Transcripts For BLOOMBERG Countdown 20151125

Anna edwards is in westminster. She is out in the cold. This is the chancellors first autumn statement of the new government. What are looking for . , it it is dark and wintry must be time to hear from the government about spending plans. The key question today, is the government going to stick to the goal of a 10 billion pounds Budget Surplus by the end of the parliament, 2020. Illusions, thisll be a budget that is predominantly about austerity. Where will the acts fall axe fall . How much of a burden will be police force have to carry. We have heard about some of the areas they want to spend more in, defense, health. And as you said, we heard more about their plans for housing. For a looking for details backtrack around the tax credit story. It was on that subject, the government faced a defeat in the house of lords recently. Well have to see movement on that particular issue. This is a set piece from the chancellor. Expect metaphorical rabbits to be pulled from hats. Guy who will be here from hear from . Anna we will kickoff the day talking about a challenge of the Banking Sector. Some of that sector is angered by some of the changes made in the emergency budget. We will talk about brexit. We will talk to the federation of Small Businesses and the bcc. Both of the leaders from organizations will be here. The mp will be joining us. He has a permanent position on the front benches of the labour party. Busy morning here. All the way through the day we have the actual announcement at 12 30. Guy thank you. I get to stay nice and cozy here in the studio. Lets get you up to what you need to know. President obama and nato have called for a deescalation of tensions between turkey and russia. That is after the downing of a russian fighter jet. Vladimir putin has called the incident a stab in the back, and warned us consequences of consequences. 12 people were killed when a bus carrying residential guards was struck by a bomb. 17 more were injured in what is thought to have been a suicide attack. An overnight curfew has been been involved imposed. The Second Attack for paris was planned, a skyscraper ducted Business District but he was killed in a police raid on the morning of the 18th. Schools and the subway system and brussels are reopening today. A highy remains on alert. Suggestsies of surveys the chinese economy is showing a muted response to fiscal easing. It was based on Search Engine interest and small and mediumsized businesses deteriorating this month. That is your first word. For more on the stories and others had to bloomberg. Com. Every guy lets find out what is going on with yvonne man. Man it seems like asian investors on a Holding Pattern the last three days. We have not seen too much action or risk off really. We are seeing the haven plays after they mentioned the downing of the rushmore plane. Adding to investor concerns come concerns u. S. Stocks rising to the two week highs. Here in the asiapacific, the yen Holding Strength today. That is having an inverse relationship with stocks. Ending the day 4 10 of a percent down. Kospi down a third of a percent. Yesterday in stocks down 6 10 of a percent. The hang seng pretty much flat. The shanghai reversing course. It is up 6 10 of a percent. We did see some earliest monthly indicators this month. A privatelyg pmi compiled purchasing index as well as a gauge that measures search interests among small and medium businesses, all of those deteriorating. We are still seeing muted response after six this Interest Rates cuts. See thathing you will is green and the asian pacific, oil and gas come up about 1 . We are seeing six following. Crude is rallying overnight. 43 a barrel. As we see, the shanghai metals Futures Exchange is a big rebound. Nickel, copper, rising. Iron ore is still not able to find a floor. It is falling to percent. Guy thank you. Lets get back to the story that seems to be dominating the shooting down of the russian jet by nato member, turkey. Certainly raising international tensions. Is in paris. Elliott, the russians are clearly not happy with turkey. Our cool heads going to prevail . Elliott they seem to be for now russia saying they are ready for a pact with nato to ensure that similar incidents do not occur. Billy thing that will detract from moscows outrage over the downing of one of its fighter jets it says it was over fighterirspace, the two pilots who were then ejected were apparently shot by turkmen in northern syria, these are allies of the turks. Then indeed some reports suggests a russian search and rescue helicopter was taken out by the same people. All of that has angered the russians and Vladimir Putin. Going so far as to accuse the turks is aiding the Islamic State. Fact stated many times the that a large amount of oil and oil products is being transferred to the territory of turkey, from the territory seized by i. S. That is how gangsters are receiving your financial support. Now we receive a stab in the back with strikes against our jets, which are fighting terrorism. Its parts ofey for the russian jet was over turkish airspace. It was backed by the u. S. And nato allies. This is not the first time the russians have breached turkish airspace. It happened twice before. Also shot down a drone. This week, the turkish government courting the Russian Ambassador for addressing down over bombing raids of the turkmen and northern syria, are allies of the turks. Tensions high between turkey and russia. It is not inconceivable to think a similar event quicker. Could occur. You have russian, syrian, american, french jets above syria right now, against various rebel groups. No sense that the russian turkish tension would escalate , but russiansrily are advised not to travel to turkey. Certainly does anger will not go away quickly. Guy how does it come with cate this effort to get everyone on the same page . Thisw does it complicate effort to get everyone on the same page . What does this do in terms of changing the nature of the battle . Elliott it used to be simple, when your enemys enemy was your friend. It is consultative right now. It is complicate it right now. Youd think a russian passenger blamedng taken out and on the Islamic State would be enough to get the russians on board to focus their fire on the Islamic State, but of course Vladimir Putins number one priority is to support alassad. He does not want to be cap telling to be western policy. Cowtowing tong the western policy. It is not impossible that there could be more of a meeting of whichover the issue in greece should be the focus of attacks from the russians and the western allies. Guy thank you. Apologies for the slight technical glitch. The french president is back for a meeting with obama. Did he manage to convince them to launch a coalition against i. S. . Caroline has been tracking the news from paris. What do you see . What we learn . Do we learn . Caroline it is not exactly the Grant Coalition between the u. S. And russia that the president might been hoping for. The u. S. And france have agreed to intensify the airstrikes against the Islamic State and syria. The u. S. Will give more support to the french airstrikes, even though no troops on the ground is planned by either side. They have also agreed to better share the intelligence as to the huge failure of Intelligence Services to prevent the paris attacks on the 13th of november. Barack obama is still reluctant to join military forces with russia, as long as russia supports the regime of alassad. Targetsas the russian are limited to the Islamic State in russia. France had been showing more willingness and flexibility to work with the russians, but barack obama gave the president a polite, no. Have a listen. President obama we have a Global Coalition organized. Russia is the outlier. Refocus theirhey