 rated if things go wrong, still a diversified portfolio could be interesting. How you differentiate is the likes of lower debt burdens. And as you go down to the likes of glencore, there is a higher debt border. You get to the u. S. , the likes of freeport. And if you want to go super highquality you can buy exxon. There still are aaa companies in the energy sector. And that is what you want. I will stick my revocation on that. Actually, despite the trades like treasuries. Alan stays with us. Up next, another day, another executive goes mia in china. Sure, tv has evolved over the years. Its gotten squarer. Brighter. Bigger. Its gotten thinner. Even curvier. But whats next . For all binge watchers. Movie geeks. Sports freaks. X1 from xfinity will change the way you experience tv. Manus it is 6 30 in london. Let us get to the bloomberg first word news. after decisions a from new zealand, switzerland, and the u. K. Yesterday, it is a time for russia to announce decisions they. It will keep the rates on hold, despite battling the countrys first recession in years. Bloomberg sources say argentinas new president is picked off talks with several wall street banks are loans up to 10 million, that is as he tries to shore up reserves at their lowest in nine years. Has delayed a decision to allow another runway at heathrow. He says more time is needed to carry out research into the environmental impacts of expansion. It has been attacked by industry groups. The chief executive of iag, which runs british airways, says Party Politics is more than the economy. A petition to have donald trump banned from the u. K. Has received half a million signatures. It was after his call to put a hold on muslims entering the united states. Any signature with 100,000 signatures is automatically considered for debate in parliament. Manus you have also been checking out the markets this morning, tough really for the asian markets emerging markets under pressure. Tell us what gives . The asianyou look at pacific index, the benchmark for the region of course, that is actually heading fourth worst weeks in september. We are seeing it down again today, heading for a third weekly drop this is about the rout and commodities by the prospect of a rate increase from the Federal Reserve next week. All of these different elements playing into these losses. If you look at chinese stocks, across the board of the National Equity benchmark am a chinese stocks hit a fiveweek low. You are seeing the hang seng index down, shanghai down about 7 10 of 1 . But japanese stocks actually rebounding from a threebaseline. You see the topics there, 5 10 of a percent and the nikkei up at the board you are looking that there. And speaking of japan, you are seeing a rebound in stocks, a weaker yen, though. It is actually weakening after some strengthening this weekend. The dollar is strengthening the most in the month, ahead of the fed meeting. I have to give you a check on commodities, of course manus, a bad week for those commodities. Looking at crude oil, declining prices actually down for a six day the longest losing streak in ninemonth, triggered by opec deciding not to put that ceiling on production. In fact, a report yesterday said the production rose to a threeyear high. Losses,cerbating those now below 37 a barrel, crude coming in at 39 a barrel grade and very finally, iron ore for that has been a very big theme this week it is declining again. Decline for the longest losing streak in seven years. Manus lets turn our attention to chinese bonds. They have plunged by a record amount. The company has extended shares, after report that the billionaire chairman has gone missing. Nick, what is the latest . This is a bit of a trend, isnt it, in china . What we do know is there are several media reports saying chairman hasn gone missing, other saying he is assisting the investigation into another shanghai mayor. The calmnessalming i party Holding People either as targets of investigations, or to help with this other investigation. This is sort of an internal Party Disciplinary system. Then later on, there may be formal charges filed. We have no indication that this himself, is under investigation. He is assisting a probe into another person. It does appear to be what is happening here. Only time will tell as to when he gets released. The other issue is that when people do resurface, they do not gradeen announce that you have to keep checking in to see him resurface. We will be monitoring his whereabouts. Manus we were talking about the bonds and the introduction to you, seeing a real response. The stock is suspended in hong kong. The market reaction, do we know how long the suspension will carry through for . Nick there is really no telling on the suspension. The issue with fosun is that it has its hand in so many pies, somebody different sectors pharmaceuticals, commodities, real estate. All sorts of companies with connections to fusn suspended traded. What you see is that this does happen from time to time, the market sees this happen. It has happened with executives at various securities brokerages in china. They obviously get very spooked. The ceo of those missing. That is an issue