We have got to keep an eye on the United States. Today we have the Federal Reserve, the end of that twoday meeting. Economists expect them to end that considerable time. Instead we will have a datadependent approach. Barclays says they may raise their forecast. This amid the currency crisis in russia, plunging oil prices. Lets check in on oil. It is in a downward spiral. 4 . Up by four it is talking down the ruble and the rest of the emerging markets. Moment,e at the currently the dollar is falling against the ruble. The is after moving from central bank. It is horrid times for russia. A look in at what is exposed to russia. , all three companies exposed to russia and get significant sales. Ult has been trying to of sales of cars in russia to stabilize themselves as the ruble continues to fall. Apple closed their online sales because they say the extreme caused theuation stock to get hit. Lets look at other areas. Oil prices are sinking once again. Phillips up by 3. 6 . Off by 3. 6 . Eyeing up, going deeper into the medical device area. And and a and the terms of m the medicalrms of devices. It is the first time they unveiled their earnings together. They do pretty well. There is no competition existing anymore. Accelerated inly the second quarter. Where is it going, this merger . The synergies will deliver them a year earlier. The footsie opens down 1. 5 . That is the equity market. One story in the market dominating the story right now, the epic collapse of the russian currency. Look at the move over the last year. It has been downhill since then. One dollar buying more and more rubles. We saw the ruble at 80 to the dollar just yesterday and that was after the central wake of russia hiked Interest Rates by 6. 5 . Where do we go next . Ryan chilcote. What is the latest . The ruble is strengthening. It is pretty dramatic. It has been strengthening all morning. There are two good reasons for that. The central bank is on the market. The bank of russia has intervened to the tune of about 2 billion. That was yesterday. Economists expect that they could spend as much as 70 their 400re worth of 60 billion of reserves to try to stabilize the ruble. The other reason the ruble has been strengthening is because we heard from the countrys economy minister saying there will be no capital controls. Not everyone is prepared to believe that just yet. It provided support for the ruble. They have tools in the kit. You cannot rule out another rate hike. They are already at 17 . They had those reserves. 400 billion worth of reserves. It is quite a bit. A lot of that is gold. The market thinks theyre going to sell some of that goal. We shall see throughout the day. The ruble is something we have to Pay Attention to. I spent the whole of yesterday with the chart of dollarruble going to 70, 74, going to 80. Besides the impact on stocks, what is the impact on the equity market . Some stocks are acting as proxies for the ruble. Carlsberg was down 6. 5 yesterday. They are down again today. Since the beginning of the month, they have lost 2 billion worth of their market cap. Russia is hurting them. They are not enjoying any of the respite because of the rubles gains today. Maybe people think that is shortlived. Bp owns 20 of rosneft. Bp is down as well. They have the biggest exposure of all the european banks. Socgen is down. Unicredit, their ceo was forced to say they will not write down any of their russian bank operations. A are wellhedge their. He thinks the russian banks will make more money there, but they are the secondbiggest western bank when investing in russia and their stock is down as well. Looking at a chart of the dollarruble and that is down 3. 9 . That is a stronger ruble this one. Lets bring in bob parker, Senior Advisor to credit squeeze. Credit suisse. Lets look at the consequences for the russian economy. There are two aspects we need to worry about. The first is the obvious jump in inflation. The last inflation number was over 9 as we go into january and february. I think it is highly likely we will see russian inflation above 10 because of this devaluation of the ruble. That has a twostage affect on consumption. We have a massive deterioration in expectations. What we will see over the next week is an increase in consumption rather paradoxically, because people want to hedge themselves against a jump in inflation and buy goods now. Stage one is paradoxically a jump in consumption. Quitehowever, we will see a serious squeeze on consumption. Ineap into that is the rise russian bond yields. It remains that the russian banking and corporate center, refinancing in the ruble is now extremely expensive. At 10 yesterday yearrussian bond yields at close to 15 . Although they might rally, i do not see a major move. That obviously squeezes investment. If the oil price stays where we are at the moment, at about 60 four brent, personally i think we can see a small rally back up to 70, then clearly we have recession in russia for the next year. Just getting a headline. Issias finance ministry looking at fx on the market. That is what is behind the steep drop in the ruble right