>> welcome to "on the move." 7:30 in london. i am guy johnson. i am in london. jonathan ferro is in new york. if you are looking for a confidence boost, you might find it in these headlines. north korea says it has successfully tested a hydrogen bomb. world leaders condemned the move. confidence crumbles. the chinese yuan falls to a five-year low. and driving forward as volkswagen unveils its new green concept call -- car.

york and onceew again, a series of negative headlines. is point around north korea that they say they have successfully tested a hydrogen bomb. with north korea, it is very hard to vera why the facts. -- to verify the facts. guy: it reduces the size and increases the yield of the device. as a result, maybe one step further forward to them being ale to put a device on missile and hit targets around the region. another reason for global instability and regional instability. which is more significant this morning, another geopolitical event or another market event? the chinese once again letting their currencies slide a little bit further. in august, that huge move. it just looks like a blip now. risk,an: north korea tail

nuclear. weaker fix.n, a we talked about manufacturing numbers. theas been offset by services data. that is going to be a concern for a lot of people if that is not a one-off. guy: we will talk about that later. mohamed el-erian lays out some of the risk. investors are going to have to deal with this. this financial repression is coming to an end. markets looking a little softer here in europe. let's get the first news with caroline hyde. caroline: north korea says it has conducted its fourth nuclear test. it says it that needed a hydrogen device in the far northeast. the explosion was first detected after a magnitude 5.1 earthquake

. it is a step back for u.s. and chinese assets to convince leader kim jong-un to restart disarmament talks. the chinese yuan has sunk to a five-year low after the central bank lowered its reference rate for the second week in a row. stocks in hong kong fell to the lowest in 2.5 years. staying with china and a private services data has slumped to the second lowest level since it began a decade ago. the economics pmi survey fell to a 17-month low. from 51.2 a month earlier. chinese market rallying today. it looks like chinese -- european equities are going to open a little softer in about 27 minutes. this is what we're looking at at the moment. the fair value calculation gives you a heads-up on what we think

the market is going to look like at the open. nothink down about 2% -- 2%, .2%. let me get my decimal points in the right place. what is interesting is once again, the dax looks like it is going to be softer than most. down by .4 rather than .2. this is how the headlines are playing out in the fx markets. a weaker fix for the pboc. that is a concern for a lot people outside of china. a lot of people are going to trade off the back of that in today's session. a big move for that currency pair. won.r-won, weaker my producer puts cable because he wants to remind me how poor i am in new york. what am i doing here, guy? guy: interesting.

i think that could genuinely be the reason for putting it in there. we will see data from john lewis, which will be interesting . it will probably give us one of the best indicators as to how the retail story is developing. it will be interesting to see the two sides of how the brick-and-mortar-internet story have developed throughout christmas. maybe there will be some shopping on this side of the atlantic. none for you, though. jonathan: in all seriousness, though, north korea says it has conducted its fourth nuclear test, detonating a hydrogen device. the move marks a setback in the u.s. and chinese efforts to convince kim jong-un to restart disarmament talks. let's go to peter. is there any doubt about the test and whether it was a hydrogen bomb? scientistsnuclear

that we talked to today are questioning the veracity of the claim, mainly because a hydrogen bomb explosion would create significantly more magnitude than what they registered today, 5.1%. as they would point out, it mbs toseveral atomic trigger a hydrogen bomb. that would have a significant magnitude. what registered today was not they would expect from a hydrogen bomb. for the next two days, i think there will be some digging through the data and seeing whether the claims are true. explosion.n there was a nuclear test and obviously that is going to, as we are seeing today, significant tensions are rising. good news,

particularly in the peninsula here. guy: let's talk about how the authorities are reacting. what happens to with markets and monetary policy, i am curious. do you think we are going to see any kind of impact into the south korean economy? do you think, as a result, we might have some kind of monetary reaction? i know the central bank had a meeting a little earlier. peter: yes, i think you are right. i think it is a knee-jerk reaction. what we saw today was the finance ministry, the bank of korea, had an emergency meeting. it almost seemed routine rather than a sense of panic. they were calm and assured and came out and said, look, we have seen this before. yes, the currency is hurt for a

few days, but it gets back to normal. more is thatesting they are more worried about china and what happened in china today than the nuclear test. sensibilityou the of what is going on in north korea. the sense is that economic activity will be more impacted by what is going on elsewhere rather than north korea. they are more worried about exports to china and those factors plus domestic spending. we talked to some folks on the street today and they said they are not worried. they said this has happened so many times before that it is getting old and they are more worried about what is going on globally and the slowdown happening elsewhere. guy: great to get your take. thank you very much indeed for your reporting. u.n. gap has widened

lowered its rate. -- itld shift a major could signal a major shift in thinking from the pboc. walk us through why this move is significant. say?: what can i this is the great wall of china. the pboc works in mysterious ways. on a serious note, it is strange that they have chosen to do this today. slumped,, the stocks creating a bit of concern in the markets. yesterday, reportedly buying market fears.ming they decided to upset markets again with this move the move today, the weakening and the fixing, was not a huge move. they weakened it by .22%.

