4:00 p.m. in london, 11 a.m. in new york. "bloomberg markets." welcome tjoin us -- i am mark barton's, and joining us is nejra cehic. we had 30 minutes left in our equity session. the requested out is our european stocks going to continue their 2016 slide? almost $3 trillion of value has disappeared this year from global equities. kasper rorsted least to join adidas. adidas jumping on that news. >> mark, we are in correction territory. a flurry of activity to try and pull the core back. it is a periphery where the real

pain is in the italian banks. nonperforming loans rise to hundred billion euros. that is the pressure point. there is no bad bank in italy. mine is about 40% higher than the past 30 days. volatility is rising to levels you haven't seen since last september. it all comes down to this, positioning in terms of commodities. and that has the effect -- and the effects it has in the banking industry. the ruble trades at a dollars $.79. -- $1.79. they say that intervention is small. who wants to fight the right of oil? we are seeing -- a real push and

pressure in terms of the ruble. the interesting thing is you are seeing a ratchet higher than natural position. you are seeing position coming into the brent trade. that i find absolutely fascinating. at one point we were talking about 3.4%. the quality -- the quality -- the volatility you are seeing is quite substantial. let's check-in on the yen. money coming out of the yen going back into the dollar and the requested out is, does that huge dollar rally continue and 2016, or will the fed be stymied from raising the rates any further? mark: that is allotted 30

minutes. nejra: starting in morocco -- police in morocco say they arrested a man who had a direct relationship to the paris attackers. they said the suspect is a man of belgium dissent. police say many of the attackers that killed 130 in mid-november had links to belgium. iraqi forces are going house to house in baghdad try to find three kidnapped americans. an official says the americans were taken from the interpreter's home on saturday in a southern action of the capital. the three work as contractors and baghdad's main airports. a suspect is in custody in the killing of an ohio police officer. the police officer's body was found behind a building downtown. police say his cruiser was missing and his gun was taken. they said the suspect was arrested after a woman phoned them. after reassessed the north

deployed 100 balloons today in the latest round of their propaganda war. the balloons dropped leaflets. the two countries are on edge again. the south is using huge speakers to last propaganda messages across the border. and cuba is not limiting its diplomatic sense to the u.s.. castro will make a visit u.s. on february 1. global knees 204i was a gay -- global news 24 hours a day and more than 150 viewers around the world. mark: what should investors do? our next guest has two words bamboo strategy. she is managing director of global advisors. sounds like a yoga move that

nejra shows me every morning. explain more of the bamboo strategy. >> in this environment, this is a bit of a new paradigm. it is not a typical crisis in an attempt to normalize world and grow very slow. it can be quite a mimic. -- it can be quite anemic. some markets are adjusting to the new growth in china and around the world. in that environment, it is easy to become very pessimistic. you have seen volatility and market correcting, which is quite clear. their relations -- valuations are quite fair, but the growth prospects, you have to be very selective to find growth. however, in that environment where you have a lot of liquidity coming from europe,

japan, possibly china -- you will have opportunity but you have to be streaming disciplined in terms of valuations and management quality and governance. you will have opportunity to pick up stocks in those of volatile times. that means having very flexible and strong strategy, strong focus on long-term things to identify the companies you think are going to make it on this sustainable basis, yet be very, very stingy with what you pay in order to dollar cost average. you might have this kind of volatility for another few months. i think it is to be expected. nejra: you use volatility to your advantage. where do you see this new growth? >> i think clearly, you always have to see what is apparent. what is apparent is pressure on

commodities, pressure on oil, you need to continue to think along the disruption thing. you need to think about the good and the bad, so even where you have very low growth, you are always looking for growth to do old things better. so energy efficiency, internet of industrials, how do we make it work what we currently have in a better, more efficient way? you also have to think about the new innovations -- what are the new technologies new luxuries? i think there is a new shifting concept in terms of luxury. mark: do we shun the old luxury? >> i don't think you shun it, but i don't think it is as clear cut as it was before. it is much more grander. people need to be much closer to

their end customer. you need some very good technologies. none of the traditional luxury will work, but you will have to be extremely selective. have to think about new luxury. it may be pharmaceuticals with longevity. that is one of my long-term demography teams. maybe the best thing you want to buy yourself if you can afford it is a better doctor, better treatment -- that is new luxury gadgets as we know from phones watches, that do something for you. i think it is really a theme there. and there has been this combination like we have seen and pharma -- new technologies apply to traditionals. you can see that in the internet of industrials, but you also see that in pharmaceuticals, where we are doing, and the last five

