guy: low for longer. opec gives its global outlook in an hours time. credit suisse claims another victim as a hedge fund faces almost $1 billion in withdrawal requests. and, the world's biggest sporting-goods maker beats as it reports a 24% revenue surge in the country. welcome to "the pulse."

i'm guy johnson. let's get you up to speed with what's happening with the markets. here's caroline hyde. caroline: can we hold onto the gains? yesterday, we closed lower on the stoxx 600. 200 billion euros wiped out. even though volumes are down below three-month averages, the european stoxx 600 is gaining steam. every industry group is currently on the rise. oil and gas, miners on the up. one interesting outlook for 2016. european stocks are likely to rally 16% for 2016. that from analysts we surveyed. the most bearish sees 10% uptick overall. jpmorgan saying you are going to get at least a 10% rally in the stoxx 600 next year. citigroup says we could have 23%. many feel that we've got another

urgent going on, more ecb firepower, so more desire to eown european stocks. today is all about oil and gas and miners. brent currently trading up 1%. , wti in thed brent u.s. managing to gather a bit of steam ahead of production numbers from the u.s. today and some of the overall concern about the inventories they have. meanwhile, you've got opec coming out later today. what will they say about prices and production? i want to show you one mining stock that is really on the up-to-date. , this is atal fascinating story from the united states. arcelor mittal jumping today, the best performer on the european stoxx 600. taxu.s. is proposing a 256%

on some chinese imports. this is what a u.s. producer is saying, the legal counsel of nucor, saying this tax is being fought through by the united states. many producers saying there is dumping happening, cheap imports, hurting domestic production. could we really see a 256% tax in the u.s.? caroline, thank you very much indeed. the pboc in china has posted a note on its website, confirming that we will see an extension of onshore yuan trading. the close will be at 11:30 p.m. that now being confirmed this morning by the pboc in beijing. we will come back to this later on. the credit crunch has claimed another victim. the fund owned by the carlyle group is said to have $1 billion

of withdrawal requests this quarter. the fund has performed poorly over the last 15 months and has seen investors leaving in droves. joining us is simon dollars and bill o'neill. good morning to you, gentlemen. simon, did was never going to be one. there were always going to be many. simon: we had 3rd avenue a couple weeks ago with stone lion capital. it is a culmination of declining prices,rices, oil investors having stretched further down the quality curve to try and find that incremental yield trade. we've had significant redemption. we've heard over the last 24, 48 hours, it is worth $8.5 billion. i guess that is going to call into question sustainability issues about the fund going forward.

canary in the coal mine, but there's never just one. it reflects the perfect storm type conditions. guy: bill, any surprises here? bill: in a cycle like this, you will get very specific stories. stories on defaults are going to rise in the u.s. we don't see this as compelling as the story once was. the focus is shifting towards the european segment in terms of high yield. essentially, the default experience up and coming is not supposed to be as deleterious, and you've got a very helpful central-bank. there's less in the way of leverage in the sector. from a tactical perspective, looking out in 2016, we are much more focused on the european segment. guy: back to the u.s., do we

understand what they were investing in? third avenue was clear that they were at the more extreme end of the credit spectrum. is that the same story here? extremes,off on the but then you work your way into the mainstream. what does that tell us? you would assume that it's largely energy-related stocks which have taken the hit. liquiditym is the with which the retail investor is buying into the etf. it is much more idiosyncratic. within the u.s., you've got this lack of liquidity. investors want to start moving out and taking some capital. that liquidity just isn't t here as it was supposed to be. guy: the focus has been on energy thus far.

you strip out energy and the story is very different. are we going to see other industries being sucked into the story? difficult tory make an across-the-board call in terms of individual sectors. at the end of the day, the story of 2015 has been about the immediate impact of the oil price decline. one third ofe capital investment is in energy. there are things like the consumer story, which has been pumping away. side, i would still see this as very much around capital spending, energy-related themes. the european piece is much more about the bags and how well they are doing in the high-yield space. that clearly is the risk in europe.

