manus: welcome to "on the move." we are counting it down to the european open. i'm guy johnson alongside jonathan ferro. jonathan: i am reliably informed that now it is the federal reserve's turn. global rebound. stocks climb in the dollar rallies ahead of what could be the first rate hike since 2006. lift.s. congress is set to a 40-year-old ban on crude exports as oil trades and 87 year low. guy: it's a big day. we have a lot to talk about.

let's get you up to speed with the bloomberg first word news. .aroline: thank you asian stocks are trading higher ahead of the crucial rate decision. they are downplaying concerns over oil and high-yield bonds wil. hang seng snapped his longest losing streak since 1984 stop . congressional leaders agreed on a fiscal plan that will lift the ban on crude exports. paul ryan unveiled the plan that will also avert the government shutdown. party arekel's expecting growing dismay at the prospect of a british exit for the eu. leaders are preparing to discuss their call for reform at us on it in brussels tomorrow. when german lawmakers as the referendum over eu membership is an exit stencil risk for europe. guy: less than half an hour away from the european open.

let's get a sense of where we will go. quite a day yesterday -- a great session. today looks like we will be opening softer than where we closed but still in positive territory. crawled up by 1/10 of 1%, a similar story on the dax. as insatiable, sensational session yesterday. most of these markets were up 3%+. jonathan: for stronger dollar was the story yesterday. trading at stronger this morning, a little bit weaker this morning, down by 2/10 of 1% ahead of that jobless data. the pound is trading at a two-year high. brent crude is just below $38 per barrel, with the potential

of crude coming to global market. guy: let's talk about what we need from the fed. >> at this point the fed has put itself in a position where it has to raise rates or it will lose all credibility. >> it is something i have been encouraging for a while because of the tightness of the labor wages were .2%. >> it is almost impossible now for the fed not to hike, unless we get some major capacity. >> it is high time that the cycle started. we have an economy that is still slower than it typically is, strong enough that the policy rates should not be zero. >> they pass like ships in the

night, and next is all priced in and someone is going to be wrong. which one are you going to bet? not a few people sitting in a room deciding for us. jonathan: is that right? they can't not hike today? let's talk to the deputy chief investment officer at black rock. great to have you with us. the fed. i have got to hike. here will bention to meet expectations as much as they possibly can, and to leave the door open for what they need to do going forward. my thought would be that they would want a small market reaction to this first rate hike , small as they possibly can. guy: is the ending of zero interest rate policy from the fed a good thing? >> in some respects i think it is. it suggests that the u.s.

economy in the global economy is on stronger footing. the fed believes that the emergency level can be withdrawn. we can argue whether they have buted too long or too soon, given the trajectory of the u.s. economy and the state of the u.s. employment market, it would suggest that it is time and that the market can withstand it. we are starting from a very small amount. jonathan: the headline is hiked rates and then they get the summary of economic predictions going straight toward the dots. when you look at that, you look at projections. in september, we come down again. is that going to come down again? on the whole idea of a dovish hike, even that the market has been trading below their blueline, can they deliver that dovish hike, even if it comes

down again? >> that's the tricky part. the market applications are so far below what the fed projection is. in particular, it is far below that terminal rate of the fed's expectation. i think this will be the part that will be tricky for janet yellen today, that she will want to -- if she had adjusted those points, she basis wants to bring market consensus toward the fed but not have to much of the disruption. there is a big pricing difference between the dots in the market expectations. priced hikes in 2016 are by the difference between them and that is a lot. it will be interesting to see how the market reacts. jonathan: shortened by the long end? > >> if they deliver the monetary policy we think is appropriate,

that could be more than his preston, and long and treasuries are obviously more attractive. jonathan: front page today, the flip-flop. idea of it, the argument comes at the turn of the year. what do you expect in the u.k. versus the united states? a are similar. -- they are similar. i think it's an interesting point. one of the observations you can make about u.k. market expectations is that it sits firmly between the u.s. and europe, which is some degree conceptual. but i would say that the market has been often confused and sometimes the wilderness by the -- sometimes bewildered. guy: this doesn't surprise me in the slightest. the u.s. economy doesn't get affected by what happens around the world, the u.k. economy

