guy: it is thanks giving on the east coast, five hours behind read not quite there yet. maybe you are still enjoying yourself from the night before. happy thanksgiving to everybody stateside, or if you are watching here in london or elsewhere in europe. let me just take you through some of the charts you need to know about this morning. this is the german two-year yield, heading towards the ecb meeting, how low can yields go? zero. down here, minus still a few days to go before the meeting, is there further pressure? anna: lots of questions about manages to dohi something that surprises the market, when there is so much expectation already. guy: does he have a rabbit in his hat? we will talk about that later. let's get the first news. >> francois hollande will meet vladimir putin in moscow for
talks on trac tackling the threat posed by isis. this comes after he asked angela merkel for more help. david cameron urged parliament to back his plan to extend bombing attacks. it is a move likely to so plit the parties. he said isis presents a clear and present danger to the united kingdom. the russian pilot who survived being shot down by turkey says his airplane never left the airspace. the bomber was hit near the border, and and kara says it has been warned several times about violating the space. the euro has hit a seven month low against the dollar as investors expect the central bank will expand stimulus next week read it is headed for the biggest monthly th decline since march.
the fed considers raising interest rates for the first time in almost a decade. and the shanghai stock exchange is celebrating today, marking 25 years since its launch. the composite index has gained more than three and a half thousand percent. china's the center of $5 trillion equity market route. guy: thank you very much, indeed. anna: let's check in with yvonne man. talking about the shanghai composite, what a wild ride it has been the past 25 years. 55 ball and bear markets later, we are seeing the markets looking pretty strong today -- up 1/5 of a percent. the are finally getting action this week to another we have seen the standout between turkey and russia, that impact is
fading. now we are seeing crude oil gaining for a fourth day. and holding those prices above $43 a barrel. and we are seeing tiny socks in hong kong rising for the first time in four days. up half of a percent in the trading day, it looks like we look at the relative strength index, we're heading into those overbought territory. in the high 60's or so. it was kind of a snooze fest session, getting the turkey ready, they are going to be closed for the u.s. holiday on thursday morning. overall, in australia, we see 30%aussie stocks enduring a increase. we see losses now. but it was a business investment falling on record. 9.2% down from the previous quarter. and that really took a dive for the aussie dollar. we are seeing at 72.38.
some movers in australia, this is an australian firm. but a law firm, i should say. it lost half of its value in sydney today. looking at the u.k., the government just announced proposals making changes to the so-called whiplash claims, removing the light to general damages for minor injuries from a car crash. it will not have a big impact on earnings for 2016, but a big chunk of the business comes from the u.k. they have twice as many employees in the u.k. than they do in australia. the shares are down 51% today. six-day losing streak, the longest one we have seen in two years. down --ling today, 3.7% a 10-year low. the jpmorgan cut the stock dividend, dropping 50%. finally, i want to and on one thing. asia, we arers in
seeing a mixed picture. there is a report that apple is going to be using organic led screens on iphone from 2018. the display is following 7.5%. lg up 1% in korea. they are investing eight and a half billion dollars on the future generation screens. back to you. anna: thank you very much. guy: french president francois hollande heads to russia to enlist vladimir putin, a task made more complicated on tuesday. it comes after the french president asked angela merkel to step up germany's commitment to the cause. ryan chilcote is in moscow. hans nichols is in berlin. things have changed cents francois hollande first changed his trip. ryan: this is going to be tricky. look at russia's relationship with turkey, the spat only
growth. russia limiting imports into russia. this is coming from the russian worthper about $1 billion of food was imported from turkey into russia just the first 10 months of the year. that looks like it will get stuck in customs, if it is allowed to enter russia at all. car parts from turkey may also come under scrutiny, and not be allowed in. when it comes to the food, we saw a russia do a similar thing in response that sanctions. it was a counter sanction to the eu food imports and when they osed sanctions against russia. the foreign minister said he will not go to turkey and call on russians to refrain going to that country. we have seen dozens of tour operators cancel packages. russia was the single biggest destination outside of the country anywhere in the world -- more than 3 million.
we saw an attack on a group of russians yesterday throwing stones, and eggs, at the turkish embassy in moscow. not so much a reflection on the mood on the street, in moscow, as the mood inside the kremlin. many analysts tell me there is no way some like that could happen without the kremlin turning a blind eye to it. and russia has ratcheted up intervention in syria, introducing the s400 antiaircraft weapon. this will give the russians the primacy over syrian skies, with the ability to take out anything flying in syrian airspace. not just aircraft but missiles as well, that is in response to the downing of the airplane. what is going to be difficult for president francois hollande is going to be two things. one, being the french -- they want the russians to abandon their plan of going after the moderate opposition, as they see it.
you know, the turks say that is exactly what russia was doing when they downed their airplane in the north of syria. secondly, of course, they need to joinians to want the coalition. after the foreign ministers comments when he said effectively this was a premeditated move by the turks, it will be very difficult for some of the hawks on if you will in the kremlin, to believe they can actually cooperate with nato member countries and nato in general in some kind of campaign in syria. anna; hans, president francois hollande extract anything from the german chancellor? piling on pressure perhaps? hans: heading into the meeting, angela merkel was very clear she would listen to francois hollande. she offered what i heard in the german press is saying is a pretty clear hint that she would consider military action. have a listen. >> terrorism is our common enemy.
