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. >> welcome to "on the move". you are about to find out all the market stories on the first trading day of the new year. i am guy johnson. john, boom, we are back. what a start to the year. of got a little bit of sleep. -- i got a little bit of sleep.

chinese manufacturing data ugly, ugly, ugly. that pivot from manufacturing to services, you see it in the data. guy: i'm glad you brought that up. i wonder if the market is reacting to that services data. maybe the pboc won't do as much as we thought. the market is tanking on the back of that. >> look to the oil market. we will talk about the saudi-iran tension. we will discuss that a little later. the headlines, your morning brief ahead of the market open. shanghai slides, circuit breakers kick in, manufacturing data disappoints. oil prices rise as saudi arabia severs the medic links with iran -- severs diplomatic links with iran. goodbye baxalta -- could

buy baxalta for $30 billion as early as this week. >> chinese stocks halted after the csi 300 index plunged 7%. manufacturing weekend for a fifth straight month. the longest-running since 2009. escalating middle east tensions saw investors shun riskier assets. tensions escalating between saudi arabia and iran. ties andbia has cut expelled diplomats after the embassy in tehran was attacked. this comes after the execution of a dissident shiite cleric. it might beher says necessary for the central bank to increase rates if financial markets are overheating. using regulatory tools should be

the first line of defense. >> if prices are too high and the economy is in a reasonable , near unemployment, near target inflation, it may be possible or wise to try to use the interest rates as a vehicle. >> for more on those stories, terminal coasters -- customers can see them. than half an hour away from the european open. up's bring this screen showing you the fair value on the bloomberg terminal. it will be fairly ugly. will openike that dax down over 2.5%. london will be down by around 1%. paris down by 1.42%. abysmalbe a fairly start to the european trading

session. we need to get out our almanac and see what that signals for the rest of the year. the shanghai composite dominating headlines overnight. by almost 7%. i believe that is the worst start to a year ever. 2016 kicking off with pessimism all around. gets a pop after the saudi-iran tensions, then rolls over. i find this absolutely fascinating. on the one side, any potential for disruption for supply out of saudi arabia. on the other, doesn't this cement the idea that opec is increasingly irrelevant. if they can't get together in any political fashion, how can they talk production cuts? guy: i think that is a critical point. you look with what is happening with russia, pumping at record levels. what we are saying is that we

will see an awful lot of supply continuing. any idea that opec will find a way to speak with one voice is because ofce now what is happening with the geopolitical story, resonating with syria, yemen. as you made the point, oil enters all of these conversations. >> let's turn back to china growth. stocks, richard is in hong kong force. breakerse -- circuit get an early wake up your behind the story? --china voluntarily volatility has become the whole market of 2016. there was concern about the manufacturing data that was not strong. expiry ofrn about the a ban on major shareholders

selling their holdings. in july.ack sometime as we got closer to that 5% and the trading halt, it only began today, we sought selling escalate. only a 15 minute halt, seven minutes before we hit 7%, and that was it. guy: do you think the circuit breakers designed to mitigate the volatility actually contributed to it? marketainly some of the is saying it did intensify selling. 5%, andt closer to after, people wanted to get out as quickly as they could. that's why it took seven minutes to get from 5% to 7%. if we look at the summer, that same index fell more than 5% on 20 occasions, more than 7% on 10 occasions. in the u.s., the limits required

for a trading halt to kick in incline required for the u.s. to stop trading. --does look like trust china, while they were trying to call him volatility, still some of the highest in the world, may have set those limits too low for such a wild market. >> just to take it from the markets to the economy, the outlook for 2016, the manufacturing data is still weak, weak, weak. servicing data still strong. which is story should we be following at the moment? the bright side of the data is that the retail side, the consumer side, is showing signs of strengthening. the economy remains driven by the old, industrial sectors, infrastructure and everything else. with huge amounts of overcapacity, and you think all the stimulus that has been taken

