and brent, which is the global benchmark. wti gainingpresents on brent. this chart goes back to the start of the year. we have seen the pace of that game by wti close the gap on brent. just around the time that we saw the u.s. government, the decision air to end the u.s. export ban. decision to end the u.s. export ban. we get u.s. crude inventories as well as an update from opec. plenty going on in the commodity space today. >> royal dutch shell, europe's largest company -- largest oil company, agrees to take over bg group. meanwhile, movies has downgraded oil ratings. managere fund majority-owned by carlyle group suffered $950 million in withdrawal requests in the third quarter. assets 85% below their peak last year. nike shares are rising after hours after it defied concerns of china's slowing growth and delivered good news of the u.s. retail sector. 24% to in china was up almost $1 billion. consumer spending in the u.s. has risen by the most in three months. purchases climbed 3/10 of one distant -- 3/10 of 1% in december. the two biggest risks facing the u.k. economy next year are brexit.nd u.s. rate hikes and the presidential election didn't even figure in the lists of top concerns. wars"cords debut of "star and "jurassic world" earlier in the year put the u.s. film industry on track to surpass $11 billion in ticket sales for the first time ever. it is forecast to rise 6.3% in 2013. anna: let's check in on the markets in asia. in hong kong. japan not playing today, other markets making some modest gains. di: i don't think we can call is a santa claus rally just yet but certainly we are getting some chair spreading. japanese markets are closed for the emperor's birthday. keep in mind, this is really that free holiday lull. aussie shares are up there. trading volumes are about 60%. region, chinese shares listed in hong kong. i want to talk about one specific brokerage in just a moment. some of the residual expectations. some policies out of china playing out in the days sessions. is the case of the missing ceo, one of the cases. inecurities brokerage listed hong kong is surging. it is now at about 8% higher. coming back to work after being gone for five weeks. as ceoesuming his duties and chairman as of today. the company also saying that he was assisting authorities in underbut isn't investigation itself and the brokerage isn't under investigation either. a bit of a relief rally. worleyparsons, these energy, industrial names being driven a little bit higher. of the most beaten-down stocks in australia, this engineering firm, surging almost 4% today. keeping with the commodities story. noble group. this is one of the commodities houses that were targeted for their accounting practices. very much an embattled stock. they are selling off a 49% stake. million, will50 go towards paying down its debt as it tries to hang on to that investment. very much a commodities driven rally we are seeing in asia. volumes as we count down to the end of the trading year. anna: haidi, thank you. oil is higher this morning, up around 1%. brent ahead of opec's report. crude traded at your parity to brent. the global glut has led to speculation and contracts that will pay out even if crude drops to as little as $15 a barrel next year. bloomberg's chief energy correspondent is here and alongside him is simon french. as we head towards the end of the year david:, we are seeing -- how interesting it is that wti is closing in on brent? >> for the past five years, brent has been trading at a significant premium. now that we are beginning to see science that u.s. production is gnslining -- see si that u.s. production is declining, a bill that is going to allow exports of u.s. crude into the global market, we have seen more pressure. this has been a very popular trade, particularly among hedge funds. it is one of the highlights of the year. we will see in 2016. i think wti is going to be very close to brent. hard to find an asset class in 2013 that has not been impacted by the oil price route and the global -- the oil price rout and global commodities problems. if you look at the u.s. gdp estimates yesterday, the u.k. gdp estimates today, it will be a massive transfer of wealth from the producers to the consumers. the decline in oil price, just putting disposable income back in the pockets of consumers. mentioned thatou this is going to be something confirming what we are doing a little bit this morning. we are seeing brent up against the close yesterday. any sense we are -- volume is so low. whoever made money just took the money aside. whoever lost money is probably not playing any longer in the market, is waiting for the first to figure out what to do next. have seenink that we the bottom and the market is expecting that we will see much to $20rices, all the way at the beginning of the year. a critical period to look at will be late april to early march -- late february to early march. we're going to have iran just coming back into the market. the combination of the supply from iran and the lower demand could move the oil prices down at the beginning of the year. anna: it doesn't sound like a good picture of you are oil makers. many of them protected from the worst of the falling prices because of their refining businesses. maybe that changes and maybe they have to follow some of the mining companies. so far, they have been sacrosanct, happened today? you look at bp, you look at shell. but they are vulnerable, they are barely covered. in some cases, they are not covered at all going into 2016. it will all be going to management. investors will want to take a clear view of where management stance. anna: do you see signs of that? javier: i think every management team in big oil will try to do that and fight very hard because if they cut dividends for some -- for the last 27 years, they have increased their dividend policy. they have not cut the dividend since the second world war at least. it depends on how you look at shell. you could see the ceo departing. i think they will fight very hard to keep the dividends. look at shell yesterday. cuts into 2015. from six weeks ago, already another billion dollars in investment. for the next few weeks, i think we will see significant investment program cuts for 2016. anna: does that look -- does that sound right that the market would judge ceos harshly if they have to cut dividends? in the mining sector, we saw shareholders punishing companies, and in some cases, there was some optimism around .ig announcements simon: i actually think they will punish the ceo that cuts the progressive dividend policy. you look at anglo, they have continued to fall after the suspension of the dividends. i think it is predicated not on the call on global oil prices, but on that income anna:. -- income. anna: thank you, javier. simon french stays with us. the hedge fund majority-owned by carlyle group is said to have almost $1 billion in withdrawal requests just in the last quarter. is seeing investors leave in droves. of course, we are talking about claret road asset management, majority-owned by carlyle group. million in withdrawal requests in the fourth quarter according to a person familiar. what that does is leave the firm's assets, 85%, below their peak last year. the firm is going into january with $1.25 billion in assets. that is down from the high of $8.5 billion. we have not had a comment yet from clarion road itself. they usually make clients giving notice. of -- a notice period of 45 days. this time, they let clients wait