years, we make tremendous progress on treatments. because we are combining different technologies with computer power and traditional wisdom or traditional science. over the next 10 years, we are going to see a lot of that in a neuroscience, in particular, in ways that will really surprised us. what can you do if you are having a listed equity portfolio? even if you are a stock picker. be aware of new trends in technology. if you come by them directly really keep informed on that. that is the flexibility part. remainder traditional valuation o.p.s. questioning growth. this is what is going to do well over the next 12 to who 18 months. you cannot take the risk on things -- nejra: even if you cannot invest directly -- i spoke to a guest

on bloomberg radio last week talking about the luxury saying look mother are a lot of companies investors can't quite access because they might not be listed. those are the ones you want to be looking at more than the older players. >> there are several reasons for that. the first one is competitive. the same way if you have been looking at emerging markets there was a time in the past you can invest in it, but those trends have very big impact on the competitive environment for companies you could buy or choose not to buy, because they were threatened. the other reason and i think you pointed it out very well for the luxury sector, is that the companies may become target acquisitions for some of the stocks listed. if you put your eyes on them early on, you will have a better feel or understanding of what

their products are and how they might fit companies you have in your portfolio. mark: virginia will stay with us. still ahead, oil dipping below $28 a barrel this morning. it is studying. how should investors navigate these volatile markets? that is next. ♪

♪ mark: welcome back to our special coverage live from london. this is the european close. i am mark barton and this is nejra cehic. shares hitting a five-month low -- colburn sent a profit warning

two months ago. kasper rorsted will join the adidas board in august 2 take the reins. worth it is currently -- worsted mess is the ceo of ankle. report in the reins would only affect the rumor mill. that is the latest bloomberg business flash. nejra: still with us is virginia, who is managing director. we were talking about how you navigate volatility just before the break.

talking about your bamboo strategy being both strong and flexible. we look at the selloff that have happened this year. it has come down to two things china and will prices. if you had to pick one thing that is scaring investors, what would it be? >> i still think people have not realized that the trend growth rate for china could be well below what the government is officially targeting. i would say the oil price is a derivative of that. not only chinese slower growth, but supply and demand aspects that are clearly in favor of lower price. both are really intertwined. what is interesting and may not be factored in is what is the impact of the sub the $20 oil price due to the financial system in terms of countries potentially being in trouble? when that -- when will that have

an impact on the expected oil price? if you look at the most recent report, they are believing that they will be built up in 2016. by the third quarter when he 17 they will be in balance. -- 2017, they will be in balance. it is very topical in bringing back iran on the oil map. it is not only one factor, it is anakin relation of factors that have -- and accumulation of factors that have potentially -- in the light of the environment with all the qe. the fact that valuations went up -- are not cheap anymore. if we had another bout or fall in the market i think we need

to be careful about becoming too pessimistic because there is support in terms of liquidity. mark: when we have the first leg of this oil price decline from it 2014 to the beginning of 2015 everyone was saying great for the global economy. why are people going against what they were saying in the initial downward like? the pessimists were saying this is reflecting the underlying economy and that it is weak. what changed? >> people are not looking at it anymore. we must not forget that. one of the fears is that it is making the jump of the central bankers and trying to somehow some or to a minimum of inflation they think is healthy to help the financial system. that makes that job even harder. it is a question of balance it how much more positive do we get

with this oil price floor with the marginal, or incremental issue on benefit for the consumer, versus all the other negative? we have to remember that the lower oil prices is positive for a lot of industries around the world. i was a that in the current environment it is possible that people have gotten over this. in particular, considering the iran situation. nejra: i want to take you back to the central banks. draghi's efforts have been sorted by oil price declined. when 50% of economists surveyed predict the ecb will announce more stimulus this year. this is up 40% from december. that is because the renewed oil price slump. what is your view on that? >> i think it is feasible.

the timing -- he will want to keep as much ammunition as he can. we know that draghi strategy is the word qe, doing as much as he can and talks and keeps his ammunition for when it is needed. it is a question of what happens in the global environment, and we are seeing what i believe, a u.s. economy doing much better than the rest of the world. we are seeing secondary derivative numbers falling. we are clearly seeing china on a path that i see as positive for many reasons. the adjustment of expectations to that is still taking place. we had this unknown in terms of what the market forecast is -- terrorism, unanticipated events -- i think the valuations are

not cheap. if the market was a bit cheaper, you would need to be at that lower level to bring new buyers into the market. at that point in time, action from the cbe might be better received. nejra: wonderful. thanks to virginia. managing director of global advisors. mark: is it me? there you go. with precious metal has the best prospects for 2016? i have a chart with a few suggestions. get ready for the jets of the year. he is coming up next. ♪

