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 easing money coming

to an end. the rout continues. guy: we will be answering that question throughout the show. the two to bloomberg's first word news. caroline: the eye and or collapse has put subsidies to the brink of survival. chief a state says many are hanging on by their fingernails. i and or fell below $38 per metric last week. below $38 perl metric last week. of $30, it won't physically work. from the $30 you to take by those trailer if you are shipping from australia. $15 trade if you are shipping from brazil. about an fabg price of 25 from australia. there is a lot of high-cost not going tot are pass at that sort of price

range. it is not sustainable. it is fantasyland at that level. australia's -- weaker global and the mystic growth. scott morrison says this financial cash deficit will expand to 37.4 billion australian dollars. gdp growth has arrived down to 2.5%. the south africa's new finance minister he will shore up public finances to regain market trust. and show credit rating companies that the government is serious. he is speaking after jacob zuma appointed him. >> we hear their concerns. we will take them into account. action.demonstrate an they must give us an opportunity.

caroline: that is your first word news. guy? guy: under a half to go until the european equity open. we have had some very negative sessions. today it looks like we are going to open in the green. we are up by 1.3% on the euro stoxx 600. it is right on the precipice of being down by 1.10%. butties have been falling it looks like we may get a solid rebound this morning. jonathan: the ftse 100 on an eight-day losing streak. the board, brent crude, struggling to geek out and again yesterday -- struggling to eke out a gain yesterday. 1.1046.lar

--cable at dollar 51 $1.51. guy: we will look for it around my: 30. the fed begins its two-day meeting. if a selloff in high yields has caught your attention, perhaps oil at $35 a barrel. or if you look at european equities are down 10%. let's talk about all of this. what does it mean? let's talk to charles newsom. also joining us, simon bellard. simon, friday into monday, horrible for credit. monday into tuesday, what are we looking at? simon: we are calming down. we have been looking at redemption's coming through some

of these etf higher risk funds over the last several months as we approach fed liftoff potentially tomorrow evening. businesseel this there's very little buying coming in. it is like catching a falling knife at this juncture. we got very low oil prices subtle in etf's . equities are up small this morning. fairly decent at the moment. germany on the fixed income side -- jonathan: some call it a falling chainsaw. liquidity, to guys point, is it real. when you have a look at what is happening. it is the end of the year. is it real as far as you're concerned? is there a message here? charles: it is in the price, therefore it is real. there is a lack of liquidity as you get 20 end of the year. books -- as you

get to the end of the year. people squaring books. clearly, investment banks have pulled back pretty heavily. that is going to tell. jonathan: it is telling. the one thing i will say is i was sitting around with guy and we dug through that 3rd avenue fund. had a look at some of the notes they were buying. these are some drillers. this is stuff nobody should be touching. the question i would be asking, look at the numbers, the issuance of high yields from 2012 to 2015. easing money coming to an end? simon: i think it is. we came -- we became overly dependent on an overly commodity of -- there was a liquid risk

which etf's are supposed to give -- that liquidity provision is not there. that is what we are seeing. guy: when everybody is back at the desk and funds are back open and the liquidity story starts to improve, how will we view what happened in december? charles: i don't think will be as worried about what we have seen here. the markets have done so well in a long period of time. we are overdue a corrective peridod. where we are, it is difficult to tell. i suspect it will last six to nine months. we had eight down days in a row. update.tse, we had one we are seeing a small rally. we could see a little bit of a rally toward the year and -- year end.

jonathan: percent close rally. is a question. -- jonathan: the santa claus rally, here's a question. the year ended story the lack of liquidity is not true for equities. i sit here and shrug and say here we go again. we get the rally in december. the liquidity year-end story doesn't hold true for the equity markets, does it echo is it about central banks? is it about the fed? is it about realizing the era of easing money is coming to an end? it is a falling chainsaw. it is going to go much lower. isn't that the story? simon: we are moving in a very small way interest rates. there is going to be great argument from here about what happens next. i think we need to think very