we have seen them do .1%. what really matters is the principle of the thing. on august 11, when china devalued the currency, they said they would take the previous closing price into account. we have seen today's fixing, about .17% of yesterday's closing level. people are speculating that this ofgoing back to the days fixing and how much trust they can have in the pboc policies going forward. that is really the issue here. they are not doing what they said they would do and the hope for transparency is not really coming through. the reaction function is key for the markets as we work our way forward. thank you very much indeed. let's get more from our guest now.

walk us through your views on what the chinese are doing, how they are handling the start of the year. we see the stock market under pressure. the currency looks like it is moving in an unpredictable fashion. guest: we are witnessing a continuation of what is taking place in the late part of 2015, which is that the chinese economy is slowing. it is rebalancing. what is taking place in the background is a bumpy landing in the chinese economy. that implies they need a much easier monetary policy. as long as the currency is egged, it is not the pboc making monetary policy in china. it is the fed. , the other to that dangerous element is this widening of the basis. the cnh-cny spread, which suggests a good deal of outflow

pressure and a loosening of monetary conditions inside china. there is money leaving the country or at least leaving the domestic financial system in into dollar deposits, whether onshore or offshore. jonathan: this has been a slow, managed depreciation. synnex -- cynics will look at this move and say the pboc has continued on doing whatever they want to do. look at the big picture. is that really what has happened? arnab: i think there is a justification for the cynicism. far be it for me to come across as a cynic myself. the sdr rules are more about the exchange ability of the currency. a more marketable exchange rate is the direction we are heading.

obviously, the transition is going to be a bumpy landing in the chinese economy. this financial transition is bumpy. the piece of the puzzle that is most risk sentiment gauged is the cny-cnh basis. that suggests it is a problem of outflows from china. should entail is the absence of multiple exchange rates. you should have a single, unified exchange rate, not different exchange rates that allow for different kinds of arbitrage. arnab is going to be staying with us over the next hour. up ahead, we will hear from mohamed el-erian as well. why he thinks the asian volatility is repressed by central banks. ♪

jonathan: good morning to the

city of london. inminutes away from the open europe. futures marginally lower, down by 10 points. plenty of headlines out there. let's go to caroline hyde. : the head of vw brand has apologized to the american people or the emissions scandal. he was speaking at the consumer electronics show in las vegas. >> the current issues with the engines are nothing to be proud of. we disappointed our customers and the american people, for which i am truly sorry and for which i apologize. caroline: apple suppliers have fallen after nikkei a review reported the company would reduce their first-quarter output of iphones by about 30%. the smartphones, which debuted in september, have piled up at retailers in china and europe. matheson, whod --

helped build credit squeeze into an electronic trading powerhouse, plans to leave the bank at the end of the month. he recently served as head of u.s. equity trading. that is your boom -- your bloomberg business flash. bankis the era of central and eventually coming to an end? mohamed el-erian, here is what he said. "much will depend on how policymakers in the private sector respond in the coming months. regardless, investors need to be a lot more nimble because they would be navigating an increasingly volatile market. the age of financial volatility repressed by central banks is ending." that has stretched far beyond what anyone imagine during the financial crisis. iew on this.nab's v

the financial repression has been a part of our lives over the last decade. is it coming to an end? other central banks still pushing and pumping as hard as they can. arnab: that is the key issue. there is a good deal of the - ofmins -- no divergence - divergence. i think he has a good point that the major player in the repression of financial volatility is moving in the other direction. we are seeing a lot of the consequences of that with the pboc and cny-cnh. i think we will continue to see these bursts of volatility throughout emerging markets and asia. asia is the epicenter of this problem. much of the asian currency complex has adjusted against the dollar. the main one, the chinese one, has not. we will see more volatility, but

i am not convinced that the iming isbank pump pr over. it needs to continue in europe. it is note u.k., obvious that the bank of england is ready to go off to the races. in much of the emerging markets, we still need further easing. agethan: to his point, the of the central bank intervention is not over. hsbc would call it q.e. extortion. are we getting to the point where the central banks cannot deliver what the markets want like they did before? arnab: i think we are in for some more tightening. i think that there is an element of this kind of q.e. fatigue or exhaustion taking place. it is not clear to me that we have reached the outer limits of monetary policy. i think more could be done if necessary.

