as we wrap up the tray. mark: european stocks jumping after five days of bosses at the fed starts their today policy meeting. the european close starts right now. betty: we are going to take you from new york to london and berlin in the next half hour, but kick things off, mark, on a pretty big rally. mark: european stocks rebounding from the 10 week low. after risk return, the fed kicks off the today policy meeting. all 19 industry groups rising today of the stoxx 600, led that oil. 600 is record, the stoxx

on its worst december since 2002, falling by 7%. had investor confidence rose for second month and u.k. inflation rose above zero point the first month in for. ok, only .1, but you have to start somewhere. betty: it is the beginning of something, perhaps, but i know the rally was posted by the m&a activity, particularly santa fe? that is right. the biggest increase in six months and they have been in talks to swap assets with germany. it would be a 22.8 billion dollar transaction, the largest for the french drugmaker sanofi. it would flop its health ringer's for boeh consumer help operations and that would give sanofi the biggest share in the health care

sector. there by 5.3%. betty: -- mark: they are up by 5.3%. betty: all right, we will be monitoring those markets but also on the west coast in the u.s. nla but the bomb threat received by nla school board member and vonnie quinn has more. tonie: we are continuing keep an eye on this and we are waiting for a press conference eastern, 9:00 local time. the second largest school district shut down because of a threat. according to "los angeles time," the school received a credible threat involving packages and backpacks. meanwhile, the threats and e-mails were apparently found overseas. you -- the unified elliott school district has been around 700,000 students. -- l.a. school district has been

around 700,000 students. >> i have asked for appropriate people to take care of the problem. that is not teachers, that is appropriate people. vonnie: he says this is a rare threat. over thever a deal budget package. house paul -- house speaker paul to agreementsuss and he says both agreements contain victories for republicans and democrats. john kerry is in moscow, seeking what he calls, common ground with russia on syria and ukraine. andet with vladimir putin the u.s. and russia disagrees with the political solution to the war in syria. nuclear watchdog is ending the investigation of

iran's program. they concluded that they didn't -- they are still in line to have sanctions lifted with the nuclear deal from the west. that is a look at our first word news. to get more on these and other breaking stories 24 hours a day, ♪ at bloomberg.com. betty: thank you. may be limited by what is happening overseas according to an economist at bank of america. they are also weighing in on the big dilemma facing the fed. this is no easy task. mark: tom keene spoke with the arab strategy forum in dubai and here is what he had to say about the risk surrounded the feds expected move. hike too much, too fast, too soon, that would weaken growth and unemployment

will go higher and the fed will have to reverse itself, so even if it starts hiking this week, they will have to go extremely gradual and slow. had theephen isaacs last fed statement there. what is the difference going to be? stephen isaacs: they will definitely hike because they fly to improving labor markets. if you go back and see what has happened the last month, it was quite strong, so they have to follow their own then was. i think what they are going to do, they have had a problem the last couple of beers which is they had to talk tough and do nothing, and now they have the reverse of the problem. they will do something -- mark: the dovish hike. stephen isaacs: exactly. i think they will just change one word. they talked about a balanced

policy. to forward i think they might change that to something like measured. it is one word but i think it will indicate to the markets that although rate rises are possible for next year, they will be back today the dependent. and the dollar could push the expectations once again. talk to me about inflation. will it be kept in check next year? let's say you help soft foreign demand and weakening and prices, let's say you have a strong dollar, or to the risks of external inflation or deflation? stephen isaacs: inflation has been nowhere to be seen for a long time, so whether the fed hikes or not hikes now and next year has nothing to do it inflation because it is almost a given that we don't have to worry about inflation. there is a part of the statement which reiterates the view over a

fed will time that the do whatever it takes and labeling long-term inflation zahra etc., etc. it is about employment because the fed past two policy mandates, employment and inflation. unemployment is at 5%. you have to accept, any economist will tell you that you capacity, andear there will be inflation tendencies in the labor market which take a long time to filter through to consumer prices. what we will -- what will thrive interest-rate policy tomorrow and the next year is unemployment rate. that is the one uncertain. we know that in the short term, there is further followthrough from the dollar. every time with the commodity prices will stop going down, they notch even further down, so inflation figures in the early part of 2016 will be soft.

