francine: central-bank watch. new zealand cuts rates for the fourth time this year. the boe is up next. mining meltdown. balance sheets are bloated because of the commodity rout and glencore cuts that. and carmakers give their first big press conference since the emissions scandal. we will find out more on how the y cheated on diesel emissions. and the argentine outgoing president refused to attend the ceremony, handing power to the president-elect.

welcome to "the pulse," live from london. i'm francine lacqua. let's get straight to central banks. it's a big day for central banks and it will be an even bigger week. the s&p has maintained record low rates. with the ecb loosening policy the fed is expected to tighten. where does that leave everyone else? let's bring in richard gerald for the next half hour. helps manages around $3.7 billion in assets. great to have you on. set the scene for us. we have the new zealand central bank, and they're getting ready for the said. -- the fed. >> yeah. central banks, a do interact with each other. there are a lot of machinations,

but everyone is acting in their own best interest. after the ecb surprise last week, the bank of england this week will probably deliver a similar message to what we saw last month. the pound is weak against the euro because of what the ecb did, and i think the bank of england are quite happy, quite comfortable. they won't want to be too hawkish because they don't want the pound to gain against the euro. francine: if we take a step back because of what we heard from the ecb, it makes the life a lot easier of people like the s&p. >> indeed. that if thefeeling ecb had acted more aggressively, we would have had some big from the smb today. they repeated a lot of the forecasts that looks to me like they were quite similar for 2050 and 2016 in terms of inflation.

they obviously lamented the strength of the swiss franc, which is still a problem, but because the ecb was less aggressive than that he thought they were going to be, that allow the smb to stay on hold. francine: give me a lowdown. if you are an investor, is the set a done deal? >> yes. francine: something small. >> something small. people will not be concerned abo ut when, but what happens next. what happens next is the fed managing expectations, saying guys, keep calm, we will be very data sensitive. ultimately, investors need to properly take the pain that comes with tightening policy, but ultimately, this is not a sentiment anymore. this is no 1994. it has been telegraphed. policy is very visible. willthat means is it

probably not react very badly to what happened. francine: we are just seeing from the swiss national bank, mr. thomas jordan. what does that mean for currencies? this year if you look, it is the year of currencies. we saw some huge swings in equities, but it was the year where you position yourself on currencies and make money. what happens next year and where do you see the swiss franc? >> i think next year will be a continuation of not only 2015 but an exacerbation of what happens. this'll be a year will they have to make money -- year where they have to make money, as far as currencies are concerned. will be verys volatile in the short-term but also quite directional. the swiss franc will continue to strengthen, the euro will continue to weaken, and sterling will very much

oscillate, but it will be slightly stronger than the euro, and maybe not as strong as the dollar. emerging-market currencies, huge dispersion. those that are affected by weakening in terms of trade because of lower commodities, and china, like brazil, russia, south africa, will struggle. those which are outside of that well holdld very value. francine: looking through what the swiss national bank said, in the analysis they said that the global backdrop has deteriorated, but they are cautiously optimistic about the outlook. what are they talking about? china, commodities? >> all of those. and they are looking at global demand and seeing commodities, perhaps as a proxy for that. it's a very uncertain picture looking forward. you can understand why they would be a little optimistic about it, whether they want to

take that tone. i think they are both taking the view that there are still some headwinds in the future and that they will act accordingly. francine: we talked about the divergence in emerging economies. which is the one that worries you the most? >> the ones that are in a systemic recession. brazil is an area where one struggles to find anything. normally you have monetary policy being able to react, but brazil with how sticky inflation is, because of this collective bargaining agreement that sets wages irrespective of what happens with inflation, i would say brazil is in the area. francine: and we have been warned off by the international stability board that there are so many countries from emerging economies that borrowed too much. come december 16, the day after the fed,, going to start seeing some of these companies unwind? businesses that

