Transcripts For BLOOMBERG The Pulse 20151221 : vimarsana.com

What is happening on the markets. A surprisingly busy session. Caroline grinding higher across the board. Political risk is dominating the front of every traders mind when it comes to spain. Stocks and bonds, stocks and bonds down today. This ibex 35, clear underperformance. Making up all of those losses we saw on friday. Id ask shopping ibex having its worst day. Every Industry Group is tainted. Real Estate Companies trading lower. Does utilities , elections. Can they get together some sort of majority . We are entering uncertain uncharted political territory. Theyre up 13 basis points. They were up 18 basis points. Daily, foreign costs rising. Concern about the political stability of spain. Interesting though, keep an eye on oil. It is always on our perspective. This is 2004 for you. It is down phenomenally this year. 36 per barrel on brent. Clearly, the ongoing concern about the supply gullet supply glut. Rig counts 17sing to 17 makes rigs added since july. Talk about cutting costs rather than cutting back on production. We are seeing some oil stocks lower this morning. I leave you with ericsson, one of the upside. This is leading the charge. Years its test day in 1. 5. This has to do with ironing out an agreement with apple. Settling a legal dispute over patents. We are seeing licenses Licensing Agreements. Very much liked by the investor base. Ericsson, the best performer on the stoxx 600. Rajoy winning the election but losing his majority. Where it does that take the majority where does that take the country . Tom mackenzie is standing by for us. Were getting a market reaction. What is the reaction there . What are the pundits saying about what we are seeing over the weekend . Tom thats right. We knew this was an uncertain election. Even the results of last night have thrown every analysts. Nobody knows how to call this. What investors were looking for theopular Party Political arithmetic seems to suggest that this is almost impossible. Socialist government could dish combined with the antiausterity party, that is startling that is still largely unknown. They are making a point of saying we are promarket. Not going to we are going to chip away at the debt. They were key to make that point. In terms of which allies falls in the next few days is largely unknown. Rajoys position is largely unclear. We reference this previously. This referenced previously. The ecb is playing a big role in this. Guy one of the critical factors is whoever wins will end up inheriting a good economy. This is a critical election. You really want to win it because you got a tailwind looks kind of good. Tom absolutely. A lot of the current a lot of economists pointing out spains growth cycles have been fairly long. We are two years into this growth cycle. It would be a good one to win. There are the problems. The jobs. I cannot stress enough 21 unemployment. Many of the numbers and the jobs that rajoy has managed to add, but a majority of them have been temporary contracts, as long as a few days. That is an endemic problem. The Popular Party managed to get the debt down. Growth is increasing. Consumer sentiment is up but that is causing economists to be concerned that we could be seeing another consumer fed bubble, instead of the export in manufacturing that this country needs. When you have longterm unemployment people when you Unemployed People here in spain, that is a problem. There are significant issues. Whichever government is formed, we could be looking at fresh elections if the parties here do not manage to come to an agreement. Look out forg to over the next couple of days. Tom mackenzie, thank you very much. Lets bring in our guest this morning, manish singh. Theyeuropean equities, are mispricing political risks . Possibly. Rclays, i believe the ecb is going to do more. The significance of this election is not just about the Popular Party becoming unpopular but more in the sense that the divide. They have not been catching cutting pension plans. They are retaining support. Giordanos d emos and chu. Os ciudadanos. Prowhat is going to happen over the next year . Or is it negative . Take us through the economic implications. There are positive applications because if you look at how the middle class has been streaking shrinking, do you think there is a need for a solution to happen . To give an example, if you look at the u. S. Come up the middle class has become a minority. Who does the buying . Expand, things do not and they do not get the money, it is going to start hurting the companys and economy. Very perversely, if you think this helps the middle class, then that should be positive for the company and the economy. Always a favorite economic effect of mine, henry ford doubled the wages to get that positive austerity coming through. Thing. This is the bigger to see this as a cyclical factor is to miss read the whole thing. Not really increasing wages for the last 20 years as some commentators have pointed out, these are big issues to tackle. Guy this is what we are saying. This is what we are seeing. Manus these are not rising on hot air. These are issues that need to be raised by the majority party. Guy manish singh will stay with us. On our radar this monday morning. Toshiba has forecast a net loss of 4. 