caroline: bears beware. china steps up yuan intervention. one official says the currency is destined to fail. to increase production. knowledgeable, be worried and want the jim rogers bad news is coming in 2016. he joins us. ♪ welcome to "the pulse." i am francine lacqua. let's get to the markets. we have had volatility over the

last couple of days. let's get some of the stocks up for you. if we can get the board. here is a picture from the european stoxx 600. automakers, investors tried to set valuations after we had a lot of losses. we had a four-day losing streak so far. maybe a little bit of investors thinking it's a right time to go back in. crude oil at 30.6. i wanted to show the rand, we saw a big follow-up to the rand yesterday. japan still one of the biggest bigs -- bids as it is considered a haven. leslie to nejra cehic. nejra: the people's bank of china is set to repeatedly intervene with the offshore yuan market since yesterday, according to people familiar with the matter. the bank has been cracking down on speculators in a move it is

maintaining a stable currency. a fresh record amid speculation currency intervention by china's central bank is draining the supply of the currency it the overnight highball client. the one-week break jumped to 33.8%. oil is extending declines after brent closed yesterday at the lowest level in 11 years. the cheapest and more than 12 years. both are at a risk of falling. expandedplies exacerbating a global growth that's a global let. -- a global glut. francine: let's introduce a guest for the next 30 minutes. he is jim rogers. jim, great to have you on the program. thank you for making the time to speak to bloomberg. how much do

we know? do you believe the figures? jim: i don't believe anybody's figures, do you? i believe bloomberg's figures. if you listen to government they kiss, you are going to go broke. francine: what indicators do you look at when you talk about china? things.re are many when you look at a country, you have to look at so -- at all sorts of things. with china, there is not as much available. i do go there a lot so i talked to a lot of people. i see a lot of companies. i see things that are happening. things are slower but that is normal. francine: how worried are you?

i am worried about the world in 2016. which is the third largest in the world is in a recession. many parts of europe as you well know, there are disasters going on. slumping inonomy is a lot of places. for people to blame all of this on china, china is a victim more than a cause. the real cause is the american central-bank -- the american government and central banks running up debt. china is a victim like everyone else. i understand your point of view is china is a victim. , theu move the on that world could go back into recession. do you agree? do you worry that a debt bubble busting in china?

jim: there is no question that there is debt in china. in 2008, when we had a problem, china could help bail us out. america spent a lot of money but we didn't have any saved the. -- any saved up. china does have that now. now.es have debt it's nothing like america or britain. you are going to have bankruptcies in china. i hope the government lets it go bankrupt. that is going to scare a lot of people and be disruptive. that, are worried about dish if you're worried about that, look at the united states. china has staggering reserves. francine: jim, you're not too worried.

does it mean the market should be a lot more confident about how china handles itself? listen, i make as many mistakes as anybody else. at the moment, i am sure the united states -- i do own a lot of u.s. dollars, but i would rather be invested in china then the u.s.. there will be problems in china. china trade within the -- with everybody. if everybody in the world has too.ems, china will francine: we have had problems with volatile markets and currency. what has that taught us?

jim: as you know, the united states and imf for the last 11 years has been begging china to let them market and set the rate for the currency. china said ok we will do it your way. we will let the market have more to do with it. the currency had -- the currency began to be subject to market fluctuation. it is normal that it should have a correction and yielded down for a wild here it -- and yielded down for a while. it is easier for people to take money out of china. if you have been trapped with the currency for decades, you want to take some out to. if the ghost of further, i hope i am smart enough to buy. francine: talk to me about the u.s. what does that mean for u.s. treasuries?

jim: i am short u.s. stocks. i am short u.s. junk bonds. the spread got to be very narrow. interest rates will be going higher in the u.s. no question of that. whether the federal reserve or market takes them up. we have had this artificial level of interest rates for a decade. this has to change. the world cannot go on. what is happening now, the federal reserve is destroying all of the people who saved their money. you were brought up saying work hard, savior money and someday every thing will be ok. all of those pensioners are all being destroyed. no interest rate. that cannot go on. francine: are you worried that actually if something goes wrong, the fed doesn't have enough ammunition?

