Transcripts For BLOOMBERG Countdown 20151207

I am manus cranny. Anna it has just gone 6 00 in london. We have a good chart. Manus flashing in green. It breaks the 40 a barrel level. That is incredibly important. You saw the cash market for brent drop below 40. Of course, this comes on the back of a rather dysfunctional opec meeting. Anna we will get further , but they are quite we will on oil in 2063 talk to Societe Generale in 2016. We will talk to Societe Generale. Retest thesen lows. You are seeing a buildup in the 38 put options. Investigators are taking a big at that we will see wti down 38. The volume is tremendous. Anna good morning, caroline. Caroline Energy Stocks have slipped after opec gave up all pretenses of acting as a cartel. Pumping in an effort to squeeze out rivals such as russia and the u. S. Wti crude is once again below 40 per barrel and their is a Record Number of beds that it will fall below 38. President obama described last weeks shootings in california as an act of terrorism. In a rare speech from the oval office, he addressed the threat of terror at home and abroad and called on congress to pass tougher gun laws. Evidence that the killers were directed by a terrorist organization overseas or that they were part of a broader conspiracy here at home, but it is clear that the two of them had gone down the dark path of radicalization, embracing a perverted interpretation of islam. They stockpiled assault weapons, ammunition, and pipe bombs. This was an act of terrorism designed to kill innocent people. Caroline terrorism and the refugee crisis have also come into play in rantss regional in frances Regional Elections. The National Front has taken more than 27 of the vote, followed by Nicolas Sarkozys Republican Party, and trailed by socialists. Llandees inflation and an unprecedented recession have left many venezuelan voters want to change. They have also been hit hard by the falling oil price. The imf expects the economy to shrink 10 this year. Economists we spoke to see inflation at 124 . Lowered theirpan reference rate. The dollarame after rose on expectations of a u. S. Interest rate hike following strong jobs data on friday. In the british army has been storm lefter a rare several northern towns and cities flooded. Rainord 314 millimeters of fell in the Lake District over a 24hour period. Back to you. Manus lets get a check on the equity markets in asia. Post211,000usly on friday, playing the catchup game. Good morning to you. It was a pretty good start for the region. We have seen a little bit of a fallback Late Afternoon trade. The cost be is closing lower. For an coming through out of korean stocks with the won weakening once again. Chinese regulators coming through today with some more rules to try to stem that volatility we saw back in august by restricting the amount of time that we can trade on the stock futures. More in line with the cash market. In hong kong, a pretty good session. Up by. 3 . Japan climbing by 1 thanks to some Good Movement from the exporters. Australia closed pretty flat, weighed down by the weaker oil price. Of course, the oil price has been the order of the day. We have seen some big weakness coming through with crude slipping below 40 a barrel. One of the worst performers in the region. Origin energy is also weaker and cnooc trading down by 4 . Lets look at some other movers. Saying it wills fire another two executives. The summer rout continues. Having aof shins you pretty weak trading day in hong kong. Mcgrath is a real estate agent. It had an ipo price that was 2. 10. Its issueout 13 from price. Generally a positive session, just those oil layers and a couple of equity movers in the red today. Manus thank you very much. That takes us nicely to the probability of a rate hike. If you check in on your function friday, it was 74 . The first rate hike in a generation coming from the federal reserve. This was progressively present. A little bit colloquial . Anna certainly encourages people that the fed is going to move. Amazing that we were 70 in the middle of october. Lets get more on the news that u. S. Crude is trading below 40 a barrel. Opec has technically given up on acting as a cartel. We are joined by the global head of strategy and solutions at Societe Generale. What does this outcome mean for oil prices . Tell us what it means that they have stopped acting as a cartel. Ryan the feeling in vienna was very bearish. It was one of the most chaotic conclusions i had ever seen. The idea that oil closed below 40 a barrel on friday, if you are a chartist, i was talking with jason at Prestige Economics and he is very negative. You have a Closing Price of below 40 a barrel on friday. You are below the 30day average. You are below the 100day average. The volume of put oil below 38 weel in two weeks time are now five times the daily average. If you are looking at the charts, there is nothing good out there. Igns inre lots of sell s the market right now. It started before we got this chaotic conclusion, this word out of the opec meeting that they would allow the target to increase. Before that, we got the jobs number, which is also bearish because it means that the fed is that much more likely to raise rates, which means there is less money sloshing around to buy oil. Manus when you look at what happened in the meeting on . Riday, is it the end of opec people have been saying that for decades. What do you make of this debacle . They decided to officially pump more. Guests what is really happening is that a lot of these countries rely on oil to meet their budget requirements. The lower oil goes, the more volume they need to pump to keep the dollar cash revenues constant. Oilwould assume that lower should create a balancing act between supply and demand and we are not seeing that happening. With that being said, our view is that the oil price should stabilize and rebound in the next 12 months. Anna ryan pointed to the shortterm possibility that we get weaker in the shortterm and say, you get 60 by the end of 2016. Kokou on the shortterm, it is clearly possible to have more momentum. Towards the downside. That is why you have systematic who like tofunds capture a trend. That is clearly possible. The key thing to remember is that it is part of a phase and there is enough of a balancing act for the oil price to stabilize. Anna the low oil price causing havoc for various countries. Venezuela, some news surrounding them over the weekend. Ryan it is bad for all of them. 11 out of the 12 opec members cannot balance their budgets in 2016 at this oil price. Venezuela suffers more than all of them. Venezuela is proposing a 5 production cut. We got this parliamentary vote still being counted. This is what the venezuelans were concerned about. The Venezuelan Oil minister stormed out of the meeting yesterday. He was really disappointed. We are seeing the worst fears for the government. Seats up forof 167 grabs going to the opposition. That gives them a simple majority. It does not give a qualified majority, but it is definitely a problem. You look at the imf forecast for growth, 10 . Manus i want to bring you in on another commodity, iron ore. It is below 40 a ton. This has got consequence as well. A lot of people would not necessarily argue with 60, but iron ore and the commodity under space under pressure. Is it the