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 data.

we had some thises -- some m isses from france and germany. 53.1, which is an improvement on december's 52.8, above estimates. the services is below expectations. the combination of the services manufacturing 54. similar to germinate, similar to france. both composite measures missed expectations -- similar to germany, similar to france. so, today is the day. washington, d.c., is the place. the federal open market committee will release its policy statement at 2:00 p.m. eastern. we will find out if the world's biggest economy will get its first racte rise since

2006. let's get straight out to michael mckee for a look at what to expect. what a big day. you have got in store for yourself. mike: we have a very big day, indeed. of complication, confusion, and volatility. sounds like a solicitor's office. complication because the fed has to set five interest rates today. whiche fed funds target is the rate banks would pay if they were barring any overnight market. rate theynt rate, the would pay if they were borrowing from the fed. and since they are doing neither, they will send an interest rate on the excess reserves they pay a deposit rate to set a top end of a range. a reverse repo rate and a term deposit facility, like a cd for banks. so five rates today. the markets have to make sense of all of that. confusion because maybe they won't. there is some question about how

the fed will be able to pull this off. and volatility because the markets have to figure out how notrade all of this.mark: only does it have to set five interest rates, we are looking to the future. the pathway of future rate increases in 2016. how difficult the job is it for fed chair janet yellen communicating this path? mike: you would think it would straightforward but she has to lay out a coherent, logical sequence of events for the markets to believe. she will probably say today that we are going to give up on the belief that the inflation will rise to the fed's target, and they will want to see actual progress. she will try to make the case this will be one and wait for a while rather than a series of rate increases. it is going to be a long day for you. nine hours, 56 minutes, 20

seconds until the decision. look forward to it. lots more analysis today and the run up to the fomc statement. stay with bloomberg throughout decides, the fed special programming from 6:00 p.m. to 9:00 p.m. london time. tom keene and michael mckee. let's get a look at the markets ahead of the right decision. how is it looking? caroline: indecision. after yesterday's stellar rally. today, meh. pretty flat. we are seeing a mixed day. just as we tried to say -- fed day. what about the wording of the future rate increases? will it remain gradual as the market does anticipate? there was a little bit of a wobble when we got french pmi. stoxx 600 flat on the day but by .3% 40 up

concern about the weakness of the services data being hampered by the tragic events that happened in the paris terrorist attacks. seem to be dragging french stocks lower. and it did drag the euro-dollar lower as well. euro making up losses. but euro-dollar basically flat. dollar basically flat. up 11% in index is anticipation of a federal reserve rate hike and the separation in terms of monetary policy -- europe versus the u.s. oil. wti, brent both lower this morning. the u.s. lifting that 40 or ban. more supply. signs thathere

european stocks could be a winner after tonight's rate hike? caroline: yes, according to data fund flows. we can see that money is coming into european stocks amid what is going to be the second worst december on record. we are seeing $3.5 billion enter the european markets into exchange trade and funds according to bank of america-merrill lynch. compare that to the u.s. u.s. has seen $9.2 billion come out of emerging-market stocks. and going into european stocks. this is the european stocks actually undervalued. what about a 20% discount? euro stoxx 50 trading at 15 times estimated earnings. and the history. i know you love your history and your data crucnching. 50nce 1987, the stocks euro does tend to wobble.

a little bitne after a federal reserve rate increase but in the next three months, we end up higher. be cautious of emerging-market related stocks. and remember, actually, many people getting into cash. mark: thanks a lot. chiefchat with the investment officer -- are we ready for a rate hike? think it definitely is ready. we have much discussion and there has been a lot of debate as to whether the fed should have gone in september. i think it has been well signal ed and we will now await janet yellen and see how she describes the path of rates. mark: the dot plot tells us that hikes next four year.