until last week in the hopes that fewer investors would decide to exit. it looks as if that plan may have got a ride. it invests in everything from distressed debt to municipal bonds. what that means is, that might lead to questions as to whether it is the next casualty in the carnage we have seen in high yields. claren roadyear, had a history of avoiding large swings. over the last 15 months, the firm has really struggled with poor performance and exodus. thank you. here is your diary. at 9:30, the u.k. updates on gdp. midday u.k. time, south africa releases its november budget balance. might get a little more attention than normal. nike has orders surge. ♪ welcome back, this is "countdown." haidi: brokerage --nejra: brokerage says his -- says its chairman and ceo. followinghad plunged the announcement that the firm had lost contact. the hedge fund manager majority-owned by carlyle group, ad, suffered $950 million in recall requests in the third quarter. lawyer and internet entrepreneur willom -- kim dotcom appeal chart -- will appeal the ruling that he can be extradited to the u.s. anna: we have been keeping you very busy this morning. you have been pouring over the latest numbers from nike. nejra: we are talking about the world's biggest maker of sporting goods. profit beat estimates. orders for the nike brand the next four months, they rose 20%, beating estimates. 4%, $7.69 million. -- the trendt was will continue if you look at future orders as well. nike's success in china started with plans to years ago. it has started selling more products to its stores and websites. also, north america turned in a strong performance in the second quarter. was an, what nike saw eighth consecutive quarter of double-digit revenue growth. this company has really been on the upswing since the recession. thisg market share from id in stock -- from iadidas. they've also benefited from a shift or a trend of people wanting to wear more athletic wear. it is called ath-leisure. actuallyve gained, tripled since the recession. a lot of people are at your meeting nike's success to the broad appeal of its trainers, its sneakers. some are now saying that demand for those is declining slightly. for nike but it still have to keep an eye on the ball. anna: on occasion, we are both known to wear sports shoes under the desk. 20 past 6:00 in london. indian prime minister modi begins a two-day visit to russia, with what is said to be the biggest indian arts you with russia since 2001. with russiams deal since 2001. what are they hoping to accomplish? >> this is very much a return to last year, when modi describes the relationship with russia as having a unique place in indian foreign policy. toyou said, india is hoping conclude the most important defense deal with russia in more than a decade, seeking to purchase the most advanced s-400 era defense systems, and discussions as well about by helicopters, submarines, warships. india sees russia as a key supplier of weapons. ansia views india as extremely important market. it has been india's most important defense partner for more than 50 years. isn't short of a warm welcome in russia. anna: how strong are the ties between these nations? what are each country going to get out of the relationship? russia has been seeking to develop its ties within the of more deeply, in part after the sanctions imposed by the european union and the u.s. over the ukraine crisis. modi said that he didn't agree with sanctions and in this case, he was much more supportive of to did then other countries -- supportive of putin then other countries. they would work open to triple trade in the next few years. it is a growing, important relationship or russia to help balance the sanctions imposed. oil fields were discussed last year. russia is likely to be building, .r expanding, a nuclear reactor both countries seem to think they can get a lot out of this relationship. anna: tony, thank you. let's bring simon french back into the conversation. it is interesting, you have in making the point that there are some u.s. firms and international firms weighing up whether to get involved in the indian energy industry, nuclear in particular. simon: what has stopped them today are worries over regulatory, legal litigation should something go along -- something go wrong. that has held back the american market from entering into india. what is quite interesting is, i think that you have here the two countries that have the most divergent growth patterns. you have russia's economy contracting at about 4% per annum. and the is growing at 10% per annum. there is an opportunity for president putin to boost those gdp numbers through trade. they very much need -- the indians, that is, neither technology in nuclear and military hardware that is not on offer in other parts of the global marketplace. anna: interesting meeting of the slowest and the fastest of the biggest major economies. let's talk about another subject we touched on during this first half hour, and that is the 90 earnings. talking about -- that 90 nik earningse. we had consumer data out of the u.s. increase. it is almost like a joke chart. u.s. consumer spending on the march as measured by the consumption expenditures number. is this going to be maintained? simon: you make a really good point about whether it can be maintained. you look at u.s. retail, the u.s. consumer sector, they have outperformed by about 22% this year. going into 2016, with oil prices expected to remain low, you would expect that trend to continue. spaces are atl 3.5 times premium over the u.s. market. we haven't seen that really since before the financial crisis. if you want to buy into that trend, it comes at a price. anna: u.s. consumers have been going out and spending, or have these u.s. retailers to drive -- been driven higher on the expectation that they will? in 2015, there was a spike in the savings ratio. the initial dividend from lower energy costs was saved. as energy costs remain lower longer, you saw confident that this was to be maintained, and that therefore the u.s. consumer moved up the value chain from less confidence over sustainability of oil prices and started to take some of those big-ticket items, some of the bigger purchases that have driven that chart their. talk up next, we will china stabilization. indicators out of the people's republic show signs that a slowdown in the world's second-biggest economy could be easing. ♪ anna: welcome back, this is "countdown." royal dutch shell, europe's biggest oil company, has further reduce spending plans after a prepared to take over bg group. we get opec's world oil outlook at 10 a.m. u.k. time. road, the hedge fund manager owned by the carlyle almost $1 suffered billion in withdrawal requests in the third quarter. nike shares are rising after hours. second-quarter profit beat analyst estimates while revenue in china was out 24% -- was up 24% to a. purchases climbed 3/10 of 1% in november, in line with economists estimates. the two biggest risks facing the u.k. economy next year are brexit and brexit. 