And sen ticentrica shares s disappointing second half after losing 823,000 customers in four months good morning welcome back to the show i have some pretty good news when it comes to the eurozone for pmis, for november all three headline pmis above the forecast for the reuters polls, and the forward looking indicators pointing to a busy december, according to ihs market. The pmis pointing to Third Quarter gdp growth of 0. 8 those are strong numbers, just to give you one of the lines here the november composite pmi flash at 57. 5, well above expectations i should tell you that the euro dollar has risen over the last 45 minutes. Its currently up by 0. 2 . In part because the french numbers blew it out of the water. Looking at components like jobs growth, the fastest since 2001 the german numbers also easily beating expectations thats helping the euro dollar currency want to show you the equity space. One hour into the trading session, the stoxx 600 is down ever so slightly to the tune of 0. 3 volumes will be a lot thinner today given that the u. S. For half of the day is out, given the thanksgiving holiday to our u. S. Viewers, happy thanksgiving happy turkey day a number of updates from the likes of centrica. We also had thyssenkrupp, thats weighing on the dax. The European Equity markets, this is the picture. Xetra dax off by 0. 3 after falling 1. 2 in yesterdays trading session. That, in large part, had to do with the strength of the euro. The xetra dax continuing those losses today the ftse 100 off by 0. 4. Centrica is a big story there. Well get to that in a second. As far as the sectors are concerned, this is the picture we have two in the green, construction and materials slightly outperforming along with technology. Utilities down by 0. 8 i think centrica, National Grid are to blame for this. Chinese shares have had their biggest fall in 1 1 2 years on the liquidity concerns the composite index was down 2 , and analysts have said with the governments increase in deleveraging liquidity in the stock market has been impacted lets get more analysis on this with jiahe chen, and Michael Sullivan has also joined me around the table jiahe, lets kick things off with you whats the selling in the chinese equity markets down to is it weak volumes is it simply just profit taking . I think its just profit taking if you look at this year, it has been rising quite a lot. The 600 was rising 24 even after todays fall if you look at the fixed income market today, its been stable because the fixed income market has been a bear market over one year today is a good day for the mixed income market. Liquidity is okay. Its like profit taking. China pmi has been rising over 100 since the debbeginning of i year and dropped 5 today, thats all right you say its down to profit taking, but that said, we had new regulation come through over the last week or so. For the crackdown on micro lending for example. A lot of investors used this to buy stocks do you foresee a total ban on that and do you applaud some of these moves put in place by the regulator . This connection between the small landing and the equity market has almost no lynink between the two. The very poor people borrow 1,000 yen, 500 yen for daily use, not for equity investment, so theres probably no connection between these two most of the small Lending Companies are lifted in the states lathrather than asia i would say theres no link at all. We have to leave it here. Thank you very much for your perspective. As i said, Michael Osullivan has also joined me around the desk i dont know if you make anything of the moves we saw overnight in china the volumes are light. Japan is out forev trade today, make it is just profit taking, but you have a view on china going into 2018. Is that view one that should keep us up at night . Are you worried . I think some people see in china today, they see the echo of japan in the 80s, taiwan in the 90s, spain ten years ago. For me the key difference is the policymakers in beijing are alive to this. They know the risks. In the last three weeks we have had three very prominent and public interventions by the governor of the peoples bank of china warning that there was too much leverage in the system. So i think im supportive in terms of what the policymakers are doing. Remember we just had the communist party congress, where effectively they get the political buyin, the mandate and the program for the next five years that will balance the managing of the transition of the chinese economy with social cohesion these kinds of policy moves are part of this if we look back to what happened in europe and the states ten years ago, i think its prudent, and Gordon Brownwood would praise me for saying that, prudent to disengage slowly in terms of where leveraged debt levels are the chi nez rnese regulatorse government is try doing this carefully. They learned from mistakes in the past, such as the huge selloff that we saw at the start of 2016. At the same time, we have had these warnings about a minske moment by the government do you believe that we can avoid such a moment which is a sudden collapse of asset prices in china . I think whats interesting about china, its still a Young Country in terms of where its come the last 30, 40 years a lot of their institutions are quite young. Two year s a gs ago with the fluctuations in the currency and the stock market, the policymakers did not communicate maybe in the way we in the west would like to see them communicate in the markets but they are learning quickly, spending more time in the western conferences. Theyre very good attacking and ebbing in terms of liquidity last week the bond yield pushed up above 4 and we had a liquidity injection. We will have more to talk about, not just china but your outlook for 2018, thats coming up in the next 20 minutes or so. Also coming up on the