Transcripts For BLOOMBERG Countdown 20151124

The odds of a fed increase in december went over 50 . It gave new momentum to both of those stories. Commodities going weaker. Once again, one of our top stories. In line with that, we are pointing out that the odds of a fed rate hike now running 74 . Chart andl take your raise you this one. This is between where europe is and the u. S. Is. This chart shows the u. S. Twoyear yield is the most sensitive to rate hikes versus the g7 twoyear yield. We are increasing the spread between the two. That is the root cause of all of this. If you had towards paris and this Climate Change conference, that is the chart everyone should be look at. American drivers are driving the big suvs. The petrol is cheaper. Anna lets get the bloomberg first word this morning. Brussels has extended its highestever terror alert into next week, saying Islamic State terrorists plan to attack highlypopulated areas. One of the 16 people arrested has been charged in connection with the attacks in paris. The other 50 have an release. France has launched airstrikes in syria from its aircraft carrier. President hollande says he wants to inflict the maximum damage on Islamic State and will intensify the operation. Passenger bookings for flights arriving in paris for the Christmas Period are down 13 . That said that although a 25 jump in cancellations has eased, new bookings remain dramatically below last years levels. A new survey shows the majority of britain backing plans to leave the european union. 52 of those questioned would prefer to leave the eu. David cameron has promised a referendum on the map on the matter. Saysche banks coceo bankers still earn too much money. He says managers need to slow the bonus process. Deutsche may shrink the bonus pool by a third. The head of a Recruitment Firm says they have effectively canceled christmas. Anna thank you very much. Guy cryan canceled christmas. The grinch of the Financial Markets. Really Christmas Morning from here either. Good morning to you guys in london. We are seeing a mixed picture in the asian markets this afternoon as we wrap up the trading day. , returning from a holiday. Playing a little bit of ketchup, catchup, but overall, Trading Volume down, not a lot of risky bets as we and her into a short weekend. Sharp was the biggest mover on the nikkei today. There are some reports that mainlanders are considering for giving loans to facilitate an investment fund. The stock surging 13 today, the biggest gain we have seen in two years. That is making the threeday gain 24 up this week. That is one of the big stories that is moving the market. The time one exchange is 1 down. The shanghai and hang seng markets weighed down on the regional index today. The hang seng down close to 1 . Concerns that traders will start to sell their shares in order to raise funds to take part in the next round of ipos. Tend that have been given the green light by the securities regulator. It is the dollar store that continues story that continues to dominate the the unwinding of the long dollar trade. The shanghai futures exchange, the metals continue, prices through the floor. Nickel has fallen 17 out of the last 18 days as well as copper, continues to be under 4500 a metric tone. Metric ton. The commodities trader continuing to hit after s p says it might cut to junk after concerns about liquidity, joining goodies on those concerns. Back to you guys. Guy thank you very much indeed. Anna the commodity crunch continues. Ryan chilcote is here with details. We are also joined by peter, head of market strategy. He joins us for the next hour. Lets talk about some of the following numbers we have seen. At sixyear lows. Ryan effectively, you have the bloodbath continues. Downberg commodities index near the lowest level since 1999. Copper below 4500 per metric ton. Nickel the lowest since 2003. You look at the miners , they are down. It is the materials and Energy Companies that have led declines in the asiapacific region, down close to 13 . Overall, about 2 . The reasons, we all kind of no. There is a big concern about growth in china and the demand story. I talked to sam walsh and he said it is overblown, but no one is listening to sam walsh. The concern about the chinese growth factor remains. You have concern about Dollar Strength. People increasingly anticipate this rate hike in december. You have two things happening. Again, concern about demand destruction. A lot of things are getting more expensive in dollar terms for countries that are not starting with the dollar. Secondly, the cheaper it gets to induce these commodities these commoditiesproducing countries, because their currencies are lower versus the dollar, the more supply you get. You have this double whammy and the market is increasingly concerned. Guy when do they blink . Ryan opec does not blink at the end of last week. We talked to 30 analysts. All 30 say that opec will do absolutely nothing next week. You look at the next real important batch of data and that comes on wednesday. That is u. S. Inventories. Yesterday, we got a Bloomberg Survey of what analysts think is going to happen. They say that inventories are expected to continue to climb. So the glut story on the market continues despite the fact that the saudi strategy of taking out ofopec producers, a lot people think is working. It will just take more time to see through. You talk about the biggest production decline since the fall of the soviet union on the back of saudi opec strategy of letting the oil price go. Yet we are not there yet. Lets see what happens 3 30 wednesday london time to nonopec supply and inventories. The feeling is it is beginning to have some kind of consequence. Anna can we find a bottom for these commodities . Peter i think we are stabilizing right now. The commodities business is extremely cash intensive. That is what it comes down to. The idea that there has to be supplied in the market because they have to have revenues coming in. They are not looking to cut supply. They are looking to reduce costs in order to raise revenue. That is not going away soon. All of these commodities producers need that revenue. . Uy what is driving this where are we in terms of the dollar . Or is it spreads . I am sure it is a combination. If you are looking at one of them, what would it be . Peter to me, it is about spread , the Interest Rate differential story that is continuing to develop. Guy that is going to get bigger, potentially. Peter we do not even know how wide it is going to go at this point and how nongradually the rate hike cycle might be. It might continue to widen. Anna why did you think commodities are bottoming . Seeing supply come off at a rapid rate. Oil producers in the gulf are coming off line at a record rate. The saudis are starting to understand that producing all this oil, well they need the revenue, has to sort of slowdown. We are starting to see a slowdown. It might not be as rapid as you might expect. We are seeing oil come offline and these Commodity Prices decelerate. Anna thank you very much. More from ryan as we work our way to the opec meeting. Guy in under an hour, we get german gdp data and then a reading of german Business Sentiment with the november ifo survey. Anna mark carney will testify before the Treasury Committee on the november inflation report. Up next, the knocked down continues. Brussels remains on the highest alert as the city fears a terrorist attack. We are live with the latest next. Anna welcome back. You are watching countdown. Lets get a Bloomberg Business flash. Approval to repair most of its