the futures market is not so bullish. will they meet in the middle? will the dot plots tell us there will be three hikes next year? julian: i will be cautious about it how exec she will be because she needs flexibility. it is likely the u.s. economy will perform well next year but tickusly if inflation were up a lot, that she needs flexibility. mark: what about the reverse? inflation ticking down? a strong dollar, oil prices continued to decline? are deflationary forces stronger than we might think? beian: if one wants to statistical about it, the weaker oil price came through december into january last year. that will help the stats. i think, yes, if we saw marked

weakness and energy complex, then yes, i would say deflation is at issue. but i think we are to see reasonable growth across the world next year. and there will be a measure of inflation coming in. mark: do we see national concerns? you don't worry about those, or are you slightly concerned? julian: i worry that china's economy is slowing, and the numbers we had this morning out of europe show the recovering europe is halting at best. so, consequently, i think we are going to have a mixture of good and bad news out of europe. and likewise the data out of china is going to be mixed. the trend is for better growth in 2016. mark: what is the spillover because we have a great article that reminded me that the s&p 500 since 2009, march that year, 202%, leading to

the question how much of that is to do with stimulus? [laughs] three cycles of fed q.e. think it is all to do with confidence and you can argue this jim was brought confidence in financial markets, true. i think that markets hanker after growth. they want to see profits continuing to grow across the global economy. thenf that comes through, markets will be sustained. if we have disappointment on growth and earnings growth, bottom-line growth, then yes, markets will be a lot more volatile. mark: as caroline was telling us, since 1987 european stocks initially when a fed tightening cycle happens, tend to fall, but within three months they either reverse those to clients or level out. is europe set for a rise post a fed rate hike?

julian: it is a just and because it is not just europe. historically, the equity markets posted the first rate hike. better across the next 12 months. in europe's case it is the -- if the economies continue to get traction and it is going to be slow growth, not dramatic. not back to the healthy on days of the 1990's. the 1990's.ays of it will be sector specific. we have high valuations amongst some of the exporters, some of the northern european stocks. some of the southern european stocks cheaper but with good reason. mark: we will come back to the sectors momentarily. chief investment officer at rathbone will stay with us for the half-hour. here is a look at our radar for this wednesday morning. oil has fallen from its highs

level in a week after congressional leaders agreed on the u.s. fiscal plan that will lift the 40-year-old ban on c rude export. paul ryan unveiled a plan that would avert the u.s. government shutdown. to a record plunged low in hong kong after third quarter profit missed estimates. 46.5 millions euros. the company says it will increase pricing in europe for compensate for slumping sales in asia and the united states. two top executives are to leave rolls-royce as new chief executive restructures the company and shapes of his management team. the aerospace division's presence will leave next year while the head of its land and sea unit will retard. up next, european services -- will retire. we break down the eurozone pmi. that's next. ♪

mark: welcome back to "the pulse and radiobloomberg tv and streaming on your tablet of phone and bloomberg.com. earlier we had eurozone pmi data. manufacturing pmi rose, beating following of 52.8

figures from france and germany today. let's get over to hans nichols. a good morning to you. what sort of reaction are we seeing to these figures? hans: well, we are not seeing a huge reaction because the figures are basically in line with expectations. we see the services number coming in at 54. epid, modest, t monotonous growth. a year ago it was 51.3. the german numbers were better than expected. there was some disappointment on the manufacturing side. you tease out the german numbers and what you end up getting is something with gdp growth rate on a quarter on quarter a little bit more than what they did last quarter which is 0.3%. overall we will have sub 2% growth in germany. those are the best numbers we might get in the core eurozone and disappointing numbers out of france. we are ending the year and the same way we started, which is to say a little bit of political uncertainty with greece. uncertainty in terms of monetary

policy and growth but not really growth. growth that is so low you can barely perceive it. mark: but we have had since, i'm sure a lot of these companies were surveyed, the ecb stimulus measures. are we starting from zero from now? hans: here is the puzzler. take germany where you have real wage growth. historically low unemployment. the best quarter on unemployment in four years. at 0.3%still see gdp and pmi's that are fine, right? we are well and expansionary territory, north of 54%, but you do not have explosive growth. the kind of explosive growth you would expect with the euro that is much weaker, 20% weaker than it was early. and you have almost, getting close to full employment. it a bi -- it's a bit of a puzzler in germany.