-- i can't even remember how many interest rate cuts -- there has been no signs of growth being revived in those lagging sectors. optimisticto be about the economy over all, while you can be positive that there are some signs of positivity among the consumer sectors. thank you very much indeed for the update. joining us out of hong kong. the oil markets very much in focus as well. crude oil futures gaining for a second day here at saudi arabia has cut ties with to run -- tehran. bring us up to speed about the political stories. >> it is inevitable when you have opec's number one oil producer in saudi arabia and the iran, five producer, ratcheting up tensions. and inevitably, there will be some kind of reaction in the oil market.

brent crude was up by more than today, butstill up not as much as they were. certainly, these escalating temperatures are unnerving investors out there. there are always tensions between iran and saudi arabia. saudi arabia is backing rebels against the regime of bashar al-assad, backed by the iranians and hezbollah. they are on opposite sides of the war in yemen. as the execution of this cleric and saudi arabia, the torching of the saudi embassy, and the expulsion of iranian diplomats from saudi arabia, that has ratcheted up tensions eight not or two, and that is certainly unnerving investors as far as oil goes. it's also making some people think this is going to efforts to try to get some kind of cease-fire going on in syria, for example.

that is something they have been working on. if saudi arabia and iran can't be talking to each other among their diplomats, then it will be harder to resolve the situation there. that is how things are playing out right now. so far, this has been a war of words, some very strong words , saying divineei -- rather than the iranians themselves. guy: thank you very much indeed. london is headin of global multi-asset strategy with j.p. morgan asset management. happy new year. is it a happy new year? china is down by 7%. europe looks like they will get stomped this morning. of the view just

because the calendar has ticked over, last year was a bit of a damp squid really. we did not get that santa claus rally somewhere expecting, lack of risk appetite, closing down of books because of of all time -- because of a volatile year. strength of the dollar, weakness and oil, all were headwinds. are china am a what we seeing is there were quite a few we're -- with china, what seeing is quite a few people looking for an into the routes and markets. evidenceks were seeing that we have seen perhaps the beginning of a turn in the data. things may be getting better. on the services side, we are. in ammodities mean manufacturing economy that drags on sentiment. i think we're seeing that come through in the data today. when everyone is so

bearish, is it a reason to be bullish in 2016? >> there is a very good argument for that. let's look at the facts. the u.s. is growing reasonably well. third-quarter gdp rise -- revised up towards 10%. the housing market is doing ok as well. economy,rld's largest 70% of the makeup of gdp is doing fine. a littleave back brown, 70 basis points, and history tells us that when you get that performance in the middle of an economic expansion, you should usually be looking for a little bit of a rebound the following year. , positionment week light, violation not stretch, all of it points to perhaps a better outlook for the year. >> how different is it this year than last year? still a lot of stimulus in the market. commodity prices beginning to come unstuck. in many ways, are we heading for a similar year?

the big negatives are still out there. >> let's look at the facts. the beginning of this year, starting with the fed raising rates for the first time in a decade. we are starting the year with an expectation of a strong dollar. the reality is that once we get to march, we won't know if the fed will do for rate hikes this year. if they do, it should be fully priced in the dollar at the that stage. although the market expects a strong dollar in 2016, the surprise could be the dollar beginning to give background, which would support u.s. earnings and begin to take the boat off the throat of some of these emerging economies, and that the ditch remains that 2016, although it starts in a similar vein as 2015 ended, could begin to play out much more like a midcycle market during the course of this year. >> we will talk about the fx throughout this program. john will stay with us could up

next, the odds of the unthinkable going up. 20% were between 16 big number. 15 minutes away from the open in europe. -300. good morning. ♪

>> 47 minutes past the hour. welcome back here you are watching "on the move". 20%, what are we talking about? the political outliers and the role they might play in the year ahead. we have a nice piece on bloomberg view. he stated that this 20% world will set the tone and democracies on both sides of the atlantic. who bets on horseracing will tell you that eventually one of these longshots -- which longshots? ps, thelking about trum

extremes in europe, spain, france. not the odds of these political outcomes becoming a reality is going up. john thinks they are paired the odds of the unthinkable are going up. the political story front and center on both sides of the atlantic. the head ofin global asset strategy for j.p. morgan. you have read the piece. politics has been a story over the last year. it looks like it will carry on. exit story in the u.k.? they're starting to have a real effect. >> i think they are. we are seeing it now. spain is going to the throws of postelection. could it go to a second election? who knows. we also have the exit vote.

