Transcripts For BLOOMBERG Countdown 20141211

Welcome to countdown. It is just 6 00 here in london. Coming up, the Israeli Basketball Team with big plans for cracking america. How they are making a play for the big time. Our top story, democracy protest in hong kong luck to streets and divided the city for the two months and it is coming to an end. Baliffs have moved in the last remitting site. Live from hong kong with the details. This hour,nd that at 6 00 here in london, and this hour has been targeted as a key deadline for the protesters in hong kong. Yes, where Hearing Police that now announcing protesters and others who should not be in the area should be leaving immediately. They have announcing this at regular intervals for the last hour. They said able start clearing this site very soon, maybe in the next five minutes. What has happened today is that part of the protest site was covered by an injunction in that part was cleared this morning by some people who are authorized by the company to do so and they were watched by bailiffs who were surveying the area. No resistance from protesters there but now they have moved on to the main protest site. This area is not covered by an injunction but authorities did say that when they clear the outer parts they would also take the opportunity to declare this part as well this main part which goes all the way down this hide way. Highway. Protesters have been camped out here for more than 70 days and the police or authorities will finally clear them and that could happen anytime in the next five or 10 minutes. As these protests come to an end what are protesters telling you, what did they achieve . A lot of the protesters this morning said a are not going to put up resistance though they may put up peaceful resistance but they are not looking to go into a physical confrontation, but there are many different elements here and we dont know exactly what will happen. We have seen protesters armed with things that look like ryan shields and helmets. Riot shields and helmets. They can take away from this long occupation is a political awakening. Lee, one ofmartin the founders of the Democratic Party in hong kong and he has been there for many years. Find the fire of democracy burning in the hearts of every student who participated over 70 days. Be clenched. Not quenched. It will continue to grow. You can expect the students to talk to other students and their parents and we part of a generation. This is the biggest ever movement of democracy we have had in hong kong. For many, the protesters they say this is the beginning and not the end of the protest of the fight for democracy. There are many signs around today saying we will be back and that is generally the spirit. Rosalynn, thank you very much. We have numbers breaking from europes biggest closing retailers. How to they look . How do they look . Theyre giving us the numbers as a ninemonth numbers, sales seem to be climbing and we are seeing an increase in their profitability, but not by much. Only up 1 . Another 6. 9 billion euros just ahead of analyst estimates. Stills a company that is seeing plenty of growth. The Fourth Quarter is off to a great start, they say sales are up 14 from november to december and suddenly it has turned cold and we are buying heavier coats from them. Clearly this is a company that is exposed to areas of volatility in the Foreign Exchange. We think of japan and they are big and in russia. That means when you bring back sales home and convert that to euros, the profitability is not underge so it has been because of that but you have seen some issues about a warmer october than many had expected. It is hard to remember that now. 72 of their stores are in europe and it has been a warm autumn. Very mild so we were not going out to buy coats and things, people were still buying their light clothing. X has a clearindite streamlined ability to change what is in stock very quickly and the Business Model has held up as the want to look for. They have not been as exposed as say h m, they can change their seasonality according to the weather. They were likely to be heard. Interesting that this company is starting to benefit from the southern european recovery, we are seen an improvement in alsol sales and we are seeing big exposure to russia and japan and overall not much improvement in overall Earnings Growth. Seventhlikely to be the straight quarter of limited Earnings Growth and many analysts have been hinting at the fact that the weather might be an issue. It looks true but remember the scale of the company. The biggest retailer of clothing in the world. Eight rands and 6500 stores. And safety 500 Stores Across the world. You have not just got your winter hat on which represents retailers, you have your telecom hat on as well. The deals are coming thick and fast. I am multitasking, keep an eye on brazil. Brazil is where it is at, hot november whether and hot when it comes to activity. And your hot description. I will not make too many analogies today but interesting play pim is the second biggest mobile provider in brazil and it will be carved up. Weve learned that hoy, telef claros group will be going together and calling themselves grupo btg factual. Catchy. Yes, how will they make that better . Pim, currentlyup owned by the Telecom Italian unit. That is 40 above when they are currently trading at. 40 premiums above the value of tim. Hoy will take 25 . Hoy just sold off its portuguese units to drum up enough money to get big into brazil. Driveand telefonica will divide up the rest. But telefonica just bought the broadband operator in brazil and it has to get signed off from the regulators. Consolidation is clearly what is wanted. It has beens that so competitive over there. On cell people getting phones this time around. Spending billions to improve the network. This is the move many had expected but the key question is, is it enough . What telecoms wants. Join the conversation on twitter, caroline is caro linehydetv. We are at im using the royal we. Anna and mark barton. Tell if the stories we should be focusing on. Rubleer the break, as the remains near its record low will be looking at the market with global crashes. Welcome back to bloomberg. Urveillance countdown bloomberg now is the russia expert. Good morning to you, what can we expect today . The big issue is the ruble. Looked, it is a list changing, it was just shy of 55 to the dollar, a record low as you said, the expectation is that they will raise rates, the real question is by how much. Mind that the bank of russia has already raised rates by 4 this year and the fundamentals like the oil crisis are really tanking. There are people saying, would that really be enough to do anything . To move the needle on the ruble and inflation. A note saying if they really wanted to do something substantive they would have to do Something Like hike rates by 2. 