france, a lot of the numbers can explained by the terrorist attacks. elsewhere, when we look at the seeeuropean story we emerging markets slowdown in what is going to happen with china and a few concerns there. mark: thanks a lot. what's the takeaway from today's pmi? services and friends can be explained away. manufacturing picking up in france and germany -- services in france can be explained away. the stimulus measures, the latest batch, berar fruit? mary on draghi believes they will and hence, hi s caution to accelerate the program in early december. it is fair to say yes, but it

will be slow growth. people have got to come to terms with the fact that we have been to one of the deepest recessions since the first world war. the deepest we would like to see and many generations. it is going to take time to recover. famousraghi said on that thursday, infamous thursday, that it was adequate. was that enough to get the inflation back up to target? julian: the man always keeps an ace up his sleeve. if the march economies are and weslightly dull, have not seen a pickup -- it is important that france see some growth coming through because a major economy within the eurozone -- so, if we are not seeing that and ispain, if they are not beginning to recover, he may come in with another package. mark: what is on the buy list? inian: what i would say

sector terms, as rates begin to rise around the globe and led by the states and monetary policy gradually will tighten over the next 12 months, then the financials will do better and people will favor financials, insurers and banks. banks, as you discussed many times on this program, have their problems but they are beginning to recover. otherwise, if the consumer continues to gain confidence and more consumer related companies will do reasonably well but domestic. i think you just need to be quite stock and sector specific. mark: you will be back with us. up next, the u.s. agrees to lift restrictions on crude sales overseas. what does it mean for the price of oil? that is the question we will be asking. ♪

mark: welcome back to "the pulse bloomberg television radio and streaming on your phone, and bloomberg.com. congressional leaders oin the united states have agreed to a plan that will lift a ban on crude export. how big a deal is this

announcement? >> in the big scheme of time this could be massive. u.s. exportsan on with a couple of exports. some u.s. producers can export to canada and mexico but lauren large -- by and large they cannot send their fuel abroad. in times you could have huge imports of u.s. oils, at least that is what the republicans are hoping. they are hoping this will put them in the driver seat in terms of the global oil market. mark: what does it mean for prices? short-term, it may not means mean smut. if you are sitting in europe you will need a discount to transport your oil from the u.s. to europe. that needs to be around $4.00 a barrel, the discount for u.s. $1.11.sus brent is mark: stockpile for something oil watchers gauge closely every

wednesday in the united states. what is the takeaway going to be? ryan: we have got that it 10:30 london time. if stockpiles in the united states, if we discover they are continuing to rise that would be a bearish signal. it is winter. people should be buying heating oil. we have had conflicting views going into this. it is a number two watch. -- to watch. mark: since the fourth of november, wait for me, i'm putting in my units, it's fallen by 11%. that is a substantial fall. a class of equities. your take on the oil sector. julian: i think obviously we have seen a lot of softness in

theo oil price. there has been quite a bit of hedge fund activity in the commodities and stocks and so, consequently, you have seen increased volatility. and the prospects for the large, integrated oil companies in europe, the shells, are not stupendous, you know. they have got quite a lot to get right in their own businesses, let alone a weak oil price to boot. it is no surprise they are not enthusiastic about the stocks when you see a fall -- mark: do you put them in the same category the miners and the oil companies? julian: we very much separate them. in reality, the oil companies, despite the volatility and a stock price, can achieve more and getting their ship right in the medium-term than miners. the miners, it is all about capacity, and they cannot get the ore out of the ground cheap enough. side,as ever by my

ryan chuckle. mark carney says that conditions are not in place for a u.k. rate hike. you will bring you the latest data on jobs and wages next. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.

