Transcripts For BLOOMBERG Countdown 20141210

Banks cut back. The royal bank of scotland will be stashing staff numbers and in japan. Hello. Welcome to countdown. We will beming up, live in paris. Conferenceal tech which brings together leading companies, innovators and startups. We have exclusive interviews through the morning starting with le webs founder. Markets are in focus after us a lot and equities yesterday. Policymakers on short loans. Of parliamentary elections and the Russian Central Bank also meet in the next 24 hours. I will start with greece. What a day. The biggest oneday decline since 1987. That tells you something. Something very interesting happened in the bond market. I will focus on this later. The yield on the threeyear bond went to the yield of a 10 year bond. It is an inverting yield curve. That is a worry because that means greece will not have access to Capital Markets and will face difficulties raising money in the future. The asset markets in greece are flashing red right now. It all came on the same day as we had these tightening moves come from the chinese central bank. Chinesehinese we saw stocks down as much as 10 yesterday. Some weakness in inflation in china. By 2. 7 gate prices down in november, a record 33rd straight decline. That falling oil and Commodity Prices are having an impact. The tightening we saw from the tighter short learn shortterm lending loans in china we saw. We also got analysts asking what the pboc was going to do next. Economists say they have exhausted their ineffective policies with this tool. What is their next move going to be . Are we going to see that . What are basically the measures of what the banks have been set aside. I touched greece, china. I think russia will still come as well. It is the highest levels you have seen since 2013. We are up a third of a percent on the ruvell this morning ruble this morning. The central bank has a meeting tomorrow. It is expected that could raise the rates to 10 . This is the worst performing. The bond markets are also flashing red. Tenure government bonds a nearly 15 , the highest yield since 2009. You have the ruble falling and the Central Bank Meeting tomorrow. 10 seems to be the consensus. Polled sayaders a rate increase of 4 is really needed to get to grips with the currency. Lets get the china where prices are continuing to slide. Consumer prices across the country also rising at the slowest rate in five years. We are joined now from beijing by tom. What is driving this de flation . I think there are two factors at work. The first thing i think this is a positive for the chinese Economy International Energy Prices are down. Oil prices are down. That is having a cost to the chinese economy. In some ways that is a positive development. It could be a boost of business profit margins. The second factor this is the troubling one what these prices say to deflation in the chinese economy. The legacy of investment in the last few years has been substantial overcapacity across chinas industrial sector. If you combine that with weak demand coming in from the end of 2014, the outcome seems to be the is very limited inflation in the Consumer Sector and deflati on in the factory sector. Chinas central bank has just cut Interest Rates so how does todays data play into the outlook among the policies . Chinas central bank, the peoples bank of china, they presented them as a technical move. Real Interest Rates were too high, they said and that is because inflation rates were low. Well, guess what . The decline in factory prices that we have seen in november has already more than offset the impacts of the rate cuts. The businesses are now facing higher real byline real borrowing costs. That underlines why the central bank felt it was important to move. If we see inflation continuing, that is going to start raising expectations of more cuts in Interest Rates coming in 2015. What does this mean for the chinese currency which at one point yesterday at its biggest interday moves since december 2008 . Are a variety of reasons why people are now shifting their expectations on the currency. On the past, it was about how much the yuan was going to appreciate. Now we are seeing analysts shifting expectations towards the appreciation depre ciation. There is a huge trade surplus which is a substantial undervaluation which is not a big factor as it was. It partly reflects low growth in chinas economy which argues for a week or currency to weaker currency for more demand. Itll add for more expectations epreciation. Thanks a lot. Ukraine and prorussian separatists are close to resuming peace talks as a oneday truce is held. They hope for an end the fighting that is rocked the Eastern Region of the country for much of this year. Ryan, good morning. How big is this seeming progress . Name in a truce only in the sense that they continue to shoot at one another but on a much smaller scale than they have been for the past couple of months. Last time they declared a truce in which two soldiers were killed. This is progress in the sense that both the ukrainians and russian backed rebels have been speaking positively about it. It is important because it sets it up for more peace talks in the city of minsk, belarus later in the week. This is the first step in a long process of getting back on the road to diplomacy. We cut up with the ukrainian president in cigna for singapore. He said this is an example of ukraine at a new crossroads. Think this is decisively important to have a sustainable ceasefire. A strong guarantee from the russian general that the ceasefire will take place. Unfortunately, we have several promises to keep the ceasefire. Yesterday, i was trying to figure out where we are in this crisis. We took a piece of paper and i did the pluses and minuses of what is going on between russia, the west, and the ukraine. A plus is this truce and another plus is russia resumed gas exports the ukraine. This is a complex relationship. Chasinghe armed f16s that Armed Russian jets yesterday. We are seeing a lot of those top gun incidents. It smacks of cold war. We also had the german chancellor of attacking russia against adding that russias ukraine policy should be shamed and maimed. That is really important because she has really been seen as a link between russia and the United States and the United Kingdom where relations are much more acrimonious. Westnk a new low in the russia relationship is also some comments we had from the Russian Foreign minister will effectively made a big at the german chancellor. That is something in my 20 years i have never heard the russians do and suggest this is actually a relationship that will take a while to patch up. Angela merkel has been the political conduit with the west, isnt it . Invery pragmatic, grew up east germany, very aware of living with russia in the form of the soviet union. But, something changed. I dont know if it was in milan or australia but her rhetoric is much tougher now. You remember the last person to make an effort at diplomacy was president Francois Hollande when he stopped over in moscow we go. Interesting because many people think if the french are the ones that are doing the negotiating, prospects for peace and not very good. We believe in there. We will talk about that a little later. Join the conversation on twitter. Ryan is if you have a question on russia, we are always there. On edwards anna edwards twitter. The one person to master twitter. What more can i say . We will go live to paris to gauge the mood of the nations Tech Industry. We will go to to le web. We will bring you an interview with one of the ceos after the break. Welcome back. We are getting some breaking news. The german travel business says their nbumbumbers are mixed. If you look at underlying every 868. 