promote his reddish company and united arab emirates have broken off talks for 60 typhoon jets. we will get to it more in just a little bit. >> we will get the full story from you shortly. ryan joins me now. another surprise from vladimir putin. will get hiscoon freedom after 10 years in jail. yesterday, we had a little bit of an uptick in the russian stock market, rose about one percent. analysts saying the russians are still the cheapest of anyone in the emerging markets. >> we will have some data later on on that. caroline hyde is standing by. what is the sentiment on high street? five days to go until christmas. >> the countdown is on.

the christmas lights are beautiful. you can really smell it. christmas is in the air. air is also an air of panic. in every shop window, a sale sign. marks and spencer is offering 30% off. don the road, 50% off. more on why retailers are slashing their prices and why ubs says the clothing retailers have hit the panic button. >> caroline, we will get back to you very shortly. , let's have a look at these equity markets. we are seeing higher equity markets as europe loses aaa s tatus. does that really matter? stocks saw their biggest rally in nearly three months. higher by door to voice a -- deutsche divorce a -- borse and merck.

we will see stocks and indices go off the board today. all agility will be the name of the game. the dollar index rises. fx volatility is dropping. pimco does not expect the dollar to rise much. the euro dollar drops by a quarter of one percent. it has had a good run. a couple of stocks and headlines. 25%.oil down . they have a big venture with london and there is a delay in production. they have just dropped back. bae down 4.2% as their deal falls apart with the uae in terms of the typhoon fighter jets. those are your markets. let's put them in context for you. our next guest, a little bit more on why he thinks that. andy lynch is a fund manager over at schroders. ray to have you with us.

you are the christmas grinch. >> i am afraid so. i am here to deliver lots of bad news to lots of people who have been really happy. >> this paper program, there has been this initial good reaction. why is that? it is a bit paradoxical to what we have seen before. is it about the guidance we have given? taper,re starting to interest rates are going to stay low for a very extended period of time. my concern is that after the thering runs off, acceptability to control the longer end of the interest rate curve is hit. will be buying more than 50% of it. >> is that the biggest risk, longer bond yields breaking out? >> absolutely. that is the big risk.

the market starts to reassert control over longer-term interest rates. so we see a selloff in fixed income. not at the short end. the fed and the ecb can control that. >> we just had the bonds up there. trading this also morning, just a smidge lower. where does it move to? on 10?.5% that hurts the mortgage market. >> it absolutely will hurt the mortgage market. the u.s. t do much in it will not hurt the people who have already got their mortgages. it reduces the opportunity to refinance and makes it harder to buy a new home. if you already have got your mortgage, 30-year bonds do not

matter to you at all. your payments are fixed. >> the correction will come in u.s. equities, you say. what is the time of that? how do i prepare for this correction? timing-wise, i think we will start seeing it early next year as companies start coming out and giving guidance for 2014. i think those expectations are going to disappoint what the markets have priced in. we have had a fantastic year this year. a lot of it has been driven by multiple expansions underlying earning your rates. expectations are getting higher and higher. when they start talking about 2014, they are going to throw a bucket of cold water over everyone's cheer. >> you are doom and gloom. >> i am. >> china is building up as a story. we are seeing interest rise to

levels that we have not seen in six months. is that something you have talked about the past couple of days at the office? are you concerned by china? chinese authorities will manage to keep this -- they are still in a very controlled economy. if they want to bring interest rates down, they could put liquidity back in and bring interest rates at down. actually, seeing interest rates go up in china is not a bad thing. we have been saying for a long time that china needs to start rebalancing away from massive levels of overinvestment and towards the domestic consumption story to put its economy on a more sustainable footing. , ifnterest rates are up returns on investment become less attractive, we should see companies getting less funding and consumers being able to spend a little bit more.

the time, that rebalance is chinese economy. it will not be easy. there will be a few skids along the way. i think that it will be better to keep the car on the road. we might have a few slightly scary bumps as we navigate the path. >> we will be back shortly. andy lynch, the fund manager at schroder investment. here is a look at what is coming up "on the move." uae dropped its fighter. and why are bankers feeling sidelined? that in a moment. to go before christmas, what is the sentiment on high street? ,e will go to caroline for more live in the center of london, where shoppers are not hitting the stores this early in the day so far. ♪