now. 62 against the ruble right now. We talk about the central bank and how russian policymakers react to it. A rate hike is one way of doing it. The endgame, ultimately, you think capital control . If we had capital controls, and this is quite a dangerous policy tool to implement. This isectations, and what happened last weekend beginning of this week, because there were expectations of capital controls, russian investors were setting the rule because they wanted to get out before they thought the capital controls would come in. If you are going to produce capital controls, one of the very fundamental problems in russia is the lack of confidence by russian investors in their own economy and market and we have capital flight from estimated in is excess of 10 billion u. S. Dollars per month. Capital flight needs to stop. Capital controls is a blunt instrument to do that. Terms ofets worse in further declines in the ruble and we are seeing a classic short squeeze going on today, but if it gets worse i think capital controls are inevitable. When you see russian policymakers say it is under consideration, do you think it is Like Fight Club where the first rule about capital controls is not to talk about capital controls . If you talk about capital controls, you encourage capital flight. The right policy approach is to implement them very quickly indeed and not build up expectation that it is going to happen. We will continue this conversation after the break. Bob parker stays with us. The ftse 100 open a little bit lower this morning. The ftse is down by 1 . 62 points lower. Move is dickson carr phone. The stock is up 6. 6 . 3. 6 . The market like the numbers this money. It is dollarruble again dominating the conversation. One dollar buying 64 rubles. The Russian Finance Ministry is in a Market Selling fx. Welcome back to on the move. I am Jonathan Ferro. The ftse 100 is lower but it is the ruble market that is the focus once again. It is moving in the opposite direction. Dollarruble is lower by about 4 . The russian feynmans Russian Finance Ministry is selling its effects on the market. Dollarruble down by about 5 . There is so much to discuss today. Not just russia, greece as well. This scene is set for another greek Political Drama that is sending shockwaves through greek political markets. The first round of the early pushedntial elections forward and the stock market has been clear. Stocks in athens have lost 20 from this months high. Elliott, that vote takes place tonight. There are a lot of Different Things that will happen over the next two weeks, possibly. Take us through the dates and things that matter. In just under 10 hours time, the 300 members of the Greek Parliament will gather in the parliamentary building. Each lawmaker will be called out and asked to say yea or nay. Is key number to look for heres, because when you get 101, it is mathematically impossible for him to get the 200 he needs in round one. No one expects him to win in ro und one. Tonight you may want to pay to the number he gets. Assuming he does not win tonight, we have around three on december 29. That is the key one because he only needs 180 lawmakers. Saying that they will vote for his president ial candidate because they want the same government or they were in the general election means they will not get parliament and they will lose their job. If they win in round three, we get new general elections and the Austerity Party would win the election. Recent poll say it is the lead over the government that its lead is narrowing slightly. No one is talking about who the candidate is in in the president ial elections. It is coming from the possibility of a general election. What happens if we get that call on december 29 . Scenario that is one of the reasons we saw the big selloff in bonds and stocks. If there is a win, they do not manage to negotiate a new credit agreement. The current bailout ends on february 28 and you start getting institutions and Central Banks possibly leading to greece struggling to fund itself, and possibly a default. That is the doomsday for an aerial doomsday scenario. They are more pragmatic than people give them credit for. Thee is an agreement with ecb. They want a friendly renegotiation on some of the debt greek owes. You have the Greek Economy. It is not the same Greek Economy we had to wonder half years ago. Economyt the same when we had the first crisis. It is expected to grow. 7 next year. Its budget deficit this year is said to be less than 2 . Many countries in the eurozone could only dream of that right now. At the start of the crisis it was 16 . Borrowing costs are about 9 . Still on sustainable but the economy is in better shape and much better to sustain some of the turmoil we could get into if we get a general election. Elliott, enjoy athens. Still with us is bob parker. Lets talk about the politics about what is going on in greece. The selloff does that play into the Prime Ministers hands . To some extent. 10yearad between greece and 10year bonds has widened to over 8. 