francine: the u.k. prime minister sees halfway to our form deal. european meters -- european leaders meet to discuss terrorism. the chinese bank book tells a tale of worsening conditions while other data suggest recovery. the force to be reckoned with is the franchise looks to make $2.4 billion for the studio. so, welcome to "the pulse" live in london. i'm francine lacqua.

it is the last day of the trading week. let's check in on markets with caroline hyde. it has been quite a week. caroline: the hangover seems to have hit. a few heavy heads amid the christmas festivities. it looks as though the hangover has set in stocks as well. we have euphoria after we saw at last the federal reserve increase their rates, and actually, the markets seem to abide by the fact that janet yellen is saying the economy strong enough. now we have a deterioration. on the stoxxing 600 after all the gains of the federal reserve rate hike in the u.s. have been wiped out. significant declines and the united states yesterday. if you dig into the industry groups, have a look at this. across the board, nearly every single industry group is falling on the stoxx 600. miners are up. up 1%, leading the charge after we saw that china copper --

looks like they might be a building stockpiles. that is helping metals this morning. miners overall managing to weather the storm today. look at it in terms of the year. this is why we are seeing a selloff, because after the euphoria comes the reality. that commodities continue to decline, that global growth continues to be a concern. just look at what things are set by the beige book in china saying about the overall deterioration they are seeing. but the past year. the bloomberg commodity index. we are close to a 1999 low. we have wiped out 30% of the value of the bloomberg commodity index. the commodity route is front and center in terms of stock trading. the dollar strength continues to even to commodities, hurt oil. hurt someially might of the big exporters in the united states when you look from a stock respecter.

this is a great chart. this show to your today who are the winners, the losers on a currency perspective. check this out. every single currency is down versus the dollar. the dollar has been the absolute winter of 2015. look who has been the loser -- brazilian real. there.k the -- no shock it's a commodity rout but a corruption scandal that is hurt the overall economy. and south african rand off by 23 % versus the u.s. dollar. hit by the commodities rout. along with electricity that has been a key concern there. not to mention some of the economic and political stability, economic polities of jacob zuma. overall, dollar strength, commodity rout they are the themes of the year. francine: thank you.

your extensive look. -- at the market check. david cameron says his bid to change written's relationship with the european union is gathering momentum. fellow e.u. leaders signaled they are willing to find compromises on his demands for welfare. hans, was anything really accomplished? david cameron is trying to spin it positively and then you have someone saying we're far away from agreement. think when you take this general positive mood, the only real thing i can see that was accomplished as they set expectations extraordinarily high for february. they need to come up with some sort of diplomatic language, some finesse to bridge some far differences because it was clear last night there was not any movement from other european leaders on one of the key demands from david cameron and that is a four year wait period before e.u. migrants get

benefits inside the u.k. coming out of the meeting, mr. meron mentioned other things here looking for will be difficult but he did strike and optimistic note. good minister cameron: the news is that there is a pathway to an agreement. and i'm confident of that after the discussion we had, but the truth is this -- it will be very hard work. not just hard work on welfare but hard work on all of the issues we have put forward because they are substantial, they involve real change and they will need real decisions by all 28 members of the european union. one quick note on treaty changes. angela merkel to not roll them out. she did roll them out before a short-term treaty change. anything would like to have hap pen after the vote in the united kingdom. francine: what about the timing

of all of this? so, coming out of meeting last night, it ended about midnight, hollande said that cameron indicated inside the meeting they would have a vote in the middle of 2016. that may day, that october date. however, cameron himself denied saying that. at least he left the impression among some of his leaders that you could have a vote in the summer or midway through 2016. he is denying that. one thing he is doing -- he is playing to u.k. public polling saying, look at how difficult my position is. this is a very close vote. if i'm not given any new concessions, i will have a difficult time persuading my public to stay in. at the same time, he has not said where he is. cameron using the polls to his advantage. francine: of course, the leaders are meeting in the building behind you to discuss terrorism. let's bring in our guest host for the hour. at ubs.