♪ mark: welcome back to "bloomberg markets." this is the european close. i am mark barton. let's focus on what is happening to the battle of the charge.

i am joined by our very own nejra cehic. i want to kick off with this -- discharge -- this chart -- are you looking at this first, or is it me? we are going to focus on the prices of gold and palladium. in 2016, gold has risen by 2.8%. the best-performing metal. the second best-performing commodity after -- wait for it -- is coming back from three years of decline. that is the orange line going back a year. palladium has not fared so well. dropping to the lowest level since august 2010 as tuesday. last year, it plunged by 30%. south african mine production rebounded. which metal is going to fare better in 2016?

it is palladium. that is according to some of the most accurate precious metals forecasters, including bernard -- he says it will rally because of the car market. palladium is used in catalytic converters in china. also consider this -- gold shares are outgoing -- are outselling. one final point, and improving global economy would be better for palladium because industrial applications account for a majority of demand compared to 10% without gold. the message is simple -- gold remains hostage to the fed. palladium's fortunes rest on the outlook of the chinese oil market. nejra: i got a commodity-based

chart. it has been a terrible time for commodities over the past year. we saw the bloomberg commodity index return. we saw it dropped to its lowest level since 1991. some have said -- some have fared worse than others. we are looking at the bloomberg world mining index versus the london metal exchange metals index. what mining shares have slumped 16% this year. more than twice as much as the measure of metals leaving shares at their lowest compared with their product prices since at least 2003. what this chart is showing -- i have normalized it the world mining index, it has lost 44% in the past 12 months whereas, the london metal index has dropped what effect percent. if you the real difference.

it is interesting because mining stocks market has been one of the most volatile. anglo american has become the most volatile stock in the stock 600. mark: i want to introduce you to the judge, jury, and executioner, and he has decided that nejra cehic is today's winner. nejra: yay! mark: we are going to talk about the fx market. will this give the market some positive data? the european close is a matter of minutes away.

>> your life from london. -- you were watching the close, live from london. >> equities dropped for the

third day. globally, a trillion dollars has been wiped off the equity market since june of last year. foreign exchange volatility is rising since the stock declines for the third straight day. 200 one billion euros for significantly worse than the markets had predicted. 75 billion euros worth of fake retail bond. that is opening the door to cheap financing. there is no bad bank yet. here is that little train going north. these is the equity markets as they close.

it is of course, down over 4.5%. the price of brent is an interesting concept. it has vacillated a lot over the day. down 1% 28 how low can we go in this market? that is the question people are asking themselves. some of the individual movers are worth taking into consideration. in 2016, it has gone into british government bonds. the single most respectable return, over 2.6% in terms of 10 year government bond so far this year on the global model market -- on market. this is all due to the ceo coming in a new ceo in charge. he adds that hundred 50 million euros worth of lu to adidas.

>> let's check the first word news. hillary clinton and her closest challenger held most of the spotlight on the latest democratic presidential debate with the third major candidate seeking the nomination since old foot runners are vulnerable on one -- since both front runners are on follow barrel on one issue -- vulnerable on one issue. they have both been inconsistent when it comes to this issue. . kuan candidate on this stage that brought people together to pass conference of gun safety legislation. >> gun control and health care with a key points of contention last night. it was for democratic debate of the river campaign. -- primary campaign. america is marking the legacy of dr. martin luther king junior

today. spacex engineers say an ice buildup may have caused the crash landing of the company's booth a rocket. is excited with a satellite into orbit, but the landing of this patient caused an explosion. they are trying to cut costs by recovering and reusing the rockets. 39-year-old peyton manning drove in the game-winning touchdown in a win over his fate. it will face some pretty and the patriots are the nfc title. caroline and arizona will play for the nfc crown. the winners will go to the big game. global news 24 hours a day.

