the shanghai composite closes down 5.5%. retaliates. president putin cuts economic ties with turkey as he and hollande fail to find common ground over the fate of assad. and paris remembers. a memorial service for the victims of the november 13 attack. welcome to "on the move."

i'm caroline hyde. let's kick off with china. the shanghai composite closed down 5.5% today, as sliding industrial profits and widening investigations into china's brokerages fueled concerns over the world second biggest economy. let's get straight to our beijing euro chief, nick wadhams. fergus -- the focus? : i think the data figure is fairly minor. the big thing is these probes. there are many ways to read this. one is that they are looking possibly at insider trading. all we are hearing his they are looking at rule violations, which can mean a great many things. the government is looking for someone to blame after the market rout in june and they

are going full force. they had thought that the market recovery in the last couple months, they thought there was enough strength that they could launch these probes without hitting the market. the market has shown otherwise. andemains extremely jittery reversed course is sharply once those probes came to light. caroline: just having that breaking news that they are banning financing with derivatives. what is the outlook now? we've got the big brokerages being analyzed by the regulators. what next in terms of where we could see the market get jittery? nick: i think what you're seeing is the government is trying to clamp down. the move today against derivatives financing, they are trying to the leverage this market. -- to de-leverage this market. people taking out a ton of financing and putting that in

the markets, so when the market began to fall, the spiral was compounded. that is what you're looking at. more broadly, the economic data does indicate the economy is slowing. that is going to have an impact on companies. you see more that are default thing. we are still waiting to see how bad the spiral is. certainly, today not looking good, particularly for value investors who thought this market was worth getting back into. there were many of them. they are in for a nasty shock. caroline: certainly. with a crackdown from the government and $5 trillion wiped out of the market. nick wadhams, we will be with you much more in days to come. joining me is william, group chief economist at bnp paribas. he will be with us for the next half hour. significant moves once again. no end to the volatility in

china. what captures your concern? is it a crackdown, or is this long-term a good thing? in the long term, a good thing. what happened today is a knee-jerk reaction. the market prices are driven by fundamentals, where the picture is still dominated by a slowdown. it is also driven by psychology. you have the brokerage being investigated is bad for psychology. this is the kind of final wave of the corruption. if you buy into that, within a couple months, we could say the cleansing has taken place. with all the measures that have been taken and the money that is already available which is not yet put to work because of the concern about the war on

means that we expect the economy should stabilize in the second quarter of next year. china-interested investors to say, ok, when should i get in? i'm not saying you should step in on monday, but we consider this to be the final stage of an effort to clean up things. with the brokerages, they have to be looked at against the background of the plunge in the market and the failed attempt to stabilize it. caroline: in terms of the data we are getting through today, industrial private down almost 5%, when will we start to see those profits stabilize? is that when you start to see the frothing in the economy? you would expect that

profits also stabilize. a the near term, it has been very unpleasant experience to put it mildly. you have the conjunction of deflation at the level of producer prices, and at the same time, wages continue to grow up fairly significantly. domestic same time, demand is slowing, export demand is slowing, that is why you look at somewhere in the second quarter to see things stabilizing. you expect that with some delay, you will see a better picture developing. about thewhat spillover effect in europe? being hitminers particularly hard. will global growth start to stabilize? william: that is making 2016 so interesting as a year.

becausel be interesting the u.s. has a kind of investment opportunity. it is, to put it slightly dramatically, the end of the road. what can you still expect? profit growth is slowing significantly. and the fed, all the concerns there. europe is still really nice. fine. but the big turnaround is going to come from emerging markets if all things go well. when you look at market developments in september and karly october, after the weal marketsnumbers, we saw picking up because bad news was considered good news. we also saw emerging-market currencies rebounding. commodities were also rebounding. question, ifour you have an impression that

china is opening, the growth rate is stabilizing. we willd expect that have another look at the liners -- the miners, etc. has been a buildup of capacity in the past years. in our view, not everything has come onto the market. it will be the issue of finding a good line between the china factor, which is turning from negative to neutral at least, but then on the other hand, are excess supplyn market? caroline: william doubled or with us -- william de vulder with us the rest of the half hour. the euro plummets, set for its longest stretch of weekly declines versus the yen since its creation in 1999.

anticipation builds that the european central bank will surprise investors with the size of its stimulus next week. the euro is headed for its biggest monthly loss against the dollar since march. japan core consumer prices fell in october. core cpi fell by 0.1% from a year earlier. we got unemployment numbers and japan's jobless rate reached its lowest level in 20 years. today marks the traditional kickoff of the holiday shopping u.s. e-commerce sales surged, raising questions about how many shoppers will show up at brick-and-mortar promotions for black friday. yesterday's online sales are expected to total $1.7 billion. up next, france and russia agree to coordinate strikes in syria, but disagree over the fate of president assad. we are live in moscow after the break. ♪

caroline: welcome back to "on the move" live on -- to "the live on bloomberg tv and radio. you are seeing that memorial

service in paris. president hollande will be attending along with survivors and victims' families.s today bd russia have agreed to coordinate strikes in syria to increase the focus on jihadist militants. president hollande now seems to have the u.s., u.k., germany, and russia on board. with the latest, hans nichols is standing by in berlin. first, let's head out to a rather chilly ryan chilcote in moscow. does this really mean putin is part of a broad coalition against islamic state? maybe. think he spent three hours talking to the french president yesterday. you get the impression that he wanted the press and his guest feelingnce to get the

