Morning. Let us get straight to the markets. We have equity markets around the world under pressure. The shanghai composite is lower this morning. Going for the worst rate we have seen in china since the slump of last year. The biggest twoday loss since last year. Is view from the market critical levels, that would be a 50 retracement from that magical high that we saw two years ago. China stocks headed for the biggest twodate loss, margin traders have cut for the 18th straight day. They are getting out of this market. Back to give you a basis. Let us get to the recording season. It is really kicking in. Let us deal with santander, spains biggest bank. In terms of capital, that is the critical issue for the marketplace. Core equity fully loaded, 10. 05 . The mention is to raise the capital level quite aggressively to match her peers in the marketplace for 2015. They made a profit, a net profit of 6 billion euros. That is the santander capital position. That is the santander net profit for the Fourth Quarter. Let us deal with the net profit, it came in at 25 Million Euros. Fourthquarter net profit was 25 Million Euros, the estimate out there was for 1. 4 one billion. As i keep an eye on the nosecone we look for any writedown, or any position they had to make. Let me bring you know of artists numbers novartis numbers grade with a dividend, it was disappointing relative to what we were expecting grade we were expecting a raise to 2. 8. It comes in at 2. 7 buried bloomberg forecast 2. 8 grade. Bane of it has been the novartis life. Were looking for strategic overalls. Let us give you the numbers. Billion. Arter is 12. 5 they have a new ceo, he has been named as a new ceo. If you think about the compact lenses come all of these solutions you had to buy 25 years ago, they were revolution. That is the business they own outright medicaid over 40 billion for the business. Dividendosed a 2014 below what the consensus was buried the numbers are back in line in terms of blockbuster sales. Whatave the dividend under the market anticipated, 2. 7. Sales and core operating income 2015. E at a level of as we get a little bit more detail on the santander story, i will bring that to you. In the meantime, you need your bloomberg first word. Nejra chinese shares headed for their biggest twothey loss since last year. Its slide,o resumed after slumping industrial profits in china increased concern it is deepening grade japanese stocks have rally promoting the benchmark on course. We get the Federal Reserve first Interest Rate decision of the year later. While policymakers are exciting to hike this year, markets show some investors are taking out protection, in case rates go negative. A poll by bloomberg shows the Interest Rates sinking next year has risen above 10 . Thewhile, a survey of economy shows most expect the bank of japan to add to record monetary stimulus this year. But probably not at the monetary stimulus meeting this week. Raising expectation, oil, and the yen decline has put pressure on the boj. Sees softnesss he in china, especially hong kong, after forecasting the First Quarterly decline since 2003. Even with the new year shopping season, china may no longer offset the broader slowdown in the Global Smartphone market. That is your bloomberg first word news. For more on the stories, customers can head to top go. Manus we will check in with the asian markets with shery ahn. Novartis is a miss. 1. 20. Ket was looking they missed on dividends, earnings per share. The headline on the bloomberg terminal for santander, quite a shocking detail. Euros, we will have a conversation with the ceo of it later. She is the head of santander. Francine will undertake that conversation grade lets get to shery ahn standing by. Manus. Good morning, we saw some positive sentiment spending over from wall street, but i was not enough to help shanghai the composite down to its lowest level since november. As you mentioned earlier, it is the biggest twoday drop since last years market rout. But itg seng is rising, has given up some of its earlier gains. Sentiment positive coming through from japan. 2. 7 higher, and we saw some gains in telecom and energy stocks. But it is down more than 1 , because we had inflation data out this morning showing the prices grew more than expected. 1. 7 on year in the Fourth Quarter, and traders reduced the central bank by midyear grade look at what happened. When that inflation data came out, look at this jump in the australian dollar. We are now seeing it rise 3 10 of 1 against all of the major peers, for the second day against the u. S. Dollar. Throughnt to take you some asian movers because we have to talk about those automakers in japan. We had so many headlines this morning. First of all, we had a report from local media saying that toyota was in talks to form an alliance with suzuki motors. Then both automakers denied those claims. Still, suzuki gained more than 11 . Then we heard that toyota was going to buy stakes, but they did not already own them. That ended 60 higher. Manus thank you, shery ahn. Does little bit of parity around the samnatander numbers. This is for payment protection cost in the united kingdom. It will be focused on the bad loans. Dont forget that two of the biggest markets are u. K. And brazil, along with a naturally. 4. 63 ,tually drops to down from 4. 5 in september. The bane of every bankers life drops down from 7. 