5 to 4 . Its not clear they had that kind of conviction. Decision, 2. 5 hours from now, this is no ordinary Interest Rate call from the bank of russia today. Austrias bank has come under scrutiny for managing a bond sale by a russian bank. The issue is their management of a bond sale for the russian this was a bank that was a bailout bank during the crisis and it has morphed into a state infrastructure bank. It is the management of that bond sale for that bank that is being scrutinized because veb has been sanctioned by both the United States and the european union. The sanctions do not bar russian units of International Banks from doing this kind of transaction as long as the securities are not sold internationally. As long as there are no eu and u. S. Citizens involved in the execution. The bank says they are very mindful of the sanctions and are in compliance with the rules, that is not what happened here but that is what the eu and u. S. Investigators are looking at. Thank you very much. Lets get more insight on the ruble with our next guest the global strategist, good morning it is a lovely chart on bloomberg which says, it is oil, stupid. As russia is down to oil how the ruble fares, not whether they change Interest Rates. Is that true . Does any rate hike translate to a fall under the ruble . No rate hike changes things for the ruble but youll get there forecast on what theyre going to do with policy rates and you have only just started. Way. Uble has fallen a long you would have to bet that the ruble could fall another leg, but once youve seen the currency fall this far, youre out of intelligent observation and itas not stabilized would be crazy to think we could reach stability when we have not reached a floor in oil prices and while the sanctions are slowly biting more, they are having more and more effect. Yet sanctions on one side and the economy on the other side if you raise rates 2 , would that make a difference . I have no clue about what a big rate rise could do to stabilize the thing. I suspect the currency in fact goes on and on. Outline how central bankers think, if you could. Weve heard from the central bank in russia that the leader says it is not possible to stand in the way a fundamental factors with one of those being the oil price, they say it is a freefloating currency but they reserve the right to intervene. How do those things go together . No central bank likes to watch the currency out of control. The u. K. Did it most spectacular as all, lets raise rates, it does not work, lets raise the more, doesnt work then lets cut rates and leave in one day. So it sounds sensible in that context . It does, but it can move an awfully long way and you of a population that is importing a lot of things so maybe cost do go up quickly and in a big way. Is, there is not sort of a playbook that anyone is confident with. Go help. And you the reality is Central Banks are , then they control are making stabs in the dark thinking, does a 2 rate hike help or will it make things worse . European central bank has been raising rates for a long time, we will get the latest results of their longterm lending this morning. This is another bloomberg story and the last way for hours that mario draghi might be hoping for a poor figure as it might persuade the naysayers to accept sovereign bond purchases. He was terribly optimistic at first and i think he is hoping for a good figure and is having some sensation about sovereign bond purchases separately i think the bigger from the liquidity injections are they doing anything for the underlying economy . Is is doing more but allowing more banks to buy Government Bonds and can i say anything much other than, the whole program and everything we have fullblownthere is a crisis in athens that is having very little impact on Government Bond markets elsewhere in europe. That is it. Mediumsized Companies in europe borrow any money or hire people to do stuff s or anything that the European Central bank its a today that would convince you that the measures so far are doing enough that we dont need to see soul quantitative easing. Start finding money supply and bank lending numbers that astonish me. I will scratch what is left of my head. On the greece, are you troubled by recent moves in bond and stock arc its and stock markets and impending moves next week . Economica terrible situation and a lot of Political Uncertainty, this might not work. This could end up with no president for a while and a third round vote with not necessarily the outcome the government will want and then what . At this point, i think the effect of greece on the wider Global Economy and europe so these headlines that greece could derail the globe is going to far . I am struggling to see how greece can do that anymore. Greece can derail greece even further. That is audibly all that it can do. That is probably all it can do. I personally struggle to see how it can at the moment. They are just short of having all their bailout money and the economy is not well. Thank you very much, we will continue our conversation and talk a little bit about you cant japan and the fed note. Welcome back to countdown. Lets talk about the u. S. , whether we will see wage growth starting or continuing, you of been doing some digging. The thing that surprised me about wages wage growth overall is flat. One. 9, 2. 2 month after month. It is held back because all of the employment growth has been in the lower paid sectors and the higher paid sectors have been shedding jobs is 2008. That means we could all have pay rises and average Wage Inflation will stay low because we are changing the makeup of the labor market. What is happening now is that the lowest paid jobs the lowest paid sectors have 3. 7 pay growth. It was falling and its lowest paid jobs saw wages cut in the andssion, slow to pick up fully unemployment for the people does mean wage growth. Thinks a good thing and i this is the part of the economy were people spend the highest portion of what they earn it is a part of the economy where i dont think you can outsource hospitality jobs as easy as you can outsource some. Nutshell if we a are going to see those wage numbers, we are going to see the u. S. Economy maintain momentum through the first half of next year and i would say you will see wage growth get to 2. 