massively opened. carney has a much more difficult job. jonathan: there is a communication issue here as well. 2015, you come out and say you will hike and you don't. therefore hanging on every single word that comes down from the federal reserve? it was their ability to survey the permission no greater than mark carney. market, the income global financial market, has become so dependent on monetary policy as a driver evaluation. -- driver of valuation. ,hen the fed raises rates today 45% of the world's central banks are still in easing mode. you have the bank of england on hold, the bank of japan. this is not going to be a global merge and interest rates, but i

think that the u.k. is correctly priced between extended between the u.s. and european situation. guy: we need to figure out some of the details. scott will be around a while longer. up next, the great debate. mathematics.s the we will take you through it next. ♪

guy: good morning and welcome back to "on the move."

for those of you waking up early in the united states, we are 12 hours away from the fed decision. futures are a little bit higher and that let's go to caroline hyde for the bloomberg business flash. caroline: product shares have plunged to a record low in hong kong after first-quarter profit missed estimates. the company says it will increase prices in europe to compensate for slumping sales in asia and the u.s.. rolls-royce's aerospace division president will leave next year as the new chief executive restructures the company. tony woods's duties will be taken over by eric scholz, who runs their engine business. shares leapt in singapore after the largest commodity trader says it is an advanced talks to sell the agricultural unit. they could bolster their drive to raise cash and avoid a credit

rating cut. jonathan: thank you very much. -- backit market has to basics for your morning must-read. in the bond market you can get liquidity or safety or yield, but sometimes two out of three is a stretch. let's bring in scott field. simon ballard also joins us. .ack to basics any professional would look at the paragraph and think yeah, yeah, yeah. he has been acting like we know that, half we? no, because it is all about the over dependency in the chase for yields. we have been going further down the risk spectrum. we have looked for liquidity and safety and returns and we have on thenything we can

basis that the next move by monetary policy will be down. now we are facing the first rate rise by the fed this evening and things are looking different. it has very much been chase it as hard as you can. guy: there are a number of moving parts to this story, two of which we have alluded to already. they are related but not related. when you look at what is happening in credit right now, you are seeing a broad pickup in default rates, but when you look at what is happening in energy, you get a huge pickup. these are almost two completely unrelated markets. >> when you think about the high-yield market, you have to dig a little deeper into it and look at the energy-related sector. the balance is less energy-related. those, in the energy-related sector, you are getting 50%-17% yield -- 15%-17% yield.

in other areas you are getting a default rate around 4% and the yield of 6%. what that tells you is that we may have concerns about global economic growth, but we have this impact of lower oil prices that is really driving prices down in the high-yield sector. we have talked about 3rd avenue to death now. you can see how stressed it is and maybe we shouldn't even call it high-yield, it's just pure, bottom of the barrel stuff. my point here is that the levels of issuance in the high-yield sector have been boom, boom, boom. there have been many corporate that have come to market, issued paper, and picked up that money with a low interest rate. what it want to gauge from you is whether that is coming to an end. respects,y they are taking advantage of the finance rates, and that is a good thing.

they have finance themselves forward in many respects, so it is the companies that don't have to come to the market that can benefit. but with the shift in finance rates, i don't think the fed has so much to do with that. be marginalse will for companies trading at 5%, 6%, 7%. it is more about their financing spread. that said, i think the environment for high-yield have changed a lot, and those companies that have taken advantage of that will be the ones that benefit. guy: the ecb or the fed? >> short-term, the fed. takeare all starting to the punch bowl. guy: the opportunity in europe is what? the fed is starting to change the game a little bit but europe is still there. they could do a lot more. >> absolutely. that is why there is a net positive view on product going

into 2016, given the underperformance of high-yield. the statements of the quality curve suggests a backdrop of the supported ecb, but as scott pointed out, it is a question of taking your spots. jonathan: going forward, the e parallels will be john. the difference now is that it is high time with the problems and not the banks. what are the implications of that questio? >> they are different situations and we have to look at what developed in the high-yield market from an investment perspective, but also from a liquidity perspective. one of the observations i would make is that if you look at the liquidity provided in the index products or other index related products, it has been surprisingly good.

