Welcome to the pulse, live from london. Im francine lacqua. Lets get straight to Central Banks. Its a big day for Central Banks and it will be an even bigger week. The s p has maintained record low rates. With the ecb loosening policy the fed is expected to tighten. Where does that leave everyone else . Lets bring in Richard Gerald for the next half hour. Helps manages around 3. 7 billion in assets. Great to have you on. Set the scene for us. We have the new zealand central bank, and theyre getting ready for the said. The fed. Yeah. Central banks, a do interact with each other. There are a lot of machinations, but everyone is acting in their own best interest. After the ecb surprise last week, the bank of england this week will probably deliver a similar message to what we saw last month. The pound is weak against the euro because of what the ecb did, and i think the bank of england are quite happy, quite comfortable. They wont want to be too hawkish because they dont want the pound to gain against the euro. Francine if we take a step back because of what we heard from the ecb, it makes the life a lot easier of people like the s p. Indeed. That if thefeeling ecb had acted more aggressively, we would have had some big from the smb today. They repeated a lot of the forecasts that looks to me like they were quite similar for 2050 and 2016 in terms of inflation. They obviously lamented the strength of the swiss franc, which is still a problem, but because the ecb was less aggressive than that he thought they were going to be, that allow the smb to stay on hold. Francine give me a lowdown. If you are an investor, is the set a done deal . Yes. Francine something small. Something small. People will not be concerned abo ut when, but what happens next. What happens next is the fed managing expectations, saying guys, keep calm, we will be very data sensitive. Ultimately, investors need to properly take the pain that comes with tightening policy, but ultimately, this is not a sentiment anymore. This is no 1994. It has been telegraphed. Policy is very visible. Willthat means is it probably not react very badly to what happened. Francine we are just seeing from the Swiss National bank, mr. Thomas jordan. What does that mean for currencies . This year if you look, it is the year of currencies. We saw some huge swings in equities, but it was the year where you position yourself on currencies and make money. What happens next year and where do you see the swiss franc . I think next year will be a continuation of not only 2015 but an exacerbation of what happens. Thisll be a year will they have to make money year where they have to make money, as far as currencies are concerned. Will be verys volatile in the shortterm but also quite directional. The swiss franc will continue to strengthen, the euro will continue to weaken, and sterling will very much oscillate, but it will be slightly stronger than the euro, and maybe not as strong as the dollar. Emergingmarket currencies, huge dispersion. Those that are affected by weakening in terms of trade because of lower commodities, and china, like brazil, russia, south africa, will struggle. Those which are outside of that well holdld very value. Francine looking through what the Swiss National bank said, in the analysis they said that the global backdrop has deteriorated, but they are cautiously optimistic about the outlook. What are they talking about . China, commodities . All of those. And they are looking at Global Demand and seeing commodities, perhaps as a proxy for that. Its a very uncertain picture looking forward. You can understand why they would be a little optimistic about it, whether they want to take that tone. I think they are both taking the view that there are still some headwinds in the future and that they will act accordingly. Francine we talked about the divergence in emerging economies. Which is the one that worries you the most . The ones that are in a systemic recession. Brazil is an area where one struggles to find anything. Normally you have Monetary Policy being able to react, but brazil with how sticky inflation is, because of this collective Bargaining Agreement that sets wages irrespective of what happens with inflation, i would say brazil is in the area. Francine and we have been warned off by the International Stability board that there are so many countries from emerging economies that borrowed too much. Come december 16, the day after the fed, going to start seeing some of these companies unwind . Businesses that have been issued dollar debt will suffer, but only those regions. I am not necessarily concerned that the chinese yuan will lose a lot of ground. If so, i would think it would be forced to strengthen a little bit. It is true that come next year, come 2016, you will see some widespread but selective action, be forced to restructure the debt because of the strength of the dollar. The dollar will be stronger next year against some of these currencies. The dollar will be stronger against their real, against the lira, eventurkish the South African rand. Francine lets have another conversation about what it does to u. S. Exports. Thank you so much. Richard joins us from london, who stays with us. Here is a look at what else is on our radar. TheSouth African rand, finance minister was fired yesterday. It fell 5. 