First time in almost seven years. Many forecast saying sub 60 is here to stay through 2016. A little bit of a rebound. Koppers, metals, a little bit higher, a 10th of a percent. Gold up. 1 . That to do with the Federal Reserve more than 80 probability they will hike. Those technical indicators are telling us when it comes to traders. Miner to keep an i on one , potentially some gold. One of its minds has suffered a spell of toxic residue it. This is in desperate this is being reported by the that breaking news from bloomberg sources that in the united states, dow chemical and dupont are in late stage merger talkers late stage merger talks. If is consolidation a good thing when you have a glut of temples in the market. Glut of chemicals in the market. Interesting news in terms of construction. Carillion coming up almost 5 . Why . Because things are looking pretty rosy. Jonathan thank you very much. European equities, i dont think that is a convincing bounce. We are up. 5 . You see the miners, we got dhp up 3 . Anglo up. That is not convincing. Some of these analysts bring up that chart. Brent crude breaking 40 yesterday for the First Time Since 2009. The white line on your screen is the estimate, the forecast for the first quarter. The forecast tracking the teachers prices lower and lower. Price isng the futures lower and lower. S are still wayy above that. Jonathan lets use the brent curve. Belowthe brent curve back 65. Guy we are not going anywhere in a hurry. The supply story is not going to get undone. Demand. Got a lot of lets pick it up and get it from a different angle. What is happening in todays show. Let me walk you through. Ceo concerned about investment cuts. Tacklees 40 crude mean . We will an update from the middle east. Seem to bel, dupont in late stage merger talks. Chinas consumer inflation picked up last month, meanwhile the pboc that the yuans ravens rate reference rate. Malcolm, great to have you on the program. Inflation story, where are we tackle where are we . Malcolm weve got the consumer side holding up. Services holding up. Services up 2. 1 . On the producer side. The commodity fallout is playing out at the factory level. Into price for oil and left as input price for some of the Raw Materials are plunging. That is what is leading the ppi inflation. It is a quick turnaround but there could be a wash through. We have some economists expecting epi ppi deflation might abate. Jonathan it is a really if pboc is situation stuck between a rock and a hard place. Time we know what the political noise will be as a consequence pretty the reference rate move overnight, where does it leave policymakers . What does it tell you about what is happening . Welcome people are reading the tea leaves malcolm people are reading the tea leaves. It comes a week after the yuan was allowed into the imf reserve. There has been a lot of speculation that the chinese authorities have been propping up the chinese yuan to keep it nice and steady as the vote was looming. The boat has been given as a kick. Now there is more room to allow some depreciation which the markets seem to want. Given the weakness we have seen in exports, the question is how many more days are we going to see this fixing level decline . How much further with the market take the yuan . Guy how much of this is about fed . That is the other side of the equation. The fed is looming. People are expecting further u. S. Dollar strength. That is not been good for the chinese yuan. It has been pegged to the rising u. S. Dollar. Off,e fed is going to lift if the u. S. Dollar is going to rise, then it makes sense to allow some weakness in advance of that. Jonathan malcom scott, thank you very much for breaking down those two stories. Guy to be run away from china as fast as we can . We dont run away. Is a massive region going through significant change. The policymakers have done a good job of managing structural reform in china as well as structural reform issues in last few years have been around communicating. Worrying from a market perspective. Those who capture Market Development as well. They have not been as aggressive as we would have wanted. The ability for domestic investors to move in and out of markets without having to go to tesco through quota systems. Go through quota systems. It is a big important factor. Guy they want to maintain control. This is a controlled economy. On the other hand, they need some levers that you would normally be pulling in a freefloating economy. The two. Caught between if the management is going to continue. There was a period in august where people wouldve called water on that. Qwest communications in the last few months has been week. The currency is a good point. The jennys economy is slowing. It is moving away from export driven. It is a slow pace of growth in china. One of the ways you can upset that is to allow your currency to fall, depreciate. With the fed moving, the expectation of moves with the depreciation of the dollar, we have seen the opposite in china which has not been helpful to the domestic economy. They have a significant amount of gdp created the export market. They shouldve been a lot