that he's prepared to work with them. have a listen to what he had to say to the french president yesterday. you are putting much effort into creating a wide coalition. we are ready for such common work. we consider it absolutely necessary. ryan: i think it was a bit short on substance. the only thing the russian president actually said that has real impact on the ground is that russia will avoid hitting areas controlled by the so-called moderate opposition to bashar al-assad. the russian president has been saying that for a while and western countries have been complaining that he's not doing that. he also complained at one point during the press conference about the downing of russia's jet, saying, we give all this information to the americans and one wonders if we should be

doing that, suggesting that perhaps the information russia is sharing about the missions it is flying in syria was used to down that plane. i'm not so sure we are about to see a lot of cooperation. caroline: ryan, thank you. unwinding cooperation with turkey at a rapid rate. let's turn our attention to germany, where angela merkel's government has agreed to send reconnaissance planes to syria to help fight islamic state. hans, what are the details? does merkel have support from her entire coalition? hans: it does look like merkel has unified the government. everyone is on the same page, that this is actually justified under international law. there's been some complaints from the green party that there isn't a specific you and resolution. here's what they had to say last

night. there -- we won't be able to get by without a military confrontation. there's a recognition within the german political class that this requires some sort of force, some sort of military. they are saying the tornadoes will only be involved in surveillance, not actual targeting. they are also sending a frigate to protect the aircraft carrier from france and they are going to give refueling support to french fighters. we will have a vote on this in parliament next week and then we will see just how unified the coalition is and how many defections you get. hans, this gets so much murkier, this picture. the safe houses of the ringleader of the paris attack, it seems is athens. what does this mean when we've

got such a broad reach of terrorism? what was reported this morning in athens is that mr. safe houseshave two in athens. we know from authorities that two of the suspected terrorists did make their way from greece to paris via. via the syrian refugee route. what we've seen from jeroen dijsselbloem is you could have an agreement just with the core states, france, germany, belgium, the netherlands, , making sure that their external borders are being protected. it is still in the incubation phase. come tot fully fruition. we will be watching that as well.

inoline: hans nichols berlin. and ryan chilcote in moscow. thank you very much indeed. let's continue the conversation with william de vulder. give us a sense of the ramifications for europe from an economic point of view, a business point of view, of all this political wrangling and instability. william: first thing that springs to mind is uncertainty. impossible toy come to grips with it. you can track how many references there are on bloomberg newspaper articles and so on. if you look at what i would call uncertainty shocks in the past, it has happened that we were overestimating the impact. .ook at 2014 the embargo with russia was a shock.

it had impact on certain sectors, but the overall economic impact was not that big. impact onn, you have one country, france, which is of course for the obvious thing, this is where the terrorist attacks happened. the other countries do not yet know to what extent business and households will be influenced by what has happened. if you look at the situation in france, typically, people saying this is going to weigh big-time you have those substitution effect happening. we saw that in january after the "charlie hebdo" attack. the ball theing to take away food business. buying less sandwiches in train stations.

they were buying more sandwiches at federal stations. parisou now are seeing in is that people go to their neighborhood shops to buy their food stuff. ironically, prices are actually higher. people are kind of spending a little bit more. obviously, the big impact that one is dreading is on the tourism sector. that is, i think, too early to say. anecdotally, referring to something which i heard on belgian radio, there was a survey, because belgium was the siege city for a couple days, so they checked with shopkeepers and there was one chocolatier selling belgian chocolates. for an entire day, his turnover

was 17 euros. is that relevant? no. it is anecdotal. but it tells you the psychology you have. caroline: thank you very much indeed. william de vulder staying with us. perhaps a few more anecdotes from the chocolate side of things. next, how can a deposit rate cut next week leave the ecb one step behind the markets in the race to buy bonds? we are debating what rabbits can be pulled out of this man's hat next week. ♪

caroline: welcome back to "the pulse." we are live on bloomberg television and radio. we are everywhere. the euro is set for its longest stretch of weekly declines versus the yen since its very creation. that theion builds european central bank will surprise markets with fresh stimulus next week. the euro is also headed for its biggest monthly loss against the dollar since march. let's talk more about the market reaction. positioning for the ecb action at next thursday's meeting, what could mario draghi find himself doing? even with a 10-basis point cut, there is still risk that the ecb

is one step behind the market as yields fall on sovereign debt. let's speak to simon ballard and william de vulder. yields, weing at the are still reaching record lows. what are the ramifications? you're investing community is having to push outside government bonds to get that incremental yield. you've got a corporate bond market which has been strong throughout this year. you've had investment grade high-yield issuance being very high. very well-subscribed. [indiscernible] those are the implications, that investors have to look further down the quality curve to reach

that yield both the which they are required to achieve. caroline: too much risk-taking? the punch bowl keeps on giving, the cheap money keeps on rolling. should stimulus really work in the long term? william: it is a love-hate relationship. on one hand, the banks want to take risk. if you look at the report of the experts are saying what the ecb is doing is putting systemic risk in the german economy. they are advocating to scale back the monthly buy. the ecb is going to do exactly the opposite. it does mean that every investor has to be very responsible. caroline: william, great having you on.