great to have been the program. markets were little bit euphoric yesterday. they were up 2.5%. we can now move on. there are so much uncertainty out there. >> we've been talking about this for over a year. i think it hardly left a ripple in markets. hardlyyear rate, effective. we have some dollar strengthening but on the back of that, i think there are much better trends in play. i think it is much more important what happens with china, with the property market in particular. i think u.s. high-yield credit market is very worrisome. there could have consequences for the equity markets. there are other things that are much more important for markets. the ford guidance made it -- the forward guidance made it past very smoothly. francine: what you expecting next year? ramin: our u.s. economist is saying four hikes.

the key thing is when the first hike after this one happens because you need to points. that will be the key thing. in 1994 it was the second hike which caused the jitter and markets it is that is the one that told you how quickly there are going to hike. this time out will see it will be fairly shallow. the end point is much lower now. francine: one percent? four hikes? ramin: so that will put us at around 1% higher than we are currently. francine: overall, we had the news from bank of japan and that is sending it higher. in 2015, it was really dollar strength. it was the year of the currencies. what is 2016? ramin: also currencies. 2016 is not going to be great nominal growth. inflation is fairly muted in developed economy. we will see the bank of japan, the ecb very accommodated. it will have an important effect on credit markets in europe.

forming -- performing relatively well. the volatility will be low. there is good credit quality. little commodity exposure in the european credit markets. that is a good safety play. francine: how do you played a versions? play diversions? is fed, ecb that play has been priced in. do you look at ecb and dboj? euro-dollar, if you look at the pricing at the moment, we think there is too much diversions priced in. the u.s. is topped out. we think that is why there will be strengthening of the euro over this year. our forecast is 1.12 for one mo nth, 1.14 for t three months. yields will rise and

treasury will stay confident. there will be a compression of 10-year yield spread. francine: thank you so much. he stays with us and we will talk about commodities in china next. here is a look at what else is on our radar. morgan stanley plans to cut 5% of his equities trading staff. that is according to "the wall street journal." it said they would eliminate 100 jobs in early 2016 and replenish its ranks over the course of the year. morgan stanley declined to comment. chile raises interest rates for the second time this year. tells us central bankers continue to see inflation's running above 4% target for 2015. apple is entering the chinese mobile payment market. will introduce the competing systems next year. ae deal offers an entry to market in which transactions were worth $3.5 trillion last

year. deterioration. china paints a bleak picture of the country's economy. we breakdown the latest data out of asia next. ♪

francine: welcome back. authorities say it's housing market shows signs of recovery after they rolled out easing measures but the news is

overshadowed by researchers in new york who say the latest china , the country's economic conditions are deteriorating. bureau chief in shanghai joins us with the latest. from china's perspective and we have been trying to figure it out, this china beige book is looked at from new york. how credible is it? do we take it with a pinch of salt or does it tell us things are much more worrying than we think? greg: hi, fran. the beige book is an independent report. one of the things that people are often concerned about in china is the reliability of the data. and you have very few of these types of independent reports that attempt to analyze the chinese economy. in that respect, the beige book is something that we should definitely take seriously,

because it may be one of the few independent reports that we have available to us. how do you put that compared to the housing markets, saying that it is stabilizing? we have had quite a year for china volatility concerns. to 2016 moreng worried than six months ago or less worried? not: well, we're definitely out of the woods in terms of the property market. although the beige book did flag this was one of the sectors that was holding up and we got positive data today. the data really is on two sides of the market. you have the tier one large, major city market, beijing, shanghai. then you have all of the other cities in china. and, well, demand is very strong in the tier one cities, it is

hard to turn over a property in the other areas. that is why the government has taken measures, focused on the smaller cities to try to bolster the market. providinge, subsidies. there has been migrant reform, allowing rural residents to move to urban areas more easily, as well as the cutting of down payments. re, trying to bolster this mo the less populated cities. francine: thank you so much. shanghai.in let's continue the conversation with our gas. -- with our guest. you are a regular on the program we talk about your thoughts on china. china-based book, does a point to the fact that we need to be conscious -- cautious? aftermathll see the