>> i am manus cranny in london on this is "on the move" bloomberg television, radio, streaming on your phone, tablet, and bloomberg.com. there is one stock that is on

the move. 8.6% at the moment. this is one of the telecom operators in france. they have challenged the traditional model. one of the protagonists in the french market ready to start an internet price war. who loves that phrase? the consumer, not so much if you are a company. value margins are 20% versus 40%. the telecom space is one to watch. from telecoms to defense. bae systems is in the middle east. to the unitede arab emirates has fallen apart. hans nichols has the latest from berlin. but start with the uae deal. what happened? why has it fallen apart? >> we do not know. pricing, presumably.

this is over the euro fighter typhoon. he comes on the heels of david cameron being in dubai for the error -- for the air show, really promoting british planes brought. is a separate deal, the saudi deal. that appears to have stalled on prices. it has not totally fallen apart. the question with the uae deal, is this just them driving a hard bargain? to jam down dassault from france? they'll also fielded another offer from boeing. this is just one giant arms dealing bazaar for who can send any kind of fighters to the united arab emirates cheaper. they are trying to play these three defense contractors off each other to get the lowest price. either way, for the moment, it is bad for bae. calls went out this morning on the share down anywhere from 3%-

5%. we will see where this deal was priced in and what the stock does when it opens. >> let's talk about saudi arabia. bae holds their discussions with the saudi's. is that a more important deal? the stock is now down 3.6%. moving, 3.6%.k is that could be both on the uae deal, but also on the saudi deal. the saudi deal is bigger, 72 jets. that means about $7 million. bae has said that they're pricing and ability to get this deal done have to do with their billion pound share buyback. if they do not finalize this deal by the end of the year -- excuse me, by the beginning of next year, they could say that earnings per share is down 6%-

7%. we will talk analysts and find out why it is diving. >> we will get you a little bit later in the program. still with andy lynch, fund manager from schroder investment management. , as anobal basis investment manager, do you like defense? do you like american defense? do you like these kind of stories? >> the defense sector is one we are under way. -- underweight. 2 reasons. austerity, reduction in government spending, less money to go around for defense. more to fight over. the second reason is that the countries where people are still they are uae, saudi, extraordinarily savvy negotiators because they have a domestic defense industry they need to support.

they can get the international guys up. off, areffering 10% you going to do 12% off the deal and then you go back and say, can you do 15%? nobody makes money at the end of that negotiation process. i think defense is a difficult market to be in the -- to be in. >> let's talk about retail. we will catch up with caroline. she is at the heart of the retail mecca. the retailers are pressing the panic button. talk to me about retail. surely it is an area that i want to be in. how do you feel about retail? if you are online, you can still do extremely well. if you are a pure play high street retailer, things are getting very tough for you. online offers greater

convenience. it also offers greater price transparency. a high streetas retailer, to earn decent margins by selling something more expensive than someone around a corner is eroding as the internet makes things more transparent. , a greatike john lewis website, good stores, integrating online and off-line, i think they have a very good offer. if you are a standalone just on high street, life is going to be tough for you. >> let's talk about 2014. ,alk to me about the portfolio the asset allocation as you go into 2014. where is my waiting in terms of equity? be bullish on equities? should i avoid bonds? viewam talking about my rather than the whole view of

the company. you should look at equities for the long-term. i think you will still make good money only equities from here. athink we see a correction the start of the year as current expectations are too high. you have a better chance to put money into equities during the first quarter than you do now. at the moment, hold that money in reserve. even in cash. it is not that exciting. riskse not taking pricing that you are with equities or bonds. rex you say asia. excludes japan. japan, despite that -- what prime minister abbé is trying to do with his program, they face extraordinarily -- extraordinary headwinds. demographics is one of the

