We have our special programming on the backdrop. It really is a market looking for a bid. It wasnt a good day yesterday, but you really wonder where the markets will be when we hear the statement from the fed this afternoon. Francine it will be interesting to see whether they link the markets to the real economy, but first lets get to the first word news. Vonnie thank you. The leaders of an armed group in oregon have been arrested in a violent traffic stop. Among those now in custody, the leader ayman bundy. Amon bundy. They were stopped by fbi agents. Shooting broke out in one of the protesters was killed, another wounded. Irans president Hassan Rouhani goes to france after a twoday business trip to italy. He is expected to meet with Francois Hollande and sign a deal to buy more than 100 planes from airbus. Italy and the European Commission has agreed on a plan to help banks unload bad debt. Italy will work with european regulators, but some are concerned it could constitute illegal state aide. John kerry faced a hard sell in beijing today, getting china to agree to tougher sanctions on north korea. As been opposed to any moves that may destabilize the regime of kim jongun. It wants to restart ties with north korea. Republican frontrunner donald trump will skip tonights debate in iowa. Trump says he has been treated unfairly by fox news, which is holding the debate, and its anchor megyn kelly. He says he will be at a fundraiser for veterans. Global news 24 hours a day. Im vonnie quinn. Tom thank you. Hopefully it is just a mixed futures deteriorating further after the big day yesterday. I think the 10 year yield will have a round number. Nymex screwed at 30, oil churning. I dont want to be too hysterical i have seen too much hysteria and i dont agree with that. Oil churning nicely at this point. On to our second screen, if you would. Is myrman twoyear headline number. China equities are weaker but the german twoyear. 46 continues to drive toward deflation. Francine i think you are right. We also have to look at the u. S. 10 year. This is my vote quite a lot of volatility. Lets not focus on the hysteria, but there is more evidence of a global glut. 118. Ryen at we are expecting the boj on friday. Tom lets go over to the bloomberg terminal. Where are we . Where are we . The answer is up we go, down correction. Were sort of in between. Vonnie absolutely. Investors were paralyzed yesterday. That didnt mean now is the time to jump in. Tom they have a pretty good about taking a breather, but what did he say did he say loads about . Vonnie he said keep things, and dont be paralyzed. Tom its an in betweeny january. Francine . Francine we have to focus on the fed. The fomc meets for the first time this year later today. Lets bring in the bank of japan mitsubishis head. Great to have you on. When you look at the fed, how are you expecting them to handle it . Of course, they have to would knowledge what is happened. That is the crucial element. Three weeks of volatility and turmoil, and perhaps a reference to monitoring developments abroad, which was something that was in September Fomc statement. I think the other big change we have seen from lots of declines in certain asset prices, Inflation Expectations have come down by between 20 and 25 basis points. What the fed told us is that they are monitoring three elements actual and expected inflation and the labor market, in the context of their official mandate. The Inflation Expectation component is certainly a worry. I think actual inflation, we have had cpi. That has shown a pickup. Of course the labor market has been performing very strongly. Francine are you expecting them to stick to those for hur hikes . Well, our expectation was three. I have to admit, sitting here now, after what has happened, given the fact that we could see some mixed economic data, we could see march becoming a tougher call. But i still wouldnt move away for the potential for three in rate increases. Tom derek, the first 15 days of january were wild, and the last 10 days w, did we find any stability . Well, whats interesting crude is looked at as a proxy of sentiment globally, and everyone looks at that as the first port of call when they check their screens in the morning. Of course, we still have volatility today, but there is some similarities with what happened in the summer of last year in terms of the short squeeze we had in the markets to the end of last week. We had a very similar price action at the end of august of last year. Crude a 25 bounce in that marked the beginning of nearly three months of relative stability in crude oil. Perhaps after this 15 squeeze we have had in recent days, it could be the start of better stability. Certainly speculators may be a little more cautious in regards to running short positions. Tom derek, i have been on the road for over two weeks. I spent too much money on the road, too much money in london, too much money in davos. I have got to make some money. Where do i do it in Foreign Exchange . What is the trade right now . Majors, in terms of the there is not a whole lot going on. One of the stories i am selling customers is that there is not much conviction in the relative Monetary Policy trade. Weve seen it come down in the key currency, eurodollar. In terms of getting opportunity, i think you need to move away from the core g10 and look perhaps at the commodities space, or even in em. The acknowledgment tonight from the fed, just a simple acknowledgment of the facts of the last three weeks, is probably going to get the markets overreacting, as they always do. We see some risk on appetite in emerging market currencies. Tom i took away from that i have to look at the russians and bob lacrosse rate. The russian zimbabwe cross rate. [laughter] francine derek, are you concerned about china . How should we read a china . Everything we have talked about depends on how one looks at