>> shots fired in the paris suburb. two are dead after a paris raid. it says russia moves to cooperate with friends in syria. fed minutes do tonight. the dollar rises and gold slumps as bets rise on a rate hike. china's risk. china's whole price recovery xi saysnd president the country still faces downward pressure. welcome to "the pulse," live from london. i'm francine lacqua.

let's get straight our top story of the day, to paris. we know that at least two people are dead as french police have raided an apartment in the anurb of saint-denis, in operation linked to last week's terrorist attacks -- five have been arrested. first, keep us up to date with what is going on -- the manhunt is ongoing for accomplices. ongoing.the manhunt is we have got the operation was over but we are told that one person is still hold up. we are outside a police cordon. said, five people were taken into custody, two killed, one a woman who blew herself up.

andalked to residents, they'll reported the civic spirits -- they will up to the sound of an explosionand were told to stay inside. behind me, what should be a busy pedestrian zone, all shuttered. schools are closed. one resident said they saw things as early as last night though we don't have that confirmed. one butcher who was already up at 3:00 heard the explosion and at a left -- he went inside and turn on the television. this is: brendan, weongoing investigation, and are still sent on details -- what do we know about the man accused of masterminding the attacks? we understand that the raid was in connection to him. brendan: fran, let's stop

calling him a mastermind because that is what he wants. we do believe -- we are told that he is the target. he is believed to be responsible for planning the attacks on friday evening. he is a 28-year-old belgian. back and forth from syria but it was not known you was in france until this morning when authorities confirmed he was the target of the raid. what we don't know is whether he has been killed or whether he is the person hold up in the apartment. francine: that is what we are hoping to find out. brendan, thank you so much. brendan greeley on the ground in paris. let's look at the geopolitics of all this as we mourn the tragic loss of life. russia and france, long opposed in their approach to the war in syria, have a united military front. this is in response to the attacks in paris, and the downed

plane in egypt. barack obama said that russia may be a more constructive partner in the middle east. >> if we get a better understanding with russia about the process for bringing an end to the syrian civil war, that obviously opens up more opportunities for coordination with respect to isil. the two things can be completely separated, -- can't be can really separated, but we won't look if russia devotes more attention to targets that are isil targets, and if it does so, that is something we welcome. francine: let's bring in andrew barden, a managing editor for international government. we have had diverging views on syria for five years. what is new this time? do we really believe in the west and russia rapprochement? >> well, as you pointed out,

there are two things that are new -- one is the attacks in paris and the other the bombing in sinai. you could add ankara and beirut. as the islamic state has gone from an organization building a caliphate and now attacking the enemy, it is basically managing to do in one month what five years of diplomacy were unable to do, which is bring russia and the u.s. closer together, or at least stop the draft. you can say from evidence that we have had ets tracking rush a surging over the past couple days. i think there is a recognition that may be the two sides are finally coming closer together on this. it is clear that the view is coming for the top as well. francine: the question is, is putin's peace offering style or is it substance?

mean, may be a bit of both. in terms of on the ground, the u.s. has carried out 8000 strike since the beginning of the operation. putin this week has doubled his operational capacity. the islamic state is getting pounded. if you are asking if this is in substance as well, we are probably not going to see flags, russian flags just yet, but if we do see some sort of intelligence sharing between the two that are carrying out these strikes, that might have some meaningful impact on the ground. francine: and her, thank you so much -- andrew, thank you so much. for more on this and what is going on in the markets, we are joined by the chief investment officer at pierce, who manages 83 billion pounds. great to have you on the

program. thank you for coming in. the three-man stores today -- china, at the attacks, and i'm not sure how you model that or look at it from a macroeconomic the -- and the fed. how is the fed looking at confidence in the markets to decide december? ina lot of us expected september, saying there was an average chance of a rate rise. all the conditions were there that you would naturally expect in the market was preparing itself. there was a lot of volatility in august that made them wait . now we are reasonably confident that it will be in december, and broadly speaking, it balanced a world economy. , andis evident in the u.s. that is evident in terms of formation into new jobs. all that is in a positive trend.