uncertainties in investing. you can look at people in my play and say, in 10 years time, you will be more overweight. if you are japan, you're working age population is starting to shrink. that puts a headwind in your ability to grade gdp. formerly, lots of young people were coming through and joining the labor force. your ability to generate growth is that much higher. valuations are still attractive on a global basis. >> when we talk about the industry groups, we have touched on some. there are some core equity groups that you favor. for example, you like food producers. let's talk about those. about demographics. what is going to drive food producers? level, itfundamental is more mouths on the planet, more food required. , you have the

concerns around diversification. iss arable land that effective for growing food. we need to improve productivity out of each and every farm. people soon -- people who supply fertilizers, seed. >> looking at the whole supply chain through production. rex people who are giving the capital equipment, the seeds that they need, all the way to the food producers and processors who package it up and put it on our shelves. there are opportunities all along that chain. if you can find people who have niche, a strong brand, or in the case of supermarkets, a good price positioning, those are areas where investors can take solace. >> we have seen $17 billion

worth of deal this week. bayer, astra on the move. what is your play on that as a sector? -- has faced -- healthcare has faced two things. an older population requires more health care. that, pricingof negotiations get tougher. areas where the demand is growing significantly. example, obesity. we are coming up to christmas. we are all probably going to put on a little bit of weight over christmas at a global level. we are all becoming slightly heavier, slightly more overweight. sadly, areabetes, going to be a big trend.

not a pound will be missed between now and next week. >> you are a better man. >> thank you very much. that is andy lynch from schroder investment. up, two thousand 13 was the euro some blockbuster m&a deals. why are the bankers still feeling sideline? more on that when we return. ♪

>> we are "on the move." here are some companies on the move today. everbright bank fell in hong kong. this is after the lender raised $3 billion in the city's biggest first timeshare sale this year. shares of the aging-based vendor fell nearly 4% during morning trade. bae systems says that the united arab emirates stop talks to buy the euro fighter typhoon. this is weeks after david cameron lobbied for the combat plane in dubai. the gauche nations with saudi away via -- with saudi arabia are also dragging on. german phone unit with kpn plus, said to face a probe by authorities.

they are concerned that they may gain too much wireless spectrum. there will be an in-depth review into the deal today. it has been a disappointing year for bankers. despite some of the blockbuster deals, like vodafone's sale of its verizon wireless stake. here to give us a little more overview on m&a in 2013, matt campbell. where is the recovery going to come in m&a next year? >> that is a good question. this year has certainly had some blockbuster transactions. the $130 billion vodafone- verizon deal was the biggest. when you look at the figures, we are flat on 2012. terms, relative to the boom years, we are way short of that. the recovery has not come yet. it may come in the new year should the m&a market follow equity markets, which are very healthy, and economic growth.

but that has not happened yet. >> what is holding them back? will we see a rush to the doors in 2014? are couple of things holding us back. confidence is the thing that everyone talks about. when you are a ceo or a chairman, you look at the last two years of economic news and say, maybe this is not a time to be taking a big risk if i can avoid it. i will buy back shares, are the cash in the bank, do anything else. learned their lessons, 10 years of exuberance and now they're talking about giving money back. what is going to be the best and worst? >> i think technology and telecom will remain very active. a huge amount still to do in that sector. hearst is a good question, probably banking because regulators do not want to see big tanking now. year.hope you have a good well done. it is matt campbell, our deals reporter at bloomberg. up next, he joins me to talk

about blackberry earnings. we will ask him about the smartphone trend going into 2014. keep it right here. ♪ \ . .

>> welcome back to "on the move ." i am by describing in for francine lacqua. these are the bloomberg top headlines today. banks are said to be racing to betray their competitors to avoid possible eu fines. the penalties relate to rating a foreign exchange markets. ubs and barclays aborted more than -- avoided fines by blowing the whistle on benchmarks. more banks are said to be volunteering information on fx markets.