it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. mark: welcome back to "the pulse ." let's get straight to caroline for breaking employment data out of the u.k. expected stronger than for the united kingdom. unemployment falling to four point 2%. we are close to the pre-financial crisis average. so, on employment figures stronger than had been expected. jobless claims change. that also stronger. 3.9 thousand. 00. expectation of .80

we are also seeing a pick up in overall claimant count ratea. . what i want to point out is wages are not rising as high as have been expected. average weekly earnings for the three months to october of 2.4% growth. are actually seeing if you are stripping out the bonus less than had been expected. earnings increase. therefore, we are seeing a build up of people coming into the workforce but not any inflationary pressure. not the wage growth pressure we might expect. the pound holding off by .2% versus the dollar. no huge market reaction. the ftse remaining up this morning. this is the claimant count, we are searching down. we have been coming down from the peak in december 2011. .1% offow at 5.2%, just

the average precrisis on a planet levels. as i say, wage growth still not there. what will mark carney do? is there more slack in the market to keep on building productivity, keep on hiring. unemployment level falls. unexpected. mark: the former bank of england positive datasays from the u.k. should signal a start of a rethink of interest rates. >> i think the markets have become too relaxed about u.k. interest rates. perhaps when we see a move from the fed, they may do a reassessment. been.k. economy has growing pretty well. on a planet has come down. we will see some updated unemployment data. we have wage growth picking up if you look at the three-month rolling average. rough gotround pretty

employers reporting to the bank of england the highest level of recruitment difficulties they have had for 10 years. so, i think the u.k. economy is in a position where you really should be thinking about rates. ,ark: joining us now bloomberg's jennifer ryan. richard jones. jennifer, let's start with you. what jumped out was the average weekly earnings excluding bonuses. 2%. expectations were for 2.3. the previous monfils downgraded to 2. the previous month was downgraded to2.5. jennifer: it is very clear that wage growth is slowing and this will be a great concern from members of the monetary policy committee. what they are after is for inflation to get back to 2%.

they are not seeing inflation pressures. that will be a major source of disappointment. mark: checking out sterling, richard, it is lower. has it dipped at all since the release of the figures? the jobless rate fell to the lowest in 7.5 years. but you have got to be looking at that wage data. richard: that is what the markets are focusing on. wages is something they are looking at. the thing about u.k. rates and the pound is that certainly in the u.k. rate space, expectations are already extremely dovish. rise is still a 2017 story. mark: what does today's story tell us about the amount of slack in the economy? jennifer: it is hard to see

where it is coming from. you have on employment at the lowest since 2008. record employment. from the standpoint of who has got jobs, it looks incredible healthy. if you see, also and something else that is interesting, consumer spending is incredibly strong. inflation just barely above zero. wage growth,have even though it is not as good as we would like to see. but with wage growth dropping down, that's going to be dashing that hope. mark: oil has been dropping down recently. jennifer: exactly. : i think what market participants are looking at is the stickiness of low inflation. yesterday's numbers -- we got out of deflation but is still very low. even if you just look at the core reading, we are nowhere near where the bank of and gwen wants to be. with wages doing what they did today, markets got it right and we are in late 2016 and probably

in early 2017 story. develop its required to justify the first rate increase in 8 years are not in place. what are these conditions? tell me the conditions which warned higher rates? jennifer: the data today is not helping. they had been mentioning pay. an interview that was published yesterday and pretty much any policymaker you can think of. this is basically the story and it is not going to be a good one. richard: the other thing is as start to takeects hold in inflation you still have a recently strong pound against the euro. that is something the bank has talked about, especially in the november quarterly inflation report, and it is still quite sticky. it's still very strong. mark: decoupling from the fed. discuss. traditionally in the last two decades according to deutsche bank when the fed goes, the boe

goes three months later. as you guys have been saying, the markets are saying january 2017. that gap, has a got to close? jennifer: it is a matter of what richard has been saying could you look at what the pound has been doing and what investors are expecting and inflation expectations are not there. it is in inflation targeting central bank. how will you raise rates if you have no hope of 2%/ . mark: u.s. inflation picked up but core inflation is well below the fed's target of 2%. even headline inflation yesterday is still very low. %he core measure ticked up to 2 yesterday. inflation expectation are well below the fed's target but they are going to raise rates today. richard: there is a disconnect there. in terms of the u.k., i know we are not supposed to say this but maybe this time it really is different. that you've got, as jennifer

