Five industries for m a this year. Supposedly they are going to be forced into doing more deals as the year goes on. I am going to keep an eye on it. For me, im going to keep an eye on buyers for today. They are also coming into the new market. They have finally done a deal. Drugis a Prostate Cancer that they have finally done a deal with for 362 norwegian krone. Keep your eyes peeled across the technology industry. Withaw oracle come out slightly better numbers last night. Those two stocks have yet to open. Lets just talk more about 80 yes, an early christmas present. A 6 billion early christmas present. 25 a330s are being ordered by air asia. Certainly, this shows potentially a bit more competition coming to europe. Unit s data making it air asia you could see air asia making its foray into the world market. One percent higher, getting an early christmas present. Astrazeneca, lets give a price check there. That is up 1. 36 . Those are the stocks that are on the move. But go back to hans nichols on our top story. The first step away from hits historic wanted it easing. When it comes down to it, this is bernanke getting Forward Guidance correct. That is how it looks in the first instance. That is what the markets seem to be saying. The pace that they are setting, the taper does not mean that youre going to have tightening of shortterm Interest Rates. What they have really convinced the markets on is this last point. They will continue to keep shortterm Interest Rates below , to get pastro that 6. 5 . That makes the Consumer Price index out of the Inflation Numbers that come out of the Commerce Department much more important than what you get out of the labor department. Lets listen to have mr. Bernanke, santa claus then, we might say put it himself. Maintain ad to highly accommodative policy. Nothing we did today was intended to reduce accommodation. We are still going to be buying assets at a high rate and increasing our Balance Sheet and holding onto those assets. Our guide us today, we strengthen our guide is to make were clear that we are going to keep Interest Rates low. Preks i know you are wondering, does janet yellen agree with him . She is fully in support. She voted that way. We are have to wait a couple of months to grill her at one of those press conferences. What you have is 5 billion on both sides of quantitative easing being trimmed month by month. As you say, janet yellen voted for this with bernanke, but is she locked into this . Does she have any flexibility . Her inaugural not her inaugural, she indicated that she has her doubts about recovery in the u. S. She seems to be more as a mystic ben bernanke. Bernanke gave her plenty of flexibility because it is all data dependent. Listen to how he put it. Its assessment of Current Conditions in the , our committee now anticipates it will likely be appropriate to maintain the current federal funds rate target well past the time that the Unemployment Rate falls below 6. 5 especially if projected inflation continues to run below its 2 goal. Tellquestion for you, if i you that im going to keep my Christmas Tree up at least as long as there is snow on the ground or well past snow on the ground, which way is my Christmas Tree going to stay up longer . There is your answer. As long as it is of string. Dont ask Ryan Chilcote about Christmas Trees. He sees theow, opportunities. He is the senior of global Asset Allocation strategist at ubs. Are you happy . We have got this mind block out of the way. Good move . Very good move. Markets hardly had a ripple. The s p rallied slightly. Volatility fell from 16 to 14 on the vix. Generally, the emerging market currencies havent seen a very big selloff. 0. 6 for indonesian rupee, malaysian ringgit. The skeptics out there, record highs in the s p, will it last . The language of guidance, he has been a clearer this time about his guidance. Absolutely. They are kind of making that less important now. Not having a number is actually a good thing because it gives them more leeway. He was saying that it would be data dependent and we see roughly the same size steps at each fed announcement. We expect it to be all over by q3 2014. With that statement came and uplifting of their outlook in terms of when we would hit 6. 5 . When we would see growth. That was quite an upbeat statement as well in terms of projections. Does that change your thinking . Not really. The other thing he was stressing with the rate of inflation which is below the 2 target. That is going to make them a bit more cautious. There werent any surprises for the market. That is why it has been taken in stride. Very much baby steps. I think it hasnt been a shock. How the market take it as we go on. Do you expect the same rate of maneuvering when yellen comes in . Do you think we will see sequential 10 billion at each meeting or is that being too prescriptive . They are trying to engineer what happened when bernanke took over from greenspan, which is a very seamless transition. As an chili, yellen is bernanke without the beard. We will leave it there. Senior global Asset Allocation strategist from ubs investment bank. Here is a look at what is coming up after the break. Christmas comes early for airbus thanks to air asia. The news, not as good for some of the european characters. In the alleged u. S. Spying cost boeing near 5 billion . All that and more in on the move. Stay with us. I am manus cranny in london. This is on the move on bloomberg television. Ise is a stock that decidedly on the move. Have a look at that. The stock opened up 30 . Saab, they produced jet fighters and a won in order from the brazilians for 36 new fighters. 