attention on what is the most substantial threat. They serve as a constructive partner. Caroline the french president also wanted to remind everyone alassad as not see part of the future of syria. No Grant Coalition on the table quite yet. I might come with take the meeting that he will have with the russian president , Vladimir Putin in moscow on thursday. Guy thank you very much. Lets get a macro picture of what exactly is happening here. Try to get an understanding of how it affects the markets. John wraith is with us. We will talk about the u. K. In a moment. More broadly, the u. K. , europe, and open economy, how is it being buffeted by what is happening with the geopolitical story. John wraith you have been touching on some of the stories impacting markets in many different ways. There are risks to the outlook a mother is concern about what this means for growth and demand. Generally, all of these instance can have an impact on Commodity Prices and inflation. Expectations for the rate markets as well. Guy you have the smb coming up, you have the fed coming up, you have geophysical tension in the middle east, prioritize that. Key thing isthe the ecb meeting in a week and the fed meeting in three weeks. Highly unusually they are heading in opposite directions and Monetary Policy. The ecb is easing significant further. The fed is starting to take baby steps to tighten. That is almost unprecedented. We need to see how they deliver. What the markets are expecting. That will clearly influence currency levels. It will influence the outlook for their own economies. If you look at the fed for example, expectations about where they go next on policy will have a big impact on the u. S. Dollar. That clearly affects commodity countries, commodities complex generally. It affects inflation. There are a lot of moving parts. An unusual number of moving parts. In terms of the bank of england, that leaves them because currency inflation is weak and with heavy time to sit back and assess how this will play out. View,rom a macro point of does the statements change much . John wraith probably not. There will probably be an announcement that borrowing has gone down a bit. Therefore the repair job is significant. The hill the needs to be climbed is slowly steeper than it seemed in may. There is progress. It is gradual. In a Macro Economic sense, it is not widely to impact on growth. If the government tries to go too fast, there are risks to the outlooks. They need to think carefully and take their time about what measures will have the least impact. That clearly has to be protected into the sickly protected domestically. This is more about politics in theater and where the cuts are calling and the actual overall numbers. Guy plenty more to discuss. Countdown, the politics and theater is there, we will have details of what the challenge of challenged Banking Sector has to say. We will have a short break. Guy 7 19 in brussels, welcome back to countdown. Bank has agreed to pay to escape prosecution in the u. S. Investigation into banks that helped americans evade taxes. I Goldman Sachs employee hired to develop Surveillance Systems to detect illegal behavior has been sued by the ftc for allegedly helping himself to inside information, and trading on it. The u. S. Securities and exchange he exploited his axis to the firm systems to make almost half 1 million. Hp has given eight disappointing forecast a profit in the First Quarter. It was heard by dependence on the lackluster pc market afters running up with its core for technology counterpart. Be 33 act profits to share, falling short of estimates. For more on a story and others please had to bluebird. Com. Bloomberg. Com. Is still withth us. Lets get back to the conversation we were having, which is this relationship between what is happening in the wider world, Commodity Prices coming down, geopolitical tension thrown in, and how the bank of england sees the world. It is watching what is happening in west westminster this loose monetary. What is the bank do . Does the thing do . John wraith it is expected to go on for another five years in a similar magnitude. That is in the bank of englands calculations. They will look at what comes out today and see if they need to change their assessment. As always, theyre looking at one hand the domestic economy and inflation and outlook there, which is currently healthy. It has been steady for a while. The labor market is tight, wages are accelerating. Domestic demand is firm. To have athey have very close eye on what is going on externally. We have touched on this already, there is an uncertain outlook for demand in the eurozone. There have been wild swings. The downside in energy and Commodity Prices in the past year, that has an impact on imported inflation into the u. K. That is also affected by the level of sterling. They have a lot of different parts. Domestically, they are confident about recovery. And all else well equal, it is starting to argue for tighter Monetary Policy to head off the risk of inflation overshooting. Guy where is the miss price in the rate curve . John wraith . It is in the back end of next year. That is partly because the external risk have a lot of tension of the moment. Tightens,market inflation accelerates, the picture could look different in a few months. Guy two and three some of the area. John wraith they need to tread carefully. Guy stay with us, lets get back to westminster. Anna is down on the green this morning, outside houses. Anna, over to you. Many are watching to see what George Osborne announces. We want to talk about the challenged Banking Sector, what are they looking for . Is up this year, were joined with cyrus ardalan. The Corporation Tax surcharge is something the government talks about in the summer. Your sector does not like it. The challenged Banking Sector does not see why you should be subject to this extra tax. Carl riccadonna it is important to know why the bank levy was introduced. That tax is designed to try to compensate for they received from the government. The situation of that is different. Today we have a highly concentrated Banking System and the u. K. Five banks account for 90 of the deposits. Policys a strong imperative to try and encourage the growth of new banks. Anna we know the make wants to see more challenge to banks. This is why this new surcharged is not apply to the smaller and the sector, like yourself. Why is the sector angry . Cyrus ardalan it does have an impact. Its is a strong signal which is negative. We are trying to attract capital to come into the industry to create new challenger banks and help existing ones grow. Secondly, once we receive that we will be taxed. That will reduce our ability to continue to grow. It would not be helped helpful. A very does very little to try to support the governments on policy of encouraging a diverse financial system. Anna it does seem to government wants to find diverse sources of funding. Do you think the government could do more to help the challenger Banking Sector pick before some of those customers are passed on to the alternative lending base space . Cyrus ardalan i think there is a need to diversify. 