said, you have got the fed and the ecb and the conditions in those areas weighing on the u.k. the u.k. is a much more open economy. the exchange rate has a big impact. low inflation is sticky here. it does not seem to be going away anytime soon. i think policymakers are concerned on this side of the pond. is maybe being braver than many of us thought they would be only two or three months ago. mark: great to see you both. let's get to the first world news. nejra: donald trump has reiterated his pledge not to stand as an independent for the presidency if he fails to win the republican nomination. that came as the party's presidential hopefuls took personal shots during a debate last night. rump: i am totally committed to the republican party. i feel honored to be the front

runner. i think i'll do very well if i'm chosen. i think i will do very well. polls have come out saying i would beat hillary. i will do everything in my power to beat hillary clinton. nejra: european stocks are trading stock. in asia, shares rallied with the hong kong's hang seng snapping his longest losing streak since 1984. party colleagues are expressing dismay about the prospect of a british exit from the e.u. they plan to discuss this at a summit in brussels tomorrow. one german lawmaker says the referendum is in texas dental risk for europe. -- an existential risk for europe. mark: what a hieke could mean. how does it mean for emerging markets, a possible rate hike from the fed? >> not much as you would think

is the answer to that. the move, as we know, has been strongly telegraphed. the forward data is showing us 78% chance now of a rate increase. the markets are fairly relaxed about the prospects of an increase. i think it all hinges on how far and how fast the fed is going to go for emerging markets. if they go further than expected today, we could see reaction on the downside. today, don't increase after all the forward guidance we having getting, i think the market could be a little unnerved by that. mark: what are the biggest risks? >> it is always about local alliance. these things that come out of nowhere to erupt on the scene. in brazil, we have the continued efforts to impeach the president . turkey shooting down the russian warplane on the syrian border. in south africa, the president

replacing the finance minister with someone who the markets do not appreciate. and the biggest factor of all is always china. we saw in august with the devaluation of the yuan just when an impact china can have in the markets, unexpected events and slow growth in china is not well - what is the prospects for emerging markets and 2016, then? >> that is a tough call to say. we're in the middle of a two day rally. i thinkns got so low, people got interested. and they are counting on the fed some relief to the uncertainty in emerging markets. but the dominant factor overall and this is probably the amount of dollar debt that exists in emerging markets now. fed, um, could be, if the goes too far too fast oas the -- rate, and will

become more difficult for emerging market countries to repay dollar debt. i think that is going to be a large factor. mark: thanks a lot. up next "star wars, the force awakens." it's opening weekend is projected to break records. taking over $220 million in the u.s. and canada alone. we will look behind the number blockbuster.'s new isn't this more exciting than the fed? >> the dark side. ♪

mark: welcome back to "the pulse ." the latest star wars film, "the debuts in some european countries and opening in a record number of u.s. cinemas this weekend. disney will hope that star wars mania will propel it to break not just the box office but the on. and the merchandise, because it matters. we are joined by tim. great to see you. let's start with the figures. 0 million. that is the estimate for the box office in the u.s. and canada this weekend. that is a record. overall global sales are projected to be about between $2.4 billion two $3 billion. -- to $3 billion.

mark: is it going to be "avatar "? tim: they have already taken $50 million before the film even came out. mark: that's incredible. i was coming in on the tube today and some fellow has his daily telegraph open, five stars, the early reviews are good. tim: there has been such a buzz about this. for 10 years it has been since film.st " star wars" probably having jj abrams has helped rekindle that enthusiasm. there was jadedness when george lucas deserted the last trilogy. and j.j. reinvigorated the star trek franchise. weren't brilliant. tim: they were very well received. the power of the force, beigh this -- being this huge

franchise combined with his love for the medium and this particular franchise will come across. mark: when that trailer came out four must ago when hand solo and "chewie, we're home." that did it for me. i was in. bringing that the other characters ingenious. it. that is what solidified it is a generational thing. people like myself. i'm taking my son to see this. it runs through families. there is the history. the same thing "dr. who" has. almost 40 years now. mark: george lucas was paid $4 billion for the rights. disney is going to make a lot of money from this. not just from the film -- merchandising. "star wars," the original film started merchandising. tim: the great story about that when it started as they could guiness so alec