13% chose the buildup to the referendum. u.s. rate hikes in the presidential election couldn't even figure in the top concerns. the debut of star wars along with blockbusters like jurassic world early in the year has put the u.s. movie industry on track to crack $11 million in tickets -- $11 billion in ticket sales for the first time ever. forecastbox office is to rise this year. anna: thank you. you have been watching the markets as well. japan is out today. the rest making some modest gains in the asian markets. nejra: japan is closed today. but if you look at the msci asia-pacific index, excluding japan, that is up, last i checked, some 7/10 of a percent. if you look at the chinese market, the shanghai composite up. hot sang up almost 1%. when it comes to the shanghai rallied 13that has percent this year. deliver all those concerns we had in august, it seems like a distant memory. it is five times the average annual advance over the previous five years and it crosses the msci world index. the shanghai composite is what of the best-performing indexes in the world this quarter. let's look at oil. we should have those prices upper for you at the moment as well. oil and extending its advance. 6/10 of a percent. brent crude up 8/10 of a percent. you can see them both around the same. premium wti this really rose to a premium -- this week rose to a premium for the first time since january. u.s. ends the ban on exports. 9/10 of a percent as well. the dollar stock index pretty flat at the moment but it is poised for its worst month since june. anna: chinese leaders have said they want stronger growth in the coming year, and they will be happy to hear of more signs of stabilization. our beijing bureau chief at the details. what is the picture they paint? quest sort of a slight uptick. two of the indicators are from baidu, sort of the equivalent of google. the issue here is that we have so few really reliable indicators and we actually lost a couple purchasing manager indexes in the last couple of months. we are really sort of scrambling for them. baidu has two of its own indices that say there is a little bit of an uptick. if you drill down into the methodologies, there are some questions. what of that sort of uses internet searches to try to gaze the health -- try to gauge the health of companies. encouraging signs, but tough to really know what is going on based on the methodologies of these relatively new indices. anna: we are also hearing three chinese companies having trouble making bond repayments. nick: the bond repayments issue is one that has been growing, and we have been paying much more attention to. there are more signs of companies saying they aren't able to repay some of their debt. the three that were just announced in the past few days were quite small. however, in the last few days, we had a major steel trader announcing it was facing a little bit of trouble. strong sign that this sort of debt overhang china has is currently estimated at about 280% of gdp overall. that is really starting to bite a lot of companies. it will also offer relief to some companies but we are really expecting this to get much bigger through 2016. anna: thank you very much. simon french is still with us. what do you see in the tea leaves coming out of china right now? we have had some interesting new data sets emerging all the time on trying to add to the picture. we have had the sense among some analysts that maybe the picture reflects some of the old china. simon: freight haulage volumes. when you are seeing an economy transition from those rishel industries to a more consumer-based economy, the value of those indices are diminished. the methodologies on various search engine based methodologies are a bit ropey. chinese authorities are really pulling a lot of levers right now. 26% year on year. you have got lending growing at 15% year on year. you are starting to see the dollar, you want moved to about -- the dollar-yuan move, and i expect further moves in the export market. that is a powerful cocktail of policy leaders, with the consumer side, which is adding to a picture. the chiefcomments of trial established -- the chief china strategist at boko. he says that the shortage of dollars was a common feature of all crises in the past. asian crisis, the 2008 financial crisis, the shortage of dollars was the problem in all of those cases. now he sees the u.s. current accounts improving and he thinks this could be something that comes back to stress china once again. compare thetant to late 90's with today in terms of china's foreign exchange reserves. back then, they were fairly negligible. that is coming down from $4 trillion. they spend already 400 billion of that propping its currency up. facthter dollar is in tightening in the chinese economy. the administration has a lot of ammunition on the foreign exchange side. i fear a more upbeat picture. you are definitely right, that if you are absent, and there are some emerging markets such as brazil, south africa that are not as resilient, where they do really worried about their ability to deal with a crisis. china, if the administration takes an activist role in terms of providing liquidity, i don't think we are against a real problem here. the ones that are geared to the new china. anything that features in your iphone, for example. in your eyes, does that set itself apart? market that set within iphones and the like, all the smartphone technology. it is such a tiny part that just simply doesn't feature. but it is reflective of what kind of commodities are going to be in demand from china going forward. making investment decisions going forward, they need to be mindful of those trends. it is not going to be coal and steel, it is going to be a different set of commodities. european investors often turned in years gone by two the european listings as an example of one to get involved in commodities. it is just a shadow of its former self. now, it has less ability to do that. i durant around talking to managers, and they say it is overweight on commodities. it used to be. down to 3%. muchfore, there isn't that of a play on the commodity prices as there used to be going forward. stocks, commodities really depends their capitalization on the future trajectory of the market and the demand for the future pipeline supply. you talk about a certain extent, nickel producers globally losing money, the coal industry not looking great either. only three producers globally make any money at the levels. things are not sustainable right now, are they? is why i have a different view going into 2016 on the mining commodities market versus the oil price. commoditiesmining market is set to be suppressed for a significant period of time . a lot of this state backed production is very resilient and spikes to high-yield debt and a very low price. by contrast, the miners are much more sensitive. i expect marginal production to start to leave the market. the question is whether that leaves a suspect -- a sufficient pace to save some of these companies where the dividends are very vulnerable. anna: simon, thank you. up next on the program, deals, deals, deals. a record deal for m&a action. ♪ anna: welcome back to "countdown ." nejra: shares have surged after the chairman and ceo will resume his duties after a five-week absence to aid investigations by chinese authorities. the stock had previously plunged following the firm's announcement that it had lost contact. boeing has agreed to pay $12 million to settle complaints over safety standards. the federal aviation administration says the company missed a deadline. lawyers for internet entrepreneur kim.com say he can be extradited to the u.s. he faces charges of copyright infringement, money laundering, racketeering. the megaupload founder and free -- and three associates do have a case to answer, according to the judge. m&a. let's talk about get a peek this -- global m&a hit a peak this year. this.s the context around