4 against the dollar. Argentinas president is inaugurated today, but it doesnt lack drama. Is refusing tont attend the ceremony and hangs the sash. A group of lawmakers will also boycott the event. Will hold an extended News Conference as the emissions scandal broke. They will talk about the status of the investigation. Up next, a race to the bottom. The biggest losers on the ftse this year. We look at the plans for companies to turn themselves around. Francine welcome back to the pulse,liv streaming on your tat and phone. Glencore has announced a new financial target today. It plans to cut net debt to 19 billion by the end of next year, which the stock reacted to. Lets get details from ryan chilcote. Will this be enough to pull back from the plunge . Ryan it is enough to pull the stock back from the plunge, the abyss it has been in. They had their fifth best day on four separate occasions have they outperformed the share price increase we have seen today. Shareholders clearly delighted with this focus on Debt Reduction that we are hearing from the company, saying that it will accelerate its plan to cut debt, that 19 billiondollar target for the end of next year you were mentioning is down from a target of the low 20s. Right now glencore has a 30 billion debt burden, the biggest in the entire industry. They said they would go to the low 20s and now they are talking about 19. They already introduce a Debt Reduction program and today they said the secured a . 7 billion worth of reductions. If you look at their trading arm remember, this is a Mining Company and a commodities trader if you look at the commodities trading side of things, the forecast for pretax profit going into next year is less than they made during the commodities boom, and it shows you how the Debt Reduction is really affecting profit. Obviously when you reduce debt and cut expenditures, that does have an effect on the business. He will just be hoping, investors got the mix right, and who they are talking to now to make sure that he knows exactly how it will work out. Francine ryan, how will they achieve the Debt Reduction . A lot of the market was focusing on the Debt Reduction. Is the amount enough and how will they do it . Ryan some out there would say that it isnt enough, but clearly investors are greeting what they are hearing. Two ways. One is that they reduce capital expenditure, so they will spend 5 billion next year and next year they will spend 3. 5 billion. They said they could parrot back even further this year. Pare it back even further this year. Overall they are planning on saving at least 1. 5 billion in terms of capital expenditures. The other thing is asset sales. They are in talks to sell a stake in their agricultural unit, to sell other assets. Today they raised their target from the amount they want to raise from asset sales from 2 billion to 4 billion. Francine thank you so much, ryan. Of course, the chairman of bloomberg lp, the Parent Company of bloomberg news, is a senior independent nonexecutive director at glencore. We like to be transparent. Thes get back to our guest, chief Investment Officer at london and capital. Thank you so much for sticking around. It looks a lot like angloamerican, companies that in the heyday had huge balance sheets, and now because of the slump they cant deal with it. Profits are diving and they have too much debt. That is the problem with debt. It is very good if you have a return on equity which is higher than the cost of capital, but if it is not, it is a nightmare. In arespected glencore, very shortterm and midterm, you do have the potential for the stock to revalue. Sentiment is very, very negative. Short interest is so low that it will not take a lot. Francine i have to interrupt you because we are just getting breaking news from glencore. Isunderstand that glencore setting a possible ipo of the agricultural business. We look at a lot of companies and they seem to be trying to restructure. If theythe right move, do end up putting a price on the agricultural business it means it would take away from mining. Would be selfsufficient . It is a dangerous move. I think glencores plan is to preserve the rating. At the moment, it is not about longterm growth. It is about managing a difficult situation and how the market perceives your creditworthiness. It has a huge impact on your cost of capital, which has a huge impact for the p l. Position doesnt surprise me. Having said that, it doesnt spell good things for the longterm. All of a sudden you have taken a , the valuable out o stake, and what is left is not that valuable. And of course, you cut debt, you plan on profitable units, what do you have . A company that will not grow in the longterm. But you also have the company that may be small enough to be taken private. Correct. Francine is that something we should be more seriously talking about . I think we should. In a way, it is very much about but you also have the preserving, and if the market does not recognize the value, and the market will certainly not be kind to glencore, the dollar will be stronger, there will be another wave of downward pressure and commodity markets. Francine this is a company that there,ick to x traders and when glencore was created, it was only billionaires. I was told the guys behind it care so passionately about their company that they will never let it go. The guys that cap so much ipo for a reason, everybody has concerns. Every time a large commodity ipo, it isup has an calling the top of the market. Theres been inside selling ,hroughout the last few years much like Goldman Sachs 20 years ago. When to stop being a partnership and become a traded company, the alignment of interest becomes clouded. Francine so pau, you say it will be messy for the next six months. The shortterm rebound, next six months very tough because the market will digest higher rates. Probably could be a little better if we are able to implement the degradation, and if they are able to get a decent price for these assets. There will be more talk about it becoming private. But in the last six months, it is catching a falling knife. Francine how do they compare with Anglo American . At the moment they are neck and neck for worst performer on the ftse. With Anglo American, you dont stumble on a black box. You dont have a lot of transparency about how this is generating