have been issued dollar debt will suffer, but only those regions. i am not necessarily concerned that the chinese yuan will lose a lot of ground. if so, i would think it would be forced to strengthen a little bit. it is true that come next year, come 2016, you will see some widespread but selective action, be forced to restructure the debt because of the strength of the dollar. the dollar will be stronger next year against some of these currencies. the dollar will be stronger against their real, against the lira, eventurkish the south african rand. francine: let's have another conversation about what it does to u.s. exports. thank you so much. richard joins us from london, who stays with us. here is a look at what else is on our radar. thesouth african rand,

finance minister was fired yesterday. it fell 5.4% against the dollar. argentina's president is inaugurated today, but it doesn't lack drama. is refusing tont attend the ceremony and hangs the sash. a group of lawmakers will also boycott the event. will hold an extended news conference as the emissions scandal broke. they will talk about the status of the investigation. up next, a race to the bottom. the biggest losers on the ftse this year. we look at the plans for companies to turn themselves around. ♪

francine: welcome back to "the pulse,"liv streaming on your tat and phone. glencore has announced a new financial target today. it plans to cut net debt to $19 billion by the end of next year, which the stock reacted to. let's get details from ryan chilcote. will this be enough to pull back from the plunge? ryan: it is enough to pull the stock back from the plunge, the

abyss it has been in. they had their fifth best day on four separate occasions have they outperformed the share price increase we have seen today. shareholders clearly delighted with this focus on debt reduction that we are hearing from the company, saying that it will accelerate its plan to cut debt, that 19 billion-dollar target for the end of next year you were mentioning is down from a target of the low 20's. right now glencore has a $30 billion debt burden, the biggest in the entire industry. they said they would go to the low 20's and now they are talking about 19. they already introduce a debt reduction program and today they said the secured a $.7 billion worth of reductions. if you look at their trading arm -- remember, this is a mining company and a commodities trader -- if you look at the commodities trading side of things, the forecast for pretax

profit going into next year is less than they made during the commodities boom, and it shows you how the debt reduction is really affecting profit. obviously when you reduce debt and cut expenditures, that does have an effect on the business. he will just be hoping, investors got the mix right, and who they are talking to now to make sure that he knows exactly how it will work out. francine: ryan, how will they achieve the debt reduction? a lot of the market was focusing on the debt reduction. is the amount enough and how will they do it? ryan: some out there would say that it isn't enough, but clearly investors are greeting what they are hearing. two ways. one is that they reduce capital expenditure, so they will spend $5 billion next year and next year they will spend $3.5 billion. they said they could parrot back

even further this year. -- pare it back even further this year. overall they are planning on saving at least $1.5 billion in terms of capital expenditures. the other thing is asset sales. they are in talks to sell a stake in their agricultural unit, to sell other assets. today they raised their target from the amount they want to raise from asset sales from $2 billion to $4 billion. francine: thank you so much, ryan. of course, the chairman of bloomberg lp, the parent company of bloomberg news, is a senior independent nonexecutive director at glencore. we like to be transparent. thes get back to our guest, chief investment officer at london and capital. thank you so much for sticking around. it looks a lot like anglo-american, companies that in the heyday had huge balance sheets, and now because of the slump they can't deal with it.

profits are diving and they have too much debt. >> that is the problem with debt. it is very good if you have a return on equity which is higher than the cost of capital, but if it is not, it is a nightmare. in arespected glencore, very short-term and midterm, you do have the potential for the stock to revalue. sentiment is very, very negative. short interest is so low that it will not take a lot. francine: i have to interrupt you because we are just getting breaking news from glencore. isunderstand that glencore setting a possible ipo of the agricultural business. we look at a lot of companies and they seem to be trying to restructure. if theythe right move, do end up putting a price on the agricultural business it means it would take away from mining. would be self-sufficient? >> it is a dangerous move. i think glencore's plan is to

preserve the rating. at the moment, it is not about long-term growth. it is about managing a difficult situation and how the market perceives your creditworthiness. it has a huge impact on your cost of capital, which has a huge impact for the p&l. position doesn't surprise me. having said that, it doesn't spell good things for the long-term. all of a sudden you have taken a , the valuable out o stake, and what is left is not that valuable. and of course, you cut debt, you plan on profitable units, what do you have? a company that will not grow in the long-term. but you also have the

company that may be small enough to be taken private. >> correct. francine: is that something we should be more seriously talking about? >> i think we should. in a way, it is very much about but you also have the preserving, and if the market does not recognize the value, and the market will certainly not be kind to glencore, the dollar will be stronger, there will be another wave of downward pressure and commodity markets. francine: this is a company that there,ick to x traders and when glencore was created, it was only billionaires. i was told the guys behind it care so passionately about their company that they will never let it go. >> the guys that cap so much ipo for a reason, everybody has concerns. every time a large commodity ipo, it isup has an calling the top of the market. there's been inside selling