5 . I can make the statement that over the last three or four years, greek borrowing costs have come down. If you are having to refinance debt at a level at close to 9 , that is clearly an unsustainable situation. Grow by 2 onomy will plus next year, but lets not greeks that since the crisis started in 2009 the Greek Economy has actually shrunk by over 25 . That not surprising sarids are ahead in the opinion because they have had five years of extreme austerity. Whether there will be a politically swing, it will go to them and if we have a general election, it is not clear that they would have a majority, but they could lead a leftist polish and. What does it mean for the leftist coalition. What does it mean for the Broader Market . In 2011, we would be talking about contagion risk to spain and italy. You see it happening again. If you talk about russia early on, i can see quite serious contagion risk from russia. From greece, i think contagion risk will be minor because greek held by debt is largely official institutions such as the eu, imf, and national Central Banks in europe. Investor positions in greece are very small. Greece is underowned. The risk is low. We will talk about contagion risk after the break. Parker from Credit Suisse stays with us. The effects market is once again about the russian economy. The ruvell has sustained its gains against the dollar this morning after the finance Ministry Said it is selling Foreign Exchange. Welcome back to on the move. I am Jonathan Ferro. Lets get back to the top story. The ruble ending a sevenday route that wiped off nearly 1 5 of insider. The Russian Finance Ministry is selling Foreign Exchange calling it extremely undervalued. It hit the lowest in history yesterday and the central bank hiked rates to 17 . Still what does is bob parker. Im looking at dollarruble. It is coming back a little bit now. The ruble is down by 3 . It is reversing over the next to go hours. What can they do to spur the currency . This is a classic short squeeze. Thate at a situation intervention it shortterm will work. We need more fundamental longterm action to make the sustainable. I can argue that the ruble is oversold, and it is very cheap. The finance ministry has stated the obvious that it is under valuable and we can all agree with that. What is going to turn around those capital flows . That is the fundamental problem with russia, which is lack of foreign and russian confidence in their own economy and markets. Capital flows had to turn around. There is a meeting later today in the United States, the Federal Reserve. How do they manage the situation . Do they have to manage it . Should they care . I think they have an interesting combination of Economic Data facing a. Every piece of Economic Data coming out of the United States at the moment, you saw in the industrial numbers two days ago, is strong. Everything is consistent with 3 plus growth for 2015. If anything, the fall in the oil price will add probably at least. 5 to what would have been otherwise a growth figures slightly below 3 if oil stays at 100 per barrel. The fall in the oil price is good for the american consumer. Yes, there is going to be shaving off of the Growth Outlook because of the collapse of investment in the high cost of shale and fracking development. Investment spending will come down in the energy center. There will be defaults in the highyield bond market, where bonds have been used to finance the shale sector. The key thing for the Federal Reserve today is that Inflation Expectations have changed dramatically. I would have sat here three or four months ago and said i was slightly worried about american inflation. It is going to edge about 2 . Not the case. That is absolutely not the case now and i think it reasonable forecast that inflation next year will be less than 1. 5 . Any tightening by the Federal Reserve i think is going to be delayed and inevitably it is going to be slow and the magnitude is going to be very minor. 20 seconds, if you can. It is a tough question. Big difference for you between 1998. Go. In 1998 we had sovereign default. This time we wont have sovereign default. The corporate sector and the Banking Sector in particular, the midsize banks, those two sectors are under severe pressure. Bob parker, thank you very much for joining us. Coming up, it is the other story. Greek parliament compared to vote in a snap president ial election. Here is a picture of the market. We open lower on the ftse 100. Lets get that or our viewers. It is down by 60 points. The dax is off by almost 100 , down 1 . The biggest story has been the currency market. Stronger ruble against the dollar this morning. Welcome back to on the move. Im Jonathan Ferro in the city of london. 30 minutes into your trading day. Here is how your day is shaping up. The ftse in london is down by over 60 point. You have the greek situation in london. The Russian Finance Ministry selling a fax. The dax is down by 83 points. Lets get to the movers and ryan chilcote. Three stocks to watch. Lets kick it off there. First earnings since the company has emerged. Impressive. Their earningsg ther were much better than expected. Carlsberg, we are doing that because you mentioned the finance ministry. Carlsberg at a third of its value. It has been a proxy for the depreciation of the ruble and shareholders like the fact that the finance ministry is propping up the ruble. 