When you look at the asian trading. When we look at the u. S. Numbers, we see risk aversion with metals and gold. Money is moving into what is same as we haven asset with of the safety that is gold. On the flipside, we see monday moving into the fx haven. You look at that story from david inglis in a moment. We see the dollar up for three straight weeks versus its peers. That is the longest streak since july. Particularly, money is moving into this particular haven. Oil is moving out of oil once again money is moving out of oil once again. Every time the oil goes lower, the stock market follows suit. That painted the picture for bhp today. As if i could not get any worse. You are already the biggest miner. Invested billions of dollars in oil back in 2009. The air down in the United Kingdom i would have seen miners feeling the pain. At last,oup is up. 9 . We get a sign of that you can pay 12. 5 billion pounds for ee. The chief commercial officer group. The ceo of the ee the ee group drives higher. In the green, many have called this stock lower. Why . The chip designer. Overnight with the earnings from Intel Driving this stock lower. They said we are warning you about softer 2016. The of worried about the slowdown in the market. Until goes lower. Thank you, caroline. He was future is still pointing to a fairly negative one. Lets find out what happened in the overnight session out of asia. David inglis has more from hong kong. David friday started out well for asian investors. It almost looked like the best day we have had this year. It did not take long for us to close out another chaotic week. The shares are at fresh threeyear lows. Time it was at this 2012. Was right before that shows you the magnitude of the selloff and how dramatic it is. The japanese yen just closed. There is no indicator of risk aversion this week. Endedrket actually stroller against the dollar. Show a recordina drawdown. It is only a record amount of foreign currency. We have all of this pressure on the chinese currency. At some point, something has to give for investors. Are sellingestors on these rallies. That does not give you a good indication of Risk Appetite just yet. Jonathan david inglis, talking about shanghai. Lets carry on the conversation about shanghai. Was indicating that maybe people were selling into these rallies, the reverse of what we saw in 2015. Lets talk to our china editor out of shanghai. Is that the interpretation here. This was a seller rally story today . Reporter pretty much. It is the exact opposite of what happened yesterday afternoon. We expectedi mean, may be a positive open, but for some reason even with the jump in credit growth, it actually responded to parts of the data. That is becaus investors were concerned for the outlook of the economye at the end. If you look at the data closely you will see the estimates and even the unexpected jump in a exports was noticeable. In theportantly afternoon what we saw was a report that some banks in shanghai will the longer accept chinese stocks as pledge collateral in order to borrow money to buy stocks. The hightech stocks are the biggest performers for the year. Jonathan i sense this is what we are looking at now. What are we looking at here . What are the key metrics we should Pay Attention to . Reporter obviously, the economy and the yen. , i think it is very important to china and hightech companies. They become the leading indicator for the market. They are incurring many headwinds. Companies are encouraged not to sell their stakes in these companies. The might be seeing heavy losses for this industry. Jonathan that is a fascinating story. Thank you very much indeed. The data this morning is perplexing many people out of china. His credit card data looks great , but actually, china does not need more credit you could argue because they have a lot already. And they are probably more problems on top of what they already have. There is less foreign that because of the currency and therefore, they have an issue with domestic debt. Is that a positive read . Not at all. Im not surprised by it because the stock market is so weak. The investors may be switching into a more defensive mode. As you mentioned, china needs more debt like it needs a hole in the head. Between 20092014, the chinese ranking system created more assets than the u. S. Did in total. When you have lending on that scale, what you will have this bad lending. A lot of the industrial or or they companies, individuals, will take on a lot of debt. You mentioned the margin being made in the stock market today. People are finding out about stock purchases earlier when the market was rising on debt. Is problem with china twofold. The Global Economy is slowing down the chinese export machine. There is also so much debt. Jonathan until we understand china and get stabilization within the market, do you go anywhere near the emerging markets . Guy we are 22 minutes into the European Equity session. Futures indicate we would open fairly flat. We are now starting to get into something of a selloff. The miners rallied hard yesterday, but are selling off this morning. Some of the tech names under pressure right now. Cad underlso seen the pressure. The dollarcad rate sneaking up a little bit. Brent down again. Re down to 30 point 19 30. 19. 117. 