about what is good to happen with interest rates over the next six to 12 months. i cannot see them going up very much from here. wholesale selloffs and commodities. oil particularly. that is at a major impact on equity prices. guy: and into the high-yield story as well. you are pointing at a but nine outlook for interest rates. it is almost one and done. how musty have priced into the fed? ; i would to see what happens from there. the case for moving on interest -- with the fed if it hasn't box itself into the given what is happening

in the emerging markets? jonathan: if it happened all over again, the probably would not be hiking tomorrow. >> you've got to get it done. they are going to go up sooner or later. there is an argument that higher rate may improve confidence. yup.yet -- if they are incredibly dovish, the maybe you don't take the confidence away. atrles: people have to look what janet yellen's going to say very carefully. guy: simon, could've gotten a little bit more from you. he is going to stay with us. up next, some miners on the brink of extension. john has spoken -- break of extension.

john has spoken to one of the leaders. highlights and a moment. ♪

jonathan: good morning. welcome back to "on the move." 70 minutes away from the open. futures higher. let's cross over to caroline hyde with bloomberg's business flash. caroline: volkswagen has suffered its biggest decline since the admissions scandal emerged. punch .5% of new cartridge -- 20.5% of new car registration. a leader rollout of its next generation camera rollout. hasmberg sources say apple opened a production laboratory

in northern taiwan. has 50 people creating new screens. devices including iphones and ipads. jon, back to you. jonathan: i spoke to rio tinto ceo who says some miners on the brink of extinction. here's your morning must listen. >> i suspect we need to see a bit more pain and reality. a miner interest rate adjustment could actually be a tipping point for some people. we are sitting on quite comfortable. we have our own internal growth projects. jonathan: charles newsom, divisional director at asset wealth investment joins us now. i sat in front of him yesterday with a confident man. not the man you would expect when the stocks are down some 40%.

what are your thoughts that go charles: -- once? charles: i can't help thinking they need to cut their dividends from here. just be a little more conservative with their cash. who knows where these commodity prices are going to be? we haveseem to me supply that is going to last for a long time. paying out these high dividends seems like poor capital allocation. when we look at this is, we look at management and how they are allocating. paying dividends -- is disappointing. guy: they're going to raise funds. they feel by they may that's by the time that make the investment, the copper cycle -- by the time they have made the investment, the copper cycle

would have turned. charles: let's look back at what money -- spent already which is a large amount of it over sustained. oftime -- a sustained period time. now, isg more money that sensible? i suspect not. jonathan: is he too optimistic to what could happen to his rivals? is he too confident about what could happen in 2016, that they could wash out echo -- wash out? charles: it comes down to investor ability to give more money to these high-cost producers. i suspect sooner or later they won't. where i would be more interested

is thinking to myself, perhaps he should be trying to buy some of these assets. seen a load ofve divestments. there's can be a flood of assets in the market. tier-one assets , they are not on sale yet. he wants more pain before people are forced to sell the stuff they don't want to sell. going to have to take a little bit longer for that to come around? is a viableience commodity in this market. later.d wait to buy these copper mines could wait as well. jumbotron newsom, he is stay with us. talks takeover talks.

but the futures ahead of the open up 58 points off the back of it a day losing streak -- back of a eight day losing streak. ♪

guy: eight minutes until the equity open. here are the stocks need to watch with caroline hyde. caroline: of eva has to be on your watchlist. no longer in a deal with snyder electric could expect this stock to fall. this is on the back of that deal that snyder electric will no longer take control of aviva by combining their software units. -- 30% inop of 32% the stock. due to do diligence, they cannot understand how to do a deal. stock, aviva..k. chipmaker,any,

casting their fourth-quarter revenue outlook. they will manage to get out about $40 million. much below what analysts have been estimating. why echo you to a weaker demand -- why? due to a weaker demand. watch across the board. i am seeing pretrade down 16%. outlooklie -- gloomy this morning. missing analysts estimates. unseasonably mild weather. they eat out -- they eat out a mild growth. exclusive talks to swatch assets worth 18 billion euros.

guy: caroline, thank you very much indeed. moreompany deal that is no this morning, another deal that is falling through. this is a company that is saying in the world we are living in, we don't want to allocate capital in this direction. the snyder deal off. fascinating. charles: we will have to see what the reasons are when they talk about it later. jonathan: we're going to talk about stocks now. the sectors that you hate. we could all do that. what you like next year echo charles: -- next year? charles: some of them have done it really very well, like insurance, travel and leisure, media, general retailers are coming off the top little bit. care, i don'talth really like that sector. jonathan: expand on that.