china's money market rates surged as fund injections by the central bank failed to alleviate the worst cash crunch since june. the seven-day purchase rates rose by 100 basis points to a six-month high. gauge of liquidity in the financial system. european union has lost its top credit rating from standard & poor's. it citedgs agency says its worst financial profile for the downgrade. s&p cut its long term rating to aa plus run the coveted aaa. for more on that story, let's had to a between. he is live from berlin. -- how muchs the eu do we actually care about this? >> i think we care about this because i think the timing of the downgrade coming from s&p is

absolutely impeccable. what is happening at the moment, they eu leaders are meeting in brussels. this is an absolute message to eu leaders the way i am looking at it. two reasons for the downgrade -- one is the overall credit rating of the 28 eu member nations has declined. lost their aaa credit ratings. say iner reason is, they our view, the eu budget negotiations have become more that theys, singling consider there could be some rising risk to the support of the eu from some of its member states. if you remember, last year, this time last year, the eu summit was also about the budget contentions, the budget negotiations. they were fighting over miniscule amounts of money. that is something that standard

& poor's has picked up on right now. >> ok, david, thanks for that. let's dig a little bit of a look ahead. factory earnings are out later today. what are the smartphones transfer 2014? hussein kanji, great to have you with us this morning. how bad is it going to be for blackberry? >> this is a question that everyone is asking. no one really knows. blackberry hasn't done a very good job giving china's -- guidance. we don't know how bad it actually is. we know that they are going to lose cash. probably $800 million. they are probably going to use about -- lose about $1.6 billion of cash. they have about $2.6 billion on the books right now. that is a lot of cash out the door. we don't know what is actually working inside this committee right now. the flagship products are definitely not working. >> your specialty is the tech

space. at what stage do investors say enough is enough? you need to make hard decisions. will they give john that time? >> time is the biggest question. he had about 18 months of cash when he joined the new financing certainly helped. they had to do all these inventory write-downs because the phones aren't selling. their customers are leaving so the department of defense which is a major flagship customer is thinking about abandoning. pfizer just announced that their employees can switch over to the iphone. this turnaround is going to happen very quickly if it happens at all. none of us really know if they can pull this off. this is an ailing company in many ways. >> he doesn't seem to be drawn to the fact -- the idea of breaking the company up. that doesn't seem to be in the rhetoric. >> it is not in the language. he wants to stay in the handset business which is a money-losing business for the company.

analysts have look at this and they say if blackberry breaks up, it would give consumers virtually all the cash it has. that is not a viable option. the only thing they can do is build a better phone and get something into the market that is going to sell. this is the unknown question. >> is it just hyperbole -- ryan seacrest in a keyboard company? would apple even be interested in buying this? does that make sense to you? >> i think that is the problem -- no one is interested in buying it. this is a company that should have gone into emergency mode two years ago. it has waited so long that it is pretty hard to fix. john chen is a turnaround guy so maybe he can turn it around. blackberry, i get made fun of every single day as a venture capitalist carrying around this device. i can't wait for the seacrest type of thing to come out. >> let's talk about next year. mobile, pcs, you some of your

stats make it interesting. the world begins with mobile from your notes. everything else tapers. >> for the last two years, mobile has been our industry. if you are a venture capitalist, this is all you are investing in. the scale of these companies is phenomenal. bbm has gone to 80 million accounts in the last six months which is amazing. 80 million people using this product on ios and android. hatsapp is servicing 400 million people around the world. there are so many of these things. right now they are at about 1.7 billion pcs out there. 900 million on the corporate side. there is 3.5 billion to 4 billion smartphones. those are getting replaced every two years. downrowth is not slowing

on the smartphone side. >> where are we with bringing in apps to the market as a company? the next paradigm. we have seen twitter, facebook, where are we? where is the zeitgeist? where can we go with bringing companies to market in terms of technology? wax if you build an app and you do it right, you can get scale enormously fast. look at what happened with snap chat. the new hot app is a company called whisper. kindlows you to share news of like what the facebook newsfeed does. there is a dating app will is worth tinder which about $850 million. if you're a member the website hot or not -- >> so we are nowhere near a bubble. that thisbelieve whole technology realm is going to be the paradigm. >> the scale is outstanding.