show, the latest fed Meeting Minutes reveal concerns about low u. S. Inflation, but a rate rise in december is still on track more after this short break. more people shop online for the holidays than ever before. clapping and the United StatesPostal Service delivers more of those purchases to homes than anyone else in the country. because we know, even the smallest things are sometimes the biggest. Even the smallest things come to a complete stop. Recalculating. In one mile, arrive at a place where you make your own lane, only to discover. It has traffic jams too. Your all new compass. I would like three two is standard. Im not standard. Three weeks. Ok. Thats why a cutting edgeworld. University counts on centurylink to keep their global campus connected. And why a Pro Football Team chose us to deliver fiberenabled broadband to more than 65,000 fans. And why a leading car brand counts on us to keep their Dealer Network streamlined and nimble. Businesses count on communication, and communication counts on centurylink. The latest Federal Reserve minutes show concern about inflation with some disagreement about whats keeping it so low and how long this will last. The minutes do not indicate a move away from a widely expected december rate hike policymakers express concern about a rising stock market and concerns about what if the market stumbles. Steve liesman has the details. Reporter fed officials continue to grapple with the conflict of inflation thats too low and asset prices that to some on the fed are worrisomely high minutes of the october meeting show the fed is on track to hike rates in december an additional quarter point but also showed a broad inflation debate with a few showing the fed should not hike until u. S. Inflation is convincingly on track to the 2 target fed chair janet yellen earlier this week provided a curtain raiser on the broadbased concerns at the fed. We expect it to move back up over the next year or two. But i will say, im very uncertain about this my colleagues and i are not certain that it is transitory and that we are monitoring inflation very closely and ill go back to what i said earlier about keeping an open mind and not assuming you have a monopoly on truth. There may be something more endemic or long lasting here from the other side, arguing for higher rates, the minutes show many fed officials think the economy is operating at or above the employment rate that could spark inflation. They think the connection between low unemployment and higher inflation will begin to work in the u. S. Economy after the meeting markets continue to see a 93 chance of a rate hike this december and are split on whether or not a rate hike follows in march of 2018 some are also worried that keeping rates too low for too long could cause increased risk to final stability and theyre worried about the build up of financial imbalances translation, stock prices may be too high and some are worried their own low rates may be fueling a bubble steve liesman, cnbc business news. We know future fed meetings could look different depending on who President Trump chooses for the board of governors that includes Janet Yellens seat when she steps down the Trump Administration will have the opportunity to fill four seats, potentially shaping the course of the initial bank for years s ts to come. Global Economic Growth is expected to be sustained through 2018 Credit Suisse forecasts good if limited returns. Lets bring back Michael Osullivan some interesting takeaways from the fed minutes yesterday. One being that valuations may be too high for the taste of some fomc members and there may be a sharp reversal do you agree with that i think the u. S. Valuations are high, very high, theyre right into the top level historically were underweight u. S. Equities. On bouts of strength in the u. S. , we take money out of that and put it in europe and japan i think interestingly that the fed brings this up we will have wholesale change on the fomc bill dudley is the one that is intellectually responsible for bringing Market Conditions into the fed and fed thinking its interesting thats beginning to perk late for some of the fed, financial conditions are too easy, even at this stage the big question mark in the markets, where is inflation . Were desperately looking for it nobody is able to find it. As the jobless rate falls, the hope is the phillips curve will work again is 2018 the year when inflation makes a comeback and were seeing more justification for the wind back of stimulus . I think im stating the obvious. In terms of our outlook at Credit Suisse, the risk factor in the next year is inflation and Central Bank Balance sheets and whether theres an acceleration in what i call the end of accommodation the inflation is there its slowly creeping higher. In some cases its getting close to where Central Banks within a it to be the uk is an example thats probably overshot. Lots of things going on. The impact of technology for me the interesting issue is how labor markets changed and how that is in some corners negating peoples bargaining power. That seems to be a feature the next year is the showme year for inflation we see it normalizing rather than spiking higher. What are the big trades for 2018 will we continue to see the dollar grinding higher versus the euro because of the back drop of higher inflation and the reflation trade going on the dollar in the shortterm is contingent on tax reform and what the former fbi chief can show us. The scene is there for the euro to rally more. Growth is beginning to accelerate in europe, compared to this time last year, its really impressive and there are signs that in some european countries, inflation has got a bit more bite in terms of compared to parts of the u. S. And also well get more news on qe disengagement from the ecb as we get towards next december briefly, michael, what do we do with equities at this point weve seen a stellar rally do we take profits now or do the returns continue we have a positive view on equities were looking to a number of areas, emerging market consumers, emerging market small caps, companies who will spend money on m a, capex, and then in europe, domestic european plays. We just take profits in germany and switch money into france michael thank you very much for that Michael Osullivan now, in other company news, this was a shocker, i warned you, centrica reaffirmed its 2017 guidance despite losing 823,000 accounts between july and october. The co of the uk Utility Company warned the Energy Supply business had a disappointing second half warning that trading conditions were highly competitive. Share prices were off 15. 