that would be almost unheard of in the u. S. Or the u. K. , for example. Some like this really does spoke markets, and the initial responders is that we see the companies would just shut down. Once he resurfaces, we would expect trading to resume. Manus net in beijing. Bureau chief, thank you very much. A deal delayed in paris. Reports that a draft title agreement on the uns Climate Change talks is to be pushed back until tomorrow. That is as the first truly global deal to rein in pollution hits more speed bumps. Caroline hyde has an update from the summit. Caroline, i hear that we are on momentcipice of a huge for the world. And they pushed the delay button. Caroline reporting on twitter that we could see the final Draft Agreement being delayed until saturday morning. The original deadline, manus, was 6 00 p. M. French time today. That is 5 p. M. Gmt. But it looks like the disagreements surrounding this are just too hard iron out. From the latest draft we know that they sought 50 pairs, that means the language has not been agreed in 50 cases. A lot has been done. There have been almost a thousand of these before, 20 fold they have managed to cut this down just the last six days. But through the night, these ministers have been working to try to iron out a deal. And they do still seem to be some key stumbling block. Primarily, ambition. And secondly, and always comes down to money. Shoulde concerns about be two degrees above industrial temperatures, is that what people are aiming . Four or should be more ambitious, 1. 5 degrees . Should be carbon neutral, what are the longterm aims, and how do you monitor more than 180 countries and their pledges to say how they will cut emissions. How do you make sure they live up to that, that they keep on improving them every five years. That is what the u. S. , europe, and the small island nations all want written by Climate Change. China does not want that, though. Neither does india. That is what is being reported. Ambition and money, key issues to contribute to the 100 billion fund per year given to the nations that will suffer from Climate Change. And struggle to pay for cleaner energy, to contribute, it should be industrialized companies . Or should china, malaysia, india help . Comedies that are more developed and advanced in the nation. Manus Caroline Hyde in paris, on the delay announcement from cop 21. Refugees quickly under the spotlight, with a vast flow of people into the spotlight, enable the attackers across borders feeley. Those who find themselves being attacked in the country they thought was safe them a and by the kind of terrorist they fled from in the first place. Last week, he called his family to make sure they were ok in syria. And now he says my parents call me here in paris to make sure im ok. Founder and director of the school. The place is not just a school where refugees come. It is a place to meet, where refugees and asylumseekers,. First, to learn french. But also as a place to make friends, many students have been here for years. From afghanistan, mainly, in the very beginning. And very recently, from syria, iraq, and libya. Mohammed. Is i am from afghanistan. I was born in kabul. I am artist from iraq a painter. I am 27 years old. I came from syria. I was detained for nine months by Security Forces in syria. That is what pushed me to leave, actually. I get a lot of problems, i get attacked a lot because of my artwork. Almost i lose my leg because of this. But the problems in the pressure we had were tremendous. It was very difficult for us. I lost a brother, he was kidnapped, and we never knew what happened to him. But we did find his dead body. When he arrived in france, it was a complete 180 degree change from the life we had in afghanistan. As we know about france, it is a country of human rights. And freedom. When you arrive, you try to delete all of this live like normal person without all of the issues that have happened. Horrible nightmares they have seen all around them, families have been killed. And the site of all the blood, violence, cruelty. All of them have seen it. They are normal human beings, but they are seeing it again. The driftrstand that the french people resent or feel. We should always be clear to people that the problems given with religion, how people use religion for political gains. French atam iraqi and the same old. I expect to live here forever. Of course, i will come back and visit my country, if it is possible. But for me, this is my life here. Manus with the attacks in paris along with a refugee prices, and helped the far right National Front make gains. Was last weekend. We get around this weekend, perhaps ironic, as leaders condemn Donald Trumps muslim comments. Our next guest says trump has long been trumped by mainstream politicians across the continent. Mark champion is a bloomberg columnist. He joins us now. Mark, great to have you with me this morning. In many ways, if we look at this, this is marine le pens National Front breaking through last week in. This is a woman who has said she has called muslim immigration as occupation, comparing it to the German Occupation in france in world war ii. We should all be outraged by