anna: with just one day and i have to go with the big rate decision, how will the fed's language because affected? about: bloomberg is told collapse hast of pushed many rivals to the edge. they are burning up the cash reserves. this is a tough decision to make. anna: after a turbulent 2015, what will this year bring?

manus: this is "countdown," and i manus cranny. anna: i am anna edwards. manus: i know that you have been waiting for the data. never thought we would be able to talk about credit default swapts. here it is. it searches to the highest in almost two years. is cost of insuring yourself the highest since 2012. that is what the market is focused on. high- ere is a growth.e've got this could be the opportunity of a lifetime. that is for the brave. anna: we have got ets on these junk bonds reaching new levels

not seen since 2009. it depends really, on how much are present.mands will this turn into a liquidity crisis? hadeems that 3rd avenue troubles at the end of last week. there might be some differentiations in the days ahead. let's step aside for the moment and talk to nejra. nejra: the imf collapse has brink some people to the of survival. many are hanging on by fingernails. inr fell belowr $30, a record low. the price of $30.

physically work. take five30 you up to dollars for shipping from australia, $15 for the shipping from brazil. that basically means you are talking about a price of $25 from australia or $15 from brazil. there are a lot of high-cost producers. it is not sustainable. australia's treasury has confirmed a bucket blowout due to falling commodity prices. this year's underlying cash deficit will expand to 37.4 billion australian dollars. new finance's minister says he will regain market trust and show credit rating companies that the

government is serious about managing debt. gordhan was appointed by president zuma we had the concerns. we will certainly take them into account and we will demonstrate action. many of the concerns are concerns we have raised ourselves. they have given us an opportunity. we will put greater emphasis on the direction we want to go. anna: after decades of estimates, we have reserves almost big enough to meet two years of demand. greenland says prices are too onanza. an oil b wars" movie has

premiered in los angeles. this is a record number for a december opening. others,the stories, and on the bloomberg terminal at bloomberg.com. manus: may the force be with you, as they say. in the meantime, let's talk to somebody who has a few things to say about the asian equity markets. juliette: good morning, nothing to say about star wars, but we are lower for another day. the sixth session in a row that we have seen the index fall. the shanghai composite in late trade down by 6/10 of 1%. japan is closing lower by 1.67%. about thetalking budget blowout in australia caused by the treasury. we have seen a positive session in australia. the and affixed 200 closed at

its lowest level since july. bita is closing a little stronger and we have seen some of the emerging markets higher. index is rebounding after a six year low. we are getting that rebound on a firmer oil price, up by 1.5% in the region. here are some of the other stocks we have been watching in the region today. apple supplies have been doing very well, particularly in taiwan. apple has set up a new, secret lab in taiwan to develop its own technology. we are seeing a switch out of the casinos. another denbigh day for asian

day for- another down asian stocks in general. anna: we are just a day and a half away from the fed's big decision. raboank.ning, to you are expecting to be said to move this week. >> yes. anna: how nuanced will the language be? >> it is all about the language. consensusirly strong or the moves that we are going to probably get. the market is still not sure about 2016. the are still many people of there who think that could be four interest rate hikes. interestingly, if you look at the moves that set up the dollar in the last couple weeks, you will see this come round.

if you look at the movements the euro-dollar, the market may not be low enough. it is really very important to whatnd get the signal of the market reaction will be. manus: you have been talking about the dollar. we have been talking about the trade weighted value of the dollar. it is that a 12 year high. that is different to what the markets position is in terms of the euro and yen. that is the under waiting by the ing by -- the under weight the market. could that in any way remotely shake the fed? >> we think that is one of the reasons why they might only hi ke twice. speech a couple

weeks ago where he was talking about the trade index. he said over the past year and a half, the broad dollar index has risen by 15%. the u.s. economy is a little less open than other economies. the ratio is a little bit smaller from exports. we have seen this in corporate results. but also, it has had a big impact on inflation. if we look at u.s. inflation indicators, they are still the benign. we're not saying that inflation because the dollar is doing the heavy lifting. why should the fed the two hike aggressively next year? -- why should the fed need to hike aggressively next year? anna: thinking of things that could give the fed pause about the high-heeled that markets.