5 billion. Jobs. Lan to cut 600,000 down around 50 this year. The new star wars movie has prices incket america. Ked 238 in it rate million. That is without china where the film opens on january 9. Well be talking to disneys chairman and ceo, bob iger, at 1 00 p. M. London time. Fifa has banned its president blatter. Has been banned from the game for eight years. Next, brent crude slumps to an 11 year low tiered they are slept low. When we return. Guy welcome back. You are watching the pulse. We are streaming on bloomberg. Com, your tablet in your phone. Brent crude drops to the lowest level in a decade. Gotkineg tvs elliott has more. Meeting in cap eric producers meeting in cairo. Alico they are trying elliott we should not be too pessimistic about oil prices. The Iraqi Oil Minister saying little prices will rise from that current level. Fundamentals are strong. Words are one thing, actions are another. The market is not seeing the reactions out there. Try to increase oil prices did indeed, we heard from the qatar minister the qatar oil minister saying trying to get the oil prices higher. Now they are trying to increase their margins. They take from every barrel that they sell. Bit lets talk a little about why we are seeing what we are seeing. U. S. Producers are adding to supply glut. We have seen changes to legislation. Reasonscole one of the one of the reasons they started up pumping the oil was to shake up those shale producers in the united states. There is evidence that it seems to be working with more than half of the u. S. s rakes. Blip. Have seen a bit of a 540 legs are up to 540. Friday lifting that moratorium on u. S. Oil exports. That adds to the possibilities of oil adding to that supply glut. Guy elliott, thank you very much indeed. What is happening with the oil story at his region. John aen isa by significant move in that currency overnight. Oil related . Certainly. Your continuing to see what is happening. The impact of oil rippling through the economy. The big ones we watch out for. China, etc. Lets bring manish singh back into the conversation. Is speaking in tokyo. He says oil is good to have back toward 80 a barrel back in 2020. Manus i will see how it is going to increase too much over the next year. My biggest fear is if they keep producing oil, the cost rises up, you might be seeing a lot of selling in the smart market. The risks are more to the downside than the upside. Guy because people are affected, because the shape of the curve. They are taking oil into storage. Manus were seeing the cost is risenish wishing the cost the demand is not increasing. There will come a time when there will be more oversupply. The headline level, it sounds very exciting. The problem is the infrastructure to shift this stuff. Nextyou can load a e manus i think can load manish i think can load it in the united states. While everythings being done on the supply side, there is very little done on the supply side on the demand side. Monetary policy is exhausted. It cannot consumption. I dont think Monetary Policy is good to help the world. Fiscal response has to come. I dont see the response in the u. S. Until 2017. You have 2016 to go through with not much fiscal response here it response. Guy up next, trouble for toshiba as they forecast a record job loss. We are going to break down the numbers for you when we return. Guy we are live on bloomberg tv. We are streaming on your tablet, phone and bloomberg. Com. Barred sepps blatter for eight years. Lets get more on this the building story. Burke news reporter, Hubert Miller joins us from geneva. Hugo, this was what was anticipated. What happens now . Take us forward and behind the ban . Say le i think we can hugo i think can say sepp blatter is officially out for eight years. That rules out ever his chances of running for the presidency in february, even though he always held up that possibility. Even more so, michelle who was a sweetheart of he seems to have exhausted all of his maneuvers and appeals. There is no way he will be back among footballs ruling elite eight years. Guy the frustration is that we have not seen a strong candidate emerge. Where does the facet and the result of this. As a result of this . Hugo they were candidates they came running forward as a candidate. There are some respectable candidates. One might although think someone associated with ua or fifa would be tainted. There is a middle eastern shake. Shake there are five or six others. Are any of them removed enough to take the Organization Forward . Guy that is the question. Hugo miller joining us. Lets get to one of our other big stories. 10 iba shares closing down after the Japanese Company released a loss. Lets walk through the details. Nejra that i put a percent drop at the close in tokyo trading that 9. 8 drop at closing in tokyo trading came as toshiba forecast a loss for the currency for the year. Also announced job cuts, 10,000 cuts, 10,600 job cuts. The reason for this is toshiba is narrowing this go of its business line. This is after an accounting scandal which started eight months ago. It is seen as one of the worst for japanese companies. They announced this accounting probe one than eight months ago p what happened is they filed false financial statements. They did it to conceal their winning performance of its pc operations which have been a mainstay within its consumer brand. It is been a tough few months for that business. Manus, the last chance to talk to you this year. Lets talk more broadly about what is happening in the world. On long equities, what do you think i am going to be able to book this Time Next Year . Manish you will probably get more of the same next year. If im looking at s p, they had a high of 21. 