4. 5 billion. Caroline will discuss that stock a little bit more later in the day. 23 is not a bad return for a deal signed. Lets talk to caroline. She is our business correspondent. Caroline, to get away. We got tapering, but without the tantrums. Lets check in for the rises and falls. The ftse up almost 1 . The cac 40 up more than 1 . We see that easing of stimulus and the United States. Ben bernanke raining back by 10 billion per month. He has convinced of the markets that this tapering does not mean tightening. The Forward Guidance finally gets through to the market. He is going to keep Interest Rates near zero even if on employment does fall below 6. 5 . The stoxx 600 trading higher at the moment. That go into industry groups. Technology up more than 1 . Isancials up more than 1 as oil and gas. Optimism in the markets. The United States can continue on its growth path even though we start to see stimulus coming back. Our clays say 10 billion per month will be taken off the overall asset purchase scheme. All will be done by october 2014 but we are not going to see Interest Rates rise until 2015. Therefore, growth can continue. Bond markets are staying pretty placid. A bit more optimism means that we are less riskaverse. We are therefore selling the more stable asset classes. Yields coming up for basis points on the fiveyear u. S. Treasurys. The havens of bonds. We want to get into equities today as we feel that much more confident. Interestingly, barclays saying they are hiring more Stock Traders for the coming year. They are optimistic about the equity markets and equity markets are optimistic. 2. 9 billion is what abyer will be buying into but people like the fact that it is getting its hands on that asset. Astrazeneca up 2. 5 . That too is m a. It is getting a tent on a diabetes drug, buying out any interest from bristolmyers. But billion we are told, they like the fact that they are going to have their hands on that asset. Deutsche telekom up 2 . Again it is m a. Dish network considered buying tmobile. It is the u. S. Unit of due to telekom. M a in the air. That u. S. Unit valued in excess of 20 billion. I finished on a full screen of saab for you. Up 23 . I will be talking much more about the stock. Saab beating boeing for the Brazilian Air force order. The v6 jet planes worth 4. 5 billion for the next decade. When he three percent higher. A bit of m a, edit of jet fighter for you. Things for that roundup. Lets bring you some pictures from vladimir putin. He is beginning a marathon q a session over in russia. This is where he gives his floor, as takes open open as you want to believe. We will get back to that with Ryan Chilcote. This is before the sochi Winter Olympics began in 50 days time. Lets get back to basics. How to deal with this taper. This is the senior global Asset Allocation strategist at ubs investments. We are having a little bit of a jump there. More m a. This is a feature. A sweep of deals today, do you expect more and what is going to be the hot m a industry of 2014 . We think it is going to be tech. It is very much like 2000, 2001. They are forecasting about a 30 rise in global m a. It could be in asia as well. We expect to see that pick up. That would be very good for the equity markets. What i want to know is, you 12 hours since this news came out. Talk to me about the clients. What is going through their minds . Are there beginning to a about adjusting their portfolios . Are they having conversations and working on strategy . Definitely. 2014, a lot of them expect they are looking for trades in 2014 will be like 2013. We dont think it will. We think the fx changes we see on the back of this tapering will be very significant. It will produce a really good tailwind for european stocks and japanese stocks. Nikkei at a sixyear high, s p at a record high, the dax at 25 , is that level of return achievable in those equity markets . Absolutely. We are murray much overweight developed markets. Down becausetook valuations still look a little bit stretched compared to other markets. In japan, we have raised because of this affects affect. We think that could be the best place to be. The sectors we favor are the ones which are exposed to europe, not to emerging markets and not to the u. S. Look for domestically exposed european stocks. Which are the industries that stand out to you . We have seen media, financials, mining. You say those are the industries that you want to be positioned in. Absolutely. They are cheap, exposed to cyclical recovery and also exposed to europe. , you just mentioned japan there and again. Do you have targets in mind in terms of dollaryen and how will that translate into performance in the nikkei . Am i just being has a mystic . Fore are forecasting a 110 one year and 120 for two years. We will see further weakening. That would be good for the exporters. What