it is our common task to fight it. the islamic state cannot be convinced with words. it must be forced with fighting. hans: you know, the idea that islamic ththe state cannot be commenced with words. they could do more in terms of joining a military campaign potentially in syria. the extent of germany's involvement is delivering weapons to the kurds to fight the state through those means. maybe more troops in mali fighting terrorism there. but in general, this is a chancellor wanted to show how willing she would listen. how she would do, what she could bring her people along the go-ahead and contributed i heard and angela merkel that was open to new possibilities. that could open a new debate back here in berlin. guys? guy: thank you very much, indy. ryan chilcote in moscow.
hans nichols in berlin. let's bring in chris wyllie. context arounder this. earlier in the week, that was particularly true. how concerned are you about the situation escalating? chris: when we look at markets, we look at a number of different factors. and i have to say that geopolitics is not one of them. that is by design. the reason being that, first of all, they are highly unpredictable. secondly, their effects tend to be reasonably short lasting. unless they have effects on other key economic variables. it always used to be the oil price, did admit? down, it isroken not a big supplier it used to be. but that used to be the transmission mechanism for the economy. without that, we found the
effects become even more transitory. the reaction to the jet being shut down, clearly, there are risks around this. and it is not something we take lightly. guy: do we fully understand the implications? numbers of consumer confidence, 70% cold after the paris attacks, we start seeing a meaningful downturn if people are nervous? they don't want to go shopping. it starts to ripple through and what people are doing, it will have an effect on mario draghi's thinking? chris: a great anecdotal statistic from my cab driver, he said business was down 5% in the last week in the aftermath of paris. that is in london. it is not just heathrow traffic, it is generally people pulling back a bit. so it is having an impact. again, how long will that last?
history tends to relate not very long. guy one of those things: that is highly -- it was the charlie formation the the people tend to discount, the second one or third one, it starts to change thinking of it. chris: exactly. and it may well have been that some of these terrorist cells were looking for those follow-up actions. although maybe the police activity in france and belgium has successfully disrupted that for the time being. but it only takes one bomb on one airplane. and that would be quite a hammer blow. and of course, never a good time, but it comes in a time of uncertainty with consumers wraps wondering which way to jump in any event/ . more so in the anglo-saxon world than the interest rates on the rise of the increases.
it is not helpful for consumer confidence. anna: the french economy is on the trailing edge of the european economic recovery. ofn before the awful events november 13. will display into mario draghi's thinking? how long they influence the shopping cycle, whatever? but mario draghi have to decide next month if he fulfills what is increasingly being seen as baked in by forecasters. chris: absolutely. and mario draghi is certainly conforming to the party he has followed since he came into the ecb, which is it is monte carlo or bust really. a bit like it is in japan in terms of throwing the kitchen sink to get the economy moving. he has shown, there was this period prior to qe where people were asking if he was all talk,
but maybe he has seen that in qe. so we are now setting up another one of those moments where people are looking for him to follow through. you see that with that two-year term and yield. it does look like he will. it is all about the euro, of course. ensuring that the competitive advantage which has been delivered by the depreciation of the euro is locked in. certainly euro needs another year of that. anna: by the end of this year? be thesuspect that will channel to focus on. but there are all kinds of rabbits in the hat. he is a very big hat at the moment, it seems a number of rabbits to choose from. chris: you can rename the rabbit, depending on the policy. guy: let us talk about the day ahead. we will get a reading if you are looking forward to a busy day of
anna: welcome back. ex: 19 in london. let us get the bloomberg news. 12 of the biggest players and interest rates have been sued for allegedly conspiring to block fund managers from entering the exchange market. filed in new york by public pension funds names most of the biggest european and u.s. banks among the defendants. two or three years more of pain, however in a bloomberg interview, the company ceo for copper and called said the market will recover faster than other commodities.
troubles in the spanish renewable community, facing trouble this morning. that is as it teeters on the edge of spain's biggest corporate story. for more on the stories and others, had to bloomberg.com. speculation is mounting that the ecb will expand stimulus next week, driving the euro down to a near seven-month low against the dollar. hans nichols sat down with vitor constancio for an inclusive interview. let's get to hans now. hek us to the concerns that has come of the concerns about a slowdown in emerging markets. are they worried about what is happening with the fed? talk us through the piece as they see it? hans: they see three potential stumbling blocks out there. number one, what the fed might do. but that is not the highest on their list in terms of concern.
they are more concerned about what a fed hike might do to emerging markets. and if that spillover effect, what it would have on the economy in the eurozone? and maybe the third pillar he mentioned was concerned about the nominal growth, what you do there to actually spur investment. when i tried to get him to say something all quantitative easing, they're going into the lockup. they will be quiet until that december 3 meeting. here is what he had to say about exchange rates. vitor constancio: we don't have any objective regarding exchange rates. relationo, no direct to the exchange rate. that is very clear. what we are doing is because we have inflation issues very low. we want to issue variability in both directions. all the rest is up to the market. to react to our policy, which our strictly determined by domestic sectors. guy, i think the overall
view is that the ecb is concerned about don side risks in the emerging market. it is something they will consider. the latest bit of information that will get before they make their decision, they get staff recommendations. of course, the has a lot to do with inflation and price stability. anna: we will see what those a little. you also made your way to the bank, how are the concerns of the german central bankh? hans: it is a 20 minute ride. in a cab but it seems like you are going to a different world. at the ecb you hear about emerging markets coming you get to the bundesbank, the effect is the low interest rate? is that forcing them to take on a little more risk, perhaps too much risk? here is what he had to say on the subject. >> what is really a problem is about low interest rates is how long it stays.
