When the options are done, everyone is done. Ready for christmas. Traffic in new york have settled down. James steelewhen will join us, we will talk to him about cold links to other commodities. Larry summers with a terrific blog, i will feature that as my morning mustread. Guy he is pretty concerned about what the fed is up to. Think you very much. What a show we have lined up. If youre sitting at home, maybe wrapping a few presents, this is the show to watch. Tom i havent started shopping, yet. Guy is that why it is so quiet over there, i think you will have an easy run of that. Vonnie i know youre both joking, you just dont want to tell me what you got me. The highranking officer asked that it will take some time for the iraqi forces to retake ramadi. They are in a battle in the center of the city. The capital was seized by the Islamic State last may. Accusing russia of killing hundreds of civilians in syria. They have conducted airstrikes since late sip timber. They say that russia is using unguided arms. Some unguided cluster bombs remain unexploded after the fighting ends, later maiming or killing civilians. In ther was found alive rubble of a china landslide 60 hours after the disaster. Three dozen buildings were varied, trapping people inside. Three dozen people are missing. Com faces charges of it will not be as crowded during the next republican president ial debate. Toy will use new criteria decide those that make prime time. That could mean as few as 6 candidates could did they. Could debate military Officials Say a streak of light seen in the western u. S. Was debris from a russian rocket. It produced a fireball while. Eentering the atmosphere it amazed skywatchers in arizona , colorado, and nevada. I am vonnie quinn. Opec is showing headlines. We know this is coming. The phrase for the rest of the decade gets my attention. They do not see a demand pickup. Vonnie saying it was like 20. It is a little bit of a positive spin. 30. 7 Million Barrels a day by the end of the decade. Tom not much going on, the second day in a row. The equities got a nice lift, the yield going nowhere. 34 of toroup with a 36. 4 five. What do you have this morning . You on anl take energy journey. I want to show you the first one and the second one. Nymex crude. The spread is absolutely tiny. Tlc 01. That gives you the spread between wti and brett. The ftse is up nicely and the nymex is surging. Tom you just like the color green. Vonnie why is nymex lower than brent . That this iser is a rare thing. The global price, for those of you watching in america, it is always brent. Where is the wage growth . The answer is it is not. This is the intergraph. Wage growth past 10 years or 15 years ago. 1. 5 Percent Inflation adjusted wage growth. We should feel phenomenal. Vonnie look at the direction. This is one of the points on Janet Yellens dashboard. She pointed to this on several occasions. Herewhy do we feel good and not here . Most of this movement is due to know inflation. As wehart explains a lot go into january and the march meeting. Get us started with our guest. Guy good morning, james. James barty, European Equity strategy for Merrill Lynch. Had you get to that number . How do we deliver . James part of the attraction is that in a world of low classes, weasset calculated that european dividends will be between 3 and 3. 75 . We have a growth rate of dividends up about 5 . Compare that to every other asset class. Given the ongoing recovery we can deliver 7 earnings growth. That is where the numbers come from. Guy if big oil could not sustain its dividend, how does that change your numbers . James it doesnt. Many say the dividend in europe is a function of the commodities sector, but it is only 12 of european dividends. Even if they half, the story remains intact. We on the are sensitive debate of continental comingn management are more like the anglosaxon model . This is something no one talks about in polite company. We are not in polite company, guy is with us. Where is the trend to act more like those crazy americans with use of cash . Do we move the needle at all . James there is a fundamental difference with what europeans do with their cash and americans do with their cash. Part of it is tax driven. In america there is an incentive for cash buybacks. In europe there is a preference for dividend payments. If you look at what companies are doing and raising dividend payments, European Companies are doing what they should be doing, and American Companies are doing buybacks. Tom what about Eastern Europe . Oddities buying companies Eastern Europe, what about the of security about buying shares in Eastern Europe . James im not the Eastern European strategist of Merrill Lynch. As an asset class, we think it is ok. Theres plenty to be developed, but that has to go into the emerging market space. Taking european banks, they are on 10 times earnings. If our numbers are right they will be sitting on a 5 positivity yield. Guy adjust your numbers for european investors. James our strategists have dollareuro and 95. The currency adjuster does not look that great. There are plenty of ways to hedge or currency. Guy you still expect u. S. Investors to put money to work in europe, they will just hedge it out. That is where the flow will come from to drive european equities higher. James we have 2 forms of flow. One is out of the states, that tends to be currency hedged. The second tends to be people coming out of other asset classes, things like Corporate Bonds. They have been hunting income. The flow has been dividend bonds. Tom you have to love someone that quotes sidney homer. You have a chart that goes back 5000 years. I want to congratulate you on that. What