raking ranks on sanctions. he becomes the first to suggest easing moscow's economic pain. >> the impact of the sanctions and the russian currency crisis. a deal with gaza from attack. we have an exclusive interview with the carmaker. another profit warning from air france, klm as they post on buying new jets. rebuffing an offer from iag. >> asian stocks extending the gains. the bank of japan sticks to its

record stimulus program. ♪ >> welcome to "countdown." i manus cranny. >> and i am mark barton. today,up on "countdown" these days vital records are big is this in vintage chic. 2014 has been a year of sales for vinyl albums selling across the one million mark for the first time in two decades. find out which driving the revival will little bit later. >> russian president vladimir putin reassuring his nation's economic relief will come in two years and one western leader is helping his case. >> german chancellor angela merkel and david cameron complies,russia

french president francois hollande broke ranks from his eu counterparts saying in use in sanctions is possible. i consider that if the gestures rusher is making what we are waiting for, there is no reason to enact any new sanctions. on the contrary, they will allow us to start the escalating the situation. >> barack obama signing legislation that gives him the power to impose more sanctions. the u.s. president said he would only act in line with european allies. joining us now to discuss all of this is our russian expert, ryan chilcote. alongmazing how quickly -- hollande steps forward but there seems to be a series of voices that's wanting to. >> belonged is the latest -- hollande is the latest.

-- theyz was discussed were not supposed to discuss scaling these back. the sanctions are in place until july. when they expire, if the eu wants to continue, they have to have unanimity across the 28 states. it is very important that the french president is now saying he's backed by the austrians. they are also concerned. france is just for god stopping $1.5 billion sale of two warships, helicopter carriers to the russians. there were russian sailors leaving france this week without the helicopter carriers. they had been there training this whole long while hoping to get those ships. the french have been wavering, but in the end of a gave in to the pressure. pain right now. france is set next year to be third worst economic performer

within the european union. they need the money. as another factory heard from the foreign minister of denmark saying the object is was never to collapse the russian economy. there is absolute there's there's actually a concern --is actually a concern in collusion with the oil price, dollar strength that have been putting the pressure on russia. where does this leave the european attitude on sanctions versus the u.s. attitude? will we see a divergence there? is the u.s. congress that is ahead of everybody -- let me change that. poland, then the u.s. congress that are out front in pushing for sanctions. we saw that. president obama last night sort of reluctantly signing a bill that authorizes him to impose new sanctions against russia.

it would sanction international energy companies who do business and defense companies in russia and would also authorize 350 million dollars worth of military aid to ukraine. russians have said if he does that it is asked of a tory and he will retaliate. -- it was escalitory and he would retaliate. i think we are in a holding pattern right now. the west is watching what's happening in russia with the ruble. let's see how this pans out. >> things are moving quickly. ryan chilcote with the latest on russia. >> some automakers responding to the ruble collapse by pulling out of the country. let's go to international correspondent hans nichols in berlin for more. who's leaving and who's staying? >> good morning. we have a firm list of who is leaving as of now and that is general motors, audi, and jaguar

land rover. they will stop at least selling cars in russia. gm did not give a date for their return. audi says that will return once they figure out the pricing and then they will come back intentionally to the market. look at the size of the auto market in russia, 2.2 million units sold. look at what bmw has done, 33,000 units. take a look at last month sales to see how far down they are going. volkswagen down 14%. audi 23%. peugeot 39%. you know what they have in terms of ruble exposure. if it declines by 50%, bmw could lose up to 150 million euros. >> is anyone doing well? we talked about porsche sales

and they are actually up, aren't they? market, weuperluxury have a bit of an outlier and that may be because russians are trying to park their rubles in these expensive assets. take a look at these figures. porsche is up i believe 55%. lexis up 60 3%. 25% the month before. mercedes with a big exposure, they are up 72%. -- 7%-2 percent. send ryan chilcote with a bag of euros and see what he comes back with. he's got to drive the entire way back with the top-down so we should get him a convertible. bloomberg international correspondent hans nichols in berlin. we have a bloomberg exclusive stalling sales in russia. we will talk to the audi head of sales in russia at 7:00 a.m. on

"countdown." don't miss it. -- air francelm klm is issuing a revision, one .6 billion euros. your with more on the outlook for the airlines is caroline hyde. heard strike, excuse the pun. -- third strike. >> now one billion euros less than it was at the beginning of this year after three profit revisions. you said it. it's all to do with the strikes, the worst in their history having to upgrade again how much this will cost them, that two week strike back in september when the pilots walked out. they've also had poor sales in the long haul. they've also blamed the pension cost adjustment. there were going to have a positive pension adjust them, but that will not come through either. in limited full prices -- fuel

rices, they will not get that warm breeze just yet. air france is continuing to have a dire situation that they are pushing back the delivery of some of their own aircrafts. they were set to receive 10 knowing -- boeing wide body jets. luckily they do not need fuel efficiency with oil prices falling. that's the only silver lining. they need to reduce their costs. meanwhile, the rest of the industry is doing really well. the international transport association says earnings will be up 25% next year. air france cannot turn itself around. >> meanwhile, other airlines have turned their attention to consolidating, like aer lingus. >> he trained as a pilot at 17 years of age and now he's gone a

long way. to what he loved. willie walsh, head of iag, british airways, iberia. back on sunday they offer -- we don't know the price per probably more than the 965 million euros aer lingus is worth. it wasjected saying preliminary, nonbinding, and not enough. this will run around. he wants more dominance in heathrow. british airways is already number one in landing slots. haulall of those good long channel fifo they're making to new york and the united states. >> join in on the conversations we're having on twitter. you will find us there @anna edwardsnews, @markbartontv, @manuscranny.

