manusjonathan: good morning, ths "on the move." i'm guy johnson. here is your morning brief. stocks plunge on wall street. the s&p has fallen more than 10% since november. european equities are following the u.s. and asia into the red. brent unravels. the contracted dips below $30 per barrel for the first time in more than a decade. we will hear from the finance minister on what it means for that country. >> if we consider today's oil pricing, the ruble exchange rate, then don't take any measures, the deficit would more than double. we can't afford that. guy: attacks rocked jakarta.

six people killed with explosions and gunfire in the capitol. let's get you up to speed with everything you need to know. here is the first word news of caroline hyde. caroline: thank you. at least six people have been killed in explosions and gunfire in the center of the indonesian capital jakarta. local media reports say three other explosions were also heard in an area near normal of embassies. -- near a number of embassies. russia's oi financial minister means he has to -- minister says he has to impose -- he said the measures, totaling

$20 billion, are needed to year.a short-haufall this >> if the state finances aren't adjusted, we can expect big deficits, big inflation, and the devaluation of our currency. that was the case of 1998, 1999. if we don't make the right decisions regarding our financial needs on th, it will be catastrophe. caroline: later, we will speak exclusively to the bank of russia's governor. the chairman of barclays has warned of the impact on the city if they leave the european union. john mcfarlin was speaking in an exclusive interview with francine lacqua. >> the question is, will it be much better or much worse? and our opinion is that it will be significantly worse. caroline: french crude is

trading around $30 per barrel this morning as iran moves closer to boosting exports and exacerbating a global glut. earlier, london traded oil slipped below $30, for the first time since 2004, amid speculation that sanctions on iran may be lifted. guy: we are half an hour away from the open and we want to get you up to speed with the numbers you need to know. at the moment, following yesterday's selloff on wall street, and looks like european equities will be opening softer. this is the fair value calculation the bloomberg terminal spits out. it looks like the taxable take the hardest -- looks like the dax will take the hardest hit. asia sold off overnight. let me take you through some of the other trades happening right

now. we are looking at oil as a major focus. this is what happened yesterday in the u.s. the nasdaq down pretty hard, the small caps now in bear market territory. the s&p down 10% from november 3. sold,f the good stuff got some of the outperforming tech markets got sold fairly hard, as did some of the pharma stocks. we run you through where brent is, this is what we look like. brent is currently trading a little bit higher north of the 30 line, but we did below it yesterday. the yen looks like it is a safe haven although we have seen a rally in the dollar. and's down a little bit, shanghai is up by nearly 2%. let's stay in asia. explosions have had central to

jakarta, the worst attack 2009. capitol since we are joined now from jakarta. it's a fast-moving situation. bring us what we need to know. >> that's right. the attack in central jakarta this morning, seven people killed, four of them were attackers. three explosions in a single attack. -- implications are that it was a joint force. police have not named a suspect, but speculation is that it will is islamic militants of some stripe. it was in the most sophisticated attack. and absolutely shows their weakness as much as their strength. guy: is that confirmed? is that something we can work with at this stage?

has there been any kind of message that it was i.s.? >> not to my knowledge. it's a fast-moving situation. it's, knowledge that several in jakarta.ans are security -- it should be said that between 2000 and 2009 there were four major attacks in indonesia by al qaeda linked allies. i think they will also be a possibility, given the style of the attack. i.s. link bute an i think they are islamic militants. guy: we will come back to you as the story evolves. a lot to pull together. let's welcome michael metcalf,

good morning. it's been a tumultuous start to the year. the beginning this year, we thought it couldn't get any wrosorse. are you changing your outlooks? >> yes. it's been a very difficult start to the year. the one thing that has changed that it hasis soured even further. is thing that concerns us that it is difficult to identify where the safe havens are. equities, it is the ongoing downgrade and concerns about global growth. on fixed incomes, the fed is still talking about raising rates, and it is very difficult -- there is a different change in fed speak compared to last september. so yes, it is a lot more defensive and probably a lot more dollar positive than i

thought we would be, even a month ago. guy: there is a case against equities and bonds, it would have to be invested to a certain extent -- where do they put their money? >> you try to find the value defensive plays that are available, and the easiest place yen, the market, the dollar gets carried along with it anyway. in terms of cross asset investing, it may be in currency. the one trend that hasn't been challenged as the ongoing trend of divergence. in some cases, the easiest way to play that is the currency market. guy: do you think the boj will stand for a significant a stronger yen? >> very good question. guy: the policy does far has not indicated that is the case. >> it hasn't this far, although there has been an interesting example out of the boj, where they shifted the component of their asset purchases.