china. Is china stable, but going down, or are we going to see it hurt world growth to a point where it slows down . I would probably go back to the similarities of what happened last year. We had this turmoil over the first three weeks of the year, similar to the turmoil in august and september last year. But then it faded. I think logic in terms of the fundamental linkages in the Global Economy, that makes sense. The equity market in china and how it correlates with the rest of the world is actually very low. The best we have ever had, looking at 30 60 , were correlations between daily valuations in the shanghai and u. S. Markets. The best we got to was. 4 for a period last year, and it is falling again quite sharply. I dont expect that kind of complete focus on what is happening in chinese equity markets, to fix a broader financial conditions. Francine Derek Calpine he stays with us. Coming up, i spoke to anna botin for a bloomberg exclusive. We will have that and much more, next. This is bloomberg surveillance, where the conversation focuses on macroeconomics. Tom we do economics, finance, and investment, and we will do that this afternoon. Special coverage of what should be a boring fed meeting. I dont buy it for a minute. Join us at 2 00 p. M. , i am really looking forward to that. Get to our Bloomberg Business flash with vonnie quinn. Vonnie thanks so much. Fourthquarter earnings missed estimates at novartis, plunging due to its eye unit. The stronger u. S. Dollar is hurting the value of international sales. Expectedell more than at the Worlds Largest chemical maker. Basf was heard by the big drop in oil prices. Says he is focusing more on oil and gas production. Its the end of an era for apple, projecting sales will fall for the First Time Since 2003, reinforcing concerns that apple has reached the limits of iphone growth. Apple is also being hurt by the slowdown in china and by the strong dollar. That is our Bloomberg Business flash. Over to you. Francine thank you. The eurozones largest lender, santander, missed markets. Concerns over its secondlargest market has weighed on company shares, which have dropped more than one third in the past 12 months. I spoke exclusively to the chairman anna bontin about the outlook for china and the emerging markets. There is a bit of a disconnect between the financial and what they call the real economy. I dont like to separate that, a bank is very much a real economy. The world is more complex, right . There are a lot of issues in the middle east, chinas transformation, politics. This uncertainty, this complexity i think it will get more volatility. We see that. But if you look at the underlying numbers, our spanish business, 18 up. Consumer lending, the number one consumer lender in europe. People forget that 87 of our group is in europe and north america. Europe is doing really well. Portuguese economy is improving. The bank of portugal is making 60 more than last year. North america, not doing so well on the bank side, but on the Consumer Lending cited is doing well. , think europe and the americas lets say the Slower Growth environment visavis asia, its going to be hard. Its going to be more difficult, more challenging, but i think we can do well. Francine the next 12 months be more of a challenge than the previous . The next 12 months, i think the world will grow at a slower rate. Theres also taxes. We have said there is an extra 100 Million Pounds in the u. K. , higher taxes in brazil. We are still going to have to pay for hundreds of millions of projects and regulatory Cost Increases next year. The same as this year, a strong performance, and numbers show topline growth, good performance cost, cost of credit going down Something Like 40 basis points. A challengewill be of cost because we have to invest in a lot of projects. So the guidance we gave in september we maintain, and the guidance we gave is next year we will be growing our earningspershare, but not at high rates. That is what we said and that is what we maintain. By 2018 we will be growing at double digits. Has been inm, anna charge for 18 months. Extremely oppressive, but she has a lot of concerns. Extremely impressive, but she has a lot of concerns. There is the political situation in spain that will weigh on investors mind. Tom she carries a lot of weight with her experience. Im afraid to ask but im sure you did did you ask her about brexit . Francine i asked her about brexit, and she said it would be up to the u. K. People to decide. She was very diplomatic, budgie said if the u. K. Can stay within the eu with a reformed eu, that would be the best outcome. I did try and press her. When you listen to her, derek its impossible for these companies that are so exposed to take a medium view that as optimistic. The economy in brazil is practically in freefall. Its very difficult, given we have gone through over the last 18 months. Its been horrendous, particularly in brazil. Weve got to look if you look to the future in terms of the year ahead, its very, very unlikely that we will get anything like the scale of the moves in Financial Markets like we got last year. Up over 50 in 2015. Were expecting further depreciation, but much more modest than last year. That would be a big help, for starters. Commodities wise, as well. The scale of drops in the middle of 2014, obviously they were much closer to the bottom. The outlook Going Forward will be an important development. Francine thank you. Derek halpenny stays with us. Coming up, we speak to the ericsson ceo, a first on bloomberg. This is bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance. Francine lacqua, an interview with anna botin. We will have more of that through the day. Right now, we speak to another ceo challenged by technological progress. Erickson has been a winner relative to so many others. Its chief executive officer is hans vesper. He joins us now. The stock