in europe, we live in a region with an 18 member eurozone. we have an election every three months. we should be used to political of people. what is interesting now is the fact that we are saying this 20%, 25% lock of the vote going to the non-centrist party. that is something markets need to factor in. should it be a reason why we see markets fall? probably not. should it be a reason why volatility picks up? arguably, there is a reason for that. be a uncertainties will headwinds for markets, but the fundamentals remain the same. economy growing, spending, market should do well. jonathan: it is just 20%. we talk about spain and the political uncertainty. there was more uncertainty 12 months ago when people were talking about a clean win in spain. likewise in france, marine le

pen, people were talking about the possibility of her taking the presidency of france. it is just 20%. we've heard a lot of noise around political risk in europe. >> it is how markets respond. with political risk, it is there in the background. it is always there in the background. tend toity is markets not focus on it until right before the event. referendum,scottish volatility in the sterling market only picked up a couple of weeks before the vote itself, and then rapidly tailed away. it gives plenty of time for analyst and journalist to talk about the risk, but markets tend to focus on core fundamentals, earnings and growth. jonathan: today was a good case in point. sweden has shut down the border in the schengen zone with denmark. this is not happen for generations.

not well marine le pen may get in and donald trump does not get in, but they change the overall narrative that surrounds politics, ship the political weight 1 -- shift the political weight one way or the other. that is a real economic impact that could come through. people are nervous, nervous about the immigration story, impact in germany, that could be something that changes the economic dial? >> not necessarily. ultimately, what you're talking about is the freedom of movement across borders of individuals. does it affect trade flow, service flow? like the u.s. are a service-oriented economy. that's going to be unaffected by -- yes, inconvenience at certain borders in response to a heightened security situation. i would argue that that is coming via the extremist wings,

bringing it back onto the agenda. whether it should happen that way or whether a centrist politician should be alert to those things is a debate for political analyst. it is a real concern for the population in europe, and as a result it is coming on the mainstream political agenda. does it affect trade? not so much. jonathan: thank you. plenty going on in the stock markets. we have some of the stocks we need to be watching. shire is front and center. >> it is 2% lower this morning, why? slashing up to $32 billion worth. this is the share price over the past 12 months. they could be spending on a u.s. rival, baxalta, announced as soon as this week. there is a sweetened deal on

what was offered in july. now it's going to be cash and stock. a juggernautte with $20 billion of sales a year. shares in shire falling. it could managed to stave off some of the falls in the market today. we could be seeing a move higher. may be getting close to a deal in the first quarter. that being reported in the sunday french press. the tire maker, continental, keep an eye on it. the ceo speaking over the weekend saying they could lose sales on the vw scandal. ferraril about furry -- coming away from fiat-chrysler.

jonathan: one of the things you talked about last year was the high-yield story. what is the corporate story looking like at a granular level this year? fewer and fewer sectors are doing well. more and more of them are credit stressed. how do you break it down? >> look at where the credit stress is. if you look within high-yield, there is a significant stress in the resources and energy sectors. that came through in the sector performance at the equity level last year. energy and resources were the worst. emerging markets also. the reality is that when you look within the sectors, outside is takinghere m&a place, it was a big cap story. we saw a doubling of the values

up to the value of last year, but only an increase invite them by 20%. it is happening in the big cap space, farmer -- pharmaceuticals, i.t., etc. i would argue that we are well in advance at the moment of that kind of late m&a phase. risk off andar of growth. as a result, we concentrated on the stocks we knew and trusted. in 2016, if we get broader growth and a pickup, though stocks can broaden back out again. guy: thank you for your time this morning. joining us from j.p. morgan asset management. the opening looks fairly abysmal, futures pointing down. down 1.5%. not a great start. jonathan: futures lower this morning. the saudi-iran tension builds,

the data from the manufacturing side of things in china not pretty at all. the market opens 15 seconds away. ♪ we live in a pick and choose world.