>> some of the other stories you will need to know about for your day ahead, two more years, the reprieve for some of the institutions made by the federal reserve. tanks have been granted a temporary reprieve from the volcker rule which will allow them to hold onto billions of dollars in private equity and hedge fund investments. the fed granted the delay to july 2017. it might force them to accept prices. >> let's take a quick look at other stories you may need to know about this morning. the u.s. is weighing a proportional response to the cyber attack on sony according to a white house spokesperson. sony has been forced to pull its movie, "the interview," from release christmas day. the u.s. is said to blame north korea. >> air france's putting off the purchase of new jets trying to contain costs. there were three profit revisions this year blaming poor

sales on long-haul flights, pilot strikes, and earnings that will be 200 million euros lower than planned. airwayswner of british says aer lingus has rejected a takeover offer. it would have consolidated aig's domination at london heathrow. >> china revising the size of the economy upward by more than 300 $8 million, 3.4% larger than million.-- $308 the central bank's efforts to stoke inflation is facing increasing challenges from the fall in oil prices. much to on "countdown," my colleagues enthusiasm, analyzing the bank of japan's policy, impact on the yen with eisuke sakakibara, mr. yen.

week when the ruble crisis has dominated the agenda. vladimir putin blaming the west for all of the problems. all things russia with our next guest joining us from idea global. >♪

>> back to our top story, vladimir putin reinjuring -- reassuring that it is only temporary and potential for more sanctions from the u.s. joining us now, michael galahad from idea global. would you be brave enough to say the ruble for now has found a flaw? it's been three days now. would you be brave enough to say that? through the christmas time, we will see a phase of relative stabilization. it will be volatile. is the rubler that pressure got accentuated this week really by the oil price decline. it is partially domestic factors, but the oil price global spiraled into

markets. rather than being the oil complex, and started to more deeply affect global markets. russia was a pressure point in that. i think we can see some stabilization with the interest rate hike and the measures for the financial system, which actually ease market to market providing relief into the new year. however the russia and oil story is not quite over yet. >> do you think we avoid capital controls? oilhings stabilized, if the price stabilizes around $60, if ruble-dollar stabilizes around 60, would we not need to see capital controls. >> in the russian case is quite moneyult because the could be expropriated. higher interest rates do not sort of, really, stop the flow toause it's driven by desire

preserve the wealth. what does sort of potentially preserve the flow is europe backtracking on sanctions and calming the situation. that's quite interesting in terms of what happened at the eu summit particularly francois hollande's charm offensive. >> what's different between now and 1998? a lot are reflecting back on the decline in the ruble and the prospect mentoring the world - 0-- mentioning the word "default." >> it is unlikely. is still at there very large war chest in terms of foreign exchange reserves. although they've actually used a portion of that, there is still a very large amount in some underpinning.

see that, it could calm the situation somewhat. ultimately, the crucial thing when he to watch for next year is whether opec and non-opec countries can have some kind of production cut. the old market was very split on that and it's why you have a lot of volatility leaving some feeling we are getting near the bottom and some feeling it's a $50 story. >> can europe withstand a russian economy slumping into a recession? various companies in the last 24 hours announcing measures, gm and audi among them, to suspend deals in russia. just the beginning of news from corporations about the knock on effect from what's happening in russia? terms of the russian effect, there will be, particularly in germany, but

given the scale in terms of german exports to russia versus globally, it's unlikely to be something that materially affects the german or the euro zone economy. 0.1 and 0.2having off of certain countries. it is two-fold in terms of europe. it is a story of some further worries about inflation, slow growth. the second half of the year, remember if you actually plug aboutt oil prices it adds 0.8 percent on two euros in gdp. the second half of 2015 could see a proper recovery. >> we keep hearing this hell falling oil prices is so good for oil consuming countries but it seems just a bit out of reach. perspective,ket the losses have been so concentrated into the number of

companies, countries and consequently, that's been something the market reacted to very quickly. the more dispersed impact will be seen. >> michael gallagher, thanks. . >> he will stay with us and we will ask you about the other big themes for 2015. ♪

>> welcome back to>> "countdown

." we're still joined by michael gallagher. income patient. you had your dictionary out trying to work out what this means? -- in comes patience. >> it was a three or four month gap before the actually hiked interest rates. i think it does actually quite clearly signal the fed saying they are getting closer. i think that is pretty much the way that we view it. yellen said no rate hike in the first few meetings but anything else is game, to be honest the bottom line remains they are looking at made 2015. dudley andt from fisher. it's been very clear that it's the game plan. really, you would have to see a deterioration in the real sector data or you would have to see wage inflation disappointing for the fed to push it out. >> michael, tell me this.

it's good for us all. you get more bang for your buck if the u.s. is strong. >> in the very long term , you can look at it that way. for 2015, there will be some financial and markets. the dollar is still relatively low on a big victor basis. for $1.15spects euro-dollar. and real in nominal terms, but we are likely to see u.s. yields higher through 2015. this is the year it's going to happen because you have the fed. and there wills

be spillover impact. >> how low can the? ? manus is gearing up to talk to mr. yen -- how low can the yen go? there was the surprise boj meeting. for the next5 year. without to see it in a wider context. the yen has adjusted a long way in the last couple years. we think the europeans are going to be leading the way more next year than dollar-yen. >> michael gallagher, head of research at idea global. >> a chat about all things japan. our next guest is still known as on the for his influence currency. talking about the bank of japan rate decisions and his outlook for the country's economy. stay tuned for that. as you just heard, the view is

dollar-yen could go a little lower. the market calls for 150. let's see what mr. yen has got to say. ♪