simon, i wish we could have you longer. simon ballard and william de vulder. coming up, we will be looking at u.k. growth in the third quarter. ♪

welcome back to "the pulse" live from bloomberg's european headquarters in london. i'm caroline hyde. let's get to mark barton with that breaking news for gdp figures. 0.5%, caroline. that is bang in line with earlier estimates. domestic demand continuing to throughthe u.k. economy september. consumer spending rising for a 17th straight quarter. the update, household spending

rose 0.8% compared with the previous quarter. government spending helped counter the biggest negative net trade on record. for the bank of england governor, mark carney, to think about. u.k.rned of risks to the from emerging markets. these figures support that view. because of record low inflation and a pickup in wage growth, that is lifting confidence among spenders in the u.k. n.s. says annual growth was 3.1%. that matched the pace of the previous quarter, the most since 2007. domestic economy, strong. external economy, not so much. 0.5%, bang in line with the

previous estimate. there you go. caroline: a bit of a slowing, but we will see what breck friday -- black friday has up its sleeve. mark barton on the breaking news. thank you very much indeed. here are bloomberg's top headlines. chinese stocks sold off this morning as falling industrial profits and a deepening probe into the financial industry shook investor confidence in the world second largest economy. the yuan weekend. sloweduse prices growth to a five-month low according to nationwide. the survey noted a shortage of properties for sale. the annual rate of growth cooled to 3.7% from 3.9%. france and russia have agreed to coordinate strikes in syria to

increase the focus on jihadist militants after president hollande and president putin met in moscow yesterday. they failed to bridge differences on the syrian ruler. hollande isesident leading a national memorial service for victims of the terror attacks that claimed 130 lives on november 13. here are live pictures of how long arriving -- of hollande arriving at the ceremony. only government officials, political leaders, and families of the victims will attend. the government has asked the french flag to fly. hollande arriving to greet some of the members of the families of the victims this morning. we understand about 1000 people will be attending in total. and of course, the rest of

france will be paying its respects after the tragic events of two weeks ago friday, november 13. ♪

caroline: these live pictures of the memorial service president hollande is attending, the anthem we know know so well being played. greg is in paris with more. we've seen lots of memorials. what is special about this particular one for you as a parisian living in paris? greg: i guess just the absolute scale of the killings. we've had many memorials in the past but it tends to be for a handful of individuals at a time. read the biography of

the people who died, whose photos will be on a screen during the ceremony, it is heartrending. teachers,rs and software engineers and small company owners. from all over the world, not just france. it's the scale of the killings and the unified reaction it has had. the president has asked french flags be flown, but there have already been flags at various memorials. in european countries, flags tend to be reserved for the world cup. it is a sporting thing. this time in france, we are seeing that. paidine: so many tributes throughout many a football match, particularly after the shocking events. talk about the political landscape for us. has it been the unifying feeling in france helping change the

agenda for hollande himself? greg: two people have benefited. not surprisingly, marine le pen on the far right has benefited. she has always been the hardest line about immigration, muslims in france. there's a certain sense of "i told you so" so she has benefited. hollande has also benefited. it was the second terrorist attack on his watch in six months. people might have said, what happened? we have not had that yet. he is sort of the war president now. the best comes out in these moments. he's not generally a great speaker, but in moments like this, he does find the right words to say. he has been a calling presidents in the country. -- he has been a calming pre sence in the country. havelas a cozy, they don't

the more legitimate side because they are not in power. on the other hand, they try to be very hard line on immigration , about the supposed risks of islam in france, but they will never be the real thing. marine le pen is the real thing. if you are angry at the government, your support goes to marine le pen. if you are a centrist person rallying around the nation, your support goes to hollande. the whole middle have not been able to benefit from this. caroline: it has been a time for president hollande to come home, to pay tribute in france. he has of course had a surge of floors, visiting world leaders and them visiting him. monday, 144 world leaders will descend on paris for the climate change talks that are to the held. how big an event is this, and how is security being ramped up?

greg: the town has just gotten back to a semblance of normality and now this comes. i think there's a little bit of frustration when people find that roads are blocked, that there's extra security at train stations, that some subway lines are being redirected. it is just monday, thankfully, parisians will say, but there's never been such a gathering of world leaders. the security is much higher. i was just out there yesterday to get my badge. it is quite a sight. there's tons of police, tons of extra soldiers called in. also, in front of some of the paris hotels, traffic is redirected. there's a sense that things have

just gotten back to normal and this comes, but it is only just one day. after that, it is the regular delegates battling out the real climate accord, but the world leaders won't be there. caroline: greg, i look forward to seeing you on monday as i head out for that meeting. thank you very much indeed. it looks to be a very beautiful tribute being paid to those 130 that died during the paris attacks. ♪ >> [singing in french]

♪

caroline: here are some of bloomberg's top headlines this morning. president xi jinping announced a major overhaul of china's military. according to the news agency, he told military officials that all branches of the armed forces will come under a joined military command.

he has insisted the military remain correct political direction. the euro is set for its longest stretch of weekly declines versus the yen since 1999. anticipation builds that the european will surprise some investors with its stimulus next week. the euro is headed for its biggest monthly loss against the dollar since march. japan's core consumer prices fell for a third month in october. core cpi fell by 0.1% from a year earlier. reachingobless rate its lowest level in 20 years. u.k. retailers are hoping that black friday will be far from gloomy and bring a much-needed pre-christmas boost. 1.9 billion pounds could be spent on cards online and in stores this year. kevin jenkins joins us now to

talk us through these numbers. sounds like a phenomenal amount when you are breaking it down in terms of hour-by-hour, minute by minute. sense of where it really is online winning out. kevin: we will see a rush to the high street at lunchtime, and a peak in online shopping between 6:00 and 7:00 today. i think the whole retail period this christmas is very interesting. black friday kicked in a couple years ago, bit of a spike on cyber monday, and now we've got black friday. we are seeing the pulling forward of consumer spending to this whole period. even though black friday is still up on last year, if you look at online spent today, we are forecasting it is up 17% compared to last year. think therting to

whole shopping experience that caroline: so the four-day extravaganza, about 4% according to your data. what about the longer-term effect? we've seen the likes of walmart, which is thought to have brought black friday to the high street, backing off. it feels that this will damage its profits. kevin: don't you? i was with a chairman a couple days ago and she was saying to me, we were sitting around trying to decide whether we would go with our early sales or not, and everybody was being very brave. a couple days ago, it is like, we have to go. some retailers win out. i think the successful retailers this year are the ones that are able to link the experience between online and off-line.