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move." to "on the guy: it has been a busy start to the year. data disappointed many over the escalating tensions in the gulf. oil prices are rising as saudi arabia suffers ties with iran. this is after the execution of a prominent shiite cleric. a $32 billion deal that will be

announced as early as this week. jonathan: there is already so much pessimism into the air. minutes away from the open. i am excited to get 2016 started. let's get over to caroline hyde. caroline: i know you are chomping at the bit. the dax is playing a bit of catch-up today. toay, it is a down start 2016. risk aversion aplenty. china isring in really weighing on investor's minds. market trading halted in china today. we have seen the dax warm-up and the cac 40 warm up. is down by one percentage point.

does this mean stimulus will be put on hold? is the move to rebalance in china working? the chinese manufacturing story is painting a dismal view. and so, down go metals. iso on the mind of investors the tension between saudi arabia oil.ran, and the tohave plenty of data digest. 5/10 of 1% on the euro. shia is down more than 4%. $32 billion could be agreed to.

meanwhile, up more than 1%. we are waiting for continental to open the german stock. continental could drop. would just want to see if we are open on ferrari. currently, no prices for you yet. we will wait to see how ferrari performs. spinss as fiat chrysler off. it goes live in milan. jonathan: we are two minutes into the session of 2016. the dax is up by 1%. happening in the early part of the session. first up, a rough start for the

new year in china. stocks are halted. we will be live in shanghai next. saudi cuts ties with iran. deal. a $32 billion drug talks with m&a. guy: trade in the chinese embassy is halted under a new circuit breaker system. shanghai is getting hammered as well. chinese stocks have their worst start to the year. manufacturing data contracted for the fifth straight month. now, live from beijing. tom, i am trying to figure out this morning -- we have

reasonably bad chinese data and a drop in the market. how do these correlate? yeah, i think there are a bunch of different things going on. if you look at the balance coming out of china, it is actually pointing to stabilization. pmi was up. up fromices were historic lows in december. th story does not seem to explain what is going on in the market. i think, if you want to explain what is going on in the chinese market, you have to look at factors, in particular, six months ago one the market was really in trouble, the government introduced a six-month ban on share sales by

major investors. x months have now gone by. that ban on share sales is expected to be lifted this week. i think it is that kind of ,pecific market idiosyncrasy rather than the bigger china group story, which is really explaining why we have seen a 7% drop today. jonathan: when you look at the data from over the weekend and overnight, what is going to god th guide the pboc? what will guide policy for 2016? tom: this is a very important question. our expectation is policy for 2016 will remain in stimulus mode. we are not expecting an of theive ramping up stimulus. growth appears to be stabilizing. tother reason, you alluded

it. services are doing a little bit better. they are more job intensive. growth might not be where the government wants it to be. unemployment is still very low and that reduces the need for aggressive stimulus. jonathan: tom, relate what is happening in the economy to the stimulus we will see, to the volatility we will get. what does 2016 look like? will they get a lot of days like today? or is today one of the factors as we come into the start of the year? tom: you know, i think one of the troubling things as we head into 2016 is one of the big objectives that the central bank is pushing for is the opening of the capital accounts. much more freedom and allowing chinese funds to go offshore and offshore funds to come into china. today, do see days like

the impact is there might be a sharp rise in the chinese market. theill be confined in chinese market, as it largely is today when china has a largely controlled capital account. as china opens its capital account, we will see much broader cross capital flows. the impact of the volatility will be resonating and rippling much more widely around the globe. muchtom, thanks very indeed. beinge interesting facts brought into the mix. maybe we get this ban on selling stocks this week. towe have been listening tom, we have seen the european markets come into more pressure. the dax is down by over 3% at the moment. a fairly aggressive start to the