5 million. The profits are coming a touch shy. 512estimates were for million. Guiding thel of it merging group which includes tui. We got the numbers on december 4. The ceo will be speaking later on today on the pulse. Tech leaders from around the role are in paris today for le web, the annual tech gathering. Bloomberg was there to gauge frances 2 Tech Industry in a slowgrowing economy. Caroline brings us an extensive look. Good morning. It has been going on for over 10 years. More than 3000 attendees here. 200 startups and some great stories, including the founder of uber who got the idea of creating the service here when he was stuck in paris and could not find a taxi. Many think that france has become a pretty attractive place. France has introduced tax rates of 7 billion for rnd. These companies are also looking for the best talent. That is one of the reasons phil libin, evernote ceo, is coming to le web. Camet him just after b off the plane. He told me he was setting up a new office in france. I asked him what his view was on for the frances tech scene. Have a listen. I think the view is mixed. There is definitely a lot of sentiment that france is a difficult place to do business with. But, i think the Smart Companies are all contrarian. When the commission wisdom is some places difficult to be, that is probably the best time to go there. The most important thing is the talent. The most important thing to attract Tech Companies in to invest in the education and have the best talent. Frances deftly far ahead in terms of many other places. That will Keep Companies like ours coming back. Places talkt of about making a Silicon Valley summerhouse. Somewhere else. For whatalley is great it does but there are a lot of problems as well. I dont think you need to create Silicon Valley in paris. I think france and europe in general is really on the verge of a notch up her nouriel entrepreneurial renaissance. It will be a great hub or location for technology companies. I think the next revolution that will have the highest impact on one billion people is this revolution in productivity. The idea of what it takes to make us productive is not having the separate tools that are based on physical ideas like a telephone or a slide projector or typewriter, which you can really combine these things that breaks down the barriers of individual productivity. I think people will be more productive next year than they were this year. Technology, a combination of augmented intelligence, wearable computing a new workspace technologies are going to make a profound transformation. Smarterng people to be in the office, to be more productive. That is the ambition of phil libin. Million70 of his 100 evernote users actually use evernote in the office for work. He also said that the company will not be ready for an another couple of years. Of course, the next debate we will have with our guest this morning is also the tax debate. The u. K. Wants to introduce a 25 tax on internationals like google and apple in their country because most of the companies actually find loopholes and do not declare all of their taxes where they make business. We will talk about this and the next tech bubble and the next tech resolution all morning from le web. Thank you, caroline. Anna will be back in 20 minutes for an exclusive conversation with the founder of le web. A Global Equity selloff yesterday with European Markets feeling the effects. Lets bring our conversation back to this. We are joined by peter, is shredded just at seneca investments. China, greece, russia said next week japan. What is number one in what you are interested mostly . Choice. Spoiled for things are all being driven by different things. In japan, you have the upcoming election. The economy is weaker than they were hoping it would be in china. You have Inflation Numbers that are coming in lower. In europe, you have greece resurfacing again. Rush a ongoing. Russia ongoing. I think iseally what the most interesting move is probably in china because it is the biggest move. You have such a strong rally in the last couple of weeks. That was bound to end as it did yesterday. How oil andhrough commodity story plays out in china because we see it having an impact on prices for many months. Hina. Deflation in c on the consumer side as well. I thought oil and commodities going lowers most of help these economies and yet we see this as a reason for weakness sometimes. Yeah. It is a doubleedged sword because on the one hand Lower Oil Price should be good for economies because it is an effective tax rate. On the other hand, you do get Lower Oil Prices feeding through into the broader economy i. E. Yo u get Lower Consumer price inflation. If you have a highly leveraged economy with lots of debt obviously, that is not a good thing because the real value of your debt goes up. It is a doubleedged sword. On balance, i think it is a good thing. Not for some countries, of course. Russia, nigeria, the middle east, but for a lot of countries, it is a good thing. Mark will focus a little government bonds increase. Having a risk is a greek exit. Possibility or reality for 2015 . I suppose is it a possibility . Its a very small possibility. The mechanismst are in place for support to materialize at some point. You go back to where we were three years ago. Those fears about greece exiting the euro. Then implementing new they can force a debt restructuring, couldnt they . Well, i suppose anything is possible. Our view right now is that we will, like we have done for the past few years, just muddle through. At the end of the day, all that matters really is what is Monetary Policy going to be. The fact is that will remain extremely loose. Is dragi going to remain in control of things . Probably yes. We have the results tomorrow. Willere a figure that assuage the markets and maybe it will put off a chance of the ecb buying government bonds . The last figure was below 90 billion. Figure,t 200 billion will that assuage investors or are we just heading towards bond buying regardless . I think we are going towards bond buying. It is probably the more evidence there is that bond buying is required at this point does because dragi feels the need to have the evidence being shoved in his face. If only two was waged the opponents of bond buying. The reality is as he said recently inflation is very low and he is legally obliged to do some thing about that which has to be bond buying. It is because of the oil prices. You almost have to do something. Absolutely right. Morally and legally obliged to do something. Central