i think there are a variety of different things going on in different parts of the world. one is that the u.s. economy is recovering. credit is recovering. it is transitioning to more of a normal recovery. the rest of the world, the diversions is very clear -- the divergence is very clear. emerging markets are still going to a multi-phased adjustment that has a lot further to run. the key is still going to be this divergence and that is the source of the volatility rather than whether central banks are turning off the spigot everywhere. guy: it is about bang for your buck. central bank policy is unable to deliver what it says, then what does that mean for asset classes? what does that mean for correlations? what does that mean for the investment thesis on which so many portfolios are based right now? arnab: we are in this transition and the correlations and trends

are changing. that is the mechanism by which this volatility is coming into the market and that will continue. on the question of whether the q.e. has done what it says, that is the more complicated question. if we had not had this kind of monetary policy response, how different would things have been or how much worse? we would have almost certainly been in another great depression. it would have taken down much of the world in the wake of the global financial crisis because of the greater interconnectedness and speed with which markets move and impact the economy. has served an important purpose. that we are reaching the limits of it is true to a certain extent in the u.s. it has largely done what it was supposed to have done. what has not happened in europe and emerging markets, much of

the world, is a restructuring and reduction of the overhang of debt. there has been more of that in the u.s. that is why the u.s. economy is doing better in many respects than most of the rest of the world. guy: thanks very much for your thoughts. he is going to stay with us. we are seven minutes away from the market open. let's get to caroline hyde with some stocks to watch. caroline: some tech stocks that i want to keep an eye on. , at theemiconductor moment, in terms of its share price. they could fall. why? because apple is so important to them. this is a chart i want to show you. this is a fantastic function of the bloomberg terminal. it is supply chain analysis. i am sorry. it is tiny. see thatom in, you can apple, 78% revenue for dialogue semiconductor. that is a german chip company and they are likely to see the pain coming from those reports

from the nikkei overnight saying rain incould see arm its -- rein in its output. keep a close eye on any company that gets revenue from apple in europe today. we have already seen the asian companies fall on the back of that speculation. aalso want to keep an eye on belgian chemical company. some m&a rumors surrounding that company, plans to sell one of its divisions. todman sachs being hired find a buyer. italians --k with allianz. at last, pimco has ended the 31-much losing streak. this is their share price over the past 12 months. owner of pimco.

end of the net redemptions as clients start to reinvest capital gains and dividends. pimcoz is one to watch as finally turned it around. guy: looks like we are going to see a negative open in europe. once again, the german markets under more pressure than most. hammered since the start of the year. suspect part and parcel of this story is individual stocks, but china, the reader into europe has been direct. jonathan: when we see bad data out of china, it is the dax they get punished. we have seen it on the ftse as well. we have two pieces of negative data. korea,e tail risk, north and the other is what happens with china this year? you have the data on one side and the currency on the other. difficult to navigate and

difficult to understand. the volatility is something that will be staying with us through the rest of the year. we are four minutes away from the market open in europe. the market open coming through very shortly. looks like it is going to be a negative one. ♪

good morning and welcome to "on the move." we are just moments with the start of the european trading session. guy: we're going nuclear, north korea says it is successfully tested a hydrogen bomb. world leaders have condemned the move of. confidence crumbles, china's markets fall to a four-year low. stocks go to their lowest level in a decade. driving forward, volkswagen unveils its new green concept car.

the head of the brand speak to bloomberg about the emissions scandal. jonathan: 50 seconds with the open, a lot of action on the fx market. futures in the red, futures down by around 10 points this morning. heady cocktail of concern. that a michael keaton is calling it today. -- heaton is calling it today. we are not seeing some of the bigger moves we're expecting. once again, china is front and center. back again today, once again. services lower than of course we are concerned about the yuan being devalued once again. where is policy actually going when it comes to china? seeing that currently being caps off. again, that cocktail of concern also coming from asia and north

korea. , that is hydrogen bomb adding to geopolitical tension. as if we didn't have enough already with the middle east. is down about 10%. it any none state as well. of course, the all-important minute from the federal reserve. meanwhile, you are seeing at risk aversion playing into matters today. and oil a little story about that. trading lower because we expect u.s. entry numbers -- stockpiles expecting to be on the increase. meanwhile, money moving into the havens. we're the u.s. borrowing costs coming down. we have money going into germany as well, clearly the havens are back in vogue.