of the housing market slowdown in china affect every market. is that growthng is revised down significantly. this year we art 7% growth. we will go to 6.2% next year. knock ongnificant effect and that is due to the knock on effect of the housing slowdown. we will have this excess property work its way through the system. in tier one cities we have a year of inventory on the books. that we can move fairly quickly. 3, 4 citieser 2, which is the majority of cities. if you look at the ones with the housing prices are falling. it's red. a few months ago everything was red. although we are out of the woods, i think we still have to way throughits

the system. but also, the impact on growth will be significant. it seems to be consensus that actually you will see more bad loans coming in from china. that is the worrying part. we do not know how the financing will be ongoing. i guess the question is whether policymakers have a good handle on it. ramin: i think they have a very good handle on it. they are aware. the key thing to look at is liquidity between the banks. if you look at chibor it has been close to 3%. maintaining that liquidity will be at the forefront. also, we are expecting rrr cuts, basis points. currently it is around 17%. that will bring it down to 14%. and also an early cut in the base rate next year. francine: no credit crunch? ramin: we think they will manage liquidity well because you have

the sedgwick organized economy so they can make sure the liquidity stays in place. francine: thank you so much. we will be talking emerging markets next. follow.next, the fed we breakout market reaction from the first rate hike and a decade. ♪

francine: welcome back to "the pulse" live on bloomberg tv and

radio and streaming on your tablet and phone and boomer.com -- on bloomberg.com. it has been quite a week. but we tend to forget what is happened in the summer months about the volatility in china. we talked about the fed, china in a little bit about the currencies for 2016. what is volatility like in 2016? i will bring you a chart we made especially for you. the last volatility in seven months. are we going to see more of it, deeper next year? have: a lot of our clients been interested in the disconnect between high-yield spreads in the u.s. and vix. high-yield spreads has been blown out by energy and vix is tight. trading below 15. if you strip out the liquidity premium, it looks fairly priced. yes, we are definitely expecting more volatility. and volatility in 2016 because when you go through macro change, that is typically when you see the highest volatility and rates and

fx. definitely that is what we expect in 2016. timing is everything for vix. while you wait you pay carry. francine: central-bank action. the fed hikes. i know you are expecting four hikes next year. what happens if the market start -- this was a mistake but she has to cut the next six months? ramin: we would see a very large pickup and volatility, because markets are pricing in a slow grind up in the economy. any surprise would be worrying. that is the worry that we will see the recession hit in the u.s. before we have reached the end of this hiking cycle because the fed ammunition the next time around. we are not forecasting a recession in 2016 but if you look at credit indicators, the probability of recession has gone up to 20% looking at credit indicators over the next year. still not worrying but i would

say that is a concern. in terms of policy shocks, yeah, that would be a definitely driver of volatility. francine: taiwan cut yesterday. chile, mexico raising rates. does it mean the because we got the fed hike out of the way, central banks are more free, they are not countering the fed anymore. ramin: a lot of e.m. is breathing a sigh of relief. a lot of them have said that they wanted to cut because it would take away the uncertainty. i think that is definitely going to be a breather for them. but overall, we think the dis-inflationary trend we see globally emerging from china is going to be a problem for some of the small, open economies. you mentioned taiwan. that is one of the places where we see the impact of china's slowing exports. but we also see them having to potentially protects their growth by devaluing their currencies. so, i think that will be a concern in 2016. francine: they do so much for

all your thoughts. -- thank you so much for your thoughts. bank of japan kept its main monetary stamens target unchanged but adjusted the program to include longer maturity bonds and real estate investment trust. against thetronger dollar. a private survey of china's economy shows disturbing deterioration across the board in the fourth quarter. the china-based book shows national sales revenue, volumes, output, prices, hiring and capital expenditure were all weaker. u.k. prime minister david cameron says his bid to change britain's relationship with the eu is gathering momentum. e.u. leaders have signaled they are willing to find compromises on his demand for curbs on welfare. they will seek to strike a deal at the next summit in february. for more on the stories and others, head to the bloomberg terminal and bloomberg.com. francine: the e.u. summit starting as we speak.