banks are coping with things the Russian Central Bank meets tomorrow. A lot of economists expected to see rate hikes. A strategist said the priority has to be to prevent a fullscale financial prices crisis. Is that the extent of the worries that the central bank in russia has . I wouldve thought so, yes. Stop capital flight . I dont know. So many of these emerging countries and russia is still an emerging country, they are in much better shape than they were back in the 1990s. Russia is a very different country to what it was in 1998. In some ways, it is a more collocated place. Broadly speaking, and it is a complicated country. We will have to leave it there. Thank you, peter. Coming up, we will go back to paris and gauge the mood of the nations tech sector. Web. S the web le lets have a look at the Fort Exchange market Foreign Exchange market. The yen is finally doing what it was supposed to be doing. The yen is rising in the euro is dying by 4 10 of 1 . Is that your opportunity to get long dollar yen . The yen is rising against all 16 major currencies. Volatility as it a 15 month high. Would you want to keep an eye on election, it is an opportunity. Is anps in the dollar yen opportunity. There is a little bit of risk. Sincengest losing streak 1983 has been broken. What i am hearing according to bloomberg first word is that you are singing Short Covering seeing Short Covering. Macro funds are buying the all dollar. Ar aussie the 30se technicians, day of the dollar has been treating below that since november 19. These are the Bloomberg Top headlines. The National Monetary fund has identified a 50 billion shortfall that is bailed out the ukraine and warns the country faces financial collapse left that gap is filled, according to a report in the financial times. The imf says the additional cash will come on top of the 17 billion announced in april. People briefed about the matter say the gap is opened up because of a 7 traction in ukraines domestic output and the collapse of exports with russia. President obama said the u. S. Government made some terrible mistakes in authorizing torture of suspects in the aftermath of the separate 9 11 attacks. It includes waterboarding and sleep deprivation which is not extract better information that was gained in other ways. His remarks follows the release of the Senate Report on cia interrogations. I think that any fairminded person looking at this would say that some terrible mistakes were made in allowing these kinds of practices to take place in part because i think study after study has shown that when people get tortured, when people are beaten, when people are put in a position of severe stress and pain, oftentimes they are willing to say anything to alleviate that stress and pain. Is notormation we get necessarily better than doing things the right way. T he end is inside for financials emergencies for detroit. The mission in governor says emergency will conclude when the backup plan has final approval. It will be leased to a new Regional Authority raising 50 million a year and the city will borrow 325 million to finance its exit from bankruptcy. Rory mcilroy has been accused of borrowing data from his mobile phone to hide information regarding his split with his former agent. Suing verizon in the bid to end a contract that cost him 6. 8 million in fees. Lawyers for the Management Company made the allegations data from hisng phone as part of a request for more information from him. Tech leaders from around the globe are gathering in paris today for the le web conference. The floor now and is bringing us in interview an interview. Le web is one of the most important european events for the web industry. Im very happy to be joined by loic le meur, the founder of le web. He was named one of the top 25 most influential people. Good morning. The le web is more than 10 years old now. Bring us the highlights of 2014. It is always about the innovation. We have more than 3000 on to doors entrepreneurs. Uber was invented here. Now. Worth 40 billion we are saying no, there is no bubble. We looked at the fact that nearly 20 times revenue. To him, not a bubble. We talked about this and the shining economy which is very central. Wearables. Everything you can wear on your body is fascinating. They are different features which is health care. Everybody believes that will be the central space of investment in years to come. More than big data and connected clothing . Becauseis all connected connected objects like wearables, inside your body, you can swallow pills that will analyze what is inside your body. We have some products that will show what you can get from any thing coming out of your body. I will not get into details but it is like a dashboard. It will connect the doctors and the scientist which is new. The startups used to be a ceo or a tech person or a designer. Now we have scientist and doctors coming. France from a u. S. Point of view, there are sometimes negative views. We saw john who being blocked by the french government. How can we change the negative view . It is more like last year. Iit is in the same space of a growing economy. France is a very positive vibe. There were 1000 engineers getting trained every year. 1000 engineers dont even have it and get an engineering dgreegree for free. That made me really proud. Also a pretty popular summit. Le webow web lo competing with the summit . It has been more than 3000 people for a few years. We are extremely focusing on the quality according to the stage of content. That is what people really like and the experience. 5000 orot going after 10,000 or 20,000. It is a different experience. Debate. Is also the tax we know that the u. K. Wants to onroduce a 25 tax internationals like google and apple. We know that france is bringing the matter to the european level. Is that an issue in order to bring Tech Companies, Web Companies to europe . This is about tech giants coming to europe and trying to avoid paying their taxes by going into some countries like ireland or others. I personally think as a french those like google and facebook and giants pay their taxes like everyone else. So why not . I think it is a good thing we try to make it a european measure. Canrance or europe france are you upgrade a real rival to Silicon Valley . The road been a lot of discussions about one in london. Weve been talking about a french Silicon Valley. Is that really possible . Does that exist . I dont think it exists yet. European investors on stage have a 95 of their transactions being raised in france or companies being acquired all happened between paulo alto palo alto and San Francisco. We know of companies that are great but i am sad that i uber boomer was invented entirely here but now it is a u. S. Giant. That is a challenge being able to create World Leaders and i think european governments should wonder why we are unable to great a competitor to google or uber. That was loic le meur. Thank you so much. This is happening in paris with more than 3000 tech leaders. Back to you. Thank you. She will be back in the next hour of countdown with the soft tech founder. Banks reports this morning on jobs. Rbs and Deutsche Bank. The