more reactive in terms of trying to weaken you want, not terms of coming months but recent quarters as well. To help some of the domestic and export. Jonathan we know how important trait is to china. How important is a weaker yuan to china. The numbers coming out of the trade data have not been pretty. That is still a big trade balance surplus. They are not clearly struggling theyre clearly not struggling. Wayne wednesday, one policy. We cannot one state, one policy. We cannot ignore that. The currency side as well. To recognize the changes they have made in terms of more of a consumer, export led economy. We have not seen that. Policy and terms of allowing the currency to appreciate and depreciate based on economic fundamentals is what we are used to around the world. It is important for them to recognize that and to change some of their views. It means losing control. Guy not sure if they are ready for that yet. Wayne, very briefly, when you look at the biggest risks for 2016, is it weve got the fed wrong . Or china wrong . Fede were hoping the taking appropriate measures in terms of policy. Is it one and done . Or is it to and done . Perspective, we are in a slow landing camp. They put 5 of china growth in a besides the gnp of china is massive. Significantly lower than expectations the chinese governor best Chinese Government is putting out. Chinese government is putting out. Global growth will be ok. ,ny significant stabilization and overactive fed, and youre in the tail. Tyco wayne, think you very much and day very much indeed. Guy thank you very much indeed. Guy welcome back. London looks lovely. The sun is out. The market is higher. Lets each up to speed it nejra cehic here for your news. Nejra dow chemical is in talks to merge with dupont in what would be the largest deal in the chemical industry. An agreement could be announced as soon as this week. German exports fell more than estimated for the month of october. Experts are down 1. 2 . Imports also dropped by 3. 4 . The white house says donald trump is this qualified from the presidency. The front runner said that muslims should be barred from thering the u. S. After attacks in paris and san bernardino. Trump is refusing to act away from his comments at even after universal condemnation. Jonathan the headline in the commodity market yesterday was brent crude below 40 a barrel. It is rebounding from that six year low, rallying for the first nine rallying for the first time in four days. Caroline hyde got to speak with one of the Worlds Biggest Oil producers. Here is what any ceo had to say. What is annoying me is that the price of today. [indiscernible] 2015 we cut 200 billion. We are going to do the same. Imbalance inte an demand. Jonathan Caroline Hyde joins us now. The ceo of norway Sovereign Wealth Fund. A man who is sensitive. Caroline this is the Biggest Wealth Fund in the world. 860 billion. To put it in perspective, they aim to own a little piece of every single company. 10,000 companies they have holdings in. Holding 1 of all of them. This has global significance. Hen you speak to the man he is saying this is a new paradigm shift them. For the first time they are seeing funds lower when they come in. The money coming from oil and gas revenues from norway are slowing. The government the first time is taking money out to help support their own economy. He is saying this is a difficult time when it comes to having to reorientate their business. When you have money coming in, whereharder to change up you want the assets to be spread across. Guy they have been cutting their bond holdings. Thatine this is a company puts 60 of its money in equities and real estate. He told me that in this new world of low negative interest rates, he says that is been the defining touristic of 2015 desk defining characteristic of 2015. Theyve been making significant changes. Wherever a considerable rate and bonds. Considerableave a rate and bonds. Caroline the word dramatically i askedtheir holdings. About the Federal Reserve rate hike. Is this the way they want to see things going back up he did not seem to flinch at the moment. He seems as though he feels lower rates are here to stay and therefore they need to get money. Nd in terms of money how do you up returns . You keep going into equities in the emerging markets. Folkestone china despite the concerns of slowing growth there. Back to you. Jonathan thanks very much. Lets welcome our guest. Heels to manage assets. A longtime head alongside him, abhishek deshpande. Abhishek, we see the effects of 40 crude, sally, etc. Are we sitting here waiting for demand to pick things up and try to bring back some kind of demandrium . Abhishek growing significantly next year. That is where the expecting support to come from. Have a look at our own analysis, i think demand will be up next year, year on year. The same your and your you dont is a priceree there plasticity in place. Were looking at a more realistic number of 1. 2 or 1. 