tot to me looks like -- just shift you around, but the way they talked about that and presented that, i think that revealed to buyers that they weren't as dovish as we thought they were. ecb did that to win the that technical measure to increase the concentration of ae bonds they buy, there's subtle difference between the ecb and the boj, where the boj is not as dovish as we thought they were. guy: you think it gets there? >> quite possibly. if they keep their current line, the yen really stands out as a haven, which is good value. guy: what else is there? i'm interested to explore bonds. if you look at the start of the year and the dis-inflationary forces, do you think the tone

has changed? compare and contrast with the bank of england. the bank has made it very clear, in its communications, that it is backing off. the fed hasn't yet. does one fall off or the other? >> they are faced very different challenges. we are getting really global about global growth. i think a lot of that is related to commodities, to weakness in global trade, and the weakness and emerging-market economies. the one thing within all that outlook is that the u.s. consumer is reasonably strong. they are surprisingly outside. -- upside. the u.s. is quite healthy. the rest of the world is in that healthy in terms of global trade and growth. and that is why i think they have to stick to their guns. the core inflation of the u.s. may go through 2%. high, thetion is

market is tight, the consumer is strong. they need to keep going. guy: we will explore that further. thank you. michael metcalf will stay with us. that is what the stoxx 600 has done over the last three months, a negative number. that is what london looks like, bright and cold this january 14. stocks look like they will open %,fter, ftse down 1.1 dax down 1%. we will find out what the last 24 hours means to goldman sachs's global institute president. she will be joining us later on in the program at 8:30 u.k. time. we will get her thoughts on the start of 2016 later in the program. ♪

>> we are going through a huge

amount of volatility. i don't see any asset classes this year. ramadi speaking to us yesterday. the market had huge movement yesterday. european futures look like they will open softer this morning. we will be down over 1%. some very big moves yesterday out in the united states on wall street. the nasdaq in particular got absolutely swamped. -- thumped. ftse 100 looking like it will open down .9%, the dax down .9%. a a little bit of a firming, but nevertheless a negative open when the open happens. let's get you moving for what you need to know for your bloomberg business flash. caroline: thank you. goldman sachs is said to be considering cutting more than 5% of its fixed income traders and salesmen, according to a person with knowledge bill, they could

come -- with with knowledge of aftertter, it could come an industrywide revenue slump. they will make a decision after evaluating client activity. gopro tumbled in after-hours trading after releasing preliminary sales results that fell short of analyst projections. the action camera maker also said it is cutting 7% of its workforce. shares slumped by more than 17% last year. norway has a 4.6 billion krone stake in its rival. the purchase accounts for almost 12% of the stock. direct exposure to core assets on the norwegian continental shelf. that is your bloomberg business flash. back to you. guy: let's bring back into the conversation michael metcalf. michael, which asset classes are further through this process, this catharsis?

where his credit versus equity? >> i think in europe, because we are at a point in europe where many government bond yields are back in negative territory, and we have been here before, this could be risky for them being down this low. ofthe equity side, downgraded earnings has been a little less in europe. in europe, rates have gone too far already, and perhaps there will be a time to go back into equities. the european economy, the recovery has been very focused on the ecb and the ongoing deflation risk. the risk hasn't gone away, but the recovery is solid, if unspectacular. i'd say you could get to a point where you could say -- just because the bond valuations are so extreme. guy: where do you think bund is at the end of this year, versus treasuries? >> good question.

i thin k bund yields will be higher, but i don't have much more data than that. against treasuries, i think it will depend on the fed. obviously there is a massive divergence that has already been priced in between th europe and the u.s.. if you look at things like the economic divergence, i am sure you could plus it, -- could plot it, and get the bond spread is the other way. i would probably argue that treasury yields probably be even higher. guy: where do you think the tenure ends up at the end of the year? >> in the u.s.? guy: yeah. >> look, given where core inflation is, given where the u.s. consumer is, it seems pretty likely to us that borrowing, the fed will do what they are currently saying. if that is the case, the 10 year 2.75%, between 2.5% in