cutbacks what it means for the financial industries. Time for todays company news. Under fire from lawmakers. Standards. G ethical overcharging and manipulating data of contracts. The chair says the culture is misaligned. Is recalling laptop cords in north america. This concerns it could pose a fire risk. The chinese computer maker is asking customers to stop using the power cords immediately. Although no injuries have been reported. Uber is being sued by district attorneys in los angeles and San Francisco over claims it made assurances to customers about drivers background checks. This follows the banning of the service in spain. Repercussions of the Global Financial crisis continues to be felt by the worlds biggest banks. New regulation is being unveiled by the Federal Reserve. Lenders are retrenching for more costly as this is across europe and asia. Here with more is caroline hyde. Like theyng, it looks are continuing the tragic strategy. They are downsizing internationally. Japan is where it is being felt. Some 200 staff have been cut. They will have bare bones when it comes the fixed income trading. They are no longer going to be a dealer. They will be dealing in japanese government bonds in terms of a primary dealership. There has been underperformance because they were attempting to manipulate the benchmark rates. Pry took a hit in terms of and lost their main executive. We found out they will meet with the Financial Services agencys to disclose their plans and they will be inferring informing clients next week. It is not the only bank, is it . It is not. Deutsche bank as well is also scaling back. Recent talk about this all the time. Government bonds the right page on bloomberg. This is a derivative that you can use to protect yourself. Keep with the program. 10 traders in london are losing their jobs. They are being moved on. It was announced last week that Deutsche Bank will be ending trading in individual names. You can then trade the credit of bp as an individual name or trade it if you want to bet bpther the cost of insuring will rise or fall. Agencies. Nly do it on it is because it is becoming more costly. This is one of the fastestgrowing businesses for banks but now we are seeing Deutsche Bank scale back. The focus is shifting to just Corporate Bonds and more active derivative indexes. They say theyll remain committed to the cds indexes but they are clearly moving back. The fed is being tough on globally Significant Banks. We know the United States is trying to clamp down much more. Boggle is a Supervisory Board to the world when it comes the banks. The International Climate is the globally important banks have a ratio of 7 . You have a lot of capital for the whole world . If you are globally Significant Bank at 2. 5 , according to these particulars. So 9. 5 . The u. S. Is gone even further 11. 5 . If you are going to be even this important, jpmorgan and the likes, you have to potentially hold 11. 5 capital to make sure you are never at risk. Your asset will be that enormous, you will have to protect ourselves. Theyll want you funding yourselves in the shortterm markets. That is where the credit crunch is born. Suddenly in england they had a liquidity problem. Jpmorgan is the one under it. Other banks seem to have enough capital to meet these requirements and they will put in place in 2016. They couldjpmorgan, need 20 billion more if they will have 11. 5 capital ratio. So, pretty significant stuff. Keep your eye on it. Thank you. Frances ailing economy could soon get a boost as the economy minister is set to present a reform bill to the cabinet. He will offer a number of proposals, including speeding up labor dispute settlements. Joining us now from paris with more is mark. Good to see you. How important are these new reforms that the french government is presenting today . I think we are talking about not a revolution but a significant step in the right direction. Shopping whichy the elements of this law will not change the face of the French Economy overnight. Things andeing up of it will create momentum. More important are the measures such as they are going to expedite the settlement of disputes between employers and employees. This is actually quite significant. It will remove liabilities from companies and other changes to labor law which will essentially free up and make it easier for businesses to hire and fire. It is quite important for the economy in the mediumterm. That theave said minister is searching for a tony blair moment. Does that mean he is likely to encounter resistance in what he is doing . Invoked the idea that this is a big moment comparable to what tony blair did. I think that is maybe a slight exaggeration because unlike blair, he is not taking on the great sacred cow such as frances 35 hour workweek or the minimum wage. Things that will be dramatic changes. Are we are talking about over 100 elements of this reform bill. 100 things that will free up a little bit of growth here and there to essentially reform the French Economy. I think it does matter. I think it is a bit of an exaggeration but it is a step in the right direction. Thank you very much for joining us from paris. Coming up, what do you buy a Nobel Prize Winner . Todays look at the papers. In hour away from todays european equities starts. It is newspaper time. Of armoris a picture to troops going to heathrow back in 2003. These troops were sent by tony blair to protect the country. This goes back that the cia actually lied over the threat to britain to justify torture. The white house and braden and try to cover up the scale of its global torture program basically saying all of this information will help protect britain. The cias claims of torture help protect britain repeatedly in the plots because were foiled long before these troops were ever sent to heathrow airport. It is not good news for mr. Blair and not good news obviously for the cia. Pretty damning. Han, what do you half or us today . Have for us . I will talk about the new auto stars on the front page. We have the new ceo to be for bmw, the ceo to be for volkswagen. Harold kruger for bmw. Two young guys. Here in germany, the Auto Industry plays such a big role. We can expect to have more electric cars and only wish wa anna was here to tease her about her parking. Guys . He speaks in a position of absolutely not knowing. I can drive. Billionaire buys back noble medal for a pioneer. He was so horrified of that james watson, one of the dna, waserers of prize to put up his nobel medal for money. He bought it for him. Liverpool in the champions league. It is futbol related. Win to go to thee knockout round. A draw means liverpool will not. Not a great night. We will have more from le web tech conference taking place in paris. Caroline ins there. The Global Equities selloff continues. Asian markets fall as low oil prices weigh on investors minds. Everybody is tired of the war, says the ukrainian president. He says that will not be a military solution to the conflict with russia. Everybody is tired of the war. It is not only just the efforts of the ukraine, or peaceful efforts of ukrainian people, this is also the position which from their