about theworried gigantic debt in the u.s. i am worried about the fed. what more can they do? what will happen is we will start having problems again. whether this month or in the spring. the fed will panic, it will try to come to our rescue again. they will print more money, they will lower interest rates. whatever they will do. the fed is the one making this problem and making this problem worse and worse here it -- worse. capital is being misallocated. the fed will keep trying because he don't know what else to do. it is the wrong thing to do, i assure you. francine: what is the solution?

jim: what you mean they cannot step away. since when is the federal reserve cannot prevent problems when people go bankrupt? in the early 1920's, we had a problem like this. you know what happened? the government raised interest rates. they balance the budget and washington. we had a horrible year or two and then we had the best decade in the history of the republic. francine: they are trying to spur inflation. they have been doing qe and inflation is not being picked up. it is something that central banks have to revisit. able to get that up. jim: since when? since when is inflation good for the world?

i read a lot of economic history books. i have never heard people advocating inflation. it is something people try to stay away from. if want to use the japanese example, the japanese market today is down 60% from its all-time high for the six years ago here in if you want to use japan as example, we've got a long period of problems ahead of us. francine: very quickly and then we have to take a break. i am not saying inflation is good. disinflation is one of the things we have to worry about. do you agree? jim: no, i don't agree. stable prices is what mankind has been struggling with your stable prices is what noble people want. they want to know that their stable. is soluble in

francine: jim, thank you so much. not only will we talk more about the bank of japan but his thoughts on your. crude continues to slide toward $30 a barrel. we will break down the commodities crunch. let's have a look at the turkish lira. that turkish currency fell with stocks. we heard a loud explosion near istanbul's tourist district. this is just breaking across the bloomberg terminal. we'll have more of that. ♪

francine: welcome back here it we're getting some big news out of turkey. there has been a bomb blast. the turkey currency falling after we had reports of a loud explosion near istanbul tourist district. we understand through the dha news agency. parts of istanbul's historic lastsula -- reported after that's after blasts in the cities touristic district. it is extremely sad and having an impact across these emerging-market currencies. let's get more from our guest, jim rogers. a quick comment good it feels a

little sensitive to talk about markets when there has been a loss of life. when you look at 2016, we are expecting more acts of terror. how should an investor deal with that? jim: you are exactly right. .ne should be prepared for what is happening in turkey is going to happen and a lot of different places. they have no fear of death and they are happy to go and blow up a lot of people. we should be prepared to see what is good to happen. it is going to affect world economies. i am very pessimistic about world economies. francine: i need to correct myself. there has been a blast but we do not know what is causing yet. coming back to our initial conversation. you are telling me you are long on china compared to the u.s.

next line -- u.s. the federned you are may have to cut rates? jim: i suspect when things go bad, the bureaucrats in washington are going to say we will save you. they are going to get calls from all over wall street saying the world is coming to an end it if the market goes down 13%, they are going to call the fed, and the fed is made up of bureaucrats and academics and they are going to panic. .hey are going to print they can take us to negative interest rate if they want to. i don't have any confidence in the federal reserve in the united states at all. risk is athe biggest policy from its it's a bank. which one has more at risk?

jim: the united states central-bank. these are the ones who have been lowering interest rates for nearly a decade. these are the ones who said we are going to print money into the cows come home. the other central banks joined in. i started printing money too. the congress and president has raised debt to astronomical levels. all of this policy which is madness is started in the washington, d c. i don't like saying it, i am an american. the rest of the world is copying us. we are all going to have to pay the price sometime in the next few years. francine: how worried are you about oil tackle -- you about oil? is net benefit for a world economy.