bottom . Kokou that is the milliondollar question. In mind isve to have the emerging markets lowdown. At the end of the day, emerging markets are where you have Energy Intensity at the top of the range. When you have a slowdown for a lot of countries, it is no surprise to see Commodity Prices suffered. Oecd elephant in the room. You have to worry about the economy and balance supply and demand. It is tough to call the bottom, but over a 12month view, we should see prices stabilize or be higher from your than lower. Was sayingcolleague that Commodity Prices are bottoming out. Thank you very much. Brian, thank you to you as well. At whatere is a look else is ahead on the agenda today. Mark carney will speak at the Eu Parliamentary Committee in the afternoon in brussels. Bullardter today, james will speak about the u. S. Economy and Monetary Policy. Manus up next, we are talking terror. President obama says the California Shootings were carried out by radicalized muslims and the National Front makes gains in france on the backs of the terror attacks in terror attacks. Anna welcome back. You are watching countdown. Lets get the Bloomberg Business flash. Caroline barclays cut an additional 20 of Investment Banker staff. Most of this was in asia and the global cash equities business. Their ceo seeks to shore up profitability. An cuts come on top of existing program to eliminate 7000 jobs throughout 2016. Says it isities unable to contact two of its executives, adding to the turmoil at a brokerage that is being investigating investigated over the china stock route in august. Mediatecpointed to reports saying the two may have been taken away by authorities to assist in an inquiry. Ford is recalling as many as 452,000 cars, most of them in the u. S. , due to concerns that fuel tanks in 2010 and 2011 ford fusion and Mercury Milan models may crack and leak, causing a fire hazard. Back to you. Anna thank you very much. Dominates the headlines with president obama describing last weeks shooting as an act of terrorism. Meanwhile, the refugee security situation in france and the National Front party are enjoying success in the first round of Regional Elections there. The latestll have from paris in just a second. First, hans nichols, we have been watching what happened in the u. S. You cover the white house for many years. What is the president trying to accomplish with this address . Hans clearly trying to reassure the nation. Oval office for serious, somber addresses. It is only the third time he has used it, trying to warn isis and let them know, we will defeat them. He did say that the threat was complex, but more difficult to detect. We will overcome it. We will destroy isoand any other isil and any other organization that attempt to harm us. Will prevail by being strong and smart, resilient and by joining upon every aspect of american power. He said there was no evidence that the alleged attackers were in contact with figures from the islamic state. He launched a strategy review talking about a year things differently, especially with the visa program as the wife of the alleged attacker did come in on. Also urging Law Enforcement to revamp and tweak their use of technology to try to prevent future attacks. To, ifthis comes down you look at the conversations, he is criticized for it only being 13 minutes. A line saying it was reactive, indirect, and incremental strategy. This is what obamas critics are accusing him of. Is that the crux of the counterargument . I dont think it is fair to judge it on the length of the speech. Speeches can typically be quite short. George w. Bush did some short ones as well. Pretty much all the republican candidates have criticized president obama, the man they are seeking to replace. One of the criticisms that did not come was from paul ryan, the newlyelected house speaker. He and obama are trying to have a productive relationship. He said he was disappointed, no new plan, and a halfhearted attempt to distract from the failing policy. That is a partisan charge from the new speaker. I will be interesting to watch affects theire ability to work on other issues, funding the government, moving forward on a variety of fiscal issues. It seems like president obama has not just disrupt disappointed the republican president ial candidates, but the party at large. Francesoline, farright National Front has made gains. The first time voters have gone to the polls since the terror attacks in paris. This is quite a historic victory. Give us the details. Caroline yes, it is the First Political test since the terrorist attacks in paris. It is a wave of dark lou over the map of france dark blue over the map of france. The National Front is leading in six out of the 12 regions in mainland france. The socialist party, the governing party of francois hollande, is only leading into regions in two regions. The current defense minister played a big part in the response to the terrorist party, the sarkozys Republican Party, is leading in four regions, including the paris region, frances main region with 12 million people. Marine le pens party has been playing on the fear of radical islam attacks. Leading with more than 40 of the vote. This region is in the north of france for you have a refugee isp and the other candidate the niece of marine le pen, only 26 years old. She is leading in the southeast of france, which is at the Mediterranean Border where there is also the fear of migrants. Last nighten spoke and said the National Front had become the first party in france. The people expressed themselves and with the people, france raised its head. This confirms what former butots had announced official observers did not want to admit yet. The National Movement is without partyntests to the first in france, meaning it is hardly represented in parliament. Manus thank you very much. Lets see how that all plays out across the spectrum. Kokou is still here with us. When you listen to the american political issues over the weekend, it is dealing with the reality of terror. Lets try and think about this. Is at superhigh levels in terms of his personal ratings. Here we are with the far right exceeding potentially to power. From a broad euro perspective, what are the risks here . Kokou it as to the Political Uncertainty with respect to the programs or the witness to investment in growth. Also, a lot of the budgetary austerity that were applied to some countries in europe. I think the markets are likely to not necessarily react positively to an environment where you have more uncertainty and lack of consistency with the different political programs. We potentially could see more volatility over the next few months. You also have to think about brexit as well. That could drive the debate. Anna is that something that will have an impact on markets . Is that going to be more tangible or markets to get their head around . they are trying to ascertain the possibility of a brexit. A 45 possibility, on the high end of the spectrum. The clear message here is that Political Uncertainty is going to be a key. Manus picking up on that theme, the danes had a vote on the third and they kept the focus on justice first. Does this embolden the hand for cameron as he tries to renegotiate . That it is aclear bargaining chip and will create more uncertainty and debate around this topic. Anna