the question here is it is very hard to invest in these spaces. you don't know which ones are going to hit. most ones are not going to hit. >> that is what risk is all about. -- you say food could be the radical disruptor in technology. >> i am looking at the space with interest. there are a couple of things out there. there is a study that says crop yields are lower than what people actually report them to be by about 30%. food is going to be a major issue for us as an economy. if there are lots more people out there, we are all consuming animals, there are not enough animals and not enough time to harvest and there are companies that are really thinking about building alternatives based on science. >> we have heard about hampton creek. tell me about one or two.

you have some fantastic names in here. >> hansen is building a substitute egg. i think an interesting one is something called ocean harvest. they are taking algae and some science and providing animal feed to feed the animals that we normally eat. interesting stuff. there was almost at no venture money in this economy 10 years ago. tohas gone from $50 million $350 million. >> are ventures going to jump at the food? >> you never know. >> great to have you with us. thanks for everything. have a great holiday. hussein kanji for talks and ventures. coming up, it is just days to go before christmas. we're going to the streets of london for a look at u.k. retailers. stay with us for that. oxford street, the mecca of shopping. ♪

>> i am manus cranny in london. this is "on the move." the holiday window displays at

selfridge's have become a must an and this year features entire gender bread village. bloomberg spoke to the display's minor -- designer to find out how much work goes into those winter wonderland. >> hello, i am the creative designer here at selfridge's. if you think of the windows as the cover of a magazine, it is the thing that people see that entices them and we hope it brings them into the store. something like this christmas window, we have got these versions of our best gifts. we hope that is exciting to see. it might be something that people really want to buy. may took us ahind long time to make. it is made from real gingerbread. andave to build the models cook and make the gingerbread. then it was ice and all of that

was put together in the window. the work that goes into these windows is hundreds of hours. many people are working really hard to get these results. >> incredible windows. i saw them yesterday myself. let's head to oxford street now. caroline hyde is out there on a mission. u.k. consumer sentiment is down. the brits generally give more gets than others during the season, don't they? >> we certainly do. here in the u.k., generally we spent on average about 40% more in the month of december than we do the rest of the year. that is why the competition is so fierce on the high street. nearly every single shot that you walk by have sale signs on. 30% off. take a look behind me.

currently offering 30% off when you going to shop. road island, over the similarly offering 30% off. prices by 50%. ubs is saying clothing retailers in the u.k. have hit the panic button this season because we just don't feel we have got as much cash as the consumer. we have wages increasing much slower than prices at the moment. lesse feeling a little bit apt to spend. >> talk to me about the other items apart from clothing. they don't seem to be doing just as badly. a little bit more extravagant. >> you are right. at the moment, clothing is where it is hurting. electronics sales are not doing too badly. the must-have tablets, you can probably get about 10 items clothing of that -- 10 items of

clothing for that. we're also spending more online. it is clothing that is seeing the pinch. >> what are the prospects for a last-minute rush out there? >> it is certainly feeling a little bit busier today. i can tell you that it is all about monday. we still have got five more days until christmas. maybe just the retailers are going to hold their nerve. having a one-off sale tomorrow. they're worried about is not getting in and spending enough. money is -- monday is when we go out and spend 1.2 billion pounds in the high street. that is what europe is estimating. i wouldn't want to be out on europe -- high street on monday. it is going to be a frenzy. asare leaving our shopping more of a last-minute spree, hoping for that last-minute

bargain. >> ok, caroline. you have got a list of what i want. we will see you a little bit later. i am one of those frenzied shoppers. " the talk about "the pulse man up in 15 minutes. guy johnson, what is on the agenda? >> let's talk about what is on the shopping list. mikhail khodorkovsky is a big story over the next 24 hours. the flak that vladimir putin designed a degree -- to create releasing him -- i wonder how long it will take him to release him from jail. we will watch and see we get any pictures on that. we're going to talk to karen karen parsons. -- catherine parsons. she was a business of the year later when her. we talked to her about what happens next in 2014 for her all zes and we are going

n. we are going to be meditating. it is a year in which we have seen a great deal of stress among senior executives. we are going to be existing -- addressing that issue right here on the pulse. we have a leader on meditation. francine is really looking forward to this one. she is going to be sitting crosslegged in the corner of this studio. .> i tried a bit of that it just hasn't brought me down off the ceiling. we will see how it goes in 2014. i will see you in "the pulse." from meditation to companies that are on the move. it is toyota. they are targeting sales and profit growth in europe and russia next year. that is thanks to increasingly popular hybrid models. the carmaker's plans in france and turkey are at full capacity. toyota ranks 10th in europe. the top seller of online ads after google.