monday morning. day one of the new year on the european markets. let's look at the global ethics strategy at union credit. are off to markets the races. has this been an anomaly? or will this set the tone for the year? guest: i think this will depend on the evolution of a number of factors. currently, what we see today is a mixed reaction. i fully agree with you, the chinese data is not really that terrible. as well as the increase in tensions in saudi arabia, which adds a layer of complexity. really a factor that is driving risk much lower today. fundamentale picture is concerned, i don't think this will set the tone for the rest of the year. guy: just to talk about your

world, there was an obsession over what the fed would do last year. is 2016 about the pboc? is it the fx market the most important currency? what happens to the yuan? vasileios: i think we will see weakness for the rest of 2016, this will behink the major theme as far as the fx market is concerned. be aajor theme will correction of the dollar lower, which i think will be widespread and not just in two specific currencies. guy: just relating that atmodity story, let's look specific. the r.b.i. is down in australia. how do they handle this

situation? is the next move a cut or a hike? vasileios: i think we are far away from a hike. i think we are closer to a cut, as compared to a hike. as far as the fundamental development in australia is concerned, and we have seen this for quite some time, especially abor marketred th the risk is they will cut as opposed to hiking. but, i have to say a lot of that is already in place. jonathan: i want to pick up on that point that you made regarding the dollar and the correction. where would you play that? which currency path? vasileios: it is not straightforward. i take it will be mild, depreciating pressure across the board. let me be more specific. as far as the euro is concerned,

i think we will see a continuation of the recent trend. we will see a continuation of the recent appreciation. i think it will be mild. largely, the market will remain aware of the ecb's vigilance. that is unless inflation starts picking up with the euro. if that happens, the risk to the euro will go higher. in terms of the other currencies , if you look at cable, i think it is stored right now. the fundamental case for the u.k. steel remains one for cable appreciation. story about commodity prices, which means they are bottoming out with mild increases further in 2016 plays out, i definitely see further upside in commodities. pronounced, the most

is the canadian dollar. it has undergone some extreme pressure in the second half of 2015. guy: we will come back to this. we will talk about commodities in a few minutes. up next, tensions rise and so does the price of oil. saudi arabia cut ties with iran. ♪

jonathan: welcome back to "on the move." the 5100 is down by 1.8% this. .8% this morning. caroline: asian stocks traded lower. escalating middle east tensions made investors reconsider risk assets. this has been the longest weakening streak since 2009. ferrari started trading on the milan stock exchange today. shares have traded on the new york stock exchange since october. fiat chrysler distributed to shareholders is remaining shares with ferrari.

a $32 billion deal with pharma. the deal may be announced as soon as this week. back to you. jonathan: saudi arabia has cut ties with iran. this is after attacks on the embassy in iran. first, let's go to dubai. we are joined now live. backdrop sense for the of what this is and how iran will react to the saudi story. is, saudithe backdrop arabia and iran have been fighting a proxy war. they are two regional rivals. the tension runs from lebanon to the actual fighting inside syria and iraq. and of course, above all, yemen.

to theiran reacting now cut in diplomatic ties? it is unclear. the initial reaction was quite strong. the supreme leader talked about the divine hand of revenge, basically ensuring the saudi's pay for the execution of the cleric. hand seems toe suggest it is not the government that will do it. at the same time, the president of iran says he condemns the attack on the embassy just as the as he condemns execution of the cleric. he does not exactly want an escalation of tensions. that would probably play into the hands of the hard-liners in iran. there is no election coming up in six weeks. jonathan: the cynics may say, if

there is one way to get the up, this is the way of doing it. if there was any faint hope on twopart of opec for these groups to work together, they could forget about it. reporter: iran is chomping at the bit for the sanctions to be uplifted. it was not looking forward to production cuts anyway. bey think, others should making the cuts, not us. they will have an extra half a million barrels of oil a day. all, they have next to --lion there is a day barrels a day. they have been at each other's throats. proxy forly, but by

decades now. these tensions ohave always been there. guy: thank you to you both. that the chinese drop today was less correlated. vasileios: i think i agree with the analysis from your chief asian correspondent. i think we have seen a wave of risk, which is largely on the back of what is happening in the middle east. it adds an additional layer of complexity. the chinese data is missing a big -- it doesn't help the general market sentiment. thethan: i am looking at stock market.