>> welcome back>>. you're watching "countdown." time projector the foreign exchange markets. retaining ¥80 trillion of an annual rise in the monetary base. the yen declines, dollar rising day three and the bloomberg monitor their. willingjapan stimulus to turn a blind eye to the speed of the drop. they are calling for 130. stay tuned.

the bloomberg poll is 125 by the end of next year. andit agricole: four 135 130 respectively. waiting for german confidence numbers in waiting to hear what the ecb does january 22, the same day the national bank will implement negative rates and tying those two dead together. your of the column --euro dollar declines. we are waiting for the german producer prices to come in at -0.2%. volatility and fx back to levels we have not seen since 2013. >> i'm anna edwards. francois hollande floating the idea easing russian sanctions. is the first western leader to suggest easing russian economic pain. oddscould put him at

and themany, england, united states. the central bank will continue to boost japan's monetary base on an annual pace of ¥80 trillion. bank of japan governor hiroda trying to reflate the economy with oilg issues prices. air france klm pushing back the purchase of new jets after the third profit revision. the airline is blaming poor sales on long-haul routes and the longest pilot strike in its history for lower revenues. >> the bank of japan has maintained stimulus in a bid to stoke inflation. boosting the monetary base at an annual base of ¥80 trillion. now with more

details. is today from the boj. -- yvonne joins us. >> no surprises at all. that is what all were expecting for the boj to hold states ready continuing to pump ¥80 trillion into the monetary base every year and that was the eight to one decision vote. showing some upbeat and the economic assessment showing there is some moderate recovery, a bit shocking for some given the third quarter gdp numbers did show the japanese economy and the recession was deeper than first thought. the boj says the consumption has remained resilient as a trend with employment improving steadily, japan exports also showing signs of picking up which is revising last month's language that may has been more or less flat. reduction has also started to bottom out.

is this fixed investment has been a moderate increasing trend as corporate profits have improved. for japanese stocks, it's also been quite the santa claus rally jumping a second day after u.s. equities post the biggest two day rally in three years. 119yen also now falling spots and it has dropped about 8 percent against the dollar since the day before the october easing. fall in oil did he prices play in that boj decision today? facing the challenges with the follow oil prices to stoke inflation there. japan basically getting out of this deflationary mindset after the fukushima disaster in 2011, pretty much japanese imports are oil now that they are more dependent on fossil fuels. that is a reason why we thought april salesd the

tax hike to just around 1% but he has said that cheaper oil is definitely better longer-term than it is weighing down consumer prices in the short term. >> yvonne, thanks. >> let's get a little bit more on what's to come from the third biggest economy. let's go to tokyo and we are .oined by eisuke sakakibara great to have you with us this morning, sir. we've just had the bank of japan meeting. many people are sort of saying the bank of japan are turning a blind eye to the speed of the drop of the yen. you are a guy who knows the yen. will the speed increase? welhere will we go in 2015 for dollar-yen? >> it will soon break 120.

it will head to one of the past peaks of 124.15. kuroda does not mind. toward 130. >> that's a very tepid call. i'm reading some levels at 150 and quite outlandish calls above that. is there a level that's dangerous for japan? a level at which the bank of japan would really be concerned that? if it goes above 130, they would probably be concerned about it. beyond 115, that is not that beneficial for the japanese economy. japanese governor corroded knows that very well.

he does, too further depreciate the currency. >> we are just getting, it's coming through saying the japanese cpi is likely to rebound 2%. the japan production will recover gradually and the virtuous cycle is working in the economy and the impact of the sales tax is waning. would you agree the end back to the sales tax is waning? is it a good move that a visitor lying this hike -- abe is delaying the hike? >> i think we will probably see some good news in october, december numbers. the numbers have not been that encouraging. i think corroded is expecting some good numbers this quarter -- kuroda is expecting good numbers. japan is now on the path to recovery.

the increase in consumption taxes dow tapering off. is now tapering off, let's talk about the debt pile. mark barton and i were talking about this. stage, mr. some sakakibara, that the japanese have to address their fiscal lack of discipline? know, given the outstanding amount of debt and , theynual sort of deficit have to cope with it within the matter of five to 10 years in the solution is really obvious -- increase the consumption tax. delay that until 2017. eventually within the matter of 115 and 120.ng to

kuroda sayingan's it benefits and costs. if we tie that into the energy discussion, they have lost nearly 30% since the bank of japan went with its next quantitative easing, does this force them into a position where they will have to compensate? this decline in energy prices is definitely a plus factor for the japanese economy and it will probably lead to some sort of throwing down of inflation. kuroda would probably take it into account when he talks about a target of the monetary policy. it may not be that easy to get %o the 2 sent target -- 2

target given the decline in energy prices. i think the governor knows that very well. >> i'm seeing figures of 10 trillion yen. would you agree with that? how long before they do get to that 2% target? what's the reality? getting to the target of 2% is not necessarily the target of bank of japan. it's really good for the japanese economy. prices isn energy fine for us. it's a definite plus for the japanese economy. if we cannot reach the target because of the decline in energy prices, that's all right. you are vice minister of finance 15 years ago. if you had a seat at the cabinet table now, what would you tell

issueat the first three should be for abe-nomics? >> trust kuroda. regard to fiscal policy, you have to consider the the consumption tax. talkor reforms, people about structural reforms a lot, but i don't know what kind of specific measures are at hand this moment. asabenomics has been written a transformational moment by goldman sachs. what should be the top of his agenda? >> i did not quite get you. writtenpapers have been that the farming needs to be

overcome, something that tops the priority for abe. what would that be? women, farmers, taxes? well, fiscal consolidation is a target of the abe government. nomics so far has been working very well. lasts reflected in the election so he's quite happy with the state of the economy at this moment. he's quite happy with this popularity as well. >> eisuke sakakibara, get ready for the cold. with us this you morning, sir. thank you. >> follow us on twitter. lots of great stuff. i'm just been tweeting like a tiger about that interview.

