anna: consumer inflation picks up, as stimulus picks up. manus: the ceo of norway's sovereign wealth funds tells bloomberg to have recovered lost ground. >> we have got back everything we lost. it is going to be a profitable year. bloomberg sources say that dow chemical is an late stage talks to merge with dupont, and which would be the industry's largest ever deal. ♪

to -- y welcome manus: welcome to "countdown." anna: commodities a big theme. by some concern investors around the high-yield markets in the u.s.. the junk-bond ecf close at a six-year low. we talked about high-yield bonds and the spread has been whitening. -- widening. now the goldman sachs event expressing concern. talking about real carnage in junk-bond market. -- markets. they say they have the most investment opportunities since lehman collapsed. manus: it worries me when you have a major international -- when you talk about

this junk-bond or these high yields, when you look at the oil industry -- a big portion -- the yields are rising to the highest level since 2009. that goes back to the conversation we had yesterday, a lot of restructuring. a lot of expense to repay the 1.5 trillion -- that is the size of the u.s. junk-bond. news.let's the first word reporter: chinese consumer inflation beat estimates. cpi november rose 1.5% year on year. the producer price index fell 5.9%, extending declines. meanwhile, the people's think of china has cut the u.n.'s interest rate to the weakest since 2011. they are trying to release

pressure before an expected increase in u.s. interest rates. they say dow is in talks to merge with dupont. an agreement could be announced as soon as this week. after the merger, the company would break into "on the move or three businesses -- two or three businesses. donald trump said that muslims should be barred from entering the u.s. after the attacks in paris and san bernardino. he is refusing to back off of the comments. unusually large items left at an airport. advertisement asking for the untraceable owner of three towing planes to get boeing planes to come get them. , the: let's bring matthew

head of global equities at henderson global investors. taking us through some of the big stories overnight, where should we start? yahoo! brings my bow -- rings my the strategy has not played out. we all know, as you look at the share price returns she has delivered, they have not been that good. then we have had the alibaba debate. that debate is rumbling on. underlining all of this is the lack of revitalization in core business. standsk at what yahoo! for -- investors are not

convinced the core yahoo! -- sayingyou made the point it was absolutely predicated on the structure of value. anna: that was what the plan was. if that didn't happen, maybe investors reevaluate. if we see a big chemical tieups between dupont and dow, that would be the largest deal ever any sector. does this have an indication for european crop chemicals? matthew: this business would be too big to invest -- exist in its current form. opportunity for those looking to bulk up in certain markets. it will be a large, cost-saving opportunity. dow chemical, with dupont had been looking around for a activistfor aggressive

involved in the stock two years ago. this is a natural manifestation. updatelet's get an agent -- asia update. heidi: it has been a taxing day when it comes to the asian session. we did see a few green shoots. we have several steep losses for japanese. the nikkei closes 1% down. index.ile we have investors playing broader attention to the global story -- the commodities route. aussie shares of 6/10 of 1%. -- up 6/10 of 1%. -- ipo's.x new ideas being cut by a lot of weakness, particularly in the industrial space. thent to talk about

ical cooperation is down. i am is another stock watching, it is one of these green stocks that is doing poorly. this despite beijing bowing to do something about pollution as that red alert continues in full force and the chinese capital. we are also seeing out a downside move for the currency. it is at the weakest in over four years. 42 -- 6.42.a six. anna: thank you.

let's get more on the chinese story she was referring to. chinese consumer inflation picked up last month. meanwhile, the country's central bank at the u.n. reference rate to the weakest level since 2011. manus: the pboc is trying to release pent-up depreciation pressure before an expected u.s. rate hike. let's talk to our china economy team leader in hong kong. pent-uphis phrase, a depreciation demand. we are set for the lowest close in four years in the yuan. guest: it looks like we have moved on. there was a surprise move in august to free up the yuan, and then the big follow-up. -- fall out. and then the counter reaction, they must stabilize.

they spent a lot of money stabilizing the currency, selling u.s. dollars to buy it am a stabilize it. that was a key to get it into the international reserve basket. it is done now. last week they got the nod from the imf board and said, yes, we will accept it as the reserve currency. perhaps speculation from some economist that they can allow it to steadily go lower. it is a stress test going on to see how much lower it can go. this plays into the story from yesterday on exports. continuing export weakness should argue for a weaker you want -- yuan. anna: let's talk about the inflation data. what does that tell us?

malcolm: it tells us of some signs of stabilization. the cpi came a bit stronger. on the domestic front, it looks like demand is looking good. services prices are rising rapidly. level, at producer the price decline that we are seeing -- largely in a heavy industries, oil and gas, steel, everyone knows they are having a hard time in china. some of the consumer prices at this factory level are looking ok. taking all of that together, along with the more moderate pace of declines in in ports yesterday, perhaps there are signs of it was nation in domestic demand. manus: thank you. let's bring matthew back in. i love this, the pent-up depreciation. yesterday, everyone assumed the yuan would fall further. how much further does it take on

the currency to rebalance this economy, or is that your best case scenario? matthew: we all expect far too much from the chinese central bank. it seems clear, it is not possible. some of us are worried that the central bank is out of control in china. that has caused loss of confidence. we do know that the companies we , things arechina not as bad as people assume. but china isgood, or as much of a drag on the economy as people think. there is a depreciation -- it will be a pressure on the rest of the world. 1.5%, it is up by looks as if it will come in

about half the pace that the government wants. expectationd more -- matthew: a stimulus was possible it would have happened by now. to some degree the government is pushing on a string. i think the goal is stabilization. manus: thank you. is a look at what else is on the agenda today. we will give the german trade data. then we will get the minutes from the bank of england financial policy committee. get u.s.noon we will mortgage applications. we will also bring you big interviews with top news anchors. johnever we talked to longworth -- this afternoon we

talk to john longworth. manus: and then we have an interview with michael spencer at 9:00 a.m. london time. anna: crude reality sets in from the least to norway, we look at the reaction across the globe in an exclusive conversation. ♪

anna: welcome back, this is a live shot of beijing. 2013.alert since some driving restrictions have been put in place. it will be likely in place until at least thursday lunchtime. three decades of strong economic growth and the authorities say they will take it -- action.

