Bloombergs headquarters in london. I am manus cranny. Time for another reading of growth in the eurozone. Italy this time. Disappointed in terms of estimates. Growth comes in quarter on quarter at 0. 2 . That after after we had the french and german numbers come in, a lackluster set of numbers. The Italian Economy grows at 0. 2 . This is super friday in terms of the overall performance. One people say is good. But lets get out to mark barton with breaking news. Mark breaking news from iea. Its on oil. This is the International Energy agency. It says Oil Stockpiles have 3ollen, have risen to billion barrels because of Strong Production and opec and elsewhere, deepening the rout in prices. Prices have fallen by 40 to the low 40s because of this, this movement by opec to sustain production and keep market share, the behest of the falling oil price. This massive cushion has inflated record supplies from saudi arabia as world fuel demand rose at the fastest pace in five years. That is not a good story for the oil price. Manus thank you very much. Lets get back to the gdp numbers. In under an hour, we will get the whole of the eurozone, but france and germany have reported gdp numbers of 0. 3 . Hans, mediocre. My last guest said, you are getting giddy over 0. 3 is pathetic for us all. Not you, but we are all getting excited about 0. 3 . Italy disappoints. Hans denmark also disappointed. They came in at 0. 1 . What we have is a story that we have been telling for two years, middling growth. Take a look what is happening in germany. It is down 0. 3 . On the upside you can say there is a lot of negative outside external events for germany. At the start of it you had greece, then the slowdown in china. At the end we had the volkswagen scandal. That did not seem to affect a that heavily. Germany does not give us a breakdown by sector whether it is Consumer Spending, exports. The agency did give us some hints. They suggested this was driven by Consumer Spending in germany. Fromcould b e a play consumers who feel richer because of the oil affect. We did hear from a logistics, a company that does three ourt of four shipping containers. Exports, when we get the details it will not look right. France also came in on the middling side. Lets bring it down to where their sectors grew. 0. 4 increase on Consumer Spending. Big reception inventories. The negative side 0. 7 on the downside for exports. The export story and france holds true for the export story in germany, it could look like a not great quarter for germany. Manus that possibly is the understatement of the week. Heat,u switching on the hans nichols, and berlin . Hans not yet. But we have had a warm fall autumn here. You say autumn, i say fall. Manus you have got to hold onto some of the old phrases. You will not go completely european just yet. Manus we spoke exclusively to thateo of wpp who told us businesses need to adjust expectations when it comes to economic growth. The world is going to grow at 4 nominal, 3. 5 real. We just have to get used to it. 6 nominal growth is not going to come back. We are positioning our business for that. Manus four, we are joined for more we are joined by a chief strategist. Listening to hans, the data, i suppose it is warm. Martin crystallized it beautifully. Prelehman growth numbers. Are you worried . I think it is hard not to be worried as the data has come in soft, not just this morning that recently from china some of the data is below expectations we also need to take a step back and think if we think about longterm, average global growth, the last 30 years has averaged 3. 5 real. So that would be an average environment. So, i think we need to look at this in the context of many markets that are priced for extremely weak growth for long time. In that case, maybe the low growthents or may not be quite as bad. Manus what we dealing with is 8, 9 years of 0 Interest Rates. We have short memories. We are reflective of these boom years of 2007. These are the near term memory. The benchmark is all wrong. It is. Even just in the post crisis period, we generalize this has all been bad, we have had some big swings in inflation. In 2010, the market was convinced that said was going to hike rates within 612 months. So, look, i think this is something where investors need to keep a little bit of intellectual flexibility. I think we need to keep an open mind when it comes to some of this incoming data on growth and inflation. And i think inflation, especially, given how effective it has been by these huge swings in Commodity Prices, i think inflation could surprise the market a bit by moving to the upside simply as some of these huge yearoveryear declines in oil prices exactly. Manus and that would the early for many. Although what we saw yesterday was draghi warning us about core inflation. Suddenly theyre all interested in the core. They make me laugh. For 20 years nobody cares about the core. Arwhat does it mean for you . Are we in a disinflationary environment . What does it mean to . The core inflation data has looked a bit better. In the eurozone, i t has been ticking higher. Cpi in japan has also been ticking higher. Related by another year in japan caret i have to take the counter side of what you say. We look at the inflation in the eurozone as a 0 number, it does suggest deflationary environment. I think initially the market suggest things are a little bit more normal. Manus so, i have got more money in my pocket and the u. K. My wages have gone up. In europe i am paying less to heat the house this winter and paying 0 to buy a new car. It is not all bad. We think about deflation as a 100 bad thing, but it is not. There are elements of deflation which can be positive supply shocks. Chi perpetual in your car. Cheaper to heat your home. Cheaper petrol in your car. One of the reasons we see very strong Consumer Trends and the u. S. , in the eurozone, in the u. K. Is the fact that, yes, the export side of the economy has been