fascinating when he said about the levels of the yen, manus. the key level is 124.15. if we break that, we could head to 130. >> that's the danger level for abe. >> the boj knows that very well. comment onot structural reform on what abe should do, suggesting he is doing enough with monetary policy for now. he would not say which specific measures were needed. >> still to come, you might have a few of these in your attic. vinyl records and sales of vinyl albums selling pass the one million mark for the first time in two decades. what's been driving the survival? next. ♪

>> welcome back to "countdown." 2014 has been the year that vinyl records made a comeback apparently soaring past one million and the u.k. for the first time in nearly two decades. here with more as a man who runs the organization tracking the sale ball kind of music in the u.k., chief executive of the

official charts company, martin talbot. why is vinyl making a comeback? >> i think it's a number of things. it is appealing to different groups of people who maybe had collections in the past but fished them out of the attic and bought a new turntable, but another generation as well growing up. most of the music being sold is digital. they cannot see it, cannot hold it. as a contrast of that, they want to own vinyl. >> who's buying what? buthey are buying new bands withhey have millions streaming and download services which enables them to plunder the archives whether it is led zeppelin, bowie, however. all of those records are being reissued.

>> there's is an article i read in the guardian on who's who and what's what in terms of the renaissance and revival. arctic monkeys, bowie. i'm not that old and these are bands that i would have grown up with. it is that 1980's genre. >> it is a bit of that, but we're seeing a lot of new bands gaining credibility and really appealing to fans who want to own something. they are releasing their albums as well. you mention arctic monkeys. royal blood, black keys, no gallagher.-- noel >> article left will now -- are they collectible? >> absolutely. the quality of vinyl compared to 10 or 15 years ago, it is almost sold by the ounce.

you, 16 ounce or 18 ounce vinyl, because that gives you extra quality. >> that's interesting. the younger generation are quite happy to mix the modes of consumption here. they do a lot of digital downloading and buy things they want to keep it nice artwork. >> absolutely. we have anecdotal reports that come back as well that you find people going into record shops with their phone in one hand listening to music almost using it as a listening post. ok, now i will go by that. -- i will go buy that. turned out, we thought it was magic that you could hold 10,000 tracks. >> it was revolutionary. >> the new generation is used to it and it's just part of the furniture.

you can put a needle on a piece of plastic and music comes out. my 15-year-old who uses my subscription streaming service has asked for vinyl records for christmas even though she can listen to them because she wants to hold them, put them on the turntable. >> so more people are buying the turntables then. >> is one reason why it's kind of growing and growing. you see more people by turntables and eight need more vinyl. >> can you give us a breakdown of the sales margin? one million lps versus cds, downloads, streaming? >> this is now, at this point in time this business is worth 22 million pounds in the u.k. only about five years ago it was worth 3 million. >> 2% total sales? >> 1.2 million albums have been

bought in the u.k. so it's growing week on week. 50,000 units are being sold every week now, big numbers compared to where they were five years ago but a small percentage . cd's, 90 million. they are accredited with being quite a big deal and forcing this back in front of t he younger. >> there are other events in the independent labels market where they all get together a few times per year selling predominantly vinyl. that has people back into vinyl again. it is cyclical. labels are putting out more vinyl which means there's more to sell meaning there's more demand, more people interested. >> martin, where are we with the american market we in gauging? re-engaging?

>> they have seen the specialist shops die out. there's very few in the united states. we at least still have 400 or 500 record shops and even in fashion shops they are selling. >> very quickly, the first single album they ever bought? go. >> the goons. >> elo's hold on tight. 1981. >> madonna the first album, but living on a box. >> manus, sing it out? >> no, manus will not sing. thompson sings. >> hold me now? you, martin, martin talbot managing director of the official shop company taking us down -- official charts company taking us down memory lane. >> raucous drinkers and streakers, why some priests are

holding christmas midnight mass is at 5:00 p.m. that's up next in the papers. ♪

>> welcome back. bloomberg's francine lacqua has been catching up with some of europe's corporate movers and shakers. in crowded restaurants talking

about the toughest challenges of 2014 and by next year is shaping up to be a good one. >> i'm always amazed by the strength of the u.s. economy. it's incredibly strong,, creative, innovative. they really focus on getting growth. it's something the eurozone is .nly starting to understand they're focusing on funding and economics. >> i don't want to say you're wrong -- >> go ahead. you can. [laughter] >> the question is maybe there have been -- they have been lehman going

bankrupt. to believe now, in hindsight, a good move or the wrong move? >> you can see the full program "leaders lunch" with france in the clock at 5:00 p.m. u.k. time. we are going to take a short break. ♪ . .