in the meantime, let's get up to speed with a business flash. reporter: bloomberg sources say dow chemical is in late stage talks to merge with dupont inlet -- in what would be the largest deal in the chemicals industry. after the merger, the company would break into two or three businesses. a source says yahoo! will scrap the long planned spinoff in its stake alibaba. apple has suspended plans to offer a live, internet-based television service. ontead, apple will focus being a platform for media companies to sell directly to customers to its app store. , john cryer said the company is willing to pay higher cost to do business in the u.s., because other regions do not offer fees that can top the world's deepest capital

market. he says not to be in the u.s. would be inconceivable. for more on these stories and others had to the bloomberg terminal and bloomberg.com. anna: oil is rebounding from a six-year low. rallying for the first time in four days. caroline hyde got to speak with one of the world's biggest oil producers, as well as the world against sovereign wealth fund. is the oil industry panicking? caroline: slightly. i spoke to be seventh biggest oil producer in the world, and i spoke to the chief executive itlining he is worried with falling yesterday. because it is putting off investment. there has been $200 billion drawn out of the market, so says the chief executive. he says we need to get to a higher price. have a listen.

claudio: i think it is the right price. we are cash neutral at $60. i think the right price is not just the right price for us, it is the right price for the average in the industry, and also for the producer. caroline: he wants $60. he says that would be good for a producer, and a fair amount for an emerging producer. check out this terminal, look how low forecast have gone for brent crude. this is where they see brent crude being price for next year. look what analysts thought it would be trading next year -- that this time last year. they saw it at $91. we now see 2016 -- not getting to $60.

instead it will be sub $60 throughout next year. it will be $57.5. great bit of an analyst coming from the terminal. coming fromcerns the oil market it is not where it should be. manus: you also spoke with the norwegian wealth fund, this is fascinating. high times have changed amid the oil, given that the funds carried by oil has been given all of its revenue from falling gas revenues. what has changed? caroline: i know you have spoken to him. executive of the biggest wealth funds -- a wealth fund pumped full of money, $850 billion worth from oil and gas revenue. they are suddenly, for the first time, actually going to see withdrawals. they will see less inflows.

the government of norway looking to take money out of the wealth fund to be able to stabilize the economy. it is so dependent on the oil and gas industry. talking about this new paradigm shift in this era of thirst redemption for the company -- interestingly, they are going or risky -- more risky. they will continue to move away from bonds, dramatically get out of bonds, instead going to risky equities. they are bouncing back. >> i think the norwegian economy has gotten back everything we lost. it will be a positive year. last quarter,he their third quarter, they had their biggest loss in more than four years, $32 billion. in just a quarter, they have completely made that back.

clearly they are managing to restructure the way in which they invest. they go for more appetizing returns for the emerging markets. big investors in china, despite the slowdown, are managing to make back the losses. as you see, the chief executive of the norwegian wealth fund being it will be a positive year. anna: the plunging price of oil has been hitting the gulf states. government spending plans have been thrown into disarray. thank borrowing costs are up and stockmarket have been hit. the council is home to around 29% of the world oil reserves. manus: let's bring in elliott. it looks like abu dhabi stocks are being treated as almost where they were. i was in the region this time last year. there was that great excitement in terms of the redefining of some of the gulf nations.

: there are three categories come have developed, emerging, and frontier. frontier markets would trade on a lower valuation because of the inherent risks associated. abu dhabi, which together with dubai holds around 60% of the world oil reserves is actually trading at a lower evaluation and frontier markets. -- then frontier markets. if you look at the chart, abu dhabi stocks are trading on a .4 times projected earnings -- 8.4 times projected. frontier markets are trading at nine. this is suggesting investors reckon there are more of sides accounting for the risks and frontier. -- in frontier. you have seen volume wendling as as saudi -- dwindling

arabia is the outlier. these are more them -- examples of how these oil dependent economies are being battered by these low oil prices. output inning to cut order to try to boost prices, there are those out there who reckon that there is still more to run for loyal -- low oil prices to filter through. others view it as such a low of valuation that it is perhaps time to go into these markets. just because something is chicas not make it a good value. -- just because something is cheap does not make it a good value. anna: thank you. matthew is still with us. manus has crafted a question.

is crude bottoming out? matthew: it worries me when you look at the chart and analysts play $62 on oil. -- place $62 on oil. price --ollowing falling price. the energy have been the worst performing. there are substantial downgrades to, if they do not go up. regardless of the quantity, it has to move quite a long way. manus: i was thinking of some of the market components -- the on energyort position is 5.5%. the average is about 3%. most short positions in this products are by commodity trading advisors. have the specs been trade -- flushed out?

matthew: they had been started. fundamental investors are looking at their earnings models. there is momentum in the stoxx. cks.n these stoick it feeds neatly into the stresses of the high-yield market. marks overnight, expressing concern or telling you about a great investment opportunity. -- of that around john bond junk bonds, is this of me that could infect the broader economy? investors have things they watch. when we think about u.n. -- one of the things they look for is high-yield markets. this is a recession indicator. the good news is, it is the only one on the dashboard flashing red right now. anna: thank you. next, is yahoo!

ditching its plan to offload alibaba. all of that when we are back. what is marissa mayer's next step? ♪ sure, tv has evolved over the years.

