Lets get the price of oil up for you. Iea is putting out the report. They are saying they are seeing a glut last until late 2016. Another 12 months of oil glut. They talk about opec. They say opec will continue pumping. We saw december for opec is basically saying you can pump as much as you want. That is the picture for u. S. Crude. 36. 60. Brent 39. 49. A lot of investor saying we could go to 30. Emerging markets stocks are headed for its longest losing streak in six months as concerns grow about next weeks tread meeting. Mark barton has been charting it. Mark if you want to gauge how riskaverse investors are ahead of the fed Rate Decision on wednesday, look no further than the msci emerging markets index. This is the last eight days. For an eighth consecutive day. Period. 5. 6 over that this is the longest losing run since june. A slumping Commodity Prices to a 16 year low. Concerns about chinas economic slowdown and the prospect of higher u. S. Interest rates, which are lessening the appeal of riskier assets. Which is why the yen has endured weekly gain and threemonth. It is the worlds best performing major currency against the dollar this week. Rising almost 1 . This is the fiveday char. Haven asset. This is the fiveday chart. The yen has also risen against all 31 of its major peers in the last sixmonth. That throws into doubt the bank of japans ability to reach its 2 inflation target by march 2017. Could droprices out of inflation prices next year but that could be done by a rise in currency, which pushes down on imports prices. Jpmorgan stanley predicts the yen will outperform all its major peers in 2016. I want to finish with iron ore. Talk about weekly losing runs. This is the charts for the entire of 2015. Losing the longest streak since the height of the Global Financial crisis in october 2008. This week, 62 content delivered to a global benchmark. Closed down 40 a metric ton in the first time in seven years. Lowcost supplies hurt the likes of rio and bhp billiton are increasing output. China, of course, is shifting its focus away from heavy industry. Miners simple he will not cut production. That sounds familiar. Opec will not cut production. They are worried that volume will be snapped up by their rivals. This benchmark is down by 46 in 2015. What a losing run for iron ore. Francine that puts everything into context. Lets introduce our guest. Hes invescos head of emerging markets. Great to have you on the program. When you look at emerging markets, the fed has flagged for the last year that they will but now hike the probability is so high. Many people are expecting a dovish hike. Im not sure what that means. I suppose the idea is that that nguageillh ike with la that comes everybody down and they will not move in a surprise kind of way like they did before. Francine 25 basis points. And next year gradual. So itdual, preannounced gets priced into the front end yf the u. S. Curve and b extension priced into other markets before it happens. I suppose that is the logic of this new forward guidance. Against that, there is this issue of data dependence. So i think the uncertainties are going to continue. What it would say coming to emerging markets is that we have seen quite a lot of outflows, particularly retail outflows. As we have been just hearing it hit the equity markets over a long period. So there has been a lot of external adjustment from these funds outlflows. What we think were going to see in 2016 as the ecb remains on an easing trajectory is a shift in the adjustment in the em from external to domestic. It is going to be another tough year for em. Francine as a whole or country specific . What will be the worst performer . That is the trillion dollar question. I think first of all it will be challenging for most emerging market countries. It will be challenging for the asset class as a whole. Having said that, there will be a good deal of diversions. I think the greatest challenges are going to continue to be in the commodity exporters. As china continues to rebalance and to shift from an investment towards consumption and also toward services. So that involves some moderate slowdown and the chinese growth rate. And also the composition of chinese demand for the exports of other emerging market countries, particularly commodity exporters could with a strong dollar, with the fed tightening and china rebalancing, that is where the the pressure is going to be. We are going to see volatility in brazil because of that external adjustment. Politics and the impeachment process. It is going to be quite competent it. Basically means that the politicians are grinding to a halt of they cannot put the Structural Reforms through. Of issuesre are a lot their underlying the politics. The most important one is a fiscal adjustment. The budget deficit is widening out sharply. A 10 handleng to be on the fiscal deficit by the end of this year. In. They need to reign that otherwise, public debt will continue to rise rapidly. That, allg said all these pressures in brazil, issues in south africa, issues in russia and turkey, there are bright spots. I hate to say about my native country of india is doing relatively well. We think that is going to continue, because of course, india is the beneficiary of a lot of the things going on in the world, particular the collapsing commodities. In with yet modi came so much hope. Investors were lauding him as the biggest reformer. A lot of these reforms are taking a bit more time. Than a lot more time people unrealistically expected. India is a very complicated country. Maybe the most complicated society on earth. It is lots of countries put together under one federal bucket. It is very difficult to coordinate. I think people really got ahead of themselves and the absence of a crisis thinking that just having a majority in the lower house was going to get everything done. So, that is going to continue to be a problem. The good news is there is a central bank that is doing all the right things. And like i said, there is a lot of good luck oil inflow prices are down. India is going to continue to do well. Francine thank you so much. He stays with us. We will talk about china, argentina next. Heres a look in the meantime and what else is on our radar this friday. Bloomberg sources say argentinas new president has kicked off talks with several wall street banks for oneyear loans of up to 10 billion. As he tries to shore up which are at their lowest. Standard charters has raised about 5. 