5 , which is really low but on a chart it will look like a lift. In 10 seconds, should the considerable time pledge be removed from the statement . It should. Will it . Not sure. Probably just above 50 . Still to come, Lebron Jamess coach wants to make it big in america. Police have started to advance on protesters in hong kong. At thec today we look russian ruble, which has fallen to another record low. The big event in russia today is the meeting of the central bank. According to economists we surveyed at bloomberg, the Russian Central Bank will probably raise borrowing costs to reverse threats to financial stability, oil prices have fallen to the lawyer to the years. Est in we expect that bank of russia to increase its key rates to 9. 5 . Nine analysts out of 34 predicted bigger increase. The ruble has fallen by 40 against the dollar, and it has left policymakers with dwindling options amid freefloating exchange rates. They spent 80 billion defending the currency. The central bank has raised putinby 400 points since moved into crimea. A great bloomberg chart in the last couple of days which basically shows that the ruble has tracked the price over the last few months of both falling roughly 39 . Each time, russia has raised rates four times in the last year. There has been no noticeable response from the nations capitals is. The title of the story is that russiantupid, that rubles are following the trajectory of the price of oil rather than what the central bank does to Interest Rates. But that is the big event today in russia will the Central Bank Hike Interest Rate . Im anna edwards. These are our top headlines. Blockadeshas removed around its offices in an attempt to bring an end to prodemocracy protests. They are moving to force an injunction against the demonstrators. Protesting students are not resisting but pledged to say to stay. Vladimir putin heads to a meeting with the indian prime minister. That is the latest destination on the russian leaders tour to strengthen trade and political alliances. s visit comes on the day that russias of central bank will be announcing its latest benchmark Interest Rate decision. They could raise rates in an effort to shore up. The bank off england, mark carney, revealed he will make the banks making more transparent. Recordings ofoys Monetary Policy Committee Meetings which decide Interest Rate. That practice could come to an end after a review. They will present their findings at a News Conference at 10 00 london time. Lets get to hong kong with the democracy protests have blocked the street and divided the city for more than two months. They lets supported by police have moved into the last remaining campaign site. We are joined now live from hong kong with the details. What is going on . This morning, the action was taken the Court Injunction undertaken by people authorized by the company that was granted the injunction. They didnt need to get involved in clearing the barriers because the people who authorized it did it themselves. Is thathappening now the injunction area has been cleared and we are moving on to the main focus, which is not covered by the injunction. This is where the police come in. The police are moving in just from across the hill, that is the flyover you can see there. Always are moving in from that direction. They get the warning a while ago, telling everyone to leave the area or it will be sealed. Anyone trying to leave will have their id cards taken down. Linksigil im standing on the public transport system to the Government Office complex. Just in my left you can see some there, and beyond that, have been some protests gathering and shouting at the police. As the police started their action beyond the bridge. That is what has been happening in the last 15 minutes or so here. We expect the police to come in and move along the main road, and clear the rest of the protesters out. Back to you. Thank you. Roslyn chin out in hong kong. In a few hours the ecb will announce the targeted refinancing operations. That news could be good news is you are looking for quantitative eating. Lets go to our International Correspondent for a preview. Good morning. Should we be looking for any what should we be looking for . You tell us. We should be looking for the number 150, 150 billion euros. Thating less than could mean that quantitative easing is going to be in the fast lane. That could give you an indication that mario draghi is having a hard time growing that Balance Sheet by one trillion euros. Heres what the estimate is 148 billion euros. Is problem and the challenge the september takeup it came in at a disappointing 83 billion euros. You add that to the expectation of 100 4380 get to 230 billion euros. Here is another issue when you add up all the outstanding debt due by february, you get to 270 billion euros. It could be that the Balance Sheet, even as mario draghi is try to do all this, simply isnt grow. To anything that comes out on the disappointing side will be another data point for the evangelist of quantitative easing. That could mean the january 22 meeting, and that is what gets people very excited. Many people are looking at what happened to the oil price and asking questions about if it is a big boost to consumers. Not necessarily a boost to consumers in the European Central bank, because of what it could do to inflation. We are going to get more clues on inflation today. Minutes, weabout 20 get inflation and then we get us aes it will give idea of what the collapse of oil has done to inflation. Remember, low inflation is yet another data point for mario draghi and whoever else wants to push for quantitative easing. A lot of data drops today we will watch them all closely and if they are disappointing, that could mean a good sign. Thank you. Hans nichols from berlin. If you are a european basketball fan the champions league. After opening an office in new york, it is opening to be the first euro league club to make it big in america. A middle east editor reports. Match night in tel aviv. They are seeking to retain basketballs champion league. It is also taking a shot at a more lucrative prize, the United States. Andhey had got the pizzazz, they have the pedigree. Is aonquering america whole different ballgame. Simple. Trategy is isour plan to interview u. S. To get more tv coverage so we will have more games played in the u. S. Against nba team. We also expect to have it in the u. S. And israel. It helps that the coach of lebron james used to be with them. Enough. May not be the United States and north america are built around a local celebrities. David stern figure that out when he was running the