the geopolitical piece -- it is always difficult to model that. there are obvious knock on effects -- we saw egypt with travel related stocks and luxury goods -- it is a short-term response. see a continued series of these events, that may change consumer assets in developed markets, but more often than not, what you saw in london last night tells you something about how it galvanizes people, saying that we must respond. was close to an ira bomb in the 1990's, we carried on. you don't let the terrorists win. francine: are you surprised by the fact that there was nervousness in the market for a couple hours and nothing more? >> well, that's it, isn't it? we saw it down for half an hour,

that we look at the fundamentals of the world economy is broadly speaking, a tax cut to developed market consumers, leading to loss of economy. what has caught people by surprise -- those who thought we would see more evidence of inflation. we have to remind ourselves that because he has such a sharp cut in rates into this crisis, we didn't have this natural cleansing that you get in a credit crunch. as you come out the other side, consumers and the weikel models of deleveraging themselves. you don't get that snap back to you would classically expect. francine: thank you so much. he stays with us for half an hour. in the meantime, here's a look at what else is on our radar. public and presidential candidate jeb bush split with

his rivals over his approach to syrian refugees. sticking to bloomberg, bush said the answer to the crisis is not to ban people from coming. >> when you have a system in place, if there is any kind of concern you shouldn't allow people in, but i don't think we should eliminate our support for refugees. it has been a tradition in our country. >> you don't want to ban muslim refugees? >> i don't. the answer is not to ban people from coming. the answer is to lead to resolve the problem in syria. that is the ultimate answer. francine: those comments put bush completely at odds with his rival donald trump, who said he would send them all back. a supply glut in china. prices rose and 27 cities. the data highlights the challenge that beijing is facing in its efforts to revive the market with interest rate cuts

and easier mortgage restrictions. the price of gold toppled to the lowest level in more than five years. it showed pick up in u.s. cpi, after the fed will raise rates. it also fell for the 15th straight day as it went for a record streak of losses. coming up, glencore under pressure again. this ceo faces another slump in commodity prices as he races to cut debt. so what are his options? we have the details next. ♪

i think within three to six months we will experienced bottoming. we will chug along. francine: that was renee hauger ud, saying she sees a bottom for the market. one company impacted by the commodities crunches glencore. but we also have to keep you up-to-date with new developments in paris, and that is what we have. brendan greeley is on the ground -- we now understand that five policemen have been wounded in saint-denis. this is the suburb of paris where we have a manhunt and an ongoing raid on an apartment, where we understand some of the accomplices are there. two people have died. three have been arrested. we don't know yet if the mastermind of the terror attacks

on friday has been caught or not. we understand that the raid was linked to him and we have that breaking news that we will keep on top of. five french policemen have been wounded in saint-denis. fact a commodities. foralked about glencore -- a while it looked like glencore had turned the tide, but shares have fallen for nine straight days before rising today. that was the longest streak on record and jeopardized the ceo's that cutting plan. is a senior independent nonexecutive director. metals and mining reporter joins us, also pierce. jesse, you are one of the very glassenbergan class an speaks to. the share has fallen some 30% -- what does this mean for his future? jesse: well, i think he has been

there since 2002. he is very much a steward of the company through the takeover. even though the share price has plummeted since they missed it four years ago, largely that is beyond his control. most people you speak to don't see his position as under any threat. he owns a significant factor. while his debt reduction plan is under pressure, that they pay the price for leveraging up when they acquired xstrata, it has been a tough couple months for them. 34% in the last 10 days. francine: you're talking about external factors. how much is that linked with the debt reducing plan, and how much is it linked with outside factors -- i' thinking of chinam. jessed: definitely. it is all about china. they announced a plan to reduce the debt by next year.