hans nichols is on the ground and will bring us the latest. i think a lot of the leaders have gone in. they are inside, ready to talk about terrorism. a lot of the working dinner was on the upcoming british referendum on whether they want to stay with any e.u. and how th ey negotiate. david cameron saying he thinks he can get this done and renegotiate in a satisfactory manner so the people in britain vote to stay within the e.u. coming up next, the new "star wars" film opens and forecast for its profits to go in hyperdrive. we talked the business of "the force awakens." one of europe's largest cinema chains will be talking about disney and talking about the battle of the princesses when it comes later to merchandising. and disney's efforts to get that all-important children's market. now, coming up we will also be looking at more emerging markets and oil. you can follow me on twitter. i'll just see you and a couple

of minutes. the ftse, 6101 down from 1.1%. ♪

francine: welcome to the pulse. live from europeans headquarters. i'm francine lacqua. star wars the force awakens opens a stateside today. --is did you hear in the u k in the u.k. how much money is it expected to make? nejra: i think i must be the only person in the city of london who has never seen a star wars film. i am not planning on seeing this one either did it cannot have

escaped anyone's notice how this film is going to be a force to be reckoned with for disney when it comes to revenue. in the u.s. the mystic box office alone, star wars is on million.make $229 that puts it on track to smash box office records. it is not just the box office that is make money, because analysts expected to rake in $5 billion from merchandise sales. over $1 billion from video games and dvds and tv licensing. bringing the total revenue in the first year to more than $9 billion. when talking about -- we are talking about big money. francine: i'm still in a little bit of shock that you have never seen a star wars film. i didn't think there was anyone that had never seen a star wars movie. the $4uld recoup

billion. nejra: that $9 billion revenue tag it looks like disney could money fromecoup the buying lucasfilms. the company has been on an acquisition spree in the last decade. in -- it bought marvel back in 2009. it bought pixar for a higher that in 2006. they want for $6.3 billion. look at how the share price has performed over the past 10 years. beentors have certainly liking this. also this week disney shares have been climbing. this is after glowing commentary from wall street analysts. disney shares are up 19% this year as well. this is a difficult market for media stocks. most of those media stocks are down on the year. disney is not.

it is up 19%. it is one of the best performers. francine: it is nothing like a blockbuster to help the bottom line. for more, let's bring in timothy richards. he was at the premiere on wednesday. tim, this is exciting for you. last time we had you when you were talking about james bond. how much of that is translating into your bottom line? tim: it is globally. i think last year we can now look back and confirm it was an aberration. we continue our trend globally to go from strength to strength. this year, it was fast and furious, jurassic world.

third-highest grossing movie of all time. francine: and star was is going to beat that. tim: star wars is going to be did. at it.d specter -- to be you had specter come in. it didn't come in and do as well as expected. star wars is breaking records everywhere. they are following hourly. francine: how many sales were pre-booked? tim: over one million tickets sold before one screening. which is phenomenal. we had 62,000 midnight screenings on wednesday night. his is just the u.k. we had similar levels in poland and germany. even in taiwan, we are seeing 40% more than the last star wars more than the

last star wars. francine: how much does it have with disney? this massive marketing machine has done a magnificent job in getting it out there. tim: disney is the best. if you look at how they have marketed it. even look the last trailer that was released, 111 million downloads in just 20 minutes. that is the disney marketing machine at its best. francine: i but batteries yesterday which had the greater -- i bought batteries yesterday which have batteries -- which at darth vader on them. tim: if you look at the the purchase of lucasfilms is looking like a bargain right now. francine: what is coming up in 2016? tim: we're looking five and six years ahead.