breaks ranks on russian sanctions. he becomes the first major european union leader to suggest easing moscow's economic pain. >> the impact of sanctions on russia's currency crisis. with gaz an asset swap prom collapse it and we have an exclusive interview with audi. >> a busy 24 hours in the airline industry. another warning from france klm as it postpones buying new jets while it rebuffs an offer from iag. >> asian stocks extend the gains

in the u.s. and europe. the bank of japan sticks to its record stimulus program. >> welcome to "countdown." i am mark barton. >> i am anna edwards. >> and i am manus cranny. if you are a samsung shareholder, you are set to benefit. they will raise their full-year dividend by some 30%-50%. the board will discuss this in january. paid 14,300amsung in terms of dividends and that is set to increase. keep an eye on that. could be a good year for samsung shareholders. >> russian president vladimir putin reassured his nation economic relief will come in two years. one western leader could be

helping his case. >> while angela merkel and david cameron insist russia complies with the west's demands on ukraine, francois hollande broke ranks from his eu counterparts. in economicase sanctions is possible. gesturesider that the russia is making is what we are waiting for. there is no reason to enact any new sanctions. on the contrary, they will allow us to start the escalating the situation. >> across the atlantic, barack obama has signed legislation that gives him the power to impose more sanctions. the u.s. president said he would only act in line with european allies. joining us for more is our russian expert, ryan chilcote. this is an interesting one. you have hollande, but there are other voices of concern as well.

>> we have seen this from other eastern european countries. this is the first major eu power to say it publicly. the u.s. was supposed to talk about de-escalation in march. even if hollande got his way, these are in place until july. in july, all 28 countries have to agree to extend them if they are to be extended. you can understand the french, from an economic perspective. they have had to forgo a $1.5 billion deal of warships to russia, helicopter carriers. austria has also expressed concern. one of their biggest bank yesterday was down more than 6%. turmoil ever since the sections really kicked in and the currency collapse went into hyperspeed. the germans have also been suffering. you look at basf yesterday. world's largest chemical

maker had to cancel an asset swap that it had arranged with gazprom. the german chancellor says they still have to stay the course. the reasons why the sections on the reason why the sanctions are there, the problems persist. >> different, the relationship between europe and russia. how is the turmoil as it unfolds so close to european borders? >> the agenda at the european union went from discussing sanctions a week ago to russian financial turmoil. it is definitely feeding into discussions. denmark said the intention was never to collapse the russian economy. they began in march and were accelerated in july and have continued ever since then. he said their goal was to punish the decision-makers in russia to influence the russian president's decisions in ukraine.

there is a lot of concern that it could go too far. i do not think any of them anticipated this sort of perfect storm of falling oil prices, dollar strength, capital flight from russia. and the sanctions that they have now. >> thanks a lot. we will come back to you in a second. has issued itslm third profit revision this year. it is said to be 1.6 billion euros. here to discuss the story is caroline. three strikes, quite literally. >> it is a pretty bad patrick. -- hat trick. if you look at the numbers, it is about a billion less than the first thought at the beginning of 2014. phenomenal downsizing in their earnings capacity. the biggest airline in the whole of europe is having to push back

some of their orders of the new jets. the boeing 777's, 10 of them they have ordered, probably have to push it back by a year or so because they have to cut back on cost. this,ason behind all of which is in stark contrast to the rest of the industry, which is actually growing according to ,he air transport association why is air france-klm doing so badly? poor sales on their long-haul flights. that youtrike pun used, they had a strike, the worst in air france's history. they keep have to upsizing the amount that it will cost them. a positive pension numbers in that we will play for 2014. that will be pushed back.

that positive effect does not come into play. naturally, the fuel price decline is limited in terms of air france. it is not looking so strong. all of this comes at a time when other airlines are looking to do a little bit of a deal here and there. >> you have got a hold up iag. it is quite a pinup. they managed to turn around the company very well indeed. now will probably get the backing of shareholders to go out and buy some more. >> earlier this week, they put in a cheeky offer for an irish player. of course, they are 30% held by ryan. -- by ryanair. but they have are above the offer by iag. later.jected it two days will they come back for more? the share price rocketed and

close 9% higher. >> thank you very much. let's take a quick look at some of the other story that you need to know for the day ahead. two more years. that is the reprieve for some of wall street's institutions delivered by the federal reserve. that would allow them to hold onto the billions of dollars in private equity as hedge funds. selling to quickly might force them to accept discount prices. a the u.s. is weighing "proportional response" to the cyberattacks on sony. sony has been forced to pull its movie, "the interview," from its release on christmas day. the u.s. is said to blame north korea on the attack. and the economy is 3.4% larger than previously reported

in china. >> the bank of japan has maintained its stimulus program. the central bank's efforts are facing increasing challenges from the falling oil prices. >> let's get back to our top story. we are joined by the director of sovereign risk. i read your notes this morning. thank you for those. one of the questions you posed was, what are the real financial risks to russia? that is the first question. >> even if we take out -- let's assume the ruble stabilizes and oil prices stabilize. the thing that will stick, financially-speaking, is the sanctions on the ability of russian corporate banks to roll over their medium to long-term debts in the markets.

that is part of what the sanctions are. the other alternative is to refinance domestic markets. that means huge, ongoing downward pressure on the foreign exchange reserves. that is a real risk to russia. >> help me with this. britain made clear that that was not the avenue that russia was going to travel in terms of using their fx reserves. in the nordics, in the 1980's, they took rates to 17%. >> that is monetary policy in terms of how you try to defend your currency. the sovereign has two options, but they cannot use both at the same time. they can use foreign exchange reserves to influence their currency or interest rates, but not both. no central bank can use both.