that kind of range. high. bit of curve flattening as it comes on. guy: we have already touched on this a little bit. the deflationary impulse around the world is indoor miss. yes, the consumer in the united states has the oil benefit to spend, yes, we are starting to see wages pick up, but nevertheless the deflationary impulse is such that we're going to see it rippling into most corners of most economies. in that scenario, at what point does the fed have to go, you know what? we are in a relatively closed economy, but as we admitted in september, there are going to be effects. when does that languish are to come back into the narrative? >> the place i would watch first is in europe. we know that draghi is the master of the current inflation rate. presentd

deflation into action policy. -- it is much harder for the fed to use that language. the unemployment rate is their estimate of the rate. core inflation is at 2%. yes, headline inflation in the u.s. is very soft, but even as soft as it is, and with the oil prices we have seen, the annual rate is still edging higher. yes, this is a deflationary environment, but particularly in the u.s., because the gap has closed, because the unemployment don'ts that narrow, i think the fed can seriously talk about core energy. guy: i want to talk about the phillips curve. michael metcalf. he will stay with us. i want to keep repeating this -- we are 10 minutes away from the european equity market open on the cash rent.

-- the cash front. it is negative. the fair value was a bit more negative than the futures, ftse down just over 1%. you are going to get a negative open. a lot of selling on wall street movers.y, big corporate we will talk about those. back in a couple minutes. ♪

guy: 54 minutes past the hour. welcome back. we are counting you down to the european cash open. plenty of stocks you need to pay attention to. caroline hyde has the details. caroline: retailers will be have been debating all week. s with homeer improvements get a $340 million bid from an australian rival. as offered for just

the home base part of a business, but that means they could get hold -- as we get sales numbers, they are looking poor, but home base is up 5%. they crawled up this morning on the m&a offer. meanwhile, another retailer to look out for -- tesco is beating analyst estimates. third quarter like for like sales are still down 1.5%, but better than estimated. the market thought it would drop 2.5%, and christmas, great guns, up 3.7%. guy: the other area we need to focus on, richemont out with numbers. we are four minutes away from the european equity open. the futures, the fair value numbers are all pointing negative, unsurprising. the s&p last night closing down 10% from its november high. we are seeing corrections there, a bear market effectively.

we will wrap you up in a minute with what you need to know, and we will tell you have a european markets are opening. we will take a break. we are back in just a moment. ♪

guy: you are moments away from the start of european trading. stocks plunged overnight on wall street. the s&p has plunged more than 10% since november 3. brent continues to unravel. below 30 for the first time in more than a decade. we were here from russia's finance minister. the day's oilder price and the ruble's exchange rate, the deficit would more than double. we cannot afford that.

least six people were killed in explosions and gunfire in the indonesian capital. be a badw it would open. that's what we expected. the futures are down around 1%. what do any to know, let's find out how these european market started today. caroline: risk aversion and returns. we have the age-old concerns, as to it the concerns about the attacks in jakarta and indonesia. we are seeing pressure on stocks. check out what happened in asia because we really did see the u.s. pass the buck on to asia in a downward trajectory. a small capwith entering the bear market, 22% below the peak in june. meanwhile, you can see the

nikkei off by 2.7% in the hang seng off by half a percentage point. it's see those attacks in jakarta putting pressure on indonesian stocks in the indonesian currency. this is the dollar rising. it's just weakening. but some of the look at other areas. oil is bouncing back but look at what happened on a tuesday. we still have that pressure near 12 year lows. we saw brent hit the low yesterday up by almost two percentage points. it is the tail that wags the market's dog. oil goes lower and we see the stocks fall. oils go down and we see that u.s. go lower. gold remaining lower but we have seen japan. currently yields are rising up four basis points but at one point they hit record lows. we sat 0.1% on the japanese 10 year.

you are seeing bond prices rising and risk aversion goes into the havens. look at a few retail stocks. i have a little picture i am painting for you this morning. i wanted to check in on associated british foods. we had a 3% increase in sales. the market wanted seven. home retail up 1.5%, getting an offer from an australian rifle, this being for the home act part of the business. we see sales really down, all could rise upsco 4% to 5% this morning as their earnings and sales to better than expected. for christmas we see an improvement with sales up 1.3% over the christmas period. let's look at luxury.