90 of banking is handled within four or five institutions. When he to have diverse institutions which are more specialized and provide a choice Banking Services to the needs of different sectors. Our bank is exquisitely focused on trying to provide funding to offer numerous. Small and medium sized entre nous is. Entrepreneurs. Other banks try to find sector oriented lending. That is what is lacking. Capital market is just another dimension of trying to stop by to supply diverse funding. Anna you are new, you got your license in the summer. How are you finding this foray into the world of challenger banks . Find thatlan we there are significant opportunities. Caseis a sector in our where customers small and mediumsized entrepreneurs are not well served. Their needs are very specialized. Banksore the large typically provide more standardized products dont meet their specific needs. Anna you used to work for a big bank, is this more exciting . Cyrus ardalan definitely. It is a new venture. Anna thank you for joining us. Guy we will be back with anna later. Largest any worlds manager says the selloff has room to run. Where is rockbottom . See you in a moment. Guy 6 30 in london. Let me get you the bloomberg first word news. Reporter president obama and nato have called for a deescalation of tensions between turkey and russia. That is after the downing of a russian fighter jet, threatened to undermine efforts from a united front against the Islamic State. President putin has called the incident a stab in the bank back. Tunisia has declared a state of emergency after a bus carrying President Shall guards was struck by a bomb in the capital. 17 more were injured in what is thought to have been a suicide attack. An overnight curfew has also been imposed. Prosecutors in paris say the alleged ring letter ringleader of attacks had planned to blow himself up days later. The attack was land in the Business District. He was killed during a police raid on the morning of the 18th. And thee, schools subway system in brussels are reopened today. The capital has been on lock down since saturday over threat of a major terror attack. However, the city remains on the highest level of security alert. The new president of argentina says the Outgoing Administration had left the koppers bear. He will have to take action. He went so far as to tell the local tv that the central bank had been stripped. He says he has no option but to admit Foreign Exchange controls next month. George osborne will put the British Housing crisis at the heart of the Spending Review later. Offering incentives to private developers to build affordable homes. That is because the lack of supply continues to push a property prices across the u. K. For more on the stories and others had to bloomberg. Com. Guy thank you. Lets find out how the markets are looking. Carolinas back. Caroline is back. Caroline this is the clear area of focus for today it is once again the rising of political tensions. The standoff between turkey and russia causing concern to asian investors this morning. Have a look at what is happening to the asian stock markets. Bloomberg board, terminal is shining red when it comes to japanese stocks. Red. Ikkei 225 is in the you might see a slight rebound in some of the emerging markets stocks such as the malaysian area. This is on the back of rising oil market. We will get onto that in a moment. Across the board, risk sentiment in a negative trajectory. The u. S. Has shrugged it off slightly more. They were feeling that these escalations wouldnt call for real concern, many analysts say in the escalation between turkey and russia would not have a serious consequences that Vladimir Putin was talking about. Overall, it is negative when it comes to asia. On the japanese yen, a clear flight to safety going on. We are seeing the dollar down versus japanese yen. The yen strengthening to the tune of about. 15 . You see on the flipside, the clear movement into gold. It is trading at higher for a second straight day. Currently it when thousand 79. 1079. It is the lowest since february 2010. Suddenly, springing into action when it comes to that luxury commodity. Looking for the haven that is gold and oil, the continuation of the rally up more than 2. 7 over the course of three days. Money moving into oil, helping the likes of the malaysian. Some area of appetite for risk when it comes to emerging markets stocks. Overall a down day. Guy thank you. Lets stay with the markets, the World Largest money manager says the worst commodity selloff in a generation may not be over. Blackrock chief financial strategist said it could be more pain ahead. Were heading lower. You mentioned the stronger dollar, that is part of it. Coincidence to that is the fact that we are seeing a slowdown in demand of the global economy. Particularly commodity intent commodity economies like china. At the same time we have a number of commodities like metals and particular oil that are Cigna Mckinley oversupplied. That are significantly oversupplied. Guy lets get a view from ubs. S ardalan the demand in china is questionable. The eurozone is questionable. Meanwhile the u. S. Dollar goes from strength to strength. Stellar strength is always consistent with commodity price weakness. If that continues and intensifies, you can see further down sides of commodities. Commodities are one of the main reasons why headline inflation everywhere has been low. Expectations are as that washes out over the next two months, the headline inflation will start to pick up again. If we get another down in the commodities complex, the risk will intensify over the next year or so. Any rise in inflation is more subdued than the Central Banks typically want. Lower,y we get the leg how are we mispricing inflation . How are we mispricing break evens . How are we mispricing the feedback . John wraith there are different , expectation phase, so too will break evens. The bigger question for the Central Banks is where you think about Inflation Expectations beyond the shortterm. Some of these moves cannot be avoided over the next year or so. What is going to happen will happen. The big question is whether these markets will go over the next twofive years. Forward starting breakeven seven stable. Have been stable. Central banks will get inflation back to target, but the more you get these hits to inflation and these hits to prices Going Forward, the bigger risk that those Inflation Expectations will fall. But of the sort of point where even the more optimistic Central Banks will have to start thinking about more stimulus. They have to stay anchored. Ifthe moment they are, but we get another down like an oil and Commodity Prices, that might be the next shoe to drop. Say we stay where we are now, we get the base effect coming through, we get as like in inflation and normalize. That is the conundrum for the ecb. John wraith it is. One of the reason headline inflation is low is because of these are external global issues. As that fades out, it will be easier to see what is going on with domestic demand. And you look at the u. K. The u. S. , there are expectations that labor markets and domestic demand are Strong Enough to keep inflation of around where the central bank would like to see it. Question for the eurozone as how strong will demand be there for the next few years . At the moment the ecb does not trust it will be Strong Enough to get inflation sustainably back where they want it, which is why we and the markets generally are pretty sure it has to inject more stimulus next week. Guy when he base effect happens and it starts to drop out are we going to understand what is happening in the british economy . At the moment it looks confusing. You dont understand what is happening. Every aspect. Every story is being a bit of this. the u. K. Has an economy because it is always did it more than most. Budgeted more than most. Heard the governor of the bank of england say several times he thinks the outlook for rates will come into sharper focus of the turn of the year. To me that is saying one of these desk when one of these distortions fallout, we will have a better idea. It is hard to see when it is marked by these big distortions. The labor market looks tight. Unemployment down to almost 5 . Wage inflation is accelerating. Some of these domestic dynamics suggests the economy is robust. They need to see through these temporary downside distortions to inflation to the constant confident about that. Guy why can they not