obviously if the crisis develops further we may see a shift in sentiment, but that's far will we have noticed is that the liquidity provision has actually been better, particularly in high-yield. we talk about these funds on 3rd avenue and that is a different story than the functioning index level. jonathan: thank you for joining us this morning. we are 11 minutes away from the european market open. look at the potential corporate movers including rbs and rolls-royce. 11 minutes away -- key futures are just a little bit higher. good morning. ♪

guy: it is 7:52 in london, but it is more importantly 2:52 in new york. building istate

celebrating. in 11 hours, what will the market do? are we priced to perfection? let's find out. caroline hyde has the stocks to watch. caroline: a slight rally ahead of that federal rate decision later today, but i want to focus on a few key stocks that are likely to rally. the royal bank of scotland is set to get a push higher to 2% this morning. they are outlining their optimism. they said in a statement today that there is a lot of speculation in the market. they are committed to disposing of it before the end of 2017 and they have had a number of formal approaches. interesting push up this morning, and other u.k. stocks will likely rise on the open and it poses pretty good numbers. andax is a beach overall

second quarter sales, europe up 7% ahead of analyst estimates. today. ssa be could fall they are warning of their fourth quarter, saying they will post an operating loss. splitting up the engine maker into five segments as the chief executive creates an overhaul. the aerospace division president and the president of the land and sea unit are leaving the business. stocks are caused to be flat -- are called to be flat. guy: thank you very much indeed. let's bring our attention back rock.tt field at black when we look at the fed, when we try and understand what is going

to happen next, there is one piece of the puzzle that is missing and that is inflation. why is inflation doing what it is doing, and can defend deliver anything it helps to deliver given where it inflation is? >> if you look at long-term inflation, you can get back to that 2% level, but what we are experiencing is deflation related to the energy sector. that, ifok outside of you look at other signs of inflation, we see a slightly different story. it is possible to get to where we need to be and we have to understand the implications of lower oil prices in the united states and how that stimulates the economy going forward. it is a u.s. issue and the european issue. jonathan: got to leave it there.

four minutes away from the open. we will have live coverage of the fed decision. ahead of the open here in europe, futures are little bit higher. 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. it is fed decision day. i am jonathan ferro, moments away from the start of european trading. guy johnson has your morning brief. guy: it is the fed. that is the story. the interest rate decision less than 12 hours away. those stocks have been rebounding around the world ahead of what could be the first hike since 2006. do not inflate those two issues. lift a. congress set to 40-year-old ban on crude exports as world trades near a seven-year low. jonathan: that is what we are watching. equities a little bit firmer.

ftse futures marginally higher in the 50 market open. caroline: it was the biggest rally in 10 weeks yesterday. -- we continue on this gain? can we continue on this gain? there seems to be a more positive momentum. market in thee green. strong gains in asia. i know you're going to be talking about asia more in the moment -- more in a moment. action it -- more buying in equities. euro up .1%. lower.lar coming off .5%

we have had dollar gains throughout the year. you're looking at the dollar index so far this year. probability that we get the first rate hike in about a decade later today. you were talking about in the united states, brent down. why? the ban in exports is being lifted. more supply, more concern. let's have a look at what is happening in rates. u.s. rates that flat. no move whatsoever on the 10 year. let's see if a few of the equities are moving up. we have had some numbers did rbs, talks they could be looking -- by the end of 2016. rb is higher, up 4% -- rbs up higher, 4%. 7%.be down by

ssab fourth quarter, weak volumes, weak sales. guy, back to you. guy: the french pmi data are out. the manufacturing number much stronger. the service number in line with expectation. as result, the number of little stronger. of's could the latest out hong kong. let's go to juliette saly. juliette: good morning. wednesday -- a very solid wednesday. we saw great gains. expected lift off from the fed. australian sharemarket which yesterday closed at its lowest level since july 2013. today having an incredible session. up by 2.4%. a weaker yen helping out the nikkei 225. it is closing higher by 2.5%. a very solid day in korea.