we have seen some mega deals, haven't we, kind of swaying the story for 2015? we are getting ready to close out 2015 with almost $24 billion in deals globally. highest of those figures have been life-sciences industry, telecom, technology. distorted a little bit by these megadeals. what we saw at the beginning of the year was a slew of megadeals that really drove the value and drove the number of deals very high. that distorts the picture a little bit. i think that we look at these numbers, we have to be a little bit careful about extrapolating too much. i think there is a distortion. anna: if we did want to , would thatanything lead to some sort of correction? >> i think it is too early to say whether we have peace. i think most commentators think we have peaked and that there will be a slowdown. thattably, when you have -- have these megadeals, there will be follow on deals that come with those as regulators but at those transactions, what we may not do is quite so many megadeals. anna: stay with us for a moment. let's bring into the conversation bloomberg's managing editor for global deals. topics through some of the biggest deals. we have been talking in the studio some of the sectors that were crucial to the m&a. >> there is no doubt that this year has been dominated by negative deals. the accommodation of pfizer and , with the inversion so they could move abroad, lower the taxes, get some new drugs. as well as make a brew, the takeover of sab. this seems to be the year that those deals that we were waiting for our actually happening. anna: what is the outlook for 2016? does this tell us anything? this history help us interpret this big increase in m&a? aaron: we were crunching the looking atesterday, what has happened in the past we reached these types of records. in 2002 and 2007, what would be the previous records, the year after, there was a bit of a correction. now, we are asking ourselves, can this huge wave of deals continue? theme is thatmmon next year won't see as many make a deal but that there is still sufficient competent -- sufficient confidence. activity, but i think people think it might not be quite as sweet of a year for dealmakers. anna: i left keep goldman sachs happy, perhaps. i saw from one of your stories that goldman breaks a personal record. anna: simon, let's get to you on this subject. the federal reserve and what they choose to do with interest rates in the year ahead, is this something that could derail the m&a boom we have seen? don't see the fed moving with sufficient speed with a u.s. presidential election in the second half of next year. i think we will lucky to see 2%. in terms of looking at m&a activity, there will still be a credit market near historically low rates to raise credits to finance these deals. therefore, support for deal to be done. also, look at the geographical breakdown of the deal this year. .orth america, asia almost flat europe. qed, low oil prices, a lower euro start building momentum, then we should start seeing this -- seeing these deals from the euro side. anna: the motivation behind some of them has been taxed in the version -- tax inversion. the u.s. tried to clampdown that, haven't they? will that be something that will carry on as a motivation? was ables. government to get through sort of the first wave of restrictions. what we are picking up, i think, thatcreasing confidence the obama administration will be unable in his last year of its term, to drive through the second wave of restrictions on inversion transactions. after a spike in a little bit of a lull, we have seen increased interest. ofking at the possibility structuring these transactions in the current year. that may be a driver as we get into 2016. ana: wendy possible to shape shareholder perception around this level of dealmaking? peaks and people start asking questions about, do they really return a value to shareholders? >> i think shareholders will almost come to expect the level of dealmaking that we are seeing. there is huge pressure on corporations to grow shareholder value. that will continue to drive m&a. the lessons from history are difficult. at previous peaks, you have those poster deals like aol-time warner, which really offered no synergies and was an absolute disaster. i go back to the macro conditions. they should remain supportive for activity. a lack of organic growth, which means that the shareholders will look for their boards to come out and find growth through acquisition behavior. anna: do you think europe is going to play a bigger role? we have seen some of these deals affecting europe, but not necessarily coming out of europe. >> speaking on the inversion point, obviously ireland is a very attractive domicile for u.s. corporations looking at those type of transactions. that may be something to look out for. i think the level of confidence in europe generally, and expectations for europe generally, are slightly lower than they are for the reasons -- for other regions in the m&a field. simon they have a more educated you have me on the macroeconomics behind that. i think we will continue to see activity in europe, but not at -- levels of other reasons of other regions, particularly in china, where we are seeing a real increase in the value of deals. at the values go up, i think that is going to be something that they drive deal activity next year. anna: it will be interesting to see what happens if the oil sector. most people talked about how this would drive a wave of m&a in that sector. as people started to realize that the prices would stay low for a long time, they wondered if that was a good time to do a deal. they will have to keep cutting costs to try to make the numbers add up. simon: one of the themes will be asset disposals over the course of an m&a deal. with such a volatile underpin such as the oil price, that is a moving target. really quite difficult in the oil and gas space to know what fair value looks like. i think there is much more before we get to a final outcome. anna: we seem to break records all the time in the size of deals. some deals that we would have thought had significant in the past almost pass under the radar . >> absolutely. the numbers on some of these deals last year really were quite economical. royal dutchgan, shell, sab-miller. transactions, as we were saying earlier, that in past years would have been significant. really not registering on the radar this year. that is quite extraordinary. anna: thank you very much for coming in. louise nash joining us on that m&a conversation. and thank you, simon for joining us. up next. we will talk more about the oil markets. we are tracking this parody story with wti and brent. we will also ask what that's in the market tell us about the future of the oil price. ♪ anna: oil upbeat ahead of reports. hedge funds malaise deepens. asset management setup up for $950 million. nike. ahead, it has just gone 7:00 here in london. really interesting dynamics going on here. the gap between wti and brent. breast-feeding the international benchmark. that line going upwards. wti closing in on brent. the pace of that closing and has increased. that really affect the u.s. decision to end the export ban. on that front, we get the u.s. crude inventory buildup. we're watching those two measures of the oil price. -- $36.44 on both brent and wti. royal dutch shell, europe's biggest oil company, has further reduce spending plans. it plans to take over amid slumping prices for crude. munis has downgraded the credit rating. oil