charles: they are not finding the drugs they need to. they spend a lot of shareholders money to find the drugs. think you've got more downside than upside. it could be one of those sectors think it turned out to be a lot more than people expected. insurance, media. they have all done very well. you can begin to feel that one of the reasons why they are a few sectors doing quite well is people are being forced out of other sectors by oils and miners. they have done quite badly. the market getting quite thin. guy: we have plenty more we need to be talking about.

coming up, the market open. we need to be focused on what is happening here. around 8% on the futures. a pop for european equities coming up. ♪ 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.

jonathan: good morning and welcome to "on the move." i'm jonathan ferro. moments away from the start of european trading. can we break the losing streak on the ftse? guy johnson has your morning brief. guy: a big couple of days. we are counting down to the fed, the world's most highly anticipated rate decision coming out the back end of tomorrow. bloombergceo tells fed hike could be the tipping point for son. -- for some. they are heading toward their first annual loss since 2008, is the era of easy money coming to an end?

15 seconds away from the open here in london, and eight day losing streak. futures indicate we could break that the open. caroline hyde has the market open. caroline: eight days down on the ftse, five days down on the stoxx 600. but today, a bounceback. the nervousness is there ahead of the two day meeting at the federal reserve tomorrow. we get that all-important rate decision where we could see the first rate hike in almost a decade. green, weg into the are expecting bigger gains across the board. we saw a rebound with the dollar on the lower side, warming up at 1.1%. certainly there is some risk appetite in the equity market, or is it just suddenly we are starting to see the

opportunities? trading is up 5/10 of 1% with the dollar on the downside coming off after much. the dollar has been on that winning streak. we are seeing the movement ahead in the market. meanwhile, oil is continuing to by eighter, brent off straight days now. gold is on the green side ahead of the potential rate hike, but metals are having a downward day. copper is off by more than 1%. let's see how stocks start performing. it is slow to open but we are expecting it to follow with snyder electric no longer combining with this company.

we see a slowdown in the mobile area with the biggest competitor, and agent and down as we sales down below analyst estimates. back to you. jonathan: give the market of chance, it is christmas. -- let's lett with her asian trade did with juliette saly. tte: stocks closed in the red for a sixth consecutive session. this is the height of the equity route. the shanghai market closed lower by one third of 1%, redeeming trait for the first time since august 10 on the back of that news of the merger that the chinese government announced yesterday. we did see the index rebound from six-year lows reached

yesterday and a stronger yen is impacting. despite a fairly positive start to today's trade on back of a rally in oil producers, australia's asx 200 closed at its lowest july, 2013. that was after the forecast was bigger than expected for the current financial year. japan on reports of the parent company planning on selling a 50% stake in the company. qantas is expecting first-half profit to do quite well. caltex is leading in the oil region, and there were reports today that apple has started its own laboratory to develop new , providers doing strongly in the region today. in a downright spot

day here in the asia-pacific region. jonathan: juliette saly in hong kong. here in europe, if that see in the green, with minors leaving us higher in the early part of the session. here's what's happening in today's program. ghost or glut? the impact of iran returning to the oil markets. then, fantasyland. the chief exec of rio tinto says prices of iron ore are still unsustainable as some miners cling to the edge. and $100 crude. the resignation from angela merkel. let's get back to the story in relation to the geopolitics. international monitors are expected to close their probe today, paving the way to the ramping up of crude production. ryan chilcote has more.