you could make a case that the renewed it down and prices heightens the pressure on glencore to and asked the asset plan quicker than they would have liked. francine: how much do you look at glencore? is there a buying opportunity, when it falls 30%? or do they still need to prove they want to do? still in awe are structural situation where there is excess supply versus demand. we have been through a classic commodities expansion in the decade, driven by chinese demand. we are in this hangover. hangover period. as we see some of the weaker business model start to fail, that is when you start to think, ok, let's look at a better business models that might provide you an opportunity. london may be your first sign that we are getting there. 94% discount is a real

capitulation. is at the right moment to go to glencore? from market perspective there is still in that more painted,. -- there is still a bit more pain to calm. ome. that $10 billion -- that is easy to say that often quite difficult to achieve. francine: so jesse, what do we know about the debt reduction program? jesse: we know that they have already outlined on that plan, announced september 7. they extract their dividends, sold $2.5 billion of new shares. they sold an asset streaming deal for $900 million, cut spending, reduced capital. a couple of key points still outstanding -- they have a minority stake in the agriculture business. that business has been valued by some as much as $10 billion. that could significantly help them reach their target.

francine: are you an easy with the fact that commodities are at the lowest in eight years? we don't have great new set of china, but equities arising, and we still think the fed will hike. -pronged like it's a two world, where they were you matching a lot more. asyou talk about commodities one block but you have to remind yourself that there are four. that supply demand is a structural issue, huge supply relative to demand, becoming more efficient in terms of oil and oil-based derivatives. the hard metal commodities we have been talking about is driven by china and emerging market expansion. stimulusid removes the -- as the fed removes the stimulus -- we haven't seen a rise in agriculture commodities,

what you would expect as we see demand improve in developing economies. generally speaking, i think people are feeling -- ok, it is a slow recovery, it is more of recovery, but that doesn't mean they need the insurance goal provides. francine: thank you very much. we are also just getting some breaking news out of russia. mr. lavarov, the foreign minister, is talking about i.s. the common fight that he has with the west. he is calling to fight the it isc state, saying that a common thread in that he is extending a hand to lebanon, to strengthen police and military. we will have plenty more on that. at the same time, an ongoing manhunt in paris at saint-denis, where three people have been

arrested and two dead. more on that throughout the day -- more on that throughout the day. ♪

francine: here is your day ahead -- a big day for banks in the u.s. we will get a reading on mortgage applications this afternoon, but of course the main event is at 7:00 p.m., when the fed releases minutes from its october meeting. investors will be scouring the report for clues to see if a december rate increases in the cards.

futures have the chance of a hike, currently at 66%. pierce is still with us. thank you for sticking around. we talked about the fact that you were predicting the fed to go in september. sure, the- probability has increased, but it is a dangerous month. it is the holiday season. are you concerned that a will cut it -- that they will cut it back to 2016 and then it is starting from scratch? >> i think the markets would take it badly if they did. you sell it happened in september. the two-year yields have had a good indication, and the u.s. two-year was indicating that money markets are bracing themselves, and that would have been fine. we are back there again, and to not act now, we are all going to start running -- what do they

know that we don't know? you get an agenda fear. if anything, you look at the data and the consistency we have seen would lead them to rise. when you get to that point there are a lot of people talking one and done. if you are not going to rise now, when? francine: and the dangers of rising much quicker. >> there is a bit of that. but what is happening is that you don't tend to know whether leverages in the systems until you do it. one of the things we spent our time talking about is understanding the financial leverage as well as the operating leverage. in some modelson have survived, because the operating model is just about to do away with low cost of capital. to rise, things can go pop, and we have a few examples. there are companies that are structurally weak. francine: is there a danger that

they can merge? >> sometimes merging takes a capacity and that allows price stability to return. you talk about the balance of supply and demand. that is what you would want to see -- consolidation is not always such a bad thing. what surprised me overnight -- the price paid is really quite astonishing. francine: is that because of cheap money? >> that is the question -- a lot of m&a deals. the funding costs are relatively low. in addition to that what surprised people is the amount of equity that is being retired, and corporate debt being issued. it is almost as if we are financially engineering corporates. if i am a regulator at the fed, i think that is not a healthy environment. i want to see investment take place. that is what you want equity capital of the system, longer-term investment decisions. we could have longer-term debt as well, the let's remind ourselves that equity is an

important factor. francine: thank you so much. as we go to break, let's bring you live pictures from paris, showing the scene where two people were killed and five arrested in a predawn raid. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around.