1 5 of rosneft. 1. 6as down by as much as this morning and it has pared some of those losses. I want to bring you some headlines. 185. 5 billionown euros of bonds and bills in 2050. Compare that to 2014, 200 one billion euros. That is substantially less than they issued this are. The ecb may be picking up the qe program next year. It will not be getting bigger as to rate they might like see it get a bat it improve that. The big story this morning is russia. The other is greece. That will be a story for the next couple of weeks. Lets get back to the greek Political Drama. The Prime Minister push forward a president ial election that could dissolve the current regime. The markets have been acted. The Prime Minister move to have that early president ial election. Down more than 20 from the months high. You. Tt, over to chiefave michael, the economist at all for bank alphabank. No one expects the Prime Minister to win this time around. Is that a question of how many votes he gets that we can see if he is likely to win in round three . Definitely. What we are going to see tonight is if there is a momentum building up to the figure of 180. At the end of the day, i think what is most important is the vote on the 29th. On your economic models, do you factor it in more likely that he will be the president , samaras . I was a bit more negative before the election of the president of the republic. Now i am 5050, i would say, would be the outcome. Investors have been getting skittish because they fear the Prime Minister will not get his man into the president ial palace. We will get general elections and austerity will win. We could have much more financial instability here in greece. Is that the correct attitude . I think the problem is really what is going to happen from now until the elections, the national elections. People have a lot of negative expectations about the derailment of the process. If and when a different president comes to power. I certainly have a feeling that at the end of the day, things will turn out to be much more mild than the markets expected, thely because it is in history, in greek history, we have seen a lot of uturns from people having the right rhetoric before the elections but then they are turning around and adopting more conventional policies. If there is a win, dont expect them to do what they have been saying . I will let them speak for themselves. All im saying is my feelings about what is going to happen. Simply because there is a large majority in the great electorate that once the country to stay in the eurozone and maybe they are not as wellinformed about the implications. What is certain about the measures for the presence of greece in the eurozone. Once the Political Uncertainty has gone one way or another, you would expect investors to return to a bit more stability to the markets . Definitely. I think the country is on the verge of turning the page for good in the sense that we are much more ahead in terms of adjustment and structure reform. And if you like, in terms of the debt level. ,he debt level may seem high but it is a debt that is restructured with very low Interest Rates. In terms of the debt, we are in a much better position than any country in the south of europe. I think that at the end of the day we are going to see good things happening after the Political Uncertainty is out of the way. Greece has nothing to do today with the countrys a large economic imbalances, loss of competitiveness that we have seen in the past. We have to endure somehow this month were two months of insecurity. If there is no president elected , we enter a more normal period. Some optimism injected into the debate. Not only is the budget deficit said to be less than 2 , more than 2 . The primary surplus cannot be more than 2 this year. Period. St the 10month i think there is nothing on the horizon to justify projections for 2013 that greece will not be able to attain a primary surplus of 2 of the gdp. If that happens, it will be an excellent case of selffulfilling prophecy. If we lose the First Quarter of the year because of the a loss ofand there is morale in the population, you may have some sort of fiscal gap. Not because Economic Policy has not been designed properly, but simply because of expectations. Thank you. Jon, the Greek Economy set to grow by a potential. 7 . 2. 5 next year. Not the same economy at the peak of the crisis to it have years ago and certainly not the same one back when it was 2009. The big mover this morning is the move in the russian ruble. Russias finance Ministry Said it was selling Foreign Exchange. You saw the move in the last hour or so. You have a weakerdollar ruble, a stronger ruble. Dollarrubles down by 2 although it is coming back. We are moving back again. Look at that chart. What a story. After the break, we bring it back to prison. Goldman sachs bring it back to britain. Welcome back to on the move. Im Jonathan Ferro. It is time to look ahead at 2016 in the u. K. Our next guest thinks that will exceedp growth expectations but its inflation will be weaker than forecast. After the first rate hike from the bank of england, q4. Joining me now is kevin daly. A month ago you told me q1. We moved it back primarily because the inflation has been exceptionally week. You pointed out that we expect 1. 