make that decision now . You just had a strong list of various factors which normally would have the central bank itching to pull the trigger on rate rises. we know those external factors. The bank does understand, but there are many moving parts. Many of them are having a bigger impact than usual. They want to see how things look when the dust has settled. Clearly if we get fresh falls and Commodity Energy prices, if the eurozone stumbles again, some of their views will have to be altered. Wheree waiting to see things are when the bass effects come out of inflation, which will be by the end of the First Quarter of next year. If we are where we think we are or where they think we are, they should start to have the courage and their convictions and as rate higher. It will not go premature. Rates are close to the lower bound. If a hike and discover they have gone too soon, they will have no ammunition to fight the downturn. To weow much currency have about the british economy from the corporate sector . I would to the tax receipts coming through. You look at those numbers saying, why are they soft . What is going on . We are being told Wage Inflation is picking up, yet companies are not paying taxes. Either they have good accountants come or something else. John wraith that might be part of it. In terms of demand, if you look at public finances, after four months of this fiscal year, we were on track towards the deficit reduction that the government had set out. Three months later we have seen no further improvement. That is partly because tax receipts have softened. That is because although the economy is doing well, it has lost momentum from the first couple of quarters. We have seen that in the official data. When that happens, you get a slowing in tax receipts. That is why we think there might have to be some revisions. This comes back to the point that while fiscal retrenchment might be necessary, it needs to sotaken there he carefully it does not impact on overall demand and become selfdefeating. Guy thank you very much. John wraith, head of u. K. Rates. , investorsto tech giving a mixed verdict on the first Earnings Report after hp split. Hp ink tumbled. Both companies have forecast firstquarter profits below estimates. Cory johnson has more from san francisco. Last time,n for the hewlettpackard as a company as we know it have reported earnings before the split takes full effect. And itthese numbers shows a continual deterioration of the company. We had 24. 3 billion in revenue. . 46 a share. It is down 9 . That is disconcerting because we have seen 15 of the last extinct orders six unity last 17 quarters with revenue declining. The business is substantially shrinking. A lot smaller profits. Printers are down 14 . That is the biggest decline i can see in any model i have created for this company in a decade. Maybe the biggest decline ever. Notion that both printing and pcs are a massive decline for hewlettpackard. The company spent well over 10 billion in Software Acquisitions the last two years. The software is also in doubledigit declines. The last quarter, software is down 6 . This quarter, software is down 12 . Enterprise,e hp disconcerting that the Software Business for which they once held promise is now following at a 14 year over year clinton clip. It is limping off into the sunset with both of the new businesses and all of the units within a much ranking on almost every front. Cory johnson, bloomberg, san francisco. Guy lets turn our attention to these pictures. Steps,e, walking up the on board the aircraft that will taken to africa. A sixday visit. He is going to kenya, uganda, the Central African republic as well. It is a war zone, i am sure it will have his security twitching. A lot on the agenda. What is happening in africa, the Catholic Church there. What is happening with the climate and climate story in africa . There you go. Getting on board. A sixday visit. We will track him as he works his way around africa. Up next as well, u. S. And nato call for calm. We are live from moscow. Following this just being shotgun shot down. Guy 6 47 in london. Lets get you up to speed. Here is the Bloomberg Business flash. Reporter this with unit of Deutsche Bank has agreed to pay to escape prosecution in a u. S. Investigation into banks of eating taxes. They came after they were forced to pay 31 million. The secyee was sued by for allegedly helping himself to inside information and trading on it. Exploited his access to the system, to make almost half 1 million. Is facing more problems in germany with a new criminal inquiry into possible tax violations in the wake of the n pedal. Emissio that is your business flash. For more on the stories and others had to bloomberg. Com. Guy here are a couple of things you need to know, the russian bank producing numbers three q net, they are slightly ahead in terms of numbers. It will be interesting to see what the rule does google does ruble does. They say that turkey might lose out on contracts that Turkish Companies are looking to pursue. Leaching into the business sector already. We see the impact on the financial markets. They are having a meaningful business impact. The tremors from that shooting of the russian jet are reverberating. Lets get more some from moscow. Gregory white is standing by. How does this story affect the broader fight against Islamic State . The french president will be arriving soon in moscow, how does that change the picture . Gregory white this is clouded has clouded any hopes that there would be a grand International Coalition of all of the countries who want to fight isis. These attacks might somehow bring together the countries that is looking less likely. The comments overnight out of the frenchom president and the american president suggests that there is still the potential and where the western countries are on the future of syria and what the target should be there and russia, which is still looking for a goal for president of thought alassad. Guy is this moving in russias direction . White the last few weeks, the downing of the airliner could not be spun in a positive way, somehow the sense of urgency was growing and the sense of the west was listening to more of russias argument. I think we have seen some skepticism in the last couple of days grow into that. I do not think we will see a major breach or a substantial escalation out of this episode over the jet. Looks like all sides are trying to keep things cool. Guy thank you. Gregory white. Lets get more on this we are joined by mujtaba rahman, john wraith still with us. Who is miscalculate . Miscalculating . Turkey is looking for three things, they want a nofly zone, they want the imminent removal of the thought alassad, and they want the americans to stop funding the pyd. On none of those actions we are seeing policy moving in turkeys direction. This is turkey saying, we have big leverage over refugees, you need to take her voice on syria seriously. Guy turkey downed one of their drones a few weeks ago, they have been sending strong signals to stay away from the airspace. Vladimir putin to a certain extent has pushed the envelope maybe a little too far. Mujtaba rahman absolutely. It is characteristic bogner couldnt. Vladimir putin. This is very characteristic of the way he has behaved over the last month. Months. The conversation is moving in russias direction. It is clear that europe is moving to ease sanctions on the russian economy. Because europe needs russia to be more constructive in syria. Guy lets talk about getting russia to be more constructive how does this does this change the nature of how the conversation will go with Vladimir Putin . Mujtaba rahman i dont think this change is fundamental calculations of the major players. I think youre looking at a situation where you have a broader alignment between