more than your margin. Who are your clients question mark what are your revenues . They are attached to a Commodity Trading enterprise, whereas Anglo American is a particularly integrated, widespread company, where at least you can recognize the value, you can attach value. I would say that when it comes to Anglo American, it will certainly struggle in the next six months. Ultimately, as they continue to cut not only them but the supply continues to reduce, the prices are moving because of excessive supply, its not falling off a cliff but the supply has to be strong. Supply will reduce. Be lookingcan should back in time and smiling. Francine pau, thank you so much. The chief Investment Officer at london capital. Next, the rams rocked. The South African currency suffers its worst day in years after the nation fires its finance minister. Laura that story, next. Francine will come back. The South African rand dropped after the president fired his finance minister yesterday. The currency fell 5. 4 against the dollar, hitting a record low. The outgoing minister clashed with the government over pay increases for workers, proposals to build a Nuclear Power industry, and to expand the state airline. Lets get back to our guest, the chief Investment Officer of london and capital. We are looking at the rand. If we look at the last six months, it is just going one way, down. What happens from now on . It will continue to go on its way down. Everything is stacked against south africa, and on top of the fundamental areas of the Prime Minister which fires a very popular, very recognized and respected individual, the confidence in investors that south africa needs desperately, it is going to wane. 10 years ago, the peso will happen again. South africa is very sensitive to commodity prices, big exporters in platinum. Youve got bolder abilities from a domestic perspective in terms of creditworthiness, concerns andt the debt situation, houses which are either putting south africas Sovereign Rating on watch or downgrading it. The passed will tell us what happens in the future but in this particular case, the next 12 months will be tough and it will be lower. Francine and it will be much more tough if the fed hikes, which we are expecting it to. We also have the msci emerging markets chart over the last year and a half. Where does that go . Well, its an interesting one. Tempted to say that the emerging markets, a measure of what emerging market index will continue to be going down because of the fed. On one side because a lot of it very much started knocked in may, but in 2013. That is when the underperformers started with respect to the rest of the world. The rest of the world took off emerging markets and stayed where they were. I would say that the valuation cushion is beginning to be so interesting. The second side is that people are accepting the reason, these reasons are not in a great position but they are more flexible than they were. This is not 1998. This is not 1984. Everyone knows that policy will become tighter in the u. S. , because the Flexible Exchange rates were fundamental. I would be tempted to say that emerging Market Equities are not going to have as bad a year as people perceive. Areas be one of the few where being contrarian will feel. Francine as long as china holds up. As long as china holds up. Weaponry,fficient sufficient stimulus that they cant apply if they wanted to be able to engineer a soft landing. A hard landing in china is very much a mild possibility. Francine pau, great to have you on the program. Thanks for coming in. Next, iron ore is down 42 this year, and things could get worse. We talk about the commodity crunch, a little bit more, coming up next. Francine welcome back to the pulse, live from london. Im francine lacqua. We are getting news. The 2015 Airlines Report for 2016, profits of around 36 billion. Given the price of oil, that is a net benefit, and also we have to talk about the concern of terrorism and the fact that a lot of people are postponing holidays, but who have plenty more next. The strengthening outlook is driven by strong Domestic Travel and Lower Oil Prices that will have plenty more. We will have more with the secretarygeneral in 15 minutes. First of all, lets get to the first word with nejra cehic. Nejra the reserve bank of new zealand has cut the official cash rate for a record low of 2. 5 . It is their fourth cut this year. The government thinks it should be enough to return inflation to its 2 target. The kiwi dollar surged on the news. The aussie dollar climbed after job status matched expectations again. Official figures show more than 71,000 people found work in november. Economists had expected a drop of 10,000. It brings the unemployment down to 5. 8 . A survey shows that almost two thirds of likely republican primary voters say Donald Trumps call to temporarily ban muslims from entering the u. S. Makes it likely to more of over him. Bloomberg sources say the u. S. Justice department is examining possible manipulation in the Trading Agency bonds, after 9 trillion of debt were issued. Authorities are investigating whether traders violated antitrust laws. That is the bloomberg first word. For moore, head to bloomberg. Com. Francine thank you. Lets get straight to the top market stories with mark barton. Day of Central Banks, francine, with a record low. New zealand is cutting rates, which brings me to the kiwi. Why is the kiwi rising . The reason is the central bank governor, signaling that this would be it, no more cuts to calm, because he is confident the central bank will reach its inflation objective. The rates were cut by a quarter of a percentage point. In the last quarter, this is the chart of the kiwi against the dollar. The kiwi is the bestperforming global currency against its u. S. Peer, rising by 5 . Crude oil is rising f