site also side aloso, people are tired from the war. I think we can deftly bring a resolution. Banks cut back. The world bank of scotland is said to be slashing staff numbers at its japan. Welcome to countdown. Bealso coming up, we will b, the annual tech conference that brings together leading companies, innovators and startups. We will have exclusive interviews through the morning. Founder it is softtech jeff clavier. A selloff of equities yesterday and policymakers in china and collateral rules on shortterm loans. The Russian Central Bank also meets today. What a day in greece yesterday. Taking a massive gamble on its future. Bring forth its vote on the next president will take place on december 17. Many say he does not have the votes necessary which means he will have to hold an election which many say means the antiausterity party could get the power. That was the reason behind yesterdays move. What moves they were in the stock and bond markets. The benchmark in greece fell back 30 13 which was the biggest daily move since years ago. They are outstripping all. In the bond market, an inverted yield curve happened. That is very significant. That means the yield on the threeyear actually went above the yield on the 10 year. The shorterterm yield was higher than the longerterm yield. Many say this highlights that greece is going to have difficulty accessing the capital market. It started selling threeyear and fiveyear bonds this year. Are the red lights flashing about greece . At the time they are trying to investigate other funding options. We have that in the market yesterday. We also have the conversation about china. That continues to be felt in asia markets today. China faced somewhat of a turnaround in todays session. Yesterday, we saw stocks down by 4 . There was this concern about tightening up shortterm lending rules in china. It seemed to spook Global Investors in equities. Just this morning in china, we had these cpi numbers on inflation. And tpi that showed factory gate prices, deflation deepening. A record 33rd straight month of decline which is fascinating. Clearly reflecting what is happening with oil prices and Commodity Prices of late. That is what people are asking. What will they have to take in terms of actions . What they call recently invented and ineffective policies. What is the next move going to be . Is it going to be cut the rate that banks need to hold the level of capital they need to set aside . When we see that all of this fv. S back to lg local government financing vehicles. There is a lot of changes going on in the way regions raise money in china. The government saw all those changes happening which will reduce the levels of debt. I think that was my plaster board moment. I found it unhinged at times. It is very knowledgeable. It always comes from nowhere. It doesnt take very long. I am seeing some news here that the bank of russia intervened in the markets to the tune of just over 21 billion rubles on december 9. Again, what you are seeing is ruble back in play. Watching russia was going to default. This was nowhere like the last for russia. The central bank will meet. Will they raise rates for the fifth time in a row . People are saying if you go to 10 . It will be the fifth hike in 2014. It is back at levels that we have not seen since the middle part of 2013. The whole argument around russia i know we talked to ryan heout this a little later t argument about intervention and defaults. Those are the words that will be top of the list in 2015 people talk about this currency. Lets go back to china because the prices are continuing to slide. Consumer prices also rising in the slowest rate at five years. Were joined from beijing. Tom, what is driving this delfation . I think there are two factors at work. The first one is actually good news for china. International Energy Prices are down. That is passing through to lowercost across the chinese economy. There is a boost for chinese businesses. The second factor is the more troubling one which is concerned that years of very rapid credit hasth, rapid investment left a legacy of overcapacity in chinas industrial sector. As growth slows, the consequence of that now is falling prices in the producer sector and very low inflation in the Consumer Sector raising concerns that china might be facing some deflationary risks. Cutting Interest Rates recently. How does todays data play into the outlook for Monetary Policy . Can we expect further measures . Inflation weak certainly opens up more room for easing by chinas central bank. Speculation in the market today that the central bank has made an injection of funds into the money market by providing funds to one of the stateowned banks. That is the reason we are seeing this turnaround in the equity markets this afternoon. Looking a bit further forward, the central bank presented its rate cut, its november rate cut, as a Technical Response to high real Interest Rates. The fall in Producer Prices we have seen in november means that real rates, real borrowing costs for chinese businesses are now higher than they were before the peoples bank of china cut Interest Rates. Megan only add to expectations of further rate cuts heading into 2015. What does this mean for the yuan which yesterday had its biggest interday fall against the dollar in years . What next for the chinese currency . A i think we have really seen paradigm shift in how the markets are thinking about chinas currency. Coming into 2014, the question was always how much is the yuan going to appreciate . The question now in many peoples minds is sustained depreciation a genuine possibility . It will betion is easing as the Federal Reserve raises Interest Rates which will lower the Interest Rate differential between china and the United States. Chinas exporters face Competitive Pressure as the yen and yuan depreciative. We have the signs of pressure, deflation in the factory sector. This will add expectations that the yuan could be entering a period of high into volatility and potentially also did depreciation against the dollar. Thank you very much. We have some breaking news. Bg confirming they are agreeing to sell the Australian Pipeline for 5 billion. A great quote from the management of apa which says it is a great business pipelines are assets. You will find apa is interested. We can see other acquisitions from the company and from analysts. Apa agreeing to buy a pipeline australian forg about 5 billion. Mt is adding to the apa syste that already carries half of the nations gas. The Company Received at least three bits of the pipeline, according to people familiar with the matter that we have been speaking to. The transaction is effected the yield about 2. 