donald trump read but we have to recognize we need to get additions together to keep them out, we have long had people with have these opinions in important political positions here in europe. Herne le pen in france, party has been around for a long time. She has cleaned it up somewhat. And yet, nevertheless, are antiimmigrant, basically xenophobic stance is gaining a lot of traction. She won almost 30 , 28 of the vote last week in. She beat both of the main parties. This weekend, it is unclear if she will be up to turn that into actually being able to control regions of france for the first time. Manus it will certainly not Francois Hollande off his perch, resurrecting nicolas sarkozy. It is not so much antirefugee, but it is not wanting to deal with the problem in europe. Europe is split on this issue. Marc not just in france, you see it here in the u. K. And hungry for example, you have a president that is been trying to out run and outflank the n neofascist party. His positions are more extreme. Donald trump says he wants to build a wall along the u. S. Border with mexico. Hungry has already done that. Manus and David Cameron went and split bulgaria from its borders. Im looking at petitions. Half a Million People have signed a petition here in the u k that donald trump should be banned from the United Kingdom into. Trump evenk donald remotely cares what the rest of the world thinks, given the gravity of his comments . Banned think if he was from the United Kingdom, he would care. He might even use anit politically, and i think he would care. He has investments in scotland. Yes, he would care. Manus when we talk about the story, it is always very, very difficult to sort of interpret these stories from an investment port of you. But politically, politics of europe are very disharmonious. And that has market implications. Look it does, but if you at this year notwithstanding the correction we had this year it is been a reasonable 304 english stock. It has to be extreme politically to really undermine and equity market, i think. It is happily a world that we can avoid. I would just point out in donald trump, following u. S. Elections quite closely, it is so difficult to the republicans to win because of california, new york, these big states that are solid democrats. The math makes it difficult for trump anyway. Manus let us see how it goes. Trying tognatures keep donald trump out of the country. Marc champion, the article is fantastic. Go to bloomberg. Com, he is a columnist with us. Alan, you are not off the hook yet. You are staying with. Up next, could the nation use a little dose . One seems to think so. We will discuss that, next. Manus it is 6 49 here in london. Let us get the Bloomberg Business flash. Nejra a brazilian prosecutor has filed a civil action against bhp and his partners over the fatal dam collapse at the mine last month. It is alleged they did not properly comply with state recommendations, at least 30 were killed when billions of gallons of toxic sludge fell on the village. Cut to junk, the agency says planned dividends will likely require increased debt. Owns pizza hut and taco bell, plans to return 6 billion to shareholders before spins off the china business. Investing 4. 5 billion in electrified vehicles. Carss electric and hybrid will make up 40 of the lineup by 2020, up from just 13 now. And hiring up to 20 Investment Bankers in the u. S. To address concerns it is falling behind on deals in the country. Japans biggest brokerage recruit bankers and the technology, consumer, and health care industries. That is your Bloomberg Business flash. For more on these and other stories, and to the bloomberg terminal and bloom berg. Com. Weafer is a senior adviser. Ryan chilcote is here. Alan is here. Slices of rate cuts from the start of the year. Here we are, 35 of our estimates say you will get no change. They are darned if they do, darned if they dont. Chris that is a good way to put it. If you look at what the central bank has said, at the end of the meetings ands jim, where it is healthy rate at 11 , they focus on the high rate of inflation. They focus on the potential for weakness in the ruble. Seeou look at that, you zero chance of a cut today, because inflation at the end of november was still 15 . The ruble has been weakening with the oil price. But the last several weeks with the central bank has been bombarded with arguments that they should cut because inflation has not been caused because of consumer demand. 