30 this year. I am doubting you will see more of a high next year. That is overestimating inflation is going to come it they will be lucky to get to rate hike in my view. The bigger fear is deflationary pressure. It is around earnings and wage increases which are not worry which are not happening here it those things make me worry happening. Those things make me worry. If you compare uber to taxi, you pay 20 less now. If you compare a brick if you compare airbnb to hotel, you are paying 20 less now. Guy uncertainty reigns in spain, well talk about that next. When youre on hold, your business is on hold. Thats why comcast business doesnt leave you there. When you call, a Small Business expert will answer you in about 30 seconds. No annoying hold music. Just a real person, real fast. Whenever you need them. So your business can get back to business. Sounds like my rides ready. Dont get stuck on hold. Reach an expert fast. Comcast business. Built for business. To discover the best shows friends together and movies with xfinitys winter watchlist. Later on, well conspire as we dream by the fire a beautiful sight, were happy tonight watching in a winter watchlist land, watching in a winter watchlist land xfinitys winter watchlist. Watch now with xfinity on demand your home for the best entertainment this holiday season. Welcome back. I am guy johnson. Lets get you up to speed. Brent crude has fallen to its lowest level since july 2004. Supplies will exasperate a record glut as they fight for market share. Prices down 37 . Urgings Prime Minister imf to leave the greek bailout. He was puzzled by the unconstructive attitude of the fund on fiscal and Financial Issues and suggested the imf should leave the bailout to the eurozone. Floatingn moved to a pay rate after oil prices slumped to the lowest in 11 years. That is your first were news. For more, head to bloomberg. Com. A similar story in the bond market. Lets get to madrid following the inconclusive election. There we find tom mackenzie. I am pleased to be joined by francisco caprio. Thes start by asking about chances of a government being formed in the next few days. What are the chances . Francisco a comparative conservative government and then a left government. [indiscernible] will it be enough . They could need the help of the left party. Ask thee will independence of catalonia. Most come from southern spain. They are strongly against the independence of catalonia. It will not be easy. Tom investors have been hoping there would be an alliance. That looks difficult now. Francisco they do not have enough seats. The Lower Chamber of the Spanish Parliament has 250 seats. They will need 12 more seats. It will be difficult to get 12 more seats. [indiscernible] independennts. Tom the markets will selloff on the back of the news. It sounds like that is justified. Francisco things have changed. A possibility of a leftist party. Tom rajoy was praised for his labor market reforms and for getting the economy back on track. Has he left that still needs to be done for any new government . Francisco a level of market reform was a good reform, but it was not enough. The rate of unemployment is too high. Government should make a new labor reform. That will be difficult. There are two fields in which the government should act. The labor market and the public sector. We have an inefficient public sector. It is almost 100 of gdp. In most european countries, public debt is high. Percent of gdp, with deficit as we have, is dangerous. Budget deficit has been coming down. Commissioners warn about the 2016 budget. If there is a coalition, it will make meeting the target more difficult. Francisco for sure. Did was toing rajoy pass the budget. 2000 16 budget has all been approved. This is very good for any government. Suppose you have to begin to be scarce in your budget. It will be very difficult. Talking about market reaction, what would your advice be to investors . Francisco wait and see. We do not know what will happen. For the moment, i would say wait and see. Tom thank you very much, francisco crababrillo. The chances about of a government being formed in the early stages of this post vote period, warning investors to hold off for the moment. Guy that is what they are doing. Tom mackenzie joining us from madrid. Turkey and israel might be about to restore diplomatic relations after a fiveyear hiatus. Elliott gotkine has more. How does this fit together with the geopolitical situation in the region . Some suggestion with the downing of the russian fighter jet. Elliotts there have been to unify the countrys. Since the downing of the russian fighter jet between turkey and syria and the economic sanctions that russia has imposed on turkey, that concentrates in the mind of turkish leaders. Secret talks have been held in switzerland. They seem to have reached an agreement where israel will have