indeed, the testing of bombs and north korea. let's have another look at some of the stocks on the move. i want to focus and him at the apple store is going to be doing. ams,out for arm holdings, because these supply to apple. the latest iphone will be hitting supplies. it could be selling one of its units, that is reported in local press. quarter of aut a percent fighting the lower feelings in the market this morning. -- allianzelian's also bucking the trend. o ended its losing streak. finally in december we of net money in. more than $1.3 billion flow in. : we are seeing the north korea -- south korean defense ministry briefing.

you're looking live at the briefing taking place. we will bring headlines as we get them. the market reaction is very clear. let's go to the latest now from heidi in hong kong. certainly there was no shortage of headlines in terms of what was moving in the markets here in the asian session. we had all of this stuff out of china, the pmi falling. and offshoree yuan diverging. we saw this being very exposed to china. that is one of the losers in the session. chinese markets themselves in the last half hour so that wrap up again. china up by 2.2%.

something of a relief rally. the biggest winners interestingly with the steelmakers in the coal miners. somethought the will be assistance for the sector that is facing such a severe overcapacity issues. as a result, about a half a dozen of those were trading limits up today. we also have the announcement from the securities regulator essentially confirming will be already now. those major shareholders was meant to expire on friday, that will not be extended. things have restored some calm when it comes to chinese markets. there was some clear winners. these are difference makers, they tend to surge quite a bit as you can see. 30% for one of these names when it comes to any rumor of a nuclear test over in the north. we saw these names doing quite

nicely. overall, run the region, -- around the region, there is a hedging of assets. europe, fourr in minutes in, underperformance on the ftse 100 once again led by the miners. coming up, in the next 60 minutes, going nuclear. north korea says it successfully tested its first hydrogen bomb. we live in seoul. we will bring you the details and later, the fed in focus. we get the minutes met december meeting. we would give you a preview. ♪ >> just had a briefing in south korea. what if we learned peter? peter: just now the defense

ministry had a press conference basically confirming what north claimed. they had the fourth nuclear test. they did not say whether it was a hydrogen bomb test although that is what north korea is claiming. we talked to nuclear scientists today, all of them have questioned whether it was a hydrogen bomb. nevertheless, any kind of nuclear test is going to escalate tensions here. obviously, that will cause a lot geopolitically. as we saw today, almost every country has condemned it. even china has come down quickly against it. peter, a clear market reaction. you see a weaker south korean yuan. korea opened itself up to visitation list spin. give me the on the ground fax.

is the big concern about what is happening north of the border? is this just carry on as usual? unfortunately, it is carry on as usual. this has happened so many times that the people here seem to be taking it in stride. a clerk in a cosmetic store. she said she is not worried. the news is getting old, see shed -- a said. it is almost routine now. even the market reaction was a bit muted in a way. even though the currency went kend.and weekend -- wea the expectations that the impact will be short-lived. things will be back to normal. the biggest worry here is actually china and the slowdown there. an interesting reaction here.

jonathan: appreciate your insight this morning. mentioning china, and the weekend market over there. the onshore/offshore gap has widened to the weakest level since april of 2011. the move could signal a major shift in the digging of the pboc. i guess out to robin, the first question why they done this? is there a much bigger picture do what is happening in china the moment, and for the use ahead? -- years ahead? robin: the question why is difficult to answer. they have built up confidence, some people were looking at the and were being able to predict what the fixing would be the following day. this is after the pboc said it would use the previous day's closing level as one of the factors in setting the next

day's reference rate. however, what they did today was very surprising. they caught the market and the off guard. they set the fixing way off yesterday's close. this is kind of back to a situational people are left guessing. the transparency is in question and the pboc policy and the confident in their statement is shaken. the problem with this is that it builds up depreciation pressure on the yuan. moret will make it difficult to relax capital controls. kind ofave this depreciation pressure in your capital controls to throw the market wide open. ws how much money would flow out of china. this is the application -- they are pretty massive. we believe are there, thank