7 billion in profit for bg but that will be partially offset i a 2 billion impairment by their remaining assets. Ukraine and prorussian separatists are closer to resuming peace talks as a oneday truce is fueling hopes for an end to fighting that is rocked the Eastern Region for much of this year. Lets bring ryan into the conversation. How big of a deal is this one date ceasefire . While there was fighting, according to the federal government of ukraine, there were 17 times they were fired upon by the rebels. Effectively, the russians and the russian backed rebels are all saying that this was a good day. This was a trial balloon. Now it looks to be having peace talks on thursday or friday of this week in minsk. We caught up with the ukrainian president. He is actually in singapore heading to watch really a. Austin to australia. It is home of many of the victims that died in the Malaysia Airlines crash. He says that ukraine is at a crossroads right now. I think it is decisively important to maintain the ceasefire. We have a strong guarantee from the russian general that the ceasefire will take place and they will be. Unfortunately, we have several russiansful times from promising to keep the ceasefire. The fact we saw lower levels of violence yesterday in ukraine and the eastern country that we have seen the last couple of months is a plus. Another plus is that russia has resumed gas supplies to ukraine. We had another one of these top gun incidents were a couple of f16s chased down russian jet. S. We also had the german chancellor really attacking president putins policy in ukraine and the Russian Foreign minister kind of attacking Angela Merkel as being unconstructive. It is very worrisome because asela merkel is seen by many the one person in western europe and perhaps the west that can broker some kind of deal to end the impasse between russia and the west. Clearly, that is not the situation we have now. India. It is all about the directional change in terms of where to look for relationships. This is the socalled vivid. He went to china, turkey and now he went to india. As was the case in the previous trips, energy is at the top of the agenda. The indians are very interested in investing in russian oil fields. They have got rising oil demands. And, the russians look like they will offer stakes in a couple of those oil fields, maybe even in is a part ofich this geopolitical thing because exxon just drilled an exportoriented exploratory well. They found some oil there. The russians may just offer the indians to have a crack at that. That would be a little bit of a geopolitical play. There was some talk about building a pipeline. The russian president did not use these words saying it whewo uld not be commercially viable. The problem is lng is much more flexible. It is harder to lock people with the crotch track from they can get their fuel the a ship via via ship. Thebig and always centerpiece between the relationship between russia and the soviet union and india is weapons. They will be talking about weapons as well. Alongside the United States. Thank you. Join us on twitter. The three of us are there as always. Trading made money. I am about the press the button. There we go. I tweeted. I was tweeting out carolines interview. Giants should pay their taxes, one of the messages he had. 2014 will be about 2015 will be about divergence. The u. S. Will continue to grow while the eurozone will muddle through debt. More outlooks on the new year. Lets go back to one of our top stories concerns over china and greece. Will European Market still feel the effects . They are indicated to rise at the open. To put this all in context, we have brought in the big guns. J. P. Morgan Asset Management Global Market analyst, david. Greece walks drops the most in 27 years. China has been in that market. What you make of these moves . I think if you look at china right now, the inflation number was low. I think everybody is concerned about not just what they can do but what they will do to arrest the slowdown in the air economy the economy. They can cut reserve requirements but that gets them back to a world of kind of debt growth. They can drive the currency down if they choose. They are playing with fire if they do that. It is a question of what they can do. I think the best way is to manage the decline. It is fiscal policy. We will see a little more stimulus. We are seeing the patchwork stuff. Is that what you would pencil in next year . And that is ok . I think that is fine for the global economy. But not forget how big china is. 7 growth is a huge addition of raw outputs of the global economy. Lets talk about greece. I think i am right in saying im right in recent years. Looking atd greece and what can happen in the vote for the next president which could entail an election which could entail the rise of the antia stare Party Winning antiausterity Party Winning. I think it was very illustrative to hear talk ye sterday and say the debt is completely unsustainable. We need another round of consolidation or cuts. I think that kind of talk in the world market and we have seen it fobefore. Absolutely, if they get into power, we would discuss this again. It leads to a very uncertain future for europe next year. There are so many upside capitalists in the market from the falling euro coming into the play, valuation looking good, etc. You can all be we can be sitting here with the european stock market lower and even cheaper in all the capitalist are in place. Wouldld those politics jpmorgan say the ruins of european politics is enough to hold the fed and bank of england back from the brink of raising rates . It is not enough to hold them back, no. It is enough to delay the bank of england. From the United States on one hand. Absolutely with a very robust and deepening expansion out there. The fed moves in the middle of next year and continues to move in the next couple of years. Ecbalso have japan and the and what they are doing. The u. K. Is a wildcard. Is our extension Strong Enough to see rates rise for that to be required or are we going to drag down if it does not perform . In which cap is the u. Sk. . We will take a short break. When we come back we will see a little more in terms of what happened. David is staying with us for more. Welcome back. Stubbs. Oined by david australias more sever than canada. The netherlands became too dependent on natural gas you to discovery in 1959. The view is maybe canada can weather eight decline in a decline in comedies commodities better than australia. It pushes the currency up and pushes of the domestic price based. That is what happened in australia and canada over the last decade or so. It leaves the nonmining sector unprotect uncompetitive. We are seeing in australia they have been hoping for a couple of years that the sector will step up to the plate as Mining Investment falls back and it is not happening. It leaves them with the they dont of seem to get. Now with the realization this is really in play in trying to slow idea what you have is the of returning to rate cuts next year. There could be more divergence with one central bank cutting rates next year. Absolutely. New zealand actually hiked it this year. I believe a meeting is later today. Again,e seeing, potentially not as strong as they thought it would be. Thank you for joining us. A brave man. We will live in paris at le web. We will bring together the companies, the innovators and the startups. Softtech founder jeff clavier. Welcome back to countdown. Lets check on the Foreign Exchange markets now. Yen is strengthening. It is the biggest threeday rally in yen since august 2013. The euro is climbing by 0. 