is interesting is that we have seen a rerating rally in europe and in the u. S. In japan, it is the opposite. They saw an earnings rally. People who buy into abenomics, there is this still an upside. There could be further upside there. Before the consumption tax disks and in april. Lets talk a little bit about the movement of money. You said you have noticed a demonstrable effect in october and november. Money coming into europe. From the clients that you talk to, from the flow of money that you see, is that just getting going . Absolutely. This is the first trickle of rotation from fixed income into equity. We have seen a lot of hedge funds have interest in european stocks. State. St see a binary either europe is in a crisis or it is recovering. Now it is flipped from crisis to recovering. Theyre looking to invest in those cyclically exposed the names in europe. We have seen these flows, we have also seen flows out of the core inequities. Germany, we have seen outflows. That is where we see the greatest upside. Do you buy spain and italy . Definitely. The greatest opportunities will be there in the peripheral equity markets. If you look at that, i expect further compression which will lead to bond spreads tightening too. Eying italy bonds,s banished bonds spanish bonds and selling german bonds. We have this Stability Fund or the shaping of a Banking Union. Does that change the landscape in terms of how you want to be positioned in financials . I think what is disappointing is that the severance still have to foot the bill. There is no europewide guarantee which is a fairly weak thing. I suppose that was the nexus that they tried i want to finish with this. 10 year Government Bond yields up towards 3 . Rates are going to stay very low in the United States. That ay treasuries or is full hearty trade . I think the clarion call is now for risk. I think it is going to be for equity and away from fixed income. We are thinking about going underweight fixed income and looking to increase our equity overweight. Get back on the phone, speak to those clients and we wish you well for 2014. Thanks for a much for being with us. It has been a great year to have you here. Coming up, christmas comes early for airbus. A yearreak for eads in that was marred by job cuts and losses. That story next with caroline hyde. Welcome back to on the move. I am manus cranny in london. Vladimir putin is speaking at the moment. He is taking questions, particularly on the question of the ukraine and he is saying russia neverine used gas prices to choke off the ukraine. He says that russia is seeking a longterm solution and that the ukraineeu pact would have printed russia to defend their position. Agreed mind that russia to a 15 billion lifeline for the ukraine. Lets leave it there. Ayer have agreed to buy algeta it is their partner in a Prostate Cancer medication. Bayer to gainws full control of the drug and experimental radiation therapies. Other large drugmakers will keep paying doctors to give talks about their products. This leaves glaxosmithkline alone for now. Glaxo changed its policy after chinese officials accused the company of using cash and other favors to bribe doctors and health officials. Executives chief would potentially boost cash returns to investors after cutting 2 billion of cost ahead of schedule. Couldn sachs says rio return as much as 3 billion of excess cash to shareholders by 2016. Eads may be catching a break after what has been a fairly difficult month marred by job. Uts, contract lost of going airbus won a sizable order from ajax. Caroline hyde has all the details. Just how big is this order . A cool 6 billion. T is 25a330s he is buying that is the long haul unit of his Discount Airline over in asia. The amount of growth we are seeing in southeast asia, we theat the airline unit that represents the Airlines Worldwide says the future of growth, passengers are going to be up 31 largely driven by emerging markets. Leastast asia ordered at 1000 new aircraft in the past five years. The chief executive of airbus saw this as a nice present. It is a nice Christmas Gift for us. A330s. So it is more fuelefficient aircraft coming his way and they are all going to be delivered by 2015. Coming is air asia x back into europe so it is a bit of a concern for flight carriers. Norwegian air shuttle is the only Discount Airline in europe that currently flies to asia. Tony fernandez now saying, i have got europe in my sites. A330s these new widebody that make coming back into europe that much more profitable. Inre is a got out of europe the first half of 2012, blaming the old aircraft that it had. They said they werent fuel efficient enough, could make it profitable. He is coming back. There might be a few airlines quaking today. Ok, caroline. But leave it there. After the break, europes finance ministers and the banking deal. You cant get rich as a nation by just writing checks to yourself. I dont think the problem in the west is that we havent our problem is that we need more business investment. We need to export things. The rest of the world wants to buy. These are our challenges. That was the u. K. Chancellor George Osborne speaking with charlie rose on growth versus debt reduction. You can watch the full interview on bloomberg. Com. You can catch charlie rose weeknights at 5 00 a. M. If you are up early or 10 00 p. M. U. K. Time. That what you dont have to get up at 3 30 like me. Welcome back to on the move. We are 30 minutes into the trading day. Lets give you a shot of how the world is shaking up after the Federal Reserve decides to begin byering, quantitative easing 10 billion dollars. European equities are higher. Paris up by 1. 