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manus: it is 6:30 in london. let's go to the first word news desk. reporter: chinese consumer inflation beat estimates showing that demand is stabilizing. cbi in november rose 1.5%. meanwhile the producer price index fell. meanwhile, the people's bank of china has cut the reference rate to the weakest since 2011. that fuels speculation that the central bank is trying to relieve depreciation pressure before an expected increase in u.s. interest rates. bloomberg sources say that dow

chemical is in late stage talks to merge with the pot in which would we the largest deal in the industry. after the merger, the company would break into 2 or three businesses. douglas tompkins has died following a kayaking accident. the 72-year-old also started the fashion company espirit. anna: thank you. caroline hyde is watching all of the market action. caroline: asia following what was europe and the united states lower today. 225,a look at the nikkei down by more than a percentage point. the commodities, the miners are feeling the pain. the next shot highlights the commodity index. it is not managing a rebound. we are seeing slight

improvements in prices, but copper remains lower today. nickel remaining lower. index, we have had five months of declines, this is over the last three days. not managing to muscle much. here is your interest rate prices, iron ore is more than 1% lower. have a little look -- the clever function on a bloomberg terminal is forecast for oil, where they stand now, and where where they last year? for 2016 we see no improvement. we could see it getting up to 57.5. this is forecast for brent crude, heading sub $40 for the first time in almost seven years yesterday. in 2014, this time last two, analysts thought we would get a price of $91 per barrel next year. now we will not get $62.

concern.here is rsilast clever little fact, , this is all about your overall market moving trending data. it is not saying it is oversold. even though it is some $40. the rsi is that $33. if you get below 30, it shows a certain asset is oversold. as yet, it does not seem to be. manus: thank you. yahoo! also in the news. it is scrapping plans to sell its stake in alibaba, after pressure from investors. marissa mayer will have to turn to other strategies, including a spinoff of its main internet business. tell us more, is it pressure, is that a u-turn, had we look at this? -- do we look at this?

reporter: you will remember in january, she really talked about a possible -- possibly selling off the alibaba stake, worth more than $30 billion. yahoo!'s market value is about $33 billion. since then she has come under pressure from investors who have been concerned about the tax risk of the deed -- deal. they could get hit with a tax bill of more than $10 billion for spinning off of alibaba. what yahoo! is considering now, according to a person of knowledge with the matter, is spinning off of its main internet business. that would mean that yahoo! would be left as a shell that owns shares in alibaba and yahoo! japan. would anyone be interested in this? how much for? we have heard verizon is interested. analysts are estimating a selloff of the business could

raise around $3.5 billion or more. some analysts say it would be last than $2 billion, depending on who was buying. of course that sounds less than the holding alibaba, you get a sense here that meyer is running out of options. sales are harboring at 2006 levels. investors are running out of patience. google venture ceo, bill mirus book to bloomberg west and he outlined some of the challenges. bill: she has a tough job, i respect the fact she has walked into that and is trying -- it is a difficult problem to solve. expectations were so high when she entered the company that lowering of expectations might help a little. reporter: expectations were indeed high when she took over in 20 of 12 -- 2012. turn thetruggled to

company around. we are about a web business that is thinking -- thinking of spinning off its main web business. anna: you wonder what is left. let's go to to another ceo, john cryan has told an american audience that the bank's performance has missed the mark for a long time. >> we have to start from where we are today and provide for everyone a vision of how the bank can be better. we have at least admitted it needs to be better. it clearly has not performed for quite a long time. it has been an underperformer, we recognize that. manus: let's go to hans nichols. listening to him, he is a man on a mission. he seemed to complain about the cost of doing business in the u.s.. does the bank have plans to scale back its operations? that is pretty much where he

sees the future, isn't it? hans: it was an interesting comment. talking about the cost of doing business in the u.s., but the fees are too lucrative to pull out. that deutsche bank still has ambitions to be a global bank. john: not to be the u.s. would be inconceivable. spent time in asia -- it is usually competed for. -- usually competed for. it is not a replacement. hans: and higher capital ratios, standards for those deep capital markets and the potential for fees in the u.s. will not be pulling out there. he almost seemed to suggest they would be pulling out of asia. he did not go that far, but he was complaining about the fees in asia. that contrasts with his credit

over a credit suite, the men you know so well, when you look at asia, they are going full on. you look at actual revenue, deutsche bank is leading in the hat -- first half of the year, they are the first place in revenue from asia. credit suite is all the way down at six or seven. in the u.s., credit suite and deutsche bank are tied for sixth. i was the human some way to explain this, i settled upon -- think of deutsche bank as your taylor and think of yourself as the u.s. market. you need to have high standards, a lot of liquidity, but the fees are too lucrative to leave manus cranny behind as a taylor client. manus: my taylor cries every time i come in. anna: matthew is still with us. let's talk about the banking sector. big restructuring story.

interesting? matthew: the scale of the opportunity for the restructuring, that is a fighting, and given the upside that could come. it is also intimidating when you is.out how bare it have is whereem i he is hoping everything is underwhelming. in terms of what the bank is being left with. when you compare to credit suisse -- deutsche bank is not as focused at the endpoint as they would like it to be. that mismatch does not create excitement. manus: you mentioned a couple of onnd names, this brings thinking on asia for well, ubs banks on china and asia for their growth and wealth, but they are ready to restructure.

the message -- message from john cryan in terms of pulling back from what is a highly commoditized -- matthew: what are we going to be left with? presence,rman retail there is not a jewel in the crown that existed where you can see growth and high returns. deutsche bank -- you see ultimately current volatile business. investors will pay a discount for that. anna: we hear so much about european banks going away from investment banking, or rightsizing their investment banking operations. is there space for somebody here to pick up some business in investment banking? is there too much of a regulatory headwind? matthew: it is the latter.