8 billion. In a low rate environment, that is no shock. Francine is in spain. She will sit down with the santander ceo to win the numbers in more detail. U. S. Earnings are being hit by slowing Global Growth and fx moves. Tim cook highlighted this, after the worlds Biggest Company reported earnings last night. Tim we are seeing extreme conditions just about everywhere we look grade major markets including brazil, southeast asia, canada, turkey, the eurozone, they have been impacted by slowing Economic Growth, falling commodity prices, and weakening currencies. Manus but there are plenty of other challenges that they are facing. Here to break those down our caroline hyde. This is a pretty big report for them. Their concerns are that the company forecasted that they will slow down. This is what everybody was worried about. Have we pay . Eaked . Of sales they get 68 from the iphone. They make macs and services as well, this is a company so wholly dependent. Is due,here credit record revenue and profits for the last quarter. They are making 50 million per hour. To put that into perspective, a 40 decline in sales. That is why you saw shares fall in afterhours trade because they are being hit by the slowdown in our demand for smartphones. This year, smartphone growth was just 10 . We have never seen it at that sort of level in decades. We could see also the double whammy of the china slowdown affect. This is affecting Growth Potential in the secondbiggest market we are getting into. But the consumer is not picking up the slack quite as much when you have the decline from brazil, canada, japan. This is a company reorienting itself. Made 31o point out it billion from the ap store, apple pay, the icloud. They are the biggest Internet Services company in the world, as well. But they are really trying to shift and reorient themselves. Manus that is bring in vasei leois. The apple store he is the very suffocation of two major stories. One, the devalued yuan rebalance is the consumer. And the dollar is causing issues. And this is a ceo this is the worlds causing him issues like he is never seen before. It is almost the very personification of every fx risk there is. I think that is right. It is actually the fed that has been communicating that for some time, in the sense that it has grown a number of worries about the strong dollar. I far as this is concerned, think it is not going to play the most important part and the policy going forward. But it is definitely one of the things in their. Apple, the2014 for strength of the dollar, there were up 85 of them in revenue in these current years. Quite phenomenal news in the f they are notx subscribing to the doom and gloom in china. Manus we will spend a lot of time on the fed throughout the show. Obviously, it is that twoday meeting. We will see that statement tonight. We focus on china, the yuan, and the big question i had this perennial debate, you were here and we had it been i love this article on the terminal this morning. The numberys that as of times the boj, fed were mentioned, there is this huge correlation in terms of and theip spikes immediate moves of the asian currencies. Down Yuan Movement or is there much more to come . . Asia is critically important beyond china. Asias number two for china. We have nothing the full extent of the downside in the war. What has been playing out is that, on one hand, you do have china and the pcob moving towards liberalization. On the back of this, you have easier Monetary Policy, so you have capital outflows. And to the extent that you allow the currency to move more freely, the capital outflows should lead to further weakening of the yuan. That is the broad overview. In terms of implications for the rest of the region, definitely implications. Simply, when the yuan depreciates, it makes it much more difficult for competitors. So from that respect, the big competitors in the big asian arena, like south korea for example, they will have to follow policies that will favor largely weaker currencies. Manus who do you think will sort of fall over first in 2016 battle for the most defensive against the yuan . South korea will definitely be one of them. It is going to be a country that will spend a lot on the Chinese Industrial cycle in the Global Industrial cycle, which is currently weakening. Competitors with china, as well. I think south korea japan is another case however we have seen a lot of yen weakness. I am not entirely convinced. Manus do not necessarily be fooled, in the market has presented itself. Caroline, great details. That is it you up to speed. 9 a. M. In the u. K. Shareholders get to vote in the hague, and the planned takeover. Today, we get Mortgage Applications and new home sales out in the u. S. That is going to be an intriguing number to get. And the main event is the Federal Reserve they released their Rate Decision at 7 p. M. Have a coffee, you dont need to do anything until 7 00 this evening. Unless it is the central bank somewhere else in the world. Stay with us. Back, a little bit of breaking news from a Global Chemical company that also has global gas exposure. The German Company will take an impairment, 600 Million Euros. This is in the Fourth Quarter, 600 Million Euros in impairment. The prices for oil and gas for many low in 2016, so we have been hearing this sentiment come through. Lower for a lot longer, as we got off the airplane in davos. Billion euros. That is breaking news. Nejra toyota shares have risen on the news it is planning to buy out the remainder of its unit. They hold a 51 stake, considering several possibilities, including it making it a whollyowned subsidiary. That came as they announced global sales of 10 million last year, meaning it is the worlds top automaker. Capital management says it made important mistakes last year. They said they also learned humility in its worst annual performance ever come with a net loss of more than 20 . Rose 20 , after Oprah Winfrey tweeted about losing weight after using the program. She posted on twitter, and she said she lost 26 pounds, despite eating bread every single day. That is your Bloomberg Business flash. Manus i could talk you about weight watchers, but i will not. I am with oprah. It works. Let us talk about