,hroughout the last few years much like goldman sachs 20 years ago. when to stop being a partnership and become a traded company, the alignment of interest becomes clouded. francine: so pau, you say it will be messy for the next six months. >> the short-term rebound, next six months very tough because the market will digest higher rates. probably could be a little better if we are able to implement the degradation, and if they are able to get a decent price for these assets. there will be more talk about it becoming private. but in the last six months, it is catching a falling knife. francine: how do they compare with anglo american? at the moment they are neck and neck for worst performer on the ftse. >> with anglo american, you don't stumble on a black box.

you don't have a lot of transparency about how this is generating more than your margin. who are your clients question mark what are your revenues? they are attached to a commodity trading enterprise, whereas anglo american is a particularly integrated, widespread company, where at least you can recognize the value, you can attach value. i would say that when it comes to anglo american, it will certainly struggle in the next six months. ultimately, as they continue to cut not only them but the supply continues to reduce, the prices are moving because of excessive supply, it's not falling off a cliff but the supply has to be strong. supply will reduce. be lookingcan should back in time and smiling. francine: pau, thank you so much. the chief investment officer at london capital.

next, the rams rocked. the south african currency suffers its worst day in years after the nation fires its finance minister. laura that story, next. ♪

francine: will come back. the south african rand dropped

after the president fired his finance minister yesterday. the currency fell 5.4% against the dollar, hitting a record low. the outgoing minister clashed with the government over pay increases for workers, proposals to build a nuclear power industry, and to expand the state airline. let's get back to our guest, the chief investment officer of london and capital. we are looking at the rand. if we look at the last six months, it is just going one way, down. what happens from now on? >> it will continue to go on its way down. everything is stacked against south africa, and on top of the fundamental areas of the prime minister which fires a very popular, very recognized and respected individual, the confidence in investors that south africa needs desperately,

it is going to wane. 10 years ago, the peso will happen again. south africa is very sensitive to commodity prices, big exporters in platinum. you've got bolder abilities from a domestic perspective in terms of creditworthiness, concerns andt the debt situation, houses which are either putting south africa's sovereign rating on watch or downgrading it. the passed will tell us what happens in the future but in this particular case, the next 12 months will be tough and it will be lower. francine: and it will be much more tough if the fed hikes, which we are expecting it to. we also have the msci emerging markets chart over the last year

and a half. where does that go? >> well, it's an interesting one. tempted to say that the emerging markets, a measure of what emerging market index will continue to be going down because of the fed. on one side because a lot of it very much started knocked in may, but in 2013. that is when the underperformers started with respect to the rest of the world. the rest of the world took off emerging markets and stayed where they were. i would say that the valuation cushion is beginning to be so interesting. the second side is that people are accepting the reason, these reasons are not in a great position but they are more flexible than they were. this is not 1998. this is not 1984.

everyone knows that policy will become tighter in the u.s., because the flexible exchange rates were fundamental. i would be tempted to say that emerging market equities are not going to have as bad a year as people perceive. areas be one of the few where being contrarian will feel. francine: as long as china holds up. >> as long as china holds up. weaponry,fficient sufficient stimulus that they can't apply if they wanted to be able to engineer a soft landing. a hard landing in china is very much a mild possibility. francine: pau, great to have you on the program. thanks for coming in. next, iron ore is down 42% this year, and things could get worse. we talk about the commodity