jim: it should be great for all of us. it is not great for a rant or nigeria. -- for iran or nigeria. it should be great for all of us. when ae, as you know, market starts inclining, -- starts declining, it builds up its own momentum. francine: what happens? your concern here is what? at the same chart for wti, there is a concern that if you go too low, and you hit off fromhat has cut oil majors. because of a chance of a recovery worldwide. if we have a panic, sure,

you can have a big rally. it will go back to 100. it takes a long time to turn a market around. the oil market is a gigantic market. it takes a long time to turn it around. 100.ould cost there are things that could cause 100. but not $20 oil. francine: what is your smartest trade for 2016. jim: my smartest trade? i only have one. , i am watch bloomberg sure you find a lot of smartest trades. sugar. maybe the short junk bonds.

francine: you said you were concerned about europe. is it because of the brexit concerns? or oil and its lack of inflation? jim: francine, the whole world is going to become a japan. you tried down these interest rates to absurd levels. can i get returns on these investments? japan has had 26 years of lost decades. europe is going that way. i am worried about the whole world. largest debtor nation in the world. this cannot go on. i don't know where in any history book where you can find this kind of policy is sound. francine: is it too late to reverse course? jim: is it what?

francine: too late to reverse course? how do you try and make sure that doesn't happen? might -- it think we don't take we have much ammunition left. japan is coming to the end of its possibilities. they can print more money, but the debt is staggering. if you look back at the early 90's -- at the early 1990's, scandinavia let people go bankrupt and they started over. after a year or two of pain, they had a great -- japan has gone the other way and they have had 26 years of problems. history shows policies we have been pursuing cannot last and will not solve the problem. the only way to solve the problem is when there are problems, you let people who make mistakes go bankrupt.

confident people come in and take over the assets, reorganize and start over here at -- start over. we are saying nobody can fail. this is horrible economics. this cannot work and will not work. francine: jim, great to have you on the program did thank you for talking to us. -- program. thank you for talking to us. up next, european shares. we break down the morning's trades. ♪

francine: welcome back to "the pulse." european stocks trading higher after investors set valuations. mark barton has the details. detention turning to china. -- the attention turning to china. the yuan rising. performingh index below $30. the dollar against the yen. that is the longest losing stretch since 2011. the dollar is oversold against the yen. crude falling for the seventh day. the since july 2014. since july 2014.

the stoxx 600 balancing between losses and gains. it -- risingtoday today. stay with us. ♪

are francine: welcome to the pulse, live from bloomberg in london. we are getting some industrial production figures to mark barton is standing by. warmer than usual weather using energy demand, up falling .7%. electricity, gas, and steam dropped 2.1% are in they had forecast no growth on the data. dependent onemains

domestic demand and services. it stagnated in october and drop in november and production will have to arrive to avoid a contraction. manufacturing delivered a lower than expected performance in november. output dropped .4%. a fifthoutput fell 1.2% per second of -- consecutive decline. there is weakness in the manufacturing survey. growth cooled in december. that suggests little contribution to the economy in the fourth quarter. we will see if sterling is reacting. it is. this is a six-day chart. the pound falls for six days. this against the dollar. it's fallen by 1.4%.

it's at its lowest level since june 2010. to do nothing. keep an eye on sterling. it's been falling in recent months. it is a reason why we keep interest rates low, because it puts a lid on inflation. references to sterling weakness. francine: thank you so much. mark barton there with asp checks. let's get a flash. 18% ass at alcoa dropped it ordered a loss of $.39 or share. that holds the impact of cost-cutting impact. them is fouring cents per share. there was rising demand for

aircraft parts. is poised tot man become the first chinese person to control a hollywood phone company. he agreed to buy legendary entertainment. the credits include jurassic world and godzilla. china's car sales will accelerate after climbing at the slowest rate climb in 20 years. accordingncrease 6% to the association of automobile manufacturers that is your bloomberg business flash. francine: another industry where china has been a key growth driver's hospitality. the largest provider of hotel accommodations has been expanding rapidly in the region. the company owns holiday inn and crown plaza during they are