as our colleagues have been saying, there are already two proxy wars. one in yemen and the other in syria. this was the straw that broke the camel's back. has anything really changed? no, i don't think we have seen any change in fundamentals. we stilln the whole, remain of the view that we will see normalization growth rates. the u.s. is going to be doing fairly well. i think we are going to see fairly reasonable growth continue out of the eurozone. to me, the biggest risk will be china and what happens. all along.en there that is not something that has emerged just recently. guy: hold that thought.

ionakis.o talk about gk vasileios will come back. up next, we are going full throttle. ferrari,. till. -- ferrari. how the shares are trading. ♪

jonathan: welcome back, you are watching "on the move." ferrari started trading on the milan stock exchange. from berlin. girardi finally separates from fiat chrysler -- ferrari finally separates from fiat chrysler. its talk about why this is happening. >> the main reason is flexibility. when for our eight was part of of fee ferrari was part at chrysler, it did not create the value for the company that he has created on his own. since the announcement of the spinoff, the two companies have a market capital of 18 billion euros-19 billion euros. rigorously, it was half that level. s, hee previous yerae he

has created some capital. these are the main reasons. flexibility and now ihis family controls flexibility for the group. jonathan: more like a luxury company. there has been some success there, at least as far as the ipo is concerned. what does this mean for the f1 team as well? >> it will be interesting to see how ferrari develops from here. they sell about 7000 cars a year. they might increase to 9000 cars. they are a luxury company, but they still have to produce cars and cars have a different margin level than a handbag and a different level of investment that goes into creating a luxury

car. there are only so many cars ferrari can sell. how much they can get out of the name remains to be seen. there is a ferrari world in of th abudabi. age. is very key to the im they have to keep the formula one brand competitive. at the same time, they have to serve the formula one fans. that means articles like t-shirts, based all caps, that stuff that does not go hand in hand with luxury items. it is a bit of uncharted territory. it will be interesting to watch the development from here. jonathan: we are looking forward to seeing your coverage on that. look at we're going to

what might be in a store for the fx markets. we will look at what this means for 2016. ♪

good morning and welcome back to "on the move." 3.65%. down by 130 vote -- points. the shanghai composite is down by almost 7%. the manufacturing data, not pretty. the services data, ok. and you have the extra layer with the saudi arabia tension as well.

euro-dollar, euro buying the dollar and nine cents. some of the moves. let's get into the stock movers with caroline hyde. year, butit is a new the same old story. china goes down and it rings down commodities. concerns about manufacturing data. orst performer on the stoxx 600. the stoxx 600 is having its worst day and a month. theworst of those feeling hit in terms of commodities demand from china. this is a tire maker up by more than 4%. the chief executive has been speaking to the german press. says that it will likely have

a hit on their sales because of the vw scandal. randgold is one of them. why? because of the haven trade. money going into the haven that is gold. it is the best performer on the stock 600. jonathan: i just wanted to bring up some of the pmi data we are getting this morning. spanish december manufacturing pmi coming in at 53. the forecast at 53.6. let's not get overly concerned about this. anything to see their? anything to worry about? >> i do not think so. misses are neither here nor there. 50 is the breakeven level. guy: how do you see the euro

trade working here? are we bottoming the trade right now? what does draghi have to do to keep it down? all, i thinkrst of we're definitely seeing the bottom. this is a continuation of mild appreciating pressures going 2016. the market will remain aware of draghi and the ecb in general. other than that, and i go back to a previous point, i do not goinge that the ecb are to fine-tune the currency that much or believes it can fine tune the currency. they want to make sure they do not see sharp appreciation, as long as inflation does not peak up from

here. tother they prefer 1.08 1.12, i do not think there is a lot of sense and that. largelycome into 2016 on the diverging monetary policy. for a lot of people, the defining issue in 2015 is the central banks. , it was a messon back in december after that ecb meeting. what do you think is going to happen in 2016? the central bank is going to be another thing to look out for. i think 2016 will be a very crucial year for central banks. from a big picture perspective, what is going to happen is that central banks in general have been quite confused as to what is keeping inflation very low af