the longer you have this area out, the more difficult it becomes. and it will also lead to the fact that creditors will take out loans, probably quite long-term, which is not that easy to refinance for banks. and if you book is a bank a long-term maturity for quite some time, it is still low yielding as it is today, let's say in 15 years. lowou are booking profitability business for quite some time. this is worrisome. what he toldissue, me was that the governor's speaks to from emerging markets, they are saying they are comfortable with an increase. they just want it to happen. they want certainty. that is one message we got in both places, both tanks. they do seem a world apart. ride.a 16.60 cab
how much do you tip? i think the german would just give 17. we clearly need a function on the bloomberg to tell us how much to tip in various cities, whether it is frankfurt or berlin. i'm sure you guys never blundered this way. guy: have you actually checked that that does not exist? let us face it, the bloomberg terminal has everything you need in life ar . this allows me an opportunity to talk about your driving, which i know is the best anywhere anyone has a bloomberg terminal. anna edwards is the best driver. guy, you may have got me fired. it could be on the terminal. hopefully, no one got fired. guy: how could they not be? chris wt us get to
yllie. should we go down the direction of the fed? clearly, there was a divergent opinion that hans discovered about the interest rate in the fed, weather worries would be greeted as a result? chris: i have a hard time imagining that a rate hike in the fed is going to come as any more of a surprise to emerging bakers thanal-ban over here. september, the last time everybody thought u.s. would drop interest rate, we were hearing from key emerging markets they wanted the rate hike to just happened. so we can get off of this. and i think that must still be true. of course it all depends on what happens next, how many rate hikes, how far behind the curve they are. but if the current script is verified, which is that we will
have a dab on the brakes, a dovish round basically, and some stability in interest rates could be just the tonic the markets need to get over this issue. maybe they will see beyond this, up until now, it has been murderous for emerging markets in particular. it could clear the way actually, who knows? you could get a better performance. guy: we're going to tip janet yellen for her driving. we want understanding about where she is going green where is the ecb going? that is much more difficult in terms of the navigation story? you have a german two-year trading at -.419. how low can they go? chris: it doesn't feel like you are scraping the last bit out of the corner of the tin. there are lax with these things -- lags with these things. theecb will now be more
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guy: 6:30 in london grade let us get to nejra. nejra: francois hollande will meet vladimir putin in moscow later for talks on tackling the islamic state greeted it comes after the french leader pushed angela merkel for a greater commitment from germany. the russian pilot who survived being shot down by turkey says his airplane never left syrian airspace. the bomber was hit near the border. kara says it has been warned several times about violating the airspace. there is evidence the attack was planned in advance. the australian dollar dips the
most on record, capital expenditure was down by 9.2% read with spending on mining the worst. this may increase pressure for further rate cuts. industrial metals have surged after chinese regulators were being told to consider short gauges. again as much as 3.9% on the london metal exchange. that is first were created for more on this and others, had to bloomberg.com. anna: that is the message, copper and coal. but despite a tough two years ahead, he remains optimistic. >> there is no doubt in our minds that there will be a long-term demand for copper. and some other composites, coal and so forth. guy: let us check in on what is
happening in commodities this point. the chinese are ruffling feathers in that market. let us find out what is going on with caroline hyde. caroline: coming closer to my screen. i have a real picture across the spectrum of commodities this morning for you. you have gold rallying, silver rallying. i want to point out you have the likes of platinum on the high, palladium on the hive. clearly, this is an area to be showing off. i will dig into the metals area for you. overall, young have copper up 2.6%. if you are looking at shanghai copper, up as well. clearly a surge going on in asia for metals. we were just hearing why from nejra. the chinese regulators are looking into shortselling, perhaps disallowing bearish bets against metals. this is being demanded by the china nonferrous metals
association. buycommission to also metals, to support the prices, asking them to buy nichols, aluminum. we also and understand the ,umber of nickel smelters across the board, we are seeing a rally in metals. interestingly though, not so for some of the miners. dropping this morning, this is on the back of its own news on the you win investigation -- the u.n. investigation in brazil. spill, themine biggest one in the country's history we understand, it has helped put toxic problems in the area. venture that the joint in brazil did not prevent harm enough. they were not sufficient in preventing harm.
that is the overall joint venture. no danger to human health, though. that is what the company is responding this morning. very quickly, just a quick look into negative yields on the bond market. i know this is not something you have your eye on this morning, guy. but we have negative. italian debt, we are getting into negative territory. spanish-italian governments are being paid for the privilege to hold their debt at the moment, to be given money. investors paying italy and spain to have their money. quite a turnaround. guy: a weird and wonderful world we live in. i want to talk about this briefly, the german automaker technology company. you can call it now. i want to focus on the fact that they are saying the forecast is euro-dollar. you would assume that where he are now, 105-106, we are
actually looking at a level where you could see an upgrade built into those numbers effectively by the currency story. in summingring similar, 106. guy: a could be that currency traded it depends on where your base currency is. anna: mario draghi will deliver creditors to the spanish company. they dumped their holdings in the firm, taking their chances on an eventual settlement. this is on the edge of the coming spain's biggest corporate bankruptcy. roderigo, good to see you this morning. how much trouble are they in? trouble, i'llt of the biggest insolvency ever. it is not happening yet. it is still a few months ago. but how it works, the company