12 il sales that were down year on year in october. It is not consumerdriven, it is sanctioned. The oile is moving with price, nothing to do with Interest Rates are capital flows. Manus we will probably have a in a sexier draft. But what i have here is the oilruble correlation, and the decline, which is the dollar rising, that is the chart there. And the precipitous decline of crude, some 40. There is an argument i look at your notes. You are calling for a much more graphic decline. Chris because i feel the oil price will go down further in the fourth quarter. We saw that at the open meeting, complete lack of unity. Taking the view they are entitled to come back with as much oil as they can, as soon as they can. They need the money. They are so focused on shale. So the oil price going down, the ruble will go with it. Chris, a lot of people say with oil at 40 a barrel, the ruble should be much weaker than it is we are just shy of 70. A lot of people saying it should be 80. If you look at the price in rubles, it is a fiveyear low. Obviously, Vladimir Putin needs a weaker ruble if he was to balance the budget. He will not get anywhere the budget deficit you wants where we are right now. Chris what ever the positives he russians did bite the bullet very early on this. They moved very early this year, the central bank is not supporting the ruble anyway since february. In that sense, rush is in a better position than some of the opec producers. Today, at the Current Exchange rate, the Russian Federal budget would balance and 70 compared to 115, only a couple of years ago. That is still a deficit. And the argument of course is the the weaker the ruble, narrow the deficit. And the more you boost the case for import substitution, wakening imports, all of which are necessary for longterm recovery. So i think i would definitely focus on the move towards the free flooding ruble as the biggest trend, and very positive changes we have seen this year. Manus i want to show our viewers one of the nobel laureates. His story on the bloomberg terminal this morning is this. Was very in vouge. His key point is that russia has posted a surplus from 20002008, after running one of the widest deficits in years. Of real answer, a little bit off the gas on the fiscal side. Alan they have room for it, but as chris mentioned, they have debt. What i would point out, there is some i noticed the economy is holding up better, remarkably, pmi in russia is higher than the u. S. It is above 50. Chris that is for sure. We have passed the worse in the decline, down 6 in the second quarter. Gdp is expected to end the year at about 3. 5 or 3. 6 . It is better than has been predicted this time last year. But it is still a recession. Chris do you think we might get some surprises from the kremlin, and terms of policy. Things are getting tougher, right . We have a contraction now. The Central Bank Says that the economy will contract by 1 next year, as well. If we have 50 oil prices, but we are at 40 now, were talking about running a larger budget deficit. Do you think that might be on the cards, one of Vladimir Putins short cards . Alan this is where the key points i make about russia. The economy matters a lot more than people give it credit for. Chris we showed you this, it is right there in your face. But i think you also need to take into account that investors the kremlin is very, very concerned about Economic Trends treated it is like a back of the envelope explanation. The stronger economy, people dont. You cancel manus cranny will have to call time. Chris weafer, thank you. Higgins, great to have you. Still to come, commodities. Will moscow move . Russia prepares to announce its latest policy decision. The commodity crash may mean miners. Or in a draft from the Climate Change talk is to be pushed back to tomorrow. Countdown. I am manus cranny. Longest losing streak and almost six months but these are the European Equity futures. London is done at 20 points a little bit of a decline there. China with a little bit of a pickup. What we saw there was a real these equity markets in terms of the day ahead. Lets get the bloomberg first word nejra . Russias turn of centralbank to announce policy today. They will keep rates on hold despite the countrys first recession in six years. The company owns club med, Cirque Du Soleil and has interests in commodities and pharmaceuticals. A petition to have donald trump banned from entering the u. K. Has received half a million signatures. Petition with more than a hundred thousand signatures is automatically considered for debate in parliament. For more on the stories and others had to the bloomberg terminal. Manus the equity markets are wrapping up her session for the week. Eidi is standing by the longest losing streak in six months. There is a sea of red behind your. I think its a week we would all rather forget. I just one referred this map for you to make sure we have all hong kong up by nine. Already 1 there. Japanese markets did see a little bit of a recovery after a heavily sold. Ing we spoke about the International Story how this is really waiting across the sentiment. Company just one because it is their largest privately held conglomerate. A number of other companies that they have business with somehow are related to. Trading theyntinue were marketed lower. They are also making people nervous. We saw the yuan. We are seeing the biggest decline since the august evaluation where it really took that leg down. Saying this is the pboc weakening the currency to get ahead of that curve. Next week well get a better idea. Retail sales figures would give us a better idea of whether we are seeing these rate cut since november. The slowdown is starring to look like a hard landing. Most of them were in the japanese markets. Up by over 7 . Particularly when it comes to sending a nice rally across the farming space. Population. Aging