opening its 5000 hotel. it's great to have you on the program. you are 112 gets to see the real economy. we speak to investors. you travel and meet people. if we talk about china, what is your feeling? should we be more concerned than we were last summer western mark is it just in transition so we need to give it more time is --? -- westmark it's an economy in transition. they are trying to become a more consumer led economy. we can see that change. it's one ofness, our fastest markets. the top lineman of the growing in the way you would expect. we are so we knew hotels because demand is fast.

if you make an investment in hotel, it might be five years to open. of openings of new hotels as high as it's ever been for us in china. there is a lot of up to miss him in the market. reaction, irket don't know what's driven that. the growth rate may be lower. an economy that size can't continue growing double-digit forever. i think we would like to see that in the u.s. or the u.k.. we remain very optimistic about it. people continue to travel and it's a growing economy. francine: we've been trying to understand the chinese consumer. it's very different than the u.s. is it different when they travel? richard: alas the same.

-- a lot is the same. we have done a lot of work in research. it's one of our key markets. broadly, consumers want the same thing. they want hotels of the right place. there are some micro differences. china,ched a brand in it's whether 5000 we just open. it's designed to be a chinese hospitality experience. francine: that means what question mark --? changes in the last six or seven years area richard: i think in china, our fastest growing rand's holiday inn. -- brand is holiday inn. ambulance, the

things chinese travelers want. what the rooms are like, what food and beverage there is. they eat different sorts of things. it's very tailored. continental is one of our biggest brand. mount pleasant plaza is our biggest band in china. -- crown plaza is one of our biggest brands in china. the chinese government has defined tourism as the fifth color of economic growth. hotels are getting. roads, they follow railway lines. you have to get there. the government knows it's necessary. we with the first in china we've been there a long time. we are the biggest in china by a long way. francine: you're happy with your

partnerships over there? you have a lot of hotels. the model is a huge success. richard: we run the hotels for third-party owners. you have to choose you as carefully. -- partners carefully. we're very confident in our partners. we do with deals existing partners and half with new partners. francine: how does china compared to the u.s.? how do they compare to your? -- europe? richard: people make commitments to travel. we are a little bit of an indicator. large aspects are the same. i think in china, there is no

precedent for china. we can't build a new runway in the u.k. is there precedent for the scale of growth? , we seethat's grown similar opportunities in china. manyast there will be as hotel rooms in china as there are in the u.s.. that's incredible. these hundred million outbound trips. that helps her business globally to be big in china. francine: this is you being very buis on china -- polish -- llish on china. that must translate to the way

people go on holiday or it richard: at the margin. they are not mutually exclusive. i am positive about travel. today, you don't live and die in the same village in lifestyle requires people to travel. the u.s. continues to grow and china continues to grow. it continues to grow. we continue to gain share. that's an important measure for us. whatever is happening in the market, i want to grow ahead of the market. francine: thank you so much. we will talk about certain m&a in your industry next grade --. we will that question to our ceo. let's have a check of the turkish lira. we have seen a drop in the last dirty minutes or so.

this is as it falls with stocks and bonds on the report of an explosion in istanbul's tourist district. we don't know much on it. we will be the latest after this break. ♪

francine: welcome back. we're live from london. let's get to the news. he pushedkaplan says

the december rate rise. economy maybiggest want staying on a path of higher darling costs. 2015 will turnor out to be 2%. that's relatively sluggish by historical standards. it's been enough to drive down the rate of unemployment in the of. to around 5% by the end 2015. economists expected gdp growth 2.5%. to be between sales are set to return to growth after first-quarter figures met estimates good --.

rupert murdoch has announced his engagement to supermodel jerry hall. they had been dating since october. that is your first word news. francine: let's talk more with the chief executive from international -- intercontinental hotels are in you talked about your views on china and the u.s.. we heard news this morning about a possible blast in istanbul. this is the security risk in the nation. how much is security a concern when you talk about travel and traveling and your hotels? richard: we are worried about the safety of our employees guest. big deal as an industry. whenlers are quite sand

about it. paris is still affected. there's no question. we see it in other markets. we have very high security standards. we have very strong risk programs. we do everything we can against it. it's somewhat of action. it's something that we worry about on the ground. what are the main halls apart terrorist activity? personal challenge to you? richard: we have security issues around the world. thelways have to deal with -- them. we train people.

we have fundraising programs to make sure we are doing what we can. we're opening thousands of hotels we've got 1300 hotels in our pipeline. training people in developing people to work in our hotels is the biggest challenge we are up against. academy's we0 train people in hospitality. that's the way's deal with it. francine: are you ever worried about over expansion? how difficult is it to keep quality control on all of them western mark -- western mark --? ofhard: the only own a few our hotels. hotel, are opening a there is an opportunity and we work with them on that.

we are very proud of that. in new york. it's a great hotel. it's in an upcoming location. we had 3500 hotels and we now removed overhave 1500 hotels in north america. reasons.or quality it's about driving quality. we set our targets every year. it's measured by our guests and not anything else. area --.ly important francine: you talked about this organic growth. do you ever feel like you are in m&a target question mark -- western mark -- western mark --? demonstratinge

organic growth is very strong. there are not many industries where they've got that level of growth. we have 5% of the worlds hotel rooms. it's a massive market share gain. francine: will you buy or will you be bought? richard: we have been buying. leading boutique business last year. it's the fastest-growing sector. acquiring brands that fit in our portfolio, that's really important. for us, it's about value creation and delivery it to our guests. us asot as important to having the right brand. hotels by it to 5000 being big for the sake of being

bigger. francine: we talked about the middle market, if you look at folio, is there something you think you are missing western mark --? is it will be something in the way that we consume our travel experience in the future western mark --? launched hotels in the u.s.. i think we are continuing to evolve. we have a new open lobby concept. have a whole new room design. understand the guest is important. we keep an eye on changes and development in the market. we have a very broad array of brands. openine: you're looking to

1300 hotels in five years. is there anything surprising abouthere you will be opening this? richard: you might be surprised how many are in china. asia, thereast and are lots of opportunities. in india, there is great opportunity at a huge market. we've got about 30 hotels and 50 in the pipeline. they take a long time to open. other than that, it's worth pointing out that there are 10 markets in the world that will represent 75% of all growth in the industry. we're were we concentrate not trying to sign hotels everywhere just for the sake of it we want to know where our customers are and where they

travel. that is where most of our focus is. francine: thank you so much i enjoyed the conversation. growth is looking positive. that's the new take on the economy. we've bring you that exclusive interview next. ♪

francine: welcome back. we are live on bloomberg television. you're looking at live pictures did --from the -- chris paris. the banks new governor will speak shortly. the dojeakers include governor and that is going on out. we had an exclusive interview .ie he told us inflation remains low. this is what he had to say. >> inflation remains too low. we have ansituation, active and effective. ofk at our decisions december 3 last year. andecreased interest rates

to marchour programs 17. we would reinvest the principle it we have been very act. this is important. we had many studies converging on the fact that his policy will half a percentage point of additional inflation. in the same growth. economic data. this is the most important point. if we have the tools and capacity of action. francine: the first word is up next. for our viewers, surveillance is up next. he will be talking about the turkish lira. leftplosion in istanbul

several people dead. turkish geeking out investigating whether it was caused by a suicide bomber. you can follow me on twitter. ♪

china steps up intervention. shortselling currency is destined to fail. oil extends losses. stockpiles are increasing as iran boost production. police are investigating an explosion in istanbul. several people are dead. this is bloomberg surveillance. i know we have to talk about china. this is the first that we