thank you. Weakens its pboc reference rate as pressure builds from a potential fed rate hike. The latest on china is next. Manus it is 6 30 in london. This is countdown. Lets get the first word headlines with caroline hyde. Caroline stocks have slipped after opec gave up its pretext as a cartel. Inhas said to keep pumping an effort to squeeze nonmember rivals such as russia and the u. S. Wti crude is once again below 40 per barrel and there are a Record Number of bets that it will fall below 38 in the next two weeks. President obama has described last weeks shootings in california as an act of terrorism. In a rare speech from the oval office, he addressed the threat of terror at home and abroad and called on congress to pass tougher gun laws. The outlined the new authorization of force against the islamic state. We have no evidence that the killers were directed by a terrorist organization overseas or that they were part of a broader conspiracy here at home. But it is clear that the two of gone down the dark path of radicalization, embracing a perverted interpretation of islam that calls for war against america and the west. They stockpiled assault weapons, ammunition, and pipe bombs. This was an act of terrorism designed to kill innocent people. caroline terrorism has also come into play in frances recent elections. According to early polling data, the National Front has taken 47 of the vote followed by sarkozys Republican Party and trailed by hollandes socialists. Manus talk us through the markets. U. S. Is playing the catchup game. What is the market looking like . Caroline ramifications of the United States jobs data spilling through into europe. We are seeing gains across the board. The nikkei 225 leading the charge this morning. We are seeing more optimism about the u. S. Economys ability to strengthen despite what we expect to be the first rate hike in almost a decade since 2006. Do keep your eye on some asian markets. Asiapacific in the green. It is the exporters faring particularly well. Honda selling cars into the u. S. The yen weakening versus the dollar. Keep an eye on the weakening currencies. Kiwi is feeling the impact the most. The u. S. Dollar strengthening. , 78 factoring in a probability that we will see a rate hike come the next meeting. Keep an eye on the kiwi and oil. We have been talking about it all morning with ryan and your guest. Oil is lower. Opec basically saying we are not going to stick to production targets. Instead, we are going to be squeezing out the u. S. And russia. It is about market share, not market price. All stocks falling across the likes of asia. Exploration is also trading lower. Look at that chart. One week, off by almost 5 . Could it go even lower . Clearly, much of the ramifications spilling manus 38 is the options trade you want to look at. Caroline hyde on the markets. Thank you. Anna Chinas Central Bank will publish Central Reserve data this morning. The forecast is for a drop just below the 3. 5 trillion mark. , whospeak to enda curran joins us from hong kong. Why are their expectations that there will be a fall in reserves . A good morning. This is an important set of numbers we are going to get. It will tell us a lot about capital outflows in china. Ago, money was leaving the country at a record pace for the devaluation. Was burning through their own reserves at a record pace. Aroundrom 4 trillion to 3. 5. If the reserve picture continues to head south, that may stoke fresh fears that capital is again leaving china. Somewhat, thats will add to the views among some at the capital outflow story has eased off. We have had all kinds of outflows in recent months. They have already taken steps to clamp down on money illegally leaving the country. If we turn to another part of the story, the chinese yuan, it fell the most in a week. I suppose that the debate is, are they prepared to let more volatility coming to that currency picture . This is the really critical question Going Forward the next few months in china. There is the view that they will have to be on their best behavior until september. The temptation must be there to allow the currency to weaken just to help the export base a little bit. Really, there is a lot of pressure. The policymakers have been keeping it under despite the broader pressure. That was part of the broader story. Itis difficult to see will be interesting to see what tactic china takes on the market Going Forward. ,ight now, the policymakers whether or not they give in to that temptation remains to be seen. Anna thank you. Manus this week, chinas machine goes into overdrive. Inflation,es, industrial output, retail sales, property, and investment. Anna lets get more from our guest. Lets talk about where the chinese currency goes. 6. 46 is where we are trading at the moment. You think the chinese currency will weaken. It is the path of least resistance to weaken gradually. A target of 6. 18. As one of your guests mentioned, china is still very much exportdriven. Letting the currency weakened is a boost for exporters. We read out a veritable feast of data that will come out later this week. Give me the socgen view. One of the journals this morning saying that 36. 5 is more likely. They are going to drip feed it kokou the view is that the growth is slowing down, but the pace of the slowdown will be measured. 3. 5 trillion in reserves. Is that ultimately the hse i index, one of the main indices in china, is cheap from valuation from a standpoint. Anna do you buy those companies , the rise of the consumer . Rather than the companies that are paid to old pegged to old china. Kokou i think it is the Consumer Spending story rather capex and highintensity part of the market. There are themes that are multiyear long that investors should consider and are likely to perform. We had this move in the renminbi. The other story is about sovereign wealth funds investing themselves. With those big headwinds, reducing currency from china, sovereign wealth funds reducing their bets, are you worried about 2016 . Kokou it will probably be a charging year similar to 2015. One of the key lessons is that no plan goes according to plan. Volatility is here to stay. On we do remain constructive assets globally. For the patient and longterm investors, volatility and a global, diversified portfolio of equities should be the way to go. Patience. Anna all things come to those who are. Last week, investors expecting brought action from the European Central bank. Spokeent mario draghi over the weekend in new york city and defended his decision while vowing to do more if needed. We need to consider the package being proposed by the committees as exactly the right one. Clearly, as the markets have demonstrated, it was not a package that was meant to address market expectations. It was a package that was meant to address the reaching of our objectives of inflation. If we had to intensify the use of our instruments to ensure that we achieve our price stability mandate, we would be we would. There cannot be any limit to how we deploy our instruments within our mandate and to achieve our mandate. Anna mario draghi speaking friday in new york. Manus i love that line that he used. Lets bring our guest back in. Not a package meant to address market expectations. It was meant to address our objectives. What he went on to say was the markets have been disingenuous with what he did on thursday. Dalio says doay not fade mario draghi. Do not try to run against it. What is your take . What is the takeaways . Away is thaty take the ecb is looking to be a gradual and progressive, but ready to act. Mindther thing to bear in is a lot of the week inflation print is driven by the low oil price. This limit and the ability for Central Banks to increase Inflation Expectations that dramatically in the shortterm, draghi isuggie looking for the underlying drivers of inflation linked to the economy, rather than the headline and shortterm expectation of the markets. Saying thats news, there are other players in the drama and windy governments around europe to do more. He said that so many times. Do you think 2016 is a year where markets focused in on what other actors are going to do . Kokou this is an excellent point. In 2015, we had several of Central Banks ability to control asset prices being questioned. 