is that something that will be on the radar for tomorrow? >> i think it already is and this is again, something we don't know how will end. certainly, it does put this back in the spotlight. when the fed reduced interest rates close to as a trend, the bank was relatively weak. how is the tightening of u.s. interest rates going to affect this market? it will make corporate decisions a little bit harder. again, we look at countries such as china. of a going to get more defaults there? i think we might. again, i think this will be very

topical next year. manus: when you talk to your colleagues in the marketplace, our people -- the high yield story is a crack. is what we have seen in one of the high yield funds. what really concerns me is the story this morning, which is the application of some of these funds to allow them to borrow into asia. that has only happened on 30 occasions since the 1970's. does it come up in conversation that this is the torch paper of the movement? >> probably not, but it is being talked about. it is a crack and we need to watch it to make sure it does not grow. anna: thank you very much, jane. manus: the fed is not the only central bank in the spotlight. has the base rate

at -3.7%. anna: let's get to johan. is there anything pointing in the direction of a rate cut today? johan: we expect the bank to stay put today. they don't expect the swiss bank to have any further stimulus. this, isn'tssue is it? the bank has been given a fairly early christmas present from the european central bank. it simply did not do as much as was anticipated and that has afforded the riksbank an opportunity to pause. johan: i think the riksbank was quite relieved when they saw the ecb decision. it would obviously hurt inflation in sweden.

there were some positive signs in these swedish economy. the swedish economy is growing strong with 3.9% in the third quarter. the inflation is picking up slowly. we have inflation expectations inching up a little bit. there are positive factors in the swedish economy that are pointing to the riksbank not doing anything today. anna: thank you, johan. the riksbank is meeting today to set interest rates. there has been some relief in various parts of europe one of fromcb did not do more, those countries that were concerned about how their currencies might react. the bank of england as well as riksbank. there has been relief. i think the riksbank has been playing it quite cleverly in the past year and a half. given quite good at preempting

-- they have been quite good at preempting the ecb. they made a preemptive measure ahead of the ecb. because the ecb did not manage to get the euro weaker, it leaves the riksbank off the hook. inflation data is very weak in sweden. the gdp figures are very strong. manus: it has been five years since we have had a rate like this. it is just under 4%. the swiss say their currency is overvalued. jane: which it is. manus: if it is overvalued, how much is a move can they have? let's focus on the riksbank. they have a high surprise bubble in australia. where's the end? jane: it does depend on the ecb. what they have been doing recently is not lowering

interest rates. they are hoping we will see a little bit of inflation. if we do see retail sales, consumer confidence, and unemployment change in sweden, there are factors coming together that suggested we might see a little bit more inflation in the years ahead. anna: thank you very much. jane foley stays with us through the program. we will get a rate decision from sweden at 8:30 u.k. time. manus: we will stay to the governor of the riksbank and data.:30 we get inflation anna: then, we have u.s. inflation data. this culminates with the highly anticipated rate decision. hanging in there by his fingernails. the ceo of the world's ers and hisest minors

rivals. ♪

anna: welcome back. let's get to bloomberg business and to nejra. a trade in newad york. tois expanding its program $14 billion from $12 billion. there are concerns the aircraft sales may be faltering. expects profits to double. they have a cost-cutting strategy. gopro shares slumped for the first weeks after the price was cut. that was based on slow consumer pick up with drones and the

later rollout of its next-generation action camera. apple has opened a production laboratory in time taiwan. that is your bloomberg business flash. for more of these and others, go to the bloomberg terminal and bloomberg.com. here: rio tinto's boss was yesterday. walsh is hanging on by their fingernails with prices as low as $40 a ton. anna:+++

a report for shareholders. >> it starts with our sustaining campaign. then, further development. and then, further shareholder returns. dividends are very high on their radar screen. personally for me, they are very important. we have shareholders who have invested in our business and put their faith in us. if you look at that model i just described how we allocate capital. it puts the dividend in a strong position. it is my job to make sure that we have the wherewithal for it to be a realistic opportunity for the board. manus: with an opaque like strategy to maintain volume, market shares, it feels like a race to the bottom for a couple of people looking at this market. is that what it is? >> i think people are looking at the market.