a fund to compensate families of the turks killed when an israeli commandos raided in 2010. Turkey will desist from trying to prosecute Israeli Soldiers involved in the raid and turkey well block entry into the country of a senior operative. Lets talk about the impact on the market pair gas market. Critical between the countries. Has been severed. Could we see natural gas going to turkey now . Elliott we could. The commercial relationship between israel and turkey has flourished despite political problems. Reason whyue is a turkey has decided to try to have some kind of with israel. Turkey gets more than half of russia. From israel is looking for export markets. Acts finally getting its together with regards to some kind of outline of how the gas will be allowed to be exported. Caveat, israel would love to export gas to turkey and to europe. They will discuss building a pipeline. If there is another war between israel and gaza, turkey might take exception to it. What is to stop turkey from switching off the pipeline between israel and turkey . Reconciliation talks between the turkish and the greek are ongoing as well. A lot of possibilities. The gas issue and russian issue playing on the mind of politicians as they seek to restore diplomatic relations after five years. Guy a lot of moving parts. Thank you. Ukraine has not paid its russian debt. The feud could be heading for london. Why london . We will find out when we return. Guy welcome back. You are watching the pulse. Lets get you up to speed. Say chinarg sources has upped its bid for. It is a 26 premium on the last closing price. Through ifs the deal comes through, it will be the biggest acquisition by a chinese country. Gotand Gas Producers clearance from antitrust authorities, removing the final hurdle to their deal. The takeover was valued at about 70 billion when it was announced in april. Ericsson and apple have settled infringement claims against each other. They will collaborate in multiple areas, including 5g development and traffic management. Mostson shares jumped the in 1. 5 years in stock trading. For more, head to bloomberg. Com. Between ukraine and russia could play out in a courtroom. Lets speak to natasha. These were written under english law. That is why they will end up in an english courtroom. Any dispute has to be resolved in the court system of england. It could end up in an Arbitration Court or the main court system. Guy is there anything that will give us a guide on how this may end . It is a unique case. Moneys a country lending to another country structured as a commercial euro bond. Shortly before the creditor oruntry invaded the debt country, if the argument were brought into court, it could be interesting. And watch with interest. Thank you. Lets talk about Industry Group<\/a> is tainted. Real Estate Companies<\/a> trading lower. Does utilities , elections. Can they get together some sort of majority . We are entering uncertain uncharted political territory. Theyre up 13 basis points. They were up 18 basis points. Daily, foreign costs rising. Concern about the political stability of spain. Interesting though, keep an eye on oil. It is always on our perspective. This is 2004 for you. It is down phenomenally this year. 36 per barrel on brent. Clearly, the ongoing concern about the supply gullet supply glut. Rig counts 17sing to 17 makes rigs added since july. Talk about cutting costs rather than cutting back on production. We are seeing some oil stocks lower this morning. I leave you with ericsson, one of the upside. This is leading the charge. Years its test day in 1. 5. This has to do with ironing out an agreement with apple. Settling a legal dispute over patents. We are seeing licenses Licensing Agreement<\/a>s. Very much liked by the investor base. Ericsson, the best performer on the stoxx 600. Rajoy winning the election but losing his majority. Where it does that take the majority where does that take the country . Tom mackenzie is standing by for us. Were getting a market reaction. What is the reaction there . What are the pundits saying about what we are seeing over the weekend . Tom thats right. We knew this was an uncertain election. Even the results of last night have thrown every analysts. Nobody knows how to call this. What investors were looking for theopular Party Political<\/a> arithmetic seems to suggest that this is almost impossible. Socialist government could dish combined with the antiausterity party, that is startling that is still largely unknown. They are making a point of saying we are promarket. Not going to we are going to chip away at the debt. They were key to make that point. In terms of which allies falls in the next few days is largely unknown. Rajoys position is largely unclear. We reference this previously. This referenced previously. The ecb is playing a big role in this. Guy one of the critical factors is whoever wins will end up inheriting a good economy. This is a critical election. You really want to win it because you got a tailwind looks kind of good. Tom absolutely. A lot of the current a lot of economists pointing out spains growth cycles have been fairly long. We are two years into this growth cycle. It would be a good one to win. There are the problems. The jobs. I cannot stress enough 21 unemployment. Many of the numbers