crunch, a little bit more, coming up next. ♪

francine: welcome back to "the pulse," live from london. i'm francine lacqua. we are getting news. the 2015 airlines report for 2016, profits of around $36 billion. given the price of oil, that is a net benefit, and also we have to talk about the concern of terrorism and the fact that a lot of people are postponing holidays, but who have plenty more next. the strengthening outlook is

driven by strong domestic travel and lower oil prices that will have plenty more. we will have more with the secretary-general in 15 minutes. first of all, let's get to the first word with nejra cehic. nejra: the reserve bank of new zealand has cut the official cash rate for a record low of 2.5%. it is their fourth cut this year. the government thinks it should be enough to return inflation to its 2% target. the kiwi dollar surged on the news. the aussie dollar climbed after job status matched expectations again. official figures show more than 71,000 people found work in november. economists had expected a drop of 10,000. it brings the unemployment down to 5.8%. a survey shows that almost two thirds of likely republican primary voters say donald trump's call to temporarily ban muslims from entering the u.s. makes it likely to more of over him.

bloomberg sources say the u.s. justice department is examining possible manipulation in the trading agency bonds, after $9 trillion of debt were issued. authorities are investigating whether traders violated antitrust laws. that is the bloomberg first word. for moore, head to bloomberg.com. francine: thank you. let's get straight to the top market stories with mark barton. day of central banks, francine, with a record low. new zealand is cutting rates, which brings me to the kiwi. why is the kiwi rising? the reason is the central bank governor, signaling that this would be it, no more cuts to calm, because he is confident the central bank will reach its inflation objective.

the rates were cut by a quarter of a percentage point. in the last quarter, this is the chart of the kiwi against the dollar. the kiwi is the best-performing global currency against its u.s. peer, rising by 5%. crude oil is rising for the first day of five after a four-day, 9.5% decline after opec effectively abandoned its output target. it drops for the first time in 11 weeks, but still nationwide supplies remain more than 120 million barrels above the five-year average. crude oil closed at $37, the lowest level since 2009. and check out glencore, the second worst-performing stock on the ftse after anglo american. this is a one-year chart. big news today, the stock jumping 11%, cutting its $30 billion debt.

this 11% rise is the most since october 5, and we have this great function called hrh. it tells you how many times a stock has risen by a certain percentage over the last year, and in the last year glencore has risen by 11% or more only twice. there is a great step for you. the gore also announced in last 20 minutes that it is starting a possible ipo of its agricultural business and is cutting capital spending. as i said, the second-worst performer on the ftse, declining by 17%. anglo american is down by 72%. they are racing to the bottom. of glencore rebounded today. francine: thank you so much. mark barton with the latest on the charts. let's stay with glencoe in bank of america, the worst -- glencore and anglo american. they told investors today that they can make money even at lower commodity prices. let's bring in the global head

of commodities at mccoury. when you look at a lot of these mining producers, they had huge balance sheets. they take so much debt, and no profits are diving. the solution is what? divest, smaller cut costs? >> all. best up in 2016, it will everybody trying to sell assets. the question is are there buyers? there will definitely be winners and losers. glencore today has very aggressive cost cuts. dohave seen miners everything they can to take costs down. i think we are expecting more from glencore today in terms of assets to be cut. there are still a lot of buyers out there. francine: they are talking about possibly putting the agricultural business ipo in that separately. that is a strategic move. why?

because to get smaller and can be taken private? because he can focus on the trouble? you don't really cut debt and that is what they need to do. >> that's true. it is a non-source of funding. death it is an odd source of funding. -- it is on all source of funding. on the whole, it is a non-core assets and the need to focus on the main part of the business, which the will generate more revenue. i think they are leaving that to the larger houses and letting a separate monetary focus on that business. francine: in terms of -- i know you don't cover stocks, but anglo has huge exposure to copper. which one is going to perform the worst? is that even have an impact? -- the demandties projections continue to be

lowered. by with a copper has been the most disappointing. and chinese demand has disappointed. in terms of underperforming commodities,: it's look terrible and we are in decline. francine: this is not a supply-side issue, or is it both? ism told that demand increasing in china if you look at the number of cars selling. but there is just too much copper out there. >> it's true. the supply was added for demand growth, which didn't meet expectations. other commodities are facing --e challenges and there are this is now a demand-side problem. quite frankly, we are in the wrong type of global economic market. emerging markets are suffering, and the service industry is doing well.