8/10 of an is up percent. business is worth more than expected. cartier and mont blanc, a few of you will know those products that they make intimately. richemont seeing a shot once again. sales fault 9% on the constant currency basis with revenue down 4%. maybe it's a little bit of a relief that it is not doing as bad as had been expected and the fact that burberry is showing an improvement. 4.5% and petroleum against 12% stake brought by statoil. it seems a bit of an oil m&a as oil continues to weaken. guy: let's get to more detail on the asian section -- session. >> an extraordinary day of trade here in asia with a lot of focus on the jakarta market and the indonesian rupee. also, have a look at the

shanghai market. the story of the day, speculation of intervention. at one point we saw stocks trading at levels we had not seen since december. it looks like we were going to reenter a bear market on the shanghai composite but after the lunch break, a lot of buying coming through. small cap stocks lifting the shanghai composite above that 3000 point level. of intervention with the shanghai composite closing higher by 2%. quite a lot saw coming through on the japanese market today. the nikkei closing lower by 2.7%. really saw the oil price play into the market in the region, particularly in australia which closed down by 1.6%. yesterday japan posted its first win of 2016.

but it was a different story today. korea closing lower with the bank of korea leaving its interest rate on hold. butness in new zealand, there will be a lot of questions about the shanghai market which looked like it would empty into bear market territory but closed higher by 2%. guy: european equity selling off a little more than we anticipated. stoxx 600 down by 1.4% as we speak. what is going on? let's find out. andrew is with us as is michael .ccarthy -- michael metcalf the year has started with a bang. why? >> one school of thought which says that qe was really successful at doing one thing and mediocre on the other.

one thing was increasing asset prices and increasing growth and emerging markets by fueling credit. compositionat the of gdp and break on came from emerging markets and developed economies, it is laid out there in the data. a good two thirds to three quarters came from emerging markets. if that was a result of what happened with qe going online and now we are starting to reverse that ross s. --are a long way every from along way away from -- reverse that process. we are a long way away from selling it. guy: we are seeing a slightly delayed reaction to the fed hiking rates in december. >> we have seen this big buildup of foreign reserves and capital

basically exiting those countries where qe occurred, going into the emerging markets and that is now starting to come back. capital outflows are taking place in china. the whole emerging-market complex has a capital account deficit. those are the chilly winds of deflation right now. guy: do we understand how it obviously, the point about the contribution of emerging markets, but the interesting thing now is that developed market consumers are showing some signs of taking the mental a little bit. taxalked a lot about the cuts that consumers get from lower oil prices. , almost inplaces europe as well, we are beginning to see that take hold.

global growth will be a lot lower, but there are one to two bright points. other point to make the global growth outlook is, we have had this routine thing over the last two years that we start optimistic and global close expectations get revised down. it happens every year. point forthe starting expectations are at their lowest in three years. the same goes for global earnings. expectations are lower and the only difficulty is that we had an awful start to the year. i think the point of expectations being low is still important. the bar is low so with consumer led growth, in some places we might get over it. bonds, by equities? >> it will be a bit of a challenge. guy: it is interesting to see

how that two asset classes are behaving. as we already discussed there is a lot of negatives surrounding both of them. i'm wondering which looks worse. >> if these trends that we are seeing in global reserve asset flows will continue, then, like the weather forecast for europe continental next week it will get a little bit colder. the third thing which qe was mediocre about is what you see, it has produced some growth in some jobs, but it is kind of mediocre in the historical context of the growth patterns where we have come from. isi think the reserve point an interesting one. right at the start we talked about currency trends. in the euro, there has been a perception that in the past there has been a lot of

recycling of reserve assets back. big growth in dollar reserve assets. that was to have the fed exporting easy monetary policy. now that is falling quite quickly and those reserve assets are not being recycled into the euro, that's one of the reasons why this new downside has opened up in the last six to eight months because they are not there coming back in like they were. you, it has been a pleasure having you along. michael metcalf, andrew balls and worth, the managing director of pimco will stay with us all ask whereinvestors next for europe's monetary policy. let me leave you on a lovely live shot of london.