rigs and have questionable software reviewed in cars in the u. S. Customers that the cost and complexity of the fixes are manageable. Democratic president ial frontrunner Hillary Clinton has attacked the pfizerallergan merger. Andsays the proposed merger socalled inversions by other companies will leave u. S. Taxpayers holding the bag. Coceo says banks bankers still earn too much money. John cryan says managers need to slow the bonus process. Sources Say Deutsche Bank may shrink the bonus pool for its Investment Bank by a third. The head of one investment pool says he has effectively canceled christmas. For more on these stories and others, go to bloomberg. Com. Brussels will be on its highest alert for another week as authorities maintain their warning that Islamic State terrorists plan to attack highlypopulated areas. Services in the city will begin reopening tomorrow. It has been decided that schools should be reopened on wednesday and that security measures around schools will be put into place. The metro will also be reopened on wednesday. It is possibility it is possible that the metro will be reopened in stages. But we will reopen metro as much as possible. That is our aim. Leaders areational scrambling to position themselves in the fight against Islamic State as president hollande heads to the white house. Guy we are joined by hans nichols, elliott gotkine, and Brussels Bureau chief. Brussels is at the center of all of this story. Can we go back to normal in a matter of days . I dont think so. I dont think we can ever go back to the way it was before. The atrocities in paris are on everybodys mind. Brussels is under a dark cloud. But the government is trying to deal with it. Hey have to do a balancing act we want to get back towards normalcy, but you do not want to let a threat just lie there. They are keeping the alert for another week but letting the services go back in. They were going to try to reopen things today, but they need to bring in forces from outside the capital to help protect the subway and the schools when they opened mark. When they open tomorrow. Anna president hollande will meet with president obama in washington tomorrow. Can we expect anything concrete . Recognizeamericans that, on some level, the americans will have to offer president ollanta something. That could be as little as publicly welcoming russias role in taking on the Islamic State. In terms of intelligence sharing between the u. S. And russia, i would not expect any of that. American officials are cautioning against that. In some ways, the real differences between the u. S. , france, and russia think of when they wantnd us to leave. The u. S. Wants to see him out immediately. France could maybe abide his presence a little bit longer if it keeps the russians along. One area where we could have a firm deliverable is to get an with the u. S. And russia to divide up zones where they will be responsible for bombing. It would not be intelligence sharing, but dividing the battlefield. Guy we seem to have multi track diplomacy underway. Vladimir putin, irans seem supreme leader, they have issued a statement saying they are going to work together. How close are these two countries in terms of their outlook on how the region developed . Elliott their interests seem to be becoming more closely aligned as the months progressed. The world powers seem to have irans back more than anything else. Regimes not backed the of Bashar Alassad since 2011. At the same time, the russians have a longstanding relationship. They have been a longtime arms supplier. About, was just talking airstrikes really helping assad going onto the front foot, starting to retake some territory. When it comes to the future of syria, it is clear that with the russians and iranians both backing assad, they see both sides of this. Saying nobody from outside should impose on the Syrian People any form of government and who personally should government should govern it. Only the Syrian People can decide it. Oncourse, if you are bombing the half of the assad regime, you are also imposing your will. Aplenty, itacy seems. Jones, back to the investigation that is still underway in brussels. Bring us up to speed on the latest. Jones we had some more arrests yesterday and they have widened the search. They have searched in a couple of other cities besides brussels trying to find the suspect who is still at large, salah abdeslam. One of the Key Developments seems to be that they found an explosive vest in paris in an area near where they earlier found his cell phone. They have not made a direct connection yet, but it seems likely that they found this vest. This is good news for brussels because this was one of the fears, that he was in belgium on the run with this vast and he was planning to explode it because he had not he had not exploded it in paris. If they found it, that takes the edge off the fear that we have here. How do you think the german public are viewing all this and how does it affect how Angela Merkel perceives what is happening here . How will she take that view and interact with Francois Hollande . He is very much on the front foot. She is a little bit on the back foot. How does that relationship work . Coordinations of with security, i am sure they will step up and try to show a unified front. The French Embassy is right next to our office. There is a longstanding role between hollande and merkel. When we get to the refugee conversation, it is not the same as it is in hungary. There is a direct link between refugees, migration, and terrorism. It has been very muted in germany. There is some concern that there is an underground movement taking place. A lot of this is building without being expressed in the popular press. One way the coalition is trying to fiddle with this they are talking about not applying a minimum wage. They are also talking about reducing benefits to refugees. Drawing away,ctly with one exception, the interior minister. There is a recognition that merkel has a problem with refugees in her coalition and she has got to figure out some way to appease those, especially on her southern flank in bavaria. Anna thank you very much. Hans nichols, elliott gotkine, and jones hayden, thank you to all of you. Guy peter is with us. How damaging is this story going to be for Consumer Confidence in europe . Peter that is what we were talking about before. Policy makers are running onund, making a big show raising spending and talking tough, which is appropriate at the time, but it does have a negative effect on the consumer psyche. There is a danger that it starts trickling through europe and we start seeing what was robust domestic spending in europe start eroding as people get over the concerned and start reducing their activity from a consumption standpoint. I think it is a very real concern. Anna it does not then change the direction of certain assets. Maybe that is a better move. Dollar strength, euro weakness. Peter absolutely. It means the ecb needs to step forward faster. The lone continual bright spot in European Economic data was that, domestically, the consumer was healthy and doing well. They need that because externally, headwinds are mounting. The situation is not great externally. Economic data is declining. That is a core positive for the consumer in europe. The ecb is going to have to do more. Guy everybody looking for a safe haven right now. The swiss franc is a safe haven. Are they going to do next month . Peter they are wringing their hands right now. They are worried about the situation. It depends on what the ecb is going to do. The Economic Situation in switzerland is rough from a world standpoint. The deflation situation is pretty right rife. They need the euro to be strong against the swiss franc. We are betting that the ecb cuts its deposit rate. That is the key, expanding asset purchasing. It is not going to affect the swiss franc as much as if they go deeper into negative territory. Th isy do go negative, likely to follow suite snb with a deeper negative cut. Anna swiss business has survived a lot. It does not do them any favors, does it . Peter exactly. They did not collapse, as many people anticipated. There has been a slow deceleration in growth in switzerland. Partners as trading backed away from the swiss franc. Morenot sure how much these swiss corporate can take. Anna peter is staying with us this morning. Guy we will speak to indias former Central Bank Governors about how to get control of the situation. We will talk about that in just a moment. 