the industrial economy continues to suffer. francine: are you pessimistic about 2016? >> it is hard to see things getting better. for commodities you really need demanded to come through, and it is hard to see where that is going to come from. we are the wrong type of economy, and that continues into next year. 's cuts will come and they will stabilize the market. francine: what is the catalyst? what does it take? is this something that needs to happen? is that emerging markets that need to start growing? >> it is emerging markets, and we are past where china can exhilarated cycle. francine: china, brazil? hat will struggle to offset the slowdown in chinese growth. cutsill see more supply and more stabilize markets and we will see more assets taken off-line. the other thing to watch for is the oil price. costs oil price goes up,

will steveepen. francine: when does it go back up? 2, 3 years, or is this the new normal? >> oil price we think can recover around 2017. it will take a full year yet. for metals, many of them are looking at trading below what we consider the equilibrium, so in 2020. this will be a duration event, and for us, we have to look at who will survive. next year will determine an awful lot of that. francine: thank you so much for coming out today. next, what is next for vw as the ceo faces the music. shares are volatile ahead of that update. in 20 minutes, they are getting 2.7%. we bring you the preview, coming

up next. ♪

francine: welcome back to "the pulse," live from london. let's get straight to the bloomberg business flash with nejra cehic. -- for about $2.9 billion in shares and cash. europe's biggest hotel

operator and is buying it from a group of billionaires. it has raised $60 million in its first bond sales to finance the $23 billion takeover of visa europe. it is the fourth-largest corporate debt offering this year. glencore says it plans to cut net debt by $19 billion by the end of 2016, from a previous: the low 20's. it was hit hard by the commodities crunch, been said it is studying the possible ipo of its agriculture business. the world's biggest clothing retailer is reporting a 20% rise. over 2come rose to tw billion euros and was boosted by a recovery in spanish consumption. that is the bloomberg is in/. for more, head to the bloomberg terminal. francine: thank you so much. ceo willutes, the vw hold his first extended news conference since the emissions scandal. he is due to brief importers

on the investigation. for more, let's get out to berlin. volkswagen speaking to investors today? >> it is a big day, the first big press conference. a lot of questions remain unresolved at this point. people want to know how they will get out of this, the technical sector behind the cars, the fine they might face. these are the types of questions they will need to answer. we are set to interview him later, so look out for that. but really, people are paying very close attention to his tone, to his general mood, how's he trying to get volkswagen out of this crisis. they have been in this for about three months now, after taking a huge hit. we saw a little bit of good news yesterday when they said it's

not as bad as they thought with ome of the admissio emissions. francine: this comes after they eliminated part of the cheating scandal. what happened? >> what happened was that they came out with the release yesterday saying that these 800,000 cars they originally thought had co2 emission issues in fact seemed ok. only a fraction of those cars have very small deviations, about 30,000, and even those might not be illegal. what looks like a second piece of very bad news for volkswagen essentially evaporated yesterday. they had taken $2 billion as a precautionary measure for possible fines or repair costs. it looks now as if they might be able to get away with that second hit, but let's not forget that they still have the diesel scandal, dieselgate as it's

called, reading down their neck. reading down their neck. -- breathing down their neck. we are expecting an announcement on how they view that. it is not like it is all good news. yesterday was a piece of good dues that was very much welcomed, stock was up quite a bit, but there is a long road for the company. expectingare we just a roundup? you were talking about things that are still unresolved. do we have anything concrete? >> it's very hard to say. judging from their recent announcement, we don't expect too much. they will probably talk a little bit about measures they have taken, possibly about the number of people they might have suspended. they had this whistleblower program that ended a couple weeks ago, where employees were encouraged to come forward,