we don't see that playing out the same way as energy. guy: once used or if it out, the rest of the sector looks very different. default rates have been low for incredibly long periods of time. what does next year look like? simon: i think we're going to start to see an incremental pickup led by the u.s. i think within those defaults, you've got two elements to watch, the business model from lower energy prices, and also you need to look at balance sheet send the amount of leverage that has been put on to these high-yielding investment-grade companies, and the increased debt service costs they are going to incur. that is where the pressure is going to continue to build. focus more on high-yield opportunities within the european space as opposed to the u.s. perhaps. guy: simon, thank you very much

indeed. simon ballard, bill o'neill. let's get you up to speed this wednesday morning. modi isrime minister headed towards moscow after what is set to be the nation's biggest weapons deal with russia since 2001. the missile system which india plans to buy is likely to cost $4.5 billion according to a defense official. u.s. consumer spending increased the most in three months in november, suggesting momentum as the u.s. economy heads into the holiday shopping season. the data was due to be released today, but was published a day early. getting things done before christmas. nike shares are rising in premarket trading after it defied concerns about china's slowing growth and delivered some good news.

second-quarter profit beat analyst estimates while revenue in china was up 24%, to almost $1 billion. with that nike beat working its way through the european markets, we have a nice bounce for its german competitor. i did us trading up nearly 2%. next, three chinese companies warn that they could default over the next few days amid a growing cash crunch in certain sectors. we are live in beijing for the details on what is happening. ♪

guy: welcome back. you are watching "the pulse." three chinese companies said they don't have enough money to make bond repayments this month. they are just the latest chinese firms to struggle with their debt. with the economy growing at its weakest level in 25 years, it is a big problem for many businesses. nick wadhams has the details. what is interesting about these three companies and what have they said? >> they are basically saying they cannot repay their debt. we are seeing this happen more frequently in china. there is about a 280% of gdp leveloddle -- gdp debt

across the country. the chickens are coming home to period ofr a long loose money. the government has said it is going to let them fail. you haven't seen risk priced in in china because the government has been so prone to bail out big companies. it looks like the government may let them out. insays it will support them some ways, but if they default, the default. so where there are three, there are probably more, yeah? >> many, many more. this has been happening more and more frequently over the last several months. this is just the tip of the iceberg. guy: there's some good news you guys have got. when you look ahead connect year, people are struggling to find good news for the chinese economy, but you've done it.

>> we are looking at a lot of indicators that have come out in the last couple days. they do suggest a little bit of an uptick. that you contrast y with this debt overhang, that is a more serious issue. we have some indication of a slight uptick. we will get more indicators in the coming weeks. that should tell us where china stands heading into 2016. guy: always a pleasure. nick wadhams in beijing. let's continue the conversation with bill o'neill. that is a healthy thing, isn't it? bill: at the end of the day, you've got overcapacity, overleveraged, and clearly this prolonged liberalization rebalancing effort across the economy. defaultsis that these were inevitable, but they don't represent a systemic risk to the

financial system in china. the big story still is the improvement in margin conditions, easing of credit conditions, and fiscal stimulus. we are still looking for slower growth in china next year, but not a hard landing. the way you happy with chinese authorities are managing the story? bill: they are doing the best given the circumstances, how many balls are in the air. guy: that implies the possibility of dropping one. bill: we've seen one or two near misses over the summer. i think clearly the role of the renminbi in terms of its international value, what happens in 2016 will be very important. we are building in a 5% depreciation. a more significant move would be clearly disruptive. guy: that is a very slow, incremental move? bill: through the year, but reflecting the need to take account of a strong dollar.

is important story here positive stimulus is coming through and it will continue to affect economics. global markets are pressing into 2, 3 hikes from our ord, if it is f more aggressive, do the chinese need to do more than that 5%? bill: maybe, but the story is one of divergence. interest rate in china are going to head lower from here. they're committed to adjust to market forces. if market forces intensify in terms of weakening, there is a risk that 5% turns out to be an underestimate. guy: should global investors allocate money to china? bill: we think it is basically a story of improving earnings.