6 by the end of the year. In the near term, we expect inflation to fall to about. 5 . It is going to fall well below the 1 threshold that would require carney to write a letter to chancellor osborne next month , and as i say,. 4 in our estimate in january february. The neartime inflation dynamic is very weak. There are signs globally of weaker growth. There are concerns about that. We didnt push it back from q1 two q4. Governor carney saying we could see this drop below 1 . We are in the middle of 2015 and we have an inflation rate of. 5 . Why with the bank of england single we get a rate hike anytime soon . They will primarily look through the impact of oil prices. The market is very much focused on the price impact of that, understandably. The growth impact for the u. K. Will be unambiguously positive, in our view. The bank of england will look through the first round impact of prices through that and by the end of next year you will have the cause of these base impacts and inflation rising quite sharply. Visually, it will be easier to raise rates at that stage. If our forecast is right, growth will be relatively strong next year. The crucial element of the forecast is what happens to wage growth. When i look at the forecasted gdp of next year of 2. 8 , that is solid growth. What we have seen over the last 12 months is thing start to slow down. This is a difficult question to ask, but did the bank of england is a window here to start normalizing rates before a slowdown . I know that sound counterintuitive, but did they miss a window . I dont think so. If you look at Central Banks that try to raise rates early because there are concerns about Interest Rates being too long or an absolute floor, like the bricks bank, with a have a situation where those rate hikes are quite sharp. Banks policy has been correct. What i would say about growth is that although growth has slowed, we do see i would not say a sharp reacceleration, but we do see growth stabilize. Her current indicator is consistent with growth run 2. 9 annualized. That is a growth many countries would love to have. Through next year, i think one of the things the market is missing is how powerful the boost from lower oil and petrol prices are good for growth. That will combine with what we think is an acceleration in wages. We have which data out this morning that we think will provide a relatively strong support for growth. We are on to wage data later this morning. We have forecast of average earnings and 1. 2 over three months. Flattened by to be lower inflation rates, isnt it . It is not a great picture of the market. It is not, but on a sequential basis in the last 36 months, if you annualized the latest wage data it has been growing at a pace faster than that. We expect wage growth over the course of this year to rise to about 2. 5 by the end of 2015. It is still not a fantastic growth rate, but combined that with as low of inflation as we expect to be, i think real incomes will look reasonably healthy. Real Household Incomes will look healthy. Politics. General elections next year. Last month, you said there is not much difference between hiking in q1 or q3. In q2 you would not when to touch and because of the election in the quarter. When you look at how politics are developing in the country, what the outcomes from that election that make you start to think about pushing that rate hike forecast out . The bank of england wont i dont think they will anticipate the election outcome it anyway. If it is true that it is a major concern for clients at the moment for financial markets, it is the uncertainty surrounding next years election. I think the bank of england will wait to respond to the election as it transpires. Parliament,a hung and currently the betting 70 ets are forecasting a probability of a hung parliament. But that has negative economic indications, you can respond to them in that stage. I do think at the margin, there is a reason to delay the rate hike. When i look at the rate market, and we could get a le at 5. 9 that is our estimate. Is that kind of meaningless right now . I think the process from a very low level is already beginning. A sequential base, the last 36 months, the pace of growth has been quite a bit higher than the 1 annual growth rate would imply. We expect to see wages begin to continue to pick up over the coming months and hit around 2. 5 to possibly 3 by the end of next year with an and Unemployment Rate of our forecast with 5 to 5. 5 . One final question before i let you get away for christmas. Russia, and not from a trade or economic point of view, but from a Financial Stability point of view. What does it mean for it the bank of u. K. In england . Russian banks are worth about 2. 