hurt really hard by these declines in Commodity Prices, this weakness in global trade, but consumers are doing ok. Manus ecb at christmas time, will he go and how much and in what way . We think they will ease policy, cut the deposit rate by 10 basis points. They will increase the pace of q. E. I think this is a very unique meeting and the sense that this is the first one we can remember in some time where the best outcome for the market, for, y,y, stocks generall might be they do not do anything. We have been in this environment for so long were you want this reflexive response. If we think about the challenges the market has faced over the last few months, there have been huge challenges coming from the strong dollar. It has driven down commodities, stressed emergenc emerging mark. Given the data in the eurozone is ok, maybe a week or euro would do more harm than good. Manus sit back, relax, have a coffee. You will get more out of the chief asset strategist for Morgan Stanley. Bloombergces say sources says that the Chinese Company is in talks to buy syngenta. The deal would be the largest acquisition by a Chinese Company of the european target. Bloomberg Commodity Index has purged some of its earlier losses after falling to lowest levels since 1999. Chinese stocks have also dropped the most in six weeks, weight down by oil companies. Copper futures are trading near sixyear low. Londons most expensive homes have slumped in value. As the higher sales techcrunch to man sales tax crimps demand. Even as overall prices in london rose. There if you own houses over 5 Million Pounds. Coming up, quite possible. Those are the words of the fed official about the potential for a hike in next months meeting. We are going to talk fed talk next. A simple and prudent approach to current policy is to move the policy settings closer to normal levels now that the goals of been attained. There is no reason to continue to experiment with extreme policy settings. Successive rounds of quantitative easing have had little or no effect. That is consistent with the data. Little or no effect apart from potential signaling that it provided regarding the fomcs outlook for future policy setting. Inflation expectations are under downward pressure. Ofe survey measures longterm Inflation Expectations are at the low end of the ranges we have seen in recent years. The there those were is fed voi various fed voices. When will the fed tighten . December 66 . The probably in europe that we go for an easing is locked in at 1997. 1994 . Anybody going for 1994 . Andrew, when you look and listen to the voices that we heard yesterday, help me whether i have got it right, taken everybody, look, buckle up we are going for lift off. Panicking a stop crying at the back because it is not going to be aggressive. That is exactly right. The fed has signaled it was to get off the zero. The data has been good enough to get them there. That has been our view at Morgan Stanley for some time that they will hike in december. They have been clear they want to move at a moderate pace. This is going to be a much slower hiking cycle than previous cycles. One might reference the dollars effects are playing a much bigger role this time around than other cycles. In past hiking cycles, the dollar has weakened after the first hike. You might not get that this time, considering how different u. S. Monetary policy is from others around the globe. Is, look, weat might hike and it is not going to be aggressive. That carries through in the dollar may not be there. Talk to me about equities and credit. We have had a significant turnaround in the beginning of the Fourth Quarter in terms of equities. Credit. The bond markets of 2. 3 . Our markets priced for hikes . I think they are. One, when you talk to investors they would like to get this process started. They would like to stop talking about theday of the first hike and talk more about the pace. The pace should be slow. If you look at credit markets, something that has been holding spreads back has been the low level of yields in the u. S. If youre going to rise those yields modestly you can bring in more buyers of bonds, given that the yield on the bond will be higher and more attractive. I think the equity markets, i think good is good. The fed is going to be hiking if the data is better. They have been very clear that they are data dependent. And i think equities will take comfort from the world being more normal. If the fed is not able to keep hiking, that will be bad for investing. I think you want a few more hikes with better data. Manus when the hikes come, as an equity investor, you would have to say, this is good news. Banks are probably rasping at the door for tha higher rate. Equities would say to me things are getting better. Although, if you look at nordstroms numbers from yesterday, the one thing that tells they were pretty appalling. The consumer is under a bit of a pressure in the u. S. That is the only thing that would worry me, which is economically, the broad swipe is we are paying more in the u. S. More americans skip the chip to the mall. The trip to the mall. The consumer has more money, wage growth is there, the house is worth more, the Balance Sheet looks and better shape. But in the aftermath of the crisis, they are not showing the level of exuberance they saw last time. In some ways that is a bad thing. In other ways you can argue that is a good thing. We are not repeating the mistakes we saw in 2005, 2006 and 2007 were buying houses on credit cards. Look, i think if we take a step back for stocks and what a fed hike means, a lot of these companies and issuing all this debt we have seen issued over three years have termed out their funding and are not going to immediate feel the effects, the higher cost of a rate hike because they have lots in longer owing. I think companies will be able to weather higher Interest Rates pretty well. Manus stay with me. The asset strategist at Morgan Stanley coming up on the pulse , sowing the seeds of a possible deal. Chem china is said to be in talks to acquire syngenta. That is our bloomberg exclusive scoop coming up next. Manus it is friday. Chem china is in talks to buy the pesticide maker syngenta. , syngenta giving some of it back. Nejra absolutely. The shares have risen 11. 