nba. They have michael jordan, larry bird, hotwired for the u. S. Audience. For tel aviv to come in without any star players makes that process a lot harder. It could be a problem. They make around 20 million a year, about the same as lebrons wages. It was trounced by moscow and its overseas appeal may wane. Though beaten on that night, their preseason nba to our bruce they can make it in america. It was a sellout crowd. The atmosphere is more european. Fans really support their teams. Ccabi ike my they are more likely to come across it on the xbox. You can join in the conversation on twitter and let us know what you think of the show. Im just tweeting at something about sony the sony hacks kendall continues to stop the latest releases show that the head make twice as much as a regular ceo. Its all this scandal about the hacking in the film the interview. Coming, u. K. House price growth dipping. Institution of chartered surveyors well a property tax overhaul do anything to stimulate the market . We put that question to our next guest. Time for todays company news. More troubles with tesco. It is moving closer to losing its Investment Grade credit statement. It places it on negative credit. Tesco has had one of the toughest years in its history. It has had three profit warnings since june. Benjamin lusk ebay have found that they used algorithms on their trading platforms. That is according to people with familiar people familiar with the investigation. It may be a systemic problem involving systemic involving tools. Both banks and the new look regulator have declined to comment. Brazil has indicted at least 12 suspects on charges from creating aof cartel the company didnt respond for requests for comment. And u. K. House price growth slows to a sixmonth low, according to an institution. House price gauges fell to the lowest point since may, 2013. Although last weeks property tax overhaul may reverse the slowdown, those buyers are lured to the markets. Joining us for more on that story is joshua miller. Morning, thanks for coming in. Prices are still increasing, just at a slower pace. Absolutely. It wasnt in a particularly exciting report this time around but i think the important point is that the market during november largely reflects the headwinds during the first half of the year. The bank of england was quite vocal about their expectations of higher Interest Rates. A lot of that is changing now. Dutyyou have the stamp announcement and that materially changes the outlook going forward, probably for the better. Flow that change the outlook for inventory levels . Durst survey shows the average level of inventory is close to a historic low. We conducted a snap poll on the day of the statement to assess what surveyors think when happen and they are quite optimistic. They think that transactions are going to pick up between 2 5 , as a result, instructions are going to pick up. That is the impact the stamp duty change could have because i was wondering, it it might force people to consider whether to buy a home, but the amount of money they are going to say on the stamp duty everyone knows that the toxic numbers, you could lose that in the rice of house prices in a few months. I think they are likely to push up prices. It is going to raise transactions and expectations, so they think it is going to be quite positive. It is a twotier market now. What is the magical figure . Benefits that compared to the previous regime. Its a weird figure. It is roughly 900 grand. In two . Arket slid it seems that way. It expects 98 of all home buyers to benefit from the change. In london that will be a little different, but overall it will be a net gain. Years, many people have been saying that the real problem is the lack of supply, got it a few houses being built. Are we seeing any changes on the horizon . Only are seeing is in our construction survey, we see a really strong increase in workload over the last 1218 months. We are seeing that on the Housing Starts and completions. The q3 figures were slightly low but overall we are sitting to pick up. How worried should we be about the upcoming general election . That is the number one concern on buyers minds. Thereurvey every time is an election they seem to sense that there is an element of uncertainty. The marginal buyer sits on his hands. It is something that they are fighting anecdotally in the runup to the election. The stamp duty is so transformational that it might override that. I suppose, looking at things that could influence where Interest Rates go, weakness in the euro zone economy doesnt work well for u. K. Exporters, but maybe works well for those with mortgage debt. Last i was here we were talking about an Interest Rate increase possibly in november, and being pushed back to march. Now we are talking november next year. Potential homeowners and homebuyers are doing alright, they are pretty safe for the next 12 months. Where our prices rising the most . Scotland and Northern Ireland are up about 10 yearoveryear. This time last year they were flat. They are the oh performers. Thanks a lot. 6 15 london. The yen and sets a Record Number of migrants died in the mediterranean this year. That is next. The City Football Club prepared for a make or break match this week. It was also showing off a new investment in its future. The new Trading Academy cost 200 million pounds. Bloomberg went behind the scenes to find out more. This is probably as good as it gets certainly in the world of football. Research across the globe multiple sports in multiple countries trying to find what is best. You have everything to give that little bit of extra edge in insight into how our players are performing. We have a big commitment to technology to make sure that we give our players every advantage to develop and perform. There are 80 acres, 16 pitchers, only four of which will be used, the other 12 being used by boys and girls. Women are also headquartered here. We also have a second stadium. That will be for under 21s. Our aim is to have football is booming. It is the worlds most popular sport. It is important to continue to invest in every age group. It is an investment in the present and future and the young people who will come next. What we are doing here is resonating with businesses around the world. Companies like nissan who are saying, we think this is a big idea, this Global Football organization. Football group headquartered in manchester but with clubs in new york, melbourne, japan they say, we like this idea. The work that is being done here, the rmb, the technical this has great ties for Companies Involved with these