the valuation is not a problem at the moment. issue still deal with an in the market performance. silly not to exclude that as a possibility, some sort of mishap in terms of policy direction. but i think the story is avoiding a hard landing should draw money back to china. -- give does china fit me the peripheral story around china and whether the investment case stacks up. when i look at korea, taiwan, how do i invest there? bill: the story in china is still one about the opportunities coming from liberalization, the orientation towards the services sector, towards the consumer, the brokerage side, the large companies in china phasing out developing.

it's the strength of the domestic theme to get retail sales spending at the next regnery case. other economies are seeing some improvement, but that is linked towards currency depreciation and a low-inflation environment providing some support for domestic demand. there, it is more about rebuilding competitiveness. china is more a domestic story around liberalization. guy: bill, stay with us. plenty more still to come. china is doubling the hours of onshore yuan trading. we are going to 11:30 p.m. beijing time from 4:30 currently. how low can oil go? opec'soing to look to global outlook, published in 40 minutes time. ♪

the hour.nutes past welcome back. you are watching "the pulse." ahead ofttle higher opec's annual outlook report and the u.s. crude inventory data out of new york a little later on. starting toures are trade near brent. this comes after brent closed

yesterday at its lowest level in more than 11 years. al glut has led to speculators buying contracts. javier blas is here. bill o'neill is still with us as well. commodities have struggled in 2015. i think everybody was wrongfooted by the speed and aggressiveness of the move. what really caught people out? javier: i think oil surprised a lot of people. we were expecting prices were going to trend lower after saudi arabia clearly hinted they were going to fight for market share. what we didn't anticipate was that saudi arabia was going to increase so much production until june of this year. it was a significant increase. qatarudi's put an extra in terms of oil production into the market.

those 800,000 barrels a day of extra production from saudi arabia plus production from iraq really drove prices down. we knew that the global economy was going to be week, but china rattled a few cages. we knew about the supply side story from saudi, but the demand side also didn't materialize. javier: demand was very weak in china. because of stockpiling in china and a strong demand in the u.s. and india, demand was priced to the outside this year. the result was too much oil in the market because of the supply side becoming so strong. wrongfooted for sure. guy: javier is a pretty smart guy, bill. everybody must have been surprised. bill: the other thing i would

add is the lack of speed in response in terms of non-opec supply. there was a slower reaction there. that is the key for 2016. you have to see some significant response. guy: what numbers do you plug in for next year? are looking back to $63 in 12 months time. it is very much focused on recovery in the second half of that 12 months. the story is that we've got a glut at the moment. you get a cut back in non-opec supply, particularly during the year, but also recovery in demand. that bynk the story is the second half of the year, you get the market moving into better balance. guy: heavier? a lot of investors are looking at 2016 with a view that oil prices will fluctuate during

the year because they are factoring a recovery in the second half of the year. , what ifion in for me that doesn't happen? what if saudi arabia keeps oil toces down, rather than $50 $60, more $40 a barrel? that is going to have a huge impact on profitability. guy: what does next year look like? is ar: i think next year key year for dividends and some companies are probably going to struggle. there is still a lot of room to maneuver by big oil taking on debt, but names like chevron have increased every year the dividend for the last 27 years. can it do it again in 2016? i think they can do it, but it's not going to be an easy task. we look at the medium-sized is a sector that

is going to be struggling. heavier, thank you very much indeed. javier blas. bill is going to stay with us. plenty more coming up after this break. we are to talk brexit. ♪

guy: welcome back. you're watching "the pulse." i'm guy johnson. here's nejra cehic with the bloomberg first word news. nejra: global deal making it an all-time peak of $4.2 trillion in 2015. 17 megadeals with a value above $20 million helped smash the record set in 2007. the biggest deals were pfizer's merger with allergan and ab inbev's tie-in with sab miller. ,laren road asset management

majority-owned by carlyle group, suffered $950 million in withdrawal requests. es assets 85% below their peak last year. china has doubled the hours for offshore yuan trading until 11:30 p.m. beijing time according to a statement on the people's bank of china website. that is your bloomberg first word news, guy. guy: thank you very much indeed. more disappointing news for george osborne. caroline hyde has the details. caroline: we think they are undershooting what analysts have expected and revising down growth for the second quarter. looking at where we are for quarter on quarter growth for the united kingdom, 0.4%. it was estimated 0.5%. there seem to be headlines coming out that the second quarter has been revised down to