guy: you are watching "on the 1.2% thisther morning. speed withou up to the bloomberg first word news. >> police in the indonesian capital of jakarta say seven

people including four attackers have been killed in the city. local media reports say that three other explosions were felt in an area near a number of embassies at the central bank. the tax is the biggest in the capital since 2009. brent crude is trading around $30,000 a barrel. earlier, oil trading in london slipped below the $30 mark for the first time since april 2004. that was amid speculation that sanctions on iran may be lifted by monday. russia's finance minister has explained how the oil price route means he has to top austerity measures on his country. speaking to ryan chilcote, he said the measures totaling $20 billion are needed to avoid a shortfall of more than 6% of gdp this year. >> they are digested to the new conditions. we can expect the deficits and a big inflation and the

devaluation of our currency. as was the case in 1998 and 1999 all stop if we don't take the right decisions -- ministerfinance speaking exclusively to bloomberg. that is your first word news. guy:, later today the european central the bank publishes an account of its december reading. ands go to frankford now jeff black. will the much deflationary impulse be playing into the ecb thinking? >> very much so. they find themselves in an uncomfortable position whereby it was only a month ago that they added extra stimulus. the oil market is not playing ball with the ecb or its forecast as far as how inflation

will turn out. what we are looking at today with this summer third meeting is an indication of how they may be reacting, if the situation changes further and we know that .t has changed again guy: it walk us through policy from here. what does it look like? have threeically options given the fact that oil has fallen sharply in december and is still going which will have a knock on impact on average inflation for the year. they can either communicate the message they will push back the time at which we achieve the average of 2% inflation -- that is not great because that's a damage to their credibility. the second option is they can change the target and say, achieving 2% in the current global environment is not realistic so let's have something lower.

that would be an even bigger blow to their credibility and they don't show any sign of being willing to do that and the third is to add more stimulus and hope for the best. given that they've only done it in december and said they thought that would be enough, adding more stimulus doesn't look great either. they don't have easy options. guy: we will look forward to your coverage over the next week as we head into the center stage. andrew buzzing with still with us. we've seen fairly decent outflows since the start of the year. given what he said is that the right call? some flows out of bond funds at the beginning of the year. in the context of asset allocation decisions, that is what will happen. let's talk about inflation forecasts and the options for

the ecb and the implication for the bond markets. i think number three will probably happen that there will be more stimulus delivered in the course of the year. the ecb is up against a very difficult challenge to get inflation up anywhere close to its target. if you look at the market for foreign inflation, be at the bond market or the inflation swap market, it is telling you that the ecb will not reach its target for a decade and we already had three years of below target outcomes. the central bank is running the risk that expectations the anchor from that target. i think that remains that option number three, more stimulus will happen in the course of 2016. the big question is, will it work? there probably are declining -- the margin effectiveness of qe

is probably less than the central banks that did it earlier. i think there was an early mover advantage to qe, but when you have the fed rolling back its stimulus program, those are some pretty strong headwinds. guy: walk me through what bunds versus treasury. diversions trade? ecb doing more will provide an anchor for european .ixed income rates now, in terms of the other things, that's with the greater uncertainty is. i think 2016 will be the story

of two halves. -- itrst half will be tends to be more looking back into the rearview mirror. momentum of the past stimulus is taking hold. the state will keep going for a bit and that will probably relate to diversions in the first half of the year. the second half is the? 's about what is happening with emerging markets and what is happening with recession earnings in the u.s.? the second half, i would not be surprised if we were back to similar spreads. guy: in november, we got up to 200 basis points. we are now at 152.

how does that spread work as we work through the year? >> the first half for the higher end of the range -- , butecessarily sharply that will probably be the direction. then the second half back down again. guy: below now or -- we are starting to toss coins. in that direction. guy: andrew is trying us from pimco. gunmen are amongst the dead and four others have been arrested. let's get to neil. thing is up to speed with what we know now.

>> the situation is still ongoing. we don't there are still attackers out there. a paris style attack across the city. there are reports of other explosions but they have not been confirmed. at the moment, there are several blasts outside starbucks opposite the you when's office. eight people have been killed there, including attackers, civilians and police. ifre still waiting to see that can be resolved but we do not know if they have captured all of the attackers. guy: who are these people? no one has claimed responsibility so far. they have not labeled anybody yet.

i'm sure they are speaking to saidsts, but they have that the islamic state warned in december that it would shine a spotlight on indonesia. it's been expected from the indonesian perspective. people are worried they will go to syria and become more radicalized, get experience, then come back. we don't know if that is the case or if it is a purely homegrown movement. they have been battling this for many years. up until now they have been fairly successful. >> thank you for the update and your continuing coverage. the bank of england meets today.