will talk to creditors and see if they find a solution. during those months, that is when they have to make the big decision you are mentioning -- hold on to the bonds are not? it is 9 billion euros in debt. it is not going to be an easy way out for them. they have and working since late july to do a capital increase that would help them. but they haven't been able to do it so far. why would things be different right now? guy: making contingency plans already, explain what that is. including an appointment as part of the plan of a new managing director. what are we looking like> ?roderigo , whencompany abengoa there was his frenzy in new york to create the coast, now the company is looking to monetize it. to exchange it to bonds or other some kind of mechanism. it is interesting company for investors. they do not have to develop any project. they have projects which have
already developed, long-term concessions. he just paid dividends. it is an interesting company, as i say. they could sell down their state to get some cash. they've been trying to do this for several months and have not been able to solve it. right now, with a fire sale, it may not be ideal. they may be selling it cheap. the company is interesting asset. anna: roderigo joining us. aguy: let us bring in chris wyllie. which side of the pond to step on? which end of the credit spectrum do you look at? chris: all elements of the spectrum is a short answer. high-yield is an interesting space. obviously, it is one of those areas where a lot of investors have been drawn to it in the reach for the yield. but we have seen spreads widening quite considerably over
the last six months in particular. and that has worried people like me, asset allocators. they have had a good track record for equities down the road, when you see yields. particularly where high-yield sits, the riskiness, it is the riskiest of bonds. when high yield investors spread, normally -- anna: not because of drillers in america? chris: a lot of it is that. you need to strip that out. ctormuch of this is se al? pocket another possible of difficulty. guy: you seem nervous about the story/ , ,. chris: one is never complacent. to develop that point, i think there are a number of little
things around, dots around which you can potentially join and say this all adds up to some indication that equities might struggle over the next year or two. but when you look and lift the lid on it, it comes back to the specific circumstances which are quite often concentrated. and i don't think i see the evidence that there is a general laxity in terms of credit standards. what we saw in 2006-2007, when there was just considerable indiscipline in terms of balance sheet management, there have been examples. it is always in the hottest sectors, isn't it? renewables were were d hot. they still are. some people manage their balance sheet badly, have too much debt. it doesn't necessarily mean that there is a much broader credit
problem in the economy. i don't see that confirmation in the statistics actually. that is why while i am always willing to say it is different this time, i think one needs to ask follow-up questions before assuming the traditional relationship tween widening high-yield spreads. anna: chris, thank you very much. the u.k. government has announced plans to increase homeownership in london by expanding the scheme where the average home now cost half a million pounds. the conservative candidate for mayor was behind the plan. we spoke to him following the announcement. >> there is a massive emphasis on housing. it is by far the biggest issue. the adaptation of the regular environment, and will help a lot of people who otherwise could not achieve homeownership. there's a lot more to be done. but it is a really big group. anna: in a city where the average selling prices over 500,000 pounds, will this make
much more the debt? do we need something more radical? interest free for five years is not to be dismissed. also talksncellor about shared homeownership rate in the next mayor will have to do a lot of genuine work. a lot of people cannot afford to qualify, they're not rich enough. but a very large group in the middle, young professionals and the like, they rely on this sort of raven. anna: it must begun when you are running to be the next mayor of london to have friends in high places to deliver this before you even have a job. london, theng about cap in hand. the first job description for
any mayor is summing i ha ve done as an mp. george osborne had to back away some of the plans for tax credits. was that expected by everybody? zac: the outcome we got today, i think it is a good thing. i have to say there are plenty of times where george osborne, he has come under the argument. that is what you want in a chancellor. absolute budget surplus. no one expected that. we got a whole lot. and i think this is a good reflection on the chancellor to hear the argument. i think that he is afraid of performing. anna: chris is still with us. let's talk about the u.k. it seems the government is moving a little more towards tax hiking, rather than cost-cutting to maintain that commitment to the budget surplus at the end of
the parliament. chris: some quite swift changing of clothing yesterday from the chancellor. and as you rightly say, more of the budget being placed more by tax rises and another move on the corporate sector, particularly with the 3 billion pounds being raised from the apprenticeship levy. i think that will be possibly the biggest gamble. which osborne is taking here, this follows hot on the heels of the national living wage announcement. so they are bearing down the cost of employment. which companies have to bear, and we do not know what the effects will be on that general employment level. but there is a risk you can see these hits coming through in the next year or two. that is a bit of a gamble, nobody knows exactly what the effects will be? more macro economic and political, it did not feel like
it's it this sort of mold. how much to be actually learn yesterday about the state of the british economy? we saw backward revisions in terms of the gdp estimates. but i'm looking at tax receipts coming out of the corporate sector, wondering how that fits together? put the picture together from an outsider point of view, from a macro economic view? chris: steady as she goes, isn't it ? one of the things eye on his economic surprise index. it is quite heavy, and lumps together data with consensus. that has been undershooting for over six months, since miley before the election. in the u k, there is the no recovery in that. in other words, economic data has consistently disappointed. not by a massive margin. it is quite interesting, it hasn't been picked up, it makes for -- guy: it has backed off from the
rate story. off,hey haven't backed would be consistent with what you are saying. chris: it is been a slightly disappointed period for the economy. it has garnered a lot of attention. i think that is because this time we are getting a feel for the impact because of wage increases. that is what has changed. the misery index is low because wagesmployment is low in are improving. as long as that is the case, and the trend growth is what we seem to be getting in the u.k., as i said, steady as it goes. anna: chris, thanks for joining us this morning. guy: sanctions in geopolitics, one of russia's top banking officials. that exclusive conversation is coming up, next. y kostin.