thats the shanghai market hold back a little bit in the latter part of trade. .201%.losing higher by -- gastock in focus stock in focus. the biggest surge since february 2007. up 10.5%. on reports that james packer is going to unload some of his assets. --modity producers agricultural sticks. rebounding from this tenure lows. we are seeing in sydney, up by 5.5%. we had those very solid gains. closing, starting to pay it in the latter part of the session. by shanghai market only up

.201%. a very solid session in asia. jonathan: we are three minutes into the session in london. the dax higher by 38 points. that is what is happening in the early session. here's what is happening in today's program. we take you through the brent pmi data. back to market. u.s. crude is a set to reenter the international market for the first time in 40 years. we talked potential ramifications of a special day for the world central-bank. the fed firmly in focus. good morning. ♪ guy: let's get back to that french data. the manufacturing number was a stronger. the services number was weaker as a result the headline number of that softer. let's get the details. hans nichols is standing by.

hans: the fact on the negative side is new orders fell to 15.9, 52 was the previous reading. it missed estimates as well. a services story. services is disappointing. we do know to what extent this is related to the terrorist attack. how much is this the tourism industry? should ignore knowledge that manufacturing is surprised on the upside. the first reading four months that we have had north up 51. it came in at 51.3. investment was 50.6. down just a little bit north of 50. we don't see a blooming economy. we get the german figures and a little bit. analysts are expecting 55.5 on the services number. junk of a head be flippant, but guy, and toonathan:

be flippant about this. is lookingk the ecb at this recovery. anything north of 50, to take this point. we're not in contractor he territory right now. you think about what just happened and the major terrorist -- you see thee, next number in the sequence as well. given what is going on, maybe not a bad number. something -- think taiko at that the less consumer after the attacks were done. at this point. jonathan: will get a clearer picture. let's bring in our guest. the head of merrill lynch and imf. that's besidem

him scott teal. data -- the ecb said look at the data. that data on my screen this morning. that is not strong data out of france at all. >> it can be very volatile. as you said, the terrorist attack in france which started affecting the data bit the momentum in the eurozone data has been imploding. from a very low starting point -- it would take a long time of improving data before we see any inflation. the ecb is focused on. jonathan: scott, to talk about the european economy, let's talk of the bond market. what is the biggest riser for the ecb or the fed? what is going to guide global

sovereign debt markets? the frontush high at and have some sort of feet through into the european bond market as well? scott: the ecb is going to keep monetary policy very easy for very long time. we can talk about whether they disappointed the market. the front end of germany price disappointing it -- disappointing. the idea being that despite disappointing the market to some extent of the qe program, maybe the size of the rate cut, they were pretty accommodative. to bemind, that is going a major driver of valuations in the european bond market. there is a substitution effect that goes across these markets. that is the risk free space. investors will swap treasuries for deals. boone's for treasuries.

what you get to investing in peripheral markets like portugal, yet to take some view around ecb monetary policy. i would take one additional to think about, there are two factors which may affect -- which may in fact to drive the european economy. we are talking about an overheating economy. less restraint on the fiscal side. one of the net effects of the terrorist attacks is that countries are going to be less austere going forward as they should be. that's going to be an important function, increasing european economic growth. the ecb foreshadow that in its forecast where it sees government spending doubling. the second is migrant crisis. with migrants moving into germany, moving into sweden, governments are going to spend money to house them and take

care of them. that is going to be stimulative , a verynet of those two low base. echo what is the bigger impact, with the ecb does now? -- guy: what is the bigger impact, what the ecb does now echo -- does now? scott: those two factors, government spending and the migrant issue are going to be really important. jonathan: for the market, it was a disappointment. the market and whole bunch of investors were comfortable with the idea that big guns were going to come out and draghi would be all guns blazing. as we go into this news conference later, we know what is going to come. what is the big risk for this meeting? draghi did not deliver.