up on foreign exchange reserves. they already spend billions for the initial fall in the currency and then they went into a force free float. ok, give it to the markets. that becomes a two way that -- two-way bet. it worked for a while, but then they used interest rates. in 1998, over 100%. it did not work because the whole credibility of the package did not work. foreign-exchange reserves were much lower than than they are now. europe i doou think in response to the turmoil it is seeing in russia right now? with ryan, the conversation from a russia perspective switched from only about sanctions to how much economic pain this trading partner is experiencing. do you think europe might

backtrack slightly? >> if you ask a foreign policy diplomat what the theory is behind sanctions, it is part of carrot and stick -- a and stick, to try to change behavior in your post. side is also the character and that is part of the gambit. we are hearing that it is very important for the west to give putin an exit. is talking about conversations with russia about being a reward for helping to resolve this in the ukraine. >> that is going to happen in march. the eu will decide whether to renew it sanctions. we will hear dissenting voices. the last time that they were

on the downing of the malaysian airliner, that galvanized a lot of people sitting on the fence. >> in terms of the ukraine -- it has not really worked. >> we said that about iran. iran is now talking about its nuclear policy. >> what is the endgame here? let's just cut out all the middle stuff. where are we headed? >> when we talk about the european position, she is holding the fort remarkably well, i think, considering the dissenting voices in germany and the rest of europe, including hollande. clear that it is all about not using force to move borders. that is the history as far as most european countries are

concerned. putin is changing that. that is hugely concerning. for putin, we have a power that does not recognize its own decline. five stages. the first is denial and finally there is acceptance. russia is still in the denial stage. u.k. is more or less at the acceptance stage. the irish and scott probably agree that we are not quite at that stage yet. let's how do we get to the final stage? what we do not, a lot of putin is up to says a lot about internally rather than externally. -- frozen compact idea >> we have got to wrap it up. i wish we had more time. thank you so much. >> we are getting some breaking news coming through from the regulator of communications and

media here in the u.k. they have been running a consultation on pay tv regulation and say there will be a review to show if the regulation -- the regulations on sky channel may limit sports content distribution. bt might also have incentives to limit sports content. they will be reviewing whether these businesses are to be allowed to limit the distribution of their sports coverage. there will be further outlines in phase two of the review in 2015. this is a very fast-moving industry as we wait to hear from bt about its aberrations -- its ambitions. >> we had that conversation with top top. so it is all moving. >> coming up, an exclusive interview with audi on why the carmaker is pulling out of the russian car might -- car market. ♪

>> welcome back to "countdown." oil's most recent freefall is causing some carmakers to hit the brakes. audi is on the list of companies pulling out of the russian market. we are live from moscow by the company's head of sales division. thank you for coming to talk to us. you said that you will restart in russia as soon as you have

list.p with a new price is this just stopping selling cars for a week or indefinitely? company does not stop sales in russia. considering the position of the global, the company decided to deeply analyze the development on the ruble currency and see if there can be an adaptation of prices at the moment. so they are going to deliver the customer orders and the russian market has been the top-selling market -- one of the top-selling markets for audi in the world.

there is no discussion of stopping business in the country, no way. >> so customers in russia are still able to purchase a car today? >> yes. sure. >> so what is it that has changed since last week in the way that you are operating in russia? now, we are contributing new prices. maybe it is the only change. the whole model range is available for customers in russia. we are welcoming every customer who was like to purchase and audi car in the dealerships. correct you do manufacture in russia as well as selling in russia. how much does that mean that the change in the dollar-ruble exchange rate does not matter to you? >> actually, the production is going on. for sure, we have to consider

the current economical circumstances and environment. but they are going on with the business in the country. said theypany has have a long-term interest in the russian market. how big a market for audi can it be? what have you been assuming you cannot sell in russia? developing quite a table. if you take the 11 months of this year, we have delivered to the customers more than 31,000 cars. is around 7% below last years performance. at the same time, the overall grown compared to the same period last year. so the company looks stable. we are going to introduce new which will have great demand among the russian

come -- customers. work with certainty into the coming years. world the media misunderstood what you are doing in russia? we reported here and elsewhere that various car companies have stopped selling in russia. you are saying you have not stopped selling, you are just reviewing your prices. how can you be sure that you will sell again? >> i am responsible for sales in the country. we do not stop delivery of the customer orders. they are going to deliver all the cars to the country as soon -- as soon as we understand what prices we can deliver the cars in the country. i really hope it will be quite soon, maybe several weeks. >> can you give us any idea of how much pain the fall in the ruble has inflicted on your business?

>> first of all, for us, it is important to meet the demand for our customers in the full-scale. probably because of this increase for volatility in the market. stable.quite they are going to introduce and launch new cars. we get new orders from the customers. actually, i think we are quite happy with what we deliver to the russian customers in terms of the model range and the image and the position of the brand in the market. >> thank you very much for joining us. the head of the sales division at audi in russia.

>> let's get more on those carmakers halting sales in russia. hans nichols joins us from berlin. good morning. has not stopped selling cars. it is reviewing prices. what else is happening? who else is leaving? >> good morning. from what i think i understood from the audi interview is that they are changing their pricing but they have not quite settled on what that price will be for now, the next couple of days. works ifsure how that you bought and audi earlier in the month and it has not been delivered to you. i do not know if that means you will get an entirely new price, but it does get at this question -- what the ruble has done to automakers. it is so complicated. companies like general motors, jaguar-land rover, said they will suspend selling. without giving any indication of when they will come back.

you do see why the auto companies and audi want to stay in russia. it is such a big market. second in europe. 2.2 million autos have been sold this year to date. see somesaid, you do big declines on the sales. take a look at what volkswagen has done beautiful swag and is down 14%. bmw down 24%. audi down 23%. these are last month's figures. autos one of the few companies to denominate the ruble exposure. if it dropped by 50% in the fourth quarter, they could see sales declined by 150 million euros. system.very complicated we will see whether or not audi can get the pricing right. >> it is not just about the carmakers today because the german chemical maker basf says a plan to swap natural gas with gazprom has fallen through.

how much of a surprise is this? what is the hit going to be for basf? >> the surprise is big. i will get to that in a second. the hit for basf will be 300 million euros. then they will have to do a back charge. remember, this is an asset swap. listen to what the seat -- the ceo said in july, insisting that the deal would go through. >> everything is in place. some legal preparations we have to do internally still have to be undertaken. >> that oil and gas storage field here in western europe, annual sales of 12 billion euros. profit, 500 million euros. so this is a big deal. >> thanks a lot. hans nichols in berlin.