3 on the news that chem china and syngenta are in talks for a deal. The offer from chem china for share,a was 449 francs a valuing the company at 42 billion. Syngenta has rejected this offer saying it is too low and cited regulatory risks. Earlier this year, it rejected a 47 billion offer from monsanto. The question is how high is chem china going to have to go to seal this deal . Were told the companies are still in talks. We could see an agreement within a matter of weeks. Manus thank you very much. Syngentatest deal in with china. Chinese banks troubled loans billion, more than the entire gdp of sweden. Lets cross to beijing and our bureau chief. This is almost like day two in the sort of the tragedy that is china. Yesterday was about the known data. Today it is about bad loans. Nick thats right. The issue here is that it is not so much that the banks are in trouble. These are massive banks. Some of the biggest in the world, stateowned banks. They will be doing fine. What does it say about companies and their ability to service their debt . As bad loan numbers rise of the banks, it really gives you a picture of how much Chinese Companies are struggling to pay broaderir debt amid the economic slowdown. The issue to note is that we are below 2 . Ks, bad loan that is the official number. This is really a sort of mystery meat statistic. We do not know what is in it. It could be as high as 5 if we count loans at risk. There is a question of how this is defined, which suggest the picture is worse than we are seeing from the stata. This data. Manus thank you very much. Rew back into the conversation. The Morgan Stanley chief asset strategist. There are Different Things at play here. When i look at china in the lending data, that was pretty bad. When i look at the bad loan data , im getting more word. Andrew china is interesting in a couple of ways. First is, i think if you had to imagine a structure that is almost perfect for extending and it isving a full cycle, china. The banks already have national control. You have a system where you are not reliant on foreign funding for your banking system. So the banks have the potential to keep rolling these loans recognitionay the of debts. As investors, do we want a lower bad loan number or higher . If you think about the problems in china, a lot of these are related to this division in the economy between the new economy that is doing well and an old economy that is suffering with too much capacity. You need to write off some loans and restructure industries. So far that has not been happening. Manus one of the things before let you go, i want to look at m a. We look at sab miller, chem china, syngenta, is everybody so desperate to find growth . There is no material blockbuster growth. Of growth,ntia what do you do . Go buy . Andrew i think it will continue to move higher in seymour late cycle behavior. This is pretty typical as revenue and Earnings Growth slows. Has notings picture been quite so terrible if you look it energy and commodity sectors. But it is weak at 4 . Companies are flush with cash and they have access to longterm financing. I think we will continue to see Companies Look for strategic activity. I think we have not yet hit the maybe kind of crazy aoltime warner type of obsesses of previous cycles, but i think it will continue. But i think we will continue to see more light cycle behavior in the m a space in 2016. Manus always great to get your input into how to get a bit of perspective on these markets. The chief cross asset strategist at Morgan Stanley. What is up next on the pulse . Here. O of telefonica is join me for that after this very short break. Manus welcome back to the pulse. I am at manus cranny. Here are top headlines. Goldman sachs has demoted fords 25 people, including a record portion of women to managing director. Bloomberg sources say women accounted for 25 of the executives named this year. Up from 20 in pages years in previous years. Residences valued at 25 Million Pounds fell 11. 5 from a year earlier. European Union President has spoken for the First Time Since receiving the list of demands from britain on eu membership. Donald trump says it will be very difficult to convince every eu government to agree to terms and there is no verity that it will be achieved by the end of the year. The requests are tough. This is why the matter was so interesting. Say it will be difficult to find [indiscernible] medical it will be difficult bewill be manus it will difficult news for the Prime Minister. Martin stall spoke exclusively to bloomberg did bloomberg. Trade our Major Investments are made in the new year. Do our do i favor brexit . The answer is no. Manus time to talk telecoms. It is been quite a year with Companies Integrating different businesseshere at. Lots of m a on the landscape. It is ronan dunne. He and i will be attending the eye ibm later on. Welcome. Manus. Thank you . Anus are we better off everybody running towards ronan in the this is market we are fully integrated. In consumer, we take the view that customers want quality products of choice. Champion. Ocused we can give them best in class products. Choice is what consumers are after. Side isn the consumer all about mobile. I looked at the numbers earlier this week. We see them filling up 4g. Where are we in terms of when that 4g rolls out, what do we want next . Ronan first thing is to finish the 4g rollout. 98 by the end of 2018. More people access the internet now in the u. K. On a mobile device. We are already a mobile society here. The opportunity is to build more capacity. , we will be up to increase the capacity and speeds that we can offer