2016 has to be a year where it is a combined effort from governments and putting through stimulus packages and restructuring arms for the Monetary Policy to have its affect on the underlying economy and jobs. It is about the transmission mechanism of Monetary Policy. The ecb cannot do it all. At thisave a look headline. This is on our bloomberg first word. The bloomberg inflation surprise index. It rises the most in four years. This is from citi. They are saying, you can see this movement and inflation. That seems to be coming through. Perhaps that is one reason why it is just held back a little bit. Or am i being overly benevolent towards mario . Onou i think you hit it point. This is where the ecb and most Central Banks look at a range of metrics rather than just the equity markets. It is important for a central bank to be measured in a way to apply Monetary Policy. Manus by the way, you still have a negative number. What about oil . Everybody says, oil is going to drop out of the numbers. It is going to get a lot better. Do you go with that . About theyou think global economy, the u. S. Is the biggest contributor to that global economy. It is seeing a pretty rapid pickup connectivity. In activity. You should see inflation pressure start to come at some point. Our view is that inflation is going to be the surprise of 2016. Anna thank you very much. Manus chinas president has pledged 60 billion in funding to promote corporations and support Development Efforts in africa. Good day here. Tell us more about this. The headline is pretty fantastic. Take me behind this story. Good morning. China is bringing big money to africa. This at a time when a lot of economies on the continent have been affected by declining Commodity Prices. China itself is facing slowing growth. Pledge madeion u. S. By china. 400 business delegates attended. Billion worth of interestfree loans as well as 30 billion of financing, export credit lines, and conditional loans. It is clear that china is bringing the big game to africa. Looking forward to other markets where it can expand its economic growth. Anna they seem to be doubling down on their commitment to africa at a time when the growth is being inhibited by sliding Commodity Prices. Four of the 10 fastestgrowing economies in the world will still be in africa next year. That is according to the chinese imf. Emphasized that it will benefit both china and africa. The chinese seem to be awakening to the fact that, 30 years after building industrialization, the competitive advantage that they had from cheap labor is fast slowing down. They need to look to other markets, such as africa, to increase their trade. Back to you. Anna thank you. Manus up next, u. S. Oil trading below 40 a barrel. As we said at the start of the show. What could the next issue before the oil markets . Anna welcome back. You are watching countdown. There is caroline. Caroline barclays may cut 20 of its additional Investment Banking staff. Seeks to shore up profitability. On top of and come existing program to eliminate jobs. Citic securities says it is unable to contact two of its executives. Citic has pointed to media reports suggesting they may have been taken away by authorities to assist with an inquiry. Is in talks to sell a 5. 9 billion credit or folio. Spent thef the firm weekend in talks to sell the asset. They have been trying to shore assets after the arrest of its billiondollar founder. Manus the magic number on friday was 211,000. The dollar came off. You had the euro rally. Thentially handing the fed opportunity, less contentious in terms of hiking rates. Anna there is now a 78 chance according to wirp. A weekssg in just time. Would that be your expectation . Kokou absolutely. It is pretty much well given in terms of signals by the fed. One of the key questions will be the pace of the hiking cycle this time around. Manus the main story on bloomberg was that the dollar traders did look at the green light. It has come off that 12year high. It means the fed meeting and the News Conference will not be ravaged by strong dollar conversation. And fed. Ecb three months ago, that probability was 25 and has gone up by significantly. Is whole Dollar Strength valuation. Ed in in it is not the first rate hike. It is going to be the third. Only at the third will you be able to see the slope of that adjustment. Anna stay with us. Lets talk about oil prices. Opec gave up all pretense of acting as a cartel. Pumping in anep effort to squeeze nonmember rivals such as russia and the u. S. U. S. Traded crude is once again below 40 a barrel. There are a Record Number of bets that it will dip below 38 a barrel in the next few weeks. With the ceo and chief economist at arabia monitor. Great to have you in the studio. If we look at the biggest issue, it is this. We are breaking 40. The cartel is in disarray according to most peoples opinion from fridays meeting. What are people telling you about this . T i dont know why people are so surprised about the way in which this cartel is behaving. It is behaving as a cartel. That does not mean there is consensus on every decision. Influential players inside it every time it so hasens that saudi arabia pulled it out of sovereign markets. It has carried the day in terms of influence on this cartel. Iran and rivalry with the coming iranian supply in the market. A major change in the political scene in venezuela is on the way. Iran is going to start supplying oil. Anna and there is a fed rate hike perhaps around the corner. That could put pressure on u. S. Producers. How do the saudis how long do the saudis not blink . Florence the imf said five years before they run out of money. That is not technically the way it works. The short answer is, five years. I do not think that is going to be the case. This is an opportunity for some of these economies to make a difficult decision that would be hard to take the masterly. Domestically. Saudi arabia is doing that. Consolidation of expenditures, these are desirable things to do and very difficult to do given the regional context. Manus who is under the most pressure in france . Who is under the most social pressure as a result of all of this . Florence there are two groups of countries. There are the small countries like bahrain. They get a lot of help from neighbors. There are larger countries like saudi arabia, which have populations of 19 million saudis. A lot of domestic consumption, which they have to reduce in order to deal with it. I would say all of them are under pressure. Certain countries, like qatar, have less pressure. Anna thank you for joining us this morning. Kokou, thank you for joining us for the last hour. Manus up next, president obama renews a pledge to crush islamic state. French politics swing to the right. All that to come on countdown. Manus turmoil as u. S. Crude trades below 40 and opec abandons all pretense of acting as a cartel. It is not every member for itself. Anna obama says the california shooting rampage was an act of terror. Manus and the National Front leads in the first round of asnces Regional Elections voters head to the polls for the First Time Since the paris attacks. A very warm welcome to countdown. It has just gone 7 00 in london. Lets take a moment to bring you the data. The numbers coming in at plus. 2 . That is well below the estimate of. 8 . Previouster than the month. Like it is a slump in energy output. Lets check in on futures. Markets,. 