the cost of doing business is too high in terms of capital cost. as an investor that means low returns. as an investor, you do not want to be heavy and capital. you want in the high return growth market. risk is one ofn those magic phrases you hear from a lot of people. choice to pursue his strategy in the u.s. -- it is riddled with risk from where i stand. the competition is so fierce. matthew: this is what i am and -- john mr. cry cryan laid out how antiquated deutsche bank risk management systems are. but the upside is of course, through pointed an aggressive investment, it will uplift and returns to margins.

investors will say, is the scale of the opportunities large, we must pay a discount. anna: you do a lot of bottom-up work. -- pick stocks and companies is there anything in banking at the moment that you say, they are -- i want to be involved with this business. boring, we find domestic focused retail franchises across europe. we find restructuring stories to be hard to get her head around. -- our head around. be -- for us, boring is better. family --a beyond the is rbs beyond the family? matthew: they are aggressively

pushing her. anna: thank you. up next, we find out why the british chamber of commerce is looking at the growth outlook. ♪

anna: this is "countdown." let's give the business flash. reporter: bloomberg sources say that dow chemical is late date stock to merge with dupont in what would be the largest deal in the chemical industry. an agreement could be announced later this week. surge an extended trade after a source of the company will scrap belongs graham spin off and it's stake

in alibaba. apple has suspended plans to offer a live internet-based television service, according to a person familiar with the matter. instead, apple will focus on being a platform for media companies to sell directly to customers through its app store. saysche bank, john cryer the company is willing to pay higher cost to do business in the u.s. because other regions do not offer fees that can top the world's deepest capital markets. the 54-year-old said not to be in the u.s. are be inconceivable. for more on these stories and others had to bloomberg terminal and bloomberg.com. manus: let's bring you that live shot from beijing. this is the reality of why we have copped 21. you have the city on a red alert. it is likely to remain in effect until thursday. this is the first red alert over pollution levels in beijing.

you have the mayor of beijing, pledged pledged -- once to cut off his own head if they cannot contain it. restrictions in a mitts this -- a mitts this. amidst this. our international correspondent hans nichols took a bike out for a ride. hans nichols riding a bicycle might be easy, but designing one can be rocket scientist. it is here at linda's application technology center. i will hop on and see how it goes. it accelerates. with thegen combines oxygen, creates a current, and propels forward. -- inly omissions, water missions, water.

an energy conduit of about one kilowatt hour. hans: your average bicycle is already ready green -- pretty green. the point of these bicycles is to make people like me, it -- converts. to convincee is consumers that hydrogen is not only safe, but convenient. just threehere are filling stations in austria and fewer than 20 in germany. that is hydrogen's main challenge, a network. germany plans to install more by 2023. the investment is often twice as much as a conventional gas station. --ing the bicycle purposes produces little human exertion. the exhilarating power shuts off. cheap, but even

uphill with 250 watts, it feels like the wind is always at your back. talking to the camera, while riding uphill. manus: he is talented. anna: he is not here to defend himself. --us: this is live tv merging market pressure looks like the bloomberg big brother house. day six in terms of emerging markets under pressure. matthew is here to discuss. when you look at the yuan, they are relying on a moderate move. emerging-market stocks are under pressure. exports are dying. there is still a great deal of pressure in emerging markets. matthew: it will come from the dollar. that will come from the outlook for u.s. interest rate.

when you look at fundamental emerging markets, there are certain areas where demand is investors, with a lack of upgrade lack incentives to invest. they are in favor of the safety of developed markets. uan is-- yo tethered to the dollar -- that could hurt the chinese economy because it is geared to the trade environment. view,w: this comes to my the tight rope is narrow. the tension between the dollar and non-dollar amount of -- non-dollar. emerging market consumption, the

tight rope is very narrow. back to thegoes story that says this is a precarious moment in time in terms of raising risk in the u.s.. there could be significant repercussions in the high-yield market. a wage cut iny of canada has a most doubled. the central banks around the world are inevitably going to have to kick back against the fed next year. becomes a race to the bottom from an interest-rate perspective. at some point, it will kick back and have inflation for the entire world. anna: after we saw what happened to the ecb and the market -- do you see that has further to run. will we get more from the ecb?

you are mentioning currency wars, -- says thathe ecb further rate cuts will not justify. if you look of the data out of europe, it is indecent -- it has been decent. draghi -- next are the pressures we are talking about now will be more to the fall. manus: will be swift be on hold -- swiss be on hold? matthew: i would be surprised if it was not the case. anna: thank you. manus: let's talk about the british chambers of commerce. there is a worsening global outlook -- it says they will persuade the day giving lead to keep its key rate on record low for the third quarter in 2016. we are joined by john.

you did not get the memo from george, we have our mojo back. where you demolishing george's message to america. john: we did not restructure the economy, did we during the last parliament? what happened to march makers, rebounding towards exports, none of those things have been done. that means the economy is driven by debt. that is consumer spending based, asset based, borrowing money to the financial system at ever increasing prices is not smart. we end up with a boom and bust cycle. we really need to do that rebalancing while we have good growth. let's be clear, we are saying that actual growth in the next three years will be good. so much for those people that said we would have to put up with a new norm of low growth. that is not true.

we need to do something about the economy while the sunshine's. -- sunshines. anna: in terms of calling on the u.k. to export more -- fine, but the global trade and market looks shaky. i have heard advertisements on the radio for contact this number if you want to -- health in exporting your business. the government is trying to get companies to export more. john: there are structural things in the economy -- drag exports is back. canada forin example, the governor of the bank of england comes from there, it is not exist in the u.k.. that facility for nonequity finance does not exist. infrastructure -- we have heard quite a bit about development, but we have not seen anything yet. we are waiting on a powerhouse.