7 . London up over one percent. There is a very different reaction in these markets at the beginning of tapering. Story in Foreign Exchange markets is that the dollar is higher. Dollarringgit also moving. That is possibly to do with the fact that they have a Deficit Running there. The aussie dollar has turned it around. The aussie dollar was falling. We know where those are rather reserve bank of australia would like to see it at. It is just we retracing some of its initial losses. Lets give you the top headlines here at bloomberg today. It is the Federal Reserve and the timing of monthly bond purchases to 75 billion from 85 billion. It is the first step in unwinding historic stimulus. Also said its benchmark rate is likely to stay low well past the time when unemployment drops below 6. 5 . Bonuses for Investment Bankers and traders will likely be changed over last year. Cost. Ks to reduce Investment Bankers could receive bonuses that are flat compared to 2012. 72 . Rs could get a cut of rbs is cracking down on chat rooms. Its markets division is now and banning employees from using multidealer chat rooms. Also said to be considering such bans, Global Regulators are looking at how chat rooms were ind for possible wrongdoing several investigations. European finance ministers last night agreed on how to deal with failing banks. It was a big step towards completing the european Banking Union. David tweed joins us now from berlin. It looks like the ministers heated and heedded Angela Merkels advice. She told them to crack the whip this week just after she was sworn in as chancellor. It does look like they have done that. When you consider, in 18 months they have come quite a long way. That is probably why the Financial Services commissioner was so chuffed last night. Link e introduced introducing revolutionary things to europes financial sector. Taxpayers no longer foot the mistakes ornks make face crisis. This is ending the era of massive bailouts. He called it revolutionary change. The bank of italy, the italian finance minister, he says the decision is almost on par with the historic agreement establishing monetary union, a pretty big call there. There are two areas of contention and you and i spoke about the my little bit. One is the resolution mechanism. How exactly are they going to work . The mechanismat that is being decided. The European Central bank is going to decide if they think a bank needs to be wound down. They will notify a resolution board. The resolution board will decide what to do. It will notify the European Commission. If the European Commission doesnt agree with the course of action, it goes to the finance minister who was supposed to take a vote in 24 hours. It looks really clunky, something that the European Central bank has been concerned about all along. As for the financial backstop, there is not going to be one for 10 years. National agencies are going to have to raise the money if there is not enough money in the resolution to fund. There are a few difficulties. The question is, how is the landscape going to change . David, thanks for that. Glad you got that story and not me. It was a tough one. A senior banks analyst at rabobank. Great to have you with us. They are hailing this as a historic moment. Have some saying that we should pacify markets. Agree or disagree . It should pacify markets. As exciting as it gets with european regulation. For them, it is historic. It is a groundbreaking development. Really, it is two years after they first outlined it. We know the intent of european regulation. We know the Banking Union is a big step forward to solving the crisis. It is just the details of it that have taken so long to get to this point. We are a little fatigued by it. It is not particularly exciting. I think probably it is quite important. Banks and sovereigns have been hamstrung together. What i want to know from you, as you look at the Resolution Fund, you look at the items on the split sovereign debt from the banks . I think the reason that they pushed this idea is because, obviously we have seen some Banking Systems collapse. It is a big problem. What youre talking about there is banks that failed. You are talking about banks that have to go into resolutions. They are not throwing good taxpayers money, often bad. It is often a difference between fireball banks that are worth recovering. There is a clear distinction in the regulation. It doesnt deal with banks that are viable. Is really only dealing with those banks that are zombie banks, the ones that need to be put out of their misery. Find out in 2014 that there may be some in europe. Funny 14 is going to be quite a big year in terms of Banking Unions, looking at the books of these banks, once we have taken up and looked what is in the banks, resolved those issues, are we