europe and russia, against the Islamic State. I think the russia attacked will attack the Islamic State twice a week instead of once a week. I think this is a long burn fight with the Islamic State. There will be reprisals in europe. I do think we expect that in the course of 2016, making this a difficult year for europe, in light of everything happening with the refugees. We have brexit risk. Greece remains a problem. For europe, it is a consultative year. I dont think it was a fundamental game changer. I think russia has an incentive to play the slowly. Guy we are seeing the downing of the jet looking ahead of potentially, we want to understand the dynamics what are the bibles what are the variables . Vladimir Putin clearly likes his own way, i think this is a symbolic gesture. The french president is looking to create an executive residence presidency. He needs to be seen as strong domestically. Turkishas attacking communities in northern syria, that would be unpopular. I think the biggest risk here, above and beyond any structural variables are the two personalities. Guy when we Start Talking about how we will integrate the population in the region . We have become efficient of how to deal with isis, but we are not taking about what comes after that. right now you have a punctuated military campaign against the Islamic State and the rebels, i think that has some way to go. You will have increased activity by the french, americans, and perhaps the russians. In parallel we have the in a process. The in a process. Vienna process. The competition for europe is up until now they have been prioritizing russias preferences in russia. If indeed turkey and russia will compete over outcomes in syria, that will really come locate the conversation consultative conversation. He has a while to run. The diplomacy has a wealth around. While to run. The question will not be resolved soon. John, what have you heard . i think it is influenced by underlying economic dynamics. If there was an excel a ration in the oil prices, i think it starts to pick up and russia benefits. With their tactics change, or is this purely about geopolitical regional views . Mujtaba rahman i think it is more about geopolitics in the region. When you look at ukraine, Vladimir Putins behavior there was not influenced by economic constraints. I think Vladimir Putin is think about syria in a similar way. I think the broader regional powers are as well. I dont think this is necessarily a function of economics. At the margin, it will play a role. It would constrain vladimir in someavior at way. Guy because of the oil price . they haveman eventually essentially prevented the ukraine move west. I think that will help Vladimir Putins reputation. Guy thank you. We will take a break, see you in a moment. We live in a pick and choose world. Love or like . Naughty or nice . Calm or bright . But at bedtime. Why settle for this . Enter sleep number. Dont miss the ultimate sleep number week going on now Sleepiq Technology tells you how you slept and what adjustments you can make. She likes the bed soft. Hes more hardcore. So your sleep goes from good to great to wow give the gift of amazing sleep, only at a sleep number store. This week only, save 50 on the ultimate limited edition bed. Hurry, sale ends monday. Know better sleep with sleep number. Guy markets after turkey shoots down a russian jet. President along flies between desk to focus on tension between Islamic State. Secondlargest to operation. Liver morerne lasted homes and a smaller test plans to deliver more homes and a smaller government. Guy welcome to count down. I am i johnson. Im waiting for the numbers. What ishow you happening in terms of the cash open in an hours time. You can figure out how this is going to work. You are a customer, unity adulation here which shows you devalue. Up around. 5 . Those are the numbers in the green. Back here in europe on the equity front, yesterday, a very jittery day. Lets get you up to speed. Lets get to bloombergs first word news with nejra cehic. Nejra president obama has called for a deescalation of tensions between turkey and russia after a downing of a russian jet. President putin has called the incident a stab in the back and warned of serious consequences. The ringleader of the terror attacks planned to blow himself up days later. Abdelhamid abaaoud was killed on the morning of the 18th. Schools and the subway system in brussels reopened today. It has been a locked down it has been on lock down since saturday. They remain on the highest level of security alert. George osborne will put the housing crisis at the heart of a review later. A lack of supply continues to push up copy prices across the u. K. That is bloombergs first word. Guy guy . Lucy caroline you look at underlying profit and group sales. Revenue up. You are also seeing underlying earnings of 310 Million Pounds ahead of analyst estimates. Up from 11 . We are getting profit after tax for the First Time Since 2009. In big turnaround since its near collapse. 19 million profit 19 Million Pounds profit after tax. They are talking trading well over, in spite of external headwinds. What you are currently seeing on your screens, the suspected bombing of a message of a russian passengers jet. This is a key egyptian resort for the company. They have to cancel flights until dates in december. Thatderstand today we hear easyjet and British Airways is extending those Flight Cancellations all the way up until the 14th of january because of concerns. They strongly performed in the u. K. Business and Northern Europe. They are also saying Continental Europe declined. Likely to have been hit with greece concerns and the slowdown in economic desk the slowdown and economic turmoil. The slowdown and economic turmoil. They are trying to sign the light on their excellence. Overall i am going to have to dig in to try and find out what they are talking about in terms of turbulence Going Forward when it comes to turkey and russia. Sheikh. T with sharm el guy european equities are going to open higher tiered what is happening in asia, lets find out . We are seeing a Holding Pattern among investors. It seems like they are looking ahead to next week when you see fit chairman you see fed chairman janet yellen. Whether to hike rates in december. A mixed picture in asia. We are seeing pretty modest bids after the downing of that russian warplane. 4 down. All of the stocks went down on the regional banks. The shanghai composite up. 9 as we wrap up the trading data in the last couple of minutes on the hang seng still seeing some pressure down. We do see the dollar losing some traction today, as weakening against all of the majors here. Citibank coming out with a note on tuesday basically telling the the fed. O not wait for you should lock in your profits now. It will not appreciate any further. Finally talking about movers before i go. You may remember the japanese subcontractor with that tilted building in yokohama. They found more than 300 cases where they used falsified data. The Worlds Largest listed jeweler. A surprise dividend for investors. Up 6 despite the halfyear profit. Finally, the big story in hong kong, the power assets holding. They rejected a bid from major shareholders. Offer wasllion rejected. A rare setback for hong kong. Back to you. Guy nice to be known as superman. Yvonne man joining us out of hong kong. Lets turn our attention to the data. Story is knitting around the world. Elliott, the russian claim not happy. That theyting a sense are not prepared to take this too far. The language is stiff but the reaction is fairly soft. Said russian has russia has said that russian tourist should avoid going to turkey here it it is hard to see what escalation rush it is likely to do. It doesnt seem, no one expects anything momentarily to happen. Some