as broadband and mobile commerce becomes ubiquitous, you need to provide a seamless experience for the consumer between their tablet or mobile phone and how that transfers into the store. caroline: interesting you talk about mobile. you safety shopping will be 6:00 or 7:00 p.m. that is commuting time. you are doing it on your mobile. kevin: that is the way the trends are going. it makes sense when you think about how we used to do online. it would be sitting behind a terminal at work. it is in our hands now. we've got our tablets, our moguls, what ever, and we've got broadband. the u.k. is always quite quick to jump on a few u.s. extravaganzas. we like halloween now, it seems. we really embraced black friday. give us a sense what is happening across the channel

today. how do we stack up when it comes to europe? kevin: the u.k. is a country of shopkeepers and retail is very strong in the u.k. it is difficult to compare directly. what consumers do is very different in europe to the u.k. if i look at spending in the u.k. over this four-day period and compare and contrast that to what's going on in france, germany, italy, netherlands, belgium and spain put together, the u.k. is spending more in shops than the entirety of all those european countries. it is absolutely key for retailers to get it right over this period. otherwise you will be left behind. some retailers this year have said, we are not going to do it, but we will see. 50% off phones on the high street.

it is a brave retailer that will sit it out. caroline: a record day for amazon in terms of online. thank you very much indeed. it has been great having you on. kevin jenkins. everyone gets ready to splash that cash today for black friday. as we head to the break, we leave you once again with live pictures of the national memorial service in paris, honoring the victims of the attacks two weeks ago. ♪

caroline: welcome back. i want to get straight to some of the charts that matter this morning. mark barton. mark: china is casting a shadow over equities today. the probes into various brokerages damaging sentiment. the shanghai composite falling 5.5%. i want to look at the euro against the yen. falling for the seventh consecutive week. that hasn't happened since 1999. what a losing one it's been.

what is priced in? thenow a 0.1% cut in deposit rate is priced in. the path of the euro from here might depend on how much mario draghi and his policymakers surprise investors. maybe the euro decline. will stop. we have seen the euro fall against 15 currencies. gold sinking for a six week. barton, always an eye on u.s. rates. we are talking more u.s. rates and payrolls next week. coming up, the iea said oil will rise t $15 a barrel. let's look at right to the opec meeting in vienna.

here with us to look ahead at .hat u.s. data, richard jones thank you very much indeed for joining us. opec,funny timing for given we've got the world's biggest get a ring change at the same time. what are we expecting on oil? >> not very much. the consensus from analysts we survey is for no change in the quota. we may see a technical change for the return of indonesia to the group. that does not necessarily mean you can count more barrels coming to the market. opec is pumping close to capacity. there may be a little bit more in saudi arabia. in terms of their strategy, they are holding the course. they are looking at what is happening in the arctic, deep offshore, in canada, and saying, so far, it seems to be working. it is very hard to argue. caroline: oil markets being buffeted by political risk as

well. talking of political risk, or monetary policy risk, we've got a lot coming next week. ecb, rabbits, hats come to mind. are we going to see mario draghi do enough to satiate the markets? >> my feeling is that he might disappoint, which is to say, he will be aggressive but not hyper aggressive with a view to perhaps save something in his back pocket for the january meeting. we've got payrolls, we've got a fed decision, we've got a currency pair that might react quite violently to those events. i think the prudent thing that draghi might do is be aggressive but keep a little powder dry for january. there could be a lot of volatility in that pair and the other euro pairs. caroline: it has been a fascinating week in general. are we expecting just more turbulence?

is it going to keep reacting to headline risks? >> absolutely. the oil market is pretty jumpy at the best of times. we saw that this week. we thought it was a very bland statement. it went nuts. this is a market where people are incredibly short. not quite unprecedented scale, but almost. if they see anything they think changes the picture, you get these huge rallies. they don't last very long. maybe a couple hours. short answer, yes, very volatile. caroline: is that what is happening with the euro, massive shorts? >> i think it is a trait that is popular, but i don't think it's highly populated yet. i think a lot of people have short positions for very good levels. probably looking at the 1.04 handle and saying, i think i

will take some profit. but it goes up to 1.10, there will be a lot of sellers. caroline: gentlemen, great to have you on. that is it from "the pulse." ♪

guy: the shanghai composite plunges more than 5%. the country's largest brokers. imirlation risk -- vlad putin is francois hollande agree to coordinate in syria. can the euro is on course for its longest losing streak against the yen ever. to you all -- this is bloomberg's "surveillance" in london. tom keene is in new york. great to be with you.

i wake up in the bloomberg terminal -- the only thing that mattered five hours ago. the on the inter-linkage in foreign exchange commodities -- look at that european confidence index, out just moments ago. that is a pretty good number that again shows the challenge that mario draghi has with a resilient europe. jonathan: including what happened with paris -- also the french confidence numbers. much more on that later in the program. for now, let's get to vonnie quinn. vonnnie: russia and france have agreed to coordinate air raids in syria as they focus on the islamic extremists. putin met with hollande in moscow. the two sides still disagree over bashar al-assad. hollande says that he cannot

play any role in serious future. david cameron has asked for airstrikes in syria. that the islamic state poses an urgent threat that will only grow worse. you may call for a vote next week. things are getting back to normal in brussels. belgian authorities have reduced the maximum terrorist threat level, saying that brussels no longer faces an imminent threat. they reopened this morning will keep patrolling the streets. russia is striking back at turkey for shooting down the warplane. more restrictions will be imposed on turkey and russia may come out with more economic measures that affect trade and investment. china has unveiled the biggest overhaul of its military and decade. all branches of the armed forces forces will be under a joint military command, in the communist party will have more