1 billion dollars after almost 97 of shareholders bought stock in a rights issue. The takeup is seen as a vote of eosidence in the c strategy. A petition to have donald trump banned from entering the u. K. Has received more than half a million signatures. It was set up in response to his call for a halt on muslims entering the united states. Any petition with more than 100,000 signatures is automatically considered for debate in parliament. It is going to be a very colorful debate. Up next, another day, another executive goes missing in action. Or on chinas missing mogul coming up next. Make sure you tune into bloomberg this weekend for a look inside iraqi curtis stand where the Falling Oil Price and political divisions are putting the fight against. Islamic state in jeopardy francine welcome back to the pulse streaming on bloomberg. Com, your tablet and your phone. Shares have plunged by a record amount in the company has suspended shares after reports that his chairman has gone missing. Lets get now to our beijing bureau chief. What do we know . The chairman is missing. We dont know much more about that. Report in ais a magazine, a reputable magazine saying he is unreachable and may be in the custody of authorities. We have no evidence to suggest that he did anything wrong, however there are other reports that she is helping with the isestigation, the he helping with the corruption investigation into shanghais former mayor. This is a situation we have had several times were executives from Chinese Companies such as some of the securities brokerages will go missing and then it comes out later that they were helping chinese authorities with investigations into others or were the targets of probes themselves. In this case, it looks like according to media reports he is helping with the investigation into another person. So he is not himself under probe. Francine what has been the Market Impact . Bonds fell and shares were halted. Nick fosun is such a massive conglomerate. Styles himself after warren buffett. Real estate, commodities, i think they even have a stake in cirque du soleil. There are a lot of companies linked to fosun that are traded. When Something Like this happen, they all shut down. He bonds falling by a record that record fall does indicate the unease the markets feel when a major figure goes missing like in this case. Francine this morning, we also have news from a developer, from one of the socalled ghost towns in china, saying it is struggling to repay bonds. What is the story and are we looking at a default . Nick well, the question about a default is a very good one. So this is one of the classic ghost towns. It is the story we have been all but waiting for the other shoe to drop. A lot of these local governments took out huge loans, sold land, then developers put it massive numbers of buildings under the belief that if we build it they will come. People will fill those buildings. Massive property overhang in china. People are not coming to fill those buildings. And bondholders said, hey, we are going to take the opt out option. Now the developer is saying we cannot do it. We are sort of seeing the fallout from that Slower Economy in the property overhang where developers are just not able to sell the apartments that they have built so much of. Francine thank you so much. Nick wadhams, our beijing bureau chief. Das, ourng in arnard guest host for the hour. When you look at china, we have so much concerns against bad loans, possible defaults. There is an underlying assumption that they will be ok. Arnad i think that is right. There is an underlying assumption. There is a good deal of logic the hind that assumption. The situation in china, although there has been a big debt buildup and some of it has been a big external build up. It is not like other cases of emerging market bad loan situations. There is not a major crossborder risk. Most of the data is domestic debt is domestic debt. The Banking System is largely state own and there are still capital controls. They are pretty porous as far as nonresidents are concerned. They are pretty effective as far as residence, favors and investors onshore are concerned. We are unlikely for all kinds of reasons to have the kind of traditional emerging markets debt crisis. Almost certainly not going to have that. What is much more likely is that we are going to have a problem of this debt overhang being worked out over a long period as the economy rebalance is away from, as we were talking about before, away from investment toward services on the output side and away from net trade towards consumption. Now, challenge with that that is absolutely the right thing for china to do, the challenge with that is that you are rebalancing from a high productivity, highgrowth model to a set of circumstances that implies lower growth and productivity. Lower overall gdp growth. That is the challenge the market is trying to get to grips with and having all these debate about the quality of the data and what is actually going on. So, we think it is a landing. We think it is a bumping landing rather than a hard landing or a soft landing. Hard landing typically you get a hard landing francine a recession globally . Arnab if there is a hard landing in china . Even if we are having a soft landing or a bumpy landing as im characterizing it, it feels like a hard landing in the commodities part of the Global Supply chain. And that is part of the thing that is going on in brazil. So, i think even without a hard landing in china, you have serious repercussions around the rest of the world. I think on china, what a despair to say i think is that theyre doing the right thing or they are trying to do the right thing. When it comes to the economy. Because this model of growing very rapidly through rapid can relation of debt and continue to have a structure of the components of gdp that are extremely unbalanced, that is clearly the wrong thing. An investor, how much do you look at . Today we have the chairman of fosun missing. We do not know the story but shares are halted on the back of that. We also have china cabinet emerging the cabinet