caucus through the timetable. ryan: iran has just a couple more things to do, remove you somees, uranium, and then we could see the sanctions removed. people tell us we could get the sanctions as early as january. the first thing you want to watch when that happens is it ran releasing its stockpile. this is 25 kilometers off the coast of the ran and right now we have four tankers off the , wheref heart island iranians keep their crude. of worldbout two hours so what that tells

you is that there is some oil which is preparing to come in the market as soon as the sanctions are removed, but not as much as there was. some might say that the overhang on the market is less than people might have anticipated. they need a cool $70 billion to do that, and they will sit down with the international oil companies in london to try and convince them that you ran is a good investment. jonathan: here's a headline for you. u.s. exporting won't affect oil prices. i wonder what he is talking about that. the big concern is not opec production in the united states as early as thursday. congress could approve unfettered exports of crude for the first time since the 1970's. the reason why they introduce the restrictions, there wasn't

enough oil kicking around. not the situation right now. the one thing to keep in mind is not only is there a glutton the united states but there is a glut globally. the premium between wti and brent is at a record low. it is literally less than a dollar right now but it had been as much as $28. analysts will tell you that in order for your u.s. companies to export their crude, they need a premium of about four dollars. this is unlikely to push up the wti price too high right now, that it is definitely something to watch in the future. the world's biggest producer of oil and gas and it could become the biggest exporter in the future. francine jonathan: thank you very much. done, fed his one and

i want to start think about my emerging investment story. >> anything so. -- i don't think so. there has been a chronic over investment of capital for some period of time, and it takes a long time for that to wash out. when you have over invested allocation tends to get poor at investing their money and it can take some time before we have proper capital allocation from these businesses and prices to reflect the risk of emerging markets. now,ve fallen a long way and i look at the spring back. markets tend to spring back and then fall again. we could see a spring back in some of them. there is some evidence that one or two emerging markets make try

to get from the bottom, but i think it's going to be -- you will have to wait a bit longer yet. jonathan: you mentioned the washout. balance energy versus material for us. other,tively versus the which one would it be? >> oil. i suspect you have risks of a shock in oil, which could severely contracts the supply of oil. that is either opec blinking or the saudi's blinking. or a political event that shocks the world, that changes the fundamental balance of oil. i can't see that happening in commodities. jonathan: we are just talking about the uranium -- there is more supply to come, isn't there? >> a while ago we were saying

that we were overdue in the equity market. i can't tell you where it will happen, but almost certainly you can't expects them to happen. it could be a terrorist event. i hope not. it could be a fundamental change in a political balance of power. talk about the pessimists guide to 2016. i think there is a lot of optimism getting back to 100 next year. give us the investor guide. you say that could be the oil market that balances. once you get the pop in the equities -- what are you looking ?or >> valuation is obviously important but markets always tend to overdo things. you can have a valuation metric which is very supportive.

i like to use technical analysis to give me some sort of idea about whether the overall market -- that tells me a lot about investor sentiment. if you have accommodating valuation and a supportive technical picture, that is usually the trigger for me to start getting capital. jonathan: 2016. run us there how you think it will start and finish, what happens in between. you are talking about very big turning point here, like oil turning around is one of those events that would have huge significance in the global economy. >> i am not forecasting and oil turnaround. is that we areg more likely to have a turning point in oil because of a shock and the commodities generally. the way 2016 plays out, i suspect we continue to have a continued downward pressure. we are still in the early stages of some sort of a rout that

normally lasts a lot longer, that has a lot of money over a long period of time. funds,t just one or two it is going to go on a while longer yet. jonathan: great to have you with us this morning. enjoy your christmas. coming up, south africa's brand-new finance minister looks a lot like the old ones stop he attempts to reassure investors amid political unrest. 12 minutes into the session. the ftse 100 is up 65 points this morning. good morning from the city. ♪

jonathan: 8:14 in london. let's get you up to speed on what you need to know. here's nejra cehic. iron ore collapse has pushed some producers to the brink of survival, according to the head of the world's second-biggest mining company. the rio tinto ceo says many are hanging on by their fingernails, after iron ore sales fell below $39 per metric time last week. >> we are still looking at $30asyland, simply because -- it just won't physically work. from the $30 you need to take five dollars for trade, $15 from brazil, which basically means

you are talking about a price of $25 from australia or $15 from brazil. there's a lot of high-cost producers that are going to pass muster. it's not sustainable. it is fantasyland at that level. nejra: australia's treasurer has confirmed a budget blowout due to falling commodity prices. scott morrison said this underlying cash deficit will expand to $37.4 billion asd, while gdp growth has been revised to 2.5% from 2.75%. wagen suffered its biggest decline since the scandal emerged in september. 24.5%rmaker accounted for of european new car registration in november, down from 26.8% a year earlier. that is your bloomberg first word news. for more, head to the bloomberg