shifting gears . Is this 2014 the opportunity for europes banks to catch up with the u. S. . Definitely. That is the intention, to replicate what happened in the u. S. In march 2009. They came up with the knowledge or the detail of what was sitting in the banks but they also came up with a solution. Those two things are essential to come together. Before in the stress test all they did was tell us what was the problem. They didnt give us a european answer to that. The Banking Union brings all of the regulations to one convergent point. To have the backstops of a Resolution Fund and to plan out how banks will have to be dealt with in those situations. Two things come to mind. Capital orhat bring quickly into european banks . Are they investable . Seendly, are we going to much more m a consolidation in 2014 or would that be delayed . You have to separate those banks that need capital. I would expect them to be working on it now. It is not just raising capital, it is also reducing assets. It is deleveraging as well as building up capital and being profitable. It is very positive for the banks that are wellpositioned. In terms of m a, yes, we expect to find that some are weaker than others. Some of them are over bank and need further consolidation. We expect that in italy. Is already well underway. We would expect i hope to see a similar process in germany. Will it be entry europe mergers or american and overseas . I would expect a lot of it to be intra. There are big banks that will do very well out of this. I would expect them to become more european on the back of this. Big is udall. Have a great 2014. Hope the Banking Industry treats you well. Coming up, as alleged u. S. Spying cost boeing 4. 5 billion . That is the story we will look. Stay with on the move. I am manus cranny in london. This is on the move on bloomberg television, streaming live on bloomberg. Com, your tablet, your phone and any windows phone. We do it globally. We have had to drug company does today. Almost 7 billion. Joining me now to break down the deals, he covers pharmaceuticals at bloomberg industries. He provides the research and data on all major sectors. You guys put it in english. That stuff about these deals. We have bayer going after al qaeda algeta. Why now . What is driving these deals . First of all, there is a lot of stuff on the move. We have these two deals, a lot of them have been presaged if you look at some of the news flow. We expected astrazeneca to continue its deals. This is but they have been talking about. This makes a lot of sense. This relationship they have with chris myers, it is converting itself to a Pharmaceutical Company much more focused on specialized tech products. More mass a much market type disease. It fits nicely. It fits for them and it helps them continue to build the revenue line and that private line as they contend with the numerous patent expires they have coming up. That is the good news. The devil is in the details. To look at the numbers a little bit more in detail. It seems like about the same sort of price that things were valued at the time when the two companies together took another out. That is where the injectable assets come from. Not a huge surprise, but when you look at the end of the resolution, you see that after taking a 1. 7 billion charge for isayment of the assets, that one of the key assets that they acquired. It was a lead product. Not a huge surprise. I am just a bit surprised the company had expected so much so early where the rest of the market analysts were thinking it would take a while. Talk to me about bayer. Us, they ared going to do small and midsized deals. This fits. Are they paying too much for algeta. We dont want to go there whether it is too much too little. It is a great deal. The Management Board of alg eta have recommended it. We will do some analysis pretty quickly. It is a cash deal. There is no contingency which is interesting. Usually, some deals have contingents, value rights or some longerterm milestone. This is just cash. Are they going to do more . Do you think mayor is going to do more deals . It is not necessarily the most active company. This is like the fifth largest deal they have done. It is the largest pharma deal that they have been involved in since theyre sharing acquisition. Gray tabby with us. Right to have you with us. Thank u so much for covering those stocks. The pulse is coming up in 15 minutes. Guy johnson is flying solo no, you are not. You have young anna edwards with you. Can forward to that. Lse is cleared for takeoff today. We have the markets surging on the back of the taper. Boeing saab defeating over brazil. We will talk about that story. Plus, we are also going to be showing you live pictures, we hope of this launch that is taking place. Forward to seeing them live on the pulse as well. Back to you. I will see you a little bit later on for an asset check. With that in mind, lets bring in the price of gold. Gold drops below 1200 an ounce for the First Time Since june of this year. We did dip below 1200, trust me. Saab has been bowing. 36 fighter jets to the Brazilian Air force. Joining me now is our European Business correspondent, caroline hyde. Saab is gaining the most on record. This deal is good news. It certainly is. We saw them rise the most on record today. Really a stellar performance all after this deal worth 4. 