chart is challenging, and i mean that with no disrespect to you. It is a war out there. What is your Strategic Plan for this year, to differentiate yourself in the time of the cloud . A great question. I think we have a strategy that we laid out some five years ago and we are in the middle of execution. Three things one, the mobile infrastructure, the core pieces that we have. A a lot of markets are going from 3g to 4g and we want to capture that. Then, refining 5g. We will be the number one on that. Technically, we are into some new territory. We are now world leader those numbers are growing at over 20 , and they will no increase our bottom line. Thirdly, a cost program of 9 billion Swedish Krona in 2017. Those are the three things were focusing on. Tom i understand you can work with expense control. Are you going to be forced into Financial Engineering to jumpstart the stock . It is a bad phrase now, whether it is ibm Financial Engineering or what John Chambers did at cisco. Are you going to become John Chambers and a ploy cash back to shareholders and deploy cash back to shareholders . Today, aounced proposed dividends to our shareholders, an increase of 9 . Course, to shareholders will approve it, but clearly we have increased our return to shareholders mainly because we are producing a good cash flow, a really good cash flow in the Fourth Quarter. Yes, we are doing that, but we are continuing to be the world leader. Francine mr. Vesperg, you put your pitch out there, you have gone through the three things you want to get right. What do you think youre doing wrong . Going back to toms chart about the share price, it has really moved in eight years. investors believe you and continue with ericsson . Why should investors believe you and continue with ericsson . Its been an industry of tremendous consternation, and 10 years ago we had 50 competitors in the mobile infrastructure but we are down to three. Its a tough industry, and we will continue to develop. Fairly lowe had a developmental share price. On the other hand, we have a good dividend, and i think that is whats most important in these times. Its more about seeing that we continue as the world leader. That is the main part. Francine when will Telecom Capex spending come back . In accounts for about 25 of your sales. Our business in north america is a piece of that, but we Sell Services and buildings as well. While we have seen in the last three quarters is the devastation in north america, when 4g was covering u. S. Soil. Now it is much more intercapacity, which means more software. Theres more stabilization and it will grow. Tom 30 seconds. Is jeff bezos your friend or your enemy . Think all clouds in the future will be connected to our networks. I think that all Cloud Computing will build a network that will be programmable with all clouds in order to give superior services to consumers. I think any cloud will be extremely important. Tom you can come out anytime. I love how you dont have any talking points. Hans vestberg is a ceo talks to us. Thank you so much. Coming up later today, a special edition of Bloomberg Markets. Stay with us from london and new york. Bend me shape me, any way you want me as long as you love me, its alright bend me shape me, any way you want me youve got the power, to turn on the light shape the best sleep of your life. Sleep number beds with Sleepiq Technology adjust any way you want it. The bed that moves you. Only at a sleep number store. Francine this is bloomberg surveillance. A lovely picture of london. It was much warmer in madrid. I flew back after interviewing anna botin. Its not were more sunny in london. Lets get to the first word. Vonnie thank you. Stocks are falling around the globe today, disappointing earnings have investors concerned. The stoxx 600 is heading for its biggest monthly decline since august. Chinas stock southbound again. New dispute between israel and the european union. They are paving the roads using funds from the eu, but israel says the work is illegal and. To work is in a west bank zone under full is reali control. Denmark is criticizing for allowing them to seize valuables from refugees to help pay for their housing and food. A un spokesmen say they should be treated with compassion and respect. Hey seizedizens say seized morethey than 50,000. The leader of an armed occupation in for it on are now under arrest. The fbi stopped the militant leader in several followers while they were on a trip to a community meeting. They fired and one of the supporters was killed. Bund oncey the rent number one, beating out harvard and annual donations. They received a record 1. 6 billion, harvard second with 1. 1 billion. Donations account for 25 of total revenue. Im vonnie quinn. Its what they do with the money that counts, right . Tom the top ones really give it back in tuition but that is about where it ends. No wonder the tuitions go up, up, up. Futures are negative. Let me do a morning mustread this was a pleasure. Martin wolf is always interesting. Davos, and he kills it today. This is a spectacular essay on the fears of the elites. Economic losers are in revolt. Tom that is only one part of this essay. Derek, how does this full didnt to Christine Lagardes new mediocre . The quickest way to get away from this polarity in society is to get some Economic Growth. When will it happen . Thats a good question. If you look at the actual fundamentals for the u. S. , the domestic situation does point to a big improvement. What i would highlight in particular from a domestic buildingve is the evidence that wages in the United States are finally beginning to pick up. Weve had a catastrophic recession, the great financial crisis which pushed unemployment to 10 . We are only just getting to the point of reaching full employment again. Timing,line with that there is building evidence that wages are picking up. The latest was the National A