this was lost in the last meeting. jonathan: on the fed, how did they disappoint? >> it is hard to see any surprises by the fed at this point. the market has been pricing the first hike since mid-2013 when the fed announced peppering. it was not a smooth path. at this point, yellen might try to have a dovish tone. a could becould be revised and it takes three hikes. it is more important what happens next year. will be the pace of the fed hikes. from this point of view, it is important for the u.s. to be not too cold or not too hot. if it's too hot, the fed will hike much faster. if it is too cold, the fed cannot go back to easing.

they have to be somewhere in the middle. jonathan: up next, we are going to talk crude. the biggest most important variable for 2016, the price of crude. nobody has a crystal ball to predict. we will debate that andy attentional impact -- and debate the potential impact. stay with us. ♪

guy: welcome back. congressional leaders in the us have agreed on a fiscal plan that will lift a 40 year old ban on crude exports and avoid a government shutdown. this could be more important than the fed some would argue. ryan chilcote has more. we'll get an update on stockpiles. we've had a big .4 hours. baucas through the story -- walk us through the story. ryan: the stockpile story is important. we got more -- we got two batches of data that are conflicting. if he sees stockpiles increase as to people think might happen, that could be a signal for the market. you should see stockpiles small -- stockpiles fall. it is then a relatively warm winter in the united states so

far. jonathan: ryan chilcote, thank you very much. scott, before the break, we talked about this being the most important variable of 2016. treasuries are trading on it. every thing seems to be pivoting around the crude oil price. we talked of the high-yield market a little bit earlier. as we look at 2016, how can we have any comfort or any forecast on any asset class when no one can predict the price on the bottom of the screen right now? scott: the volatility has been extraordinary. that is filtering into all asset classes. traders and portfolio managers have been looking at. 2016, from the research we have done, it is an

oversupply situation that is been driving the price of oil. not necessarily being predictive. the question is how does that supply function work into the beginning of 2016 and beyond. -- one would suggest we would reach the bottom in 2016. , wemarkets are so focused are talking about inflation expectation also moving around with the spot price of oil. thing.nusual going to raise rates today. oil crashing to the floor. effects of stimulatory that we are good to see, which is more important to the u.s. economy? >> this is an important question. [indiscernible]

this is a positive supply shock. this is the news for the economy. however, we have not seen the response to that. subjectsin oil prices a more dovish fed looking forward. it is very hard to predict oil prices looking forward. are 20, 40, 60 next year, it will affect every thing else. brightestsome of the most experienced academics are setting on the fomc with access to the most detailed data on the u.s. labor market, and they cannot conform it -- and they cannot form any consensus. if you cannot form any consensus on debt, you cannot form any consensus on brent. how can we have any certainty?

scott call -- scott: the discussion that is going on that relates to the jobs market, we all have to take a deep breath and say these things work over a big lag. lag in theso a impact of rate hikes into the economy as well. what i would say is not being on the fed myself and not being a part of those conversations, i would say there's been a robust conversation about why we have not seen a feedthrough into inflationary levels from the employment situation in the u.s.. -- in the u.s. ex line when you look at the wage labor inflation, that is wising -- rising. the fed is an attention to that. join to incorporate this idea of a world where oil prices are

much lower. oil prices being lower are very stimulative for the u.s. economy and also for the european economy. there is an effect of that. activity for economic in the future. guy: we have to wrap it up there. think you very much. up next, decision day for the fed. we're going to take you through some of the stocks that could be affected by the hike. we'll see you in a moment. ♪

jonathan: good morning. where 23 minutes into the session. the ftse up marginally. let's talk to nejra cehic. stocks arepean turning mixed ahead of the fed crucial rate decision. in asia, shares rallied from their lowest level with a hong kong saying saying -- oil has -- that will lift the 40-year-old ban on crude exports. he unveiled the plan that will avert the u.s. government shutdown. that was at a closed-door meeting. expressingel's party growing dismay at the prospect of a british exit from the eu.

britain's call for reform in a summit in brussels+++ jonathan: it is been a volatile buildup. european stocks to be the winners from the u.s. lift off. here with more is caroline hyde. caroline: jonathan, thank you. they could see a bit of a rebound. of course, we have had volatility and a selloff of 7% on the stoxx 600 since the end of october as the into space and bills over a rate hike. starting to see inflow. inflow data shows we have the highest and 14 weeks. the $.5 billion of inflows coming to european stocks.