control. the aim is to make the military better equipped to protect beyond its borders. another breaking -- all breaking stories at the new bloomberg.com. check et me do a data jac -- there is a lot going on. 17,800, a closing resilient market. 106.uro is nicely under goldman sachs in the last 48 hours with a strong statement to parity. 42.03 for nymex. 15.19., there is the dell again, showing the elevation. i will get to euro-yen in a

minute. german two-year is at -0.42. i will look at that statistic. vonnie, this is something that has crept up on us. don't look at euro-dollar, they look at dollar-yen. this is back 30 years -- the long-term strength of the yen versus the euro, very cyclical. yen,is abenomics -- week rolling over and breaking through that. vonnie: in some of this is a weaker euro story. a look ato getting fiscal stimulus after the country fell back into a recession. am: and jon, it is about currency pair, and in this case it is about weak euro. that goldman sachs call really got my attention. jonathan: it is looking good, isn't it?

the call for parity has been there for a while. the other thing about euro-yen roda traded draghi-ku -- they are looking at the world very differently. kuroda is sitting on the sidelines, draghi doing nothing of the sort. that is what we have seen this prolonged decline in euro-yen. the other thing that took my eye is the shanghai composite -- aat a plunge overnight, 5.5%, one-two punch coming out of china. widening probes into their biggest brokerages. for more, our beijing bureau chief. great to have you with us. the concern, as i look at the shanghai composite -- is at the data or is it what's happening with the brokerages? when you announce investigations into three of the

biggest brokerages in the country, that is guaranteed to spook the market. they say they're allegedly rule violations, not being any more specific, that we do know there are anticorruption probe going on in the communist party. there have been allegations of insider trading, and there is this issue are the executives disappear and the brokerages are obliged to notify the stock exchange -- hey, we can find our ceo. they are expected to be under police probe. what you are seeing is a very spooked market, and it really shows how immature, in some ways, this market is. this is not a market for value investors. jonathan: in terms of the outlook, talk to me about this and tell me whether it is a coincidence -- the ipo --, they were suspended they come back online, and we know that ship in china is so concentrated. as a just a coincidence that the ipo came back online? nick: well, i think the issue

that it shows to a lot of people is how much control does the government have? how much credibility do they have? they would really like this market to be healthy and unlock a lot of the clampdown they put down on the market after that plunge. the ipo's were part of that. i guess they thought that the market was strong enough to be able to do these probes, but clearly it shows otherwise, and it suggests broader concerns about the fundamentals in the market. tom: nick, if you look at a long-term chart of the two major china indices, i am very curious where we are in terms of the bet on the markets. is there in massive come along bet of retail china against the shanghai? know, i think it is a little premature to say. i think it really is brokerage driven. there is still a lot of faith that this is a consumer market

over the long run, that will lift the market. people can put a lot of faith in that market over the long run, but still, we are not there yet. these are not warren buffett style value investors, these are people looking for quick hits. when you look at today and yesterday with the brokerages under investigation, it really sends people to the exits. jonathan: nick, our beijing bureau chief, thank you for joining us. we continue the conversation with our guest host, the chief currency strategist simon derek -- good to see you. i look at the data overnight -- not great. the stock moves driven by brokerage accounts -- fine. one story -- the macro matters to me. it shouldn't matter to me, should it? no, although i like the comment that these are warren buffett investments. the reason why it might possibly

matter is that we remember of the events -- the turmoil in the chinese market, we remember the fact that when the fed pulls in september, one of the things they mentioned was the turmoil in international markets. but let's be realistic -- is the fed seriously going to take any major attention off turmoil in the brokerages? of course not. but it might just marginally lead them to say a little cautious in the statement after they make the rate hike. until then they will keep their eyes -- reserve: the federal has a target on the s&p 500. they look at the shanghai composite -- simon: if you think about what janet yellen said back in september, she highlighted china. in terms of how it impacted u.s. markets, think about it.

the story of the last 28 years has been one that the fed put, expanding and 87. -- in 1987. what did the fed do in 2013 when they delayed? concept thathis the fed is aware of what happens, not just in domestic markets but in international markets. tom: we have to get to the december 16 meeting -- as we go to the end of the year, do the holidays and the lack of volume, the lack of interest, does it accentuate or diminish volatility in foreign exchange? it ended with the quiet market, but i have to say that coming into the end of the year, with so much coming in, the fed meeting, the ecb meeting, the meeting of opec, and huge amounts of liquidity, flux toet which has

vary dramatically, i think we could end up with a pretty volatile december. i would also make the point that -- a lot of people say we know what the ecb is likely to do, what the fed is likely to do, but this is a market that has turned out to be far more reactive rather than proactive. go back to win the ecb started cutting rates. when the fed actually said the -- made its announcement, they instituted the rate cut. this is a reactive market and i think december could prove very interesting. jonathan: never mind december, the whole month condensed into one week. hour, we will hear from the managing director of pimco -- do not miss that conversation. we are streaming on your tablets, your phone, and blooper.com. good morning. ♪

tom: good morning, everyone. black friday in the united states, all about retail shopping. worldwide, no one cares. an important day in the markets as well. here is our business flash with vonnie quinn. vonnie: there is a report that the folks like an emissions scandal has widened. engines from their audi brand has now been implicated. both the u.s. and germany began investigations wednesday, and are suspectedeers of rating engines to cheat admissions tests. domestic demand keeps rising -- economy was. -- woes.