and the jobs that rajoy has managed to add, but a majority of them have been temporary contracts, as long as a few days. That is an endemic problem. The Popular Party<\/a> managed to get the debt down. Growth is increasing. Consumer sentiment is up but that is causing economists to be concerned that we could be seeing another consumer fed bubble, instead of the export in manufacturing that this country needs. When you have longterm unemployment people when you Unemployed People<\/a> here in spain, that is a problem. There are significant issues. Whichever government is formed, we could be looking at fresh elections if the parties here do not manage to come to an agreement. Look out forg to over the next couple of days. Tom mackenzie, thank you very much. Lets bring in our guest this morning, manish singh. Theyeuropean equities, are mispricing political risks . Possibly. Rclays, i believe the ecb is going to do more. The significance of this election is not just about the Popular Party<\/a> becoming unpopular but more in the sense that the divide. They have not been catching cutting pension plans. They are retaining support. Giordanos d emos and chu. Os ciudadanos. Prowhat is going to happen over the next year . Or is it negative . Take us through the economic implications. There are positive applications because if you look at how the middle class has been streaking shrinking, do you think there is a need for a solution to happen . To give an example, if you look at the u. S. Come up the middle class has become a minority. Who does the buying . Expand, things do not and they do not get the money, it is going to start hurting the companys and economy. Very perversely, if you think this helps the middle class, then that should be positive for the company and the economy. Always a favorite economic effect of mine, henry ford doubled the wages to get that positive austerity coming through. Thing. This is the bigger to see this as a cyclical factor is to miss read the whole thing. Not really increasing wages for the last 20 years as some commentators have pointed out, these are big issues to tackle. Guy this is what we are saying. This is what we are seeing. Manus these are not rising on hot air. These are issues that need to be raised by the majority party. Guy manish singh will stay with us. On our radar this monday morning. Toshiba has forecast a net loss of 4. 5 billion. Jobs. Lan to cut 600,000 down around 50 this year. The new star wars movie has prices incket america. Ked 238 in it rate million. That is without china where the film opens on january 9. Well be talking to disneys chairman and ceo, bob iger, at 1 00 p. M. London time. Fifa has banned its president blatter. Has been banned from the game for eight years. Next, brent crude slumps to an 11 year low tiered they are slept low. When we return. Guy welcome back. You are watching the pulse. We are streaming on bloomberg. Com, your tablet in your phone. Brent crude drops to the lowest level in a decade. Gotkineg tvs elliott has more. Meeting in cap eric producers meeting in cairo. Alico they are trying elliott we should not be too pessimistic about oil prices. The Iraqi Oil Minister<\/a> saying little prices will rise from that current level. Fundamentals are strong. Words are one thing, actions are another. The market is not seeing the reactions out there. Try to increase oil prices did indeed, we heard from the qatar minister the qatar oil minister saying trying to get the oil prices higher. Now they are trying to increase their margins. They take from every barrel that they sell. Bit lets talk a little about why we are seeing what we are seeing. U. S. Producers are adding to supply glut. We have seen changes to legislation. Reasonscole one of the one of the reasons they started up pumping the oil was to shake up those shale producers in the united states. There is evidence that it seems to be working with more than half of the u. S. s rakes. Blip. Have seen a bit of a 540 legs are up to 540. Friday lifting that moratorium on u. S. Oil exports. That adds to the possibilities of oil adding to that supply glut. Guy elliott, thank you very much indeed. What is happening with the oil story at his region. John aen isa by significant move in that currency overnight. Oil related . Certainly. Your continuing to see what is happening. The impact of oil rippling through the economy. The big ones we watch out for. China, etc. Lets bring manish singh back into the conversation. Is speaking in tokyo. He says oil is good to have back toward 80 a barrel back in 2020. Manus i will see how it is going to increase too much over the next year. My biggest fear is if they keep producing oil, the cost rises up, you might be seeing a lot of selling in the smart market. The risks are more to the downside than the upside. Guy because people are affected, because the shape of the curve. They are taking oil into storage. Manus were seeing the cost is risenish wishing the cost the demand is not increasing. There will come a time when there will be more oversupply. The headline level, it sounds very exciting. The problem is the infrastructure to shift this stuff. Nextyou can load a e manus i think can load manish i think can load it in the united states. While everythings being done on the supply side, there is very