we have seen sterling back off. that is good news for the bank. has now pushed out to the end of 2017. >> there is a reasonable chance the bank of england will go this year. it will probably be the second half, otherwise known as the fourth quarter. if it does, there will probably be a couple prerequisites. headline inflation is basically zero. i think that will have to be up closer toward the end. we will have to see core inflation continuing to move as well. it will be very difficult for them -- for carney to move ahead with a hike without those

conditions being fulfilled. they would need an extreme amount of conviction in the forecast to increase interest rates. while they're still below even there lower part of the ban. usually, the bank of england moves in sync with the fed because the economies are reasonably in sync. but certainly was the case when interest rates were cut. there is a little bit of difference now on the exit. it has to do with the you k's proximity to europe. the other big debts with the u.k.'s proximity to europe. the other big -- it just extends the time until the terminal rate is achieved and reached.

in other words, we are talking about a longer this this cycle before the economy is back at potential. guy: so -- you think we will end up with elongated? >> it comes back to where we started. this deflationary wave of global , feeding through slower growth in the emerging markets. the debt risk spilling into the developed market and extending this recovery period. guy: do you like that gilt market? >> these levels are not exactly attractive. in either direction, i can build a case of going both ways. i tend to be pretty neutral on that. guy: thank you for your time, as ever. nice to see you in london. it sounds like it will be a fascinating year. andrew bynum worth joining us

from pimco. up next, we will talk to goldman sachs and the global market institute president. she is up next on on the move. ♪

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sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. welcome back, 8:30 in london, 30 minutes into the trading day. let me show you the numbers, by 1.8%.ks down dax 1.6. cac 1.7. london faring a little better. we are seeing selling across europe. asia, in a you to bit from the indonesian police. police in jakarta saying the attack has ended and they are also indicating that they strongly suspect that the attacks are linked to the islamic state.

some prerecorded pictures from the attack earlier on. some of the stocks on the move, let's get surrogate with caroline. looking at some performers at the moment. looking at the retailers that are leading the charge. having its best day sent september. a quilt 871 million pounds being added to their market valuation today. the reason is because it is doing much better than had been expected. guy: we will come back, u.s. stocks we saw that entering a bear market. seen some 30 handles over the last 38 hours. what does this all mean? elliott is running us now from outside the philippine stock exchange. am pleased tos, i say i am joined by abby joseph cohen when who the president of the institute at goldman sachs.

great to have you with us here in tel aviv. we were just talking with the selloff we saw yesterday. in correction mode, it is just the tip of the iceberg? on valuation and based the outlook for the u.s. economy, this is not the tip of the iceberg. clearly, investors are nervous. but the underlying performance of the u.s. economy is actually quite good. the unemployment rate has fallen to 5%. new jobs are being created. companies are profitable. ar feeling is that this is reaction to some of the important news around the world, including the sharp decline in energy prices and the world is about china. then thoughts about what will the federal reserve do next. elliott: you'd expect some kind of rebound eminently? bby: when we apply our

valuation models, we think fair value for the s&p 500 is about 2100. so several percentage points above where we are right now. elliott: you already answer my next question, the bank of scotland warning of a ferry -- fairly cataclysmic year ahead. that chinas says induced volatility we are seeing is reminding him of the crisis of 2008. you presumably don't think it will be quite that. abby: i think there are some important differences. ofst, from the standpoint the stability of the financial system. in the united states come we have had tough love regulation, banks that are still in business -- keep in mind the weak sisters are gone. though still in business have significantly improved capitalization and very strong balance sheets.

we don't seem as vulnerable as they were in 2008-2009. our economy is moving in a more sustainable way. we can look at the china situation, look at the energy situation, and can run the math. we can do the arithmetic about a percentage decline in energy leading to the following outcome for the economy. but that is not exactly what is happening. what is happening is really very emotional response. i understand investors always have the idea of what could some of the alternative scenarios be do as what we need to professional investors is to think about the most likely case as opposed to the most awful case. you're not convinced the volatility we have seen on the chinese market or plunging oil prices, or spats between iran and saudi arabia are enough

to recalculate. abby: not at this point. we are watching everything very carefully. our feeling is we need to put things in perspective. volatility will see the global markets has been arrived back up to normal levels. time whenrough a volatility particularly in equity markets was extremely low. now it is back up to historical average. secondly, with regard to what is happening in energy come out commodities teams have forecasted some very significant weakness in energy prices. of course in other commodities. keep in mind, much of this is related to 2 factors. the two big ones are a slowdown had been a huge consumer of energy and other commodities. they were building infrastructure. obviously, that is genetically slowed. mindther thing to keep in