they are looking at times with flows. as the highest cost producer in the world, we are in a privileged position. if you look at supply and demand, the economics, it is the high cost producers that have come off in the last five years. we have seen 400 million tons of capacity come on. falls intot tonnage the high cost category. at the moment, they are people hanging on by their fingernails. sooner or later, the adjustment will take place. it is not natural. it is not normal for the lowest cost producers to be looking at, how can we withhold supplies? manus: the price has gone the other way. it has gone much lower. called $30

"fantasyland." you are knocking on the door of "fantasyland" now. sustainable price of $30 does not physically work. from the $30, enough to take five dollars for shipping from australia and $15 for shipping from brazil. that basically means you are talking about a prize of $25 from australia, or $15 from brazil. there is a lot of high cost producers that are not going to master that price range. it is not sustainable. asyland" at that level. jonathan: is that what needs to happen, though? do prices need to go lower? >> this happens in every cycle. there are people that are suffering. ouldthan: you also said it w

be a lonely price. it is still looking pretty crowded in many ways. >> it is crowded and there are a lot of producers that are hanging on by their fingernails. they are burning up their cash reserves of their shareholders. that is a decision for them, not for me. there,hat was say mulch speaking to jonathan ferro. here,at was sam walsh t speaking to jonathan ferro. many are having to cope with what we have seen from commodity markets. the economic narrative is being reframed. where do you see the impact falling as he look to 2016? jane: we see it in reduced incomes for australia. market the people in the

are encouraged by the fact that unemployment has come down. worsedig deeper, we see news. the jobs we are getting are not paying as much as the jobs we are losing. the high income mining jobs. if we look at wage inflation in australia, we have got reduced incomes coming through from the exports of iron ore. that is coming through. to me, this all means that there is a risk that the australians could cut interest rates again. again, china is a real part of this story. your, the top one of your notes here is that this pboc could unleash a new chapter of global currency wars.

there is a strength against these asian currencies. whitey's you say they will release a new chapter in global currency wars? jane: first, if you look at this table what we see is the ribbon third besthe performing asian currency. the japanese yen has not seen weakness this year, but it has in previous years. and japan arels back to levels from the 1970's. the reason for that is the de facto peg. we said in the past couple days, there is a bit of a changing narrative around the chinese currency. that could influence but we see them moving it to. jane, thank you very much. high: up next, i yie

yield crunch. ♪

and 7:3030 in london in brussels. let's get to nejra. nejra: producers have been pushed to the brink of survival. sam walsh says many are hanging on by their fingernails. fellcomes after iron ore below $30 a metric ton last week, a record low. >> we are still looking at "fantasyland." the sustainable price of $30 will not physically work. from the $30, in need to take five dollars for trade from australia, $15 for

brazil. that means you are talking about a price of $25 from australia and $15 from brazil. there are a lot of high cost producers who cannot keep up with a price range. it is not sustainable. it is "fantasyland" at that level. anna: the australian treasurer has confirmed a budget blowout due to weaker global and a mastic world. scott morrison says this year's cash deficit will expand to 37.4 australian dollars, while gdp 2.5%, has been revised to from 2.75 percent. gordhan was speaking after president zuma appointed him to the position, replacing the man who zuma had given the jump to

just days earlier. gordhan: we hear the concerns and we will definitely take them into account. thatll demonstrate action many of those concerns are concerns we have raised ourselves. they must give us an opportunity to start shifting. we will put greater emphasis on the direction we want to go. nejra: the new "star wars" movie has premiered in los angeles. that is your bloomberg first word news. for more on the stories and others, go to bloomberg.com. anna: we are only going to get more "star wars." "the force awakens" i guess. let's check in on the markets

with caroline hyde. forces or not, they seem to be pretty mixed. we looking at emerging markets. let's look on the positive side. we do see the market index scaling today. chinese stocks are driving them higher. it is the hang seng index up from 1.2% at the moment. for the first time in 10 days, a gain for emerging market stocks. japan's stocks of remaining lower at 2.5% over three days. have lost significant value. we are filled with unease ahead of the federal reserve's two day meeting. a 76%s are pricing probability that we will see the first rate hike since 2006. that will make more expensive cash. the $2.5hat is behind

trillion that has been wiped from global equities since december 1. let's check in on economies. crude at $36. we are rising from the lows we hit yesterday. we had the lowest price sense february 2009, but we are trending lower once again today. we are in the low when it comes to brent crude. if you are looking at koppers and metals, we are the downside as well. -- if you are looking at coppers and metals, we are on the downside as well. i want to talk about high yield debt. yields spiking higher. are crescendoing. back to you guys.