7 ty higher. Over 1 at the moment. You have oil below 40 a barrel. Trading near multiyear lows. Glencore has a big meeting this week. Commodities are going to be the key focus. They went their own way on friday, European Equity markets. Lets get to bloombergs first word with caroline hyde. Caroline Energy Stocks have slipped after opec gave up all pretense of acting as a cartel. It essentially offered to keep pumping in an effort to squeeze rivals russia and the u. S. Wti crude is once again below 40 a barrel. There are bets that it will fall below 38 within the next two weeks. Obama described last weeks shootings as an act of terrorism. In a rare speech, he addressed the threat of terror at home and abroad and called on congress to pass tougher gun laws. He also authorize a new force against the islamic state. Thee have no evidence that killers were directed by a terrorist organization overseas or that they were part of a broader conspiracy at home. But it is clear that the two of them have gone down the dark path to radicalization. They have stockpiled assault weapons, ammunition, and pipe bombs. This was an act of terrorism designed to kill innocent people. Anna terrorism and the refugee withs have come into play the far right National Front party making gains in early rounds. It has taken more than 27 of nicolas, followed by sarkozys Republican Party and trailed by Francois Hollandes socialists. That is it for your update. Anna we have an update coming through from electrolux. This business makes many Household Appliances. They are not going to be buying the Household Appliances division of ge. Manus i think we were together when we spoke to the ceo. This was almost his raison detre. Concern that the regulator might block it and they would have too much of a stranglehold on the market. This will be a big issue for mclaughlin when the stock starts to trade. Anna regulatory issues are always tricky. The industrialto production number that we broke at the top of the hour from germany. Hans nichols has been looking at the details. Most of this has to do with a decline in energy. It came in at. 2 . This does not keep with the really strong number we had on friday on factory orders. Industrial production is very volatile. When you look at the threemonth average, the last two months have not been in positive territory. Something may be happening here in terms of investment and growth within the german economy. The factory order number that we got suggested that germany was out of the woods. His gave me an indication that maybe we are back in. We will get clarity later in the week. We will hear from central bankers. I want to get you guys out of the studio for some real reporting. One of you gets to go to portugal. Here is the caveat. He is heading to finland. The other one of you has to take dark finish studio finnish studio. Anna we do not leave the studio, hans. We start to melt. I have been known to stand in the dark, too. Good morning. It has been a pretty positive session here in asia. We are seeing the shanghai composite closing higher by about. 3 . It is worth noting that chinese stocks had been in the black for most of the session. Closing higher by around. 3 . There was weakness in korea. A lot of foreign out coming through in the market as the won weakens again. Some gains coming through in japan. The nikkei up by 1 with exporters leading the gains. Taiwan looking pretty good. The Australian Share market is pretty flat today. We did see a little weakness coming through from all of those energy players. Crude oil falling below 40 a barrel, extending that slide. Oil and gas stocks in the region coming under quite a lot of rusher, led by the Australian Oil producers. Cnooc still trading down by around 4 . Is better than expected jobs numbers coming through out of the u. S. That has seen the pboc we can its reference rate by the most in a month. We are seeing the yuan falling the most in a week. Falling about. 1 , holding at 6. 4079. Jobsally, that positive number out of the u. S. , we are seeing a lot of buying. Hopefully a positive session in europe today. Anna thank you. We might have that. Immediate exas intermediate is below 40 a barrel. Opec gave up all pretense of acting as a cartel. Ryan chilcote was at that meeting in vienna. Richard jeffrey joins us for this discussion. It was described as one of the worst meeting has ever seen. A guest earlier said, why are you surprised . This is what cartels do. To doif they decided nothing, that would be the result everyone was looking for. Actually, it was a train wreck. That is why we got such a reaction in the oil price. If you are looking at wti going into today, you are concerned, particularly if you are a technical trader. Below 40 a barrel, that is the first time we saw a close below 40 a barrel. If you are a technical trader, you are thinking, are we going to test 34 . You look at the options market, the puts over the next two weeks , this is best that the oil price will drop below 30 38 a barrel. People think that oil is going to fall. I think we are going to test that. The ceo of total says the market is oversupplied by one Million Barrels a day and there will not be any recovery in the oil price in 2016, which is a growing team theme. Anna we spoke to socgen and they say Commodity Prices are bottoming out. Richard i am not sure i am seeing signs. I do not see any reason why commodity vices or Energy Prices will rise significantly in the next year. I do not think we are at the start of a new up cycle. Clear demand side, it is that all over the world, the economy is growing. This is a consistent theme. The World Economy is growing less quickly than it was prior to the this to the recession. On the supply side, there is plenty of oil in the world. Historically, that might have been saudi. Their budget is now under pressure. They will have to start borrowing. Pollution has never worked very well. They always break that collusion. I think this is just the acknowledgment of that. Opec inhe relevance of terms of its capacity, there was theeat article that says other small producers need saudi to survive. We have a graphic here that we show to our viewers. Opec no longer has that control over the market. You have the United States of america, china, much