we have the studios right now green lit, named films right through 2021. that is unprecedented. it is almost the second golden age of cinema. part of that is on the resurgence of the asian market. ultimately it is the revitalization of the whole industry. an interesting fact which was a long-term study in the north american market, young people are coming back to films. francine: why? you still have netflix here it -- you still have netflix. the resurgence of cinema, is that because of the way we shop? people, yourng

sing the proliferation of social media. what is the next best thing? the --ut and saying with with best friends. young people tend to go out in packs -- pacts. it is a competitive form of out of home entertainment for kids. rental has the way we want -- francine: has the way we watch films changed? tim: we are social beings. i think a movie is that much funnier when you watch it with other people -- scarier. even some of the tearjerkers. when you are sharing that collectively, with friends, families or strangers, it is a better experience. what young director would aspire to direct and produce a movie for an ipad. can you watch this can you imagine watching a death star -- can youan ipad

imagine watching a death star blow up on an ipad? francine: how much do you work on price, compared to the actual experience? us, exhibitors globally are back to basics. seats, sites, screen and sound. what you're seeing is this incredible new sound system. it is an amazing immersive sound system. laser projection technology coming out. you got to k and 40 project is. 2k and four k projectors. , your sing new seeds being introduced -- you are seeing new seeds being introduced globally. expensive but we are

getting returns on these investments. these are talking points. we're putting in fully reclining, electric, la-z-boy seats. -- when you experience a movie that way, that is a talking point. you'd tell your friends, you got to go and check this out because it is a different viewing experience. francine: how much of this star wars success is due to u.k. financing? tim: the current government has been very supportive of the industry. the tax credits they put through, the highly skilled workforce in the u.k., it is note to with students that all of the blockbusters of being filmed in the u.k. studios, they are booked for the next five years.

francine: i did not see the film yet so i cannot verify. think you so much for joining us. timothy richards, the ceo of view entertainment. spain goes to the polls for its most uncertain election to date. coming up next. ♪

francine: welcome back to the pulse, live from bluebird's london headquarters. -- live from bloomberg's london headquarters. caroline: we see the stoxx 600 up by .25%. the industry groups which are performing well and worse it minus leading the charge, up 1.3%, why? metals are rallying. anglo american, the outperformance today. they are the mining index currently performing higher. there is hope. copper smelter's are mentioning they're going to build -- could there be in easing? reprieve, ane days bounce back after what has been

a to mulch was year? i want to focus in on the cable side of things. -- the cableformer coming despicable company has been on a frenzy snapping up u.s. companies. cablevision is the key question. it is being reported that the justice department has asked the federal communications commission to defer consideration. we want a national security review to be completed first. everyone thought the regulators would give a thumbs up. this deal with synergy has expanded into the united states. this is a concern going forward. performer.ur worst it is a down day for european

stocks. apple and samsung are entering the chinese mobile payment market. the two companies reached separate agreements with china's union pay. the deals offer an entry into the market. las vegas casino billionaire the casino industry to start recovering next year. that's after an 18 month downturn with china's slowdown and an anticorruption drive keeping highrollers at bay. they are expecting a 32% decline in growth gain in revenue. japan kept its main monetary stimulus target unchanged. and real estate. the yen stronger against the dollar this morning. that is your bloomberg business flash. francine?

francine: nejra cehic. today's until spanish voters go to the polls for a new generation of politicians demanding power. is anasically this uncertain election. tom: absolutely. believed,ls are to be the spanish are going to be ripping out the political playbook. someday there going to be moving away from the old parties of socialists and popular parties. pro centrist,rd a market party. ofng people on the sharp end a morbid jobs picture here in spain. yes, polls suggesting that whatever parliament takes shape after sunday is going to be one of the most divided in more than 30 years.

the polls suggesting that as many as 40% of the people here in spain have yet to decide who they are going to vote for. topping the list in terms of andrities, jobs, corruption the education system. jobs in corruption really number one and two. heads and shoulders above everything else as far as concerns here in spain. francine: what issues are to consent to stage? is a lot of the focus still on the economy? the prime minister and the head of the poplar party would like to be focused on the economy because he has seen growth cup in the last two years. -- growth up in the last two years. he has managed to chip away at the unemployment rate here is still around 21%. forfor young people looking work. people under the age of 25. he has made some progress and he is opening that he is hoping he can capitalize on that.