mark: let's switch the conversation into currencies. the yen weakening after speculation against the currency. let's bring it richard jones. the yen has been the success story of 2016. this is after four years of decline. the end of the terrible ron and the record losing? >> and defense upon what your view of the world is. of course the yen has benefited from the rocky start we have had in equities, loyal, and the general negative risk tone we have seen. if that continues, it is possible we could see it continue to outperform. >> what does this mean for a possible further central-bank action? at some point we even saw the euro being treated as a haven currency. if we see further gains this

year, possibly in the euro and the yen, could that prompt further easing from the bank of japan, from the ecb even reserve currency board? >> is very much code. in the case of the euro a lot of investors are looking to this week's ecb meeting, thinking that the euro has risen on a trade basis, about 3% of the first of december. many investors are expecting them to sound very dovish this week. if not as early as march, maybe the eerily -- the middle of the year. >> and the forecast was to be 1%, with crude oil below the level they thought it would be. is it uncertain it will have to implement more stimulus richest? >> the inflation numbers will be very challenging for the ecb, given what we have seen in oil. i think those forecast, which are due to be revised in march -- >> march is the favorite for the

next fact of stimulus, according to the economist we have talked to. >> it gives them cover if those inflation forecast a revised lower to do something further . >> what about commodity currencies? we've seen a number of them rebound, the canadian dollar appreciating for the first time this year. but in general they have an quite punished by low oil prices. >> it is a trend we have seen across the commodity complex. that is a function of a low oil price. the theme that we have seen throughout the year so far, about low oil continuing to asset classes is continuing. >> mark carney speaks tomorrow. it's easy week for data.

inflation data will show close to zero on the cpi level, which is better this year. -- which has been battered to this year. is this realistic or not? >> one of the big drivers of sterling weakness this year so far is that the bank of england in terms of their interest rate fell as been pushed well into 2017. interest rate differentials are the one thing that is putting sterling on their back foot. you have carney speaking tomorrow, the first time he's been since they made the announcement last week. inflation tomorrow will be really important for the market and it is hard to see this being a number that will surprise to the upside. given that backdrop i think it is going to be challenge for the bank of england to raise rates us your grace that is what is weighing on the pound. >> how much of it is about the

dollar? the owner people we have spoken to in general say that they have the risk of a stronger dollar relieving into other asset classes -- permeating into other asset classes. >> for the u.k., the strength in euro sterling, the ecb will not be to happy with the euro strengthening. it goes back to what you are talking about earlier. are we going into the next bout of currency wars? there is some competitive devaluation going on. realistically, the strong dollar something that could underpin everything in the currency markets. those moves are also very interesting. >> has china called the markets down now? have we seen the lows for the yuan for the moment? >> i think it is quite possible

because we remember back in august we had a similar situation where we had a chinese currency weakening that it was done over the course of a week or two. bennett was very quiet. it could be something that we see now. with that be the end of the weakening of the chinese currency, not necessarily. >> thank you for joining us today. it is 4:39 p.m. here in london. still ahead, sanctions on iran were lifted. while the extra supply of oil put more downward pressure on price? ♪

>> welcome back to bloomberg markets, live from london and new york.

>> time for the bloomberg business flash. danger is wasting no time returning to the iranian market. they announced a deal with volkswagen for trucks. media bank a role in handling foreign investment in energy and automotive industry. and barclays are reportedly wants to sell a stake in its african unit. nearly two thirds of barclays africa group on the market. some do nothing it fits the strategy. that is the latest bloomberg business flash. >> the markets in the middle

east rediscovering some putting today. closing of a quarter of -- up a quarter of a percent. our advisor joins us. thank you for joining us. our middle east investors, our gcc investors, are they going to be used to days like yesterday where we saw a big selloff across gcc stock markets? >> if we see world going down by 6%, this is what happened on friday, most likely. a lot of the bad news is stock markets in the region going

down. >> does that tell us that iran's turn to the oil market is priced into the price of crude or not? >> not exactly. then to produce the oil they have been claiming they are able to produce a short timeframe. one million barrels is a lot of oil coming onto the market. they have to show it. knowing to see what markets will react now they need to reduce output. >> out of iran coming back to the market, tell us a little bit about the impact this could have on other middle east economies. >> on the economic side, the gcc countries are better than what they had back in the 1990's when we saw oil prices falling again.