6 30 in london. 7 30 in brussels. Brussels has extended its highest level terror alert into next week, warning Islamic State plans to attack highlypopulated areas. Schools and subways will be closed for one more day before gradually reopening tomorrow. One of 16 people has been arrested and charged in connection with attacks in paris. The other 15 has been have been released. Airstrikeslaunched from its aircraft carrier. President hollande says he wants to inflict maximum damage on Islamic State. Passenger bookings for flights arriving in paris during the Christmas Period are down 13 from last year. Although a 25 jump in cancellations the week after the attacks has now eased, bookings remain dramatically below last years level. Deutsche banks coceo says bankers still earn too much money. John cryan says managers need to slow the bonus process. Sources say deutsche might shrink the bonus pool by a third. The head of one Recruitment Firm says he has effectively canceled christmas. For more on these stories, had to bloomberg. Com. Head to bloomberg. Com. Anna peter is still with us. We were talking about the swiss situation. How does this look compared to other Central Banks . Put it in some context. Iser it is not as bad as it because of their qe programs and expansion, but it does tell us that direct fx intervention by the snb is probably not on the table despite the hawkish rhetoric that we have heard. It looks like that is not an option. They are going to have to move more towards deeper negative Interest Rates in order to get banks to loosen up their own balance sheet. Guy we have to rethink that one. Lets turn to the emerging markets and go away from what is whatning in switzerland to is happening in india. Joining us is the former head of the central bank. Thank you for taking the time to speak with us. Can i ask you a broad question first of all . Are you happy with the pace of reform that we are seeing at the moment . I think it sets the benchmark for the rest of the conversation. Bimal absolutely. On the whole, i would say that the reform measures taken by the government have already reflected in the kind of growth expectations beginning to take place. Anna does the defeat that the government suffered suggest that getting reform will take longer now . Bimal i dont know. I would not related to i would not relate the two. The party has formed the government at the center. They have to be responsive to the requirements of different states. As you know, there are a large number of states and they have different governments in power. The center has to make sure that the states are consulted, brought into the picture. The government is not doing. For example, in terms of the ds and services, texas taxaes. Taxes. On the whole, the situation is quite positive in india. Put inod to see that place. Most investors would probably agree with that. Given what you have said, is there the need for more stimulus from the central bank . What should he be doing right now . If you are comfortable with the numbers, does he need to do anything else . Bimal no. So far, as the central bank is concerned, there are enough resources, enough credit for the banks. Or six monthsgo ago, the Credit Demand was low. Now it is picking up. Positive Development Also from the reforms. Growth rate is expected to be about 7. 5 now. But the pickup will take some time. The government has already taken some action. For example, the national highway construction. They have started to build more than 4000 kilometers in our country. So some things are happening. As you know. At the moment, and it one of the highest, fastestgrowing countries. India is a bright spot. Anna let me ask you about how the bright spot fares if we see the Federal Reserve increased Interest Rates in december. That is increasingly the an assumed to happen by investors. Do you think the Indian Economy will take that in stride . Bimal of course. I think that what happens in the influence on what is happening in the u. S. Economy. If they decide to raise Interest Rates, we do not have any shortage of exchange flowing into our country. By and large, as you can see, we have a very positive outlook on the economy. Guy what do you think about mr. Rajan . Is he doing a good job . Should his term be extended . If he should not, do you have a name of someone who should replace him . Bimal who . Rajan . Please forgive me. I cannot comment on that issue. Do you think he is doing a good job . Bimal of course. There is no doubt about it. When you are looking at this problem from the outside, you have a different view. Having been there, with these results, you do this and with those results, you do that. They have to move with the circumstances. Tradeoffs hasse been growth and inflation. Inflation has come down, growth has come down. Do you think that that is a good thing . Is that the right course . As of now, the growth forecast is in the range of 7. 5 . And no inflation. Within india, there is the issue index, butumer price it is within the range of what the reserve bank says is satisfactory. Whole, weat, on the are in good shape. Anna thank you very much for joining us. The former governor of the reserve bank of india. On a number of pressures the Indian Economy and the emerging markets at large. Falling Oil Prices Putting Pressure on nigerian government, which could cut its benchmark rate despite the prospects of a rate hike in the u. S. What are we expecting today . Good morning. We are expecting that the central bank of nigeria will be announcing its rates decision today. There is some speculation in the market that the nigerian rates, and ifut he does, this would be the first time in six years. The argument for a lower Interest Rate is that it would support the president S Administration and fund the budget and compensate for a drop in oil prices. He had seen how oil prices have dropped over the past year. That has shaved a significant amount of the oil revenue that nigerias government receives. Guy we have got to leave it there. Thank you for that. Emerging markets and the Central Bank Decisions they are seeing this week. Bloomberg finance has posted its report, revealing a record year for Clean Energy Investment with china leading the way. The report brings further proof that the Clean Energy Center of gravity is shifting from developed to developing countries. Guy they visited 55 developing countries to compile the report. Amongst them was justin, who joins us from hong kong. Lets talk big picture. What are the main trends you have found . Trends one of the main is that Clean Energy Investment billion about 126 around the world, which is a new record. Before, what