much money so he took a deal on merchandise. he claimed up, it kicked off the whole toy market and the merchandising. they expect between $2 billion and 5 billion from merchandising alone this year. which if yourvel, look at the box office worldwide of all time, " avengers" is number four and number six. they have got star wars, marvel, pixar. they are firing on all cylinders. tim: they spent $4 billion on marvel in 2005. up to the state, they have made $8.9 billion. -- up to this day. they have more than doubled or money. it is a good investment. i think they have played the right investment. mark: this is the first in a number of "star wars" films.

tim: this trilogy that is happening, then there will be spin off "rogue one." and "monsters." then there's a han solo film, the younger inventors of a han solo. mark: you brought in some figures. the original "star wars" budget was $11 million. it made $460 million. i know inflation will take that figure up, but that is the most successful if you account for inflation. tim: yes, absolutely. it's interesting when you look arehe costs of how films made and how much it costs, that was $11 million. this one is has -- has a budget of $200 million. the stakes are going up. mark: the film company only gets

half of that because the cinemas take half. you spend double that on marketing. so, you need to make $500 million before you break even. tim: but there are so many spinoffs. all the toys, the sort of comics, the computer games. mark: what is the tour we have to buy for our sons? bb8 ise remote control the coolest. that is lovely. mark: is is the biggest film for your right now? out of all of the big sci-fi comic book adaptations -- tim: you can see all the other phifilm companies are going very quiet. everyone has backed off and let them release this film with its own clear shot because they know there is no way they can compete. this be theedicting biggest film of all time. it has to overtake "avatar's"

$2.7 billion. thank you for joining us today. all eyes on washington, d.c., head of today's fed's decision. it is not just about "star wars." it is about the fed and washington, d.c. stay with us. ♪

mark: welcome back to "the pulse ." you are seeing live pictures from washington, d.c. wall street wakes up today. washington, d.c. wakes up to this massive day. let's wrap up the only show in town. the fed reserve's big decision. michael mckee will be co-an choring our coverage. michael, what would be a shock today? let's look at outliers. what would be categorized as a shock today from the fed? doe: if the fed were to nothing that would constitute a major shock for wall street. so many people have priced a move in, they would lose an awful lot of money if the fed did not act. they would not be very happy and company.en

the other possibility is she comes off sounding to caucus and the markets start to price in a more rapid pace of tightening. that would be a problem for she has got to walk a line between those two. does unanimity within the fed matter? we had dissenters inth the past. what about dissenters this time? will they be some that say, you know what ? i don't want the fed raising rates and does it matter? mike: it does not really matter. janet yellen has addressed this say she expects dissent because when you're trying to do something is, kid is they are, extra kidding themselves from this extraordinary monetary policy, -- extricating themselves from this monetary policy, -- shbut no governor has dissented since 2010. unless there is a

significant number of dissents, it is not going to mean anything. the bottom line will be what they do rather than what they say. mark: how do you persuade the markets that the pathway will be a gradual, will be a shallow one? dott the dot -- is it the plot? mike: it will also be janet yellen giving guidance that is more numbers based and say because we are moving because inflation will rise towards our target. we will not move again until we see actual evidence that it is. and that may reassure the markets. mark: an actual evidence, when oil could keep falling, pommodities could kee falling, the dollar could keep strengthening. does that pose a tricky problem for the fed going forward? mike: it does if you believe they want to raise rates. they would like to get them up in case we see another recession so they can respond. but they are perfectly willing to set for a while and see what

happens after this first move. mark: have a good day. it is going to be a long one for you. michael mckee will be live today. lots more analysis and the run up to the fomc's statement. stay with the bloomberg for special programming from 6:00 p.m. to 9:00 p.m. london time. ♪

♪ the fed the sides. all eyes on washington ahead of friday's is expected to be the in 2006.st hike lifting a 40 year ban on crude .xports oil at 7.5 year lows. rolling to a 2008 low, but wages are slowing. what happened to the phillips curve? good morning