ter having run that loose monetary policies for years. it is a structural change in the underlying fundamentals of the demand. that is emanating from the lower energy prices. if you believe the space effects from energy prices are going to wash out or even becoming inflation, then this is the year that central banks are going to get far more clarity as to whether we are talking about structural changes or we are talking about the previous supply chokes. i think it will be very crucial year for central banking. guy: we have oil, we have central banking, give us your surprise traits for 2016. pictures: from a big perspective on commodity effects, the central banks are

not there anymore. aussieecifically, the and kiwi are no longer overvalued. they have been massively overvalued. i focus on the exchange rate. as far is the loony is concerned, i think trading at where it is now at 1.39. i think it is just crazy. unless you believe that oil goes to 20. as long as oil stays where it is or it gravitates higher, the trend will be for the loony to go lower. this is another case in point. ofave always been quite fond the norwegian economy. i like the policy of the central bank. i think it is one of the most transparent and most forward-looking central bank policies that we have.

saying is i am dependent on a reasonable outlook or prices. if you told me that oil is going to be at 20 by the end of january, absolutely. in that respect, i am optimistic. guy: great stuff. it has been fantastic to have you along for the ride. what a day one it is turning out to be. other stories we need to focus on, repairing for an influx -- peter is in copenhagen. what is at stake here. are they concerned about the things we have been doing? peter: good morning. there is a great many topics in play here. just the fundamentals of having

to show your passport of when you enter sweden. denmark has not had to show their passport when going throughout the nordic countries since the 1950's whereas the rest of europe has been getting accustomed it to having to carry their passport. mainly, this is a -- about the economy. the cost of taking and refugees. it is about the cost to the copenhagen instead of the sweden region. copenhagen is by far the most prosperous part of denmark and it has been for the better part of the past decade through the financial crisis. jonathan: the world is paying attention to what is happening in nordic countries. asland is in this situation well. what is next on how this will develop in 2016?

it remains to be seen. i what to see what this entails in terms of refugees. took 163,000 asylum-seekers in 2015. denmark estimated an influx of around 25,000. or shoulderingt the cost of taking in asylum-seekers. i spoke to police this morning. so far, there is no response to these border patrols being enforced. refugees being rejected at the swedish borders. what the swedes are checking for is whether immigrants carry or people coming into sweden are

carrying legal documents. or else they will be sent back. the vast majority of people going out of sweden over the last couple of months. people that the are afraid of coming back and applying for asylum in denmark. we do not know where that is coming. if it pans out in the worst possible scenario for the danes, the danes will impose border patrols on the borders with germany in attempt to pass the buck to angela merkel and the germans. thanks very much for updating us on this story. peter joining us out of copenhagen. up next, a $32 billion drug deal. we are going to talk to a former

m&a agent.

jonathan: good morning, this is "on the move." good morning to the city of london. the dax is down 3.26%. an extra layer of complexity with the building tension between saudi and iran.

that is pushing markets lower. you would expect brent crude to be pushing lower. dead flat. then rolling over. we will talk about that later in the program. now we cross over to caroline hyde. caroline: billionaire elon musk's tesla motors shipped 50,000 vehicles last year, delivering 55,580. utility vehicles change their guidance as they grapple over one automobile. suvs in the 208 third quarter. for ari started trip --ferrari started trading on the milan stock exchange today. 80% stake inan ferrari.

drugmaker shire is in advanced for $32 buy baxalta billion in cash and stocks. the deal may be announced as soon as this week. thank you very much indeed. let's talk about the drug story. let's talk about what is happening with shire and baxalta . to a price nowup where it makes sense? >> yes. our model suggests that pushing up near the top end of the range, it will be difficult for of itto get much more out over the next few years. it depends how much cash they can get out of it, how much synergy i can get out of it. i have well over 10,000 employees.