little done on the supply side on the demand side. Monetary policy is exhausted. It cannot consumption. I dont think Monetary Policy<\/a> is good to help the world. Fiscal response has to come. I dont see the response in the u. S. Until 2017. You have 2016 to go through with not much fiscal response here it response. Guy up next, trouble for toshiba as they forecast a record job loss. We are going to break down the numbers for you when we return. Guy we are live on bloomberg tv. We are streaming on your tablet, phone and bloomberg. Com. Barred sepps blatter for eight years. Lets get more on this the building story. Burke news reporter, Hubert Miller<\/a> joins us from geneva. Hugo, this was what was anticipated. What happens now . Take us forward and behind the ban . Say le i think we can hugo i think can say sepp blatter is officially out for eight years. That rules out ever his chances of running for the presidency in february, even though he always held up that possibility. Even more so, michelle who was a sweetheart of he seems to have exhausted all of his maneuvers and appeals. There is no way he will be back among footballs ruling elite eight years. Guy the frustration is that we have not seen a strong candidate emerge. Where does the facet and the result of this. As a result of this . Hugo they were candidates they came running forward as a candidate. There are some respectable candidates. One might although think someone associated with ua or fifa would be tainted. There is a middle eastern shake. Shake there are five or six others. Are any of them removed enough to take the Organization Forward<\/a> . Guy that is the question. Hugo miller joining us. Lets get to one of our other big stories. 10 iba shares closing down after the Japanese Company<\/a> released a loss. Lets walk through the details. Nejra that i put a percent drop at the close in tokyo trading that 9. 8 drop at closing in tokyo trading came as toshiba forecast a loss for the currency for the year. Also announced job cuts, 10,000 cuts, 10,600 job cuts. The reason for this is toshiba is narrowing this go of its business line. This is after an accounting scandal which started eight months ago. It is seen as one of the worst for japanese companies. They announced this accounting probe one than eight months ago p what happened is they filed false financial statements. They did it to conceal their winning performance of its pc operations which have been a mainstay within its consumer brand. It is been a tough few months for that business. Manus, the last chance to talk to you this year. Lets talk more broadly about what is happening in the world. On long equities, what do you think i am going to be able to book this Time Next Year<\/a> . Manish you will probably get more of the same next year. If im looking at s p, they had a high of 21. 30 this year. I am doubting you will see more of a high next year. That is overestimating inflation is going to come it they will be lucky to get to rate hike in my view. The bigger fear is deflationary pressure. It is around earnings and wage increases which are not worry which are not happening here it those things make me worry happening. Those things make me worry. If you compare uber to taxi, you pay 20 less now. If you compare a brick if you compare airbnb to hotel, you are paying 20 less now. Guy uncertainty reigns in spain, well talk about that next. When youre on hold, your business is on hold. Thats why comcast business doesnt leave you there. When you call, a Small Business<\/a> expert will answer you in about 30 seconds. No annoying hold music. Just a real person, real fast. Whenever you need them. So your business can get back to business. Sounds like my rides ready. Dont get stuck on hold. Reach an expert fast. Comcast business. Built for business. To discover the best shows friends together and movies with xfinitys winter watchlist. Later on, well conspire as we dream by the fire a beautiful sight, were happy tonight watching in a winter watchlist land, watching in a winter watchlist land xfinitys winter watchlist. Watch now with xfinity on demand your home for the best entertainment this holiday season. Welcome back. I am guy johnson. Lets get you up to speed. Brent crude has fallen to its lowest level since july 2004. Supplies will exasperate a record glut as they fight for market share. Prices down 37 . Urgings Prime Minister<\/a> imf to leave the greek bailout. He was puzzled by the unconstructive attitude of the fund on fiscal and Financial Issues<\/a> and suggested the imf should leave the bailout to the eurozone. Floatingn moved to a pay rate after oil prices slumped to the lowest in 11 years. That is your first were news. For more, head to bloomberg. Com. A similar story in the bond market. Lets get to madrid following the inconclusive election. There we find tom mackenzie. I am pleased to be joined by francisco caprio. Thes start by asking about chances of a government being formed in the next few days. What are the chances . Francisco a comparative conservative government and then a left government. [indiscernible] will it be enough . They could need the help of the left party. Ask thee will independence of catalonia. Most come from southern spain. They are strongly against the independence of catalonia. It will not be