we found is a story of growth in emerging markets. For the first time, more than half of Energy Investment comes from emerging markets. The rate of growth for Clean Energy Investment in these countries has exceeded that of the oecd countries for the first time ever. That is a significant change for the first time and it is a story about the emerging markets leading the charge here. Anna really interesting context to take into paris. A far more nuanced picture than the simplistic emerging markets versus developed markets conversation we had seen in the past round. Moneyis spending a lot of and emerging markets are spending a lot of money. Tell us about the chinese story specifically. What can you tell us . Justin 55 countries that we looked at and china was one of these countries. China is obviously very big. It dominated the figures. China invested three quarters of the total, 90 billion. More than twice the number of the other countries combined. Which is, frankly, not much of a surprise. China is a large market, has very stable policies. It also has a value chain. It manufactures many of the wind and solar equipment around the world. China is a major contributor to this. This is a very interesting event for china to bring to the negotiations in paris starting next week. Guy talk to me about that. What are you expecting . What do you think the themes are going to be . Is it changing . We are getting close to this event. Do you feel that certain elements are in flux . Justin there is cautious optimism. Chinas top negotiator made the news by saying he wanted a hislly binding agreement, country wanted a legally binding agreement coming out of paris in december. All of this optimism is good, but what it means is a major question. One thing to observe is not really what china will do, but what india will do. They have made pledges with the u. S. From last year. Its economy is slowing. Its emissions are actually starting to slow. The next big question is india. Will india make any pledges . Or will they replace a china pollution problem with an indian one over the next few years . Anna thank you for joining us. Guy lets get the final thoughts from peter. It looks quite interesting from a market point of view. Up. Have cop coming that could have a meaningful impact on Global Growth. You have the paris story and the related terror story. With the fed, the ecb, the snb, ec, where are we going to be at the end of the year . Good time tonot a take an early vacation. I think we will see a very volatile runup to the yearend. That is the story. Session talking about yield spreads will be the key driver in 2016. Saidabout what is being and more about what the markets are pricing in. India is a good example. Central bankers on the dovish side, but unlikely that they will start cutting rates anytime soon. We will continue to see capital go into india. Raisingn the fed starts rates, we do not expect a mass exodus. Those are the winners coming out of the group. On the flipside, brazil looks like it is a difficult story. Not only an economic story that is unraveling, but a political situation in brazil that is getting more and more tenacious. One of those countries that i do not think will handle it well when the fed starts raising rates. Anna when we saw the taper tantrum, there was a great deal of tension around markets and assets fleeing from emerging markets as a result of what the fed was doing. It was fairly indiscriminate back then. It is going to be much more discriminate this time around. Peter absolutely. There are going to be winners and losers. That will make the difference between a good 2016 and not for most traders. It is going to be what is going to be the most important. Countriesa batch of that are starting to look more appealing. I think that is going to come to the forefront at the end of this month. Guy there is one crowded trade, and that is long european equities right now. Concentration risk in a number of places. What are the chances of some of those big trades unwinding . Peter we do not see that. While it is nice to be contrary and and look at Central Banks ping up asset pricing for from loose monetary conditions, it does not look like it is coming to an end anytime soon. In fact, the ecb is going to get more aggressive with a full suite of easing policy, as we expect, in december. That will only make things look even more appealing in the equity markets. We do not see that trade coming down anytime soon. I might be eating my words in a , when but historically Central Banks get loose, it means equity prices continue to outperform. Anna thank you for joining us this morning. Guy up next, we talked to the Company Bringing restaurant food to your front door. Next. M hsu is up anna welcome back. You are watching countdown. Lets get the Bloomberg Business flash. To repairwon approval most of its european diesel engines and questionable Software Reviews in 85,000 cars in the u. S. The ceo said that the cost of the fixes is manageable. Noble group may have its Credit Rating cut to jump by stand junk by standard poors. It is cutting the rating to the lowest measure for investor grade debt. And Deutsche Banks coceo says bankers still earn too much money. John cryan says managers need to slow the bonus process. Sources say they may shrink the bonus pool for its Investment Bank by a third. The head of one london Recruitment Firm says he has essentially canceled christmas. That is your business flash. One more to go. ,000 jobs are to go at hsbc part of a plan to reduce costs. The cuts in the commercial banking operation began last week and will be completed in 2017. That really is your business flash. Anna thank you very much. Guy lets move on. Switch gears completely. This start of is expanding to five new cities in asia and australia. Ets meet its ceo, william hsu not enough business in europe to keep you going . William cowan we are excited to expand to new areas. We are looking for areas with population density and supply. All of these areas meet that. Anna you have been raising money from different places. This does look like very fast growth. To scalewe do want quickly. In every new market we have entered for example, the first market outside of london was january and that was brighton. Our first foray into europe was dublin, berlin, and paris. We are in 30 u. K. Cities and about 20 cities outside of the u. K. Right now. In every market, we have seen significant traction. We want to bring deliveroo to as many people as possible. Guy how much is this going to stretch you . From london to brighton is fairly straightforward. Dubai and australia, that is a long way away. William it is all about the team. We have a fantastic team. Obviously, i am not the one doing everything. There are some unique challenges. On the marketing side, how you treat a customer in paris is going to be different to how you market them in london. The logistics side can be very globalized as well. In hong kong him a dubai singapore, a lot of the Restaurant Supply is in malls. A driver may have to walk far. We are trying to solve these problems through technology. In europe, everything is street level, basically. Anna is there a limit to how big you can get in any city . Do you have to say no to certain restaurants in order to keep your business different from others . Because there are other Services Like this. William we want to work with the best restaurants in your local neighborhood and get the food to you in about 30 minutes. That is our global view on what the customer wants. Guy are you a Delivery Company or Technology Company . Is the