57. En trading at it will be a shortterm phenomena, but interesting to see how the authorities and up reacting. Were looking at what will happen next with the playbook. When the fed hiked rates last month, with gradual rate increase. Will that turn out to be a reality . Joining me now is Caroline Hyde with the chart that matters. The chart says, no. Caroline remember that they said four rate hikes. Traders at the beginning thought half that, they thought two. The betsund rates, that they are making and where they see the rates going for this year. Coming back. Now pricing in just one. This is the chart that shows traders on the whole think that bewere thinking it would. 25 each time. That means we would only get one rate hike. They saw two rate hikes. All of this is adding to the cocktail of negativity. You mustve been watching the charts coming out. Has said, ithe u. S. Dont see the s p where i thought it would be. Earnings are not where i thought they would be. They are 12 higher. Higher . Even get 14 you have to think of that. Guy i guess because of where we start from, really. Yesterday on the program, they were talking about a 12 upside. What is interesting is the market is signaling be fed does Pay Attention to what is happening around the world. In september, they made this very clear. The fed was focusing on the domestic story and the domestic story looked fairly rosy. Perhaps this is an indication that you cannot ignore this kind of turbulence. Caroline the bank of england was talking about their inflation expectations, how currencies affect their view as well. It is interesting that we see the dollar in such a tear right now. Guy the market is pricing out fed rate hikes. Caroline could the accident to why they will be worried about four rate hikes. Always been a big debate. What will we see this year . The correlations are spread widening. Caroline, thank you very much indeed. Salest, european auto have had their worst Monthly Sales since 2009. Certain brands did not do so well. What happens next . Are releasing the emissions scandal starting to spread . Stocks are moving aggressively yesterday with names like rea nux. European equities are starting to soften. They are down to 10th of 1 . The ftse 100 is at 5900 right now. When youre on hold, your business is on hold. Thats why comcast business doesnt leave you there. When you call, a Small Business expert will answer you in about 30 seconds. No annoying hold music. Just a real person, real fast. Whenever you need them. So your business can get back to business. Sounds like my rides ready. Dont get stuck on hold. Reach an expert fast. Comcast business. Built for business. Watching on the move. It has been an interesting session thus far. We thought we would open fairly flat and we did. Since then, we have seen a subsequent selloff ripping through these markets. What stocks are moving up this morning . Lets join Caroline Hyde and find out. Caroline the selloff is accelerating. You have to watch out for the miners. The worstperforming Industry Group and her down on the stoxx 600. Down by close to 5 . This is close to a double whammy. Not only are they exposed to iron ore prices down three quarters of 1 . We are also seeing that they have made big bets on oil as it is at 30 per avail. They poured millions of dollars in u. S. Shell in 2009. The have had to write that down to the tune of close to 5 billion. That 5 billion writedown is hitting them hard. See if they can support a progressive dividend. Will they have to renege on that promise to investors. We could see the dividend flash by half in the second half of this year. Bulletin is close to rskier numbers. Preliminary Sales Numbers are ahead of market expectations. Overall, we are seeing the sales up 14 . Operating profit will be ahead of estimate views. Overall, the insurance contracted slightly in the last quarter. I think that is just spooking if you investors today. So much we are starting to see if pull back on the recommendations. It is the worst performer today. The Semi Conductor was up one point 75 the last time i looked. It is now just coming down. They are still having to pay out a termination fee, but many investors like the fact they will not be over exerting themselves and buying up rivals as the chip market seems to be slowing down. Check out intel numbers overnight. Back to you. Guy european carmakers are in the spotlight today. There were definitely in the spotlight yesterday. Rose 16 on the continent last month in what was the best year since 2009. Additiona it is not all good news. Citron was not the subject of the search. These developments could hurt the reputation of the industry. If some other problems occur, i can say it is not good news for the industry. We have no problem and so, that is not clear. The results of selling the two had nof cars requests from our side. Homes nichols is standing by to Talk International car sales. First, lets go to paris. Shares are down 10 on a twoday basis. Back thisot bouncing morning. Are people saying there was an overreaction yesterday. In somewhat clearly, there was. The market is very nervous. Reporter at least the government is trying to reassure and say that the market overreacted. You have to remember the french state owns nearly 20 also. What happened yesterday could jeopardize the french governments plan to reduce their stake in renault. We had the economy investor saying last night in berlin that they are in no way comparable to the situation with volkswagen. He said he retains trust in renault. The environment minister had a similar line saying, the renault shareholders and employees should rest easy. The damage had already been done. The Market Reaction yesterday wiped out more than 2. 