bombing raids previous ire. Ould arouse the we dont expect any military escalation between russia and turkey. We had obama speaking with president are one president erdogan. Russians are outraged at what happened. In the turkish airspace and was fighting terrorists. At the same time, we had a Fighter Pilot ejecting and being killed by these ethnic turkmen who are allies of the turks. Fact one update, syrian commanders have rescued the other pilot. There is one pilot ejected the was killed. Commander has rescued a second pilot from that russian fighter plane. President putin was saying yesterday that he was not happy. He went as far as to accuse the turks of helping the Islamic State. The amount of oil products parts ofnsported to turkey being seized by i. S. Next line is out gangsters are being with strikes against our jets which are fighting terrorism. Syria,th the skies over there is a danger that a similar incident might occur. Youve got to bear in mind different targets. Your enemys enemy is your friend is not true of this area. Guy Elliott Glock and. Lets get a sense of how this is affecting the market. Lucy macdonald, good morning. There is a lot of big geopolitical themes and Macro Economic themes around the world. The fed and the ecb, what is happening in turkey. What is happening in paris how does that change the world of equities . Lucy from a specific bottomup level, were looking at change in consumer behavior. In the leisure hotels, travel. Clearly hotels are suffering within paris. There hasnt been too much of a change in travel apart from has seenm trips which some cancellations. Were looking at luxury goods. Onparis, it is dependent what is happening in china. Were looking into china to see if those dimensions have changed. Impacte quite a limited when Something Like this happens. The whole issue is whether it is not just one. Guy you got paris still very much brussels is reopening. Lucy it feels like something longer. It is too early to say. We are monitoring and watching very carefully. It is limited impact at the moment. Guy how do you rotate money . Do you take money out . When you look at the situation in front of you, what are the obvious moves to make . Risque the kneejerk react lucy the kneejerk reaction which has happened. Within leisure retail travel, everyone has to wonder how long this will last. Reactions happened very fast. That is quite fine judgment. Guy i was talking somebody yesterday, brickandmortar versus online. These are two shift . It is not like they have to go out to the shop. Technology. Media. That social all of those big structural trends. They are not can be affected. Guy stay there. We got plenty more to talk to Lucy Macdonald about. Let me give you a quick heads up. Consumer confidence. Period include the during and after the attacks. Hisge osborne delivers winter statement. Slow data out of the u. S. Slow data out of the u. S. Next line talking about awesome statements. Up next, tech statements to small business. Tax statements to small business. We are good to speak to the federation of Small Businesses and the chamber of commerce. Next. Guy 7 16 in london. Lets get you to Bloomberg Business with nara. Nejra thomas cook has reported profits that beat analysts estimates. Europes secondbiggest Tour Operator says it has seen an encouraging start to next year. Goldman sachs employee hired to develop Surveillance System to detect behavior has been sued by. He ftc the Security Exchange Commission Said that he exploited his access to the firms system to make half 1 million. Hp has the lackluster pc and Printer Market after splitting up with its counterpart. Falling short of analyst estimates. That is bloombergs business . Just an aside on the ecb. It is messing around with its Asset Purchase Program due to lower market liquidity. It is going to frontload that program. And little bit a little bit of an effect into the bond market. As wider question which is ecb expanding, are the good to be other liquidity issues . They are going to be other liquidity issues . George osborne delivers the first awesome statement. He will do it at lunchtime. Anna is down at westminster on what we can expect. Nna lets talk to two men here on the green outside who have a lot of expectations. They speak on the behalf of business. Wraith. G was john john, if i can come to you, your message is stop anchoring, lets have action. Getting finance to businesses and around skills. That sums up the focus. It ought to be leveraging growth in the economy and innovation. In addition to those things, he ought to protect science and innovation investment. It will be extremely disappointment desk actually disappointing causing on spinoza not being able to invest. A real retrograde to that. Anna do you share thoughts . There has been speculation we could see a removal of some of those benefits that john talked about. George, he has made promises. That is one path of the empire that is not protected. We support tax simple vacation. Tax simplification. Clearly supporting regional growth and that means putting Small Businesses at the heart of any decisions. Seeing longterm support for businesses and infrastructure, delivering on those core areas, roads in particular. Of course reducing the cost of doing business. One of the big things we have seen coming down the track is an increase, very sharp increase, to the actual living wage. That is going to have an effect on care sectors and public finance. Anna john, we know a little bit about what the government wants to do around skills. They talked about a coalition. They went to introduce many more millions for apprenticeships by 2020. We know more about how they want businesses to pay for that. Some businesses are a bit concerned about the type of fair trading the people are going to get. John it is not about numbers in a printer ships. Numbers in apprenticeships. Also businesses want to see a choice as to who the provider is. Can take the choice. Anna we might find out today how far down the size of business we are good to see that apprenticeship levy apply to. Mike it is not going to affect the smallest businesses. It is there to support them. Where that threshold on the levy against. Is it going tole affect people. It is quality training that we need to fill that skills gap. To support more businesses to train their people. Anna you both run businesses. What is the issue around financing right now . We talked to a lot of people who say start up, there is a lot of interest in that. It is the longterm Patient Capital that you need. It is more difficult here to achieve than it is in other parts of europe and the u. S. The fact that we cannot export as much as we ought to be a look to is because of this issue. One of the crucial issues of the u. K. Economy to be a look to get toestment when it comes scale up, what you need is a longterm Patient Capital and working capital. For businesses who want to go from small to medium and businesses who want the confidence to export. Hasany countries, canada a Business Bank for a state bank. It was set up before the treaty of rome was signed. This is a crucial issue for the u. K. Will always have an undeveloped midsized business sector. We will never have that innovation driven economy as long as this problem exists. Anna brexit, it might not come up, but it is something your members are a little more inclined to think about than some of the other bigger businesses. It is important that we get the independent information in september. Members need that independent information on what either remaining in europe is going to as itthat will mean affects their businesses. Anna filling that information. My cherry from the federation of small this is weird John Longworth federation of Small Businesses. Guy we got the Russian Ambassador in france saying one of the pilots