3. There has been some slowdown in china,from the u. S. , even in europe. The same numbers you see earlier this year are not coming up now in terms of growth. Guy what is going to stop u. S. Producers producing . Is it the banks saying enough is enough . Is it they can i get anymore out of the technology . I dont see the headline amount of oil coming down as dramatically. Abhishek for me, as we move into 2016, they were quite well hedged this year. Could they were able to afford those online at the they werewhich hedged. As we move into 2016 and we know the hedges are not in place, this is when we will see the trouble coming in. Guy i thought they rolled off in september . We are not seeing any new hedges coming up. They are quite light on 16 hedges. Light on 2016 hedges. For the u. S. To bring in more rakes, unique prices above 45 50 a barrel. Jonathan you look the Energy Sector and the remarkable sector is to cut the dividend in terms of majors. D spec that to change in 2016 . Do you expect that to change in 2016 . Into capital expenditure. From an Energy Perspective did there has to be a normalization that these prices are not good to move back into the 70s, 80s, 90s anytime soon. In terms of capital expenditure, the dividend payout has to be normalized. Thank you for your time. Abhishek deshpande is going to stay with us. Im going to talk to michael now. He says about 40 oil. I would be fascinated to get his take. Jonathan welcome back. Guy Michael Spencer is good to chat. I am really intrigued to get his take on a number of things. Him is 40 oil telling about the state of the world . He is feeling the effects of the markets now. What is the signaling mechanism he is seeing . M a. Han he has this you got the brexit situation. I wonder if mr. Spencer has an opinion. Guy he keeps saying his view is the u. K. Would be ok outside of the eu. Im going to get a little more flesh on the bone. We done in the consolidation story . I am most intrigued by fed, oil. Jonathan guy johnson, leaves the studio. You stay with us. . Hat does 40 crude mean we will do all of that in just a moment. Jonathan good morning and welcome back to on the move. Were 30 minutes into the session. Ons could you up to speed where markets are trading this morning. Yesterdays mining rout. A rebound not entirely convincing. Glencore a little bit higher. A percent. 8 . The dax head above water. Switch up the boards quickly. The commodity market, you know the headline from yesterday. A drop below 40 a barrel for the First Time Since 2009. A bit of a bounce. , the pbocmarket weakening the reference rate the weakest since 2011. A lot to discuss in china. Lets cross over to Caroline Hyde. Caroline i got the biggest fall or for you. It is a stagecoach down the most since 2011, down by 30 . Why . The havoc that is been caused by the events in paris. The attacks have been hurting their revenue when it comes to intercity bus revenue. Clearly this is a warning. Economicage from an point of view. People concerned about using transport after the attacks in paris last month. A very concerning trend. Low, aller fresno gold rally on the backs of of the first hike of the fed reserve. Nillo had alow spill of toxic residue. Keep an i on construction. This is the one area of industry that is doing well after the commodity rout. Copper so much cheaper. Construction much more profitable. Inillion leading the charge the green. Up 5. 6 percent. They say their full year is looking rosy. 2015 total revenue expected to grow strongly. Ask you get a jonathan Caroline Hyde. Lets take it back to crude. The punching price of oil has been hitting the gold states. Bank borrowing costs are up its stock trading has been set. Zapped. S been is tha i want to bring in elliott gotkine. It looks like i would be stocks are being treated were warily. We know the story. Alico elliott it is all down to oil. Markets,eveloped abu dhabi isets. Oblique dob classified as an emerging market at you when i know it by looking at its stock market valuations. At it, it is trading on a multiple of 8. 4. That is lower than Frontier Markets. What investors are saying is investing in Frontier Markets which is considered the riskiest of the three. Investors are saying it is better. There is more upside even when you factor in those risks. We know that markets across the gulf have been reeling. Sinceillion wiped off 2014. Volumes have been whittling as well does have been dwindling as well have you been dwindling as well. Cutting production in order to boost prices. There is more to go. As we know, just because something is cheap does not make it go value for money. Some of it will see this as a Good Opportunity to get into these markets. Jonathan and it can get much more cheaper. Elliott goc and, thank you for joining us. Lets bring back and abhishek this brandy. Abhishek spidey. I want to discuss 40 crude. Youre not feeling the pain of the street. In terms of people in saudi arabia, what does that look like right now echo abhishek right now . The upper class in rich people on different products. Line with other countries in removing subsidies, that is when they will start hitting people on the streets. It will cost a lot of unrest in the country. It is on the table clearly for them. Jonathan that is the reason i raise this point. Where dcd pressure points coming from . What can stop the saudis from continuing with their current strategy . Abhishek the region is surrounded by uncertainties. It is only gotten worse from last three to four years. Saudi decisaudi arabia doesnt want any distractions inside of the country. They want to cut subsidies but they cannot cut subsidies as it would lead to further disturbance in the country. They have to trade very carefully. On paper it makes sense to take away subsidies. On the other hand, the nation is in a part of the world which is rather disruptive, they have to look at other avenues of raising would be the right way to go. Shalean we talked about and how resilient it has been. A lot more than analysts thought it would be. The budgets of some of these countries, we know the battle to balance budget. 