outlook at 7 a.m. u.k. time. management,asset the hedge fund owned by carlyle group, suffered almost $1 billion in withdrawal requests in the third quarter. shares rose in after-hours trading despite concerns about china's slowing growth and delivered some rare good news for the u.s. consumer sector. revenue in china was up 24% to almost $1 billion. consumer spending in the u.s. has risen by the most in three months. the two biggest risks facing u.k. economy next year are brexit and brexit. economists surveyed by bloomberg said a british departure from the eu is the biggest threat, while 13% said a buildup to the referendum. u.s. rate hikes and the presidential election didn't even figure into the concern. record debut from star wars and blockbusters like jurassic world earlier in the year have put the u.s. film industry on track to be $11 billion -- two top $11 billion in sales for the first time ever. it is forecast to rise 6.3% this year. anna: thank you very much. let's check in on the market action over in asia. 11 trying to track down the rally all week, haven't you? did you have any more like today? haidi: where is the man in red? we are seeing pretty good gains across the board. holiday, thin volumes we are seeing, particularly when it comes to places like australia. ending up .5%. those volumes about 60% less than the average. we just saw shanghai closing in the last few minutes, and it has fallen into the red by about 4/10 of 1%. chinese stocks listed in hong kong surging to a three-week high. some nice gains across southeast asia as well. inflation numbers coming out of asia. taking a look at some of the day's movers. we didn't see financials in hong kong really leading those gains. seen some ofs have the worst performance in hong kong so far this year. we saw: ty junot -- we saw guotai junan really recovery today. work andas returned to resumed his duties. he disappeared for a number of days. he was apparently assisting authorities with an investigation. that has alleviated some concerns. there is a bit of bargain-hunting going on. byic securities is also up 6%. silly -- wewe really saw a nice rally when it comesrallies, picking up by abo% overnight, sitting above that $40 per tongu level. that has boosted some of the smaller miners as well. not a bad day, but in volumes as we count down to the end of this trading year. anna: a day or so to go, isn't there? it's almost there. heidi in hong kong. oil is higher ahead of opec annual outlooks, well new york features are trading near parity, after brent closed yesterday as well as levels in more than 11 years. has led toglut speculators buying contract that will pay out even if oil drops to a price of $15 per barrel. us, and alongside him is peter trugood. just explain that a little bit. you wrote a great story about how oil is taking out bets around $20, $50, well below current prices. what is that telling us? >> it is telling us that some investors will pay only prices that drop significantly, in some cases more than 50% from current level. the volumes are relatively small. you could put off until december next year. if you get lucky you will make a lot of money on that contract, but what we have seen over the last two weeks is that putting options at low levels has increased. yesterday, the most traded option for december next year was $20, an indication that investors have a negative view of oil prices going into the new year. anna: is it still possible to be surprised by anything in the commodity markets? it has been such an amazing year. looking back, what stands out to you? >> to me, oil has been the biggest surprise. when we were finishing last year, we knew that oil prices were going to soft. they kept production unchanged, the saudis clearly fighting for market share. but this new year, the surprise was not only is saudi arabia keeping production, but boosting it significantly. they have about 800,000 barrels per day, that is putting another into the market. that has been to me the biggest surprise of the year. anna: peter, give us your thoughts as we head toward the end of the year. fracking is not a small part. the production is ebbing away, so i think it will get more dissident. at these prices they have done most of it. anna: and then once they have done that, opec can cut back? >> that is what they do. anna: what do you think, javier? we heard about the opec countries meeting. a couple voices were both saying that we shouldn't be too pessimistic on the oil price. what does that mean? >> we are looking at 2016 at least for the first half of the year and we will have a lot more new oil coming. of we still have a lot sustaines that will sta production and other areas of the u.s. sustaining. russia keeps doing very well and more importantly, iran is coming to the market. we could put half a million barrels per day into 2016. it depends on what happens into the new year. the amount of production comes in the big oil companies, small oil companies, it all indicates at some point that we will have a rally, but the key questions at what point. the first part of next year is looking pretty bad. anna: and before we get that rally, do we see dividends being cut? are you expecting that already, peter? >> they won't. they can't, of course they can't. these prices, no one is profitable. trouble.in big $50 per barrel, that is not the right price. it is simple maths. anna: we spent a lot of time talking about the oil price and many other commodities that have been hit this year. what has been the most unloved? $50 per barrel, that is not the right>> iron ore. if you look at the price action, and ore has gone down a single investor wants to be involved any longer, particularly on the equity side. look at the market particularlyn, and bali of brazil. the market capitalization of this company was almost $300 billion, today less than $20 billion. that tells you how unloved the iron ore story is at the moment, both as a commodity but more particularly as an equity market on the mining site. anna: how the mighty fall. thank you. peter, let's stick with you on this conversation. within the last hour, we were talking about estimating that only three producers are making money right now and you were talking about oil. what gives there? you refer to it as a choice on the part of shell, for example. they are all difficult. >> exactly but eventually you .ave to get dividend they can do it, they can raise debt, they can do all sorts of things but they have to bite the bullet. if you take it to an apocryphal level, they are busting. there is no way they can sustain production at this level. to your point, what you're is are these countries -- there is no way they can operate at this level that is what -- anna: we have seen the mining companies are the cutting dividends. not the oil makers though. do you think investors will be ruthless on ceos in oil? point, --alf years that was halfjavier's point. >> they will get boxed into a position where they will have to think about it. these prices are not replenishing cash flow and you have the challenge out in the isure -- the first response to cut as it always is. then hope the price gets back up. capacity needs to be taken off -- some miners are getting workedbut they haven't out that they need to stop this supply. anna: peter, thank you. let's move the conversation to ron, had almost $1 billion of credit withdrawal request this quarter. they have performed poorly as investors leave in droves. simon ballard is here. great to have you on again. what