-- he is hoping he can capitalize on that. the allegations that are -- anng around his interesting poll out this morning from one newspaper that his party is doing better than expected, picking up in the last few days from strong debates. alliances are going to be crucial because what we do know, according to the polls, the popular party will win this vote. but he will lose his majority and be forced to forge some kind of alliance. that is when he gets really interesting. it could take days or weeks or longer. that is where the uncertainty feeds back in. so far, the markets have been sanguine. the yields on the spanish tenure are narrowing versus the -- spanish 10 year are narrowing versus the italian. the economy is doing better but

there are major structural reforms. francine? francine: tom, thank you so much. below $50 ahave wti barrel.- below $35 a we look at what is next for commodities. ♪

francine: welcome back to the polls. -- welcome back to "the pulse." oil is heading toward its third weekly decline. ryan chilcote is here with the latest. ryan, -- the lifting of the u.s. export ban. how significant is it echo ryan: long-term, -- is it? is veryng-term, it significant. we're talking about a marginal thing on the oil market. there are some big obstacles to u.s. oil flooding the world. one of them is infrastructure. the u.s. is too good. it is really light and sweet. oilou take the biggest market out there which is asia, many of its refineries are guilt -- are geared toward heavier oil. to get a barrel of crude from houston to japan cost five dollars. to get it from saudi to japan,

it is closer to two dollars. there are going to be a number of obstacles. it might affect the bti a prices does wti prices a little bit. -- two things to watch is one, the rig count. stood atount last week 524. down from 1600 a year ago. that is kind of a leading figure. production still remains good. hedge fundshat think about oil prices later in the day. lastly, they were particularly bearish. we'll see if they remain as negative as they were. francine: christmas coming early. commodities,out the worst affected metals. ryan: we had a little visual i prepared for you, francine. there it is.

i got your own personal copy. there it is. the gift every girl wants. mo-lyb-de-num. there are four parts to this word. is lyb like women's lives. then you got de. and then you got num. worsts the world's performing commodity this year. the worst of the worst. down 50%. it is used to make steel. many people calling this the poster child of the bear market commodities. francine: i bet the bears cannot pronounce it and don't want to. i love the visual aid. i am a happy anchor right now.

ryan chilcote. let's wrap the date with the market update from caroline hyde. caroline: euphoria fades. -- calling it hangover is. if you looking at what is happening at the stoxx 600, the euphoria that we had yesterday, we saw all of those gains posted the fed hike eradicated in the united states. 20%. 600 off by once again, it seems to be commodity rout's and concerns about global growth. the beige book from china coming in showing an issue with ongoing growth, concern and deterioration in china. metals seem to be on the higher side. copper driving higher, up 2% across the board. why? is there a decision that this is the time to get back in echo copper smudges in china saying let's draw back on production.

they could help ease some of the glut that is the going on. the copper on the high side. stillerg monti's index is the lowest since 1999. off by 30% over the course of the last 12 months. for today, the miners are doing well. metals driving higher did the stoxx on a downward trajectory. what is been a key concern, the commodities rout and growth questions both come back. the hangover setting in. francine: think he's a much. -- thank you so much. up next, surveillance. we will talk about japan, star wars and that eu summer that eu summit. -- eusummit geared

summit. just a reminder, you can follow me on twitter. i will be back with tom keene in just a couple of minutes. ♪

climbed then slide as the central bank announces changes to the asset person program. progress towards a reform deal. european leaders meet to discuss terrorism. awakens" a the force force to be reckoned with. good morning. a diverse day. this is "bloomberg surveillance." the