of cosco group the merging of cosco group and shipping. Two investors have to stay cool do investors have to state cool . Arnab the part of the market that is focused on the equity space has a focus on the bottom up issues. But i would say is taking a step back, the real story is that trying toxi is improve the reputation and the function of the communist party. And that is, again, the right thing to do. The danger there is that it starts to look to people outside or inside the country less as a kind of general institutional clean up and reform and more as power of a coalescing of and personalization rather than it institutional is asian. An institutionalization. We need to wait in see the good story would be that the communist party moves in the sght direction under xi leadership. There is evidence of that. Youou want to be a bull, can see it that way. If you want to be a bear, you can see it the other way. Francine thank you for now. Lets talk russia. We have news from the bank of russia expected to keep Monetary Policy on change when it meets today. That is despite the countries battling its first recession in six years. Ryan chilcote is here with the latest. When you look at the oil price, when you look at inflation, this is a country that is going to very tough times. Ryan if you look at the economists that we surveyed, 2 3 of them think there will be no cut today. 1 3 saying that there may be a kind of a 50 basis points. The prevailing view is no cut. Despite the fact that the governor of the central bank herself has made it clear she would like to see a cut. All of those same analysts a couple of months ago would tell you that there would be a cut. But problem that has sort of surfaced in the last month or so is inflation. Inflation peaked a couple of months ago at 17 . It was headed lower, around 15 . Now there is concern is that inflation could pick up again or least not decline as quickly as the central bank would like. Because we have this other leg down in the price of oil, a, and retaliated with turkey, after turkey downs that russian jet in syrians guys, the theian in syrian skies, russians banned a lot of turkish imports. That means less produce, less competition on the shelves and super knockers. In supermarkets. Competitions, higher prices. There is this newfound concern about higher prices. That is why the majority of analysts think that she will not cut rates. But she does like to surprise people. Francine what about the ruble, weaker . Ryan the the problem with ruble at 70 to the dollar, is that if you look at the price of terms, itsed in ruble has fallen over the last five years. A lot of people think that as the price of oil falls, sodas the russian ruble. Yes, but the correlation is no longer one to one. The ruble is overvalued compared to the price of oil. The russian budget gets half of its revenue from oil and gas. Vladimir putin needs a weaker to narrow the budget deficit. So that is the issue. Of course, the other side of this a weaker ruble means higher inflation. In this case theyre more concerned about higher inflation than they are about the budget deficit. Francine they do so much. We will have to continue to monitor russia thank you so much. Arnab, what do you make of russia . 2015 was tough. This goes a little bit of way to why putin focus so much on geopolitics. 2016 is going to be even tougher for russia. Look att invesco we things very topdown and bottomup as well, particularly in emerging markets. In the case of russia, what ryan about, thisking issue of the fall and the oil price translating into a weaker and higher inflation expectations. That is the way that the budget gap is being close in the case of russia. Very importanter factor that we have to worry about when it comes to inflation in russia and the local market and investing there is what is going on in the budget. There are all these conflicts, some of them frozen, some of them not so frozen, some of them like with turkey involving a lot of saber rattling, more than actual conflict or substance. So, there are a lot of factors going on. The bottom line is that, although the geopolitics are very messy and, located the domestic politics as well, the macro policy makes a lot more sense than it has in quite some time, at least twice. The structural issues, the business environment, these things are not improving but they are doing more or less the right things. Francine do you get into bonds . Arnab i would say that this question about the Interest Rate in russia is pair a question about the outlook for oil. What we had been thinking is that oil would hit a bottom and recover from there. But as you were saying earlier, the iaea is talking about this glut continuing. Saudi arabia has an economic and political interest in continue to keep the price of oil low. We dont think you can be much lower than here. We will see a bottoming out in russia at some point in 2016. Francine i of two countries i need to get to in two minutes. South africa. Is this a watershed moment after the president sacked his finance minister. Investors are starting to free gout. Freak out. Arnab there are very good reasons to watch the situation like a hawk. President zuma has done some quite concerning things throughout his tenure. Also, i think the central bank in south africa is a pillar of stability. Or later have to do the right thing for the circumstances and the wrong thing for the economy, which is to tighten Monetary Policy to head off these concerns. The risk i think we are looking maybe this 2017 and event with a finance minister has brought that board, is a downgradesome more taking south africa below Investment Grade and taking it out of some global Government Bond ncs and sparking some selling. There has been some precautionary unwinding of positions because of that possibility. There is also the external balance is deteriorating, even though oil import prices are way down. South africa imports oil but exports other commodities. They need to tighten up fiscal and monetary. Francine too early to get into argentina. We have a new president looking for a loan. Arnab there has been a rally. The finance minister tells a very good story. I used to work with him in the 1990s. Very good people. Bright ideas. It is going to be complicated and difficult to sort the situation