Dollar for the First Time Ever. It is it is a morning. You need to be up to speed. Caroline hyde has your bloomberg news. chinese stocks have extended last weeks plunge after concern about the slowdown deepening. The Producer Price index slumped 5. 9 in december, sending declines to a record 46 months. The cost of borrowing the yuan has jumped by the most on record. Tightened supply of the currency following intervention by the Chinese National bank. Ubs will double its staff in china over five years. Their chief executive says that a time of volatile markets is as good a time as any for wrapping up operations. China is not on its own with those challenges. We have to expect some adjustments for 2016. Those are also good times to plan for the future. That is the reason why we are starting to implement our Strategy Plan in the next five years. We think we are going to double our account in this region. Crude has extended its slide from an 11year low, confirming the view of hedge funds that prices are lowest since 2010. The bad data fueled concern over further weakness from the worlds Biggest Energy user. And david bowie has died at the age of 69 according to his publicist. A message on the singers official Facebook Page says he died peacefully today, surrounded by his family, after a courageous 18month battle with cancer. He had just released his latest album, called black star, on friday. , headre on those stories to topgo. Guy we have seen a significant once again. Sia how is that going to be reflected in the european story. The bloomberg terminal fair value calculation has the euro stocks down by point durant this stage. The ftse down by. 2. The dax down by. 6 . The dax is once again the other performer as china is under pressure. Some of the big stocks have a rant reflection in them. Its like old mutual could be a we seehis morning as london open later on. It looks like we will see a softer opener acted in europe as well. The data coming through fueling concern and economic slowdown is deepening. Joins us now. Walk us through the Market Action we have seen this morning. At also what has happened with the currency as well. The stock market is once again under pressure. Compare and contrast what is happening in those two markets. Robin china is finally beginning to trade like an emerging market after months of stability. They were seen for years as a ,aven in the middle of chaos even when the u. S. Started paring back. Things have really changed it now. In the offshore u. N. Market and offoffshore u. N. Market shor and onshore yuan market, they can limit it to 2 . They cannot do that in the stock market. So it is all up in the air right now. We do not know what is going on. A fair idea of what they are trying to achieve at the end of all this. It is still early days. There is a lot of uncertainty in asia. How worried should we be that we are seeing interbank aren costs jumping in hong kong . Robin i would not be extremely concerned about that. It is worrisome that this is happening. It shows that china does not have much regard for other Asset Classes when it wants to push through a policy initiative that is to narrow the gap between the offshore and the onshore yuan. The hong kong yuan borrowing rates has been volatile of late. A matter of concern and probably rates as ithibor tries to push of a currency against the dollar. Guy always good to hear your voice. Thank you for taking the time to join us this morning. Lets welcome the chief Investment Officer at good morning. Surprised to see another week starting this way . Not totally. We saw week data over the over the weak data weekend out of china. Investors are more aware that the chinese domestic market is quite retaildriven. The authorities are waking up to the concept that you cannot really manage a market. Last week was ineffectual. Guy the rant hitting 17 against the dollar. Dr. Under pressure. Wti getting crushed again. Is that you are seeing a stronger dollar. People are worried that a slowdown in china will impact a withr of Commodity Markets demand featured by the price of oil. Consequently, it heightens the volatility and puts further pressure on these markets guy . How do i invest . I think you stay in the developed world and remain quite cautious. The degree of risk aversion is undoubtedly required of this sort of time. Guy i am selling equities and buying bonds . I do not think you need to be that extreme. Do not need to take on board too much risk in terms of equity investment. Au need to look and see margin of safety. What is it that you are buying into . Is the earnings stream good . Is cash flow going to be generated by these Equity Investments . Will that produce protection in these volatile markets . Guy but i do not step out and just do only cash . I have another week or the ftse is trading down. People are cutting their forecasts for the year. Last year was not great. Why am i not sitting this one out . Cash return is not high. Guy not negative, though. Having been involved in the markets for over 30 years. Ive have never time to the entry and exit into the next market. I think you have to take a longer view. This is not a market for trading. I would emphasize totally. Guy plenty more to come from julian. He is going to stay with us. Up next, a warning from Larry Summers. We will discuss why next. Guy welcome back. 42 minutes past the hour. Lets get you up to speed at what has already been a busy morning. Electrolux chief executive officer is to retire. He will be replaced by jonas samson samuelson. He is leaving after the collapse of the swedish manufacturers deal to buy general electrics Household Goods business. Ubs will double its staff in china after five years, adding about 600 people. Aat is as their ceo bets volatile market is as good a time for ramping up operations as any. China is not on its own with those challenges. Those are the good times to planet plan for the future. We are starting