0.5% growth. it seems to be the services area showing weakness across the board. we are seeing services month on month growth of just 0.1%. the expectation had been for double that. there are concerns about the spelling nature of the services. the pound moving not all that much. trading flat against the dollar. not much of a reaction. it seems as though that rate hike coming in 2016 could be pushed back even further. we are seeing slightly weakened growth. guy: caroline, thank you very much indeed. will be concerned about it or not, but what they are concerned about when it comes to the u.k. economy in 2016 is the brexit. also, the buildup to the brexit. the referendum. the biggest risks they see our

brexit and buildup to brexit. it is the only show in town. there is some good news for the global economy. greece could actually deliver on what it promises. mr. tsipras is on the tape as we speak seeing greek ministers should increase the pace of their work. the fed could actually get it right. we did a few weeks ago the pessimists guide to 2016. i call this the optimists guide the 2016. mark gilbert is with us and so is bill o'neill. are you finding it hard to be optimistic? mark: it's not easy, but we should make the effort once in a while. you've got to sometimes try to take the opposite view and see what could go right. the two things that stuck out the most were greece for the euro and the fed, whether the fed has done the right thing by raising interest rates. larry summers yesterday came out with another for reasons why the

fed has gone too early. if you look at the economic data out of the u.s., the growth figures yesterday were ok. if you look at car sales, they are storming ahead. prices, not bad. decent recovery there. inflation outlook, not quite there. if you look at the economic forecasts from the economists in the market, they see the 2% inflation target coming up at the end of 2017. the growth figures are above average for this decade going forward. that's a pretty rosy outlook. the fed wanted to get off zero. central banks are uncomfortable and zero. economic evidence is also in their favor. the data, if all you knew was the outlook for growth in

inflation, and you were told the fed is at zero, you would say that is the wrong interest rate. you would say they should the north of that. guy: you agree with that? bill: i do, actually. i think it is going to be a decent year for growth. eurozone, 1.8%, best growth rate since 2010. we are moving, chugging along, somewhere close to 3% in the coming year. to be cheerful, particularly in the developed word. the mystery is what's happening with inflation. that's what's really bothering central banks. if we get a controlled tightening in the u.s. and the u.k., the markets can live with that. we have brought returns forward from the future into this year of qe andear apropos

zero interest rate policy. the backdrop in terms of the real economy should be decent. guy: how many have you got penciled in from the fed? bill: four. >> guy: you are kind of with the fed. we've got a view that we are back up to 2.5%. it is not the end of the world. whereistorically, that's you will be. let's talk greece. bill brings up the issue of the eurozone and what's going to happen next year. we spend most of our summer watching every tick and turn of what happened in athens and gained a great deal of knowledge of greek political life. it's gone away. the story has disappeared. tsipras is saying this morning that he can deliver. his parliamentary majority is secure. if they work a little bit

harder, are we going to see some deliverables? drip of good news from greece is significant. i was in athens at the start of the month. i met investors and ministers. the optimism is rising. if you look at what has been achieved, they've got the next billion. they have done some privatizations, finally. they are going to get some money through privatization. makes next year's target look not so stupid. tsipras says he is going to have a pension reforms built on the block. they've got a plan. one of the ministers said, we're not going to cut pensions. too many greek households are dependent on a single pension income. we can't cut that. ist they are going to do charge a little bit more on those people who are working and hope to make the savings required from just doing that.