more aggressive than opec. To that end, it is losing its grip. Richard there are all sorts of conspiracy theorists around. People saying that saudi is willing to take the pain to try to stop the development of the u. S. Shale oil market, to try to put pressure on russia. Saudi will take all these things into account. I think it is the demand side which is most important. The demand for oil is not growing in the way it was. Anna we were talking to florence in the last ,onversation and she was saying if you look at how much money saudi has, maybe for five years, they could face down the u. S. They would like to see a higher oil price, but they have the reserves to see this through. Your point about demand is spot on. There is such a focus on supply. At the end of the day, inside the meeting, it was concerns about the demand picture that would really sort of when the day win the day. If the saudis thought that their strategy was not working, maybe they would give it give in. They are concerned that if they were to cut, they would be hurting the global economy. These guys see themselves as the central bank of oil. They see themselves as needing to support growth to maintain the demand picture. They were of the day, talking about chinese manufacturing and u. S. Manufacturing. Particularly chinese manufacturing. That is where all the growth and demand is. They were saying, not only has our strategy not had the opportunity to play through, we are going to let production rise. We would really messed things up if we were to cut production. At the end of the day, that is what won out. Manus i was thinking about what the market believes the price of crude will be as we go forward. The overall view seems to be that the market is going to price it somewhere towards 60 a barrel by the end of next year, which brings in a bit of hope for these dividends, but the that 60 really attainable . These dividends are all predicated on holding a slightly higher price of oil. Richard you cannot rule out 60 a barrel in a year just as you cannot rule out 20 or 30. The market is not very good at predicting oil prices. The oil price is quite sensitive to rates of world growth. Price will be firm and vice versa. You have to remember, this sort of situation was not predicted by the oil analysts 18 months ago. Florence ryan over the last four or five days, they have been pushing back to forecast. We had a story looking at what did the independent oil traders think is going to happen. Even now, they are pushing back to forecast for a price recovery. Meanwhile, one third of all stressed that in the United States is taken up by oil and gas companies. Manus up next, we are going to talk terror. President obama said the california shooting was carried out by radicalized muslims. In france. Ht more details to come. Manus 7 17 in london. Eight 17 in frankfurt. Time to get to bloombergs headlines. Caroline General Electric has abandoned plans to sell its appliance business to electrolux. Ge is entitled to a breakup fee electrolux. Ion from barclays may cut 20 of its central banking staff. Most losses would be in the asia and global cash equities business. Their ceo seeks to shore up profitability. The cuts would come on top of an existing program to eliminate 7000 jobs that the Investment Bank through 2016. Citi securities says it is unable to contactc two of its executives, adding to the turmoil. Citic has pointed to media route reports suggesting that they may have been taken away by authorities to assist in an inquiry. That is your Bloomberg Business flash. Anna thank you. Terror dominates the headlines this morning with president obama describing last weeks shootings as an act of terrorism. Farright frances National Front party enjoying success in the first round of Regional Elections. Latestwe will have the from paris in just a second. First, lets send it to hans nichols. Give us your assessment or interpretation of obamas speech in the oval office, only the third in his tenure. You use the oval office for formal, somber addresses. That is what the president was trying to do, trying to reassure the nation. He talked about the attacks being less complex and therefore more difficult to detect. The threat from terrorism is real, but we will overcome it. Isil andestroy iso any other organization that tries to harm us. Our success will not depend on tough talk or giving in to fear. That is what groups like isil are hoping for. Instead, we will prevail by being strong and smart, and bynt and relentless, drawing upon every aspect of american power. While the president is undertaking a strategy review, he says he will not commit additional Ground Troops to the fight in syria and iraq. He says that would further the goals of the islamic state. In terms of criticism, predictably, it has been caught up in the president ial campaign. House Speaker Paul Ryan was quite strong in his denunciation. He said he was disappointed and it was a halfhearted attempt to end and distract from it from a failing policy. No real political unity. Anna caroline, lets come to you next. Farright National Front has made gains in the elections. This is an historic victory for the National Front. Caroline yes, the National Front has done three times better than the last Regional Election back in 2010, when they did only 11 . At the national level. This is the front page of one of the newspapers here with a picture of marine le pen. She is leading in six out of 12 regions in france. Niece in the southeast of france also has more than 40 . Playedle pens party has on the migrant crisis and the fear of radical islam. The region in the north of france is very hit by the high rate. Marine le pen said the National Front has again become the first party in france. Themselvesxpressed and with the people, france raised its head. This vote confirms what former ballots announced but official observers did not want to admit yet. The National Movement is without any contest to the first party in france, meaning it is hardly represented in parliament. Caroline this means the National Front will win the regions in the second round. The head of the socialist party said last night that the two candidates in the two main regions that may be controlled wants totional front create a republican barricade to block the National Front from winning the second round. Anna thank you. Jeffrey is still here. E are set for a higher open mario draghi, on thursday, the whole world wailed that he did not deliver. Friday, there was a reprieve. It is as if the market is trying to assess what it does with equities. Give us your interpretation. We went over some valuations before the break. Europe is trading at 14. 