sorts of things involved in data and technology and nutrition. Involved in elite human performance. One trophy this year would be amazing. We are a Football Club first, second, and third it is all about winning. That was tom glick. Its apt that in the newspapers, roman conquest, eisai through gritted teeth eisai through gritted teeth. Row 20, thereby progressing to the later chance of lack later chances. Not be looking at sport i am dipping into the independent. Mediterranean migrant death toll based on this story new figures released yesterday. Africa to europe is now the most lethal root in the world. It isare coming winding down to be replaced by another european scheme. We will continue to cover that. More coverage from hong kong with world Police Moving in to remove barricades after 11 weeks of protest. Hong kongs moment of reckoning, Police Moving on students after 11 weeks of prodemocracy protests. Draghisg the site for cheat money. Another twist in the game of the phones. Telefonica and claro are planning a 15 billion offer for brazilss secondlargest mobile company. Cracking the code, Benjamin Lusk he is said to be investigating out of rhythms used by banks on Foreign Exchange lifeforms. Platforms. Welcome to countdown. Just gone 7 00 here. The Israeli Basketball Team with big plans. How tel aviv is making a big play for the big time. Lets get to our top story and hong kong where protesters blocked the streets and divided the city for more than two months and theyre coming to an end. Bloombergs rosslyn chin joins us live with the details. Right now police are facing and right behind me you can see them here. There physically moving along from the west. Also alongside them there are thate dismantling things they have been using as barriers during their more than 11 week stint. Steadily move forward clearing protesters as they go but actually you can see from the streets down here that there are a few protesters gathered on the lower section of the road. Actually the large part of the road where there were protesters before that is now largely clear of protesters. The ones remaining are gathered in small areas. Here also coming in so for the actions have been largely peaceful. What are protesters telling you after all of these weeks of protesting, what are they able to take away . Many of them do say that even though they will not beer air be here at the protest site physically, what is been happening is Political Awareness and an idea of what can be done to push things forward. We spoke to martin lee and he is one of the founders of the democratic aarti in hong kong and he has been campaigning for quite some time. Today you find the fire of democracy burning in the heart of every student who participated. , this fire cannot be quenched. It will continue to grow. As you talk to students and talk to their students and parents it will be passed on to a new generation. This is the biggest ever movement for democracy we ever had. That is generally the spirit of many of the protesters, they say that now that people are more aware, they want to continue. Art work onen some the roads this morning saying, you can only clear the protest camp, you cannot clear an idea. Thank you very much, joining us there from hong kong. We are getting breaking news from air france, strike activity surrounding the airline plans. Today thatsaying they have approval on a deal for the development of transitive yet which is their lowcost operation. Saviaransit via transa will operate at least 50 aircraft by 2017 and will wage reach breakeven by 2017 and 2018. Ing profitability by it is something that has made a management of airline very difficult. Pilots are going on strike due to the objections to the plans of putting some of their ansaviaons under the tr umbrella. They said that was a response to slow growth. Lets move it on to talk about inditex. Caroline is here with some of the key takeaways. 1 fit just eat out at increase. Profit is barely there and barely growing because they have weaknesses in foreign currencies and weve seen weakness in the yen and russia. These are two key crunchies. This is such a huge company. We after a minor cells that we have eight brands. Countries with more than 6500 stores. When you are that globally exposed to start to get volatility in the emerging markets it will hit your profitability. Sales are still strong going 7 but when you bring that home and convert it back into euros, the ruble is much weaker and the market seven week or so we are not seeing the bottom line. What is interesting is that we are starting to see optimism for their christmas. What everyone had cited and everyone had warned was that inditex would have the same winter that everyone else would have. It was too warm and we were not buying coats and heavy items. Now suddenly, i dont know about anyone else but i am a lot colder and people are spending, 14 growth is what they are seeing her november to december. Did you ever by that winter coat mark . Nope, still waiting. We proved the rule right. Youre not just waiting on retail. Hat,am wearing the Telecom Brazil is where it is at, consolidation is where it is at and you cannot seem to go through week without another multibilliondollar deal in telecom and this time it is 15 million being offered for brazils number two mobile Company Called tim. Both of the buyers are potentially oi, telefonica and chloro. Claro. Competition is ripe and people are picking up smartphones at a rapid rate so we are seeing growth cooling a bit. At the same time the government putsking these companies to in billions in form of investment. We are seeing is fewer players and less hot competition. Claro putting of 15 billion, quite a premium for what tim is valued at. They will divide and slash and about. We will see tim become three parts, oi will take 25 of the company and carlo and telefonica will divide the rest. Interesting we have already seen so much activity. Telefonica waiting for the regulator sums to buy the oiadband of gdt, rubber that is just selling off portuguese assets to go front and center into brazil. Really interesting news there. Tim and oi. Shares trade in america. Both spiked, tim in particular up 19 . Telefonica brasil doing pretty well. Will they accept the offer . Accept it . M italia they are the main owner and they think it is worth 25 billion. That is a big premium. Quite a large premium and i think they have a little further to go around the table but none of this is that much of a surprise. All of the potential buyers have all said that they want in in brazil. More scrutiny for Deutsche Bank and barclays. This time from the department of financial services. Lets get the details from hans nichols. What we know . Loskis shopnjamin in new york and they are found evidence that potential algorithm trading has manipulated benchmarks and manipulated for exchange. That is according to a person familiar with the matter. This is an important story in part because it suspects suggests a systematic or call where automated teams it goes beyond what rogue traders may have been doing to rig benchmark rates. This is according to a person familiar with the matter. We do not know if there is any confirmation between the trading platforms and are clays. Wereche bank and barclays left out of that 4. 