francine: welcome back to "the pulse," live from london. i'm francine lacqua. let's get back to the markets -- mark barton has the charts the matter. mark: the fed minutes loom large. the release of the minutes from the october 20 a meeting, signaling that rates would or could be raised in december. on the 27th of october, the day before the announcement when the fed kept rates unchanged but signaled the intention, the expectation for a rate hike or at 25% and today they are at

66%. this is a lovely chart -- this shows the difference in the spread the tween the u.s. and its seven peers. as you can see, it is at the widest level, 76 basis points, since july, 2007, reflecting the view that they are ready to raise rates. it also highlights the divergence of monetary policy between the world's biggest economists set to expand monetary stimulus in japan. oran is set to follow suit, inflation is far shy of its 2% target. have a look at the price of zinc. industrial metals continue to slump, zinc falling to the lowest level since july 2009, concern about slowing demand in china. the dollar strength is also weighing, the bloomberg index raising to its highest level since 2005. french stocks have opened lower. since monday, the index is up by

1.67%. killedt two people were as police raided an address in the northern paris suburb of saint-denis, links to friday's terror attacks. air france shares are lower after two air france flights, bound for paris, were forced to deibert to alternate airports amid a bomb scare. chart --he intraday shares are down by 6%, the most on the closing bases in seven years. it intends to by its rival . buy, a $143 per share 50% premium to the average day price. it also comes four years after airgas fought off a hostile bid. it does give them the key to a massive market share in the

u.s. liquide down by 7% today. francine: mark barton there with the charts that matter. breaking news out of germany -- we are trying to understand and follow the events closely after those terrible attacks in paris on friday. theow understand that german cabinet is meeting today for a special session on security. the german cabinet was meant to me anyway, but they are having a special security meeting, and that is on the back of that football game that was canceled in hanover. we understand that in a paris suburb of saint-denis there is still an ongoing manhunt. there was a raid in the early hours of the morning. two people were killed and five --ested and they are lookin

the russian foreign minister is updating in moscow about russia's help to the west and his help to lebanon in particular. these are our other top stories. $100 million to settle an investigation into rate rigging. this is an investigation into new york's banking regulator as to whether it's electronic currency trading program. home price recovery slowed in october due to a supply glut. itless prosperous cities challenges beijing's efforts to revive the market with interest rate cuts and easier mortgage restrictions. for more on all that we are joined from hong kong. priceshat to the in china tell us? enda: it is a story of oversupply. they are struggling to shift a glut of overcapacity to smaller

cities -- that is a drag on the recovery. beijing, theyd are ok, but that is such a huge multiplier -- the real drag on has constrictions that flow through 70 other sectors in terms of manufacturing supply chain. it would be a disappointment to policymakers, especially when you consider that they have had six interest-rate cuts over the past year, and they have brought in tax breaks to stir up house buying and auto measures. it is not exactly the picture the policymakers would have hoped for as we head into the end of 2015. francine: what does that mean for the central bank? enda: well, we heard president xi tell us that there is still significant downward pressure on the economy. not quite flacking language from

him. it is a reminder for those hoping to a quick turnaround in the world's second-biggest economy that it not going to happen anytime soon. exports are struggling. they have a factory that is stuck in deflation. even though the retail sector ok,consumer side are doing it's not enough to fill a gap being left by the other economies. there is a view that the central bank may need to do more yet. francine, the other convocation is that rate cuts aren't as effective as they previously were. francine: enda, thank you so much. for more on the china angle, let's bring in one of the greatest minds on china living in london. great to have you on the program. is the most significant thing that we have heard from china in the last couple days? the president is saying that there is considerable downward pressure, for followers of china

the question is do they have to handle on it, even if there are downward pressures? >> i think it is going to be very hard to get out of this sluggish growth, economic growth model. is, is that it was a web of distortion policies tha tt aided this supply model. unless they get out of that and get reformed, it is hard to see china's growth significantly picking up. that takes a lot of reforms to happen once. francine: that is politically dangerous. >> it is also politically dangerous not to carry the reforms, because the people recognize they have to do it now. it is not a question of one reform here were there, it is about getting out of this growth model and going onto a consumption path, increasing services and liberating the household that was suppressed. francine: we have this huge