easy. Tom investors have been hoping there would be an alliance. That looks difficult now. Francisco they do not have enough seats. The Lower Chamber<\/a> of the Spanish Parliament<\/a> has 250 seats. They will need 12 more seats. It will be difficult to get 12 more seats. [indiscernible] independennts. Tom the markets will selloff on the back of the news. It sounds like that is justified. Francisco things have changed. A possibility of a leftist party. Tom rajoy was praised for his labor market reforms and for getting the economy back on track. Has he left that still needs to be done for any new government . Francisco a level of market reform was a good reform, but it was not enough. The rate of unemployment is too high. Government should make a new labor reform. That will be difficult. There are two fields in which the government should act. The labor market and the public sector. We have an inefficient public sector. It is almost 100 of gdp. In most european countries, public debt is high. Percent of gdp, with deficit as we have, is dangerous. Budget deficit has been coming down. Commissioners warn about the 2016 budget. If there is a coalition, it will make meeting the target more difficult. Francisco for sure. Did was toing rajoy pass the budget. 2000 16 budget has all been approved. This is very good for any government. Suppose you have to begin to be scarce in your budget. It will be very difficult. Talking about market reaction, what would your advice be to investors . Francisco wait and see. We do not know what will happen. For the moment, i would say wait and see. Tom thank you very much, francisco crababrillo. The chances about of a government being formed in the early stages of this post vote period, warning investors to hold off for the moment. Guy that is what they are doing. Tom mackenzie joining us from madrid. Turkey and israel might be about to restore diplomatic relations after a fiveyear hiatus. Elliott gotkine has more. How does this fit together with the geopolitical situation in the region . Some suggestion with the downing of the russian fighter jet. Elliotts there have been to unify the countrys. Since the downing of the russian fighter jet between turkey and syria and the economic sanctions that russia has imposed on turkey, that concentrates in the mind of turkish leaders. Secret talks have been held in switzerland. They seem to have reached an agreement where israel will have a fund to compensate families of the turks killed when an israeli commandos raided in 2010. Turkey will desist from trying to prosecute Israeli Soldiers<\/a> involved in the raid and turkey well block entry into the country of a senior operative. Lets talk about the impact on the market pair gas market. Critical between the countries. Has been severed. Could we see natural gas going to turkey now . Elliott we could. The commercial relationship between israel and turkey has flourished despite political problems. Reason whyue is a turkey has decided to try to have some kind of with israel. Turkey gets more than half of russia. From israel is looking for export markets. Acts finally getting its together with regards to some kind of outline of how the gas will be allowed to be exported. Caveat, israel would love to export gas to turkey and to europe. They will discuss building a pipeline. If there is another war between israel and gaza, turkey might take exception to it. What is to stop turkey from switching off the pipeline between israel and turkey . Reconciliation talks between the turkish and the greek are ongoing as well. A lot of possibilities. The gas issue and russian issue playing on the mind of politicians as they seek to restore diplomatic relations after five years. Guy a lot of moving parts. Thank you. Ukraine has not paid its russian debt. The feud could be heading for london. Why london . We will find out when we return. Guy welcome back. You are watching the pulse. Lets get you up to speed. Say chinarg sources has upped its bid for. It is a 26 premium on the last closing price. Through ifs the deal comes through, it will be the biggest acquisition by a chinese country. Gotand Gas Producers<\/a> clearance from antitrust authorities, removing the final hurdle to their deal. The takeover was valued at about 70 billion when it was announced in april. Ericsson and apple have settled infringement claims against each other. They will collaborate in multiple areas, including 5g development and traffic management. Mostson shares jumped the in 1. 5 years in stock trading. For more, head to bloomberg. Com. Between ukraine and russia could play out in a courtroom. Lets speak to natasha. These were written under english law. That is why they will end up in an english courtroom. Any dispute has to be resolved in the court system of england. It could end up in an Arbitration Court<\/a> or the main court system. Guy is there anything that will give us a guide on how this may end . It is a unique case. Moneys a country lending to another country structured as a commercial euro bond. Shortly before the creditor oruntry invaded the debt country, if the argument were brought into court, it could be interesting. And watch with interest. Thank you. Lets talk about Something Else<\/a> affecting russia. Oils continuous production, squeezing the rivals. Russia