manus: thank you, caroline. on is just one day and a half away. roach.poke to stephen stephen: the question is not whether or not they are going to do it, but what the trajectory is. what is the glide path after this first move? is it going to be very gradual, setting the stage for two or th ree more rate hikes and 2016? what is it me into a world that has become overly dependent on zero interest rates. the fed has made a huge mistake and being overly accommodating in this post crisis period. they push interest rates down to zero in the depth of a crisis. the crisis ended and they kept the policy rate at an emergency setting. they have been doing this repeatedly for the last 15

years. i did the math on this. over the last 15 years, the inflation-adjusted policy rate -.06 percent.t in the previous years, it was 2.2%. the fed has gone well beyond what they needed to in an inflation targeting mindset. that is a breeding ground for credit bubbles and all too frequent crises the fed is part of the problem for financial instability. ripplinghave fears across the globe in the high yield growth market. third avenue management froze redemption from its fund. manus: let's bring in simon ballard. are there any buyers coming back in? we had a great line from bill gross where he said, 9%?

legal risk it. -- we will risk it. hand out tout your try and catch it while it is still growing. there are many people talking about evaluations looking appealing in high yield. until we remove the uncertainty tomorrow evening, it is very unlikely we will see buying in the short-term. we willking and retain liquidity problems. anna: is there something about the end of figures that makes things less liquid? or is this because of changing regulation the cousin certain parties have stepped away -- changing regulation because certain parties have stepped away from market making? simon: as you move into year end, you have fewer traders

around as liquidity goes into a decline. that gives opportunities if you are one of the few people trading. we have liquidity from the etf themselves. that has been one of the big problems. retailers are buying into the products without realizing the high yield. manus: what happened to all of the regulations of the past seven years? retail investors, my mom, your investorsme -- retail where i go and i buy a mutual bankruptch invests in companies. which part of that is suitable for a retail investor and why is the fcc not over this like a rash? roach i think stephen

hit it on the head. it is the negative yield environment that has led us to trace yeield. policy. loose monetary anna: and there is the delusion of liquidity. these products say you can get out whenever you need to, but whether you really can is yet to be tested. simon: you only find out how liquid something is when you try to sell it. receive aill probably lot of debating on this. , it is all a bit of a and the between 2007. and 2008? eruld this be the preempt

to similar rates? simon: people are putting this down. this rings alarm bells. i think we are in a different environments now than before back in 2007-2008. the money markets are in a different position from where they were then. nevertheless the less, we have this hunt for risk to get incremental yield into portfolios. that leaves us exposed to fed liftoff. as yields go up, the more defensive posturing can begin. by definition, you are going to get a selloff. this is combining with low prices. you have the perfect storm centering around the high yield space. anna: we will see how it goes. simon, thank you. manus: let's talk about oil

now. be will be closed today. it is a key step into lifting sanctions. anna: the ramping up iran's oil production. iran was blamed for taking us lower than $35 a barrel for brent. we need to know what will happen in terms of iranian oil coming online. we have this meeting of the imf. we expect to be 35 countries to gather and rubberstamp this. beyond that, there are some technicals. what has to happen is a lot of the centrifuges, a lot of the enriched uranium in iran has to be taken away. that is happening around the clock. the iranians are very keen to have those sanctions removed and

get therir oil to market. as soon as the sanctions are removed, the iranians can take their existing stockpile and get it to market as quickly as possible. a lots of people want to those stockpiles. most of them are sitting on a place called cargharg island. youg information from ihs, can see which ships are there right now. and at the moment, we have four ships there right now. and collectively between them, they have 8 million barrels of oil, enough to supply the world two its oil needs for about hours. it does not sound like a lot but it would move the oil market if you can imagine that. 10k in july, there were ships. what does that tell you? it tells you there has been some

oil that has been stockpiled. not as much as there was, however. the next thing that happens is they a radiance immediately ratchet up their output with their existing capability in their fields. then, they try to get international investors involved. total,es of shell adn tnd whoever they can get. they need $70 billion of investment. they are going to try and get their production capacity increased even further. this is what the oil market is anticipating. anna: thank you very much, ryan. manus: i want to know the names of the other tankers. i am going to get ryan on that. european car sale data for november is out in just under 30 minutes time.