3 billion settlement between these banks and the swiss, english, british and u. S. Regulators. Here is one thing we know about ys shop, theyve installed a monitor at barclays and are looking to put one in it which a bank. Deutsche bank. Program, up on the which will be better, europe or the u. S. . Guest has recently changed his stance and will be with us after the break. Were speaking with some of from jpmorgan. Time for todays company news. More problems for tesco, the u. K. Supermarket is getting close to losing its Investment Grade credit state. It is placed on the negative credit watch. Tesco and one of the toughest years in its history and is seeing three profit warning since june. Benjamin lusk, a found evidence that barclays and Deutsche Bank may have used algorithms on their trading flat arms to manipulate Foreign Exchange rates. That is according to people with knowledge of the investigation. The practice suggests there may be a systemic problem involving automated tools that goes beyond individuals rigging currency markets. Both banks and the regulator have declined to comment to bloomberg. The wall street journal is reporting that brazil is indicted at least 12 suspects in the case. The charge stems from allegations that several companies force them to drive up the value of contracts. The company did not respond to the newspaper for request for comment. Lets look ahead to 2015 and how equities in europe and the u. S. Might shape up. Our next guest has changed his stance recently and favors europes chances. The Global Equity strategist at j. P. Morgan has missed out. Thank you for coming in. Lets talk about what you expect to see and equities in europe versus the u. S. , give us the rationale, is this a centralbank policy . I would say if you look at the u. S. Itself, the equity market is getting a little bit tired. The big picture is the markets tripled over the past five or six years. The sentiment is very bullish on the u. S. And the money printing by the fed is finishing as well as the Profit Margins potentially speaking and the dollar is going the wrong way. Thats why we think europe is starting to be more interesting for next year. Fed play to this as we approach the crucial meeting for when the feds might tinker with its communication. Our view is the fed should start to tighten. If you look at many labor market indicators their strengthening quite a lot and in this space the Unemployment Rate is likely to go to four in one years time. The fed is thinking about 5. 5 currency will be the big story. So if europe is trying to play catchup, how much does that depend on europe possibility to generate better growth . The european underperformance was largely due to the earnings underperformance and that was due to the growth disappointment. What i think will go in their favor is that ecb is on slippery slope to do more and therefore the euro should weaken further. The growth, surprise from this level, we do not think it is unrealistic. How will the diversions in Monetary Policy affect emerging markets in 2015 . The big call we think is happening right now is that this is a late 90s type of story, the dollar should be structurally strong. Strongs, the dollar was for five or six years in a row and Commodity Prices should be quite weak and the fed should not be tightening. For the emerging markets overall this is not a great set up at the falling Commodity Prices will mean a lot for policy flexibility of some of them and whether it is india or wherever this country should do quite well. Year where we a start to work out the winners and losers of the emerging market. I was interested at looking how markets have performed this year, the Mexican Exchange down by 3 , the problems in brazil are well documented and the commodities reliance that that economy has, many economies talking positively about mexico, it seems interesting that those economies look bad to each other when they had different stories to tell. The problem with the emerging markets is when you have Key Countries and whether the chinese are balancing but everybody is aware of that and the problem is this is still ongoing and we dont know exactly how it will end up, you have russian issues and resilient issues so the big rates are not likely to do that well and therefore one should differentiate within the emerging markets and there should be winners from the policy flexibility as inflation collapses. Coming back to europe, your call the europe the euro will cause the u. S. To slip. What about grace greece . The ways that assets performed in recent days, it is certainly a concern. One guest already has said that greece will derail the Global Economic recovery and it wont even derail europe, just greece. Where do you stand on greece and its likely impact on the Global Economy . This year we were all the way to the u. S. And on the way to europe and we thought it was a Good Opportunity to switch of course when you do with europe the politics are typically a mess. So you have a few of the issues next year coming up and greece always wanted to provide uncertainty and next year it just brought it forward a little bit. We think there is a good chance that in december the president is elected and we avoid the elections again in january or february. Does not happen history teaches us that once a party goes to power it becomes more centrist. There was a time when samaras was antibailout and he changed his tone. Talking quite extremely ahead of getting to power but once you get to power you become more centrist. I think the big story for europe is the diversions with the u. S. If you look at the outer differential we are at the top of the range of a 40 year high. The u. S. Is as profitable as it can be and this gap should start to close. It does not stay like this for too long and currency is going the right way for europe. He stays with us for a little bit longer from j. P. Morgan, we will talk to him after a short break. Youre