5 billionyearold of renaults market value. This had an impact on the whole sector and the investigation is not over because the french government after the volkswagen scandal decided to randomly test as many as 100 cars, french and foreign brands. Carsr, only four renault have been tested. As many as 25 could be tested in the next few weeks. They could be a cloud hanging over the renault stock for quite some time. Guy think you very much indeed. Lets stay with the conversation. Hans, the numbers came out earlier on and they were positive. What is going on below the surface . I think the biggest so far is the decline in market share from volkswagen. The first time it had a decline since 2007. They are down to 24. 8 . That is part of the story. The other part of the story is looking at their month on month market share. The month of december, they had a 22 market share. If you look leading into that market show, it is renault and ford. You can really see the two french Brands Taking more market share from volkswagen. When you look at the overall sector, the number 42015 is 14. 2 million passenger cars sold within the european union. It is really a spanish story, though. Look at the spanish numbers. Their sales are up 15 . Italy is up 11 . Then, you get 5 in germany. Germany had a banner 4014 year. One other brand is doing very well, increasing market shares. That is not all on luxury vehicles. They have a big bet on smart cars. Sales are up 70 on those. That is proving to be a very profitable investment. Guy nice and easy to park. Hans, just more broadly, can we step back and take a look at vw. The u. S. Trip did not go anything like what was anticipated. When they all get back together, where do they take it from here . they need to have some sort of approval from the California Air Resources Board and the epa. On the pr side of things, they try to walk back an interview. He did not apologize. He said in the interview, he was kind of given the opportunity to say that volkswagen was dishonest. He did not do the kind of prostrating that ceos are supposed to do when they are on their grand apology tours. Numbers are bad, but they are not falling through the floor. The brand is still selling cars. Investors are giving this a wait and see look. This is a healthy Auto Industry and volkswagen was trying to export diesel technology, which is popular in europe, in part because of softer a mission standards and export them to the states. That is where they got in trouble. None of the big european auto many fractures have tried to take european diesel cars and convince americans to sell them. Guy thank you very much, hans nichols. For more now on what has been happening over the last 24 hours, lets go to paris where we are joined by nicholas miller. Good morning, nicholas. Yesterday was interesting. I had not really appreciated how nervous the market remains about the possibility of the vw spreading. Clearly, people are still not convinced this is a vwlimited issue. Nicholas it is very important to understand. That has nothing to do with volkswagen. What is happening is diesel cycle used to use a test which is 25 years old. On the how old the cars market have been designed. There is a new cycle getting into place, starting from 2017. The new cycle is much closer to condition. Fedex points the difference that you had between the test that was done that is the real difference that you had between the tests that were done. Renault is not the only one. There was a study by icct in september. Those hads of that high levels as well. Guy the market is right to be nervous, then . No, there is no reason to be nervous. I think volkswagen caved in the u. S. It is very different to cheat the authorities. Europe canult in manufacture to meet the new cycle. Some they can manufacture like psa. They are using specific tall and they are using specific technology. However, in december they said they would invest 1. 2 billion euros to come back on track. Guy i am going to be obtuse about it. Why did it dropped 20 yesterday at the mere whiff of concern. That is the question i dont have an answer for. When they announced everything, the stock was down by 2 . The stock and wall street went on the day before. They stop in tokyo as well. ,nvestors, as well as robots were very nervous. It is very important to explain what is behind this because it has nothing to do with any evidence. Michael the big manufacturers in europe. The good news is, with this new cycle, all cars will be much guy harmful. Guy we just received cara we just received cara data from last year. What will 2016 look like . Nicholas they can manufacture with nissan to sell electric cars, which are growing. Second, they have a very interesting product for india. That is doing very well in india. They have less exposure to china, which is slowing down. Iran have big plans in when the sanctions are removed. They are going to catch up on this image in on this a problem. It is a very successful car. They are the only ones to do this kind of cars. I am very optimistic for the next year. Guy thank you for explaining, nicholas. Next, monetary policy, is it too loose . Germanyslk about relationship with the ecb. Guy welcome back. 8 45 in london. We have a few positives and if you negatives. Germany is one of them. Angela merkel is hosting draghi. This happens likely. Many of her lawmakers want to oppress the ecb presence to create a qe exit strategy. How will she say this . Hans we dont really know what Angela Merkel says and private. We want to and maybe the nsa will get those transcripts oneday. She is being pressured to urge draghi to end this will Interest Rate environment. That is the same pressure he gets from his german