you very much indeed. i want to draw your attention to what is happening in the market this morning. large leg lower, but it is interesting. 2004e down a little bit at lows as you continue to see what some would describe as a counter intuitive in the oil market. maybe this is partly down also due to the china story in the demand story you could see generated from that country as it continues to slow. is it the later of the to you think it's factoring into the market this morning? >> there are three big things going on, weak demand, a continued oversupply contrary to the tensions in the middle east. the is an overhang and immature

space, a supply overhang. the third is we're still in our fed tightening environment. i think the other day we saw signals from saudi arabia that they are trying to hunker down for an extended. of lower oil prices. budget and reforms, fiscal tightening structure. we will see how much of that they can deliver. that says theyl expect the price of oil to stay week for some time to come. jonathan: let's talk, we have brent and -- add a 2004 low. we went into 2016 and people are talking about the reflation trade, is the market in that sense -- will be wrong all over again? >> i think it is clear there are these deflationary pressures emanating from asia and from china and particular. indeed, flowing to the oil market. the strong dollar environment is

adding to that. maybe one of the reasons the fed and it up being somewhat more constrained than it signals at the moment. context, this divergence we have been talking about, it still seems likely to continue and maybe even go further. i think that will be a of the source of the volatility and the discussion in the markets right now and in the months to come. jonathan: how is this going to work with the fed? most anticipated will have to signal at some point. we'll would be doing more than the market anticipated, how will this work? we will see fed minute a little bit later on. how does that suck to manifest itself? nab: we have been in this position for a while. that is what the fulcrum is going to be. credit growth, and consumption -- are these really going to be strong enough to allow the fed to tighten as many as four

times. or will the strength of the dollar and the risk aversion's constraint all about? that is the debate going on in the markets. the data will be the main guide. but it would say is that a obviouslylar is negative for the manufacturing sector and the industrial sector and the export sector. but those are not big sectors. what matters is consumption, and would drive the u.s. is consumption and credit. this is a relatively early part of the cycle in the u.s. long, drawnout cycle because of the crisis. if indeed income and credit is and unemployment is falling even if employment isn't rising fully, then the fed may have likes to stand on and to go ahead with this debate. guy: we believe that by there and come back.

who have that joining us now to the rest of the program. ♪

jonathan: good morning from new york. brent crude down by 2.2%. that is one of the big market

moves this morning. let's cross over to caroline hyde right now. caroline: pimco's total return fund has snapped a 31 streak of redemption. in reinvesting capital gains. $200 billion have been pulled out of the fund isn't able 2013. was ousted in september, 2014. north korea says it has conducted its fourth nuclear test. the regime said it detonated a hydrogen device in an underground test site. the explosion was the first -- setback a earthquake. it was a setback to convince north korea to restart summit talks. the central bank lowered its reference rate for the seventh day in a row. meanwhile, stocks in hong kong

fell to the lowest in years. jonathan: thank you very much. yen, the dollar took zero gain back. at the emerging markets this year, the strain and stresses, the concern still seems to be very much there in the way that it was back last you. will 2016 develop any kind of trigger back into the numbers? arnab: we think it was a general process playing at with specific stories in specific countries. what has progressed significantly many countries is the external adjustment that is been led by much weaker currencies. in the case of turkey stands out as being a bit of an issue. although they held the line on fiscal policy despite all the elections last year, and even though the current account has

started digesting like many other emerging markets, the bad news is that inflation expectations remains very high. that is largely because fiscal policy, even though it is overall not terrible, it is doing a lot to contribute to growth and inflation pressures. the central bank is being constrained in restraining those pressures. what isthat explains going on and what is going on in the domestic interest rate market. you see a lot of steep curbs across em, including into turkey. maybe more attractive in turkey where the em's environment is more appropriate to the underlying circumstances. jonathan: acronyms really is unhealthy investor approach to watch the emerging markets. if you look of the move in the brent market and the commodity market, some people said that is just a blanket bad.

it is a bailout for the likes of india. it is great for china as well. will this be the year that he will finally begin to differentiate between what is happening in india and what is happening in brazil? arnab: i think the markets have been differentiating. it is not clear that it flowed throughout the performance across all of the funds. been quite a wide divergence in the financial performance and even to some degree the economic performance of the countries that are net importers of energy in particular and commodities in general. are exporters. that divergence in performance has been exacerbated quite a lot by policy responses. india, youe case of mentioned india is doing relatively well because it has benefited that the price of oil has collapsed so much. it is also done the right things in policy and is trying to do reforms to make reform happen.