watching countdown. Welcome back, the Global Equity strategist at j. P. Morgan is still with us. One thing you said before the thek was you believe dollar will go stronger in 2015 and you admit that consensus. Are there risks were storing for next year based on people thinking the same thing will happen . Is it the wisdom of crowds or herd mentality . If you take a step back, the big picture is the equity markets in the u. S. Have done extremely well. Even in europe the stock 600 was up 20 , 2013 another 20 . For this time of year that says a lot. The markets are about to be at a high, at the same time volatility is a threat. Not unreasonable to say there is a lot of complacency out there and a lot of calls do appear with a little bit of consensus. Our view is there are some risks and therefore for the equity market one needs to be more careful. The story is not really clear. Overweight japan, surely that is among those calls, isnt it . You still remain lish on japan bullish on japan . I would say it is all about the currency. If you look at the chart of topics and yen, it is oneone. If you look at what bank of japan is doing, the Balance Sheet with a share of gdp is going to four times more than what the fed has ever managed to do and this story should still be a reasonable one. Ftse hashe u. K. , the underperformed in europe, because of Commodity Exposure and you think politics is going to lead to underperformance. U. K. Have been underweight for the past few years, one of them is because the commodity rate is double the global rate. Another one is Political Uncertainty to the may elections. It is almost a nowin, whoever wins will be difficult for the equity market and you have potentially a number of lucian losers from the elections. Twitteran join us on and join the conversation and let us know what you think of the show and the stuff that you love and hate. Hopefully just love, love for anna. I have been multitasking, talking about oil. 6 00, hard times for the rubles and trouble on the streets of hong kong. Moscow, what is the live next step for the bank of russia . Will go him back. Business countdown. Time for the check. Therecord low against dollar as the bank moves. They are going to expand the key rate and nine analysts out of the 34 surveyed say we could see a bigger increase. The ruble has fallen this year. Withft the bank of russia doing billing options. Spent 80 billion propping up the currency and the bank has sense Vladimir Putin moved into the crimea in march. Has a story out. Ruble tracking the itce of brent crude and shows when they benchmark increases. As long as the price of brent crude declines, the price of the ruble could decline with it. It is widely expected that it will raise Interest Rates. The big question is by how much and will it stop the ruble. Klein. These are the top headline. Kong, the police are moving and on prodemocracy ro democracy demonstrators. The protesters say they will remain until the latest. Putin hits the latest destination and political alliances and Vladimir Putin visits on the day the central bank will be announcing the Interest Rates. The bank could raise rates in an effort to shore up the currency. That theyy may reveal will make the decisionmaking more transparent. And the practice could come to an end after a review by the former Federal Reserve official. They will present the findings at a News Conference. Lets go over to the democracy protests that divided they have moved into the last campaign site. Are joined live from hong kong with the details. What is the latest. Latest . You consider the police some ofe dismantling the places the protesters had built up in the weeks they had been camped out by the Government Offices. Mentoringe them this the awnings and then keeping guard as a few more Police Arrive to support. Placetion has been taking for about two hours. Part of the protest site was cleared and the company said it was losing income because of the major highway here. Said, youbasically can go ahead. And no actionple was taken that was necessary. There was a different matter. The authorities said they are going to go in and clear this has hadcause the public enough of the protests and it is time for the protesters to move. That is what is happening. It has been peaceful. The police are moving in from the east and west will stop they are removing barriers and other objects. We have seen a resistance from protesters and some press moving around. So far, it has been peaceful. Thanks a lot. Rosalind chin out of hong kong. Decision on a benchmark rates later on today. The ruble continues to be hurt. Lets go to moscow. Joins us now. Thank you for joining us. Increase do you expect to see police centralbank . Most economists seem to expect the increase in rates. There is a wide range of expectations. What are your thoughts . 100 basis points. Addressthe goal to inflation rising. It is not that by itself. If you really want to defend the more and iteed much could create additional rates. It also creates additional financial stability. Compromise not growth. The central bank will stick to the inflation targets and it is not as dramatic. They will announce the macroeconomic forecast for next year and the Additional Information in a sheer. If it becomes pessimistic, we can see our dramatic rate hike. We expect it to be very moderate. What is the point . Rates and theg ruble is being driven by oil prices. Isre talking about how it why makeal factors and a decision to increase Interest Rates . The point. Exactly ity react to inflation and will accelerate in the next months. Why it will address the ruble weakness. It is fundamentally german by oil prices. See the ruble stabilizing. Again, inflation is accelerating. This is about inflation and not the ruble. . Hat about capital controls can you share with us on whether capital controls will be introduced . Some say we are already seeing those. Businesses have been asked to convert revenues into rubles. What do you think we will see . Will not be the availability. Banksl be companies and with Large Cash Holdings and deposits. Flagging. Ediation is at the same time, the company and banks, primarily because of the anticipation create additional affect. Effects. It may be a control. Toher than forcing people more actively trade. The first round of capital controls will be tighter for the president had his stated last week and that banks and the government should coordinate and we think this is a form of sales. You whatgoing to ask your forecasts for growth was . Nd what are the key functions we expect a recession and we go into asia to recession from the