-- $3.5 billion of inflows stocks coming to european stocks. european stocks have seen inflows over the course of the last few weeks. certainly, if you look back at the history, the past 20 years, you actually get a rebound in european stocks after a u.s. fed rate hike. in the longer term, over the course of 60 days, you will see a 3% uptick in european stocks. euro stoxx 50 looking at a valuation point of view. --is 14 times versus at versus estimated earnings. guy: european stocks, yes. which sectors? you need to be more specific. caroline: we have been looking at calls from analysts. perhaps dealing with more picky. exporters are likely to do well because of ecb.

they are going to fire on all cylinders. according to the morgan stanley index, look at low rates for europe until 2018. the differentiation will mean euro remains weaker, therefore exporters are going to do well. domestically good companies could went out as well. manufacturing pickup in europe. nursing at unemployment rates falling. -- we are seeing unemployment rates unexpectedly falling. as long as the u.s. doesn't jolt us in terms of more significant rate hikes. as long as what happens today is already priced in, europe is set to win out. one area to keep an eye out on is emerging-market related companies. they could be volatile. thank you. jonathan: coming up, moments away from german pmi data. we'll bring you that data.

numbers, 55 german is the survey. ♪

guy: welcome back. it is a: 30 in london. 9:30 in frankfurt. german data hitting the tape any second now. jonathan: manufacturing comes in at 53.0. that is slightly better than the survey of 52.8. disappointment in france. this a disappointment. 57.9.mpass it all selling this was a take down from the previous month. let's cross over to hans nichols. hans. hans: what we have is a surprise

on the upside of manufacturing. i love bit of a disappointment on services. we will see where that is when we dig in. the composite is down than expected. in general, i get to tell the divergent story. francis disappointing. germany slightly disappointing but much more robust economy. we have seen the german numbers in the 54 to 55 range. now we are in positive expansionary territory. we are going to have moderate growth. one thing we are concerned about is the buns bank, that's the you don't need. these numbers don't necessarily contradict that but they give you a sense that the german economy is still thriving in this environment. jonathan: amazing, isn't it? it doesn't mean they don't want

it. economyuld the german be humming right now? that shouldn't it be delivering what ecb wants. it doesn't have any of the constraints that you would have on an economy. a pickup in fiscal spending. low oil prices. supercheap money. a eurozone economy slowly picking up. jonathan: is it all about china? is that why this economy is not all guns blazing you go what is your read? guy: china plus emerging markets. we have seen -- the auto numbers coming out of result. the slowdown in south america, also affecting them. you cannot discount the slowness that kept the growth and flats -- in france. emerging markets plus oil slowdown within france.

union, broader european and then china. hans: maybe a little bit. the numbers we got last year, the market share is a 2%. in the u k, down 20%. in the state, down 25%. the cob get is that they do not sell that many vehicles in the states and the u.k.. a little bit maybe filtering through to suppliers. we have not seen disappointment on the manufacturing site in germany. the manufacturing numbers are holding up. it.s not read too much into jonathan: hans nichols, great work. europe using pretty much nothing. nothing off the back of the german data.

guy: equity markets are softening after a solid start. ftse butaveat is the it is still being weighed down. american the biggest loser. metals some of the big could be in focus still. ♪ guy: aside from oil prices, when he did speak about -- we need to speak about the fed rate hike. -- he has been saying this for a while although he is not expecting agreement at all when it comes to what is happening at the fed. >> i'm not sure we'll see unanimous fed because if you have said they still think we

should be waiting to see sides of inflation. i think that is wrong. inflation istil flashing red, will have to raise rates more sharply. that is what the fed wants to avoid. the best chance of getting a gradual rate hike is in these conditions when the economy seems to be growing ok, inflation is under control but it needs to pick up slightly. the market has become too relaxed about interest rates. perhaps when we see a move from the fed, they may do a reassessment. you a cat that's the u.k. economy has been growing. -- the u.k. economy has been growing. you've got employers reporting to the bank of england the highest level of recruitment difficulties they have had for over 10 years. the u.k. economy is in a position where you really should