terminal into bloomberg.com. jonathan: thanks very much. the finance minister has attempted to reassure investors in an interview with bloomberg. the prime minister reappointed the finance minister after his abrupt dismissal. he would keep the south african economy on the current fiscal course. we are joined now by our south african correspondent in johannesburg. you conducted the interview. what does he think he needs to do to get investors back in his country? >> hi, guy. he was very clear in the fact that he needs to regain the market's trust in south africa, and he mentioned that he wants to continue on the fiscal consolidation path, something that ratings agency have come out for strongly, as well as the spending ceiling that got the

government to where it is today. he also noted that they built a stronger petition since 1994. economyhe south african through the first recession in 2008. he was really trying to come out strong saying that they won't cut spending to the core programs, but whatever spending they will do will definitely be done within the fiscal consolidation policy. who is shaping policy in south africa right now? is it the markets are is it zuma? the way i see it was the markets pushing him to do something he didn't want to do. is it his party, the market? does he still have control? >> i think we have seen the market come out strongly. even after the reappointment of the finance minister, they gained up to 6% yesterday. we saw the johannesburg foreclosing in the positive,

even barely so. more reassurances are needed that at this point in time it seems like the market is pushing the south african government to finally give some clarity. the president's decision really through the market into turmoil and it is only now that we are seeing people coming into cognizance of the impact of that decision. the government is slowly trying to regain the trust of the market. they still have a ways to go in terms of getting back to where they were a week ago, even two weeks ago, but it definitely seems that the economic part is the one that is leading at this point in time. guy: thank you very much. to your point, you are quite right. he really didn't understand the economic applications. i think he has had firmly focused on domestic politics without understanding what's going on outside.

the fed is about to raise rates. there is a huge current account problem, and this is what you do? jonathan: twin deficits and you throw this card out? the market is already moving against you. the rand might have come back a bit but it still has -- i wonder how they approach it. i still sit here week after this mess, who's decision was this? who advised him? that has not been explained. guy: a lot of internal politics clearly going on, domestic problems within their party that i don't think he was resolving. we'll talk about this later. up next, european car registration is up for the 27th straight month, but more bad news for vonnie:. the details when we come back. ♪

jonathan: good morning and welcome to "on the move." the ftse up by 79 points. let's get to the biggest movers of caroline hyde. caroline: i am looking at the stock that has been leading the charge this morning, a car parts manufacturer up more than 6%. we saw the stellar numbers coming out of the 27th straight month of increasing sales in europe, up 14%. that will help a car parts manufacture but we also have the chief executive speaking out about how the margin will be 4.5% for this company. investors like it, faurecia g

ains, but there are some key stocks to keep an eye one. .ialog lower this morning they are cutting their fourth quarter, that whole years outlook for revenue, due to weaker than anticipated demand. keep an eye on chipmakers this morning. and check this out. the biggest full on record at one point for this, down 36% because a deal is no more. schneider electric will not be taking control of this software and services company. that deal is off, therefore the premium gets sucked out by 36%. what a move. jonathan: caroline hyde, thank you very much. talking about a move, this one is expected. volkswagen seeing its biggest decline in european market shares since the scandal broke

in september. they cannot with earnings this morning. hans nichols is in berlin. metro, profit, beating in the third quarter. hans: their cash and carry business and their media business. i was in one of those stores, it was booming but i will get back to that later. look at what they did in terms of earnings. the estimate was for 1.46. andr stock is up almost 2% they are talking about reducing their debt load. strong earnings from the consumer goods group. down moremarket share than 2% month after month. when you look at who is gaining, it looks like the market share is up. this is a discounting story. the average discount for autos was 12.9%.