waiting, waiting, waiting. digital infrastructure is still not great. we need to actually get infrastructure development going to facilitate exports. we need to have access to finance. we do have that export support on the ground overseas. in the old days it would have been a sterling crisis. it is not a no-cost gain. having the deficit we have means that the flows are actually negative. you have to sell off assets in the end to fund it. john, i hearing to what you're saying. everything we were promised in terms of restructuring has been the emperors new clothes. you would suggest that he has not done his job. when you look at the u.k., you have a variety of perspectives.

that level of growth with the challenges sterling, hadi look at the u.k.? -- how do you look at the u.k.? matthew: it looks better than some. the country's commodity driven -- it looks more attractive to invest in globally. anna: the autumn statements seem to be a backpedaling away from austerity, even if that is how people characterize it. was that how you saw it? was that how you characterized it? john: absolutely. there is very little in the autumn statement the businesses could find fault with, other than levees. nonetheless, for the most part it was ok. it was what was not there that was the problem. 27 billion pounds windfall to spend on restructuring government and the economy. that's not happen.

-- that did not happen. that was the big opportunity. to coin the phrase, six the roof while the sometimes -- sunshines. we should be restructuring the economy. so we can face potential headwinds. global debt to gdp ratio is high. if interest rate go up in the u.s., and a lot of the debt is denominated in dollars, that could lead to a slowdown. we in the u.k. need to be positioned well to weather the storm. also pushed back your view from the second to the third quarter for a rise in interest rates for the u.k.. hase a bit of a discussion been made about the unsecured debts rising, our capacity to

deal with a change. a paradigm shift, a generational shift in interest-rate, what comes through from your members? john: i have talked about the credit crunch. , getting access to nonequity finance is important for them. if there was a sudden increase in interest rate, that would make things a bit tougher. we have record low interest rates. we have record low oil prices. we are in a very good situation to grow the economy. not all of that is bad by the way. we have actually advocated the government using this opportunity to issue special funding to infrastructure rebelled out -- redevelopment. anna: you have sympathy with the qe. john: there are right-wing economist at the depths of the recession that were advocating helicopter money.

it is not outrageous. anna: thank you. asian markets -- manus: the nikkei is down by 1%. the inflation story in china begins to stabilize. there is the shanghai composite. anna: we have a busy morning ahead. ♪ manus: china stabilizes. the euros interest-rate cuts support demand. anna: the ceo of norway's sovereign wealth funds tells us they have recovered lost ground. >> i think it has funded itself. we have gotten everything we

lost in the third quarter. you will be a positive year. -- it will be a positive year. bloomberg sources say the dow chemical is in late stage talks to merge with dupont in which would be the industry's largest ever deal. welcome to countdown, i am manus cranny. anna: let's get this in german data. we have exports down by 1.2%. this is a month on month number also down by 3.4% with a balance of 23 billion, just below the 23.7 billion we were expecting. had a little bit of a rebound.

we have can -- some concerns with the high-yield market. we've london indicated up by one quarter of 1%. the markets are really just getting a little bit of relief with the inflation data and the cpi be in china. you are also seeing the mining index up for the first time and billings worth off a tenure low. bloomberg's first word news with caroline hyde. >> they are stabilizing. thenumber rose 1.4% beating forecast. meanwhile there extending declines to a record 45 months. meanwhile the people's bank of it to the weakest

since 2011. it fuels speculation they have an expected increase in u.s. interest rates. bloomberg forces the dow forical is in late talks what could be a largest merger in the chemical industry. the copy could break into two or three businesses because of regulatory and other industries. the white house says donald trump is disqualifying himself from the industry. trump is refusing to back away from his comments despite almost universal condemnation. the north face founder and noted conservation -- conservationist has died following a kayaking incident. anna and manus? manus: let's get a little bit more on the trade data at the

top of the hour. hans nichols is standing by. you had 2.5 minutes, give us your interpretation. hans: experts to some -- exports disappointed, but imports were down to 3.6. that gives you a sense of why the trade balance went up. we had that weird number in august down to 15.4 billion, now we are in the 23 million, don't hold me to that because my screen just which tommy and i did not have the right one up. what we have seen does not seem to be happening quite as severely as we feared. at the same time, exports are down and they did come in lower than estimates. be a little bit more of the leading indicator to give you a sense of what factories are doing in terms of inventory.

sometimes we have seen that negative import number scope through later on and show little bit in terms of growth. but right now with have exports and they did not meet expectations. thoselet's check in on asian markets. heidi is standing by with an update. it is still a day of negativity in asia. we have been talking at length about chinese inflation data. while it wasn't terrible, it wasn't great either. shared it's usually a bit of a problem for people in china. 225 had a ban on machinery orders. in the last few minutes we had the chinese market closing up shop for the day, shanghai just

managing to get above water but i am calling that flat. i want to talk about the big movers and take losers. 0.8% but a bity of a recovery bevan really battered. weakness with metals attached but that metals corporation of china down, this is a company with a control -- consolidation story when it comes to the center in china, this is an effort to try to streamline part of that effort. this is one of those green companies tanking today despite beijing authorities saying they will do more when it comes to clamping down on pollution. it is really another day.