laws quarter of this year and stay until the end of next year. Recession will be in the near term. Ok. Thank you for joining us today. Thank you. Economists. Ssia and you can join us on twitter and join the conversation to let us know what you think. Tell is the stories you are watching and you want more of here on the show. What have you been talking about this morning . Chart. L to come, the high will talk about how chinese stocks go in the big question posed today. Stay with us. Clerics how high can stocks go . You listen to mark mobius, he has been investing and he says the market in stocks is just getting started. It was his words that inspired the chart. Check out the benchmark and the shanghai composite. Most in the the last month alone. In the last month, the indexed as gained 19 and the Chinese Central Bank cut rates. Venezuela cost stock index has risen more. For the year was reached on monday. Have a look. My pencil my pen is pointing. That was passed 3000 for the first time. The index finished off at 3020. This. S interesting is the index has a jump from a fouryear low in 2013. It is still less than half of the average. 122 gain during the bull markets since the 1990s. Theou are a believer, market could have further to go. Be aware of the volatility of the composite index. It fell 5 . Tumble sincegest 2009 and china is stepping up efforts on government debt. The price swings reach to the highest level. Do not let that put you off. He says that increased opportunitiesates to buy shares. Jonathan gardner said there was a potential for a rally where prices double in 18 months. There are naysayers. There is a strategist who says the rally is not rational. It a World Bank Economist called it a bubble leveraged traders. I will let you decide. A fascinating conversation. Airbus raises the prospect of discontinuing the jumbo in 2018. It is the first admission that they may have misjudged the market for the doubledecker. The aviation and defense team leader joins us now from berlin. Thank you for joining us. What happened yesterday . Talk is through the news i came through. It was obviously a day to forget for investors and the stocks tumbled the most in six years. In the afternoon, it was said toy would not hand over qatar airways. There is nothing wrong with the we do not know what the problem is. We know there is a prickly dresser and the ceos to down and executives. That could be part of the reason. Andstocks start sliding airbus says that it would be flat. That is when the stocks really took momentum. Is probably company thinking, in for a penny, in for a pound. This is a blow to the Flagship Program and raises questions the Program Going forward. It leads to aircraft manufacturing in different directions. One of the problems they are coming up against . A large obviously aircraft and you have to be a confident operator. The only real sponsor of the aircraft is emirates. They have a business that is difficult to replicate around the world. Airbus has said they might not have marketed the plane properly. Instead, it was sort of a luxury product with dutyfree services. It is not leveraging the space properly. Going forward, they will work hard to convince customers. Say thatays, you could yesterday put the first death nail into the coffin by saying it may not survive. Thank you. We will get more of the investor conversation that continues this it is stop thursday. If you are a basketball fan, match for the sports champions league. After opening an office in new trying to make it big in america. Match night in tel aviv. Retain ineeking to the Basketball League and taking a shot at the lucrative prize of the United States. We are over here because tel aviv has the pedigree. Conquering the mba is a different ballgame. The strategy is simple. The plan is to get more tv coverage and have more games played against teams over there. We expect to have basketball camps in the u. S. And israel. There is merchandise. Ofit helps that the coach lebron james and the Cleveland Cavaliers used to be there. It may not be enough. Is builtited states around a love of celebrity. He had Magic Johnson and larry board larry bird. I thank for them to come in without any star player, it makes it harder. They make about 20 million a year and that is the same as lebron possibly to. As lebrons wages. Bhr theon and preseason mba tour proves they can make it in america. The atmosphere is more european. You know what im saying . They really support the team and the university. Now, the basketball fans are more likely to come across it on the xbox with euro league best of theg the nba. 7 52 and the ecb will announce how much appetite there is for a targeted longterm financing operation. A bag news could be good news. Our correspondent in berlin. What are we looking for . We are looking for 150 million euros. Anything less means a slow pickup and could mean the quantitative easing is going to be in the fast lane on this meeting in frankfurt. Of 148 billiones. That is a consensus median estimate. When you take a look at when it came in and 83 billion euros and lower than expected, the goal is the key word. He intends to grow the Balance Sheet. The problem is the loans from 2011 in the coming months. Eurosmount to 270 billion 270 billion euros. It is hard to see how you get beyond the numbers. We will look at how strong the number is. Goodk number could mean news. If you like the idea, it could mean good news. Lets talk a little bit about the factors working in. Europe. That front in yes. The final readings are for germany and france. They came in line with the preliminary reading. Here is how much the price of oil is going to weigh on inflation and deflation. The final reading now seems to indicate inflation is awfully weak. Us. Ods nichols is joining hans nichols joined us from berlin. A move against students. Process ending protest. See you tomorrow. Same time. Same place. Welcome. We are moments away from the start of european trading. Lets get to the morning brief. Drops below 65 a barrel. Of the Big Oil Producers take the pain. Lows against the falling Commodity Prices. Will the Russian Central Bank react . It is decision time later this morning. Updatehours, will get an on how much money was lent out to the biggest banks. These of the stories we are tracking. We have another down day. And 35k at futures down points lower. Lets get the market open from caroline hyde. Thank you very much. The risk sentiment slides further. Not by much. Expecting a fourth day of decline when it comes to european stocks. And oil isy concern in freefall. Saying the prices are going to fall further