to bloombergget news with nejra. nejra: the antitrust complaint filed in new york by public pension funds names of most of the biggest u.s. and european investment banks among the defendants. the copper market is facing two or three years more of patriot however, in a bloomberg interview, the ceo said the metal what a six-year low this week read it will recover faster than other commodities. copper is rebounding along with other metals today. are in focus after reports that apple will adopt a new led screens on the iphone. is all down. that is your bloomberg business flash. if you want more on the stories, had to bloomberg.com. guy: the french president
francois hollande is due to meet vladimir putin in moscow later today. ryan chilcote is in the russian capital. let's go to him now. ryan: i'm joined by the head of russia's second-largest bank. andrey kostin, i wouldn't talk about the market reaction to this. but also the geopolitics. when president francois hollande was going to come to moscow, and looked like we were about to see a thaw in russia's relationship with the west. they were not exactly cuddling at the g-20. but certainly the relationships between the russian president and the other members, particularly the western ones, was warmer this year than it was last year. part of the reason is for this desire for cooperation in syria. then we have this russian jet shot out of the sky in syrian airspace. how does that change the aspect of a thaw in russian relationships with western
countries/ andrwey: russia stands for democracy. it is quite clear that russia is in good leadership read russian with u.s. and nato. and what has happened with the latest of element with a russian aircraft bomber was shot down by turks, and looks like it was action frustrated there was no reason, no very good reason, to do this. the national impact is normally quite different. but my opinion is that countries like the u.s. and germany have distanced themselves. they are saying that turkey has a right to defend themselves. -- itfinitely that was will definitely affect the russian-turkish relationships. a summit was canceled for december. and the russian foreign
minister's trip was canceled. anyway, we should believe that both russia and the west can overcome this problem. , i thinkn move toward that will be key on the agenda. ryan: but can they? think about turkey, a nato member, what francois hollande was to do is to have pressure work with nato. taking off your banker hat. you were in the kgb. you know how the hardliners thing. they will look at that and say this is yet another reason why we cannot trust nato. andrey: not only with hardliners but public opinion. in america, it is the same. are of the people, they trying to speak more for the buildup, the use of force.
these kinds of things. i think the government should react. general, public opinion is against turkey. and turkey enjoys a relationship with russia. but i still believe that turkey has a bit of the other nato countries. they are somehow connected to islam. and turkey, itself, is becoming more of an islamic country. from this point, you can very much believe that other countries like france, germany, or the u.s. can play a positive joinin actually trying to our action against isis. ryan: we have seen the ruble decline against the dollar, with the price of oil has gone up. normally, the two move in tandem. the ruble strengthens when the price of oil goes up. but it is up because the
geopolitical tension, of which russia is a part. how long is that going to last, this geopolitical risk associated with russert? ia? andrey: we are always nervous. two days ago, the russian stock market went down because of the shutdown. definitely, the russian ruble is very much connected to the world price. i think that is more of an influence of oil prices then any geopolitics on the russian ruble. ryan: how do you se your e your corporate clients? we are hearing that russia may introduce restrictions on turkish imports of food, car parts. there are two or operators canceled trips. do you see this as an issue? there are some trade relations -- andrey: i'm not sure that will
happen. my personal opinion is that economic relations should be separate from politics. that is why we are saying about sanctions, for example, ivory much believe that it will continue. withoutpoliticians damaging the relationship in finance or the economy in trade, what will happen is that russian food is going to turkey. 4.5 million tourist group visiting turkey area. ryan: when you see sanctions lifted. and it looks like they are clearly in place for several months, you must have a date where you think in your business plan they will be eased? andrey: i have my training from my banks, it will stay for at least one or two years. at least on the american side,
and that is the most important for financial sectors for example. ryan: moving to the domestic economy, trying to get invest in and the economy going. have you seen russian corporations investing in the economy? andrey: it is improving. the headlines in july, that we were down on the year-to-year basis. in october, they were down to 5.2%. that is slightly improving. but i agree that most of the russian companies are still taking a policy of wait and see because of the uncertainty about the economic growth for next year. , thank youy kostin very much. that was the head of russia's second-largest bank giving us is insight not just on the geo-political side, what it means for the russian market, as well. back to you. guy: i did not know he was in the kgb. i learned a lot in that interview.
onyou are in europe thanksgiving, happy thanksgiving. you are watching in the united states, you should be a sleep. >> we have a lot of good things. curve and the german we have france and spain and italy, as well. mario draghi will deliver that part of the story. is the word and what they are saying with so much already build in. you are looking at the expectations built in. it surprises the market and makes the euro weaker. guy: this is a chart of the day. the commodity markets are arriving. let's show you. we have the right rocks.
what you areyou seeing with the slightly-negative open here, in terms of where we think cash will open. so, this is kind of where you need to be here and it is a predictor for the cash opening later on. daya: it is weaker on a where we will see lower volumes. >> he will meet to talk about islamic state. the leader pressed merkel for a greater commitment. parliamentl urge the to back his plan. move that has the opposition labor party and he
said they presented a clear and present danger to the united kingdom. the russian pilot shot down said his airplane never left syrian airspace. russian claims that this was planned in advance. markets surge after considering the shortselling. zinc rallied. and the hit a low european central bank will expand for the biggest monthly declined. they considered raising interest rates. he march 25 years since the
loss. the index is at the center of a $5 trillion equity rack. that is a first word. seet will be fascinating to in london later on. london indicated positive and it is a fascinating call with the other ones having a impact on trade. the trading day comes to an end. talk about the wild ride with the shanghai composite and you see the reverse course and it wraps up the trading day and china. still, down a 10th of a percent.
see a little more action today after autopilot. that is the u.s. heading into the thanksgiving holiday. happy thanksgiving to those. crude staying and holding gains. it is still holding strong here and the industrial metals are surging and nickel and copper raised up as they considered a probe. they will be meeting tomorrow to talk about a response to the nickel prices dropping and including measures to buy up supplies.