thai airways surging for most after eu regulations. We also saw gains in the Japanese Airlines accounting for the forecast of the better than expected of profits going into 2016. As a region it was another session to write home about. Manus that is heidi wrapping up the week for us. Is expectedrussia to keep Monetary Policy in the countrys battle for the first recession in six years. Ryan chilcote is here. How sure are investors . Of the 34 economists, the median view is that rates will stay on hold i have to say that about a third of them think we will see a small cut to the key rate. If you ask the same question a couple months ago you wouldve got a different answer. A lot more of them really thought we would see a cut in rates. There is this new concern that has been taking down a little bit but it is way too high. The ruble has been going down a lot more than that. Some say the ruble should be a lot weaker because russia imports a lot of stuff so that concerns and the second is russias economic retaliation. The russians banned a lot of turkish imports and the concern is that though it wouldnt be massive you could see an uptick in food inflation on the back of that. Thats why the majority of economists and traders think they will not cut rates and save the gunpowder for another day but she has the capacity for surprise. That certainly sits with the knowledge, the chief Investment Officer with avian private banking. Russia isthing with he was quoting the ruble above observe in the context of low oil price. The reason why is that the balance payment is in better shape than it was a year ago. It something that maybe a support and probably not too timely to come this afternoon for this morning. Considering the environment we have on the oil price. Go in theend is to direction of cutting. It, we you think about had a new Zealand Center bank and the Central Banks there is a lovely line in our story today that currency traders back here get worse. Next week you have the czech republic, you have sweden and hungry. Janet yellen makes her decisions. There are two money schematics. The purpose of the central bank is to create a certain level of uncertainty to avoid unidirectional trip unidirectional trade the ghost too far. They have succeeded in claiming the expectation for the sense of give urgent trade. Eurodollar is trading at a rate which is compatible in the level of volatility on the eurodollar is coming down. For the decisionmakers the real economic decisions very much in control. Manus what i found fascinating is with had a number of different central bankers, what is you expect so much. I am being subjective, but you are all so greedy, you are also euro hasous, the bounced back 3 since this discussion. This is a question i have at 6 00 a. M. , is it highyield or treasury . Pure bond market the diversions is very much in the market already. The diversions can still be played by playing the credit market because its something that is rather stable and you have to stay for most of next year. Market the Government Bond largely benefited from qe. Thats were the returns are. Hedge if it goes to solobased. Mentioned highyield, but it depends who you speak to whether highyield is set for the rather large bubble in the rate hike cycle or with commodities, miners and all of those big kind of beasts of the market potentially under pressure. There is still appetite for the highyield. Between equity rates in the bond rates. Standing in the middle have to go at the standing for sure if you exclude the most dangerous play, you can find some good return with very low support traded we are going into a recovery phase in europe which means we should expect the rate to stay low. Liquidity is something that is not the most in the yield market. Of are paid for the lack liquidity. Isus is a line i use which this time next week you have the meeting in bond traders. And somebody is not prepared. From the Equity Perspective there is still equity in the market because the rate rise is not something to be harmful to the equity market. We had the surge for yield for a long time and the return you can get with dividends higher than bonds. Remaineal so there will an appetite for the simple reason. We might see volatility around that. There will probably be concentration around the winners. There is still a large growth orential in the Moment Health care for instance. We are the big winners. Manus you will stay with me and we have a couple of big subjects to get to. Ow cheers to that next is the winners of the commodity crunch. Nejra brazilian prosecutor has filed civil action against php after the fateful collapse. It is alleged that didnt properly comply with state regulations. At least. Theirung brains of had bond rating cut. He plans to return more than 6 billion to shareholders. Suspended ineen hong kong after a report that the bridge chairman has gone missing. The 17th richest man. Million to ever tougher in missions standards. The car will make up 40 of its lineup by 2020. The plan to hire investors in the u. S. To address concerns it is falling behind on m a deals. Should to find out more on the stories and others had to head to bloomberg. Com