was killed. Confirming that. One of the pilots escaped. Seeming to confirm a report from out of the region. Information ase we get it. Well bring it straight to you. Lets get back to Lucy Macdonald. Small versus big. Where do we stand . Lucy on valuation grounds, small capital. We are in an error where growth is scarce. You can find more growth in small companies. That valuation is going to be tolerated. I think the same thing applies. Guy you start to see this gap between markets are and where operating profit is and revenue is. The latter is starting to turn down yet markets levitating like wiley coyote. Lucy the reason why that is there is because Interest Rates are where they are. If we do not have the Interest Rates on the floor, you would not have the reactions where the art. It is not corporate profits that are holding up markets. The end of the bull market will exwife risk to the market valuation is fear of central bank quality. Central banks are aware of that and that is why we think the path of Interest Rate in the u. S. Is good to be very gradual. Be veryis going to gradual. They should not be any surprise of the central bank to be more harsh. We have to recognize that is why markets are where they are. We know what we are looking at the moment is the difference between companies in the market. It is a good time to start picking the goods. Guy stay with us. Thank you very much. Lucy macdonald. Is turkeyssia biggest source of imports. Which could lose out if we see another situation like you see on your screen. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Guy 7 30 in london. We are less than a half an hour ago until the european open for equities. The me take you to where we think that let me take you to where we think we are going to be. London looks like it is going to outperform. Be opening ino positive territory. The ftse up around. 4 . All of the headlines you need to know about. Is nejra. Ow here nejra on the pilots that was down was killed the other escaped. Has declared a state of emergency after 12 people were killed when a bus carrying president ial guards was struck by a bomb. 17 more were injured and what was thought to be a suicide attack. Been ight curfew has the Second Attack was planned november 18 or 19th. Abdelhamid was killed during a police raid. Schools and the subway system in brussels are reopening. The belgian capital has been on lock down since saturday over the threat of a major terror attack. The ftse remains on the it still remains on the highest level on alert. Offering incentives for private developers to build homes. It continues to push up property prices across u. K. Had to bloomberg. Com. Guy we didnt talk about which companies will be benefiting as a result of the geopolitical changes in the last 48 hours. Caroline is with us. We need to talk about that. , lets startjra with you. Nejra both russia and turkey have a lot to lose. The trade between the two countries, russia was the biggest source of turkey imports last year. Surpassing china and 12 of all forced to turkey were from russia last year. Market russias biggest for gas export. If we look at companies that could continue to be affected, why not start with russian oil and gas companies. Gas,u are looking at because turkey doesnt rely on russia for much of its gas supply, it pays statecontrolled gas from as much as 10 billion last year. Those energy ties are looking like an unattractive target. I have been digging around and watching eq ex. That search turned up 12 companies that report getting their revenue from russia. It is likely to be more than that because not all of them are required to report their segmentation. Seeing hem reported reported receiving russian revenue. A Holding Company that largest specializes in financial services. Back to you. Guy caroline, we are 26 minutes away. What if you got echo caroline and if you stocks. I have a few stocks. 40 . Ding from 20 to to rally on the back of that. They want to distribute up to 50 of profit in dividend after the year of payout that trailed. Some optimism. Keeping and i on that stock as it might rally. This is amid ongoing speculation in the markets. Imperial tobacco could be a big target. It could be either up by British American tobacco. Analysts saying the Tobacco Industry would benefit from consolidation. Keep a keen eye on imperial tobacco. Reports that it is a big target. We got thomas cook coming up with its numbers. The fullcial report, year, only twice in egypt twice is egypt mentioned. We saw a real concerns about sharm el sheikh, a key area for thomas cook. Eric egyptian an egyptian resort where they had to. Vacuate, cancel flights also tunisia which is in a state of alert because of threats from terrorism, it is a key destination for them. The company says despite the fragile geopolitical environment, our business continues to grow. We saw 2014, a full year earnings. Actually beating analyst estimates. Threeontwo 10 billion pounds inc. Broadened. 310 Million Pounds being brought in. It is the First Time Since 2009 that we have seen a profit for this company. This is, they continue to see disruption from certain destinations and foreignexchange headwinds. Dk and Northern Europe are outperforming despite the concerns about political tensions. Thomas cook fell significantly yesterday. Metro is giving dividend news plenty. Bigger rally as much as 2 . Dividend and its raises its payout. Guy caroline, thank you very much indeed. Let me take you back to the geopolitical story and strasburg where will looking where we are looking at the plenary session. Hearing from mr. Juncker as the Parliament Debates the reaction post paris. How europe should respond . So much to talk about tiered what happens with so much to talk about. What happens to schengen . Plenty more to think about. Plenty more that these parliamentarians need to ponder. Certainlyovernment have their work cut out for them. This get back to Lucy Macdonald. Lets get back to Lucy Macdonald. Lets take a step back. Look at the european economy, how do you look at a world where up . Rity borders get thrown the friction of doing business starts to go up. Lucy it comes through in a slowdown of growth, then that is going to affect companies that are interested in investing. We are always interested in companies that go by structural growth rather than cyclical growth. We have been hunting for a bit more of a recovery to come through in europe. This may take the edge off that. You get very supportive monetary conditions in europe. You got margins that are below the level. There are plenty of recovery potential in europe. Adding oil prices where they are. It really ought to be getting better. This could take the edge off of it. Guy the calculation that he will do more. Lucy he will do more. The central bank in europe, as they note that growth is fragile. They know that growth is fragile. Is growth is so slow in europe. Unit. 1 makes a difference. The shame of this is that it could take the edge off where we should beginning to recover. Guy if you dont see the growth coming through, where do you look . Lucy the cyclical disappointment, that is well priced into shares. We are not saying anything that is surprising. Scattered quite well. As you go to next year, do you get a feeling that you got some vibration in your potential got some valuation in your potential. You need to fight and up on cyclical at the moment. Lighten up on cyclical at the moment. There isnt much growth around. Guy do you have a geographical spin on this as well . More germany, less italy . Lucy it is more of a question of whether industry or geography and seeing whether that growth is big dividend. Shortterm and whether there excitations putting into the market are realistic. That is the Good Management that you need. Guy French Companies we are going to worry