another bad one for volkswagen. manus: hans nichols joins us now. whatever done with cheap loans in europe? we have bought cars, cars, ca rs. hans: manus, enough about your private activity on air. we will get to that. what we will be looking at in these numbers is the overall health of the european auto sector. will this be the 27th straight month of expansion. in october, france was up 8%. the only place that was down was the u.k. we can't talk autos without talking about volkswagen. we will get an update about how much market shares they are losing. we have not had the complete number come in october. they were down to almost 25.2%. in the u.k., they are down 20%. in the u.s., the market share

was down 25%. in germany, they were down 2%. we will get the global number for all of europe. volkswagen has already pre-released their namesake brand. they want to be at 5.3 million vehicles. oft time they hit a total 6.1 2 million vehicles. they will not hit that. how much incentives are taking place? in the states you have zero cash down and zero interest rates. the average discount in germany was 11% for october. ot talk about luxury. so far, mercedes is having a better year. bmw is doing well. compare these figures with volkswagen. down on the gear. we will see if bmw will retain the top spot globally. manus, do you buy cars no cash

down? or are you cash only? manus: when i was young, i bought everything. i bought a lot of things. i have had a lots of cars. some of them i lost indiscriminately. manus can teach you a lot of life lessons. hans, thank you very much. what are the worst case scenarios for 2016? ♪

anna: welcome back, you are watching "countdown." nejra: boeing had extended trade in new york. they are increasing payouts by

20% and expanding its stock repurchase program to working billion dollars from $12 billion. this follows concerns that aircraft sales maybe faltering. go pro shares slumped the most in six weeks after the rates were cut. that was based on slow consumer pick up of drones and the later rollout of its next generation action camera. apple has opened a production laboratory in taiwan. the building has at least 50 people creating new screens for devices. that is your bloomberg's nest flash. for more on these stories, go to the bloomberg terminal and bloomberg.com. manus: thank you very much. 2015 was a big year which we saw shocking terror attacks. what surprising events does 2016 have in store for us? anna: we are joined by john

freya to give us a pessimist's guide to 2016. tina is also with us. john, walk us through the pessimist's guide. john: the world is becoming a more unpredictable place. april's that have governed global politics have unraveled to a certain extent. militarism andng eastern europe. some of the roles that ruled the eurozone for a long time are unraveling. with the fed raising interest safetyomorrow, the blanket we had around the geopolitical risk is going away. politics is becoming more important for markets. that is but we are trying to get at. anus: you have launched

graphic. the top three risks. you have talked to a lot of people. tina, we will get to you in a moment. give us the top three. you can go to bloomberg.com and find them. john: we are talking about oil falling. there is a lot of expectation in the market that it will go down to $20. actually, one of the counter intuitive risks is islamic state. a lot of people talk about what would happen if they struck saudi and iraqi oil inflations. that is one of their secret concerns. there is a big concern for many people we spoke to. cyber is a very interesting one. specifically, what would happen if hackers decided to target wall street. anna: tina, how does the oil

thing tie into the risks for 2016? tina: i am concerned about the political risks for low oil prices. we have to keep watch over venezuela. he pressure on regimes and the relapse isairab one of the things on my mind. manus: you made the point that geopolitical risks are at a 25 year high. government collapses over the past three years. a 54% increase, versus the previous decade. this is your political analysis. a crescendo in terms of political movements? tina: this is the big question. is this the year the rising geopolitical risks converge and significant for

policymakers to deal with in the incremental approach we have seen? anna: where do you put these increasing concerns down to? u.s., there is a decline for the middle classes. there is an increasing gap between the top and bottom of the income scale. is that something you see reflected globally? tina: there are a lot of factors at work. in the u.s. case, the shrinking middle class is interesting. you have more wealthy people and poor people. the sense that the middle class is under siege and really, the tensions between globalism and nationalism. manus: the one thing that strikes me about that is the subtitle within your piece. you talk about merkel.