is what heidi was talking about. alert being issued by the chinese authorities. it has resulted in schools closed, factories closed and driving restrictions in place. manus: china's consumer inflation picked up last month. price gains for food and services in the reference rate. pboc ision that the trying to move went up depreciation -- pent up depreciation before the fed rate hike. anna: we have data on producer prices and cbi today. what does the latest data tell us? the industrial sector and

heavy industries are flailing at the factory gates there. 20% for steel products but on the consumer side, prices are not total bed. outlet, consumer prices are a little bit more than what economists had expected still -- expected. still, it is about half what the central bank wants. plenty of room for quantitative easing next year. manus: talk about the move in terms of the you want. theve the phrase we used in introduction which is a pent-up depreciation. >> we have this pent-up depreciation and a desire for lower yuan, but the pboc has been stepping in ever since that

august move did allow a more market oriented approach. they been stepping to prop it up because it wanted to be part of the reserve counter market will stop now there is a little steady trickle down in the yuan. the pboc is lowering the fix each day. seen four days of weakness in the yuan. the question is how much further will it go? some is that they are trying to get in ahead of the fed move. yuan.s. dollar and the have been moving very closely together which is not good for the chinese export competitiveness. weaker yuan should help on the macro front. anna: let's bring in an

armstrong.- anna we're having a conversation about the latest chinese inflation data and what the authorities are doing with their currency. you expect the currency to be devalued further? >> it is very possible. the priority of the policymakers is to avoid the hardline bank. this would have quite a bad impact on the global economy and the region as a whole. especially those countries that would close ranks with china. don't be surprised if you see further devaluation of yuan. manus: we were having a conversation with matthew beasley and he said, globally we are probably expecting too much. the rate cuts and the theirement cuts --

mathematical equation has not had a desired outcome in terms of our perception. what comes next? we have been discussing the yuan movement and everyone agrees it will depreciate. what is the time spent in the levels? bloomberg intelligence has said more rate cuts to come. >> i think it is absolutely going to happen over the next year. however, global growth is to let 3.5%. far toowe're betting much on demand from china and it u.s. and europe we to increase demand in those regions. if you think about the chinese exports, it's very important for the economy. you can see the local consumer is picking up in the local market. impactquestion is, what has the slowdown had over the

next year? it is not just the slowdown of the exports from germany to france but it's a second round neck and be much higher than the first round. anna: how worried are you about corporate profits? he was saying if this were a normal economy, by which he meant one you can look at through a western lens, if it were that, we would have seen more bankruptcies and more companies going to the wall. we have not necessarily seen that. are you worried about the corporate profit level of debt? >> well $1.5 trillion is invested there in china. billion of corporate earnings in the u.s.. -- 10%, overt the one trillion in chinese context

but it's one made by a chinese investor. disregarding singapore and hong kong, they are exposed. manus: let's try to take the conversation and get it into reality. the consequence of everything we discussed has ramifications for minors, commodities. i found my favorite figure of the day. is 400rage u.s. hike hands of copper wire and copper pipe. let's talk about the minors. yesterday's demolition derby, which is anglo-american, followed by the year performance. anna,american down 3%, where are we? a rocky year for the miners. understatement of 2015.

it is about china and a variety of issues. >> putting things in perspective, chinese demand counts for 50% of demand for iron ore and many metals all stuff you can see that the chinese slowdown has a huge impact on demand. policymakersese shift so the consumer will have a great impact, but producers have been good at adjusting the supply until demand balances the same supply. you can see that in the sugar market over the last three months. i think it will be an adjustment and that is in the commodities market and mobile recovery is quite helpful, but i don't see any reversal in commodities prices. look at the sugar prices, for the first time in six years, demand was higher than supply

because it is used to production in india and thailand and increased demand for ethanol. supply is gradually adjusting. anna: it wasn't just the mining companies having a bad day. but in the u.s., become pete was cutting their dividend -- a company was cutting their dividend. manus: petroleum fell apart yesterday as well. bouncing back. the head of norway's -- exclusivemberg in an conversation. ♪

anna: welcome back, let's get the bloomberg flashes. caroline: bloomberg sources say

dow chemical is in the late stages to merge with dupont. after the merger the company would break into two or three businesses. yahoo! shares surged after extended trade after they will scrap the extended spinoff of its stake in alibaba. bank code ceo says the company is willing to pay a high costs to do business in the u.s.. the 54-year-old said that not to be in the u.s. would be inconceivable. morgan stanley has named alistair darling in the financial crisis at a former member of the british parliament to its board of directors. advisoryreated a new board including gordon brown and ben bernanke.

i know we will talk you about the oil markets in just a moment. we've been talking with elliott about some of these budgets. the 2016day that budget will be based on a conservative oil for cost -- forecast and that estimate will be based on lower than $50 per barrel. manus: to bring it to the bloomberg forecasting page we use, if you look at where we are year, moment, versus next you are still looking at the brent forecast at $56. that is still below the top end. anna: it has been dominating the conversation over the past week. you got to speak with one of the world's biggest producers. is the industry panicking?

saying they are used oil below $65 a barrel, that is not music to the ears of anybody. me chief executive telling that they need $65 a barrel for to make sense for oil company invest as they should. to keep the investment going, to keep the lights on, you need $60 per barrel. one of the largest oil companies buting me $40 is too low not only was i speaking to one of the biggest producers but the world's biggest wealth fund, norway's biggest wealth fund the entirety as inflows from oil and gas. norway is dominated by the oil and gas industry. this is a fascinating paradigm shift because they are starting

to see a change or a move. for the first time ever we will see money removed from the management to push into the economy. overall they're managing to weather this storm with asset prices but they will have a positive year. listen to what he said. i think the norwegian company got economy has to learn to fund itself. it will be another positive year. everything.t back they lost $32 billion in the last quarter and have managed to get that back despite the chinese uncertainty. this is a wealth fund reorienting itself getting ndsmatically out of ons -- bo

and turning to equities, in particular, emerging market equities. and armstrong -- ana armstrong. the qatari think they can budget at below $65. the norwegian sovereign wealth fund -- wealth fund battered. take of the consequences of volatile oil. thatrst we have to say need oilproducers do $55.s to be above the saudi arabian producer is struggling with a deficit of 90%