it is moving in the right direction for study of the side have brazil, you where all of the wrong things are happening in a political sense. the wronggue that things have been happening on the policy front even before the political crisis. running to loosen the fiscal policy, not doing enough on the structural front. now since 2015 really being hammered very hard by the commodity price bubble. a lot of divergence there. in the middle, you have russia hit by sanctions because of all the geopolitics. but struggling, and probably delivering quite a lot on the fiscal side to keep things under control. so therefore they're performing relatively well as it seeks to pay down a lot of the corporate external debt. i would argue there is a lot of divergence in em, that is coming through in economic and financial performances. even if it isn't reflected in all of the funds.

some of the sucked into positions given by qe in other factors. a great pleasure having you long for the ride, thank you for the much for your time. next, talking grexit. david cameron has to germany to meet with angela merkel again as he negotiates uk's membership in the eu. what will he be talking about today? ♪

jonathan: welcome back to "on the move." to a 2004 low for brent. we need to talk politics now is the keep -- u.k. prime minister's job into bavaria to talk brexit with angela merkel. he told lawmakers and government ministers would be allowed to choose which side to campaign for the european referendum. >> there will be a clear government position. be open to individual ministers to take it personal position while remaining part of the government. jonathan: let's head to hans nichols who is in berlin. cameron goes across to merkel, the mp vote whichever way they want. he is been very careful to say

which side he will be actually campaigning for before the negotiations with europe have concluded. ans: this is in some ways merkel keeping her coalition together and him keeping his cabinet together. merkel somewhat puzzled by this decision to let cabinet members vote. in some ways they are irritated by. what is clear is that cameron is on the hunt for allies outside of his cabinet. i hope he has his passport all in order. he is the first british prime minister to go to austria in some 30 years. he still needs renegotiate that core point of when newcomers to the u.k. can actually receive benefits. jonathan: the migration story front and center as mop.

that will obviously play into that story. next week will talk tech as the consumer show picks up. tech stocks had a rough start to 2016. how should you invest in tech? we talked that next. ♪ we live in a pick and choose world.

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jonathan: good morning, welcome back. , brent crudearket 3567, 8 june 2000 four low. 30 minutes into the equity trading session bring up the market scores. the new weakness for equities, miners0 -- it is the leading me losses -- leading the losses. bring up the of the board, we yuanat the fx market, the weaker.

a weaker korean yuan this morning as north korea says they have successfully done another test. that is a sort will talk about later. brent crude down by 2% this morning. lots of stock movers out there. lots of china proxies on the move. caroline: let's look at one of those proxies, miners the worst performing groups. i'm picking up just one of them, down by more than 4%. you just outlining the exact reasons. and services data coming out of china. once again china goes lower. the risky concern about the growth to the world's second-biggest economy. miners feeling the pain as copper and metals fall as well. the applenside, effect. the speculation that apple might bring back production of it iphone 6. that being reported yesterday by the nikkei agency is having its

affect on supplies. semiconductor, one of the worst affected down by 6%. it is the worst performer on the stoxx 600 today. clear that the supplier is having problems. i want to focus and a one of the bright spots. the leader of the pack, it is a payments company in germany. climbing up some 3%. this is the back of morgan stanley raising the price target to 55 euros. you for a much. luxury stocks on the move as well. the aussie dollar is under able to as all being tie back into the china story and what we see at a beijing. having this massive ripple effect once again across global asset classes.

let's check in now with a microblogging service -- twitter, may not be so micro in the future. the company is preparing to raise its character limit from the current 142 as much as 10,000. ceo jack dorsey confirmed twitter is looking at new ways to display text. a lot of you want to get around this by posting a picture with the text on it. there may be some appetite for it. he said the company has been looking at new markets. the tieups in sports along with developing virtual-reality capabilities are a top priority for the maker. >> we can do replay on our system at home. using a microsoft surface, we can relive the top highlights of almost any prospective. you can see he is choosing where he wants to go.

what perspective he wants to see it from. what you are seeing is the power to redefine what it means to watch and experience sports. intel's view kicking off tech stocks very much in focus. fangsan: shares of the stocks fell of the first trading day of 2016. it has been an an start for netflix, the s&p's best performer last year. the others facebook and amazon, etc.. but the outlook for tech stocks 2016, oliver harrington joins us now. oliver: good morning. is not sure if there anything actionable from we've seen so far. what is interesting to the lack of focus going back around tablets, smartphones, people seem to have moved on from them. now they are much focusing on autos, the economist car, entertainment -- the autonomous