whether that works economically, don't know. they've already got a problem with shadow workers. that is a bit of an issue. but they are being sensible about how they are doing it and trying to walk this tightrope between objecting to austerity but having been on the edge of coming out of the euro and it terrified them. they do not want to be there again. for all the left-wing rhetoric, i think they are going to meet all the conditions creditors have laid out. we can go on and talk about spain, but there are other elements which could cause confusion next year. let's talk a little more about greece. the banking system is still in many ways heavily constrained. it works better than he did in the summer, but it still doesn't work. mark: they've had three recapitalizations.

you say, will there be another one, and they are a bit shifty. nonperforming loans, they now have signed a bill. that says, yes, you can bundle the loans and sell them to third parties or license out the managing of those bad loans to experts. that's a big step forward. given that tsipras talked about voters earlier in the year, the rhetoric has changed. they recognized the reality of the situation. you cannot have a banking system where half of debts are not being paid. guy: is the euro secure? review, i think is going to be very important. the nature of the imf involvement or not and germany's reaction. that will be the test. the context is that they've

already been extremely generous to greece. of the euro inks the coming year are more extraneous in terms of the u.s., of the fed, the rather than what's happening in the internal european economy. i think the cycle is with the eurozone in the coming year. i think draghi will have put it off. a big move in the dollar, if the dollar weakens substantially, that could clearly have an effect. guy: thank you very much indeed. mark gilbert being optimistic. bill o'neill, thank you very much indeed. he's the head of investment strategy at ubs investment wealth management. up next, we are going to talk about the crazy frog spent. what am i talking about? find out what it means. i will explain, i promise. thank you for that. ♪

welcome back. you are watching "the pulse." let's get you up to speed. here is nejra cehic. nejra: international shares have surged after the brokerage said its chairman and ceo will resume his duties after a five-week

absence. the stock had previously plunged. pesticide company syngenta is in advanced formal and intense negotiations with rivals about possibly combining. that is what a chairman has told a swiss newspaper. syngenta is in talks with monsanto. the whole industry is talking to each other. boeing has agreed to pay $12 million to settle complaints over safety standards. the federal aviation administration says the company missed a deadline to give instructions on installing devices to prevent fuel tank explosions. guy: thank you very much indeed. in the run-up to christmas, a mobile payment platform identified a key trend that is unraveling user habits. the company with partners such as google, facebook, is calling it the crazy frog spent.

we need some information, don't we? is the chief of bango. could you say what the company does? >> we are an intermediary between the big app stores who want to collect payments from consumers with mobile phones. we enable people to spend on their mobile phone bill. for click a button to pay an app and it comes up on their phone bill. guy: i hope that i would never hear crazy frog ever again in my life. why are you bringing it back to me? ray: first of all, it is the 10th anniversary of crazy frog with those remixes and so on. we are seeing the trend come back. crazy frog was built in an era when sms was the way content delivered if you can remember that. these days, the internet is rolling out into emerging markets. there is more innovation like

the crazy frog type personalization. guy: what shape and form are we talking about? technology has advanced considerably. what are we talking about, emojis? emojis, you want to personalize your matches -- your messages. i was hearing about kimojis, which is kim kardashian emojis. guy: staggering. ray: on the other side of the coin, you don't hear ring tones much anymore, but you look at the whole phone being themed. you can download different themes. some of them will be disney or other content. guy: is this just an emerging market thing or is this happening in the u.s. as well? ray: i'm sure that people are is in the u.k.moj

as well as emerging markets. in emerging markets, this is almost a first-time activity. intounched google play africa for the first time this year and we saw a really good take up of a lot of types of content there. we are seeing in asia, indonesia and places, messenger, or line which is an asian messaging system, the emojis are selling well there. guy: a different world than we were. what growth rates are you seeing? ray: historically, we've seen about 100% increase year on year. and the market opportunity seems even bigger than that. to growrecasting apps to around $80 billion in 2019. the proportion of that that is