is this telling us? tell us a bit about clearing aron road and what it signifies. simon: it signifies further down the quality curve. we had that still lie in capital story just a couple weeks ago, and i think it is further development moving through the fed tightening sphere now. the gates that were put up on certain funds, it's an interesting story. back in september it was worth $8.5 billion and it is now down to $1.25 billion after redemptions were scaled back in the third and fourth quarter. continued -- a continuation of the story of what happens when the fed moves into tightening mode. the restating of the quality curve, investors trying to take profits. this time of year, it reflects the lack of liquidity. anna: lack of liquidity in various assets has been something that's been talked about this year. how worried are you about the high-yield sector? >> to the point of interest rate -- you have a credit cycle deteriorating already and an interest rate rising until last week. the implication is be scared, it's the first time anyone has seen this. not everything in the high-yield market is all down to fund financing sectors because they have mostly refinance their balance sheet. it is not that bad in the quality sector, but you have this cycle -- we are seven years into the recovery and this is normal. it's that weird question that this has been driven by commodity prices. a year ago.over the deterioration is already affecting price. it was about piling money into the ground. it is the fact that investors have been persuaded further and further down the quality in terms of trying to find that incremental yield and rates.e of zero interest fed has done, people have to stretch their parameters of risk tolerance. anna: are there investors who maybe shouldn't be there, who don't understand what they are investing in questio? >> there are an awful lot of people forced and the situation -- in the u k, for example, that is the magic number. but to get to that, after buying product, you have to get from five to six. fed has done, people have to stretch their parameters of risk tolerance. high-yield equity is the old banner, aliens of que so yes, ye pushing a lot of people in. simon: and those yield tourists solvate on the basis of liquidity, -- >> that is the other thing. this is all the beginning of deterioration. anna: we will talk more about this no doubt. thank you very much. simon ballard joining us. next, good medicine. megamerger,ear's what to expect in 2016. ♪ anna: welcome back, this is "countdown." let's get the bloomberg business flash. nejra: shares surged after a brokerage said is chairman and ceo will resume his duties after a five-week absence due to investigations by chinese authorities. it had previously plunged during the announcement that it had lost contact with him the hedge fund manager majority-owned by carlyle group suffered a $950 million withdrawal request, according to a person familiar with the matter. it leaves assets 35% below last year. kim.com says he will appeal a ling that he can be extra day to the u.s. that was your bloomberg business flash. anna: it has been a turbulent pharma, at stocks outperformed markets on both sides of the atlantic. for a look at how health care could very, we are joined by sam fideli. good morning. give us some detail about the sector's 2015 performance, when you look backwards. >> good morning. one of the most important things is to realize that when you are comparing the sector, you have to think about what currency you will look at. put everything into u.s. dollars and it is exactly the same. the u.s. pharma sector did relatively well compared to the s&p, and so did the euro pharma sector. but the u.s. beat the europeans. is there anything in that? i don't think so. it is a small amount of companies, so i don't want to read too much into it. on a stock level we had some very interesting moves. eli lilly led the sector in terms of performance, driven by good, clinical data, and everyone knows about diabetes, so that is driving -- anna: you can get sidetracked by the big m&a stories. there are some good clinical stories coming in. what interests you? activee i am an investor. a long-term growth story. all of these companies, everything seems to be a proxy for more growth out right. i'm a bond proxy, in that story continues. that is the story in the making. the market -- we have seen a lot of m&a in 2015. is that going to continue? you mentioned that easy to understand business, why diabetes might be on the rise and this might be an interesting company -- to companies like that stay independent? >> this is a special case because they have a shareholder who is very unlikely to want to fill. all this growth has come from just bringing new drugs and better versions, new diabetes treatments. in 2016, you will continue to see some deals that everybody hopes will close, what shareholders will do it that we don't know. the politics are going to get in the way, but i expect to see a gives in 2016 which people a direction estimate put money is both large pharma are looking for bolton acquisitions, acquisitions that give them high client growth. the most recent example was after zeneca. -- was astrazeneca. that is the kind of thing we are looking at. of thehe lower and billion dollar market cap biotech that will be a particularly interest. anna: do you go around looking for small pharma companies that may be bought up? >> well, the large pharma's have a pipeline problem. all the innovation is being done in biotech, primarily. specializing, buying in bulk. may,ving said that, if i one area where pharma has been ahead of biotechs in the past few years is oncology, immuno oncology. we talked about this along the way. that is one area where they really take head and shoulders above, and that is where we see a lot of innovation. anna: who do you watch on that front? >> the key companies are astrazeneca and roche. bristol-myers -- anna: big names. >> absolutely. bristol-myers is the lead player, and we will see a lot of innovation. we are treating and curing people, but that is an important thing. anna: is that going to be a theme for 2016? this politically is a hot potato in the u.s. do you think so, peter? bat.t's an easy thing to you can't lose by curing cancer. anna: do you think if you invest in one of these -- >> there is a lot of noise and probably very little activity. >> we have talked about this before. we had a democratic -- everything was democratic in 2010, and they did manage to get it through. i think they tried to put some pricing control for the government into the affordable care act, and wasn't going to pass. it there is a reality, and is coming from people who actually control prices. there are a lot of competitions there. anna: we will watch that, then. peter, thank you very much for joining us this morning. that is it for "countdown." up next, "on the move." we will be talking you through everything you need to know ahead of the market open. futures suggest a positive start of the trading day. ♪ anna: welcome to "on the move." we are counting down to the european open. here's fully are watching this wednesday morning. low for longer. pinning down a slippery commodity, opec will publish its global outlook later today. crude cuts. slashjors continue to costs as brenda close-out out 2015 with its lowest average price in over a decade. and credit concerns. carlyle's claren road is set to lose billions as anxiety claims another victim. and we are less than half an hour away from the start of european equity trading, so let's have a look at what's happening on the markets. it looks as if futures are giving us a positive picture for the start of equity trading this wednesday. possibly a santa rally -- who knows? 