is that many commodity producers around the world overbuilt their capacity. so some of the decline we are seeing in commodity prices is not just the weakness and demand it is the abundance of supply. that will take some time before that capacity get used up. elliott: we could quite easily see oil prices going down towards 20 or $10 a barrel? where do you think things could go before they get back to normal? letby: -- abby: my colleagues have been saying for extended. of time that the trading range for energy is something probably on the order of high 30's to mid 40's. that doesn't mean that we get there right away. to thosewe get back up sorts of levels on a sustainable basis. what we need to keep in mind that commodity prices are

volatile. things like commodities, and foreign exchange come over time often tend to be more volatile and then stocks. so, we should necessarily look at the last tic or price on commodities and say that represents the new reality. sometimes it is more reflective of volatility than anything else. elliott: i want to take you back to your home country. what do you see happening over the next few months in the u.s.? how long before europe, the euro zone and the bank of england feel able to follow suit? believe the federal reserve will stay on its course which is to look at the data. when they raise rates in december from extremely low levels to their below levels, basically our fund rate went 0.25%.range of 0% to

the fed toll any additional changes would depend on the data. they will look at strength in the labor market, strength gdp. also looking at what is happening around the rest of the world which has been their modus operandi for several years. the recognize this is a global economy that has needed stimulus. i don't think this is a fad that is anxious to apply the brakes too quickly. giving his investment idea for the year, he said it is good to have some gold. yourfor 2016 will be investment idea. perhaps and -- and industry class. >> we don't see a recession coming. we see economic growth whether and a quarter, we see

the economy continuing to expand. he also see corporate profits continuing to grow. if those assumptions are correct , moderate improvement in the rest. market is underpriced. we can't say the same for b onds, we don't think they are underpriced. we about the extreme volatility in commodities. our judgment will be stocks are probably the best place to be. especially if you think the economy will be growing. our colleagues around the world have similar conclusions about their own home markets. for example, our analyst in japan thinks the tokyo stock exchange with that ok returns is here. we also think some european markets without positive returns. >> legacy much for joining us. it is great to have a voice that doesn't say only gloom and doom in the world.

for now, apple had it back to you. guy: thank you very much, indeed. we closed 18 or 19 last night. a little bit of head room maybe on where we stand now. up next, more of what russia's finance minister had to say. >> if he considered today's oil prices and the ruble's exchange rate, it will more than double. can't afford that. ♪

guy: welcome back, you're watching "on the move." it is a sea of red out there. falling really from the get-go this morning, the story we saw last night on wall street. let's see what some of the individual stocks, caroline hyde what are you watching? caroline: i'm looking at retail. this is an area that is needing a charge up. day in a yeart o stocks. the reason is that performance during the christmas season. all of the back of the fact that christmas trading, the time of 1.3 percentnt up much ahead of analysts expectations.

in the quarter as a whole fell than previously estimated. meanwhile, looking pretty appetizing on a few fronts. it was performing relatively low. this -- china returns to growth. using of concerns for the -- a sigh of relief after what happened into asia. sure we saw -- a bit of a non-growth for the overall quarter. no change in terms of the like to like sales. on the downside, check this out -- the restaurant group up by 50% -- 15%. says theyrfunkel's it are conscious of a 2016. a much, someen stocks to watch -- russia has been forced to extend austerity is the government takes stock of followed finances hit by the new

decline in oil prices. the reserve fund slumped by 30%. quizzically with russia's finance minister asking him why russia is facing a crisis like the one we saw back in 1998. if the state finances aren't adjusted to the new conditions come we can expect big deficits, big inflation in the devaluation of our currency. that was the case in 1998-1999. if we don't take the right and 99 thein 1998 parameters were cut by 10 percentage points with a spike in inflation. it happened all on its own. out of our control due to inflationary devaluation.