value in the backend, the relationships . What is it that i am investing in . William you have to think about it from a different point of view. We are creating an entirely new market. You could not get this food delivered previously. It is not like we are substituting a phone call and someone would have delivered it anyway. ,hen it is a brandnew market from the restaurants point of view, it is incremental revenues. All of this is powered by technology. That is how i would think about it. Is a small anonymous restaurant you are going after, though, it is only companies that did not do their own delivery before. William the vast majority of restaurants do not deliver. Guy it is scaling restaurants. Anna but you cannot take it very far, the food. William we are a hyper local business. That is a good question. A total Customer Experience of about 30 minutes. If you can order from the best restaurants in your local neighborhood, that is great. Getting it to you quickly is for the food keeping warm as well as a great Customer Experience. In our officeguys complain about how delivery food is really expenses expensive. Why is that . William because food is more expensive here in general. We charge the same restaurant price plus 2. 50 pounds. Anna are you in a sweet spot in terms of raising money . Do you feel like the door opened easily for investors . William i do not know what it is like for other companies, so i cannot comment on that. The team has done a great job executing. We have grown our business 10x and 25 month on month since inception. Guy the paris attacks, do people stay at home more . Not seen anyave significant differences in Customer Behavior in paris. Anna thank you very much. William hsu, the ceo of deliveroo. Guy up next, german gdp figures. The commodities have slumped. In week yet profits. Brussels was paralyzed with a prime suspect at large and the focus is in the streets. The west prepares to spend more on security we look on the war on terror. Welcome the countdown. We have breaking news out of Germany Expectations is the headline. Quarter on quarter zero point 0. 3 skied data line. Negative. Is this is the wl future banks and it ms. Priced. Time, letsnutes get bloombergs first word. Thank you. Brussels extended parallel warning a Islamic State terrorists plan to attack highly populated areas. One more day before gradually going back tomorrow. One person has been charged. The other 15 have been released. President trikes hold one says they will do the maximum impact. Travel Data Specialists say 13 is down. Mining stocks have german decline in asia with nickel trading at its lowest prices in six years following a route and industrial records. The imperial stock was down 13 in asia shares. Almostank was down five months into the rebound, the owner says they have to so the owners process. The head of one on the Recruitment Firm says the decline is counseled profits. For more, go to bloomberg. Com. Isa i wonder if christmas pricing in dollars because it may be hollering places higher in places. Or it may be getting weaker, for more of a chance, whether the thewould move it over 50 , week commodity story, that is something we are witnessing in the markets right now. 1516 ofons on the december. Guy this chart tells the total story. The u. S. Is widening out. Really driving everything right now in terms of what is happening in the empty space, commodity space and in particular. Anna lets bring in other voices. John is here. The senior joined by european columnist. I will start with you. Now,erman gdp story right confirmation 0. 3 banking on that what is a story for you . It is really it is right at consumption with the economy. We have negative contributions with that trade. That is the story for the advanced economy. We had a massive fall. And we seeing that the ruin Consumer Confidence, labor markets are getting a little better. Which is good. We have been lacking that. The the numbers the takeaway other than the confidence if you are relying on the german consumers, we are in that right . 0. 6 . E consumption that is the concern for the german economy. And then we had down expected my capital investment. That gets us to it overall growth and matches the preliminary reading which is 0 . This is consumer driven, guys. I was standing outside the newly opened berlin Shopping Mall mall the berlin the highest point of my career, i can assure you. We are back in the same, similar position. We are looking at the strong market here to increase spending and maybe give a little bit of a sale. In terms of longterm, it is not positive numbers, guys . Anna thank you. It is very consumer driven paired without beer assessment . Absolutely. In germany, it is fermented. Men s consumer momentum but what i think is happening is there is a plateau in germany. Theres inevitable and a acceleration. How hasce Business Confidence out of france, around europe or Consumer Confidence overall been affected in paris . Will we see a meaningful political in the data here . Even if we see that, it will be very sure term shortterm. That theerstandable real impact on the u. S. Economy is quite slow. Collects do you think a major do appear in capital you think a major you up in European Capital will be affected . Course, friday the 13th we had a collapse. Doing een people back to the shop. There is no way. There is some kind of reaction but take a look at the longterm impact said after after september 11, if you see that, it is extremely broad. After a couple of months, we have seen a gradually come online. But we have some more even which some people dont really agree this is not going to be what will be the major driver of economic collapse. It will be much more about the west the rest of the world. Anna they are working out just how much they can be trying to work out if the paris attacks have had a shortterm negative impact. Demand were just stored up and you get people spending or haveer it is people longerterm disturbances that they take a long time to bounce back from. I think, of course, it could be. Have longerterm disturbances that they take a long time to bounce backwhat we see now, looking bat the accounts and comments from the policymakers, this is very much even before this on the recovery of inflation, it is is weelation it were surprised when the message was so damaged and despite having a longterm the you, it is not coming back to do percent. Now when we look, we understand we have to reassess what is going on with the potential of actually getting in the longterm. Shortterm, there is Something Else which is a deep concern. Thank you. Stay with us. Guy we have an update and a crisis right now. We been looking at the business and strategizing. What is the future. What is he telling us. The company very much in crisis. We have much more firm rollsroyce. 2. 5 billion pounds off its value. The medium to longterm outlook actually remain strong. Major restructuring will the cost Savings Benefits from 2017 onwards. Changes that are more expected in the near term. They would change the mix of business from the ceo. It will streamline Senior Management and cut six. Their recent shortterm pain. Back to you. Guy all right, we will come back to that later. What expected in the near term. They would change the mix of else . Anna we have already started this. A Business Sentiment. 