she went for a vote of confidence yesterday with her party. it would have thought at the start of 2015 that angular mark would be calling for a vote of confidence? john: if you look at the broader narrative, you are saying the unintended consequence of a geopolitical event. we have not seen anything like this in europe since the end of the cold war. when you see something like that happening, a country like syria collapsing from within, it is unpredictable how that will play out. a year ago, who would have thought this would filter into the german geopolitical debate? the point that with angela merkel, she is not 2017. election until

tina: the risk is that her own party's worries about the next election. erkel's popular across the german population. with the be able to do as well with a different candidate. it is german's elect the next government. it is all of europe that needs merkel's leadership. it is becoming a real proposition. you have the cameron image here. a latentre is expectations that the u.k. will vote. vote, it is hard to say. anna: thank you very much, john freya. tina, thank you as well.

we look forward to more conversations with you. manus: we are going to talk about emissions next. we will talk about car registrations. up next. ♪ 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.

manus: with just a day and a half to go until the rate decision, concerns about high-yield fears. anna: in an interview, rio tinto's ceo tell us the collapse has pushed many of his rivals to the edge. a lot of producers that we believe would leave the market. hanging on by their fingers. are burning up their cash reserves with shareholders. after a turbulent 2015, white mike the next year bring -- what might the next year bring? we take a look the worst-case scenarios. ♪

welcome to countdown. i'm a manus cranny. anna: i am anna edwards. we have a breaking news from the european car industry. 14%mber car sales rose by for the 27th consecutive game -- consecutive gain. vw's market share narrows to 24.5% from 26.8%. thatshowing the struggles vw is having to try and retain market share in the wake of that emissions scandal that hit the business back in september. 4.2%wagen managed to gain in terms of its growth rate. that was less than one third of the industrywide increase. manus: that is beginning to nibble away at them. a quick line.

metro is the german retailer, full-year earnings beat estimates. full-year 2016 profits up slightly. that is a bit of guidance from them. let's can your bloomberg's first word news. the iron ore collapse has put some producers to the brink of the survival. saysinto's chief executive many hanging on by finger nails. fell lastter aaron or week -- after i and or fell last week. >> they are still living in fantasyland. it won't physically work. $30, a need to take five dollars from still you. $15 from brazil. you're talking about a price

from 25 -- of $25 from australia. there is a lot of high-cost producers. it is not sustainable. it is fantasyland at that level. anna: australia's treasurer has confirmed a budget blowout, blamed on a weaker domestic growth. the underlying cash deficit will expand while gdp growth has been revised down 2.5%. after decades of estimates that greenland may be sitting on oil reserves to meet two years of european demand, they are going -- they are throwing in the towel. the new star wars movie has premiered in los angeles. thanilm will debut in more 4100 theaters this weekend. a record number.

manus, back to you. anna: breaking news coming through on ge. they're going to sell their commercial and lending business in japan. toy are going to be selling smsl.-- to manus: you so their deal of full of heart with electrolux. $5 million is a chunky piece of change. that's check in with the markets. in asia, juliette saly standing by. good morning. it has not been a great day in asia. we are seeing the original benchmark session -- general -- original benchmark down. the highest of that equity rout in china. the shanghai market closing

lower by .3%. on the back of the news yesterday that china has planned a merger between the shipping giant. the nikkei 225 in japan very much hit down .7%. it was a pickup coming through in some of the emerging markets. they rebounded from a six-year low that we saw yesterday here in hong kong. we are seeing gains of .4%. -- that was due to those comments we had coming through from the treasurer today saying australia's budget deficit is going to blowout the financial year. oil and gas players were moving higher. finally a rebound in that sector across the board. also caltech in australia

leading the gains. we are seeing some of the emerging market currencies. they are ahead. the malaysian ringgit is up by .2%. emerging markets and emerging-market currencies back and focus. we have seen a weakness coming through once again in this part of the region. manus: juliette, thank you very much. a couple of lines cost just crossing the bloomberg terminal here it -- crossing the bloomberg terminal. talks have ended by mutual consent. the integration challenge could not be overcome. unchangedk remains for them. that was a deal that drove -- .chneider electric

another deal that begins to unfold before the end of the year. anna: we are a day and a half from the feds a decision. here's a preview with mike bell. mike, great to have you on the program. let's talk about as we look ahead, what concerns you? are you focused on what happens after the fed lift off? are you focused on anything that could give the fed to paul's the thought. --hael i think it is highly mike: i think is highly likely that the fed doesn't raise rates. people were disappointed with the ecb. it will be a big surprise if they don't go up tomorrow. we think they will go, but the question is how much they increase rates next year. the market is expecting to increases year. whereas we expect four. manus: one tiny peppering thing that comes through is the ecb is