shift we have been hearing from china. this'll probably take decades -- a shift from what we have now too much more consumer led. 10 the pboc follow? dash cam the pboc follow? can the pboc follow? >> they have not really been effective. they have this great unintentional consequence of consumption because through research we have found that they spent about 10.8% of household expenditure on educating one child. when you have two children, a ghost 18%. -- it goes to 18%. i think that rate will fall, so other than making people have more kids, it will be a huge stimulus and consumption and stocks will do well with choice toys and children's books. francine: is it two years, four

or five years? >> i think it will take place at about five to 10 years. my generation having their kids right now, it will take a few years. but some people think that it is not going to reach two. i think still people will want to have two children. it will be an effective consumption booster. francine: overall, what should the message be from president xi to the community worldwide? he said -- you can't get used to this kind of growth. does he need to readjust his figures, given below 6.5%? >> i think china's government is now much more relaxed about reaching a target of gdp growth. especially environmental considerations. his new point which he has gathered groups for is to emphasize innovation, technology, and environmental concerns.

the target on gdp reaching a particular target will become weaker overtime. francine: you talked about reform. what is the next one we will see? >> the one that will happen the quickest is international. we have already seen that in the headline news, the gradual international organization of the currency, a joint venture with the germans. thatis just an indication china is very serious about pushing through this particular reform, and i think it will be more rapid than we expect, much more rapid than the other reforms. francine: i was reading a note ny from fathoman -- is that the world doesn't realize that china and the pboc may look at interest rates like feds. in a few years we may see 0% -- how crazy is that? or is that something you are looking at? >> i think easy monetary conditions will continue.

we have a lot of deflationary pressures. expanding monetary policy works only as inflation expectations are not there. these people have very few channels to invest in. they have to protect their personal power so they can accumulate wealth. it will not be effective because the financial sector is so distorted. unless we saw this financial market under development issue, i think effectiveness in monetary policy will be limited and all this capital will be stuck in the banking sector without getting to the people who need it, which is private entrepreneurs and the very productive private firms. francine: i want to talk about the banking sector. that is a whole other issue we could talk about. next, we are live in paris, where two people have been killed in a raid linked to last week's terror attacks. we also understand that five people have been arrested.

what we think is because this is an ongoing investigation a manhunt is ongoing, and we understand that this is all linked to the paris ringleader, the mastermind behind the attacks of paris. we don't know yet whether he has been caught or not, whether he was in the flat that was rated. we will keep an eye on the situation. you are looking at live pictures from saint-denis, the parisian suburb. ♪

francine: welcome back to "the pulse," live from london. here are some of bloomberg's top headlines. killedt two people were and five arrested as police raided an address in northern paris in connection to last week's terror attacks. the french prosecutor has confirmed that the target was the suspected organizer. air france has confirmed that two flights were diverted due to anonymous threats made by phone. the planes were traveling to paris from washington and los angeles. one has been cleared and departed from salt lake city to paris. split with his party's rivals over his approach to syrian refugees. speaking to bloomberg's "with all due respect," he said the answer to the crisis is not to ban people from coming. >> we have systems in place. any kind of concern,

we shouldn't allow people in, but i don't think we should eliminate our support for refugees. it has been a noble tradition -- >> including muslim refugees? >> the answer to this is not to ban people from coming. the answer is to lead to resolve the problem in syria. that is the ultimate answer and that is my focus. francine: these comments put bush completely at odds with his rival donald trump, who said he would "send them all back." the tragic events in paris last friday came less than a year after the "charlie hebdo" massacre. many are asking -- is the french capital safe? we spoke to the head of the french security think tank. >> what happened friday was bad and it will happen again and again and again. everyone in france has to understand that peace time is over.