saying they think things are going wrong. this is a big part of the turnaround to make it a more open culture, to make people not afraid of revealing things that are going wrong. he might talk about that. hard to imagine he will come out with something concrete and say we have now identified this or that, or we think the fines will be x. we think this is more of a round out press conference where he will say, these are some of the issues we see, this is our vision going into 2016. he has said that this will probably occupy them all of 2016 and probably beyond. thank you so much. the global business editor in berlin. , argentina gets a new president -- up next, argentina gets a new president. we will talk the top political risks in 2016. ♪

welcome back to "the pulse," streaming on your

tablet, your phone, and bloomberg.com. here's what we're watching for the rest of the day. argentina's new president gets inaugurated at noon local time. since the former president is not going, we will get to that with our managing editor next. then the investor meeting is today for yum! brains, the first time since they decided to split off. onn a central bank watch, interest rate in the snb. jonathan ferro spoke to -- that's all coming up. let's get more on argentina. it's a great story, too good a story not to talk about. the country's new president gets inaugurated, but the ceremony doesn't like drama. the former president is refusing to attend. a group of lawmakers will also boycott the event. let's get more on argentina and

the challenges the new president will have. our executive editor or international development joins us now. i love this story because it plays out like a tele-novella. the president is not going near him. they had to elect an interim president for 12 hours. >> we are in a pretty remarkable situation. right now, argentina has an interim president. level,his -- on one there was heavy squabble between the former president and the president-elect, but on the other hand, if you look at what lies behind us, what you are seeing is a pretty fundamental battle between to alter personalities. saying i amident is in charge, but fernandez, watching is doing here, even though it looks like a drama,

she says she's not going anywhere. she is still going to be around. she can still run again. she is saying that she is not going away. she will remain in the background, and she will be there on the sidelines as he tries to push through these reforms. francine: the background to this -- if you look at the main objective, of making peace with the nation's creditors. what does he have to do? this doesn't help the political mess. but it does feel like it's a pretty strong mandate, and he has said right from the get-go, i am going to be doing a lot of things. he said that when he comes in, he is going to abolish currency controls. yesterday, the central bank governor, he resigned. we are expecting the peso to slump soon. he needs to go to congress that

will get legislation to help them negotiate for the holdouts. obviously that is a very thing for international investors. francine: and it goes back to we are looking at the fed, a lot of these emerging markets, and with countries that aren't going so great, on the trade between argentina and china. i want to talk about the political risk. there are loads. you have a pessimist's guide coming out on monday. >> this guide looks at a lot of the things that could go wrong next year. it's really in a lot of ways intended as an exercise to get people thinking about all of these risks that can seem quite outlandish but can happen. you get, for example, to the point where you have a refugee crisis. can angela merkel survive this?

we are talking to a lot of strategists and economists, and it is pretty interesting what people say. obviously there is populism in the u.s., and that is something people are fascinated by. donald trump, obviously his unending momentum is a concern to people. it would be interesting, if you dig down and ask people -- we talked a lot about oil, but a lot of people are worried about this, for people to strike out in saudi arabia. that could change the narrative -- francine: we are worried about a spike in oil and with that would mean for the global recovery. in a world where china will be slowing and the fed is not raising rates, that could change the dynamic pretty quickly. francine: and brexit. it's interesting. you sat down and said people are concerned about oil, but also they are concerned about cyberattacks.

that when you look at the possibility of donald trump, about marine le pen possibly to become president of france, and the brexit factor. >> what you are seeing here is political disruption. we've had -- the big question, is what we are seeing a short-term event? we saw jeremy corbyn, donald trump, marine le pen. are the tectonic plates of western politics shifting towards a populist direction, or could you also argue that this is just noise? for example, who would have thought that david cameron would go with the majority? angela merkel, despite the problems, germany is still strong.

even if you look at the ultimate firebrand of 2016, alexis tsipras, he came in on a platform promising radical change, but pretty quickly after he became elected he had to bend the knee to the berlin in brussels consensus. the establishment is much stronger. francine: let's see what 2016 brings. thank you very much. we are back in two minutes. ♪

vonnie: waiting for the fed, new zealand cuts rates for the fourth time this year. the biggest miner is reeling from commodity prices. glencore cuts. vw take center stage. has his first news conference since the scandal broke. good morning, this is bloomberg television. tom: