francine: china shorts trading again. shut down after less than half an hour as the yuan slumps. wti slides to a 12 year low. and george soros warns of a market -- similar to the 2008 crisis. we'll see four rate rises in 2016. welcome to "the pulse." there is lots going on in the markets.

mark: blink and you would have missed the chinese trading day. kickedt breakers in when the csi fell by 5%. after 29 minutes, game over. this is the chart for this week. china halting trading for the second time this week. the csi sinking by 7% after china cut into -- its yuan reference rates to the lowest level since august. concerns about the economy are everywhere. listen to george soros, the billionaire who made one billion against the pound in 1992. he said china is struggling to find a new growth model and its currency devaluation is transferring problems to the rest of the world. all country world index is down for a fourth consecutive day. look at brent crude, down to a 2003 low.

2003 low. the trend is correct. crude is down by 13% this week. are wti and brent oil trading around $32. we could be heading even lower. nomura warning that brent will lower over the next three days. concerns about china are weighing on the price of oil. china is the biggest consumer of oil. u.s.piles of the largest storage hub in oklahoma rose to a record. crude slumped 30% last year. where is the money moving? it is moving into the yen, into gold. look at treasuries. this is the six-day chart for the u.s. 10-year yield. declining for the sixth consecutive day.

the yield on the 10-year note has dropped 15 basis points since december 29 to 2.14%, below the level on december 16 when the fed race interest rates for the first time in a decade. and look at sterling. this is absolutely fascinating. to thend has fallen lowest level against the dollar since june 2010. this is a chart going back all the way to 2010. put it simply, the interest rate differentials are widening as the fed plans to raise rates four times this year. the bank of england is not scheduled to raise rates until february 2017. i could've given 20 charts today. what a day. francine: the pound the weakest since 2010. regulator's stocks held an emergency meeting after the nation's mark halted trading

after 29 minutes. the meeting ended without agreement. this get straight to hong kong. enda, what do we actually know about this meeting? enda: i guess we do not have too much details, but the fact it was called underscores how nervous the regulators are about what is happening in the stock market this week. adds credence to the view there is a lumbar the paddock with policymakers because this circuit breaker was the first time it was introduced this week. it was meant to be the new tool to calm things down but clearly it is not working. there seems to be a lot more selling pressure out there on china stock market. as long as that pressure is lingering, the feeling is that the state will not separate. they're going to continue to intervene. and use the circuit breaker as well. it illustrates how nervous

things are. francine: what is the significance of the stock market halt and the yuan intervention? been a very significant day and a very significant start to the year for china's markets. it is the worst start in two decades. on the one side we have the jittery stock market and the desire to sell. the bigger risk to the real economy comes from what is happening with the yuan. the authorities want to let it aken but the-- we are being forced to intervene because they cannot let it go too far because they are suffering from capital outflow. we had that confirmed today when we saw that the reserves fell by 108 billion, bringing down the trillion.033 that is still a pretty decent

arsenal, but it shows you how much pressure now china is under. to manage it currency it would like to free up without triggering capital outflow. on the other hand, they are trying to stabilize the stock market. pressure from all angles. francine: pressure from all angles is the perfect way of putting today as a whole. now let's continue the conversation with brenda carr - miranda carr. also joining us is our guest, the european head of global market research at bank of tokyo mitsubishi. it's start with you because has been four days of trading and it is all about china. george soros comparing this to a possible crisis in 2008. what is going on? >> this is the worst at the china could possibly had. a lot of it is the overhang from six months ago with july-august where we saw the depreciation in the stock market crash. with the stock market they put

in six months measures to stabilize the market. these are not coming out. the real problem is if you have pressure from the major theeholders -- you see regulator trying to minimize that but you have this group of major shareholders potentially selling down. francine: yesterday we had a lot of people saying you have to make a difference between markets and circuit breakers and fundamentals in the economy. as we see more and more routs, at some point this is going to be blended in. miranda: the stock market is not a great reflection of what is happening in the underlining economy. if you think that's a last year, we were having monetary easing. they were talking about capital market reform. that led to the rally. talking about things like supply-side reform,

which is quite tough. not seeking stimulus, not doing boosts anymore. doing fundamental reform. also you are dealing with the stock market which is going to be volatile, because you have the selling pressure. slump is the yuan's basically sending markets into turmoil. if you look at the chart. it is pretty stable. are you overly worried? >> no. the point i would make is i think the situation the chinese have got themselves into in terms of the effect size of things -- sides of things is a consequence of mistakes made previously. riod i would point to is when the dollar rally began in the middle of 2014. if you take that period through to the august evaluation, the broad dollar index enhanced by 16%. 1%.ar cny dropped by

there was this huge appreciation of cny which was inconsistent with fundamentals. the economy was slowing. are knownt sense, we a situation where i think what is happening is what should be happening, based on the fundamentals. the currency should be weakening. francine: so, the market should not freight out -- reak out -- freak out. derek: there is an element of panic. today the fixing was .5%. that is the largest one-day increase in the fixing since august. i think markets are reading into this that the potential for another big deval like we had in august which would have deflationary consequences for markets, i'm not sure where you're going to go down that route, but we could see days like today were have big one day increases. miranda: the change in the pboc stress she -- strategy is a big

indicator for this. during the deval they had to set it up for the previous days because yesterday was weak, they have to set today weak. it's a self of filling prophecy. it continues driving down pressure. had the weak have forex reserves and they had to sell down lots of reserves to support the currency, this is where they need to keep doing that in order to reach the currency. if they are not able to do that long-term, then he will see continued selling pressure. francine: we also have a chart that shows the spread be tween onshore and offshore. miranda i think they: need to do something in terms of game or -- more confidence. they managed to stabilize the

cnh, but even then it was not as widespread now. we have not seen any supportive measures coming through from the government. this is what normally happens. oris either a reserve cut some kind of monetary easing or government stimulus to get confidence back in to what is becoming a one-way path. so, we need a bit of government intervention. francine: do you agree with that? derek: yeah. really it is about a lack of confidence in market pricing. and because of all these different measures that have been taking place, investors just to not have a true sense of where the actual market is. and that is very negative for investor confidence. francine: thank you so much for now. us. stay with we will talk about the implications for the fed. stay with us. a change at the top of marks &

spencer. and virtual reality becomes reality at the ces. ♪

francine: it is time for data check because there is a lot going on on the markets today. this is the picture for european stocks. overall, they are tumbling to a

three-month low. this is after we had another, the news from china. china basically cut the yuan. stoxx europe 600 down. crude oil down. touched almost 30. the rand is at the weakest ever. and this is the safe haven, the japanese yen. first, let's get straight to the bloomberg first word. caroline: thank you. marks & spencer's chief executive is to retire. he will be succeeded by the retailers executive director of merchandise. the announcement came at the same time that they said that third quarter like for like sales declined 5.8%. george soros says that global markets are facing a crisis. weather current environment

similar -- with a current environment similar to 2008. is billionaire says china struggling to find a new growth level and says the nation's currency devaluation has transferred problems to the rest of the world. the federal reserve decision to raise interest rates last months was a close call for some, according to minutes from the last month's meeting. the debate revolved around downside risk to inflation. even no official said they were confident they had reached their goal in the median term -- medium-term. francine: let's break down the fed minutes with our guests. guys, thank you so much for sticking around. derek, we have so many currency moves. we mentioned yen safe havens. the yen keeps going higher. rand weaker. we also have a little bit of

pressure on pound. what are your top three picks for 2016? i think in this environment i would probably favor the japanese yen. this is something we have been saying over the last couple of months. the dynamics have begun to change. expandingr rapidly surplus which is a key characteristic. we have the boj. we are convinced they do not need to go again in terms of easing. that could come back at lower levels of dollar-yen, but the moment it has got a lot going for it. and relatively recent past performance tends to draw expectations of that being a good place to go. and given what is happened with dollar-yen over the last couple days, it could be a degree of self-fulfilling prophecy. francine: what happens to the dollar, and what do you make of the minutes? it seems like they were more hawkish. derek: well, i don't think, i

wasn't particular surprise. it was a close call. going into the meeting, the markets were expecting one or two dissents. of course it was going to be a close call. the actual inflation, there are some numbers you want to see physical inflation. again, the fact they put actual into a statement says that is a concern and it is a valid one. but i do think over the next couple months we could very well see the core pc index beginning to decline. and that sits with the fed going in march. francine: china. first of all. i want to show you in inflation chart. we made it especially for you. we talk about internal, the risk of recession in the u.s. their trouble with inflation or the lack of in other parts of the world. how much should janet yellen videbe looking at china?

reasons.there are two one is what is happening with its economy. we are still seeing quite strong um, instead of inflation, deflation. still strong consumer prices are going down. producer prices are also set to go down by 6% for the first half of this year according to our shanghai chief. so your are still seeing a lot of weakness in china's core economy and that is not going to change over the next year. structuraling to the reform process. but the real big issue is coming back to what happens with currency, because obviously, if china sees outflows keep seeli lling, that means it is tightening domestic policy but also tightening international policy. that is what is happening up at we saw the forex, one of the worst cell downs in record. can offsets china

that. it can boost a mystic liquidity. still talking about a closed economy. but that has ripple effects throughout the global economy and particularly impacts the u.s. francine:, he more days like this are we going to see? the difficult question. our view and the forecasts we laid out is we are assuming a difficult first quarter. we get a further adjustment, days like today, perhaps that means we do not get a move in march, but then beyond that, we think certainly commodity prices will have adjusted to the realities of what taking place in emerging markets, china in particular. and if we get to an equilibrium price if you like to call it that, then we can see better stability and financial markets which is conducive to better growth. so, a concern, yes and

volatility over the next couple months but then we have a better outlook for the remainder of the year. francine: they do so much. -- thank you so much. derek stays with us. we will talk in depth about the yen-pound next. punishes commodities. we discussed the emerging markets fallout next. ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio and streaming on your tablet, your phone and bloomberg.com. this is the picture for oil. $30 is where touched yesterday. sliding to the lowest in 12 years. we had a big move on brent. 33 for brent. 32.6 for wti. halpenny is still with us. i would quantify 2015 is the europe currencies. 2016, it seems like we are going to see even more moves. randw a huge move in but also the australian dollar. derek: yeah. until we get some reduce volatility in the commodity space, we will have these terms of trade dynamic that is fueling volatility and currencies linked to commodities and currencies linked to china demand. so, we're pretty bearish. we still see further weakness in

that space over the first half of this year. as i said before the break, if you get oil into the 20's which i think is looking very likely, we're assuming at those low prices that we are going to get some stability and at that point, a lot of what is anticipated in terms of supply and demand is in the price space. francine: we also saw a move on the norwegian krone linked to oil and the banks. is there anything to buy on the back of it? it's a forecast on oil, right? and it's difficult to predict. circumstances, you just stick to the dollar or the japanese yebn in terms of what i mentioned before the break. it was a good point made by miranda in terms of the shrieking of liquidity. that makes looking at external decisions in countries much more important. when you have shrinking

liquidity, currencies that are running current account deficits are very vulnerable to further depreciation. when you look at those currencies over 2015, there has been huge depreciations. you have to take into context of valuation at some point. getting two levels were some of these currencies are looking extremely undervalued. francine: on the dollar, you were saying it is a lot less linked to fed policy than it has been in the past. derek: essentially if say, for example, the fed don't go in march, i do not think it will have a huge bearing on where the dollar moves over the short term. when you look versus the majors, what does that mean for the euro in terms of what the ecb might have to do? same for the u.k., with a have to push back there timing of rate increases? in march,n't go assuming we do not go into a big crisis, the markets will look and say we will go in june. it is not going to have a huge

impact on the dollar. francine: we will be talking about the pound next. and thenext, metals miners drop on china concerns. we break down the losses. you can follow us on twitter. ♪

francine: welcome to "the pulse." let's get to the bloomberg business flash. caroline: barclays about to close most of its cash equities business in the asia-pacific region. the near exit from cash equities comes as about 50% of jobs will be eliminated. the move is said to be part of the chief executive officers push to reduce costs. -- chineseny might

economic slowdown -- thinks growth will be 2.9%. netflix shares jumped more than 9% in new york trading. netflix was the best-performing stock in the u.s. last year getting more than 130%. check on the's markets. a lot of moving parts. equitiesay's chinese session lasted 29 minutes. they halted trading for 15 minutes. these are the new rules that were implemented on monday. trading halted for the second

time this week because of a 7% decline. last fiveowing the days of trading. on januarye session 4. 5% decline, halted. 7% decline, halted. today, trading halted after 29 minutes. it came after the central bank cut the yuan reference rate. concerns are if china is allowing its currency to weaken, what does that tell us about the fundamentals of the world's second-biggest economy. crude continues to slump. it is falling for a fourth consecutive day. it is down to a 2003 low. $32 a barrel.to brent could fall to $30. ubs sees an oversupply pushing prices lower. throw into the mix, we had u.s.

inventory data weighing in on prices. stockpiles are pushing oklahoma. opec countries abandoning output . china is the biggest consumer of commodities. any concern about china weighs on the likes of rude. where are investors putting their money? putting it into the japanese yen. they are putting it into the u.s. treasury market. ,.s. treasuries are gaining coming close. look at the yield on the 10 year. down for the sixth can get a day. what is most astonishing, 2.14%, that is below the level on december 16, when the fed raise rates for the first time in almost a decade. this view is for yields to rise this year to 2.8%.

will this financial market turbulence in the first four days of the year put back expectations for the amount of time the fed will raise rates. is a chart going back to two thousand 10. sterling coming close. it has fallen to the lowest level since june 2010 against the dollar. the fed is indicating it is going to raise rates by four times this year. it does not seem likely we will see a hike in u.k. interest rates. what a day. only four days into a new year. francine: we were looking back into september and october, rates, -- hikes and rates, mark carney seeing how it is done. everything has changed in two months.

gold is a refreshing its credentials as one of the most important and go to commodities. if you look at the price of gold, if we get the chart for gold, rallying above $1100 an ounce. is down. mining let's get to our precious metals report. eddie, thank you for joining us. forhere any bottom insight metal? who yout depends on ask. on one hand, if you believe george soros, that it is as dad as it has been or was in 2008, that it is as- bad as it has been or was in

2008, it will have an effect later in the year. in the short-term, anybody's guest. you could see further falls. that -- is being devalued further, does that have an impact? eddie: it does. on the first instance, it is a -- the yuany theuan being weaker means they can buy less metal. sentiment ine terms of what people think is going on in china. -- it will impact what people think about the metals. gold, taking the opposite of the trade, four days, up in a row. its status as a

safe haven, that seems to be a distant memory. it is still binary. is this typical of the things to come in 2016? macro spectrum, i have argued that given qe in we couldis finished, see further declines in gold. i would not be surprised if the whole qe trade, that that is fully reversed. go into a crisis period, the fed are taken away, market are back to the idea that the fed are going to have to go back into the policy a, -- policy again, it could do well. gold could go lower. there's always a chance,

but what is your probability of the fed having to decrease interest rates? 5%? 20%? derek: 10%, 15%. at risk ofubbles bursting. we could have prices developing. you cannot ignore those situations. it is a difficult environment for the fed to raise rates. we are expecting three. even that is small. fran: i need to get your thoughts on town. there is no rest by for the pound. when is the perfect time to hike rates? you have the risk of a

referendum. depending on that timing, your window could he shorter on when you can hike rates. derek: we have been calling we have been- calling for may through most of last year. we think we will get a referendum in june. we have pushed the timing back to august. that is still ahead of the markets. in terms of where the yields are in the u.k., it is vulnerable. you throw on top of that the brexit scenario and the uncertainty around that, there is a recipe for pound of depreciation. it could become a big worry. i am not convinced on cameron's ability to get what he wants. we have to wait until february. there is a chance the poll is shifting. it becomes close. fran: you think there is a chance of brexit happening? i'm not.

i think the polls could be very close. that is what will create the volatility and the uncertainty. fran: thank you. bloomberg precious metals reporter eddie. reality virtual world -- virtual reality, high-tech cars. we look at the ces show in vegas. ♪

fran: welcome back to "the pulse." market shares are up. the announcement was made after the company reported a worse than expected slump after sales during christmas. mark has been unable to revive that strand of the business. caroline: down by 5.8%. boland in mark perspective, the market is relishing a change in his six-year tenure. he has added about 33% to the &s, but it has been a brutal few years when you look at his tenure. he is handing over the reins to

the new man, steve. he is that the helm of the general merchandise area. he is handing it over to a man &s for 25een at m years. like he isteve looks going to be appreciated by the shareholders. he is a man who knows the business and can hopefully turn it around. when you dig into the numbers, let's look at what came out today. over the christmas trading period, they said they had sales over christmas, but general merchandise, down by 5.8%. unseasonable weather. they also say we have problems with our overall access to availability of stock. lining, of silver

margin. at the top end of guidance. that is one area mark should walk away from proud of, the fact that he has been able to sustain profitability and turn over margins and cut costs despite what has been a brutal market for many retailers. problems of the weather and the problems of online retailing. see, food has outperformed, general merchandise continues to fall. steve deal --n steer the company on a better path? back to you. as the world's largest tech show, ces gets underway. let's talk about the 2016 technology trends. our next guest, eileen burbage. i am excited to hear more from

you. back, we havestep a lot of news from twitter the last couple of days, news from netflix. in terms of the big share prices, what is the one that has the most potential for 2016? eileen: a lot of people were thinking about netflix having peaked and i do not think they would have anticipated that at all this week. 2016 has continued momentum driving this sector. we talked about how digital is contributing more than 10% of u.k. gdp. we will not be talking about sector anymore, we will talk about how it is driving everything. fran: talk about entertainment. netflix chasing amazon or amazon

chasing netflix, we have so many more content providers. eileen: we see the pendulum shift between distribution and content. netflix realizes, now that we have a captive audience, we can feed our own content. the pendulum shifts the other way. seeing thet you are amazon and netflix realize there is more to be made. even more traditional entertainment providers are thinking about doing the same thing and trying to get their content delivered through a new medium. is the most exciting thing that will come out of 2016? we talk about robotics. at ces, we see cars driving by themselves and technology being used in places where we may lose jobs. eileen: it is hard to pick one.

everything is going to be changed. robotics, autonomous vehicles, artificial intelligence, virtual reality will start to take hold. we talk about year -- we talk about wearables for years and years. that will continue to take hold. is whatind interesting is going to happen in the financial services sector. i think technology impacting and whats are doing consumers are doing with financial services is transformational. fran: give me an example. will see think you digital only banks, mobile first banks. i think what is happening with retail banking is really opening up.

they will be mobile first. they will not use off-the-shelf software. modern be brand-new, technology, delivering new services and bringing down your delivery of service. this is a difficult year. we are looking at the pound fall. you have a question about referendum and whether this country leads the eu. how do you attract talent to london? ofeen: talking about the end last year and everything i think will happen what technology, a huge opportunity for us to ride the wave. some of those things are challenges, but i am an attorney optimist. we have opportunities. we have opportunities to restructure our relationship with europe, to reiterate our need for skilled talent, to have free movement of skilled labor.

if we ratify the fact that in ain is stronger reformed eu, that is a great thing. we get that distraction out of the way. fran: that makes sense. you have facebook, google, with big campuses here. do you see them holding back? eileen: i do not think so. they probably always have contingency plans. they are used to operating in a different environment with varying geopolitical movements. they go where the people are and where the talent is. for now, that is the u.k. and london. if there was to be an exit, i think you would have a reaction to that. for the moment, everyone is here. there is no reason for them to worry. fran: i applaud your optimism.

thanks so much. great to have you on the program. we -- as we break, head to break, we have to look at the markets. a short circuit breaker in china. happening again today. euro stocks down 3.3%. oil, 32 point nine. dollar rand had the weakest ever. japanese yen, considered a safe haven, yen higher. see you in a couple of minutes. ♪

fran: welcome back to "the pulse." let's get to the bloomberg business flash. barclays plans to close most of its cash equities business in the asian region. then near exit from cash equities comes as about 50% of jobs will be eliminated. the move is said to be part of the chief executive officer's push to reduce costs. the central bank continues to sell dollars to pop up yuan. it dropped by more than $108 billion. the least in more than three years.

shares jumped. it's online streaming service went live in 100 30 new countries, including india, russia, and singapore. it was the best-performing stock in the u.s. last year. economic data out of europe today. weaker than hoped inflation data. hans nichols is standing by. what are we expecting? unemployment numbers here in about five minutes. 11.5% is the estimate. right in the middle. earlier we had good news out of italy. their unemployment rate dropped to 11.3%. the picture,across germany at 6.3%. greece is at 24%.

we are also going to get consumer confidence. economists tell me consumer closelyce in gdp is correlated. they tell me it is true. i believe them. the expectation is for -5.7. that gives modest gdp growth. these are lagging indicators. on german data, bad news, retail sales in november disappointed. good news, factory orders came in better than expected. a clear beat. for 0.1.on was it depends what your view is of the german economy. hopefully we will have a better sense of where we are going. just a reminder, you can follow me on twitter,@flacqua.

europeanook at the stocks, tumbling to a three-month low. currency most, they could be brutal. if you look at the pound, it is also on the down. ♪ we live in a pick and choose world.

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♪ francine: trading in the 6.6 trillion dollars csi. shutting down of her less than half an hour of the markets. asding to a 12 year low chinese markets push crude to $12 a barrel. follow-up of the 2000 night crisis. still seeing 4 rate rises in 2016. i am francine lacqua in london, with tom keene in new york