we shouldn't make the same mistakes. we must revise the budget to meet the new conditions. ryan: there are an awful lot of parts of the budget the can't be cut. what it makes sense to change the rules and cut in those areas as well? >> for now, we've decided not to cut defense spending. we will see how the situation develops further. a little budget that would make it to the year. -- into thousand seven we have enough resources reserve but this year we need to make decisions that will allow into balance public finance 2018, 2019, and beyond. guy: he did that exclusive interview for us with the russian finance minister. 1998 is a year that is burned

into the memory of many russians. ryan: it kicked off the black monday when russia defaulted on its debt. it was hyperinflation, and a run on the banks. you may remember of the video people fighting and the lines for a place because they were desperate to get their money. the banks weren't returning people's deposits. what he says that he is being a bit of an alarmist. he said oil is at $30 a barrel now, and we need to do this otherwise things get out of control. talk about the kind of cuts they are talking about. the magnitude versus the reality of the situation. it & enough? -- is 10% enough? them ahat would give little over 500 billion rubles, they need to find 1.5 trillion.

they need some luck and some privatization sales. at $30 a barrel, that might not be worth a lot. in the to burn through their reserves. we need point is that to make carter decisions going forward and make those decisions now. we will pretty much be out of reserves by the end of 2016. it will be interesting to see if it ultimately affects foreign policy. . -- an update on jakarta before we go into the break. the deadly explosions are linked to the islamic state. say three gunmen are amongst the dead and four others have been arrested. we bring you more on the developing story as we get it. ♪

guy:/welcome back to "on the move." the ftse is off slightly. the dax down by 1.8%. somebody decent moves.

in just 10 minutes germany will go to a preview of its 2015 gdp. what will it tell us? let's find out with hans nichols. will get a reading for 2015. it is a preliminary reading because it only includes two of the three months of the fourth quarter. it is that fourth-quarter month it is the most interesting. again, it doesn't include the month of december. we will leave that to others and whether or not the german consumer can really tip gdp that much. it would give us an indication, the overall read -- 1.7% growth. that is not exactly red hot potatoes here in germany. it is frequently referred to as the engine of economic growth in europe. guy: what will we learn from the ecb's meeting in december? hans: just how much pressure

mario draghi was under by the committee. bloomberg prison reported five members didn't want to do more or have a lower deposit rate. we get a sense of just how strong that opposition was. he was only able to bring it .3% menacing it could 4% that gives you an indication of what expectations are for inflation five years out. that is down to its lowest levels since october. that is driving some speculation that the ecb will have to do more, especially will miss the soft inflation data. we get the latest figures we will see how much pressure mario draghi is under to do more to get to that price stability goal. given much, indeed. hans nichols running is out of berlin.

we have a number of things going on right now. the bank of england is out at 12:00 noon. bridget jones will be joining us. outmarkets are now priced until 2017. will be veryey consistent with what they said over the past couple of meetings. it will highlight the headwinds that they are facing to achieve that inflation target. i'm sure they're not over the mood with what market pricing has done recently pushing the lift up after the middle of next year. i don't think they will push back to water. guy: they have to be pretty happy with the sterling. the one brights spot for them. if there was a lot of downward pressure on inflation and making them achieve that inflation target, sterling was one of those things. it has actually abated a little bit. it was in a leg low run the

selloff this morning, most european markets down to 2.5%. down nearly 10% this quarter. century bancorp is a with the fed is to hike through four times this your. the market are signaling a very different narrative. raterd: on the interest side, yes. we know the disconnect and what the market is pricing, i think red will test the resolve of the fed. but they allow equity markets to slide? on previous evidence, that hasn't been the case. maybe this time is different. the blessing this is an opportunity. richard: it doesn't seem as prevalent as what it did see --

say a year or 18 months ago. it strikes me that if anything investors are nervous -- we see some sharp falls as a reflection of the nervousness. i think we're into a new regime. i think but take a while for investors to get used to that. guy: is the sense of the people you're talking to the directly to hang out is the end of the moment. richard: it is one of those things that the serve them by will up to now. there is some view that maybe it is time to take some of that risk off the table. one of the technical levels that we look at over the past day or 118 dollar yen. whether people unwind those trades or add to them, but up until now it has been very positive for investors. guy: thank you very much, richard jones joining us. --opean equity markets

giving back some ground again this morning. stay with us. ♪ we live in a pick and choose world.

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francine: explosions in jakarta. three blasts tear through the indonesian capitol and the terrorism threat escalates again. european stocks fall again after a selloff in the u.s. and china. brent cruise follows wti below $30. terror flights and low inflation comforted the policy decisions for central banks as the bank of england prepares for its new decision. welcome to "the pulse," live from london. i'm francine