the most recent example that all gung ho, raised its rates. what is your reading in terms of the ability of the u.s. economy to accept sustained increases in rates? or could a u-turn be a potential threat? mike: i think a u-turn is pretty unlikely. the u.s. economy can withstand several increases in interest too muchore it causes trouble. the transmission channel that could slow the pace is if you get excess of strengthening of the dollar. if you bear in mind there is already to -- already two rate hikes priced in for next year. perhaps a peak in the dollar next year would be a key for allocation calls. anna: that is something that could slow the pace, the strength of the dollar.

what about the weakness we are seeing in the high-yield sector? the concerns about the survival of some of those businesses? mike:t something -- line -- mike: i don't think so. generally, we think the high-yield market is quite attractive. pricing a larger probability of procession in the u.s. then we forecast. away from the energy sector, something that focuses away from that? you end up in a fund that invested more than 80%, unless you have the risk appetite for that? mike: a lot of the issues that are going on are at the higher-quality end of high-yield spirit we think there are some

-- high yields. we think there are some opportunities. you need to be very cautious and selective. outside of the inches space, there are certainly opportunities and high-yield. manus: if you look at some of the articles that have been written, flex being raised by retail investors, potentially invested in these liquid products. that is the risk that we are giving with as well as a systemic risk. a jpm you see any systemic risks at all from high yields. mike: i think there are concerns over liquidity. you need to be buying these bonds on a surety basis. them ifng to hold onto necessary. i don't think it is going to be a major issue. sometimes the markets are little of concerned about this. i don't see this as a strong concern. anna: a lot of houses seem to be making the skull. if no we had a strong dollar

2014. there is further to go for the storm dollar according to many economists. mike: we believe it has one more leg left in it. it is relatively muted from here. you're not can see the sort of gains that we have seen in the last year. it will probably peak sometime this year. that is good to be a key thing for markets, or delete for a key thing for commodities. hold that thought. we're going to talk about commodities after this break it we're going to talk about eurozone car restriction. anna: joining us now, hans nichols. a slow burn really in terms of the impact of the vw scandal. you're starting to see that come through in the numbers now. hans: will look at the november market share. that is one part of the story we

have on european auto sales. the other part is how healthy the overall industry is. up 14%. that is when you look at the topline figures. the third most important aspect is the amount of discounting taking place in europe. the average across all brands, 12.9% off the sticker price for the month of november. the biggest discounts are was open, gm's brand. ford came in. overall sales of 14% year on year. volkswagen is doing well in this environment. they are up 4% this year. there is a mass amount of discounting going on. the winners in all of this, the ford brand is up a couple of percentage points. the mercedes brand also up. driven by that smart car, that

two-seater. i know that would take no effort by you to part. you can park on a postage stamp. here's my question for you, manus. you 27 of thegive 20 countries. which is the one country that is left off the list? manus: that would probably have to be ireland. hans: malta. that doesn't make sense to me. thatof has more population iceland. they include iceland figures, but they don't include the multis. bottom of get to the this. manus: i am not going down this road with you today. anna: hans is going to hit the phones now to try and find out why malta is being ignored. manus: he tries to make it very personal. up next, hanging on by their

fingernails. the ceo of the world's second-largest minor says the impact of iron ores collapse. the impact of many of his rivals. ♪

anna: will come back. you are watching countdown. live pictures from moscow. we have sergei there. russian foreign minister meeting with u.s. secretary of state john kerry. they are in moscow. conversations with vladimir putin. all ahead of syria talks in new york later this week. manus: let's get to bloomberg's first word news. caroline: extended trading in new york after a buyback plan in dividends. increasing plants by 20% and increasing their stock and

purchase program to $14 billion. a reward for shareholders vote on concerns that aircraft sales may be faltering. gopro shares slumped the most in six weeks. that was based on slower consumer pick up on drones. the latest roll up of the next generation action camera. engineers are developing new display technology. has 50 people creating new screens for devices. that is bloomberg's business flash. anna: iron ore is close to what he calls a fantasy. making unsustainable for high-cost reducers. -- high-cost producers. he believes many companies are hanging on by their fang and nails. remainse says dividends