90 crude for the saudis. It is much more resilient than people thought as well. Abhishek low oil prices not good for anybody. From saudi arabia to u. S. It has not been good for anybody. On one hand, some countries are more resilient. Saudi arabiahand, is more resilient because of foreign reserves. Every country or company is want to thank maybe the other country will go down first and we will survive. Willmes like these, you see production minimize losses. That spirals the situation into worse and worse conditions in terms of glut. They can continue to do so for another year but that does not mean they are not being hurt. Jonathan what is driving us on an intraday basis . It seems to drive all of the other asset classes. What is the predominant driver of the crude market . Youll see oil going up in terms of three to four months. Whatever drives the market could be from investor side. The price will rebound because decisions by investors and even on analytical side, we see the market tightening by 2016. You cannot jump in and go along right now. That deepens the tangle. That will continue to drive this market. Jonathan 2016 seems so unpredictable. He managed to and all accrued. Going into next year, they said it good to five dollars. Abhishek, great to have you with us. Chemistry. A dow chemical and dupont are set to be in are said to be in late stage talks. What is said to be the biggest deal in that industry. We rolling over the ftse 100. Dead flat on the session. The dax in the red. Good morning. Jonathan good morning and welcome back to on the move. What a beautiful morning here in london. Minas bounce is not convincing. Bloombergc with the news flash. Nejra their peoples bank of china has cut the yuans reference rate. The central bank is trying to believe german exports fell more than estimated in october. Exports were down 1. 2 . Imports dropped by 3. 4 did volkswagen will be suspended from the ftse index series. The removal comes after the w cheated. After the w for more on the stores, head to bloomberg. Com. Jonathan lets take a back to germany. That the export numbers but the Deutsche Bank story. John cryan has told they have a long time. Rk for it needs to clarify its goals. Provide for everyone a vision of how the bank can be better. We have at least admitted it needs to be better. It hasnt performed for quite a long time. It is been an endemic underperformer. We recognize that. Jonathan lets get out to hans nichols for more. He always seems to complain about the cost of doing business in the u. S. Just taken a knife to many of these as assists. Does he have any plans to scale back . Any hint ofn this may be paring down some of their operations in asia, they are going ahead and set in the u. S. They have visions of being a Global Investment bank. Ive spent time in asia. Markets are not week. It is not a replacement to the u. S. Asia his comments on contrast with his counterpart. They are doubling down on asia. He did not say they are not going out of asia. He was far from that. He talked about the fee structure. How much more lucrative it is to be in the states. When you look at what they have done in the states, they are about six place where they are tied with credits wiese for the year. Over in asia, there had over 2 billion in revenue from asia. Seos try to manage this company and expectations and let everyone know where their priorities are going to be. Jonathan . Jonathan hansson nichols, great to have you with us. Chemical isl, dow said to be in talks to merge with dupont. M a aboutt year for to get a whole lot bigger . Running is now, aaron dupont. Lote have been talking a about how the players need to merge. Prices are going down. Pharma is getting hit. Any to merge to cut costs. We thought this may not happen before christmas. Here we are, it looks like it is around the corner here it jonathan offensive m a does not sound optimistic. Toon were getting industrial names having to combined having to combine and then split. Bigpeople are facing challenges. They need to cut costs and they need to somehow get your and cut costs to survive. Jonathan to moscow we want to talk about two months ago we were going to talk about what does it mean for the other players . Aaron it is good to great the number one in the world. Monsanto try to do a deal and they got rebuffed. Youre going to have three big players shaking in their boots. The swiss