1%,ftse 100 is up by about cac index also a little higher. let's check in on some of the other asset classes. oil prices and focus, energy focus. we have this curious situation where we are trading almost a parody on brent crude and on my next. -- and on nymex. 36.49 on brent. wti has been closing that gap. the u.s. benchmark rising toward the international benchmark to reflect this change in u.s. government policy around crude exports. we have got the euro a little weaker against the dollar. oil is a big focus today. in two and half hours we will get the world oil outlook, along with some data out of the u.s. it comes in a week when oil prices sank to an 11 year low and oil prices announced plans to cut costs. elliott gotkine has more. good morning. what are we expecting to hear from opec later? meeting inna, the the world oil outlook coming out later this morning will probably not be too dissimilar from the one that put out in 2015, namely that they expect energy demand to increase by 50%, that asia will generate much of its growth around $10 trillion. year, the short-term outlook will generate a lot of excitement. we already know that oil majors have been scaling back investment, international energy agency's reckons that investment will decline by assist. -- by 1/5. it does give a kind of reference value of a barrel of oil so many will be watching for that another thing will be what iran 's reentry will mean and by definition the prices to. that will be -- anna: that will be an interesting one. elliott: absolutely. the biggest oil company came out yesterday, lopping another billion dollars off its oil plan. also, u.s. majors are scaling back spending as well. reducingfrom chevron, their spending plan by one quarter. they lopped off $11 billion of their investment plans for 2016. the biggest one could be yet to come. we may here as early as next month about what petrobras plans to do for its investment over the next five years. that budget had once been around $20 billion, and we know it is embroiled in that corruption scandal, and it is probably the most indebted of all the oil majors. expect some major cutting to be going on there. it could come as early as next month. anna: a story to watch from many angles. thank you. elliott gotkine. joining us on set is richard hunter, head of equities. welcome to the program. let's continue this oil fever if we could. going tos -- are they have to change the narrative and 2016? so far we have seen the mining companies cutting dividends but not the oil majors. is that something that 2016 will hold in store? >> not according to the companies themselves. we had another announcement this morning that shell is looking to cut even more costs, questioning the viability of the deal at $40 per barrel or less, but the other thing against that is the fact that in terms of the chief theytives of shell and bp, have both unequivocally said that their financial strategy is untouchable. obviously at some point that will come under pressure, that investors are certainly being paid to wait. anna: so no change in the narrative for now. some of the oil makers were helped by their refining businesses during 2015. this as something that will go away in 2016? there will be quite the support there has been for companies seeking shelter from their upstream difficulties? >> absolutely. it has been something of a savior. in a strange way there will be some easier comparatives coming through in 2016, but clearly the majors are pretty much under pressure. whethersituation now, in terms of the general commodity picture it looks like a one-way bent in terms of the u.s. dollar. the stronger the dollar gets, that's more pressure on oil. anna: mining and energy related businesses were a big weight in the ftse, and out the mining sector has gone from 20% to a shadow of its former self. it doesn't move the footsie in the same way it once did. >> that's right. it stands at 4% at the moment. having said that, if you add together the bank and mining sectors, it still counts for 30% of the ftse by value. importance,of some but obviously quite apart from the oil and mining sectors. we have had banks under pressure as well. that has explained some of the underperformance in london. investors, this remains something they have to focus on because there are so many in london. >> absolutely. and that is one of the dangers of investing in the market, which is another reason for considering bottom-up investing, which is not to ignore the macro noise. you still need to pay attention to it, but there are number of world-class companies in the ftse 100 who will be affected rather wes by this story -- rather le bss by this story. the average dividend yield is about 4% at the moment, which offset some of that capital. anna: i know you like prudential and we will talk about that, that are you brave enough to be looking for any kind of exposure to commodities related companies? as we going to 2016, do you feel anything will change? >> there doesn't seem to be any end. that being said, of course the rather more favorite stocks of the likes of rio. still, towards the higher end of the risk spectrum, but it might be worth a look in terms of their location and the different metals they mine. anna: richard stays with us. as we look ahead to the outlook for equities, we will also find out which particular stocks richard is watching. we'll talk that through in just a moment. ♪ anna: welcome back. you are watching "on the move." let's get the bloomberg business flash. nejra: international shares chairman andthe ceo resumes duties after a five-week absence to aid investigation by chinese authorities. the stock had previously plunged following their announcement that they had lost contact with him. afteryou shares rising concerns about china's slowing growth, and delivered some rare good news. revenue in china was up 24%, to almost $1 billion. com will appeal of tha ruling that he can be extradited to the u.s. the court in new zealand says he does have a case to answer. anna: thanks very much. let's talk to richard hunter. richard, there is a particular stock you are looking at. i gave it away before the break, it ruined all the suspense. prudential -- tell us what you like this. things intoo put pockets of time, with what's happening in 2015 as opposed to just normal investment in three to five years. , therelook at prudential are three main strengths to its longer-term prospect. in the u.k. we are becoming aware, pension provision is something that needs to be done over a much longer period of time. in the u.s. you have a similar story with the baby boomers, and in china where prudential is very established. those are three very strong things that underpin prudential. anna: and you mentioned this exposure to china, a lot of concern about slowdown in the chinese economy, but the thing about this is that it is geared toward the new china growth story. >> and it is long-term. ,t has obviously been affected as has the wider market, but what you have got to be hoping for when prudential comes to lay the market is that it continues to make progress, and having that geographic diversification, it can pick up the slack elsewhere. anna: are the regulatory concerns around the sector? >> yes, or certainly