let's look at the movers before i go. we talk about the property market and, in the next two years, they expect the home prices to fall 30% because of rising unemployment and a potential rate hike in the u.s.. bullish and it is already priced into stocks. it is 20% in the next year. this is are saying below the global average. market as the property cools and does not crash, there .s room for stocks to rally
>> thank you very much. >> a president goes to help vladimir putin in the fight against islamic state. it is more complicated because of the jet. commitment is ryan chilcote. how have things changed? chilcote: it has gotten more complicated with the spat with turkey growing. they announced they would limit and food andmports car parts, some of this comes here in moscow. there is economic retaliation.
the minister called on russians to refrain and a lot of operators have outright canceled tours to turkey, even though it was the single biggest destination in all the countries for the russians. economic and trade issues are blowing up between russia and turkey with a group of russians gathering outside of an embassy here and throwing eggs. you look at that sort of thing as a manifestation of a mood inside the kremlin. that would not happen without the kremlin, at a minimum, turning a blind eye. how will they get vladimir putin to work with the nato countries on the coalition? the russians will be reluctant
to work on the back of that and the french need to convince the russians to go out to islamic state. they see the moderates right now. >> thank you very much. the speculation is mounting to expand stimulus. the fed rate announcement has expectations of a rate hike. interview.exclusive through what you were ecbussing and how does the see the risk picture and how worried are they about the fed? thenly worried about spillover effect on the emerging markets and this is causing the most concern for the central
bank. they were clear that they do not have the exchange rate policy and their short of the inflation targets, wanting to look at that. listen to how he put it when they talked about -- when they talked about it. it means the bond yields will pricese and the equity will also suffer. capital losses for institutions. it can be influenced by simple possible spillovers in interest rates in the u.s. and the deceleration of growth and the emerging markets and the general situation in the euro area.
risk that may or may not be realized next year. prospect ofadd the all of the risks builds in transition. there is potential terrorism and another round of terrorism. this is the geopolitical situation between russia and syria. >> hans nichols with the central bank. he is the head of strategy at ubs. opening.or was has it been closed again? that is the early opportunity to get back in. >> just before the events occurred, they rallied a lot.
incomeng in the fixed , i don't think this changes the russian story. i feel like the growth model is severely compromised and i do not think it is going away. it would be less attractive and we want to cover some ground. it is not completely unthinkable and we could see decent returns in russia. anna: russia comes in from the cold and we see sanctions removed. >> i think a bigger possibility is inflation is lower and we
the the central bank with highest inclines in interest rates and it keeps the money coming in through the duration. andill see this phenomenon it will go up. it will pan out, in that regard. stunningly negative on -- and and it haslow bar been a poor year. it has been compromised by the increase in debt. up credit ratios have gone in the exports remain very poor. earnings will go up.
year, earnings are down. we are five years into this and we are underperforming. the question was, i would looking at the trends in china the --going in half of in the opposite direction. india is probably a place where leverage hase and gone up. that is a key point. the leverage increased and developed in markets. >> are you concerned about the results of the balance sheets with credit?
>> we have been concerned for a long time with alex sheets being strong. now, income statements impact credit and credit is the holy grail getting impacted. one credit gets impacted, it is not like equity. it is set up further. you will get positive returns. it will be considerably lower than what you have seen and it has been different from hard currency. i does extremely well and think he gets compromised as the cost of equity rises in the balance sheets get compromised. pips arese is that the squeaky. you wonder how the turkish central bank story will kick around. you wonder how he will react. are we going to see an out of outcome inparameter
these places? >> a good question. you will see the fiscal situation become worse because the central banks will try to cut rates and the currencies will have to suffer a little bit. most importantly, the place they have room is the fiscal side and turkey has a prestigious balance sheet with other problems of inflation. the fiscal situation is strong and it will support growth for a while. as we said, it comes with a cost of worsening the balance sheets. >> we talked about what would happen with the central bank and we had some comments coming through the turkish deputy prime minister who talked about the central bank and he says it will determine tools independently
with the turkish government in line with the law. how independent is the central bank? >> they are independent and i turkey has to have low interest rates. we have a negative on turkish debt for some time. it is in the opposite direction and we do need rates quite high and turkey has a poor history hittingalmost never inflation targets. i would say the rates in turkey are not high enough. we are modeling potential risks 1990's stylea problem with the rest moving away from financing. >> thank you. stay with us. >> going to moscow to galvanize
anna: welcome back. it is 20 minutes past 8:00. guy: the french president will meet with the vladimir putin -- will meet with vladimir putin later tonight to talk about threats posed by islamic state. to moscow. ryan chilcote is there for us. >> i am joined by a man who has been in russia for the last two decades and a long way away from home. he isw up in texas and building what will be the single largest warehouse ever in the
history. we are joined now. thank you very much. it is good to see you are not afraid of the russian cold. what i want to ask you about is the trip. oft we saw was the beginning a thawing of russian relations with the west. it is not as if obama and prudent were cuddling. we have a russian debt -- a russian jet downed. what does this mean? world, you cannot solve the major problems without engaging with russia. maybe global political leadership is understanding. and theill understand
political leadership in the world sees that. i expect bumps along the road and this was unfortunate with the aircraft. a warehouse.ilding what do you see? >> people who say that do not have big operations in russia. it is easy to assume big global businesses have franchises here. he has to show the substantial operations. >> you have take businesses making bigger investments. >> we are building some of the largest retail histories in the world in russia and these are made by global retailers and
they say it is a time to invest in assets to sustain a strongest is to make it stronger. >> how can you tap into this not well-known news story? >> the best way to do that is in capital markets and, for big business, i see existing businesses doubling down. you need to make the upfront investment and it is challenging for the corporation that has not been here. >> some of the most bullish peopleand the boldest say the middle of next year would be the time to get in. >> we have invested half $1
billion today and we have been doing it for a decade and will several that way. we do not think in terms of six months. you can wait six months or not wait six months. we have a 20 year horizon. >> thank you very much. we thank you for joining us here. perspectiveesting that may have been contrary to what we are thinking about now and maybe the time to get involved in russia. there is a lot of opportunity here. >> thank you very much. russia.ave done well in this changes the space and there is real wage erosion in russia.