are going to be asking themselves can they partner up. Monsantos going to be looking twond and seeing our biggest american competitors have just gotten bigger. What are we going to do . Jonathan is their way of looking at it like that . Aaron they wanted to do this was deal. Them just locked just block to them over and over. They have to think about what they need to do and review what they passed up before. Jonathan we go into 2016. Had a massive year of deals. These guys have got to merge because of the pressures of growth. Organically, they are too high. By someone out. 2016, is the story just going to continue . Aaron it depends on who you ask. The confidence among executives is still pretty high. They still want to do deals. A lot of these big deals have been talked about for years. Were talking about make a brew. Where talking about science. They are finally happening. Ceos are looking over the shoulder and saying everyone is doing a deal and it is time to pull the trigger. I believe it will continue in 2016. Jonathan thank you for joining us. A big deal. Up next. Well be joined by Richard Jones discussing mark carney. The disaster masters over at pimco. Atted darling also got a job a bank on wall street. Stay with us. The problem with not running is you are basically saying we should borrow forever. By the time we expect to run a surplus, if you cannot run a surplus after eight or nine years, when are you ever going to run a surplus . Inbe the debt problems emerging markets are going to overwhelm us. Maybe there is going to be shocks coming through the oil price. What i do know there will be some shocks. You canhat was watch it at 10 00 p. M. U. K. Time. Joining us is Richard Jones. Great to have you with us. We will talk about the trading day ahead in just a moment. You saw the pimco disaster masters. Appointingley alistair darling. That these guys are hiring these people at this point . Richard theres nothing really. Now really new the revolving door between wall street and the Public Sector has been going on for a very long time. Jonathan these guys know a lot about financial crisis bottom. Ine, whether it is bernanke whether it is gordon brown. Thater it is tree shaped did not guide the ecb through one. Did it speak to an impending crisis that these people are worried about . They need these guys on board . Richard the next 12 to 18 months whatever has in store for argue there is not a lot of experience in all of those people. That experience will be of some value. Jonathan i would know i would love to know what his advices on gold and rates. Coming up, lets bring of the boards. 9 30, and record from the bank of England Financial Policy Committee meeting. I will talk about that in just a moment. At 11 00, we get brazilian inflation. At noon, it is u. S. Mortgage applications. Dont miss guy johnson. Wille will be keep be talking to Michael Spencer in just a few minutes. To go back to the bank of england and carney. We are always focused on the mpc. The financial policymakers are making a lot more noise. The pittance into what is coming out today . Richard i think the mpc is the most important game in the in town. Policyo prudential becomes a bigger mix of the whole bank of england policy offering, the sbc will be increasingly watched by participants. Some go bank of england, do you think theyre going to tighten bank of jonathan england, do you think theyre going to tighten credit . What other people saying . I am not sureard it is good to swamp the mpc in terms of importance did the policy mix is going to become more interesting it youre going to have them playing a dual role. Jonathan the trade environment at the moment. You look at the crude Price Matching that s p 500 take for take. About theu make trading environment at the moment . Richard it feels like one big trade. Sometimes that scene changes. We have oil and commodities being front and center. We have centralbank expectations in the past being the thing that is the big drivers. It feels like a big trade. It is a december and market liquidity is slightly different than other times then at other times. Jonathan 55 minutes of the session. A quick check. Equity markets not much of a bounce on the ftse did where lower, down by six points. Low, down a session by. 3 . I want to talk you through the other asset classes. Brent crude below 40 a barrel for the First Time Since two since 2000 nine. Market, there is a story there. Where going to talk about it throughout the morning here on number television. Coming up, guy johnson, not next to me, because he is going to be talking about he is going to be talking to Michael Spencer at 9 00 a. M. For me and the rest of the bloomberg team, rest of best of luck for the rest of the day. Ftse lower by eight points. Francine crude reality. The cfo ofces back, Sovereign Wealth Fund tells us theyve recovered ground. We have got back everything we lost in the third quarter. Inflationchinas stabilizes. Cpi picks up as stimulus helps support demand. The pboc gets another cut in the yuan rate. Bloomberg sources say dow chemical is in late stage talks to merge, in what would be the industrys largest ever deal