ford was at 15%, and that is on top of the free money or at least interest-free money. here's my apology to shareholders -- they have a when youreturn policy get home with your new coffee iter that was not plugged in will you take your new coffee maker back. both.an: you just lost us guy: coffeemakers are important. i am trying to wonder whether my coffeemakers plugged in. jonathan: i am always skeptical about european carmakers because it is never the value of the registration. guy: the big surprise is that they haven't been hammered as

much as they thought. jonathan: they lost market share but you try to keep it up there. guy: when we come back, sweden. interest rates. ♪ 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.

guy: welcome back. 8:30, half an hour into the trading day. you will days down -- get it pick up after that, and that is exactly what you are seeing. mining stocks, energy stocks bouncing back strongly. as you can see, this is large across the european markets. both markets are outperforming what is happening in london. jonathan: look at the situation stree in sweden. 1.3% in 2016 versus 1.4% in october. that is a slight downgrade.

also a slight downgrade in buying of bonds that will continue in line with the october decision. last week, i sat down with the s&p president, failed out somewhat by the ecb disappointment the other week. just maybe this is getting bailed out as well. guy: affair case to make. it will be race until inflation is at 2%. that is the guidance coming through, and inflation is a long way away from that number. an awful lot of work still to be done. jonathan: let's check out a currency very quickly against the euro on an intraday basis. 9.274, a stronger swedish krona. guy, clearly some people expected an expansion to qe. guy: judging by that

positioning, that is exactly what you are seeing their. a fairly decent move. the survey's we were doing pointed to the data going to exactly as we always saw it. the market looks like it was out of position. jonathan: they see no flaw for rates. the repo rate can be cut. in terms of that last chart, the euro has come a long way quite quickly. i think in terms of the positioning, this squeeze you have seen on the euro may be looking for some excuses. maybe this is the case in point of frying of the edges. jonathan: nevermind the opinion of guy johnson and myself. in terms of that last chart, the euro has come a long way quite quickly. you can listen to the governor of sweden's at central bank in "surveillance" at 10:45 a.m. over in new york. globally, commodity prices are battered. 16-year lows and one company suffering. rio tinto has been forced to

slash spending, selloff billions of dollars of assets. in an exclusive interview the ceo told me that $30 iron ore would eliminate producers hanging on by their fingernails. >> we are still looking at fantasyland, simply because the sustainable price of $30, it just won't physically work. from the $30 you need to take five dollars from australia, $15 from brazil, which basically means you are talking about a price of $25 from australia or $15 from brazil. there's a lot of high-cost producers that are going to pass muster at that sort of price range. it's not sustainable. it is fantasyland that level. jonathan: is that what needs to happen to wash out the excess supply, prices need to go lower? >> this is what happens every

cycle. i suspect that right now, there are people that are suffering pretty loudly. jonathan: you've also said it would be a lonely place. it's still looking pretty crowded in many ways. >> it is crowded. there are a lot of producers that we believed would leave the market hanging on. that's life. they're burning up cash reserves. that is a decision for them, not for me. jonathan: joining us now on set is the commodity mining analyst. great to have you with us. that interview, and i said early on, their stock is down 40%. incredibly confident about his strategy. should he be? >> i think he has a reasonable reason to be. the cost of production is the lowest in the industry. you are sitting in a position of strength and you can know that

it is hurting you, but hurting others more. he is thinking that his reserves will outlast. lowest-cost producer in the world, i can see everyone struggling. ands just about holding on, he is the lowest-cost producer. 75% of global production comes from four names in his is the strongest. obviously they have the copper assets, many will see that as a negative. guy: why are you spending money? it's a terrible time to spend money. >> people said that about the oil expenditures and look at it now. should they still be paying a progressive dividend? >> no. that is something that mining companies in general

should not undertake. in a cyclical industry like commodities, there will be boom and bust years, and i think investors want exposure to commodities that they don't want exposure to the balance sheet risks. you would rather have the dividend related to the other performers of your operation in the underlying commodity price. jonathan: does that change next year? >> there is a good chance of that unless the company says they will leverage. guy: why would they do that? it's not as if money will be that much more expensive. >> exactly. they are in the fortunate position to make that decision. glencore's name -- it's not a wise -- we tend to view that it is not the best way to operate. if they believe that they can leverage the balance sheet, maybe so, but it means they