>> structurally, i do not think it is big and the capital is strong, compared to the commodity economy. some impact on the bond markets and i do not think the currency has great value because you will see the capital outflow and the central bank starting to buy the reserves , so you do not see a lower inflation story. the was to broaden on to point, it was a very specific part of the market that has done well. places that have have the depreciation
>> 7:30 and london career that is what london looks like. another gray day. and a: ryan chilcote in the snow. 29 minutes until the start of the equity trading day. hollande will meet vladimir putin in moscow for talks on the islamic state. it comes after pressing for a greater commitment from germany. the russian pilot who survived being shot down by turkey says
his plane never left syrian airspace. indicationshere are -- russia claims there are indications the event was planned in advance. gained as much as 3% on the exchange. had a low against currency iss -- heading for the sing us to the biggest monthly decline since march as the fed considers raising interest rates for the first time in almost a decade. for more on your stories, had to bloomberg.com. anna: david cameron will ask parliament to back his plan to
bomb isis. how confident is cameron he is going to get the backing he needs? he doesn't have much of a majority. the opposition is divided. >> i think he is pretty confident now. vote two years ago. he has to make sure he has backing. 15re are probably about conservative mps who will vote against it. quite a few labour figures have said they might support him. i think he has a strong chance. guy: the labor party and opposition party, they have a history of not supporting this kind of action. how can we have a reasonable this kind ofe have political division? >> this is a tricky one. his record of opposing any kind
of action is well-known. this comes with the background of a huge split in the labour party. most mps did not want him to be their leader in the first place. you do have some voices who are going to make a reasoned argument against intervention. some voices even on the conservative side. at this stage, it might be a vote against him himself. anna: there are diverted views. the latest on what we can look forward to. european equities looking like they won't open flat. things happening in the metals german,as we watch spanish, italian yields plunge. box. the features as you can see, just in the
green but only just. anna: i cut up with a former goldman sachs analyst for an exclusive interview. so far, the eurozone is doing better than anybody thought. even though it is a declining export market, it is still our biggest. purchasing managers in this was surprisingly good. not just focus on negative. china is slowing, more than i would have thought. is doing pretty well. thethe likes of the u.k., new china doing well. the old china falling away. that is not necessarily a bad thing. what we have to focus on is
doing the right thing to get a bigger share of exports to the new china. o'neill says china is doing pretty well for 25 years since trading started on the stock exchange. if you had put your money income he would have gained 35 hundred percent. die: more of a roller coaster. of a rollerabov coaster. >> for those not concerned about the sharpe ratio, it was fantastic. guy: china has been nothing
short of the miracle. you have paid attention to how china has grown, there is nothing quite like it. guy: the industrial revolution 2.0 on steroids. gdp is going to slow from 7% to 5.5%. the problem with the rest of the world, it is not levered to the new china. it is levered to the old china. even to some extent europe, it is not levered to consumer services in china. anna: the u.k. could be more levered to the new china. we have heard about market changes, selling shelf products.
slowly, we will move toward that. if you look at what proportion of financial services are imported, it is very small. particularly in china. it has been a manufacturing bed. when we learn, it is not slowing down by that much, i don't completely by that. i think what matters for the rest of the world is investment. the new part of the chinese economy through the stock market will be ok. we are underway on a chinese and the story in stocks. the old part is going to impact the rest of the world more than chinese stocks. goinggs next year are not to be that strong. profitability is compromised. capacity utilization has not been taken down. china is not going to suffer a
massive increase in equity. which brazil or india could face. china is unlikely to see that pressure on financing. it will have a bigger impact on the west -- rest of the world. if you look at the gdp coming will understate that impact. do you look for the next china? or india, but through a different lens? >> is a different lens. per capita income in 1978 was higher than china. since then, have taken divergent paths. india's demographic time is now. when china hit their prime, the manufacturing as a percentage of gdp boomed. we're not seeing that in india. not raising levels
at the pace they did in 1980's china. i think it is a political economy that is different. not push growth does further along, at least in the near term. in terms of starting points and trajectory, i don't to get can replace china. the size is way bigger than any place else. south africa, indonesia, they may make up for that. we are some way away from that. guy: how long will china export deflation? >> my answer is at least for the next 2-3 years. have notinute, you taken down capacity. want to do, that is when the ary wings begin to
dilute. emnibi wesee the ri can. we will elect the depreciate our currency. if the depreciate the currency, that sends those winds. it is the thing that will be with us for a little while. anna: what does that mean for the broader global economy? the global trade story? trade is likely to stay week as a result of that. effectively if china is prting deflation, that is likely to mean china is going to continue to gain market share. not quite at the same case it did in the early 2000's.
trade suffers more. shoring is not taking place in the u.s., in china. china is going to move further along the path. the trade is going to get compromised more. i think trade suffers a little bit. eurozone more impacted. the u.s. is a more closed economy, more services aced. on shoring is helping. the u.s. gdp will be hit less. one thing that would help the global economy, china's financing problems if they were to occur are unlikely to affect u.s. or european companies. whereas during the time of lehman's, the u.s. financing problems hit every company in the planet. guy: stay with us. we need to talk about commodities.