to implement our strategy and in the next ive years the next five years. Ceo says volkswagens the carmaker is sticking to investment plans. It continues to view the United States as a core market. This comes ahead of critical meetings with u. S. Government officials after the emissions cheating scandal. He was speaking at the north American International auto show in detroit. We know that we have let down customers, authorities, regulators, and the general public here in america, too. We are, i am truly sorry for that. I would like to apologize once again for what went wrong with volkswagen. Caroline investment banks are lining up for what could be the biggestever ipo. Hsbc, jpmorgan, and Deutsche Bank are in position to win a role if saudi arabia goes ahead with its ipo of aramco. It is considering selling part of its business or a state in a subsidiary. Much. Hank you very the recent market volatility coming out of china is not cataclysmic according to joseph stiglitz. It is not cataclysmic. It is a slow process of slowing down. There is no real news. What this does remind us is market rules matter. The way you structure those market rules can either diminish the volatility or increase the volatility. What we are seeing here, in a sense, is a consequence of some market rules that were not as welldesigned as they could be. Joseph stiglitz saying do not panic. We are not seeing a cataclysm happen in china. That is a different view than the one being taken in our morning mustread today. Larry summers, treasury secretary former treasury secretary says guy Larry Summers saying, pay attention. Politicians send tend to ignore market signals at their peril. Is that a fair point, that policymakers need to listen a little bit more . The noise coming from markets at the moment is incredibly downbeat. In the shortterm, it is downbeat. Areade the point that we going through a massive change in the chinese economy, which is reflected back on the rest of the world. That is over 5, 6 years. Returning to policymakers, i am sure they are listening. A bounce back from George Osborne when he was speaking about being more cautious. Allspect they are taking on depreciation. In the shortterm, these market moves can hit sentiment. We have got to make sure that people realize that the developed world is still functioning very well. Oil has been down for a wild. China is going to be exporting deflation for quite some time. At four times this year. That is against the backdrop of a Global Economy that they say they do not pay that much attention to, but is very from china,wing flowing from the emerging markets, incredibly powerful. You wonder if the markets have it right rather than policymakers. I think we have to wait and see in the next 12 months. Particular this reserve board has been more receptive to listening to the markets. I think janet yellen is sensitive to the noise that comes out of the market. If you are a policymaker, you have to interpret noise and moved through that noise and look at longerterm as well. It is balancing those two together. If you expect the fed is not going to do what it has said it is going to do, then maybe treasuries are a good option. People believe that we will see some spike in yields. It simply has not come through i think it is interesting that Larry Summers forecast inflation. One should not underestimate where you are looking at high levels of them are in the u. S. And the u. K. , that Wage Inflation will not be more than it should guy again, it has not shown up. It seems to be turning into sideways for a very long time. We will see. There are indications in the u. K. And Certain Industries that there are still some shortages coming through. Particularly people entering the workforce. I think you will see pressure in 2016. Guy Julian Chillingworth is going to stay with us. We are minutes away from the open. European equities are firming into the open. We now have a positive read when it comes to the fair value. It looks like european equities could open a little bit higher. Not much, a flat open. Up next, a look at some of the Corporate News as well. Is going to bess stepping down. We will talk more about that when we returned to when we return. The hour. Nutes past we are eight minutes away from the market open. Lets figure out which stocks are likely to be moving. Caroline we have to keep in mind the market implications and their effect on certain stocks. The South African rand at one point slipping as much as 9 . That affects Companies Like old mutual. As well. Ye on investec these are two companies that will be trading on the back of the rand slumping. South africa is where the company was founded. Once again, front and center when it comes to emerging markets selloff. Meanwhile, electrolux, a new ceo. Electrolux chief executive is the one to bow out. He will retire on the first of february. Jonas samson samuelson will take over. It seems as though the collapse of the 3. 3 billion deal to buy general electrics Household Goods has been a nail in the coffin. He will depart, but he will remain on a consultancy basis. Watch for that stock to move on the open as well. I want to keep an eye on some of the stocks to watch in the united kingdom. They are related to our continued concession that his property in the u. K. Wimpey announced a record operating profit margin of more than 20 . Compensation prices are up, sterling is up. 2015 results ahead of previous expectations. Also made some significant disposals last year, boosting profitability. Amongsome, once again, many others to follow. Guy thank you very much indeed. Will there be a point in 2016 where i have to say emerging markets are so beaten up that i have to start rotating into them . i think there will come opportunities. If we use china as an example, the old economy is not the idea you should be looking at. You should be looking at the new economy in that area. Etf inople by an emerging