. it. quite a few infrastructure projects because of the collapse in the oil price. anna: with spencer much time talking up the negative implications, there were supposed be positive for the global economy. >> for all those countries importing oil, eastern european countries, india and others are doing well. but they're also taking out of u.s. gdp something like 0.5%. we can see that the countries producing oil cannot really sustain at the current level. one of the potential investments is to be a larger producer of oil, they will benefit from the

consolidation process. i do want to reveal companies at this point, but small companies will not be able to adjust. anna: big cache files benefit -- companies with big cash piles, benefit from m&a. manus: some of the middle eastern pegs being challenged. could that be a gray swan of 2016? >> oil prices will have to go up. it is in the interest of producers to push prices above $55. it is much needed for these countries. if you can talk about the wildcard for 2016, i don't think it will be the oil price. anna: thank you for spending time with us this morning. anna armstrong from armstrong

investors. up next -- manus: we have on the move. stay with us on the equity artist in europe. ♪

"on the move." to we are counting you down to the european open. i am guy johnson along with jonathan ferro. jon: straight to the commodity market this morning. brent pboc are

trying to get in front of the fed. guy: let's go to caroline hyde. caroline: dow chemical is in late stage talks to merge with dupont, according to people with knowledge of the matter. an agreement could be announced as soon as this week. 1.2%, importswn also dropped by 3.4%. the white house says that donald trump has disqualified himself from the presidency. he said muslims should be barred from entering the u.s.. trump is refusing to back away from his comments despite universal condemnation. less than half an hour to go until the european open. let me tell you what we think will be a story today. if you look at the fair value calculations, euro stocks up by

0.3%, cac 40 up by 0.4%. the dax up by a run 0.3%. you are looking at the futures. it looks like europe will stabilize. that is probably the best case scenario. jon: stabilization is the opposite -- operative word. brent crude, you have the chart up. you were watching with $40 and we dropped below $40 for the first time since february 2009. we are up this morning. let's call it stabilization. dollar-yuan a really interesting story. that pair right there is a 2011 high. euro-dollar back through $1.09. guy: it has been a fascinating 24 hours.

maybe we can call it the calm after the storm. let's talk about how we progress from here. let's welcome wayne bowers, that is what the miners did yesterday. ak.is the ceo for amp billion.oversee $870 miners got crushed yesterday, brent oil is sub 40, is that changing your paradigm? >> the commodity move down has been significant. everyone is focusing on the negativity. especially for the miners. but whether it is antarctic research, north sea, deep-sea oil, there has been a significant cut back in terms of planned expenditure and actual

expenditure. of thedon't lose sight positives for reduction and oil and energy and commodity prices as well. for certain regions that need help and need stimulus. japan and china have other regions as well where you could argue that the effect is have is a significant increase in stimulus. fm our perspective it is a double-edged sword, but we are looking at more winners versus losers. but the bottom line for yesterday's session was that anglo suspended the dividend into next year as well, we scratched our heads and wonder, is it going to happen to rio? as you look at the extraction industry, is this the beginning of people facing the reality in the commodity market? the potential for more dividend is small. >> lower for longer is a term

that we have used for the last few years, whether it is monetary prices, ponte yields, core commodity -- bond yields, core commodity prices. you have some short-term, fundamental price action that really drives significant change. they can be shut down quickly. as i mentioned in the opening, we are seeing more long-term capital expenditure. are very important. we probably questioned some of the analysis, especially in the middle east countries. we don't think it is as high as is being floated out there. but you look at some of the long-term trends and we think it is a lot lower. jon: it is the story of the year. guy: technology is amazing and it keeps delivering. , and, when these guys turn

this is a story we have been juggling with, when they turn, miners and oil companies tend to be a real player on the commodity playground. picking your entry point is critical. is there any understanding in thatmind when we approach point? butt is not just valuation we need to understand the global macro economic development as well. reduction in need for demand, especially in places like china. rice point of view you may not have match that with a -- from a price point of view, you may not have matched that with demand. but i think we have seen a number of industry bodies talk

about, not only the supply, but the inability to clear some of the inventory. that is based on demand today, next quarter. guy: 17? 18? >> exactly. there are a couple things we are focusing on. not just the actual sectors, but emerging markets as well. points, fromuation a currency perspective as well. there are some key triggers we will be watching. jon: we are taking a very long-term horizon, you have an s&p 500 following the brent crude rice tick -- crude price tick for tick. what do you make of that at the moment? buthe correlation is high, it is strange.

if you look at some of the other you can see some of the other commodity prices extremely higher. but taking costs as well, you bring in the winners view in terms of those companies that can actually produce really good high quality goods and services at a much lower input cost. there is an increase in profitability. if you overlay that with some of the currency moves, they will be doing well in 2016 and 2017. you can argue, if you go into some of those you would do better. you challenge some of that correlation. guy: winners and losers. looking forward to having you along over the next hour.

wayne bowers will stay with us. could the fed regret its next move? the bond market turmoil is a red flag for raising rates. his thoughts, up next. ♪

jon: welcome back to "on the move." that is not a dickensian scene, that is beijing. he just cannot see it because of a smog advisory. a reporter just got back and said it is so bad that you can taste it. co-coo sayshe bank the company is willing to pay a high cost to do business in the u.s. the 54 euros said, not to be -- 54-year-old said not to be in the u.s. would be inconceivable.