we do not know what is going to happen to the unemployment rate. that is the one component that could sugar higher rates in 2016. ephen, there are lots of what this, and there is a great story on the bizarre theories out there. one from stanford says, might it actually happened at higher rates could actually spur inflation? theakes americans believe economy is doing better, and it makes them spend more. is this as far out as it sounds? stephen isaacs: that is the confidence view that emergency levels are consistent. it is a basket case the economy and an interesting theory. little it makes difference the psychology, so i'm not sure that is true.

there is bill gross and his. that if you bring rates down to zero, to not be surprised that returns go to zero, so there is an argument that you need to see some kind of higher rate in the economy to bolster savings and that helps pools of capital form an integrated growth, but there was a long-term cycles. betty: do you expect that any capital is going to flee or leave the u.s. market to others once the fed starts hiking? stephen isaacs: there is an interest-rate differential. poor treasurers sitting in europe, they are getting minus bonuses on their deposits, and there is, i am afraid, a policy or tendency to pass them where they're not getting penalized to have their money on deposit. the interest-rate differential and ittious late wide may edge a little higher. it does not in itself make a big

difference, but that effect is there, cannot deny it. mark: my battle of the chart today is the bank of england decoupling from the fed? last twolly in the decades, the banks go three months later. will it closely followed the fed? the britishcs: economy is somewhat in the middle of the atlantic, not 23 miles from the continent. yes, the british economy is affected and they will monitor the policy more closely than our european cousins, which is rightly saw positive interest rates. if we were totally european economy, very without negative interest rates like the ecb, so your decoupling is there. you are right. does that mean the bank of england has to follow a small increase in federal funds rate? no, i do not think so. if the fed was going to take off and run, and we would be up to 2% interest rates next year, i

think you would see the bank of england move. they do feel some of the heat, i think that is your point. mark: thank you. we will begint special fed coverage at 1:00 p.m. new york time and 6:00 p.m. london time. betty, are you ready? betty: i am ready. it is my turn to get excited about what happened. as we are hitting session highs still u.s. market, but ahead on the european close, it has been a rough couple of months for folks fog and -- for volkswagen. there is more trouble ahead and we will have the latest on vw. ♪

back.welcome we are to live from london to new york. this is the european close. european stocks today, becky, added 253 billion euros of value. i will not neglect to type that before today, 600 billion euros of value with top european equity, so we have almost clear that path. betty: almost. try tocertainly going to fall back as well from our losses and quite a rally today based on the fed's move tomorrow. have a lot of corporate news going on, so it is time for the bloomberg business flash for some of the biggest business stories. homebuilders are growing less confident about prospects. the national association of home builders fell for the second month in a row. they had hit a 10 month high in october. they're concerned about the

rising cost of labor. calls tohas rejected break up. they decided to keep the semiconductor and technology licensing arms together following a strategic review. shares of qualcomm has fallen 37% this year. radio star howard stern is staying with serious xm. he said today on his show that he has signed a new five-year deal and he does not come cheap. the current deal reportedly cost serious xm about $80 million a year. you can always get more business news at bloomberg.com. mark, more trouble ahead for volkswagen, right? been yes, the effects have doubling the emissions scandal. european markets shares narrowed, accounting for just under 25% of new car registration. chris read that is struck --

chris is covering this story. is this the start of a worrying trend for volkswagen or not? chris: it is the start. since the crisis broke in september, the declining market share has gotten worse from month to month. in europe, customers tend to order their cars and it takes a couple months to build the orders, so the effect that we saw in november does not bode in ther volkswagen coming months because they did not do a very good job in the beginning responding to customer concerns, so that is now being seen in the results in november. mark: why aren't investors focusing on the market share and focusing on the fact that sales did increase last month by 4.2%? mean, i think -- i volkswagen has gotten hammered

since the crisis, so they are down a significant amount since it started. it could have been worse. the market shares are a little bit shy of trade by percent, which is pretty much in line with what they have been throughout the year. that is what they are going with. that said, there has been some heavy discounting in europe at the same time. in germany especially, and not only by volkswagen but by other competitors as well to get to those numbers and boost sales, so it is not the sales themselves not moving, but it is the price that they're able to charge for those cars. that is going to be a concern when volkswagen reports earnings in the new year. mark: despite the heavy discounting, this seems to be going on across the entire european auto space, what are volkswagen's peers doing to respond quintessentially it is