a much bigger issue, the fed set to release its first policy statement since the rate hike last month. While reserve officials are expected to continue raising rates this year and next, bond traders have a very different perception of what is going to happen in terms of the second hike. Our treasury reporter joins us now. That is the understatement of 2016, between the Trader Community and the fed, what are they expecting today . Bloomberg surveyed over 100 economists and each one, every single one, says the fed will hold rates. They just raise them in december. They said they will go gradually. It is really too early to expect them to move again today. Which leads us to focus on the statement. A lot of people i speak to seems to think there will be a repeat of what happened in september. In september, despite now, there was a lot of Global Market turmoil. The fed mention this in the statement, using keywords like global focusing on Global Developments and developments abroad. People are expecting a kind of repeat of that today, that the fed will give a nod to these Global Developments, as global turmoil, and buy some more time. Manus that janet yellen is losing that with the dollar, and terms of it still accelerating higher. What about the u. S. Economy . Is it on track to support a hike cycle . Are we seeing enough momentum . Not exactly. Wes well, the strong point of the economy is the jobs market, the labor market. The fed took note of that in its last statement. However, there is a sort of growing kind of laundry list of things that could certainly give the central bank pause. We have manufacturing shrinking, inflation stuck near zero. The fed wants to percent. That is not happening. Retail fell in december. We get numbers tomorrow which are supposed to be down. On friday we get the big 1 Fourth Quarter gdp. That will be up based on our survey, not even up 1 Economic Growth in the Fourth Quarter. I say, a growing list of reasons for the fed to pause. Manus let us see what the statement brings. Wes goodman, our treasury and fed reporter. We bring you full coverage of that statement and reactions to it at 7 00 this evening. Let us bring in vasileios back to the conversation. There,istening to wes they are chipping away at the confidence level. Do you concur with that . this excitement seems to be normalizing. And at the same time, youve seen the downsize and the number of data releases. There is no question that the job market in the u. S. Is doing well. The big question is whether we will start seeing it filtered through the strong labor markets to inflation. And the other thing which i think has been worrying a number of analysts, including the fed officials, is we have seen a dramatic decline in oil prices. And we are not seeing that start, as part of the consumer is concerned, dont be wrong. It is still strong. But we would have expected it to be stronger. The big question in 2016 is whether there has been structural change between the relationships between inflation and the labor market. Manus personally, i think it is a rate of the psychological contract. There is an irrevocable change in Human Behavior since 2007. Hdat is my personal, nonp opinion. These correlations do not hold up anymore in terms of what we should do. Let us talk about the dollar. There could be a correlation there. That you and the boys, and girls, have put together. This isey hiked rates, the Effective Exchange rate im referring to back in december, the dollar. Keeps on going more so because the rest of the world is under pressure. But this is a battle for janet and in termssider, of the reporting season, were seeing it come through in apple. This is going to be one of the biggest currency headwinds for the economy and the reporting since 2011. How much basis do you think the dollar plays into the conversation . Vasileios right, i think you showed the broad dollar. This is good to be a key distinction. If you look versus majors, and especially the euro, the dollar has not done anything. As a matter of fact, it is actually lower since the ecbs surprise in the beginning of december. So i think the bottom line out of this, and this is what we have been saying all along for the past four or five months, the dollar, especially against is up more than the current Interest Rate is pricing in. And i think it is largely, substantially overvalued against major currencies. I can only see the dollar going down from here, but it is going to be slow growth because the other Central Banks will try to push back to ensure currencies are weak. Markets,ally balanced the ones that have high deficits as well, and the currency is very high, it will be a different story. Manus stay with us. Of next will talk about shell. It is their shareholder vote today. It is earnings season. Erickson gives us the numbers. Fourthquarter net sales, 73. 6 billion. Excluding the restructuring, 36. 6. 37. 5, they have missed on sales and dividends, expecting a 3. 7 Swedish Krona that i just made up a currency. For 3. 55. Te was estimates were at 70. More to come. In the meantime, lets talk about the rest of the earnings we will get. As the micro, and less than 30 minutes, we will also get numbers from boeing, facebook. And ebay, those are all to watch today. In the meantime, the bloomberg first word. Shares headed for the biggest twoday loss since last year. Oil has also resumed its like him after slumping industrial profits in china increased concern the slowdown is deepening. Japanese stocks have rally, on course for the drop. We get the Federal Reserve first Interest Rate decision of the year later, policymakers are expecting a hike this year and next, the market shows some investors are taking out protection in case they go negative. Data compiled by bloomberg shows the u. S. Interest rate sinking below zero next yea