5 times profit. Where do you put your money for 2016 . Richard europe is still gaining momentum in terms of the real economy. That is why mario draghi was not as generous as people has hope had hoped. Growth is improving in the eurozone. They do not look astoundingly cheap, but reasonably valued against what we expect to be a slightly better earnings background. The United States economy is further on in the cycle. A are still gaining a little bit of momentum. American equities already looked quite expensive. I do not think there is so much attraction in that market. I think the west is still more attractive than developing and emerging economies. Socgen andoke to they were talking about a european recession not coming until 2018, 2019. Is that the date that you would put on the growth of the u. S. Economy . Are sayingthink they it is off the predictable spectrum at the moment. It is off their immediate radar. Sometime in the future, america will have another recession, but not a timescale we have to worry about at the moment. Pursuitas Central Banks sensible growth rates, they can prolong the cycle. As soon as they take risks and allow growth to accelerate, that always heralds the end of the cycle. Week, andatility last i think this encapsulates where we are, the Standard Poors had four consecutive lows. At the end of the week, the gains were unchanged. Might asy have well not have happened. Yellen might as well not have happened. Do i buy protection . More volatility . Richard i think we will see increasing volatility. This is one of the hangovers of quantitative easing. The liquidity is still hanging around in the financial system. Same in the u. K. Audited easing going on in the eurozone as we speak. Huge amounts of liquidity worldwide. I think this will increase volatility in the financial markets. Anna you sound like someone who is worried that rates will be less low for a long time. Richard i am. Policymakers are already behind the curve. It is evident that we should have started normalizing Interest Rates not just a couple months ago, but probably a year ago. We are beginning to see some quite strong credit creation in some economies. In the best economy in the u. K. , we are various we are seeing very strong lending to households. They are saying that households think Interest Rates are too low. Manus lets see what the market brings us for 2016. The potential for a taper tantrum in the bond markets. More on that next time you join us. Richard jeffrey. Electrolux will be the important stock to watch at the start of trade. Anna the futures market suggests it will be stronger, which is interesting because the equity markets are kind of laggards from fridays job report. On the move will take you through everything you need to know ahead of the market open. Welcome to on the move. Its 7 30 a. M. In london. We are 30 minutes away from the start of trading. About what is happening with the markets. The mario draghi bounce, its on. To the mariont draghi in new york. You see it in the futures market. Dax futuresr move, up. Lets go to the sx classes. Uro creeping lower after that huge move on thursday. We yen, where are dollaryen, where are we. Now im a dead. Oil production will keep pumping. I would disagree with that narrative. Opec is saying, play by these rules. You can pump whatever you want. Credibility point. Production target of 30 Million Barrels, exceeded. If you came out with a target on friday, what credibility with that have . That wouldnt have any credibility. Exactly to my point. The saudi strategy is to get these guys out of the market. Thats what they are doing. We will see. I agree credibility is something we need to think about. We have your morning first word news. President obama described last weeks shootings as an act of terrorism. The address the threat of terror at home and abroad. He covers to pass tougher gun laws. Called on congress to pass tougher gun laws. No evidence the killers were directed by a terrorist organization overseas or part of a broader conspiracy at home. It is clear that the two of them had gone down the dark path of radicalization, embracing a perverted interpretation of is along the calls for war against america and the west. They stockpiled assault weapons, ammunition, and pipe bombs, so this was an act of terrorism designed to kill innocent people. Terrorism and the refugee crisis have come into play in france in reasonable elections. The National Front party making gains in the first round. It has taken more than 27 of the vote, followed by the Republican Party, and trailed by the socialist. Venezuelas opposition has won a majority in congress. Recessionflation and have left voters wanting change. The opec member has been hard by the falling oil price. They expect the economy to shrink 10 this year. Economists see inflation at 120 . Thank you very much. Todays top stories. As opec abandons any kind of target. The vti under 40 a barrel. Back under 40 a barrel. It looks like marine le pens party is taking the first round. We will discuss the setbacks to president along francois hollande. Lets get back to the mario draghi conversation. Thursdays ecb decision saw stock markets fall, the euro searched on stimulus and interestrate cuts. Not enough for some people. Defendedario draghi his stimulus plan to critics, pointing out he will be ready to take further action. To intensify the use of our instruments to ensure we achieved the prize to the mandate, we would. Limit to howbe any far we are willing to deploy our instruments within our mandate and to achieve our mandate. By our ngjoined Wealth Management. Good morning. We have digested the two mario draghis. Of actuality and reality what the right read is . Where is the line . For the first time we have seen the political fight of the ecb coming out here. The germans are against further policy stimulus, where is the southern block say do what ever it takes. After the october meeting, they laid out a clear program. It got the market into a bit of frenzy and they under delivered. Mario draghi understands he under delivered because hes not able to get the german block on side. He has been a master in the past, and now he knows he has retained control with disappointments in the markets and do whatever it takes, but can he deliver . Does that message have any bite . Many arguments about what may or may not have gone wrong on thursday. One camp says longterm gains. Mario draghi playing the politics, more cute be in the new year. Qe in the new year. What resonates the most . I think the ecb is done here. Mario draghi says this is as low as we will go. Now he has gone further. I think he has gone as far as he can. At the end of the day, the european economy is doing that to than people thought a year ago. So maybe there is no need for extra stimulus as per the german unit. If the economy is doing ok, he will not need to deliver anymore. In fact, the Bigger Picture is he cant live anymore. ,hen he says there is no limit but there is a practical limit. The forwardlooking inflation gauge has collapsed since we had this happen. The market is saying it expects relation inflation five years out to be larger. Done, but how much more do we need to push inflation down . Its about having an economy which is operating in a functional manner. At the moment, he has done what ever it takes in terms of pushing rates to negative. Its fairly marginal in the Bigger Picture of things. Minus 20ps on saying, is the lower band, 30, no, 40. Reality, if the economy cannot get as their, they have to get the fiscal side working rather than let the ecb takeover strain, and that comes back to credibility. Reached the limits. We have reached the limits. That is a big deal. Stewart will stay with us. Up, a warning for the report, why the latest says there is an uneasy calm that story is next. Jonathan it is 7 41 a. M. In london. Lets get you up to speed. Here is the bloomberg flash. Barclays may cut 20 of Investment Bank staff. Most would be in asia. The ceo seeks to shore up stability. Cuts would come on top of an existing program to eliminate 7000 jobs at the Investment Bank to 2016. German Industrial Production than predicted. Mosts yuan has fallen the in a week. That news comes as the dollar rose on expectations of a u. S. Interestrate hike following strong jobs on friday. Jonathan thank you very much. The commodity price slump and the slowdown in chinas economy are crippling developing nations ability to borrow abroad. Thats according to the bank of international sentiment. Billion dropped to 1. 