car, and entertainment. when you look at what happens next, is tech going to in-- it ought to do well 2015. you had to be in those key stocks like facebook and amazon. if you weren't your facebook didn't do well, will 2016 be similar? oliver: it is difficult to tell. if he didn't on those stocks probably underperform the index. obviously the start of this using people selling out because in the case of netflix and amazon, valuation is for a much an issue. less so perhaps google and alphabet. it is hard to see a these continue. if we do see a rotation from growth into value, which is one of the key things people are concerned about, that some of these stocks will be really hurt will stop. of the bigne

headlines has been general motors. investing $500 million. seeou look at this, will we much more, the traditional hardware companies that are 50-100 years old trying to get in on the action? think they have to. if you stand still, you are dead. we've seen that in ibm, it hasn't really slow to adapt to changes within its industry in terms of cloud. you are seeing that, they realized the future is likely to be dominated by google and apple. they cannot stand still. they are having to adapt to this new environment. it is interesting that so much of the buzz is around auto. we mentioned general motors the same phrase as we are apple and gopro. it is remarkable. is the realere value to be found as we get this crossover?

as the automaker start going hunting looking for software. where the sweet spots? oliver: we like a sensor company for a long time. over the lastek six months that is primarily been over concerns of the auto market. the grilli exposure to china. -- in particularly exposure to china. that is a great play around them. the we cover yet, but one that we are more and more clients about. there is a lot of interest in there. one of which is auto and the connected car. there is news of a big supercomputer. they are exposed to his virtual-reality and gaming. that is one of our core ideas. i'm going out to bring my first ideas in the first half was of

these are key names i want to talk about. guy: a huge amount of change, many still to them as legacy names. have been playing console cycles a new product launches. actually now it is all about in game, micro-transactions. becoming relevant with the millennials. some of these legacy content names are unable to do like a disney and some of the media names. jonathan: all of these buzzwords have shifted to digital disruption. you want to know how they will monetize these things. --tual-reality hague sets headsets will be a big deal. when can they monetize these products. oliver: that is the key to be focusing on. rift, they're taking orders for that come a bubble we see a similar situation with google lasts -- glass.

does it really start to gain traction, who knows? i think it is a while before we oculus monetizing for facebook. guy: thank you very much. i just want to draw your attention to something, the cross rate has just gone to 6.7. that is a significant spike. we will have more on that in a moment. up next, nothing to be proud of -- vw looks at the future following his apology. ♪

jonathan: good morning and welcome back to "on the move." china concerned are once again on the table. we see that mostly in the fx market. climbing 202011 high. with a going back and forth about the markets all morning. a lot of it is playing out in the commodity market. guy: there's been a decent move in the u.s. dollar, again being reflected out of the dollar. what you are seeing is this move in oil as well. to see the brent price going

back down to the levels that can 2004. this in a leg lower. think it has to be a demand a story. that is how it feels this morning. the fact the chinese are basically pushing their currency ever downward. that is a reflection of the problems they have over there. that is being priced back into the miners. currencies are all moving on the back of this. it could be fascinating to see what that happens. we talk about the resilience of that story despite the heightened tensions between saudi and iran. the id the inevitable that shakeup -- the idea that you can have a couple of sides. i think a lot of people took away from that. the other they out pick up on his look at the federal reserve.

in looking at futures all the way back out to 2020. this time last year the blessing of crude approached $80. now $55 a barrel. that is a problem. jonathan: guy: how do you hike as aggressively as that when you have inflation nailed to floor. that will be some of the central bank not just on that side of the atlantic, but here in london what the deal with as well. how do you raise interest rates when you're seeing this this inflationary impulse being generated out of china as well. that will really raise -- this inflationary impulse being generated out of china and well how will he do this use of this embedded lower inflation at a time when you're wondering whether or not actually is going to be lower for longer. and if it will be a problem for just it even further out than that. if you look further out, it is embedded already. will be a big topic

of conversation post of the headline in the commodity market, brent crude at a june 2004 low. bloomberg's reported will be joining us soon. caroline: shares and european -- theypplies including have fallen according to the u.s. comedy would reduce the first quarter output of the making of iphones by. they're now piled up and we in china and europe. fund hasotal return snapped a 31 month the street of redemption. than do you want to a been pulled out of the fund. u.k. retailer john lewis and christmas sales were up.