not down right now by the omission -- when it is knocked down right now by the emissions scandal? carmakers, gmnch it, they do seem to smell blood in the water, so to speak up and they are trying to grab market share from volkswagen and keep that. also, what they have been doing and assessment mark strategic, they have been quicker at bringing out small suvs, which are hot segments in europe. they have been attacking too,wagen on that front, from the portfolio and model front. mark: thank you for joining us. chris telling us about volkswagen in berlin. we have breaking news. betty: we are getting word from then might be commissioner that there has also been a specific but not credible threat to the you -- the new york public

school systems and vonnie quinn has more details. vonnie: we are getting this after the incident in los closed that school district, the second-largest in the company. the commissioner says they are made to promote fear, and i am coding, and we cannot let this allows to raise the level of fears. the department as coupled that it is not a credible threat and their concern of people overreacting. we know in los angeles that the school superintendent of the school system decided to close all of the schools, all 900. they had buses come to collect children due to a threat. the associated press says that one of the board members received an electronic threat and that this happened yesterday. according to that board member, it may have come from overseas, so almost one million children are being sent home today. we are expecting another crest -- press conference in over 10

minutes from los angeles, so we will keep you updated. thank you. let's get back to the markets with a check on the move in the stock market. you have pretty much all of the sectors, except industrial, moving higher this morning. the dow jones up about 153 points and they are very much near their house. abigail is live at nasdaq. abigail: we are looking at a big rally at the nasdaq and a piece of it is health care. it is up more than 2% at this the four top had pleadings, biogen, regeneron are all up nicely. up about 3% on a morgan stanley upgrade to overweight after amgen reacquired truck war to developcountries their own international sales infrastructure. the revenue from those regional licenses is relatively small compared to the $20 billion in

sales last year, berdych could offset slowing growth in 2011 -- but it could offset slowing growth in 2011. morgan stanley named a price target of 193 and it could move higher by 20%. betty: thank you. much more ahead in the battle of the charts. tomorrow, the economic world is watching the fed. mark, you are looking at decoupling in the u.k., right? mark: yes, will the bank of england follow suit or will it decoupled from the u.s. monetary policy? i have the chart,. see you in a minute. ♪

betty: welcome back. vonnie: you are watching bloomberg "markets."breaking news, this is heated press saying the new york city threat that we reported was the same threat

schools in los angeles and determined a. all schoolchildren in los angeles are going home or are at home following a threat e-mail. betty: thank you. vonnie quinn at the news desk. it is time for the battle of the charts, where he look at some of the most telling charts of the day. joe weisenthal joining me, the miss,"r of "what do you and mark barton standing by. knows the fed is probably going to hike tomorrow -- why is it not coming up? betty: you forgot to login. [laughter] joe: may be let's go to mark. betty: market is repaired. mark: is the bank of england decoupling? in the last two decades, they tend to follow the fed in policy

by roughly three months but all of that is changing because teachers are telling us that if they start hiking rates until january 2017, and there are two reasons this is a shot. the first is the white line, consumer prices today rising an annual .1 percent. we are so far below the bank of england 2% inflation goal. the other reason, average hourly 2.5ings and rose by percent. where the fed goes, the bank of england may not follow. are you logged in? joe: and here is why we will probably go. we have inflation data with energy the highest in a while. cpi, highest of 2014 and cpi also a highest. all the data goes in the right direction and the fed has to be believed by that. betty: joe wins this because he

saved his chart at the last moment. mark, joe is the winner, but tell them what is going on next. mark: i take all of that back earlier. here is what happened, the biggest rally for european equities in two months in the fed kicks off to today meeting. look at that footsie with 2.5%. tomorrow, there is no bigger event tomorrow then the fed reserves today meeting. also, tomorrow, eurozone consumer price data may confirm annual inflation rose .1% tomorrow. that is the big one. see you tomorrow, guys. ♪

>> it is noon in new york, by the clock in london -- and 5:00 in london. welcome to "bloomberg markets."

scarlett: good afternoon. alix: we are watching the countdown underway with the fed beginning the most anticipated meeting in years and it is expected to end with a first rate hike and now must one decade. we will tell you what that could mean for the markets and economy. los angeles public schools are closed after receiving a threat. qualcomm rejecting calls the split itself into two, betty they could turn around their earnings as one company. well investors agree? l.a.on that situation at public schools where closes -- what a threat has closed classes. first, we went to get a check on the markets on this announcement. ramey has the details. ramey i went to get to the