manus it has been quite the week for commodity producers with Angela Merkel and having to answer tough questions from their investors but there are some industries cheering the decline. Chief correspondent has more on this story. Is still javier, we are still so doom laden, who can benefit in 2016, how, why . It consumes a lot of this for the price. British airways was a big consumer of jet fuel for any automaker buying aluminum or steel and fuel Companies Like nestle and you deliver who by week, soybean and other commodities. Between 30 . Wn aeyre benefiting for significant reduction in cost. Wellholding up relatively but in general is a big drop in their input costs. From an investment point of argument for the discussion we had was that nestle is hedged and will they continue to hedge. Perspective how long until you see a Material Impact from these commodity moves. There are recent effects from the commodities and i think it has to be seen in the Global Trends who will benefit and everything connected with travel. Also you have the trend of travel which is expanding gigantically. This is something that will benefit from companies in the auto business if you look at marriott and the hotel change. And if you think about the royal they have a megatrend. To me these things have an unexpected. Youe are telling me that feel better and you may go to their to the cafe in that area your stopping on the way and you take a sandwich. Those products in the petrol station have increased. Chocolatey buy some because you will spend less filling up the car. You want to enjoy the moment and to go to starbucks. Woo youe is trying to in. He was probably feeding you biscuits. When you look at what is happening to oil, i can rubber this conversation about bp and shale and with that will be a boost. Putting it into oil, oil heads for its worst week since march. This week we are in here for a little bit earlier and the venezuelans would have you believe it will be 20. Is there an opportunity in those refineries . Think about names in the u. S. Like bolero like valero. This is a big independent refiner in italy, 107 up over the last year. The demand has been relatively strong. Whether theyion is will continue benefiting from demand. We continue to seek signs of the demand for oil and it is slowing down from the high levels of 2015. Whole on that fact, the argument of 2015 the societies which are reluctant to combat production is that they wanted to keep market share amid concerns that the market share will continue to rise. Thatunderlying belief Global Demand is faltering, that does not bode well for 2016 in terms of energy exposure. Fracturingy of demand is the story of 2015, not the story of 2016. I think there will be a reversal from emerging markets that really pull down all the trade and the demand for oil. We can expect the demand on that front because we will see all the measures of lower currencies and policy measures that will rekindle the demand from china and other emerging markets of that is the potential surprise. I dont buy the story of oil at you dothat perspective the reporting on these stocks is it medium term . Sometimes if you look at theyst today, a lot of forprofit for next year for big oil the numbers go between 50 and 60. If we remained below 40 those numbers will be revised very quickly. I will just pull this up on the terminal. If we look at the price expectations, this is nymex. Now and the median 2015 and by the end we will be 53. We are beginning to readjust our view in terms of where we are. The bigger problem in the oil market is we have a stronger correcting. W it is making the oil go flatter. At a certain point in time we make get to a situation where the investment manager could have a role in the oil market and that is one of the reasons why they are called by hedge fund and other managers. The private banking. Thats a state of play on commodities. Lets show you where the european futures are they have been trading down managed to pull back from the brink. Focus later inin the day. These markets are hunkering down for the long haul as we go toward the Federal Reserve. It is all about liquidity. Two late nights in tucson. This but is we do still a business. We spend the sure, tv has evolved over the years. Its gotten squarer. Brighter. Bigger. Its gotten thinner. Even curvier. But whats next . For all binge watchers. Movie geeks. Sports freaks. X1 from xfinity will change the way you experience tv. Tand thats what were doings to chat xfinity. Rself, we are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Guy welcome to on the move, it in730 in london, 8 30 frankfurt. Crude is on a sixday losing streak headed for the biggest they and losses since march. Even the major of hsbc very shortly and the ministry in shanghai reports out of shanghai that the billionaire chairman has gone missing. Shares are halting. Guy we will find out later where these guys go when they disappear. With Everything Else need to know is near a. Managementd avenue is blocking them pulling money from a 38 million mutual fund. They put assets from a fund in necessary to avoid sales. Argentina has kicked off with several wall street banks to loan up