4 . The yen is rising. Dollaryen down. The question is whether this is a shortterm retracement on dollaryen, an opportunity to to yourosition and add dollar having an position. At the moment, you are seeing a little bit of a jolt in greece and china. The deflation story still very much a core thing. The yen is on the rise at the moment. Aussiedollar, have a look at that. What youve got with aussie is Short Covering going through. We had the longest losing streak j. P. 83, so we are morgan Asset Management would say that this is something which , the change in the economy, from a commoditybased economy, rebalancing is more difficult to achieve. Risestimate is for jobs to by 15,000. That is the estimate, but the view from the market is there are more rate cuts to come. I mark barton and these are the Bloomberg Top headlines. The imf has identified a 15 billion shortfall in its bailout and warns the country faces financial collapse. That is according to a report in the financial times. Says the additional cash would come on top of the 17 billion announced in april. People briefed about the warning say the gap has opened up because of a contraction in ukraines domestic output and the collapse of exports to russia. President obama said the u. S. Government made some terrible mistakes in authorizing torture of suspects in the aftermath of the september 11 attacks. He said the techniques used including waterboarding and sleep deprivation did not extract better information than that gained in other ways. The releasefollowed of a Senate Report on cia interrogation. That any fairminded person looking at this would say that some terrible mistakes were made in allowing these kinds of practices to take place, and part in part because study after study has shown that when people are tortured, beaten, put in a position of severe stress and pain, oftentimes they are willing to say anything to alleviate that stress. The information we get isnt necessarily better than doing things the right way. The end is in sight for detroits financial emergency. Governor Rick Schneider says the emergency will conclude when a bankruptcy plan receives final approval. Detroits water and sewer system will have new Regional Authority. The city will borrow 325 million to finance its exit from bankruptcy. Rory mcilroy has been accused wiping data from his mobile phone to hide information related to the split with his former agent. Mcilroy is suing verizon Sports Management in a bid to end a contract. It is a hearing in dublin. Lawyers made the allegation against mcilroy as part of a request for more information from him. Techts return to the theme. Tech leaders from around the globe are gathered in paris. Caroline connan is on the ground and is joined by another big name in the tech sector. Caroline. My next guest is jeff clavier, the founder and managing partner of softtech, one of the leading vc firms in Silicon Valley. How are you, jeff . Im great. Youve invested in many startups. 156 startups that have been bought by the likes of facebook, twitter, what are your next targets . We have a pretty broad strategy. Service,as a marketplaces, connective devices, will be the core of what we invest. In terms of new areas, we will ,e looking at commercial drones the infrastructure of the bitcoin, and we might actually do a robots deal. How much Venture Capital do you have available . We have a new fund that we chose last june, which is 85 million. We will get about 45 investments out of that fund over three years. 400 to 750here from companies a quarter and we invest in four or five. Where do you think the next Tech Revolution is going to come from . Is it going to come from health care, from connected objects, from big data . What is your idea on the next Tech Revolution. Revolution for us, the it evolution,is revolution, or disruption . Platforms,number of mobile, social, cloud, big data. They can be made available to a number of different variables. I will be looking at the web today talking at le web about health care. You deliver services to both consumers and doctors hospitals. So we have a very keen interest in health care. Ill curate the session on that today. Otherwise, we think that we will see connected objects really grow pretty much everywhere, for the consumer, or businesses as well. Onersonally have an interest the evolution of drones. Unfortunately, we have some regulation issues in the u. S. , where europe is actually taking a much more positive stance on drones. What are the big startups that youve invested in that youve been a seed investor in fitbit. It is to track your health, your fitness. Do you think it is going to suffer now that apple is launching its iwatch . The iwatch is a very different product both in terms of target, price point, and functionality. We think that there is two different markets here, one which is focused on having the iwatch as an alternative of the iphones, and then there is the , which you dont need to recharge every day. That is why we think that with this new version of fitbit, which has been extremely successful in its first few weeks of sales, wont be effective. Tell us about this. August is basically a lock that you connect to with your smart phone which is going to sense your presence and unlock itself as you get closer to the door. I can invite you to come to my place and give you access to the lock so that you can get in the house without having the keys. We will deal with those issues by offering a digital solution. It is selling at the apple store very well. Coin is another sort of product. It is basically a digital smartcard which allows you to program all your credit cards into one and no longer have to have a wallet full of credit cards. Au just switch and choose credit card that you want to use with a click of a button. Coin is still in beta because it is a Challenging Technology to put together. I used one for a few months and it is working really well. Finally, we have seen that it has been a rough year for stocks like twitter. Are we going to see more high profile ipos in 2015 and are you concerned about the next tech bubble . Ill answer the tech bubble question first. There are lofty valuations right now in the valley and there is a , when you pays to a few billion dollars for a company, how you can actually make money. Certainly, we have seen extraordinary innovation, but we dont call that a bubble. We will see how long that lasts. Contraction in the number of jobs being made, but fundamentally there is extreme interesting innovation happening. We feel this is companies being funded just because you can. As twitter is concerned, it has been a rocky road for the stock. I think there has been an issue in terms of the message for the market, in terms of how they scale monetization. Facebook is killing it and twitter isnt. That doesnt mean that twitter isnt a very valuable property. Definitely, our understanding is that 2015 will field an interesting year for ipos. We hope to have a couple of them of our own. Fors that the big problem coming forward, the monetization of all these new innovations . I think it is, how can those companies which are getting a