these countries, like saudi arabia, they have huge reserves. they announced a budget that was far more conciliatory, but also consolidating the account. for the first time they announced a budget that will diversify the economy. there is a vision behind big pharma. this is a big thing for the market. but of course investors are saying, beyond that, what will happen to oil prices? now the ball is in the court of around. again for the big producers the strategic producers such as saudi arabia to come back and say we're going to put does reduce output or go market share, the overall market is able to weather this storm. having said that, it is always negative when you see oil prices

going down because these economies depend on oil. >> we have talked a lot about the impact on oil of iran reentering the market. but i want to talk a little bit about iran's stock market as well. it has become a little bit more accessible to international investors are talk about what investors need to be wary of here. >> in many ways, we talk about other emerging markets. what is the depth of the market in iran, what do we know about these companies yes the market is opening up, but yes again to what extent can investors go into iran? this is still at a very nascent era of the arabian stock market as people begin to know. just recently the saudi arabia market opened up to investors, and we witnessed that they are more lukewarm when it comes to saudi.

we're talking a lot about iran but we know far less than investors will be apprehensive at the beginning. >> we are with the same currency market volatility. investors are beginning to question whether countries or cities like hong kong and saudi arabia are essentially going to lose their pegs to the dollar. salad he this peg for 30 years. is this silly talk that the peg could go? >> it is a great question. i'm glad you're asking. i think it is silly talk, i agree with you. i do not believe and expect that the saudi's are going to suddenly decide to withdraw the back war, and begin to devalue when you have major economic reforms that they are on to her taking. in many ways, this is the wrong time to be doing it because have -- they have all of these variables.

yes it will make the revenues go up if they devalue, but their imports and they are so important president for more than 95% of what they consume is important, is going to be priced that i had our level. -- at a higher level. i think all this talk and speculation will be speculation and talk. i do not think they will change the currencies. >> something that is not all talk and speculation as saudi arabia examining selling part of a round co--- aramco, the state own oil company. that got us talking a week or so ago. do you see that happening? how significant was that announcement? >> i think it is very significant because over the last 11 months with the advent of a new king, and definitely the arrival of the prince at the helm of this new economic

thinking, there is something going on. that is a new saudi arabia being created. we are in the midst of this, and i have seen it. i have not seen a government operate in such a high pace of reformist attitude than over the last 13 years i have been here. i think this is going to happen very fast. i do not think they're going to privatize the segment right away, but they will do downstream. saudi arabia wants to tell the world that we are open for business and we are sharing with you because you can use this oil. >> are they really open for business? are they really transparent? saudi arabia when it comes to gore oil reserves, that is two different concepts. >> is a very good question. a year ago i would have asked myself if the government is going to announce a state budget

that actually for the first time tells the world what they are spending in terms of defense and security. this time they did not. they announced how much they spend on yemen, and on everything else, including defense and security. it is something that is happening as we are speaking. the government is very keen to open up their books. i do not think they will do it immediately, but eventually they will have to do it if they want to privatize the segment. they want to be more open and more transparent. >> thank you for joining us. still ahead on bloomberg close it was a shaking start for the retail for the year. where we see market opportunity next. ♪

>> luxury retail milan fashion

week is underway. luxury goods maker graco says they plan to grow their business to ♪ ♪. >> we play in a large opening in beijing. sometimes what is this understanding is that the stock exchange is not really impacting the conception market. the stock exchanges kill something accessible to a limited number of people. not involved with the domestic market. the major thing is growth in the middle class, improvement in the quality of life.

all of the maryland related subjects. >> here is the ceo talking about the outlook for the market in china . >> i am worried but i have to have courage. we are not oversaturated, and we will continue. if china we believe, this is the right deal. some people, some competitor will exit. we will have stability for us. >> clearly china is the massive concern for these executives. hong kong is a concern for the swiss luxury market for watches. >> absolutely. we were talking about how we

have been seeing a stronger again this year. but it is to that what luxury customers were doing was a lot of shopping in japan to develop savings from that weaker yen. >> let's talk to loan clear chief executive about prospects in china. >> we are very good with distribution. i think it is important to build up the brand in china, not to want to send it out. >> you can read more about luxury pursuits on bloomberg. a quick look at european union markets it was another choppy day. >> absolutely. the stoxx 600 close down 3%.

>> it is an incredible year. if you exclude the u.s., the only stock -- there are known stock markets that are worth than more than $7 trillion. >> it only took seven months to wipe off that rally that it took two years to get. >> how have you enjoyed your first day at bloomberg? >> i have enjoyed it. >> well done. well done on winning battle of the church. we will see later. ♪

the only way to get better is to challenge yourself, and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit

into your life. not the other way around.

>> welcome to bloomberg's netsuite on television. >> coming up this week then that so friendly skies of united airlines. we will look at what happened. >> can high-tech influence the gun control space? smart weapons that could be a game changer. >> the challenges women directors face in hollywood. that is all this week on bloomberg television. ♪