to 10 billion. They tried to shore up centralbank reserves at the lowest level in nine years. There are divisions over the obligations laced on rich and poor countries. Reports a draft final agreement being pushed back to tomorrow. Guy thank you very much indeed. Lets talk a little bit about what is happening here. At the moment we will see a negative open. Member that we did see a positive close on wall street done by 2 10 of 1 . That russian Rate Decision is going to Pay Attention to front and center. Bring up the other board and we will check out the markets overnight. Copper getting a bounce it continues a sixday losing streak on wti. 36 per barrel. Guy absolutely amazing surrounding that story. A lot of people calling for jakob to go. Lets take a look at the chinese heading forh you on the biggest currency drop since the devaluation. Paying attention but not as much as they did in august. Heres the global head of fixed Income Research and hsbc. The market got really excited in august. People are absorbing it. It is happening more quietly. Most forecasters have a weakening chinese currency in the next 12 months. Like many forecast is either completely wrong or was met earlier than expected. Anyot a huge move on typical currency fair. When you scale it for 12 months. If you kept that pace for a year youre talking a major move. This is probably happening because markets are thinking ahead of the fed and next week we have this move affected. Significant because its a militant level we saw in august. It becomes a bigger move and you think about whats happening with excess capacity in china. Ust been exacerbated by this this is important to the global story which is often underestimated. One part of the world is exporting its deflation in a happens through the currency or the rates that affect the currency or bond flows there are all sorts of ways of this happening. This is exporting a deflation risk. This is publicly available information. Biggest. Second currency going down and the bond flows might be less. We are going in opposite directions. You have one or the other. The direction of trouble for me is quite clear. They are exporting deflation. Guy when we think about what happened with the imf that we start back on the path of a slow and gradual devaluation, does it have a little bit more credibility in your mind . Its all about timing. This is all happening as everyone expected and it may be sooner rather than later. Its catch me by surprise because forecasters like to put things into next year and the reality is it may happen sooner. Jon there is a negative connotation attached to the were devaluation. If this was p early for Market Forces you would see a weaker chinese currency anyway. Should we avoid the term devaluation just because theyre controlling the reference rate . Strictly at devaluation. That is the correct way of looking at it. The end ofing toward that range. It is very gradual and a very slow move. Elephant in the move, 1. 5 . I wonder about the gyrations in china and the bond flows everyone is talking about what is that mean for the next hour . The bond flows have never me. Ly worried that is a public held those bonds and they wind up selling them and are buying them. So the question is why is this happening. It depends where you are in the world talking about opec countries as well. Theyre selling for a reason. So if you look through the last 12 months, bond yields have not moved. Fiveyear yield and the 10 year yield is more or less where they used to be. You have bit of round tripping. So i think weve all been but nobodyy excited expected to be honest. Selling ofs, the these bonds is a tightening. It is a tightening for one part of the world and is listening for somewhere else. Quite fair to say that centralbank buying around the factors, if you other its fair to say that the rigorouss low so to be it would normally push the yield up. It doesnt necessarily have to drive yields higher. Record low level. The turnaround is quite accumulating the billion dollars of goods. Hes been setting the equivalent amount. 1. 5 billion turnaround. Thought theve mathematics would be phenomenal. Russia hike or hold . Or even cut . We will talk about that when you come back. Jon good morning from the city of london. 17 minutes away from the open. Lets get across a nejra cehic. Been downgraded with the leverage position with the leverage potential for further switching with commodity price rushers. A brazilian prosecutor has filed a civil action against the hp. It is alleged they didnt properly comply with state regulations. At least 13 were killed when billions of gallons swamped villages. That plannedys dividend and share buybacks will likely increase debt. The pizza hut and taco bell brand plans to return more than 6 billion to shareholders before it sends back its time to business. Thank you very much indeed to nejra. Guy russia responded with an emergency rate increase. Is stephende him from hsbc. Its interesting, this is quite a tight call. Is that we get nothing. Talked to about three dozen eight economists in the medium is no cut and one third figure could be a cut. The majority of couple months ago thought there would