are, -- there certainly are. but potential has been working on these for some time now, to put necessary financial blocks in place to withstand the pressure. it is a massive and old u.k. company, which, again, given those constraints, is looking fairly robust. it is the insurance sector under the same pressure, and it is that diverse occasion. anna: those who have been exposed to commodities may be questioning the mining sector and whether those dividend yields will be maintained. some have heard that they won't be and others are concerned about other commodities. is the insurance base somewhere they can look for dividend payments? >> yes, it is. if theentioned before, shell and baby executive management -- that is another good place to look. on average, the ftse 100 is yielding 4%, and some of that is income seeking investors. solace, even if the index has been under pressure. that takes you back to the bottom of the investment. anna: richard hunter stays with us. companiesore chinese -- questions of contagion arise. we are in beijing with an update. ♪ anna: welcome back. you are watching "on the move." 7:49 in london. china's leaders have said they want stronger growth in the coming year, and you will be heartened to hear of more signs of stabilization, according to the earliest indicators for december. nick wadhams has all the details. tell us about these indicators. they are not quite the traditional ones we often talk about. tell us what they are showing. nick: that's right. two of the main indicators are from baidu. what they found is through an algorithm where they look at searches for product sold by small businesses, threw that they have given a positive sign about the performance of some small retailers and other companies in china, sort of a baidu purchasing managers index. we lost a couple pmi's in china because the sponsors backed out. those showed an uptick. the issue and china more generally is that we struggle to get reliable data. there is the government data but there is a lot of suspicion that data is not entirely accurate. when you say something like this, people get excited. they are showing an uptake, but fairly minor. anna: it is interesting to look at the private sector data, some of it coming out of china. some of it is coming out of new york, out of london as well. we are hearingt, about the chinese companies having problems making bond repayments. what is happening there? interesting,very contrasting the two. you have suggestions of an uptick, but on the other side you have hard evidence of companies struggling in china. we need to counterbalance those two things. what we are seeing is a pattern of companies across the country having more trouble paying their debts. that is a big warning sign that would suggest some companies got to leveraged up in the heyday over the last many years in china, and now the piper has come calling and they are struggling. the government has said they will help some companies, but we are not seeing the routine bailouts we saw in the past, which does suggest that the government is going to allow a weeding out of some of these poorer performing companies and let them fail. anna: nick, thank you very much for joining us. let's bring back into the conversation richard hunter. universe is mostly listed in the u.k.. but obviously with the commodities exposure that london has always had, albeit lower than it was, you have to focus a lot on china and other companies listed here. what is your big concern? >> what of the biggest concerns is that we are hearing about the reliability -- even earlier in the year. gdp growth was reported at 7%. there seems to be an application of companies doing business out there that it could be half of that. it is too early to say yet whether the gdp numbers will fall to those sort of levels, and it is a figure that we might take. isetheless, what it means that we have to deal with what we were given, and when you get contrasting reports of what's happening on the ground as opposed to the official line, that is something that would tend to lead away from direct investment, may be taking a longer turn. what my clients have preferred to do is invest that fund around the region. anna: it seems there is a bit of data for everybody coming out of china. whatever your story, whenever you are looking for, you can find it in the data. do you want to see evidence of this reorientation of the chinese economy? for a long time they talked about how this old bottle is to be discouraged, and the new model is more consumer driven. that would be fine if we were seeing the slack picked up, the slack in the old being picked up by the new. investors are looking for more evidence that it's happening. >> very much so. it has clearly been waiting over the last few months, that particular new index is a very interesting one. but of course, we are in the season for it -- the chinese new year coming up in february, so you might be seeing seasonal payments. it will become entrenched for all sorts of reasons. we have seen the slowdown already having an impact in terms of gifts on the drink sector for example. withave got the investment prudential, the general consumer spending, wishes had an effect on the likes of burberry and roc luxury retailers. you will want to see at least six quarters of sustained growth. anna: we talked about prudential and how that is geared to this new china. i suppose there are many other financial services companies in excels, who london would love to do more business, have more access to the chinese market. is that something you are holding in on? -- you are honing in on? >> absolutely. in terms of the banking sector you have the likes of hsbc and standard chartered, but you also have a very interesting other side effect, which is the pharmaceutical industry, where more developed western medicines are starting to be picked up in china. you have the brand-new middle-class and a potentially massive market. anna: your general outlook for the global economy is that monetary policy will be quite supported. >> that's right. thealso we have seen over last couple years that companies have been able to a cumulative cash. one particularly positive thing would be a deployment of that cash. anytime there are a number of options, be they increasing the dividend, share buybacks -- yeah, there are a few points of hope. anna: richard, thank you. richard hunter stays with us. coming up, the market open. futures are suggesting a positive start to the trading day. looking for that santa rally, maybe it is there. up 9/10 of 1% from 50. -- from ftse. ♪ anna: good morning and welcome to "on the move." we are moments away from the start of european trading. let's get straight to the morning brief. opec will publish its global outlook later today. slashjors continue to cuts. and credit concerns. carlisle will suffer $1 billion in withdraw requests as high-yield anxiety claims another victim. that is what we are watching this morning. wereuropean equity markets set to a positive start to the trading day. let's get to caroline hyde. caroline: good morning. lower with three days of losses on the stoxx 600. we lost 200 billion euros in market value. we could eat up a little bit more. the 5100 is opening in the cac 40.ike the ca diddggdp shows growth, as consumer spending. consumer spending data was released one day early. this gives hope for global growth and a rebound for oil. we are up more than one percentage point for cac 40.

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