5 , a drop of 90 from the second quarter. There is a clear tension between the markets behavior and underlying economic conditions. At some point, it will have to be resolved. Rmg Wealth Management still with us. The report comes out every quarter was something quite. Unchy that 3 trillion year old sparked a lot. I havent seen the bike. Its a slow burning disaster waiting to happen, brazil teetering on the brink. The Health Commodity complex really struggling here. Is reallyck struggling. We have this extremely easy policy from the Central Banks which is still encouraging trades, less than two years ago. It is still allowing people to refinance at the margins. Its not allowing normal economic option to operate, the cathartic moment. The fed starts raising rates, is that what changes . What is that one moment . Stewart it wont be one moment. See one momente that defines the peak in the s p em. He finds a moment in the you will wake up one morning and say i cant so my portfolio here. Jonathan this is not a new narrative from them. At some point, they will be right. They can carry on climbing the wall of worry for a while. Stewart if they print more than i think the Central Banks are done. If Central Banks continue to print money, we can keep this whole game going. The other line, Familiarity Breeds complacency. Familiar with so the idea that the fed will hike rates in december. You see the probability in the futures market, strong jobs report, everyone sees that is positive. Everyone is getting a little complacent about the consequences of it . I think were over emphasizing one move in terms of the impact. Whos going to change the borrowing habits with a quarterpoint move in either way. Its all about market psychology. We have this moment back in august, and then we got back on track again. Point, it will remain broken. The 25 basis points does not matter. You have a minor disappointment over the ecb and a huge move in the market, can we say that 25 basis points doesnt matter when you see the moves and markets when you get a slight disappointment . With 30, we only needed another five basis points to satisfy the market. It could be worse than people believe. Stewart a lot of this comes back down to how Central Banks are trying to deliver the message. The ecb spent a lot of time and credibility keying up their moves and under delivered. Everyone got short in the euro. Streetused a oneway ready to reverse on any disappointment. How dovish are they with policy . If its more aggressive than we think, that could be the upset we are looking for. We dont know whats out there that will be the tipping point. You have to look at markets and think they are overvalued and vulnerable. If you take action after the event, you will lose money. If you take action before, you could miss out on gains. If youre out of the market, youre fighting Central Banks and you could lose your job over this if you underperform. So the market has been told to be fully invested. Jonathan one of the most unconvincing rallies in quite some time. Stay with us. A few more thoughts out of him yet. Minutes away from the open. Electrolux this morning. We were sure he those stocks when we come back. Good morning and welcome back to on the move. Futures up 35 points this morning. 10 minutes away from the open with stock movers. A swedish stock plummet on the open. Afterolux, the news out regulatory wrangling in the United States, General Electric has decided to take its appliances unit off the table. Its no longer going to be selling it to electrolux. Well see how electrolux have performed over the past month in terms of share price. Beenll see how it has evening into the lows. The regulators were not liking this deal, too much market power in the u. S. It comes off the table. Watch electrolux sink. Sales, clinical trials, wont seek approval for its extreme mental cancer drug after it failed latest stage. Thats going to cost the stock to fall on the open. Back to you. Move focusingte on the big oil majors. Sub 40. De why was last week different. . What is opec. . Cartelhought opec was trying to set price. They have abandoned that. On friday, it was clear, very much on the record by top ministers saying we will not do that again. Some of the senior ministers of opec dont see opec arresting production ever again. That is a massive change. The 30 million barrel a day target, weve exceeded that for the last 18 months. What did it come down to that opec decided to throw in the tile . Ho they cannot win this battle against shale oil and russian oil unless they keep pushing and pushing and pushing. Saudi arabia is trying to bring huge economic pain to the bigindustry, whether companies or countries outside opec, russian, mexico, kazakhstan, and tell someone says we are ready to play ball and cut reduction altogether. It happened in 1999. In the process, the amount of pain inflicted will be huge. If youre the boss of exxon, shell, bp, how do you reply . 2016 will be like 2015 in terms of prices. If youre looking at the stock market today, the consensus the street is for Big Oil Profits to go up year on year and 2016. Chevron, for example, the consensus is a 25 percent increase in profit. Well see that repricing in the next few days and weeks. I dont see prices rally much you. Oil,ure the boss is a big i think you are in deep trouble. We talked about this for the last several months. Majors, only one has addressed their dividend policy Going Forward. Do you think that will have significant pressure for the majors . Yes, thats absolutely true. Some Major Companies may need to reconsider dividend policy. If they will not cut dividend, they will cut Everything Else in the meaning more pain for the oil industry. Our chief commodities corresponded, stuart richardson, will stay with us. We are four minutes away from the open. Futures higher across the board on the continent. s change the markets tune . Jonathan good morning and welcome to on the move. We are minutes away from the start of european trading. Defends theresident Central Bank Stimulus plan and vows to do more, if needed. Futures in europe job. Wti drops below 40 as the cartel abandons production targets. Marine le pens far right National Front takes the lead in the first round of Regional Elections. 20 seconds away from the open, futures higher by 32 points. Dax futures up i77. By 77. Looks like we could have a bit of a bounceback this morning. Today, were expecting a bounceback. Is here to stay. That is what mario draghi is talking about. Just opening in the green. Expecting the dax to open higher as well. We will wait for it to warm up. Risk appetite is back on in europe. Euro. Have a look at the , but put it into perspective. Lets have a look at what happened on the week. The biggest bike since 2009 on