will take away some of the potential for future expenditures that they can make to improve the business going forward, for example something the diamond division. jonathan: everyone is familiar with the opec strategy, the saudi strategy. the mining story is fascinating. 400 million tons of iron ore in the last five years index or production, much of it from high-cost producers. it's just not coming off. even the price at $39 per metric ton. gina rinehart brought even more supply onto the market. he keeps calling $40 fantasyland. why is $30 fantasyland? i think $30 comes from an anchoring bias, really. but if you consider gina rinehart's operation, that production has been sold under long-term agreement. that is not going to impact the stock market. is the were referring to

higher cost producers turning to domestic production. the funding behind those names, in the good years the companies are able to generate significant cash resources. 2016 that youin will see the elimination of those cash resources. it won't happen overnight. it's a long-term, drawnout process that will take time. you will see a lower for longer iron or price. ultimately those cash reserves will be burned up, and it will be the last man standing or the strongest man standing. it was wells fargo yesterday talking about the energy sector, a similar story. stay with us. we have plenty more to get to. up next, $100 crude. a resignation from chancellor merkel. 2016.ssimists guide to ♪

guy: good morning and welcome back to "on the move." 41 minutes into the session, the ftse on an eight-game losing streak. higher by 88 points. let's cross over to merit change for your bloomberg business flash. exclusive talks to swap assets worth 18.1 billion euros. shares in london listed as a group slumped today as a merger

talk and it after the companies were unable to reach an agreement wil. gopro shares after morgan stanley cut its target rate on the stock based on slower consumer pickup of drones and a later rollout of action cameras. that's your bloomberg business flash. guy: thank you very much. spain hold the general election on sunday. the people's party is expected to come out on top, but not by enough to form a majority government. the economy minister told bloomberg he is confident of the solid when. -- solid win. i'm confident that the spanish people will come from the situation we had four years ago. that it will think take into consideration the future.

in 2012, our future was dark. now it is much brighter. we will be taking into consideration the final outcomes. so to summarize, i am fully convinced that we will have a stable government. that will continue with the policies we're taking the spanish economy out. guy: we are joined now from the dread. ae economy minister, he's politician so of course he says that. what is the reality? what are we hearing from the polling? but the very confident, word on the ground is that they are very likely going to win the election, but it's not going to be as easy as it is being presented. essentially right now they have an overall majority that lets

them push through reform legislation with no opposition. independent polls are right. on sunday, they could lose as many as one third of their seats. this'll make life so much and will the prime minister lead a stable government? it looks like it could get messy in spain. just yesterday during a presidential debate insisted that their mission is rajolla.id of the pro-market moderate option said they don't want to get into an opposition with him. it is difficult for him to establish a stable government and know how to go from an overall majority like he has to a simple majority. we come in the 2015

with so much about it. where are they? >> if you look at polls, it varies. back in january they were number one and now they are stuck in fourth in third place. we have seen latest polls that show a slight pickup, but definitely not the threat that we spoke of at the start of the year. yesterday we got second opinion polls, all of them showing pp at number one. that they could which couldres, have a watershed moment for politics. for 30 years it has all been about the conservatives, but that, we haveto to walk toward the center. you could call it a radical element to the mining sector,

willing to talk to every party, willing to avoid the situation that we saw in greece earlier this year. it seems that it is a different type. high-profile figures have left the party because they feel they are no longer represented by what emerged out of the protest in may, 2002. --doesn't seem guy: maria, thank you very much for joining us 2015. looking back, the year in which we saw a record refugee flows, shocking terror attacks. what surprising events could 2016 have in store? the pessimists's guide to 2016. ohn, anyone that knows you knows you are not a pessimist. i sense a lot of this is politics. >> yes. what we heard is we are looking

at a changing world. if you look at the geopolitical pillars that have dominated the market, dominated politics for the last 10, 15 years, a lot of ever-changing. the rights and china have changed. the rising power of russia. what you are seeing is the tectonic plates of world politics changing, and layered on top of that we have the said raising interest rates, which makes for a much riskier world. we looked at some of the biggest risks for next year and turned it into an exercise of what could go wrong. guy: it's not inconceivable by any stretch of the imagination. as we work our way to the end of this year, with what's happening with crude and commodities, one thing that stands out is the possibility of the significant swing back in the price of crude. you look at the origins and it comes out the way you would