there is a lot of opportunity there. day, it looksthe like we are getting to a point where shire will find it difficult to get an enps lift out of it. how big of a deal is this for global pharma? sam: this is a big deal. they made their first approach at about $29.4 billion. thatmight have changed is the number is bigger now. not a huge amount. a little bigger. there is a possibility of a cash element which may be more tax efficient. that is for the lawyers to work out. we live in a different world. we had the chinese stock market halt. people are holding back shares.

how does this fit into the broader picture. is busy doing deals. have we got all of the deals we are going to get? sam: we are still waiting for pfizer to close their deal. deals fores two big pharma. year, theest of the expectation is for smaller deals, $8 billion deals. you'll see more activity in pharma. i do not see the opportunity for bigger deals. nobody talks about them. anyone.n't see

might need toat do something if they could is ad vi. they still have a huge product that has some risk associated with it. guy: there will be plenty to keep you busy throughout 2016. thank you very much indeed. we are live in berlin as german pmi breaks. we had initial ratings out from some other countries. spanish data, a little softer. that is what it looks like this morning. range like hell yesterday. the markets down by 122%.

jonathan: good morning and welcome back to "on the move." into the trading session, we opened sharply lower. twostoxx 600 is down by full percentage points. the shanghai composite is down almost 7% overnight. big move by the shanghai. .6% despite the rising tension between saudi arabia and iran. data youome of the

should be watching throughout the week ahead. you get eurozone inflation numbers. you have the minutes from that crucial december meeting where they hiked rates for the first time since 2006. to come back to you very quickly. the story in the commodity market, brent crude popping higher off of the saudi tension. it is easy to cherry pick your narrative during the story is really a resilient story. even with the tension, we go lower. guy: every guest has said that the real surprise is that britain has not bought more. china is down. the real surprise is that has not happened. , you take the three-day chart and it has climbed a little bit. brent picking up.

it is being pulled in a number of different directions. do you worry about the supply side or the demand side? happening between region.sion in the gulf pmi data. we have already had numbers out of spain. the french numbers are a little bit softer as well. what do we make of it all? >> the french number came in a little bit lower than the preliminary reading. they came in at 51.4. previously, it was at 51.6. we are waiting for that german number. previously, it was at 53 flat. the strength of german manufacturing is still there. later, we will get the entire

eurozone number. in germany, when you look at protection in 2016, what has not been factored in is the effect of refugee spending. the latest numbers, they are going to spend 21 billion euros on refugees. that is housing and accommodations. you look at some of the multipliers out there. the four, they were estimating 7 billion. 20,hat number does get to you will see a much more robust german economy. refugee spending counts as fiscal stimulus. we will get the final readings of the pmi numbers in a few minutes. guy: let's bring in richard jones from "bloomberg first word." you have the china story, you have the brent story. tensions in the gulf.

bring it all together for me. this is day one of 2016 for the markets. can we extrapolate? richard: the danger is to extrapolate too much. you look at that chart there, that bounceback after geopolitical risk was very shallow. i was quite surprised by that. it tells us a story that the heaviness of the crude price is something that will linger. it is real. notwithstanding any geopolitical risks, there is that out there. 53.2, that is a 0.2% increase from the preliminary readings. the final reading from germany goes up. the final reading for france goes down. we will get the final aggregate reading. guy: thanks very much indeed. what do you make of it all? you have a start to the year

that has china getting crushed, germany is down pretty hard. we are coming in repeating some of the stories that we saw on the back end of last year. if feels like a very aggressive day one. jonathan: you wonder how many people are actually at work. the question is, what changed? what has actually changed? the pmi side, services are still good. the iran-saudi tension is not new. there are two proxy wars. thisbrent crude lower morning. guy: will that be the consistency this year or does it stay down? richard: it will take a long time for that dynamic to shift. it will be one of the themes for a long time. guy: we will wrap it up there. you are going to be up a little bit later.

looking forward to that conversation coming up. stay with bloomberg television because "the pulse" is up next. you can follow jon and i. good morning, everybody. ♪

>> europeans stock fall. treasuries drop. diplomats after the embassy in iran. trades in milan for the first time today. welcome to "the pulse". i am friends rain look up. we are getting breaking