drag, exports a being heard by the strong pound and weak global demand. britons are sent to splurge this christmas. it has had a two-year low but the outlook for their own finances is good and now they are making major purchases. consumers say something and don't often do what they say. jonathan: they do. i'm not doing it, simon derek isn't doing it. we can talk about that later. and vladimirande putin have agreed to coordinate airstrikes in syria, keeping the militants.hadis to this came after a three-hour meeting in moscow between the french and russian president. ryan chilcote is in moscow with more. ryan? ryan: it was an interesting three-hour meeting. the russian president said he

was prepared to coordinate with the french president, so in that sense, the french president got what he was looking for. i am not sure that it will go much beyond rhetoric. the russian president also talked about how the u.s. is already sharing information inside syria, telling americans coordinates and altitudes. he did mention that he is not sure why they did that, if the information was going to be used well, and suggested that the turks were able to use it to down a russian jet. that, doesn't bode well for the idea of russia cooperating with western countries in a tight fashion. tom: ryan, are sanctions part of the currency of diplomacy here? the russians are looking at imposing their own sanctions on turkey now. the sanctions imposed against russia were not discussed at yesterday's meeting, and i think

the reason for that is because the russians know that sanctions will be in place for a while. the western leaders met at the g-20, and they agreed to extend the sanctions that were already imposed against russia for another six months. vladimir putin has decided he will waste his time. jonathan: great to have you with us. that is the geopolitical story -- let's talk about effects with simon derek. worried, i go to the swiss franc -- an intriguing move. euro suisse a pop higher. that is a stronger euro and a weaker swiss franc. 5/10 of 1% -- simon: and i am absolutely stunned, giving that we are going up to an ecb meeting. it may be a reaction to the confidence numbers, maybe a reaction to the market.

jonathan: you are on the spot. a move like that -- does that smack of intervention? [laughter] jonathan: great to have you with us. tom: you look at the moves in the instabilities, and they go back to the question about instabilities. the royal bank of canada made clear that it is extremely important, the jobs report next the markets straighten out their beliefs before the next two weeks. is that the beginning of what we are seeing now? simon: i think that is probably the case. but you have to take the facts that this is an incredibly big trading day. -- it may be a slightly i think we move, so need to assess what's happening

right now, or assess the next few days. comenk that what we have to look for is home markets in the aftermath, and what happens on the 16th. right now, there is this great pressure to get everything christ in. -- priced in. i think that things aren't priced in right now, but after a nine-month period, maybe people aren't as heavily positioned as we think. that is where we can have the shock. tom: the shock is on moves on various currencies. china is front and center in the news. coming up on bloomberg , a cautious view on the american economic experiment. right been stunningly

over the last year or 2 -- we will get an update at 9:00. jon ferro in london, tom keene in new york -- stay with us. ♪

jonathan: good morning. i'm jonathan ferro. alongside muse tom keene in new york. -- me is tom keene in new york. it's that time of mourning -- time for your morning brief. tom: i can't convey the shifting of tides in america over black friday -- it has always been stupid. it is actually been a huge

embarrassment. but now it lessons because of the internet. brilliant piece and buried in it is a little asterisk next to the quotation mark. this is a statement from walmart, buried in their press release to employees. andart's full-time part-time associates will receive the 25% discount. seasonal associates and those who has been with the company for under 90 days will receive a 15% discount limited to one basket for associates. the granularity of retail america, everybody and retail struggles. how do american consumers change it? the consumers are driving the bus on this black friday. jonathan: are we going to do this later -- i find it fascinating the story, short energy and longer consumer.

it worked, but not in the way people thought. walmart did nothing, netflix and amazon -- that is where the real performance was. tom: walmart is not in that yellow line. this&p 500 -- but vonnie, is a cultural change that we are seeing. vonnie: well first of all, that move will definitely help walmart. you know where those employees will be sending those extra discounts. 2013, walmart accounted for 41% of holiday shopping versus amazon 36%. that has no reversed. -- has now reversed. tom: that is great. jon, i really can't convey the sea change -- vonnie, you and i wash the macy's day parade, and even that has changed. there are little, subtle things going on. vonnie: exactly. a lot more talk --

tom: what is in on the channel? -- an omni channel? jonathan: that sounds like marketing speak. all i know is i'm not doing black friday. tom: there it is. we will do that for you. but it is interesting, all in all. coming up, we will get perspective on retail. truly one of our most popular guests on real estate and retail. the challenges that retail faces. vonnie quinn and tom keene in new york, jonathan ferro in new york. ♪ 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. tom: good morning. first news this morning. vonnie: francois hollande is

talking tough on terrorism, as they pay homage to those killed in the terrorist attacks two weeks ago. he promised to destroy the army responsible. we are looking at live pictures at the ceremony in paris. hollande met with vladimir putin. they agreed to coordinate airstrikes against the islamic state in syria. after five days, authorities in brussels say that a terror attack is no longer eminent. this schedule resumed fully today, still police and troops are patrolling the streets. is moving to improve his foreign-policy credentials. he is making a surprise visit to jordan to visit syrian refugees . before the attacks, he was leading in some polls, but dropped due to his lack

of expertise in foreign affairs. a driver was charged and killed. 95 palestinians died in random attacks since mid-september. israel is trying to draw a russian borders away from turkey. last year they attracted millions of russians, but that may change because of the terror attack. due to the shooting down of the putin isarplane, offering a discount in flights. tom: very good. thank you so much. right now, a lot of challenges with investment. we have an important desk on the fixed income space. jonathan: we do. what a week coming up -- all about the bond market, all about the central banks. the ecb kicks off the monetary