5 of bank of england capital. It is not insignificant, but direct exposure is not huge. It is the second round of fact. If there is some contagion effects, i think it would be the pencil concern for the bank of england. Im sure they are watching very closely. Kevin daly, manager of director and goldman sachs. Is looking for a rate hike in q4. We wait for the bank of england notes out later today. Talking about jobless claims and unemployment at the same time. That is the main event this evening. We have the latest fomc statement. Investors hanging on the words of that considerable time pledge. Maybe a little curve fall happening in russia. Lets check in on the ruble. Russias finance Ministry Said it is selling for exchange. We saw a stronger ruble against the dollar. How long before that turns around . That remains to be seen. We will talk about russia more after the break. Welcome back to on the move. It is time to talk about corporate use. Phillips saw 1 billion this morning in a boost to its business. Aging i am joined on the phone by philip ceo france the newton. Be is itquestion would a good idea for you to take on more debt to finance this deal in the midst of a crisis in russia and a key market for you . Good morning. Russia is indeed in a crisis situation. Phillips has been flagging that development already for nine months and we saw our business getting under pressure. I feel for the people in russia because it affects them very much. We should never forget that our patients in russia as will need medical help and we were engaged in helping build the medical system in russia. It is what it is. Russia is speaking, only a small. Small part of our global phillips business. I would not make this bigger the necessary. We have a thriving business in the United States, in europe, in asia, in china. The reason why we do these we see aons is because World Population that is growing , a population that is aging and will have more chronic disease. Cardiovascular disease will be at the forefront of many populations and minimallyinvasive therapy, basically surgery without cutting with a big knife, but rather through smart catheters and imageguided, are the way forward for a much more Productive Health care system. It is better for patients because through minimally Invasive Surgery you can go home the next day, but it is much more cost effective. We see this as a great acquisition that is synergetic with phillips and help us grow faster. Can we expect similarsized takeovers in the near future . It is part of a wider plan to do this in the next two years . We you be taking over more debt and taking advantage of low rates in europe . Indeed. At our Capital Markets stay in september, we announced our strategic way forward. We took the bold position to separate phillips in the next one to one and a half years and create two standalone companies. Healths, will focus on technology, and we separate a Light Company which will focus on energyefficient lighting. It is good for investors who can decide whether they invest in health tech or lighting, and it will allow us to grow faster. I have said that acquisitions will be part of the strategic approach. We want to be a Solutions Partner to hospital systems. Solutions in technology can drive productivity of hospitals in a much better way going forward. A good example is the smart catheters from volcano of how we can treat cardiovascular disease better. Yes. We will be interested to gradually look at more acquisitions, although we will be very prudent and apply good financial discipline at the same time. Just a requested before we go to break, volcano, coming back to this deal. It has been a target of activistinvestor engage capital. How do you think you can convince them to offer up their shares . What is the strategy . Volcano has been trading a lot higher earlier in the year and came under pressure as the growth was stagnating. We paid a good premium to the good share price. Fair share8 is a price for the standalone company. The synergies we see are because of our ability to inject new opportunities in volcano. Our technology, the synergies in sales, the synergies in cost. Those are benefits that should flow to us. We think 18 is a very good price. Tendered offer will be wellreceived, but we have to wait and see how each shareholder will make their decision. Frans, a pleasure having you on the show. Frans van houten. A big story this morning is russia. It is the ruble. Russias finance Ministry Said they are selling in the market. 1. 2 rruble down by just even though we have the big word, intervention. Heres a picture of the market for you. The ftse 100 trading lower through the morning. We are off sessionlows. The dax is off by 76 points. A lower open to todays trading. Intervention. Russia sells u. S. Dollars to prop up the collapse of the ruble. S trying to convince lawmakers to back his choice for president in the first round of voting tonight. , sonysling the plug premiere of its new film the interview has been canceled. Good morning. Welcome to the pulse. We are here in london. Im guy johnson. Im francine lacqua