about that here the german companies, about that. German companies, lucy yes, you need to have a very good broad spread of understanding of the macro conditions for each company. Guy lets look at cash, the cost of borrowing. The school that is been a big help to the margins both in the u. S. And europe. We dont think that is going to be changing very much. ,hat could be more of an impact particularly in the u. S. Where you are seeing more wage pressure. Youre not seeing that in europe because of the levels of unemployment. You got top line which is a real struggle for all companies. You got margins which are more difficult to move ahead, particularly in the u. S. Europe, you should have more potential. Guy should have is quite important because european equities is a really crowded trade. Is notg that the should cast iron but pretty solid. How stable is the should there . Lucy that doesnt have the u. S. Investors think. That depends on how the u. S. Investors inc. Investors think. It will affect the relative violation market. Positioning but not over valuation. Fx ofo you know at the london discover that has been the case but many of the companies we invest in our hedged or selling into java. That impact comes out in the wash. Guy Lucy Macdonald. Up next, Consumer Confidence which will include the period before and after the attacks in paris. We will break down the figures when we come back. Guy capital for an underway. The rainclouds are out. Dawn is going to be a prolonged process. We are getting Consumer Confidence data. Where getting an idea how european equities are going to open. French Consumer Confidence coming through. Let me show you what is happening on the terminal it that ei you get the fair value number. We are going to have a just open for european equities. London is good to be outperforming with underperforming yesterday. European on the equity story. Here is nejra. Reportedomas cook has profits of three to 10 Million Pounds. Profits of 310 Million Pounds. The swiss unit of Deutsche Bank has agreed to pay two escape prosecution. It comes after does it was ordered to pay 2. 5 billion dollars in april. A Goldman Sachs employee hired to develop Surveillance Systems to detect illegal behavior has been sued by the f ec by the sec by helping himself to inside information and training on it. He made half 1 million. Withre problems in germany a new inquiry into a new tax violation in the wake of the new emissions scandal. Hp has giving this has given a disappointing has given a disappointing profit. Pc and Printer Market after splitting up with its counterpart. They expected to be . 33 per share to . 38 per share. That is Bloomberg Business flash. For more, head to bloomberg. Com. Guy the numbers look ok. They include the attacks that killed 130 people. They are quite good numbers. What does it tell us . Well, it shows sign of defiance from the french consumer. We have to be very cautious with these numbers. We have one month to go before christmas. We saw signs of overseas is slowing down and shops, cafes and restaurants over the past week since the attacks. The Big Department store in central paris, this is dropped 30 in the week following the attacks. Visits had reports that and cafes, restaurants were down as much as 40 in central paris. We will see how much this impact tourism. France remains the worlds top choice destination. The first report we had from the flight booking in paris for the Christmas Period already down by 13 . Guy that is the story on the economy. What is the story on the investigation . Is thee what we learned 13th of november was not the only attacks that were planned in paris. Abdelhamid abaaoud was planning another attack on the 18th or 19th of november. Five or six days after the attacks in central paris. The financial district. Another essential deadly attack that was avoided. That was killed in the early hours of the 18th before these attacks took place. Lot of fronts is the financial district. Very highly populated area. As many as 200,000 french people work in that district. This is where you have the headquarters of many French Companies. Another potential deadly attack avoided. Also we learned another man is still at large. Salaam. Th salah up the his name is mohammed. He is 30 years old. Was seen with Abdelhamid Abaaoud in a petrol station north of paris two days before the attack on the highway between brussels and paris. This is a new manhunt for a second manned thats a second man that is still taking place a second man is still taking place. Mohammed a brainy is a dangerous man. You should contact local police. Guy sounds like pretty sound advice. Let me take you back to strasburg but we see european parliamentarians debating the post paris world. Jeanclaude juncker, the head of his feet. Sion on were going to hit from the head of the council. They briefed the parliamentarians. Plenty to talk about for these guys. What happens to the schengen. The errors that were made. We will come back and continue to update you on what we are learning. We are seven minutes away from the start of european castrating. On the move is up next. Jon ferro will be opening the markets for us. Whats on your mind . Jonathan russia, turkey. Yesterday. Guy my response my reaction to the spots is that it was benign and quiet. Jonathan it doesnt take as much as the following morning. We get a rebound this morning. Crude higher. Maybe unanswered questions. One of them would be serious consequences. What are the serious consequences . Another two questions. The prospect of putting coming in from the cold. What is happening with i. S. Right now. When will we take a step back and it 24 hours in 24 hours . What we want it was a Cohesive Strategy that russia was about and all of these partners coming together. That looks less likely based on what we are hearing. Guy maybe. Lot of jets running around the coronation is necessary desk the coordination is necessary and desirable. Maybe it accelerates the process. Chocolate listen to some of the accusations. Jonathan listen to some of the accusations. Suggesting and implying an allegation against turkey that they are buying oil from i. S. That is a very public accusation. You have to take notice of that. I am not sure that is something they want to discuss so publicly. Guy essay these are two men cut from the same cloth i say these are two men cut from the same cloth. Jonathan all of the noise in the market, you have to cut through that. What do you judge as escalation risk . What is his noise . At the moment, that is difficult to do. Guy you have a kneejerk reaction. Confidence. Onsumer yesterday, the aussie numbers very similar as well. Markets refocus and the ecb. Jonathan threeminute conversation with guy. That at some point in the very near future. Pretense of 1 out here on the continent. That is it for cap down. We catch you down for the cash open. Jon ferro takes over the basket now. I will see you tomorrow. Jonathan good morning, and welcome to on the move. Lets constrict your morning brief. After ation risk escalation risk after turkey shoot down a russian jet. Europe gives up with 50 million defense boost. U. K. Homebuilders are in focus at the open. Ahead of the open, were about 20 seconds away. A bounceback him yesterday selloff was the turkeyroger incident post up escalation is in focus in this program. Caroline it is great to be back, and yesterday was the worst you have seen in two weeks of european selloffs. Russianbecause of the aircraft shot down by turkey really causing concern for investors. That, may be mulling over cause for concern. Will be see any significant tensions between these two countries . Particularnalysts in saying a major escalation seems unlikely. Soil rebound is in the cards. The fifth day the ftse 100 up. That has been among some big speculation of late