be a cut. From the 11 key rate until where we are now. That newfound concern about inflation. Inflation is at about 60 and it has actually been ticking down from 17 and yet there is concern that it could come back. Globalson for that is depreciation has fallen about 16 this much with which puts pressure on import prices and also geopolitics. The russian retaliation for turkey for its the downing of its jet with less variety on shell competition and higher food prices. Whatever happens with dollar ruble in the cruise market at the same time it gives the inflation problem. Steve, for your world what i have noticed and what everyone has noticed is that treasury yields has matched oil tick for tick. And to the last few weeks. The reason for this is because the fed is in play. Weakerair to say that oil prices will push headline inflation lower. Know we now have this new development some of the commodities have some catching up to do with the oil price these supply shocks, this is what it is the dont just and in a few weeks. They stay with us for a while. I would like to point this out, i would say normally, you would but its goingwn down anyway. Becauseus a balance clearly she is putins person in place. How does she manage the political story. The politics and the interaction with economics are more and more pronounced. Aboutple love to talk geopolitics at the end of the day it is the oil price and in at howys if you look much a barrel of brent costs right now its a fiveyear low. Maybe they will balance the budget or narrow the budget and not let it get too crazy, but at the same time that weaker ruble that would allow them to do that could increase inflation and they cannot allow that to happen. Contrary to perceptions, what moves Vladimir Putin and the governor of the russian centralbank is a concerns about the domestic economy and how it deals with the commodity slump. Sections are necessary. Another driving force right now. Emerging market bonds. If youre prepared to be selective and take some risk that might be the right time. One of our case for next year is the worst performer for this well,n indonesia as malaysia looks as bad as before. We are picking a few. Play . That the valuation effectivek at the Exchange Rate where the real yield is and start to think the fundamentals are bottoming out. Our rates people are more confident than they have been. Jon he will stay with us. Ryan chilcote, where are we . 11 minutes from the open. Futures down by 23 points. Up next, we look at the potential corporate movers and miners. Good morning. 7 53 in london, 8 53. Sit nejra cehic is here with the stocks to watch. Nejra i am looking at miners this morning. This has been downgraded to three and may be cut further to junk. Further earnings deterioration as result of commodity priced pressures. The stock is down 73 . It has been vying for that spot with glencore. Keepingas well to bhp an eye on bhp billiton because a brazilian prosecutor has filed a civil action against them over the fatal dam collapse at the mine last month. Jon lets get to our morning mustread. The chief economist for ecb said that markets set themselves up for disappointment over the new stimulus measures. Even to the most recent Economic Data has been encouraging. It seems like a little of a team effort. Centralbank almost more than any other central bank in the last five years. Are you surprised by the reaction . Blamealways have the somewhere else. But we cannot keep doing that. Some say if we take responsibility, the markets get ahead of themselves. Market safety it is complicated by the fact that the ecb is pushing on the quantity button and the executive rate one at the same time. Is going to be complicated because pricing in what you think the ecb is going to do or was jon druggie has one of his big speeches, does the market, on a little bit later draghi has one of his big speeches, does the market come on a little bit later . The point is that the central bank is not there to set up for you to make money. Jon they did just that on thursday. Tephen major will stay with us futures lower and we are down by 22 points. The market open his next. Sure, tv has evolved over the years. Its gotten squarer. Brighter. Bigger. Its gotten thinner. Even curvier. But whats next . For all binge watchers. Movie geeks. Sports freaks. X1 from xfinity will change the way you experience tv. Tand thats what were doings to chat xfinity. Rself, we are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Jonathan good morning, and move. To on the we are moments away from the open. Guy johnson has your morning brief. Guy u. S. Crude is heading for its biggest weekly losses since march. And a mystery in shanghai. Credit, halted. Jonathan i. E. See this headline every morning. Every morning i wake up and somebody is missing. Over to neasee the opening. Lot of focus on the fed next week. The possibility of a rate rise, and also, investors wait to seek more data from the u. S. Today and china in the weekend. Lets look at the equity markets. 4 . 100 is down we are still waiting for the dax to open. Forhe meantime, watch out anglo american. It has been downgraded. It may be cut further. It has been