billed through mobile operator bills -- guy: where are you based? where do you keep your engineers? ray: nhq is in cambridge in the u.k. we have 60 odd people there, many developers and internally focused people. we have people around the world, singapore, the u.s., brazil. guy: given that the immigration debate is so strong here, give us your two pence worth on how critical it is for your business to attract the best talent. ray: we are in a high-tech hotspot in cambridge. it is very competitive. i was talking to a couple ceo's about the situation we are seeing, about 60% of our employees coming outside the u.k., countries ranging from .ermany, nigeria negotiatede special

rights to be able to sponsor visas through, but without the ability to bring in skilled talent, it would be very difficult to get the talent we need. guy: that was a statement of the obvious, nigeria not in the eu. congratulations. thank you for bringing me back the crazy frog. i'm very happy about that. ray anderson, the ceo of bango. one airliner increased its stock price fourfold. how did they do it? find out when we get back. ♪

guy: welcome back. you are watching "the pulse." let's talk about el al. in many ways, el al, the israeli airline, has a lot of things not going for it. etc., plusdown, low-cost airlines are coming in. that made life a lot more difficult. but yet this is a stock that is absolutely delivering this year. it massively outperformed. how has it done it? elliott gotkine is standing by in tel aviv. elliott: el al has had the good fortune to the the right airline in the right country at the right time with the right currency.

all airlines have been benefiting from plunging oil prices, but israel has the shekel to help el al. the shekel is one of only three countries -- currencies around the world that has not been crushed by the u.s. dollar this year. the israeli shekel has risen against the u.s. dollar. that has increased the purchasing power of israelis abroad. flights out of the country have risen some 15% this year. on top of that, as the airline has recovered, it is paying the first dividend since 2008. people tend to like the stock. year,up fourfold this 342% at the last count. .ext up was spice jet none can touch el al right now. it seems to be going up another 2% today. guy: and clear skies ahead? elliott: i don't think you can ever say that in this part of the region.

the open skies agreement was expected to have a debilitating impact on israeli aviation. didn't quite turn out that way. in 2014, the gaza war prompted a drop in profits at el al as well. there's always the possibility that the current round of violence that has been bubbling away with a spate of stabbings and the like could turn into something worse that could scare off tourists from coming to israel. really bad, could potentially damage the economy and reduce the potential for israelis to go abroad. never clear skies here, but for now, analysts seemed to like el al. guy: elliott, thank you very much indeed. elliott gotkine joining us out of tel aviv on el al. nike shares are rising in premarket trading after the company delivered some good news to the u.s. retail sector. second quarter profit the estimates while revenue was up in china almost $1 billion. let's break down the numbers.

nejra cehic is here. nejra: the world's biggest maker of sporting goods saw profit at $.90 a share for the second quarter. that beat estimates. sales growth was a bit of a mess, but we saw futures orders also beat estimates. the real standout was china. revenue there was up 24%. part of my keys success in china -- nike's success in china was a plan to revamp its distribution and merchandise. it has been selling more products through its own stores and websites. it wasn't just china that did well. north america also turned in a strong performance in the second quarter. overall, what we saw for nike was an eighth straight quarter of revenue growth. nike has been on the upswing since the recession. this year, we've seen shares gain 30%.

adidias has actually gained more than that, but nonetheless, nike has been taking market share from adidas in soccer and increasing its presence in china and south america. it has been benefiting from this shift in trend toward casual athletic wear. osire, it is called, something i'm familiar with outside the office. guy: something i'm not familiar with outside the office, but we will leave that alone. thank you, nejra cehic. stay with bloomberg. oil is the big focus today. we will get opec's outlook shortly. the baker hughes is out a little later on today. plenty more still to come on bloomberg television. tom keene and i will be taking to the airwaves very shortly. we've got some great guests lined up. oil as ever taking center stage. the spread between brent and wti

is now virtually zero, which is another interesting aspect of what we're seeing in the world of oil. u.s. exports cleared for takeoff. that's it. "the pulse" is over. "surveillance" up next. ♪

♪ opec says oil demand will continue to slide into the end of the decade. risky business. british exit from the european union is the first and biggest threat to the european economy. nike outruns the china slowdown. good morning, this is bloomberg "surveillance." i am guy johnson in london with tom keene in new york.