it is very, very easy to get into france today -- it costs less than 1000 euros. if you really wanted, you would -- you have government like that in every french service. that big game changer that we is the the last two days confirmation that one of the attackers came. no one is stupid enough to believe that he was the only one, so now we face attacks in the coming months by guys like that. we fell into our own trap. we have in europe of freedom of circulation -- we have only one border, which is the european border. people are in and there is no way to send them back. the french prime minister said

that there will be other attacks, "within days or weeks." the community is absolutely sure that things like this will happen again, and will happen again very soon. for several reasons, one of them being the big international country with more than 100 delegations worldwide. jihadists will come to life worldwide. francine: let's ring in bloomberg's news reporter mark dean, in paris. mark, if you look at the raids, if you look at the fact that we are trying to hone in on the leader that masterminded the attacks on friday, the situation is extremely fluid. i guess you are monitoring everything from the paris bureau. mark: we are on top of it. we have a cabinet meeting going

on right now, to find out what will come out of that. francois hollande and the prime minister have been in meetings all morning, not too far away in saint-denis. we are waiting for a statement from the prosecutor where we will get details and confirmation of exactly what happened this morning and two has been arrested, who has been killed. steps.re the next we will hear first from the prosecutor and then from the politicians. francine: mark, since friday, have you seen any noticeable change in security? look, security is increasing in the private sense all over paris and also in a public sense. you see military on the street, more police right in the center of paris, two steps from the doorway.

with those coming into work yesterday morning. there are more patrols there and police making sure that there are less crowds. yes, there is definitely a noticeable increase in security. francine: and mark, we have looked at the geopolitics consequences and the fact that russia may become closer to the west and to the u.s. but there are also more immediate political consequences for france. mark: well, what are the political consequences in france? it is difficult to say at this stage. people are understandably reluctant to discuss it. there was a session in the national assembly -- president hollande met with the congress of the senate and the national assembly on monday, and that was all very respectful.

sort of sitting of a moment of national crisis. yesterday, tuesday, in the national assembly, we had question time, and that defendant much more quickly into something quite close to partisan bickering. wellveryone is aware as that any politician seen as trying to turn deliberately to their own advantage risks being punished, and punished quite hardly. -- heartily. not to put things to dramatically, but if the mastermind of these attacks has been either arrested or killed in saint-denis this morning, that will obviously be a good thing for the current government and for francois hollande. always, for good or bad, a public thirst for official reaction, and real advance an investigation.

the capture of people involved. again, this morning's raid probably helps in that sense. but we need a few days to see what the real consequences are. francine: mark, thank you so much. you are looking at live pictures from saint-denis, that ongoing raid. we understand that two people have been killed, and that five has been arrested in the predawn raid targeting the suspected mastermind. it is a developing story and we will have more when we come back. ♪

francine: it's a developing story -- a manhunt underway. joining us now from saint-denis his brendan greeley. we understand that five people have been arrested and maybe more. what do you know from being on the ground? being on the ground, we know less than you do. french television is reporting that we have a second raid. we doubt see it from where we are but what i do see is an area closed off that would normally be a busy pedestrian's own. . -- a busy pedestrian zone. what we know is that there have been two people killed, five have been taken by police.

what we don't know is whether the target of the raid, the planner of the attacks, alleged to be those that were either killed or taken. francine: how much do we know about the person that you just mentioned? how much do we know about his direct involvement on friday's attacks? i'm sorry, there are some police activity behind me right now -- it may be difficult to hear me. what we do know about him -- belgian born, 28, his father owns a business in brussels. at some point he was radicalized. we know he had been back-and-forth from syria. french authorities believe he was involved in the attack on a andch earlier this year, also with the attack on a train that was awarded by several americans in august. but here in saint-denis, there seems to be an ongoing operation, and we are kept

behind a police cordon. there is also some rumor that one person is still holed up inside. francine: thank you so much. "first word" is up next but for viewers it is "surveillance." ♪

deadine: five arrested, 2 after a police raid connected to friday's attacks. russia moves to cooperate with france in syria. fed minutes do today, dollar record high comical slumps. -- gold slumps. president she says china's economy still faces downward pressure. this is bloomberg "surveillance," i am francine lacqua and london with tom keene in new york.