be thinking about rates. danny is i know that in town. danny and as you have an interesting relationship. he is throwing stuff at the screen right now. data, we dok at the what we sometimes do, the martian economics comes down from mars. you look at the data in the u.s. and u.k., if i told you that one central bank would be hiking is doing the other flip-flop and talking about not hiking rates, it is hard to reconcile the two. it depends on how important you think this rate hike actually is. i wonder -- the u.k. economy is lagging. there is a lack, so it is not surprising we are not in the same place. on the other hand, u.k. economy it is been open,

busted by the volatility we have seen -- we have been seeing. maybe carney has a little more reason to be more circumspect. the fed has a domestic agenda that is more solid. i can logically make reason for why carney is doing what he is doing. jonathan: merrill lynch is to with us as well. what is your two cents into this debate? we hear a lot more about macro prudential policy. the idea is to keep rates low. is that the way you read things? economies, they are in advanced states. as long as inflation is low in the u.k., the intent for carney is to make sure the pound does not follow the dollar higher. she can afford to do that. there is a consent about the housing market here. bying to address this

emphasizing micro-prudential measures. she wants the bank of england to be closer the ecb rather than the fed. depends on how you phrase it. many people say the fed rate hike is price by the end of next year which is too late. it is not that far from what will happen. it may happen a little bit earlier. we are expecting a dovish tone from the bank of england. abouthe bank has to think number of thanks. we're looking across the channel at a eurozone economy that is growing but not going anything needss fast enough as it to be. there is a major trading partner. yellen doesn't have to think about that didn't she doesn't have to worry about what is happening on our doorstep. she operates in a closed economy.

>> that is also the case. eurozone suggest a number of -- much more exposed to the eurozone. this is one more reason for the bank of england to wait. guy: do you think that either central bank has a clue what ultimately its long-term story is. the bank of england has been flip-flopping all over the place. so has the fed. had carneye have coming out and try to get the market. then the fx market seems to push back. my point is, governor carney is getting drawn into what could be characterized as a policy war with ecb because he looks at euro sterling and every single time they batted back toward 73 pence again. is that the way to manage monetary policy?

is successful central-bank medication, if you -- where the central bank [indiscernible] there is a lot of uncertainty about the data, but creating some certainty about the policy, this is how yellen would do what she would do today. jonathan: we have some pushback against that because it is really important. 7% unemployment. 7% and theyt to would think about hiking rates. think being the operative word. there was only one hand up on the abc to raise rates anytime soon. the mpc to raise rates anytime soon. i don't think anyone has a clue. >> that is a good point. policy action should not only

include labor market conditions. it should include how the central bank views markets and the rest of the world. all of this for variables is very important. guy: it is what is happening with the pound, the euro-dollar rate. that is the reaction function. with yellen, we need to have that clarified. we understand what is happening with the bank more than the fed. jonathan: the markets interposition was dead wrong. gdp, getting up to near the norm before the crisis, rubbish. rates hiking to any normal level, rubbish. situation,ok at that the market has been dead on. the fed, the bank of england has been dead wrong. predictir ability to

inflation has been questionable. none of us can predict, and that is what is happening with oil prices. until you get some clarity and sustainability in the oil price, these guys are in trouble. it is been great to have you with us. we need to talk more about what is coming up here at come out next, emerging markets. ahead of that critical fed announcement. we're going to look at more of what the decision will meet for emerging markets in just a moment. ♪

jonathan: good morning. this is "on the move." good morning to those of you waking up in the u.s.. pictures of ec. that's pictures of d.c.. -- pictures of d.c. cehiccross over to nejra with your bloomberg news flash. net income was 46.5 million euros in the week's luxury market for six years. the company says it will increase prices in europe to compensate slumping sales and