>> coming up, gold is headed for its first two-year decline since 2000. we will be joined by the executive director of gold core. ♪ ♪

make the best entertainment part of your holidays. catch all the hottest handpicked titles on the winter watchlist, only with xfinity from comcast. >> you are watching "countdown." time for your foreign exchange check. it is 7:30 in london this ride a morning. let's see how we are doing. the yen fell for the third day in a row. the bank of japan opting to keep their stimulus intact. , we spoke toapan sees4.15 is where he

dollar-yen going in the near term. 130 is where the bank of japan becomes concerned. that is where westpac says the bank of japan will turn a blind which the speed at dollar-yen is moving. let's have a look at the euro-dollar. we are seeing euro-dollar give up its gains this week. you have a couple of different things in play here. on january 22, quantitative easing. that is the train of expectation. treasury yields in the united states of america hitting a 16-month high. you are seeing a big drop year on year in the producer prices in germany. flat or better than estimated inflation numbers in germany. epic volatility, the highest level since september of 2013. >> these are the bloomberg top headlines. french president françois

hollande has floated the idea of using sanctions on russia. he is the first major european leader to suggest using -- easing moscow's pain. his views put him at odds with most eastern european countries as well as the u.s. the central bank will continue to boost japan's monetary base at an annual pace. the boj governor faces a challenge from falling oil prices as he tries to reflate the economy. has pushednce klm back delivery of some aircraft following its third profit warning this year. they said their earnings would be 200 million euros less than previously planned. the airline is blaming poor sales on the longest pilot strike in its history. >> gold is headed for its first two-year decline since 2000. let's bring in our next guest to chat about the outlook.

very good to see you. august 18, 2011. you were somewhere in ireland and you said gold may be poised to go parabolic. $1,823., gold closed at why didn't it go parabolic? what went wrong with that call? >> i do not know if the call went wrong. i did not say it go parabolic -- >> it may be poised to go parabolic. >> i do not think we saw the final phase. i also warned that we were likely to have a sharp correction. we have now fallen 40%. short-term, i would be

nervous. i think momentum is a very paltrow -- a very powerful thing. q4 of thisk at q2 and year, there was a lot of gold weakness. the long-term trend is intact. monetary policies are set to continue near 0% interest rates. it isnterest rates rise, towards the end of an interest rate tightening cycle that will be vulnerable. >> what about asset inflation? >> there is a correlation. havingation takes off, an allocation of gold is a good thing to have. >> it does not seem like inflation is taking off, does it? some would say we are not going to see that return to the bull market because we have not gotten the inflation. ini said the same thing

2005-2006. the low inflation from 2001-2011. it is not solely a hedge against inflation. it is also a hedge against deflation. could fall another what, 40%? give me the lows and the highs? ,130 is the low, where there is support. a lot of people are looking at $1000 as the potential retracement. long-term, i think we could easily do 20% given the geopolitical risk. done even% is easily the scale of the fall we have seen. longer-term, the inflation --

>> this is the one i want. >> that is the key. long-term, i to we saw in 1980 will be reached again. there has been significant inflation over the last 35 years. china, i emergence of think the emergence of china into the global gold market is a paradigm shift. the chinese people have been buying gold from 1945-2003. it is increasing from a near zero base. there will be absent flows in china -- ebbs and flows in china. i think that is very important.

>> are you more excited about china and india? -- than india? >> asian people, it is part of their culture, dna, psyche. they actually buy gold for religious reasons. we are celebrating christmas next week. because they see it as good luck and a store of value. saiderything you have just , a moderate retracement, 14% on the downside. out and buyto go gold options. the options to buy gold must be incredibly cheap. is that the most efficient way to trade? >> if you are trading it, possibly big we are not really on the trading side. about havingmore

allocations of gold within a diversified portfolio. that is a key thing that people tend to lose sight of. the value -- i sell gold, so i say that. there is a huge amount of independent research. the asset allocation experts always say 5%-10% of your portfolio in gold. decline, it could sell part of its 1169 metric tons. >> i think that is chatter. they are more likely to dip into the dollars. they did that in a small way. sell themore likely to dollar reserves and the gold reserves. >> takes a lot. putting me in my place. see you soon, three years. it has been a long time. >> you can join in the conversation on twitter.

you will find all three of us there. mr. yen, thatew, audisive without a -- with . >> they are not pulling out of russia. says janet guest yellen made wall street purr like a cheshire cat this week. time. is marks charts,