online sales rose more than 21%. the supermarket chain saw sales fall by 1.4%. vw shares down again in europe this morning. in the states, the company's at aof brand appeared consumer electronics show in las vegas. once again, apologizing for the emissions scandal. >> the current issue with the diesel engines is certainly nothing to be proud of. we disappointed our customers and the american people. sorry, and for which i apologize. guy: hans nichols joins us now from berlin. still a lot of grad to cover to restore confidence in the brand. they keep apologizing, but what

are they doing? to get thisant behind them. the problem is, they don't have any sort of agreement with the epa here in germany. after the gain that speech, bloomberg caught up with him. difficult, we have different technology. with several models involved. several different technologies. have toll be kayseri intervene comparable to the situation in europe -- cars where we have to intervene comparable to the situation in europe. hardware,rvene in the that is code for an expensive fix. down in december, but i was much better than the 20% drop in november.

they may be stopping the bleeding a little bit by not focusing on diesel. hans, looking to the future, vw presenting a new emission free concept vehicle. what do you make of that? what kind of reception with that get? hans: i still secretly want an old vw bus, but this is a concept car. , which isarge range impressive. we charging only takes, they say, 30 minutes to get an 80% charge. 6.0 seconds. it is a concept car, we will save it actually rolls off of the assembly line. it looks like a fun car. i can see that with the whole family driving across

berlin. i can really see that happening. thank you very much. up next, we take it back to the markets and look ahead to the fed minutes. what clues might they give up of the central bank? we talk that next, plus big news in brent. brent crude drops. ♪

ofathan: good morning to all

you in europe. 51 minutes into the session, stocks are lower. -- 15 minutes into the -- we get u.k. pmi, and then the fed december minutes from the pivotal meeting and the first --erest rate hike since 2000 2006. they're all part of the same story. a weaker chinese currency, lower crude price, and pressure looking to hike rates even more. cocktail, a heady isn't it? the move into the chinese currency also absolutely fascinating as well. brent down to levels we haven't seen since the summer of 2004. exactlyrying to see what is going on here. others might say this is more to do with what is happening with individual companies. let's find out what is going on.

view on the fed, plus a currency story from him. in energy correspondent also with us. let's talk first of all about the brent prices. >> certainly, the chinese currency is one of the elements. i think that one element is the u.s. shale industry is fighting back against the price were. we have one of the big players raising $1.4ry billion in new equity to boost, increase their spending power in 2016 to try to increase production. thethan: quite interesting company is going to the equity market and not to the debt market. that is probably a very different story at this point. looking at the futures curve, this has been remarkable. the market had brent crude trading at about $60.

that brand curve has shifted lower once again. that is a big story, isn't it? javier: not only what price we have today, the bigger story is that the market is pricing that we low prices for many months or years to come. the investment market if we go a $20, what matters to me is $50 for the price of the year. that is the big problem we have not only for the shale industry but for big oil. guy: that is a problem for the fed, isn't it? we had the hike, when does the next one come? we have china sending deflation are on the world. the oil prices getting absolutely crushed list of how big a problem is i going to be? rich: it seems like an awful long time ago to the hike rates. it will be interesting to see how much, i know we had a

minimus vote last time. it was no dissent, but it will be interesting to see how much argumentation there was for those that may be wanted stay on hold and were convinced that they should hike immediately. there is a lot of headwinds that we knew they were there last month. their uglynly reared head this month. it'll make it more competent. in september, they said they worried about the world ever worried about china. heardcent noise you've the fed said that it doesn't matter so much. where are we? does it matter or doesn't it for the fed? richard: the thing that -- the real proof in this will be how the u.s. data holds up. i know you give me a hard time about being data dependent. i think the fed truly is looking at the domestic economy. they want to see if any of this will really be feeding in and we see any deterioration in the numbers. so far, it doesn't look to

encouraging for them. many of these have been on the manufacturing side, and the services part is more important, but still the data we have seen so far will not encourage them that much. guy: is the correlation changing anyway? what other looking at? butse me, it is trending, -- inhave seen a lot of tension 30 years. the market has been to the ignored it and focused on the fundamentals. i think we will see an increase in focus on what is happening in the shale industry. focus of a more physical flows coming from the middle east. play a biglar will role. but the market remains very well oversupplied. geopolitics will play much smaller role guy: than in the past. guy:thank you very much to both of you fussed of the

conversation will continue right here on bloomberg television. "the pulse" is up next. but what a morning, reinforcing the big themes we saw. ♪

north korea says it has successfully tested a hydrogen bomb. as world leaders condemned the move. china's yuan falls to a ocve-year low as the pb surprises with the weakest fixing since 2011. the fed minutes are expected to provide clues on hikes as european markets experience a most volatile start to the year since 1999.