policy decision-making, the s&p on the 10th, the federal reserve on the 16th. amey, you are the man i go to one survey happens in the bond market. right now the news is italy's five-year auction. -- 93ooking at the spread basis points in the german tenure. how much upside is left? mike: if you look at where yields are, it is now a question of carry. will we see the ecb lower interest rates again, raise the amount of assets? ident think one can really look at any of those yields and expects structurally lower interest rates on the bond market. it is purely a game of carry, and the fact is that short-term rates are negative and 1% on

intermediate bonds. mike, before we get to the fed, i want to talk about europe -- french yields, a two-year negative percentage. beyond .3%'t go negative, they can't buy that stuff. is that what the ecb wants or did they not like what they see? mike: i'm not sure they have a strong view, actually. what they want to do is make sure that they have a set of interest rates which allow them to buy enough assets. they probably need to lower the deposit rates. -.3% is reflective of an expectation -- tom: mike, it has been a number fixedrs since 2009's

income, but it is getting a little old. what is the level of panic next year about institutional money meeting their actuarial assumption? when does that panic set in? mike: that is a long-term game. if you look across the piece, you have interest rates in europe that have been very low for a couple years now. the same story in the u.s., as you know. the challenge with that one is that generally speaking that investor cohort is generally given quite a long time to rectify. with us for will be a while but i don't think it will be a big bang. tom: i will go with that -- the idea that i need to make 6% in them only making 4%, but when does it kick in? five years out? 10 years out? mike: you can see what has been happening in places under this for a while. here in the u k, it has been a

problem for a number of years. the risk out of that, as investors lower their return expectations, they redirect money into their pension schemes, and they forgo business investment. you get in that nasty, self reinforcing feedback loop, whereby the same earnings are diverged -- tom: absolutely brilliant. that is the smartest thing i've heard on black friday. the idea that the financial end of things goes right over into the real economy through lack of investment. that is interesting. jonathan: it's fascinating. the other thing that interests me going into the federal reserve and beyond, the liquidity profile of your portfolio -- big houses are looking at liquidity premium and making a shift out of a high-yield space. they guarantee -- they hope -- a little more liquidity. is that the thinking of pimco right now, go to bonds with

extra liquidity? mike: we tend to have a high level of liquidity in our portfolios anyway, and you can see it metric in a number of ways. the valuation of corporate cash bonds. we generally hold a range of each because we recognize, and we will get this over the next couple years. youbalance of volatility, want to have cash to take advantage of those. we are in one of those positions now and it will be with us for quite some time to come. jonathan: mike amey, u.s. 10 year -- compare that to what is happening in europe. i know it is not apples for apples but it looks like high-yield. this time next year, what does it look like? mike: 10 year yields will probably be modestly higher. our forecasts are that they will be a little bit higher or thereabouts. we are not expecting a big market selloff because the fed will be very slow, and it will

be a very slow grind up. thank youmike amey, very much. quick thoughts from simon derrick. simon, it doesn't matter so much to you, the back end -- but you have seen what happened with that spread. i keep asking, how much upside is left in that euro short coming into december? simon: we are back to where we were in 2005, back to where we were in the 1990's. -- maybe it is more to do with what happens in the u.s. then what happened with germany. in terms of what that means for the dollar and what it means for euro-dollar, back in 1998 and 19 nine the dollar continued to make strong gains. given the fact that this is the best year of income we have been able to get for a decade, the dollar will continue to rally. tom: i see the dollar and i see

the 1990's -- the rubin dollar. no one is looking for an ever that concerns me is that none of the gurus are looking for significant dollar strength. well, you make a great point. there have only been three great dollar rallies in a relatively short period. aren't know that we realistic to compare, because it was a different world. makes a lot ofit sense to go back to the rubin dollar. . it looks just like 1998 in a lot of ways. we get to the end of the year and he comes back. we have cautious central banks, liquidity will be there, it will probably go into masonry and equity, where there

is any kind of yield. the dollar looks great, and people forget how strong the dollar was even in the latter stages of that 2000 rally. tom: and this is what makes "surveillance" so good -- not a number, just a few outlier calls of weaker dollar and stronger euro. it will keep me and jon ferro employed into 2016. gollum aslk to john he read tracts optimism in america. this is bloomberg's "surveillance." ♪ ♪

tom: good morning, everyone. a lot going on -- macy's is open right now. vonnie: for 12 hours now. tom: what am i going to do it macy's? euro-yen.is all jonathan: i am. we are talking about the abenomics friendly number -- this is a fascinating story between draghi and kuroda, and what is transitory about energy prices. kuroda is sitting it out and drug he is doing more. that is will we have seen over the last seven weeks, that seven-week decline. tom: the last time we looked at this was the euro swiss, and take out the dollar, long-term structural strength. abenomics is saying enough, we can take the strong yen.

rollover atmove in a critical level for yen strength. vonnie: exactly. a huge, 44 figure move. up the script -- i want to talk about euro swiss. when you were i were in zurich in the smb came in, we were looking at the swiss national bank to be that dramatic. jonathan: we aren't, but we have to rip up the script because i have not got dollar swiss up on my screen. it is at a 2010 high. you can pull up the dollar index as well and back through that level. that dollar index chart, that 100 line, is the federal reserve pain threshold. when we breached in the spring, janet yellen slapped it back down. andk, when you see 100 fundamentals going higher, the

fed is not going to sit there and let that happen. know that overdy the last couple meetings that they were worried about dollar strength. we know that will kick in even more. it will impact the commodities -- weaker oil prices, can think about what that means not just for this inflation forces to what it means for the u.s. energy industry. the fed, relatively speaking, will be slow on policy in 2016, precisely because of the pace of the move. i can they fight when everybody else is easing policy? jonathan: do you know how may times i've heard this over the last couple months, talking to the effect guys about a dovish hike from the federal reserve? do you hear that from wall street as well? tom: not so much, but we do make the understanding that we are moving from altra accommodative back to neutrality.