that is according to the researcher. facebook is on track to take more than $3 billion or more than seven percent of the u.s. digital as spending. airways in talks with alitalia. the struggling italian airline is seeking a new international backer. this as the existing shareholder air france said it won't inject fresh funds. prisonermost famous and once russia's richest man has just been released from prison. mikhail khodorkovsky was pardoned by president putin this morning. ryan chilcote joins us now for more on this story. this is quite a romantic story. this is one of his adversaries. >> absolutely extraordinary. the news coming from the russian news agency, we cannot independently verify it, they

are saying that he walked free from a jail in the north of russia about 29 minutes ago. we are told that he may go to germany. resident putin yesterday when he said he received a request to be was basedaid that it on humanitarian grounds that he wants to go see his brother in germany who is their fighting cancer. extraordinary stuff. he has been in jail for 10 years. he was worth $13 billion. the principal owner of the fourth largest oil company in the world. now the main piece in russia's largest oil company. >> let's talk about this incident when he was arrested. you were in russia at the time. where were you? what was going on? >> it was a cold evening in october. was in southern russia covering a mining story. member exactly where i was

when i got a phone call. this was 2003. president putin had been in power for three years. he was cementing his grip on power. this was the first battle with the so-called oligarchs. cane was a deal and we confirm this, but this is widely believed to have taken place, that the oligarchs were told if you want to keep your money, you must stay out of politics. in 2003, mikhail khodorkovsky got into politics. he started funding the opposition parties, notably the communist party. president putin didn't like that. he was charged with the fronting the state, embezzling and he spent a decade in prison. >> he denied those charges. he spent in decade prison saying he wouldn't ask for a pardon because in russia a pardon presupposes an admission of guilt. he maintains that he was simply on the receiving end of a vendetta. was justident putin

intent on getting rid of him. this.l me i am slightly skeptical. why is putin doing this? why do it now? is it that he is getting so much bad press over sochi? is it a zeitgeist moment in russia? is it a change? >> i don't know if it is a zeitgeist moment in russia. it is a symbolic moment. i think there is a possibility that print and -- president putin is doing this because russia has got a bad image not just in terms of its investment climate but also with the olympics coming up, the anti-gay laws. this is a way of taking the temperature down between russia and the west. the kale khodorkovsky has been defended by many western governments. he was sort of the poster case for everything that is wrong with the rule of law in russia. it has been 10 years. perhaps theger

meaningful adversary to putin. >> where will he go? think he will stay in russia? >> the immediate thinking is that he would go to germany to be with his mother who is fighting cancer. what he will do after that, we will have to see. will he go back into politics? he may have a couple hundred million that he was able to for it away before he got arrested. >> that would do me for a couple of years. ryan chilcote there, our man in russia putting it in context. stay with us for final thoughts on these markets. we are going to take a look at emerging-market currencies. there is a taper impact. i will show you where that is being felt most. currencies when we are back. ♪

>> welcome back to "on the move ." i said to you that tapering may not be felt in the equity markets right now. have a look at this. these are emerging-market currencies. this is dollar rising. down 21% thisee, year. dollar/turkish lira i'm a record low. record low for the turkish lira. the malaysian ringgit down 1.5% this week. nine straight weeks of declines. againstcomes to defense the fed, dollar/real traps --

drops. all that and more with guy johnson on "the pulse" coming up very shortly. edited for me for 2013 at bloomberg. see you in 2014. ♪

walks free asy president putin signed a decree pardoning the former oligarch. >> the writing is on the law as european eaters meet in brussels. >> shares slump as typhoon euro fighter sales try out in the deserts of the gulf. good morning. you are watching "the pulse." we're live from bloomberg's european headquarters in london. >> this is what we are focusing on this hour, russia's most famous prisoner is now a free man. id