.> time for today's bar chart where will this slump in commodities and? if you look at open interest, it is often used to confirm trends. open interest in raw materials futures and options contracts are down 6.5% in june. -- since june. let's get to the chart. index bloomberg commodity going back to the beginning of 2014? it is an index of 22 commodities. since peaking on april 29, it

has sunk by 22%. that is a bear market in its own right. during that decline, 19 out of 22 commodities on the index have fallen. note prize to see brent crude and crude oil as the -- no surprise to see brent crude and crude oil as the worst performers. interest outside of energy, agriculture commodities have been hit hardest. soybeans, wheat. base metals, though, have held up relatively well. both zinc and aluminum registering 2% gains. live cattle is the top performer with a return of 11% since that high for the year. the reason why the whole commodities space is under , according one word

to society generale, oil. oil is used to produce and deliver almost all of these commodities. cheap oil reduces the likelihood of falling commodity prices, so says socgen. china is the largest consumer of grains, energy. its expansion the weakest since 1990. not all commodities will continue to drop. some industrial metals will rally in 2015, so says socgen and j.p. morgan chase. nickel will have the biggest upside, says goldman sachs, who industriales in metals will make up for the losses in agriculture and gold, helping to make commodities a boring return of 2.5% in 2015. by the way, a return of 2.5% for the year is something it it would be a big reversal of

irtune because this -- started with it so i will finish with it -- the bloomberg index is down 14% for the year, the biggest annual drop since 2008. on tuesday, it touched its lowest in five years and it is on track for its fourth annual decline, the longest losing run ever. that is it. i can breathe. >> i am learning a lot. as the year draws to a close, francine lacqua has been catching up with some of europe's corporate movers and shakers. they talked about their toughest challenges of 2014 ny next year is shaping up to be a good one. >> i am always amazed by the strength of quality, creative, innovative -- they really focus

on getting growth. and really something the eurozone is starting to understand. important.ry -- too not want to say play your role, but i have a question. next go for it. you can play my role. you can ask me a question. is, maybe weon letting -- dot in you believe it is a good move or the wrong move? >> fascinating conversation. you can hear that in full this evening. it aired this evening on bloomberg at 5:00 p.m. u.k. time . >> less than 20 minutes to go

before the start of trading. we are joined with -- by david buick. great to have you with us. you are too kind to us before christmas. the biggest rise in almost three years yesterday. at hiseemed combative speech. the european leaders are changing their minds. what do you take from it? >> i am just utterly amazed. that little grandmother from brooklyn, who i toured, janet yellen, steps on her feet two days ago and says, you have to have patience. and we are off. we have seen a rally the likes of which we have not seen since march of 2009. 1996, the russian rally after the demise of them, and you go back to 9/11. exacerbated by very low volumes.

it does not take a lot to change sentiment as we go forward. the plans of uncertainty gather from january. what troubles investors now is going into 2015 is that the united kingdom looks ungoverned. people do not like uncertainty. they do not do uncertainty. bear causing us an enormous amount of trouble, the european union will get trashed as a result of these sanctions. germany is going to suffer badly. you just like to think there might be a cheaper light at the end of the tunnel to stop this nonsense. .e want the engine president obama, step out of the white house. others tomerkel and

try to deal with the men. -- the man. people said that before the last election, fearing coalition and what would that mean? coalition has happened already. what is the big fear? combination?e is it labor and the scottish nationalists? you tell me. no one can forecast it. the sentiment is that people just do not like uncertainty. there is likely to be no growth in the early part of 2015. we will be affected. >> i look at the trading year of 2015. is it footsie, sterling -- ftse, sterling risk?

>> that is such a big whack of the ftse -- will benk the ftse basically because the earnings do not come up to snuff and it european union does not deliver in the manner that it should do. whether it will carry on in that way remains to be seen. janet yellen has a little bit of doubt in her mind. otherwise, she would have said she is ready to put rates up. -- someow, "countdown" have come on "countdown" and said maybe they will not raise rates. >> i think hell has a better chance of freezing over them rates going up in the u.k. in three years. >> what about the states? >> possibly in the third quarter, but do not hold your breath. >> is that the biggest long-term risk?

>> the trouble is that when you have virtually no inflation at all, you are heading towards deflation. if you start jacking interest destroy theu will declining margins of profitability for people and that is the biggest thing. mark, that was wonderful. not a single repetition. but you stated that is what would happen with these commodity prices. without that, you start jacking rates up and people have even less disposable income. >> david buik is going to stay with us. -- re going to talk >> you are looking at the live shot of the city of london. what did we find out? >> st. peter's something -- >> if you go up floodgate hill

and turn right -- beautiful shot. >> we will take a short break. ♪

>> welcome back. we are still with david. you were suggesting there might be a little rally -- >> we have had a little rally, nearly 4% in two days. that is pretty grown-up by my

standards. we may see the odd fund manager dump his money into track funds. >> janet spoke and up we go. biggest worry of 2015. what is it? >> vladimir putin. the problem with russia is it is all very well in saying he has behaved that the in the ukraine and we are going to impose sanctions. the ruble falls out of bed and thes 53% below against dollar. he stands with his feet and says nothing except we have spent $2 billion supporting the ruble. that is set to rise for him. he has $319 billion worth of dollar assets.

the ruble into the banks, that is not good enough to -- not good enough. >> you are always welcome. that is it for us. "on the move" is up next. have a great holiday season. ♪

>> welcome to "on the move." moments away from the start of european trading. what a week. happy friday. as weins on wall street head into the end of the week. the s&p 500 caps its best two day gain. european equity is coming off their biggest gain in three years. leaders meet in brussels and the french president is scaling back sanctions on russia as the ruble collapse threatens to cripple the russian economy. a downgrade.ts the company says profit will be

200 million euros less than planned. three things we are watching. i'm looking at future markets -- higher. daxhe euro stoxx 50, futures up 100 points. points. 100 up by 100 a very excited manus cranny. the last two minutes before he runs away for christmas. >> stocks perform the best in three years yesterday. that was after six days that saw the markets come lower. equity markets are opening higher. anemic we're told were yesterday. the market had rallied over 2%. were you part of this rally? wpp driving the ftse higher.