markets. Would say that perhaps the etf is not the answer for emerging markets and you need to buy a fund that is looking to select stocks for you in that area. That will give you a much better opportunity of finding some real bargains. I think there will be some real bargains, but not possibly buying the market wholesale. Guy do you have to be country selective . Julian yes. There is a big difference between the commodity emerging markets, brazil and russia, and those that are much more consumerbased economies. You need to differentiate between those. You can include south africa in the commodity area more so than the Service Sector area. You need to drill down where they really are. Guy when does the correlation start to unwind . Julian there is a genuine concern, as we were chatting at the break, you have companies with high dollar debt. You need the dollar to stabilize. A number of these currencies will not come under pressure against the dollar. Guy great stuff. Stay with us. The market is about to open. Looks like we will see a fairly flat open after some really big falls in asia overnight. The open is next. Guy on the move. Good morning and welcome to on the move. Good morning and welcome to on the move. Here is your morning brief. The selloff continues. Dipping below 20,000 for the First Time Since 2013. Oil is also sliding. Ipo. Audis prepare an a manic monday with a rant. The currency plunges as much as 9 . It is hit 17 against the dollar. Or the First Time Ever european equities look like theyre going open fairly flat. Underperformer. Lets find out what is going on. Lets find out what the story looks like with caroline hyde. Caroline new week, same old problem. We are likely to see a job in european stocks. Upt week, the stoxx 600 give 640 billion euros worth. Is, it turnsere it into the red. China, front and center. A 46 month of the. Of drop in Producer Prices. Cataclysmic. It is not that much of a worry but clearly the market thinks it is. Down goes a. We are currently trading in the red. 25 . Se 100 up by we are seeing the euro it deteriorate ahead of that number. That phenomenal number in terms of u. S. Jobs on friday . A vague memory now as a look at the risk aversion. People worried about the u. S. Reacting to wage is not increasing. It is a risk aversion when it comes to commodities. Oil down a 2 . You think copper selloff, that is up by 2 . Again, china and the slowdown in the worlds secondbiggest economy at the forefront of investors minds. Getting into gold, again. Yen. Getting into gold, the odd stock you should be watching and what has come out. If you changes in management. The effects of market moves. The rand taking 17 for the First Time Ever. Affects old mutual. Electrolux cleaning up. Up. 05 . The ceo will retire on the first of february after that gm deal. By. 2 . Impey down record operating profit margin. Obsession guy . Guy we just had industrial output, very strong. Certainly versus what we were looking for versus the prior month. Markets are open. Broadly flat i would argue here in europe roughly flat here in europe. We are going to talk china. The random record good shot South African currency weakened 9 . We are going to go live to joe berg to johannesburg. Were going to get the latest from the Company Selling shares in its refining assets. Guy so, turning stock markets. Inhave seen an extension default that we saw throughout the week. Nobel prizewinning economists told Bloomberg China needs to boost demand to avoid a deeper downturn. I am of the view that you have to have both. On justpush too much the supply measures and not enough on the demand measures, then you could see a deeper downturn. Guy joseph stiglitz. Emerging markets currency editor, china keeping the reference rate changed over a second day. How are the managing it . It . Ow are they managing china losingon is the plot . Is the party losing control of the markets . Is it not being able to control the markets as it would want to. What we are seeing is today for the second day they stabilized the fixing. Their firms buying back the firms last week. Worked. Ng hasnt today we have stocks dropping 5 . That is unheard of over the last year and a half. China was seen as a rock in asia , in emerging markets. Really lose too much money, but things are looking quite somber. Guy robert, have heard a lot of people talking about the chinese stock market is not the chinese economy, and we should not equate the two. For instance, we are seeing the cost of interbank borrowing jumping sharply by the most on record. That has got to be something of a concern. Robert it is. The concerns are that it is going to get worse. The bbc the pboc continues stepping into the yuan market, buying its currency and starving the market of liquidity. This goes on to affect not just the currency, it affects hans, money markets, rates. Bonds, money markets, rates. This is no saying when will let up. Guy robert, nice to get your thoughts. Lets go to south africa now, where the chinese turbulence has a certain effect on domestic factors. Fallen the most in seven years. Ammo boxer. Ow is cooks very sharp. We saw the random foall. Almost reaching that 18 rant to the dollar mark. The sharp drop of 9 . Saw the rand going through that 14 rand to the dollar mark just a few months ago, that was during asian trading. Just showing you that liquidity is very thin. Guy are we going to see the authorities stepping in . Are we going to see possibly rate hikes coming through . This is going to have a huge impact on inflation. It has an economy that is on its knees. We have an economy that is struggling in south africa good we saw the rand. That coming from the lack of growth. A slump in commodity prices. As well as the setup and emergingmarket currencies coming off the usa kicking off its rate hiking cycle. Merrill lynch saying they are expecting south African Reserve bank may have pressure to increase rates by 50 basis points late