anna: welcome back to "countdown." >> bloomberg sources say lloyds banking group well this goes plans -- will disclose plans. to closet of a plan 9000 positions and save one billion pounds by 2017. some of the biggest players have been sued for allegedly conspiring to block funds. the complaint filed in new york named most of the biggest u.s. and european investment banks among the defendants. the troubled spanish company -- they are having to decide whether to dump their holdings in the firm. abengoa teeters
on the edge of being the biggest bankruptcy. guy: thank you. we have been talking about the emerging markets. let's carry on the conversation. despite a tough few years, he remains optimistic. we are bullish about the long-term fundamentals. there is no doubt in our mind to there will be a long-term demand for copper and other commodities. coal, iron ore, and so forth. we expect the volatility in copper prices to continue for the next 2-3 years. we have been saying we expect the market to go into a deficit situation as early as a couple years down the road. volatility will continue in the coming 2-3 years. we expect the market to move to
situation. anna: caroline is here. ioroline: it seems the r head of copper says he is bullish. have a look at what is having to copper prices trading in asia. trading higher. this is on the back of reports that we could see chinese regulators start to investigate potential shortselling. bearish that's against metals on local exchanges. has, the metal association asked a key agency, the national development and reform commission, to buy nickel, aluminum, other metals to support the prices. could they do this? could we see china push metals higher? but it has is up 2%,
been sinking in the last 12 months. we have seen collapses in the prices of nickel and copper. this is a market that many in the investor base but miners are desperate to see some sort of trough happen. we are seeing a spike in metals prices. these miners could start to gain on the rally. watch out for the particular stocks. i have been hearing calls for 1.5% gains. , they keep an eye on, bhp could fall and u.k. trading. they are down in asian trading. check out the plummet we saw today. currently on my computer screen. down 5% over the last three days. why?
united nations investigation into the tragedy that happened in brazil. the biggest mining disaster in brazil, we understand. they are investigating this deadly mining incident. the u.n. says they did not do enough to prevent harm. it was not sufficient. meanwhile, the joint venture has said there is no danger to human health to read their firm all measures are being taken. anna: thank you very much. france,comments from talking about how it is possible the terror attacks could affect french growth. this is something we have been talking about for some time. how this reason the french economy and those in the ecb. he says there is no budgetary obstacle to security. guy: are you listening in brussels? let's get back to the commodity story caroline was talking
about. the head of emerging markets. long china, short austria. bhanu: this is the way i think about it. there is no asset class, financial, or real, that has not been impacted by two megatrends. one is the decline in u.s. real rates. the other is the decline of china. both are maturing. you could describe them as head fixes. the guy: you invest in a mine, would you invest in it for 20 or 30 years? you think it is going to carry on for ever? bhanu: the people who have invested in this commodities thought rates would stay low for the longest time and think china would continue? chinesehought urbanization and demand for property come up for commodities, would continue at
quite the same pace. there were arguments about the size of the chinese economy being so large that even if the growth was less, it would still be enough. but the capacity was built up. people have invested in those mines. you haver copper, excess supply. the next 2-3 years, we have a fair amount of wood to chop before we get the list. i am not sure we can see commodities -- say commodities will turn around. it has been a simple story. commodity ndm-- returns. end all thatn't dramatically. if you have china exporting deflation, it is hard for the fed to go too high on interest rates. bhanu: the problem is that is what is priced into the market.
if you stare at the u.s. fed, you are not far. far from the reality of stagnation. if you stare at the multiples in the equity markets, including the e.m. materials and energy. some parts of financials. the consumer stocks, they are trading more deer then g.m. -- more dear than dm. can you get more gratification -- i findiscount on that a little difficult, given where fixed income markets are. s are priced in terms of rate hikes. get four, you are
working into 2017. how bad does it get? bhanu: i don't think e.m. blows up. the reason, in our minds we have the impression of a massive catharsis. dollaresn't have a major liability. it also doesn't have the inspiration to grow. ideas to grow. it is deflating slowly and frustratingly. we have been negative on e.m. and it continues, despite everyone being bearish, to disappoint low expectations. is it going to matter? is it all priced in? i think it is going to matter.
i don't think they are completely hedged. the weakest link, we always said, is the fx. t class has to go further. anna: great to see you. guy: you in -- european equities look soft. john paris is going to be opening up for us. john: we don't know where we stand. the euro dollar looking at a seven-month low. all options on the table. the profit rate cut, increasing. two-tiered deposit rate? that is something we will discuss later. the big story for this market, i pulled up the bloomberg terminal. the back of a
couple of stories to the dominant one, whether china opens a program into shortselling career that is going to be a big story if that develops. something we are going to discuss. and it: it is moving markets already can listing in china moving higher during the trading session. jonathan ferro will have his eye on that. that could be part of the london trading day. they are saying the french economy will hit 2016 goals despite security costs. as one of our big debates we are having. harris versus brussels. anna: that will do it for "countdown." not as cold as moscow. ♪
jonathan: "on the move." good morning and welcome to "on the move." togood morning and welcome "on the move." let's get straight to your morning brief. french president francois hollande meets resident in moscow today. putin inpresident moscow today. rabbit out of a hat. what can european central bank due to prevent a bounce? futures pretty flat across europe. in the green. a euro at a seven-month low.
let's get straight to the market open with caroline hyde. caroline: cautious trading ahead of the giving thanks. the big central-bank meeting lined up for next week. all eyes on the ecb. what can they do? can mario draghi lowered the rate even further? we are trading pretty flat in the ftse 100. tentative, cautious on the equity markets today after the significant bets on ecb moves continuing to drive incomes lower. check out this low of negative yields. money being given to the government to hold their two-year bonds. spanish and as on continuing negative yield