00, guy mark carney will testify before the committee. You will get a decision out of turkey. Anna we will also have that decision i week before the Federal Reserve. Barrel, below 30 a which is the oil minister says. We will have more on the continuing slump. Welcome back. 8 14 a. M. In frankfurt. We have an update on business. Thank you. Vw has won approval for the european diesel engines for questionable Software Reviews. The most executives and complexities. Democratic prison to front runner Hillary Clinton has attacked the merger under which the combined company will have it in ireland. Will leadsed merger u. S. Taxpayers holding back. As president , i will fight to reform it back and job creation here in the united states. We cannot delay in cracking down on emergence. Deutsche bank coceo says bankers have to 20. Managers have to slow the bonus process. Deutsche bank makes too much. The head of one Recruitment Firm says he canceled christmas. For more, go to bloomberg. Com. Guy thank you. Lets go to how the markets are for trading. A mixed bag. Slow over in wall street as we have a risky basket. Overall picture shanghai composite reports incurs reversing course. The hang seng will have pressure with a shares of chinese stocks in hong kong and also down. Withe back from a holiday a half a percent but we are seeing australia stocks out of a fiveday climbed down 1 and continued to see the mining stocks with the regional benchmarks. The hang seng features are hitting hard. Copper, nickel, falling. 2 in the shanghai market. Take a look at the shanghai market. Update. An sources telling us china has canceled recording requiring broker ricages. We are seeing i ching easing of control. Afterr sign of confidence we heard from the security regulator debt the ipo freeze after they give a green light for 10 new shares. That is how we ended the day. In the last couple of hours of trading. The ceoge chairman could be nowhere to be found. , shanghai regulator saying they did send disciplinary inspectors to go to the enterprises and six universities, including wind hangzhoing another company as well. Another company not rebounding all 2 12 on monday, down a quarter of a percent back to you. Guy thank you. Anna courtesy crunched is continuing. It has fallen to its lowest since 2009. Here with more details is ryan. What caught your i . Eye . Ryan the commodities selloff continues. Low so veryts 1999 long. Copper is one dollar and a metric ton. A citizen at citigroup saying platinum in addition getting hit like other commodities was hit by the dw scandal. What citigroup said was it was overdone. Platinum is a place where people need catalytic converters for their diesel cars, diesel car still hits cannot be hit and thats not forget you can use platinum in gasoline driven cars or petrol driven criers cars like in the united kingdom. Nickel down. You look at the miners leading the asian stocks 13 . The reason they are straightforward it forward is the demand in china. Increasingly, people talking about Dollar Strength and that is even eroding both demand from countries that dont have the dollar and also the countries producing more because there are hotspots for dollars strengthening. A gives more competitiveness. It is a double lenny. Double whammy. Guy what are we trading 42 . All 30 analysts we have spoke with says they dont togethers late next week that they will keep production exactly where it is. If they do bump it up, that will keep it for indonesia but it would not show it change the overall production picture. The saudis are getting what they want. The one on old lower the oil price. It is not having any affect just yet when it comes to overall supply. Unused u. S. Inventory. Ultimately, we have not seen the real magic of its. It is working in the sense in it southeast will keep at and the strategy of pumping like there is no tomorrow will continue. Anna thank you. Your first. Can we find a bottom . The venezuelans are talking about 55 oil right now. I think the commodity market is telling us two things. It is week. We see this generalized weakness, not just in the industry. The second thing is yes, china is doing that. 10 ,china was growing at production was at 2. 5 times the speed. This is a good indication that china is doing that. Demandxposed the growing in terms of consumption in china. Petrol. G more less than what we would trying to put people in a good mood, if you want to, in terms of medium terms, supported by the idea that there is a different commodity and supported by the manager. Guy you know that the Global Economy oil and another amount of materials. How important is the commodity story going to be the drive back it in 2016 . I think positive is always relative. We do have a view that some countries like china will see some stabilization. We believe the cycle is still looked at thee cycle indicated for a number of countries. From that, we have a few more years. We have a longterm forecast. 2018, 2019 u. S. In the meantime we have boosted by is a question if that is doing more for the consumer then what we have seen from the central bank. Anna does that counteract the negative effects . Many countries import and now see energy we have seen lots of worrying and headlines in particular with shale drillers in the united states. Balance the positives and the negatives of the oil price for the Global Economy . For the u. S. , we have seen investment feet very hard. It differs from country to country. In china, mostly concerned about smaller Oil Exporting Countries who have other former abilities like high debt. We will see that in markets. When we look at the advanced economies, they are all consumers. How would that we asset bubbles . Banks andt central you are wondering how in earth would they keep the rate part flat as is is and not certain parts with consumers . Clear that there are more focused on gross momentum. Are here in the ecb city have a simple objective which is a credibility, when you aboutsee it, it is more the interestnd rate. Its exact same story. Are having massive levels being built into the financial system, corporate system as well. When you look at the earning u. S. ,ions in 2015 in the its dropping. Yet the stability. Anna the point of these macro credential tools instead of using the Interest Rate, that is what it was designed for. Pricehink the rule of the is to match supply and demand and more importantly to allocate capital. I remember when my parents were buying a flat and it was based on volume and not on price. The pride of money is here. To lead the capital to be invested. I think you can almost make a follow when the interest way policy at a sluggish followed positivity and momentum is not accelerated. Guy thank you both. Jon will stay with us. Thank you very much. Anna up next, the westin government and has a bring the fight against Islamic State. The war on terror, next. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. It is 7 30 in london. It is 8 30 in frankfurt. We are less than 30 minutes away from the european open. Lets show you what is happening. If you are a terminal customer, you have the opportunity to take a look at this on your desk. This gives you the fair value calculation and it is pointing. O a slightly negative open yesterday, it was about what was happening with the minors miners particularly. Copper and nickel price at a sixyear low. All of that in the next in the asian session. With the fed story story right now. The expectation of the markets around a december hike in Interest Rates from the Federal Reserve is up to 74 . We were in the mid30s in october. It was 74 when we made the graphic. I have not checked to see where it is now. It appears to be increasing in probability. We are going to be seeing this rate hike delivered by the fed. Firstget your bloomberg word update. Brussels extended its highest level terror alert into next week, morning Islamic State terrorists plan to attack highlypopulated areas. Schools and subways will be closed for one more day before reopening tomorrow. One of 16 people who was arrested was charged in the attacks in paris. The other 15 were released. France launched airstrikes. President hollande says he wants to inflict the maximum damage on the Islamic State and will intensify the operations. Passenger bookings to flights arriving in paris for the christmas per is down 13 from last year. Iod it says that a jump in cancellations after the attacks has eased, but new bookings remain dramatically below last years levels. Mining stocks have grid driven have driven declines following a route in industrial metals. Industrial stocks are down 13 in asia this year. A new survey shows the majority of britain backing plans to leave the european union. Questionede preferred to leave the eu. Prime minister David Cameron has promised a referendum on the matter and wants to renegotiate riddance terms of membership. Deutsche banks coceo says bankers still earn too much money. Almost five months into his revamp of the country, the company, john cryan says managers need to slow the bonus process. The head of one Recruitment Firm says he has effectively canceled christmas. These stores and others, go to bloomberg. Com. Anna thank you very much. Guy canceling christmas. Serious business. Governments step up the fight against terrorism. Thanwe will invest more 178 billion pounds in buying and maintaining over the next decade, including doubling our investment in equipment to support our special forces. Thee increased the dis size of our deployable armed forces. House i can tell the that, by 2025, we are increasing the number two 50,000. Anna lets bring in ben katz. And also a senior principal analyst. To the program. Ben, give us some context on what we heard from the u. K. Government. In 2010. Eeping cuts some of these announcements had quite a long the time. The industry has been intensely anticipating this. It has been the chatter since cameron won the election. This is the first review since 2010. Some things we werent necessarily expected. Boeing was awarded the contract. Aerodynamics being involved. The third big one is lockheed f35s toting its join the u. K. Air force. The big question that came out of it is benefits for the u. K. Supply chain. They have a big exposure on the f35 program. At the same time, there is a ups. Aurant whether bae one we also have the type 26, a warship that the u. K. Was planning on purchasing 13 of, but now is looking at only buying 8. Guy this has been a long time coming. The Defense Sector has been anticipating this or a long time. How much did the events in paris change the thinking . Have we seen any shortterm revisions to where we are going to spend money in the u. K. . This is something we very much expected last week after the awful attacks in paris. We thought there would be some lastminute revisions. To say whatifficult it looks like before that. It is possible that there was an additional emphasis on specifics. Guy more money or a change of emphasis . Guy a. it is impossible to say. The risk existed before. Inis very difficult to say that sense. Certainly, there was very much an emphasis on this area. Harris was mentioned specifically. Anna this is not just a defense review, but industrial strategy. It is about trying to help these businesses export as well. It is not just about how the u. K. Government spends, but how it positions u. K. Manufacturing in this sector for exports to the rest of the world. Guy a. that was particularly interesting. We saw a commitment to a refresh , Defense Industrial strategy. We saw the government putting more of an emphasis on supporting exporters. We saw this in the 2010 one. It is really built on it this time, though. To helpic office negotiate the governmenttogovernment green agreements. Guy what kind of market are we going to be exporting into . How changed, how different is the worst looking . We have a situation where you wonder how many countries are going to make that 2 . How many countries around the world are going to be changing their thinking in terms of where they spend the money . How does the export market look . Ben it is always a doubleedged sword. It is actually looking quite promising. There are some conflicts that have built up over the last couple of years. We are looking at eastern europe. The when you, poland. Ithuania, poland Southeast Asia is a really promising market. Countries like malaysia, thailand, the philippines. Around the shipment, maritime and the navy. That is due to china and the south china sea. China is building of these faux islands. They claim they are a portion of the south china sea. Russia,hing china, and the third thing would be the middle east. A huge conflict going on and saudi arabia is obviously involved. Of course, what is happening with isis. Anna which of the business is do you think are best positioned to sell some of these products postparis . We have seen some defense manufacturers doing quite well in terms of their share price. Anticipating that there could be more sales from some of these businesses. Are there certain areas that stand to benefit . Guy a. i would agree with his comments. Paris, if we after look at the responses from the western powers in terms of their strikes on syria, the companies that could benefit are those who make countermeasures, protective systems. Guy lets talk about rollsroyce. Now. Rily a civil business is this company just in a bad place because of where it is cyclically, putting its new engines into the market . Or is there something structurally, longterm . Short to focus on the term, which makes me think this is just another little bump. Ben it is a combination of both. Aerospace airbus and boeing are bringing a lot of profits with a lot of orders. Traveling demand is expected to grow exponentially over the next 10 years. They actually sold their engines at a loss or breakeven and they are recouping those revenues back from maintenance. Ch means that rollsroyce they are doubling their output of engines over the next couple of years. Whenwill lead to revenues we get to the aftermarket stage of that. That is further down the line. What he needs to focus on now is how to whether these changes in demand. We talked about this massive increase and escalation of travel. It does not necessarily go in a straight line. It goes in troughs and peaks. He says there is an inflated Senior Management and he wants to fix costs. He says there are way too many costs that are unnecessary. That is a structural thing and an historical thing that comes from his predecessors. Anna it is a seminal time for rollsroyce. The civil side and military side. Is this on your radar . Guy a. it is in terms of the military side. They are in a difficult position along with the rest of the industry, particularly western markets. The decline in recent years is now recouping. As as bad4 and 2015 as it can get. We are on the way up now. They certainly did suffer. There was a reduction in orders. Guy where do they take this business longterm . Does the power by the hour model work and how is it different than the strategy that ge put in place . They have different problems to deal with, but compare and contrast the strategies. Been in theyce wrong place . It has been wide bodies. It has had a focus at the top end of the market. Being emphasis at on being at the narrow end of the market. On the maintenance side, they are well positioned. It is about the commitments that Airlines Make