can we learn from an Interest Rate chart acts 5000 years . James Interest Rates are at unprecedented low levels. It is a function of what Central Banks had to put in place to generate recovery from the financial crisis. They talk about the financial crisis causing a long dated recoveries because we have to build a financial sector. That is why banks have had to take unprecedented actions to stimulate economies with unconventional means. It has largely been broken. The Monetary Policy into the real economy, that is why they have to go down different routes in terms of buying government and mortgage bonds to stimulate the economy in other ways. That shows, notwithstanding the low Interest Rates in 5000 years, we still have a tepid recovery. The ecb will remain for a long time, and the fed will have to go gently with its timing next year. Tom i believe that england lost 1790, inies in 1780 or dont know if you recall that. Guy i been trying to forget ever since. Tom that is a cool chart from sidney homer. James barty with brilliant research. We will continue with the brilliance. One of our most popular guests, james steel. Not only on gold, but on the microeconomics, the culture, the fabric of the Precious Metals. Tom there is no other theme across all of america. I know that guy johnson is saying that london is warm, as well. It is beyond it. In new york, we may touch 70 degrees. What is that in center great what is that in centrigate . Vonnie i think it means centigrade. Cente part of thebiggest u. S. Economy was gaining momentum and to the shopping season. Spending is down 310 survey percent. Percent. F a released early by the bureau of Economic Analysis website. The biggest risk facing the european economy is a british departure from the european union. 32 said the buildup to a brexit. The president ial elections did not feature in the list of concerns. Staying with a gdp, they grew less than expected. Growth is losing some momentum. It has been a record year for mergers and acquisitions. That is according to data compiled by bloomberg. There have been 3700 deals completed. Roughly one in every four employees at goldman sachs. That is our Bloomberg Business flash. 2016 will saying that be bigger by volume, if not by dollar amount. Tom maybe smaller deals, as well. Guy lets talk about the oil story we were referencing. Opec says that demand for crude will continue to slide until 2020 as rival supplies grow. It comes at a week when oil. Rices sank to an 11 year low lets bring in our chief energy correspondent. In a surprise with what opec is saying . What opec is saying is that the war for market share will take a long time. Hisit he is basing forecast on 100 10 by 2020. Now he is assuming 80 by 2020. That could be optimistic. Nonopec countries will be very resilient. Guy that is not a surprise, but it is something that has caught a lot of people off age. How hard it has been to winkle out. Yours producers have provided them with a little bit of hedging, but it is a harder battle to win that opec originally thought. Have a lot of momentum. We have five years or six years of 100 royal. 100. That has come in on a stream right now. The other thing you have to take into account is the currency impact. The ruble, the canadian dollar, the u. S. Dollar that is the lighting. The Companies Operating in russia are not feeling 30 oil, they are feeling 50 oil. Tom what we will do a james steel, we will bring this forward. Going back to the low, oil of two 100 a barrel. It is a normalized chart. It shows oil collapsing and going through the lehman low gold migrates back. I do not want to make a correlation between oil and gold, but it is a correlation of the dollar. The strong dollar is critical for oil . It is absolutely critical. Fed increasing rates, already probably going in 2016, we will see more pressure across the commodity sector. For loyal that will be a problem. That is why they are taking a negative view in it to 2016. Tom thank you. We will see you through the week into next year. Writes up a storm on hydrocarbons for Bloomberg News. Goals, oil, or Interest Rates. James borgwarner interesting bory with interesting views. Back. Elcome im guy johnson in london with tom keene in new york. It is a chilly 11 degrees celsius. Tom stop with this. I need to go to the fahrenheit converter. Guy i have it up in front of me. 51. 8 to be per ses. Nice and warm, but not as warm as new york. It is sunny. Look at that blue sky. The morning mustread from this side of the atlantic, i think it crosses the atlantic well. A piece in the financial times. It is basically about the danger of taking roads out of oxford. Clearly this is something we have talked about with Woodrow Wilson at princeton, a similar story. What it says is that airbrushing out figures because they offend our contemporary values is no way to approach history. If the students at oxford dont understand this point, they should question why they are at university of all at all. It is right to be alarmed at the lack of racial equality, but they need to open their minds. Tom it is a big deal in the United States as well. Have to be careful. I have opinions i am not allowed to give. Vonnie last thursday, new orleans about it over the city Council Voted to remove 4 statues that were huge part of the center of the city, including one of robert e. Lee, jefferson davis, and beauregard. The idea is that the museum is the place for those. Tom i. R. Number the quality of under the football stadium at the university of colorado the morning after they cant state shootings. I dont know what else to say. Guy i find it hard to follow up on that, to be honest. Tom we are about stuff that is politically correct, when there was real tension, including when maybe mr. Rose was alive. I find it charming we are having this debate. Discussion toood have. Think about the names associated hodes. Goes tothat it surrounding how Race Relations work, particularly in higher education. Barty went to tragedy. To the students have a point . James those sites have a point. I come down on the side of the t brady have to be careful about airbrushing history. The rhodes scholars has been a great program. There is some stuff by saying is that a great job of educating people in bringing through. They have added a lot to the world. You can keep it there and have a debate around it. That the police who are living in in modern times, and you have to make sure not to disenfranchise anybody. 