colleagues. He gets that every day in frankfurt. Whether he gets it in berlin we might not ever know. What is clear is that german lawmakers are very concerned about what is happening out there. Brussels yesterday blamed even china on this sort of low Interest Rate environment. And here was a quote even regulators here in germany are starting to get concerned. Here is something from a merkel Party Members saying, i will not deny that the low Interest Rates are wearing us are worrying us. Everyone is urging merkel to Say Something to draghi it is gotten to the point to regulators where they have said the fact that Interest Rates have been low for years is increasingly authoring thanks in germany. Annual review had them concerned about asset bubbles across all sectors. It is a common problem you hear, whether you are in frankfurt or berlin. Will its way draghi will it sway draghi . All we can infer from the december 3 meeting is that draghi is hampered for doing more, but not necessarily putting the brakes on. Guy thank you, hans nichols. Hopes are fading for global profits because in part, the slow in oil. What is going on with a corporate earnings story, which is so important right now. Good morning. What has happened is critical. Reporter exactly. You have corporate profits contracting in the u. S. At a really fast rate at the time when the fed is withdrawing support. Stock markets dont have anything to go on. If corporate profits dont deliver, that is. This is the most important earning season. If corporates disappoint them, markets dont have anything. Guy how will they disappoint them . Going into this, expectations are on the low side. Reporter that is a positive thing. Expectations are so low. Corporates can only surprise on the upside because everyone is so bearish. The thing is, china is slowing down. Everyone knew china would slow down, but maybe the china slowdown is more deep and worse than we expected. The worrying thing as well is the u. S. Is slowing down. We have mentoring fracturing data at the beginning of the gear that showed a recession in u. S. Manufacturing. If or when we had at manufacturing data or bad data out of the u. S. Wherever it was, we had the fed. Now, the fed is pulling out. Guy how importance is guidance going to be . Guidance is always important. Especially in the u. S. Where they tend to give a bit more numbers guidance, rather than qualitative guidance. Oil prices and gas prices will affect earnings. This is important not only for the u. S. , but also for europe. Remember, a huge market for europe is the u. S. And asia is still a very significant part of it. Is anybody saying it is going to far . Reporter we have those here. There is no reason why these cuts should be such an overreaction. If you think about where we are now compared to 2009, it sounds extreme. Objection. E some yesterday surprised the market and drove a rebound with u. S. Stocks. Maybe as we go into earnings season, that will give something for markets to balance on. Guy thank you very much indeed. The bloomberg stocks reporter. Up next, it has been one year since the s p shocked the decision to drop the swiss franc. Has the move left switzerland in pain . Will come back and talk about the story when we return. Guy now, remember this . We will come back to this story in one moment. We are getting moments from the Swiss National bank. Is 0. 75 . Nb they are down 20 in the last few minutes. Markets are blowing through very key levels at the moment. It are going absolutely be going absolutely berserk at the moment. We are going more negative on our Interest Rates. It is not having the desired effect at this precise moment in time. Guy the polls just canceled the bond auction. Was next and where is the franc going to settle . You are going to pay a lot to a bank in switzerland to take your money. Keep it together, europe. Keep it together, europe. Come on, come on the markets were completely stunned by this. It will be a major deflationary shock to switzerland and even spreading into europe. Guy it was about one hour from now one year ago that that happened. Perfectly timed, of course for everybodys annual trip, which made things very expensive. Richard jones joins us now. It . Have the swiss managed richard the franc is still massively overvalued. Index the big mac economist does. Overvalued, still and they still have a problem, but many of the doomsday scenarios have not panned out. The swis economy is struggling, but they are not the only economy. The snb felt they had to abandon was because they felt it unsustainable. If you look at everything that has happened in the world since delay we had the fed a lift off and then finally lift off and now, we have this turbulence we are facing so far this year in the markets. It has been fairly eventful. Switzerland is still has a problem with the franc being too strong. Guy in many ways, jordan has lost control. Richard i think it is very much out of his hands. Snb was the mission of the this time last year. I can or control exactly where their currency can be. They are not the only centralbank that has the problem. It is very difficult for them to guide their currencies. Guy thank you, richard jones. The u. S. Future is very negative at the moment. Yesterday afternoon, risk on and today, risk off. Francine the shanghai bear chinas benchmark dropped 20 . European stocks are lower. Victim bhpces latest will take a right down. As thatchers child strategists rush to downgrade forecast. Deutsche bank sees it hitting 1985 lows. Welcomeo
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