two rollsroyce. It is something that ge and Pratt Whitney are starting to emulate themselves. It is a model that they quite like. What it has done is that it is really only in the widebody market. To produce for narrowbody aircraft in 2012. Since then, they have not really had any exposure to what is the fastestgrowing Aircraft Market in the world. They have said and his predecessor said that it is a market they are looking to get back into. That obviously produces another level of issues. There is a big question about whether they have the cash flow to fund that investment. It looks like they do. The presentation outlining his operational review the spark. Anna and he has activist investors to deal with as well. Thank you very much. Guy up next, we get French Business Manufacturing Confidence data. This does include the period after the paris attacks. We will see if there has been some blip or interference with that data as a result of what has happened. We will bring you the numbers when we come back to when we come back. Anna welcome back. You are watching countdown. Lets get to Bloomberg Business flash. Vw has won approval to repair most of its rigged diesel engines and have questionable saw where reviewed in 85,000 cars in the u. S. Their ceo told companies that the cost and complexity of the fixes are manageable. Noble group, the commodity trader battling criticism, may have its Credit Rating cut to junk by standard poors. The Ratings Company says it is placing it at the lowest level for investmentgrade debt, on review with negative implications. Deutsche banks coceo says bankers still earn too much money. Almost five months into his revamp of the company, he says the bonuseed to slow process. They may shrink the bonus pool for their Investment Bank by one third. The head of a larger recruitment yan has effectively canceled christmas. Anna thank you very much. French Business Confidence numbers out this morning. Guy the confidence number coming through at 102. That is exactly where we thought it was. Let me show you the trend so you get an idea. This data does include friday the 13th. Not much of an effect in terms of what we anticipated. , the front low point end of 2013. Since then, the number has been coming back a bit. Are we going to see it quite tell . See it plateau . Too early to say at this point. Anna also getting some breaking news from allianz, talking about how they want to target an average of 5 per year eps growth from 20162018. They are giving various other metrics. Great story on the bloomberg terminal. In three charts, the challenges facing this business. Stagnating process profits, rivals closing in. They were recently talking more positively about that. The update coming from allianz, average 5 a year eps growth from 20162018. , let me take you back to this chart. How much of that is down to the ecb . Jean i think a small part is down to the ecb. A big chunk is down to the french government, which have finally been implementing some reforms. Kind of a tax freebie to corporations, which is helping to boost Business Confidence. The only caveat is that this kind of rebate is not enough savings. There is a question of the sustainability of this kind of problem. More broadly, you think we are living in a world of scarce growth. How optimistic are you going into 2016 . Jean we are quite cautious on the economic momentum. We see emerging markets slowing down significantly. We see the u. S. Economic momentum, we still have significant jobs numbers. The numbers of industries creating jobs is actually negative. It is more concentrated on small numbers of sector growth. Inventories are growing faster than sales. Production,ustrial at the beginning of the year, was growing year on year. Today, it is very it is barely positive. A much slower economic momentum. Guy that is why people are nervous about u. S. Equities. Equities thepean right trade . For twodo not think so reasons. Europe is not insulated from the rest of the world. If you have the rest of the world slowing down, europe is also impacted. And also, people are betting on european equities going higher because the euro is getting lower. Do you make more money as an investor because you make 10 on the dollar gaining 10 or european equities gaining 10 . It is basically a zero sum game. Anna how much are you focusing on trade next year and the trends in global trade . Picture Global Growth and a slump in trade that we have seen. Jean we have seen competitors around the world and china, the manufacturing sector, when you , we are in ppi negative territory. We have very strong Deflationary Forces in trade. We almost get the wrong kind of inflation. We are struggling to pass price increases. On the other hand, when you look at cpi numbers, they are gradually grinding higher in europe and japan. You might have corporations facing some kind of pressure around wages. On the other side, you have with prices increases. It is avoiding Cyclical Companies that focusing on companies which have strong pricing power. Guy Central Banks keep telling us they are going to raise inflation. They are not raising inflation. When are we going to admit defeat . Jean you touched on a very important point for next year, the Central Banks credibility. To boost Economic Growth and inflation, no. When Financial Markets are going to recognize that they are not. Agicians as for Central Banks, they are between a rock and a hard place. The only strategy is to keep doing more, but for investors, the danger is that we are building more and more risk into the system and that is something we need to keep in mind. Anna thank you for joining us. Guy markets open in five minutes. On the move is next. Jonathan french Business Confidence in line with the previous month. That is a decent sign. It has not dropped off in the month of november. We will dig into that and the gdp as well. Also in line with the previous figure. It is domestic consumption, both private and government, that is driving the economy now. It is a slowdown abroad. We will look at the outlook for europe with Goldman Sachs at the top of the hour. And the big question for the whole of the city of london, Deutsche Bank coceo coming out and saying that bankers are still being paid too much. Compensation structure has changed radically. Lets not pretend that nothing has changed at all. We will talk about that after the break. Anna people talking about how he has canceled christmas. Guy that is it for countdown. On the move is next. See you tomorrow. Jonathon good morning and welcome to on the move. I am jonathan ferro. We are moments away from the start of european trading. Canceling christmas. The Deutsche Banks coat ceo talks about compensation. He says bankers earn too much. Looking for liftoff. The odds the Federal Reserve will raise rates and climbs to 34 . Germany, relies on private and government consumption for growth as the local slowdown the global slowdown ways on europes largest economy. Miss myeet conversation with Goldman Sachs. As we go to the European Equity market, commodities are still front and center. The slump on producers in asia yesterday. European stocks impacted. They dropped with the biggest slide in more than a week. What will we see today . A look at the european equities across the board. Ftse 100 slid best pretty pretty flat at the moment. Still waiting for the dax to open. Well comeeaker as down by two tests of what percent. Those commodities are still putting pressure on the stoxx here in europe. Speaking of which, lets take a quick check of these. Starting with the oil price come both wti and