asia and the u.s.. two executives will leave rolls-royce. the aerospace division's president will leave next year while the head of its trouble land and sea unit will retire. -- afterup shares asia's largest commodities trader says it is in talks to sell the rest of us agriculture unit. -- the rest of its agriculture unit. that is your bloomberg's business flash. ♪ guy: emerging markets stocks are fed news.ead of the let's bring in our emerging markets reporter, samuel potter. in many ways, a rally is not

related to what is happening with the fed later on. there are significant risks with the emerging markets. samuel: a two-day rally today is not about the fed. love these emerging markets have been heavily battered in recent weeks. got too good for some investors to resist. we are seeing a bit of buying. the fed decision has been so well telegraphed by janet yellen and federal reserve that i think the market is pretty sanguine about what is going to happen. remain.d, risks the emerging markets dollar debt pile is significant. the pace of federal rate increases is really going to have an impact on these countries corporate abilities to repay. jonathan: will get to that story

in a moment. the last couple of weeks and months after rise not by what is happening with the fed but domestic issues conflicting estimates issues inflicting pain. -- domestic issues inflicting pain. nothing to do with the fed at all? >> it became much worse this year ahead of the fed hike. specific abilities in some emerging markets which create more concerns for the 's footgiven that the fed is not there at this point. the market will become more selective. in emerging markets, investors will be more selective. when you look at as a prices,

nation to be very cheap. they are still vulnerable to commodity prices and to china. will china will -- will china line -- ex .uy: none of them made easier the fed may have telegraphed it but it leaves the pboc with a difficult decision. >> we saw in august the impact that china can have on the emerging markets. the shock of the yuan. i think it is a fair assumption that this is the big risk. there are more eyes on china than on the u.s. that's not the land rate increase is not a risk for emerging markets. i think if the fed goes further

than expected today, the market could see a surprise on the downside. i think if the fed does not act today, there will be some surprise because all of this preparation would've been for nothing. jonathan: we have to leave it there. samuel potter, thinking for joining us. , tickyn g 10 strategy for joining us as well. equities on mainland europe on the ftse, marginally up in the green. busy day ahead. we talk u.k. jobs. that is due out later. bloomberg richard jones joins us to discuss that and the fed decision. ♪

>> at this point, the fed has put itself in the position that it has to race race or it will lose all credibility. rates ort has to raise it will lose all credibility. were .2%. >> almost impossible now for the fed not to hike unless we get some major catastrophe. >> we think the fed is going to start to raise rates. it is time the cycle started. we have a economy that is slower

than it typically has been here it -- has been. it passes like ships in the night. somebody's got to be wrong. the fed has got to be wrong or the market has got to be wrong. [indiscernible] there.lions of people up not people sitting in a room deciding for us. guy: that is where the decision is going to be made. washington, dc which jones joins us now from bloomberg. -- richard jones joins us now from bloomberg. d trust the cook -- do you trust the collective wisdom. the old adage is you never fight the fed. you people have done alright this year on the right side.

the economists have got it wrong most of the year. the market has been ahead of the game. going forward, i think it is important what the fed delivers tonight, we know what they're going to do. if they deviate, there's going to be an issue. , we've got aer smooth year and ahead of us. jonathan: decision drops. the summary of economic projections. ,ive me an estimate for 2016 2017, 2018. let's bring up the charts. everyone expects it to come down again. the market is already trading below that blue line. the dovish hike depends on the coming in their and lower toward market expectations, maybe meeting where the market is at the moment. to deliver that dovish track, that is what needs to happen. everyone expects that blue line

to come down. for he come down far enough everyone looking for the dovish hike? richard: i think that is something that is good to play out in 2016. what if we get a very strong payrolls number in january? tonight the chair says is put in jeopardy and the market -- and now that they have gone in height, -- gone and hiked, then they've got an issue. guy: what this gradual mean? -- what does a gradual mean? do you need to codify it? richard: they don't need to codify it. term and it can mean different things to different people. jonathan: stocks are up. richard jones, great to have you with us. we'll have analysis of today.

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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. mark: all eyes on washington in what is expected to be the fomc 's first rate hike since 2006. crude oil declines. eurozoneean pmi, figures break. welcome to "the pulse" live here in london. i'm mark barton. getting some eurozone economic