1970, i was sitting in a room as we were in shock getting shot at kent state. Coming up on bloomberg surveillance, we are joined by howard davidowitz. Holiday retail, tomorrow. Stay with us, bloomberg surveillance. 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. Tom it has a december 23 take to it. Watching the gold at 10. 70. James steel will join us in our next hour. Now, vonnie quinn with the bloomberg first word news. A Human Rights Group said russia could be guilty of war crimes in syria. And it strikes have killed civilians and caused widespread damage. Many facilities have been destroyed. They say that russia used unguided weapons and cluster bonds in densely Populated Areas. Pushing back against the Islamic State in a key city. Are in a battle for ramadi. Y of they say will be a long fight, but the recapture of the city by iraq is inevitable. A man was found 60 hours after the landslide in china. 70 are still missing. It will not be as crowded during the next republican president ial debate. The network will use new criteria to pick those who make prime time. Tot could limit the debate 6. A preliminary forum will be held for the rest of the 13 hopefuls. News 24 hours a day. Guy . Tragedy5 was marred by for france with paris suffering in januaryattacks and november. How will that play out in 2016 . We are joined by Eurasia Group associate charles lichfield. James barty is still with us. For many be remembered things in france, but front and center will be Charlie Hebdo and the attack on the 13. On the recovery story. How will that play into politics and the french economy, charles . Charles the attacks will be what i remembered from 2015. You already said that Francois Hollande is trying to use the partyal unity to show his is in control. Not only of security, but taking care of the economy to ensure france has a future in the 21st century. Given the division on the center right, he has a better chance. Think it will be used . Telling people she is the only person i can protect the french by redirecting the borders. You have seen her popularity grow to 30 . That does not when sheikh that does not mean she can win power. Remaining french voters would like jobs. That goes for huge part of europe. One of the best papers that i read was on the shadow employment economy in europe. Lets bring up a chart. France and germany. For years, the red line did better than germany that crossed during the financial crisis. Those unemployments are elevated. 10 or so. France, of what will they do to create jobs, especially with the dynamic of one million migrants . Charles it will be difficult. The million migrants will not come onto the job market straightaway. We have to look at reforms before we think about the migrants. Reform itsrying to economy. Theres not a consensus to take courageous measures, but they are trying. You will see interesting measures taken in march. When the migrants come in, most stimulant will go to germany. Germany is a country which needed quite a lot of low Skilled Labor to come into the market. You will see a lot of german industrial champions and employers in Smaller Enterprises privately saying theyre happy a lot of people are going to germany and can work with them, maybe later in 2016 when i have learned a bit of german. Guy one thing people have said that is lacking in the european recovery story has been a fiscal impulse. Do you think the terror story on debtovide a raise for the fiscal impulse to become a reality . Pitch ise fiscal starting to move toward more stimulus starts in europe. It is marginal. Weve gone from austerity to a marginal expansion. Real work is being done with the ecb. I can agree with the previous speaker, what you need is structural reform in the labor market, particularly in france. Were slowly but surely seeing that. That means that labor has less power in europe, meaning it will take longer for the ecb to get to their inflation target and they will have to keep Monetary Policy for longer. Guy when we look at the fiscal story, james says it has already started, but will be relatively small. What will we see in terms of and the in migration terror story . We heard after the attack large numbers being talking about bank talks about by Francois Hollande. What would that look like in terms of a meaningful impact on the economy . Charles more spending. In the grand scheme, the state is reducing its spending and deficits. Not the same as germany and they will not obtain a balanced budget, but they are bringing it down. It is not expansionary just because of spending on security. After the attacks, president hollande said that the economy exceeded the terry rule and was exceeded the budgetary role and was more to reassure the french. The wordnailed discipline. To the people of europe and france, do they want discipline and their politicians . Certainly. Hat is a very difficult word you have to think about what it applies to. In terms of spen