5 billion. Ripping it away from the likes of boeing, 36 jet fighters to the Brazilian Air force. What is interesting is, this tthat saab could go on to win more context. About 100elf means aircraft over the next 10 years. This could build on their overall pipeline. How much did politics play into this . They had a brazil basically saying, you americans are spying on me. Did boeing lose out because of the u. S. Spying allegations . The view is that there was a lack of trust created by the spying incident. We know what it is all about. That was what the allegation was towards the National Security agency. Tapping him on the president S Communications with her staff. She said this is an affront to our state. She canceled her own trip to washington. Notably, the defense minister n overf saying saab wo boeing because of the performance, the cost of the aircraft. It is their willingness to transfer technology, not because of any spying scandal. There are many people voicing that that probably is why boeing lost out. If brazil is going to ramp up its spending, 8. 6 billion per year is what they are estimating to spend on their armed forces. They are putting in 100 orders for jet fighters. This is a big loss for going. We believe that there. Extra wrapping that up. We had news out of russia as well. President putin is half an his antiwar press conference. Ryan chilcote, our russian man in the hot seat there. What is your feeling so far . What are we hearing . He has become the press conference talking about ukraine, really making two points. The first one being that russia is not opposed to ukraine entering into a freetrade pact with the European Union. Point,is is an important if ukraine had joined in to that trade Association Last month, russia would have been in his words, forced to defend its market. He did not elaborate. The second point he is making is that russia with its 15 billion bailout, its biggest ever bailout, was motivated by concern for ukraine and ukraines economy. What he is trying to do there is i think dispel the view that russia was effectively buying a satellite state or trying to pick a fight with the European Union or even intervene and ukraines own affairs considering that there are all of those demonstrators still in the streets of the capital kiev. E is just getting underway like you said, a little bit more than half an hour into this press conference. He has spoken for as long as four and a half hours at these press conferences before. This is an annual event. If history is any guide, we are going to learn a lot more. We will be monitoring throughout the morning. Rex ryan, i know this is one of your favorite subjects. Tried a lot of these olympic sports. I have seen the videos. We are 50 days away from the sochi games. This has raised a political hot topic not least in the United States of america. It is a big project for putin. It is. 50 days away, the big story politically speaking this week has been president obamas announcement that he is highly unlikely to go. He didnt say why but he also announced that the delegation for the United States will be led by the openly gay Billie Jean King who as you know scored 39 grand slams. President obama making a point of their, however this is going forward, real big point for the russians. For say that they are ready it. Are you ready for it, ryan . My television is ready to go. [laughter] we will see you very shortly, thanks for that. Stay with on the move. Get a final wrapup with caroline, myself and hans in berlin on the day that the fed pulled the trigger and began tapering. Will come back to on the move. I am manus cranny in london. Lets recap todays market movers. It has been a busy day. We have a tapering, m a. We have the best day on the stoxx 600 in more than two months. All up. We got tapering but we got no tantrums at the moment. They finally seem to have convinced us of Forward Guidance. Ben bernanke managing to ease off his. It doesnt mean theyre going to start tightening policy. Barclays saying, expect every month after january for about 10 million to come off the table in terms of stimulus. Then, rates are going to be raised until at least 2015. That is the critical thing for equity markets. It is a day in which we have seen merger and acquisitions. Industriesain team when does for the bayer deal. Showing that finally companies have got the confidence to start using their money that is on their Balance Sheet. They are getting in bayer getting in with its joint partner. Astrazeneca throwing 4. 3 billion after bristolmyers. Telekom, rumors still rife that they could be looking to sell their tmobile unit. Thanks for that, caroline. Stay with bloomberg television. Guy johnson is up next with the pulse. The morning after the night before when the fed dropped quantitative easing by 10 billion. The beginning of the end. The fed tapers by 10 billion, but there is a pledge to keep rates at historic lows. That has sent stocks rallying around the world. Aab soars as the swedish companys fighter jets chosen over boeings. Russias president said the 15 billion package was not about expanding putins sphere of influence