my question is -- assignment, i know you don't have an answer -- is this priced into the market? whether december 4 or december 16 -- i don't buy it for a minute. simon: i don't buy it either. people -- it of think coming into november, they will probably let people build up to this, but no, i don't think we have seen it. tom: we rip up the script square -- now we have to go to a cuban function. tell me, jon ferro, about euro-sterling, about the idea of euro ascendant over a weaker euro. is that going to happen? jonathan: this is an important trend. i think of it as the carney-draghi spread. mark carney is very sensitive to it. a stronger currency

against the euro, they worry about that. "surveillance" history on black friday -- we have never had a hat trick of ripping up the scripts. vonnie: we have never had the monetary policy, either. tom: we have also never had jon ferro on short notice. that was brilliant -- jon ferro, thank you so much. this continues for the next 14 hours. in our next hour, by popular howard will talk to us about retail in the underlying real estate. stay with us. ♪

tom: good morning, everyone. it is black friday, or black saturday in hong kong. a beautiful friday evening as they move on to the weekend. they have a lot to think about with him floating chinese stocks and ever weaker renminbi as china manages a challenging economy. right now we will manage a business flash with vonnie quinn. vonnie: for the first time, audi

has been implicated in the folks like an emissions scandal. both the u.s. and germany launched investigations into their luxury car unit. suspended to engineers suspected of rigging admissions tests. shoppers will actually show up for black friday sales at brick-and-mortar stores? onlineystems says that sales are expected to rise 22% from last year. is pitching to sell a supersized version of its superjumbo plane. it would carry 500 passengers, and airbus says it would be perfect for carrying pilgrims to mecca. it has never had more than 500 seats before. that is our bloomberg business flash. 615 passengers -- that is huge. jonathan: a crucial week ahead

to talk about it. ecb, payrolls, a meeting in vienna called opec. the payrolls number comes right before the federal reserve meeting late december. looking ahead to next week, simon derrick, let's play again -- bloomberg terminal. you will be sitting at home, and you are allowed to predict one of them. 21 the loaner? -- when do you want the loaner? simon: ecb. payroll will make that much of a difference. opec, we are you know how it will go. so i want to know what the surprise is. jonathan: a deposit rate at -.2%, qe at 60 billion euros per month, than the prospect of a little extra to expand the pool

of assets. what are you looking for? simon: well we are talking about getges for banks -- do we something more dramatic on the negative deposit rate than has already built into the market? who knows, but he promised a surprise. the only thing he can do -- tom: the careful what you wish for. i have a german to your -.426, grinding down to a positive .46%. swiss 14 year is negative. all of this is pushing against the proverbial american strength, and the mathematics i learned in school. a negative rate is quadratic lower, with huge impact -- when do we get to the negative tipping point? moment, -- that is the point. we go back to 18 months ago and . was talking

about lower policy yellow we have seen elsewhere -- we know it is not enough. right now the central bank is looking at this and saying we don't know what the lower band is and we will feel our way. generally, who knows? the interesting thing, and how we may get a little closer -- the ecb makes its move. what does the s&p do? what does the danish national bank to? what does the riksbank do? they have to do something that is even more dramatic to fend off those plans. nie, if i have $100,000, i have to play the government $430 to take my money. vonnie: exactly. even if the ecb lowers the rates by 20 basis points, on top of that -42 basis points, do they

need even more? well, there's always -- i genuinely don't know the answer to that question. what i do know is that right now, the ecb is clearly trying to do something, a shock and all move. you can argue about whether it is to get asset prices moving, or to get a sharply weaker currency. most of us think that the currency element is definitely one part of this. move -- ithat parity will be pretty happy. vonnie: the other question i have is that report yesterday from reuters, suggesting that there might be a two-tier interest rate system. how likely do you think this is? is this just a bonding thrown into the market? simon: i think one of the things

new has been handled is ideas being injected by these leaks. how much we take them on board i really don't know, but maybe it says more about the way these stories tend to break more generally nowadays. jonathan: final question. we talked about the lower bound and no one seems to know where it is -- what do you expect on thursday from the ecb? simon: i think it is probably 10 basis points. me thattier says to they have to do it with further qe. maybe they will do another 30 billion per month -- who knows? jonathan: every single ecb meeting they talk about how high the expectations are. but once again, the expectations are right appear and i'm not sure how we get to them. tom: my observation is that the markets are moving and you wonder who is out in front -- the markets of the bankers. see that negative german

yield where i would have never thought it would have been a month or two ago, -.42%. speaking of not being able to afford it, francine lacqua and i will be next friday in paris at the climate conference. this news is front and center, particularly with the tragedies in paris. leaders will be coming together to come up with a new agreement. we will be there friday, december 4 after a good week in london. "surveillance" from london and new york, stay with us. ♪

china stocks slump. the yen appreciates. commodities struggle to find a friday bid.

greatand hollande -- the illegible. black friday. retail adapts and retail panics over amazon. good morning, everyone. this is bloomberg "surveillance" live from our world headquarters in new york. it is friday, november 27. jon ferro in london. we have a day that is supposed to be quiet heard forget about it. markets move. jonathan: the dollar index back to 100. that was the pain threshold for the federal reserve and spring. the big question for the december meeting, you deliver a high. how shallow is that going to be? about on thetalk foreign exchange but the bond market. a busy day. here is our bloomberg news. vonnie: the president of france is vowing to destroy the army o