lot of traction from the consumer you have something snapchat, which will have a 5 billion to 10 billion sticker price. Some point, it can deliver 700 million in renovations in revenues. Of the companies will grow into their valuations. Thatan i justify the fact i was priced at such a high price and have zero revenues . Er, thank you so much. Vc, oneder of softtech of the leading Venture Capital firms in Silicon Valley. Back to you. Caroline, thank you so much. Caroline connan joined by jeff clavier. Coming up, todays berks chart bart chart. How anxious should investors be about greece . Bartme for todays chart. How anxious should investors be about greece . On tuesday, they had significant moves in the greek bond and the greek stock markets. The reason why is the Prime Minister has pretty much gathered gambled his political future on this parliamentary vote on the new head of state. Unless he can persuade 25 opposition lawmakers to support his choice, samara will be forced to call a parliamentary election and the antiausterity party is favorite to win that election if it takes place. Take a look at the top chart. It is the Stock Exchange in. Thens, the benchmark on tuesday, it fell by 13 . That is the biggest decline since 1987, even outdoing declines during the sovereign debt crisis. Since reaching its high for the year in march, the ase has sunk. This chart goes back to june. Your today, it is down by 22 . The middle chart is the greek three year yield. The yield on the greek threeyear bond on tuesday reached a record high of 8. 3 . Greece onlytes that started selling in july as part of its reintegration in the bond markets. Justare notes that it started selling and they have reached an alltime high. Bonds falling, yields rising. , theield on the threeyear middle chart, is now above the yield on the 10 year bond, the lower chart. That is very, very significant. Yesterdayr yield finishing just above 8 . The differential is now 40 basis points between the threeyear and the 10 year. This is called the curve inversion and it is a sign that access to Capital Markets is starting to unrivaled. As Sunrise Brokers says, curb inversion in greece isnt a good sign. It usually signifies heightened perception of default risk. Voting kicks off on december 17 with two further rounds possible. Vale your to install a candidate after three attempts would force samaras to dissolve parliament. Syriza takes over, it will not be a smooth ride. Keep an eye on those three market,the athens stock the greek threeyear, and the greek 10 year, as we approach the vote on the new president next week. A massive week for greek assets. 87 40 eight in london. Lets talk about the oil prices. Drilling is an expensive process. With prices of crude near fiveyear lows, projects across the world may be making less sense. Hardtofind and hard to extract, deepsea oil is one of the most expensive sources. One of the costliest projects is brazils ultradeep water libre oilfield. Arelopment costs for total estimated to be 80 billion. Hostile weather conditions make drilling in the arctic a huge technical challenge, and very costly. Ft and exxon spend millions drilling in the sea. Exxon has pulled out because of sanctions. Ft is hampered by rising debts. While shale has helped flood the market and lower crude prices, some operations could still become unviable. Regions of some texas, oklahoma, and north dakota, is already proving unprofitable. Across the sector, exploration spending could tumble 50 if Oil Prices Stay low, according to bernstein research. The ramifications of that could be felt for years to come. Oil producers are not the only ones being attacked affected by oversupply from the u. S. Consumers are profiting from oils pretty prices. We will be speaking to the chief iata later in the morning. Tony tyler joins bloomberg later on. Some Commodity Traders might disagree with that. In the meantime, we are going to give you a little bit of a live shot. Equity markets open higher. These our beautiful starts to the trading day. We are looking for a bounce and european stocks after a slide. Lets keep an eye on greece when it opens. Stay tuned. We are back in two. Repercussions of the financial crisis continue to be felt across the world by the biggest banks. More from the Federal Reserve in terms of lenders, retrenching from costly businesses, europe and asia, caroline is here. We have news from rbs. This is the top line in terms of banking news when it comes to asia. Retrenching, but this time it is happening in japan. They are cutting 200 staff at the top line. Are no longer going to be a primary dealer of japanese government bonds. They are going to be talking to the Financial Services agency, informing them of this decision. Next week, they will be informing their clients. Interesting. Ubs losing money in japan. It looks like rbs is taking that step from retrenching when it comes to fixed income. And it is not the only bank cutting jobs in credit. Deutsche bank, interesting story. Not an enormous amount of people, but an interesting trend. Touch a bank is starting to exit credit default swap trading. Insurance. Hat bond it went mad in the greek debt crisis. Also, indexes with the sort of derivatives in them. Weeks announced also last that Deutsche Bank is no longer providing trading in individual credit default swap names. Anyhey wanted to trade bp, debt derivatives linked to these companies, you couldnt do it on an individual name basis. You can do an index of these derivatives, not an individual name. This is an area that is shrinking 22 . Still 17. 6 trillion. Still more than the entire u. S. Economy. Caroline, thank you very much. Caroline hyde with the latest on the banking sector. Join the conversation on twitter. Very good. It is a mark barton day. On the move is up next. The European Markets look set for a higher open with a rebound on the way. What is in the cards for 2015 . They will be discussing that on on the move. Stay with us here on bloomberg. Welcome to on the move. Im jonathan ferro. Moments away from the start of european trading. Lets get to the morning brief. Chinese lowinflation. Factory prices drop for a 33rd month in Consumer Prices rise at the slowest pay since 2009, triggering plenty of talk whether there is cause for another rate cut. Japanese stocks plunge. The nikkei drops 2. 5 . Europe asading day in greece steps back into crisis mode, driving the equity market to its a guest oneday drop since 1987. A new french revolution . The nations minister of economy introduces a new bill to jumpstart the economy after slowing to a virtual halt. Futures looking for a little bit of a rebound. Euro stoxx 50 futures up 40 points. We could get a little bit of a rebound. Manus cranny. Yen y going into the it is performing and delivering, as it does. In moments of reflection, this is the euro down, the yen rising. We have a little bit of a move in dollaryen. You are seeing probably one of the strongest threeday since we have seen since the middle of august 2013. The reason im starting with Foreign Exchanges because volatility is back in the markets and back in the Foreign Exchange markets most evidently. It is the most volatile