this removal comes after vw cheated on the admissions tests. suspended companies are not eligible for reinclusion for two years. surged after the company said they will scrap the long planned spinoff of its stake in alibaba. they may consider a steak and web businesses as well as a stake in yahoo! japan. jon: fed hikes. the odds, the probability, rises to 80% for december. jeffrey gundlach has outperformed 99% of peers over five-year says the fed could regret raising rates amid carnage in the junk-bond market. he says, " it is a little disconcerting we are talking raising into straits with the credit markets absolutely tanking." y're, " falling apart." kinggundlach is the bond

in place of bill gross. what do you think? >> we are long-term investors. that is not an excuse, that is reality. they can have a very long-term investment philosophy as well. one of the main reasons is not necessarily because of the corporate credit effect, but the currency attraction as well. we are looking to take risks within the portfolio, but also expecting return. we would probably argue that it is more high quality than low-quality. we do actively research the underlying issue, so we know with credit quality we cannot stop and avoid the market corrections, in the market moves from a broader index perspective. what we are buying, we think it is good. from a default rate perspective, one of the reasons the fed could use to raise rates would be a

steady state from an economic environment which does well for corporate, equity markets, and should reduce default scenarios. guy: what are the premises to operate with? are you look at cash flows, there lines in the sand you are uncomfortable going over? are you strutting to see some of the names you have looked at creeping up toward those lines? >> you have a whole matrix of laws and guidance. the biggest could be the credit rating agency's actual public rating. there are certain things we would not buy and cannot by. another is the interest list waiting for upgrades, or potentially to rotate alpha dan s as well.-- downgrade isis one the public -- it

what the public can see but other things as well. we are heading for the first annual loss of the asset class since 2008. it is concentrated in energy, but the word contagion does not concern you? >> it does concern us. we're looking at carefully, in terms of the liquidity asset. this is not an asset class you would expect to write checks from. very much on the long-term strategic allocation that we are looking to take within portfolios. from a liquidity point of view, one of the things we saw was the reaction that the bond market through this year's equity market volatility. we were worried and concerned. would we see contagion, volatility and bond market dynamics, not just necessarily in terms of credit spread, and the actual functioning of the market. the ability to get bond away from cash, to put money back into the market. we think the bond market reacted

and behaved quite well from a dynamic perspective. obviously, we saw some correlation of move there, but the extreme volatility we saw in equity markets worked well. guy: briefly, the possibility of the fed -- referring to peanuts where they take the ball away. is it a done deal? jon: what stops them? >> what stops them is today until the meeting, at the moment we have seen everything work and play to allow the fed to raise rates. if there is something that happens that is dramatic and in our miss, -- enormous, do we get a big miss. is there a significant change of heart? is there an unfortunate geopolitical event hitting another western center? something like that. bowers, he will stay with us. minutes away from the open, we

look at the potential corporate movers. coming up, more on the challenges facing basf. ftse futures, 10 points in the green. ♪

that is victoria harbor in hong kong where the markets are trading a little soft today. in london, we will open a little bit higher when things get going. let's get you up to speed. let's go to bloomberg's caroline hyde. caroline: as if the pain were not enough for miners, yesterday the worst performing industry grew down more than 6% and today let's keep an eye on one miner in particular. we're expecting them to fall on the open. they have been announced that they suffered a spill in one of

their minds. minera saucito is what it is called. a spill of toxic residue. ruptured tubese affecting an area of 8000 square meters. the german chemicals, he could fall as well. they are facing more competition. that news out of the united states that dow chemical and dupont in late stage merger talks. they could become the second biggest company combined the basf in germany. newsre putting out a conference saying that basf itself is facing challenges because of oversupply in the global chemical industry. we are talking oil, miners, no chemicals. keep an eye on carillion. this is an interesting sector in general because construction of these have been faring rather

well from this fall in prices of commodities, particularly copper. they have been winning out as it is suddenly that much more profitable to the building. carillion set to move on its own reasons. the 2015 total sales expected to grow strongly, the company tells us. operating profits could be in line with the guidance in the first half but they say they will secure orders this year for 17 billion pounds. construction and industry to keep an eye on as it benefits from lower commodities. guy: let's bring you back to wayne bowers. one of the stories that have driven equity markets higher have been the buying back of stock. i am interested to see what is happening in the chemical sector. thatg to find something drives that share price onwards. how tough will it be for co's to manage their eps? >> they have clear choices. do you increase dividend?

do you try to improve and buy back stock? do you look for market share, in terms of other acquisitions? and what we have seen across equity markets, they are running high. if you look at the economic fundamentals, and you are concerned from a sector perspective or a global market perspective, in terms of, we are not on full liftoff. you want to keep the powder dry. you do not want to make any significant change to the cash pile in the incoming quarter. slowly and surely is a reaction that we would expect to see. workcorporate treasurers through from a ceo perspective and they are concerned, do we buy back or acquire? jon: looking at some of the m&a deals activity, how defensive is it to you? >> you either -- i suppose you could argue that from a market share point of view are you

comfortable in the markets or are you missing out from other markets? that is the key determinant. the currency moves we have seen in europe and japan, they can clearly put companies on the radar screen of other countries about anything happening within those companies. there is no significant dramatic product or improvement in share price performance. if you are a japanese company and you of had a 20% devaluation, you may look attractive. it is interesting how some of the companies on the peripheral of the radar screens from an m&a perspective simply come onto the radar screen because of the currency. guy: wayne bowers, northern trust global investor. we will have the market open for you. we think europe will open broadly positive, london up by 3/10 or 2/10 of 1%. i suspect this is a holding

action. after the break, we will talk commodities, china and chemicals. the open is up next. ♪

jonathan: good morning and welcome to "on the move." at the european headquarters here. moments away from the start of european trading. guy: we are stabilizing a little bit. hike.n a december fed as corporate creditors are taking, that's taking a lousy time to raise rates, economists say the pboc is trying to get in front of the fed. junk of everyone is trying to get -- jonathan: everyone is trying to get ahead of the fed. by the samehigher

amount. caroline hyde has the morning market open. caroline: based on yesterday and calm today. euros in175 billion terms of market value. minas felt the pain, down more than 6%. of a rebounde bit -- miners felt the pain, down more than 6%. today, a little bit of a rebound. remember we got data from china. when a little less concern you look at consumer prices. still factory prices down for a 45th straight month. we are going to be talking about that with her asian correspondence. some risk appetite going on in the equity markets. let's take a look at the commodity markets. brent crude $740, for the first time in almost seven years --