a priority despite the crunch. it starts with sustaining ethics. the progressive dividend, then further development. a further shareholder returns. dividends are very high on the radar screen. personally for me, they are very important. have shareholders who are invested in our business and put our faith -- and put their faith in us. model i justt that described for how we allocate capital, it puts a dividend in a strong position. at the end of the day, it is a board decision. it is not my decision. it is my job to make sure we got the wherewithal for it to be a realistic opportunity. manus: 304 the players and the iron ore business to maintain

market share, it feels like to race to the bottom for a couple of people. isn't that what it is? >> i think people are looking at than lookingther at the ends and flows of the cycle. as the lowest-cost producer in the world, we are in a position. if you look at normal supply and demand, economics -- supply and the mad, it is the high-cost producers come off. over the last five years, we have seen 400 million tens of capacity -- forged million tons of capacity. most of the tonnage falls into the high-cost category. that is life. sooner or later, the adjustment will take place. it is not natural or normal for the lowest-cost producers to be

looking at how can we withhold supply? jonathan: is not moving the price, is it? -- it is not moving the price, is it echo -- is it? >> i believe we are looking at fantasyland. $30 sustainable price of will not physically work. from $30 coming you need to take five dollars trade. $15 trade if you are shipping from brazil. you're talking about an fab price of $25 from australia or $15 from brazil. there is a lot of high-cost -- it is not sustainable. it is fantasyland. jonathan: is that what needs to happen to wash out some of the

extra supplies? prices need to go lower? what happens in every cycle. i suspect right now, there are people that are suffering. jonathan: you said it would be a lonely place if we got anywhere near $30. it is still looking pretty crowded. crowded, and there are a lot of producers that we believe would leave the market that are hanging on by their fingernails. they are burning up cash reserves from their shareholders. that is a decision for them, not for me. manus: mike bell is still with us it global strategist at jpmorgan. getting this of stuff from the shores of australia and south america. this is the reality of commodity crunch. moment?pm see that the

are we anywhere near a baseline in this? mike: commodity is suffering from oversupply. that are oversupply are not go to bounce anytime soon. if you look at copper, the copper price can go lower than it is. manus: you are way against the bloomberg forecast here. let's have a look at copper. what we have got here in terms of projection, 5300 by the end of the first quarter in 2016. there are views that oversupply is so much a problem in the copper market. it is going to take over a year for that to come back into balance. during that period you tend to see that price down of production. the $4000 mark. what do we need to see

producersr and oil stop producing so much? mike: they need low prices for a long peridod of time. copper which are very dependent on china, the demand remains relatively weak. sometime around the second half of next year, we think the oil supply and demand should get a little more into balance, therefore we think the oil prices can move a little bit higher. timing is going to be a little bit difficult. beforeiced is could go they do bottom. manus: that's got a big consequence in terms of interest rate policies in terms of -- interest rate policies for

emerging markets. that is critical, isn't it echo -- isn't it? of themthink a lot would like to be of to cut interest rates. given the fed is going to increase, that would put tossure on their currencies further flows outside of the em countries. not able to cut and stimulate the economy in ways that they would otherwise do. they pushed and pulled in different directions. " if you think the -- anna: if you think the fed interest rate if it comes this week, will it put higher pressure? them -- see some of would that be a positive for the sector? mike: i think it doesn't help on the costs go up. the marginal increase in interest rates is good to have a

nice double affect -- a negligible effect. for those struggling high-yield issues, they need a bounce back in prices. in some of the commodities space we think that is unlikely. anna: mike, thank you very much. mike bell joining us. and brief word from the markets, we are expecting to see a move higher at the start of the european equity trade. yesterday we saw miner stocks coming off in europe. a bounce coming through in some of those -- see tomorrow everybody. ♪

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guy: welcome to on the move. 8:30 in frankfurt. where cap you down to the european open. i am guy johnson alongside jonathan ferro. jonathan: it is to count down to the fed. u.s. century bank begins its two-day meeting. the world's most highly anticipated rate decision comes tomorrow. executive --esed chief executive says a rate hike could be the tipping point for some of its rivals. of era