expect it to. >> very much so. right now everyone is talking about $30 oil, but if you look at oil, they are at maximum production. take that much of the geopolitical incident to cause problems there. if you talk to intelligence officials in the middle east, the big worry is that the islamic state could figure out how to do acts of sabotage in oil installations. venezuela could go a lot of different directions. a major political disruption there could disrupt that. right, geopolitics in the middle east are one of the big risks people are looking at. and oil some people say could go to $100. jonathan: that is the optimist guide for some markets. oil could be a market that balances next year. a lot of people are saying that despite where prices are, the materials business is a different world. you don't expect the likes of

iron ore to balance and 2016, do you? >> we have more in terms of stabilization. anomaly,been such an with such aggressive declines across the board. 2016, you would probably expect q1 to continue the trend we saw in the last half of 2015. going very to the latter half, it was more optimistic that things will stabilize. you will see some of the higher cost producers running out of cash resources, taking some supply off the market. you could see things a little better in 2016. i won't say there will be huge but we have seen the worst of the declines. guy: politics will once again dominate in 2016. we already alluded to that. but there are some key things that will start happening. the french elections, the german elections, and very much of the

brexit story. we're going to start getting data, understanding the dynamics of that. that is going to be a story. >> the real unknown of european politics is this great disruption that we are seeing in the normal world politics. for a long time oin europe, populism drove a lot of it. on the left, we just heard from spain and greece, but on top of that now is the extra security. the right wing taht makes a much

more unpredictable world. one of the biggest risks is brexit. right now unbalance balance you would think that cameron will win the day, but it could be tight. there is a lot that could go wrong. electorates right now are in an unpredictable move. in terms of western europe, the swings underneath thetaht makesh more unpredictable world. one of the biggest risks is brexit. surface of european popular opinion will drive not only politics but also markets, as we move out of the zero interest rate world. jonathan: jeff ryan, thank you very much for joining us. we are talking u.k. inflation bloomberg's first world with richard jones. 51 minutes into the session. ftse up 81 points. good morning. ♪

>> i believe that it is, in a world where it is inevitable, much better to make easily reversed errors then to make it difficult to reverse errors. i believe that the decision to delay rates runs risks that are easily reversed. by subsequently raising rates, whereas the rates, if itaise proves to have been the wrong decision, is a much more difficult decision to correct. francine: the u.s. treasury secretary speaking with tom keene.

-- guy: with us now is richard jones from first word. a whole bunch of stuff today. we have cpi data coming out a little bit later, an awful lot to think about the central banking point of view. let's start off with what's going on with cpi right now. we look at to the fed. u.k. petrol prices are part of parcel the story. theought this up, and reason why we haven't seen cpi picking up is because that drop there is bigger than that drop their, despite the fact that petrol prices are still falling. >> the basic facts obesity to kick in. what i think will be interesting about today's number will be how much is the base effect offset by the strength of the pound, which throughout the year has been very strong, something flagged as a headwind. . think it is a great chart i tweeted it early this morning. jonathan: he was very excited

about that. we know the amount of spare capacity -- the u.s. and you can't are a different story. what is the risk of an over show in the u.k. in the back half of the next year? >> it depends who you ask. if you ask market economists they will say it is high. if you ask investors, there is more to say about that. then for the actual rate path -- jonathan: $100 for oil next year? >> we will have a bigger problem than anyone imagines. fair i not sure many people are expecting $100. richard jones, always good to have you with us. cpi data coming out in 30 minutes. stay with bloomberg tv. later in the day, we will be speaking to the governor of the sweetest central-bank. in the meantime, that's it from

guy and myself. best of luck for the rest of your day. 56 minutes into the session, up 86 points. good morning. ♪

francine: this that goes live, the u.s. central bank begins its two-day meeting as larry summers warns against hike. emerging-market stocks rebound from a six-year low. european equities gain in the dollar weakens. thatio tinto's ceo says the rout has left some producers hanging on by their fingernails. welcome to "the pulse," live from london. time for a quick look at what the markets are doing. it is the day before the fed. to m