5 over the past three months, the stock falling 3 . Remy is backing its fullyear guidance after a sharp rise in operating profits. Results were boosted by Strong Demand in china and the u. S. The distiller said it is focused on higherend liquor which offset higher marketing spend. And thyssenkrupp has come out with better than expected profits and strong orders. It swung to a loss charging sailing of european operations cnbc spoke with the ceo about his strategy for tackling overcapacity what we wanted to chief in signing the memorandum of understanding that we want to solve the underlying problem, which is overcapacity. As you said correctly, all the steel notes in uk, netherlands and germany, they always restructured the business. But the success out of that restructuring was always taken away because of underlining problem. We want to solve that issue and make more than 10,000. Altice is looking to sell its Dominican Republic unit. The sale comes as the french telecoms giant seeks to reduce leverage by cutting noncore assets this after a run of acquisitions raised the companys net debt to more than five times the annual core profit. In the u. S. A Record Number of people are expected to fly this thanksgiving weekend but the airport rush may not pay off for Airlines Reporter the long lines say it all the thanksgiving travel rush is on we were wondering who crowded it was going to be when we got here, its crazy already. Not as bad as i expected. Surprised its not worse. Reporter overall the number of people flying at some point this long thanksgiving weekend is up 5 they may not like the packed planes, but they are paying less for their seat airfares remain near the lowest level in years thats good news for passengers, but for airlines, the pressure on prices has made it tougher to boost revenues meanwhile, jet fuel prices have been rising. Which is cutting into airline profits. Since july we have been seeing a pretty strong surge, up over 30 so right now, its a race between fares and fuel right now fuel is winning the race reporter the mixed picture on Revenue Growth is one reason Airline Stocks have drifted lower. But for the millions flying this weekend, the best news is that the vast majority of flights should be on time. The weather is expected to be relatively mild for most of the country. Ive been checking the weather, the incoming flight and where im going to all week. Its been nice to see that they have no snow, no rain, no nothing. Should be smooth sailing im on the Basketball Team at the university of chicago. We get, you know, about a day to come home. If theres any delays, were probably not going home. No delays is great for me. Reporter a smooth thanksgiving weekend in the skies with few delays or cancellations would be welcome news for the airline industry, and set it up for what could be a strong Holiday Season that extends into january lets talk more about this with john snell head of aviation at iges market its been an incredibly busy time for the airlines. Going into the christmastime its the time to shine but also disappoint where do you think the airlines are at this point . Its a peak time, youre right. And airlines will have been looking carefully at their planning theyll make sure the maintenance is done on the aircraft so theyre available, sort out the landing slots for their aircraft so theyre maximized to ensure thats available for passengers. They will have made sure that the crew rosters are correct and appropriate for that level of activity theres a grade deal of Airline Planning that goes into this through the summer and winter to make sure these peaks are properly reflected ryanair is a company thats finding it difficult to recover from this reputationally is Something Like that fixable i think it is because people will continue to want to have adventure, to go to different parts of the world, as time goes on, while this has been a shortterm downturn for them, i fully see them recovering and they obviously eventually offered better pricing to attract customers back but easyjet and others will be looking and making sure they dont fall into the trap and, b, pricing is competitive. One big theme discussed in that package and report was the rise in fuel prices given the rise in oil prices i want to get a sense from you how difficult this is to manage from some Airlines Many of them are hedged. I dont know where theyre hedged for each specific airline, i guess will have a knock on effect on their profitability and margins. To what extent can they pass that on to customers one major developments in aviation is in Engine Technology engines need fuel, fuel is the major contributor to that. So, inevitably the developments of engines that go on to new lighter aircraft is really key to improving the efficiency, reducing the level of fuel usage and increasing revenue per trip. Right so from an aviation perspective, that recapitalization of aircraft to make them more efficient and reduce reliance on fuel will make the aircraft go further, and that is key to that particular i