has no attention no intention of succumbing to the pressure. This is very difficult for russia. We are seeing the effects of azerbaijan. Russia is going. Not have thought they are inefficient, they do not have infrastructure, investment going on. It is not stopping them. It is not. There are a number of reasons for that. Russia wants to be a big dog. There is no political incentive to cut back output. It is difficult to shut in production in siberia and restarted again. These oil fields produce a lot of warfare along with the oil. 90 of what comes out of the well is water. That in, you will probably never restart that well again. Most ofmercial side, the costs are in rubles. Of formpany, most the company exporting, most of their money is in dollars. Government is the one that has lost out in terms of the taxation of exports. When the oil price was 100 a barrel, Russian Oil Companies<\/a> were earning about 30. Now that oil prices are closer to 40 a barrel, Russian Oil Companies<\/a> are probably earning Something Like<\/a> 25. Their income has not gone down much. We are down to levels on brent we have not seen in decades. Opec, saudi policy pushing the price down. Is beginning to have the effect they are looking for. Julian it is. The saudi view is there is nothing else we could do. We have to put this in the 2014, u. S. T in 2012, output was growing each year and now it is flat. That is the palace he working. That is the policy working. Not just u. S. Production the saudis are targeting. We are seeing projects being delayed, canceled. Those will have impact on supply. They are not having that impact yet. Guy how did we misjudged the timeline so badly . Julian i think this was very people outside looking in and saying they have done this, they are expecting immediate return. Werenot think the saudis at ma have taken longer than they anticipated. Put a timeline on it. The only alternative for them. As to keep cutting output all that would do was underpin growth from highcost producers. They have been in that position before. In the early 1980s, production went from 10 Million Barrels<\/a> a day to two. Guy thank you for the analysis. Julian lee joining us from first word. We will see you in a moment. Guy welcome back. You are watching the pulse. We are streaming on your tablet, your phone, and bloomberg. Com. Rosie. Ding up y. Is being portrayed as the good guys in the film the big short. The whole World Economy<\/a> might collapse. I am sure the world bank have more incentive than greed. No one is paying attention. Guy looking forward to it. Why such a good year . You can get an inkling if you look at what happened this year. Walk us through the dynamics. The s p 500 is on track for its first loss since the 2008 financial crisis. With twitter, facebook, the social media, it is easy to get your ideas out there. That is new. Guy you would have thought after the run the s p has had, you would get a turn in it area to shortsellers do well in that turning point . Is also the debt. Near zero Interest Rates<\/a> are coming to an end. Chickens are coming home to roost. Over leavempanies her, chickens are coming home to roost. Lever, chickens are coming home to roost. To me about the reputational story. We know the names, but a lot of people do not. Trista a lot of it is unfair. Not only be can areas the coal mine, a lot of them are the garbage men, taking out the dirty trash on the market. They have been vilified for hundreds of years. Napoleon called them enemies of the state. Back in thetlawed tulip bubble in the netherlands back in the 1400s or something. Up they speed the process anyway. The capitalism cycle starts to work quicker. People have a tendency to shoot the messenger. No one gets mad at the buy side for lying. Guy i think you make a good point on that one. Lets talk more about this, hopefully a little later. To see what is happening with the markets. Caroline says keeping an eye on spanish stocks. Abounding after we saw selloff of about one billion euro. Starting to see a pickup. Stocks trading lower, underperforming the rest of the market. Uncharted territories after politics that have been dominated by two parties. Seeing a selloff in spanish stocks. Seeing a bounce in terms of commodities. Best performance on a stock 600, autos, technology. Keep an eye on glencore. Rising as much as 6. 5 . Ofically on the back citigroup, upping its view on where its see its price core for glencore. Seeing optimism about metal prices this morning. That is why we are seeing all of the miners outperforming this morning. Keep an eye on this stock. Well. Logy is doing ericsson, the deal with apple supercharging the stock this morning. In ag the most yearandahalf. It has managed to settle the legal dispute with apple. Starting to see ground being made in terms of the corporation. They are reaching a Licensing Agreement<\/a> paving the way for operation Going Forward<\/a> after surroundingspute mobile device patents. Outlier amid the political uncertainty. Thank you. Caroline hyde with key stocks and markets you need to be watching. Surveillance. A big focus on oil and spain. Guy a new low for crude. Brent dips to levels last seen in 2004. And stockse election fall as uncertainty looms in spain. A red card. 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