cools.a gdp growth returns to levels last seen in the 1990's. shares are rallying on increase stimulus bets. unilever beats as its ceo warns of a rocky 2016. we will bring you are interview. and slow inflation for longer. low-flation. pound struggles to make itself felt in the u.k. analysts are forecasting a 0.2% increase for december.

guy: welcome to "the pulse" in london. i'm guy johnson. let's get you up to speed. here is the first word news. nejra: china's official growth figures came in below expectations with gdp rising 6.8%. the world's second-largest economy expanded 6.9% annually. it's lowest rate since 1990. it signals first and this may be needed after a record yuan evaluation and a $5 trillion stock market rout. china's biggest gas producer plans to cut spending and reduce production. the company says it will decrease capital expenditure to as little as $9.1 billion heard at the same time, it sees 2016 production falling by the equivalent of as much as 25 million barrels of oil compared to last year. ramsey says the s&p 500

has another 10% to drop before the 2016 selloff is over. he correctly predicted last rout. august 2015 the s&p is down 8% this year. we are getting the markets report from the i.e. yes. ws an emphatic hen address and the question of can iran's return drive oil lower? the other interesting line is they are saying that growing inventories may make floating storage profitable. that is a pivotal moment in the shape of the oil-- and another bearish factor we need to bear in mind. iran's return to the international market may add an additional 300 barrels a day by

the end of q.1 2016. global stockpiles are to swell to 285 million barrels in 2016. line wes would be the are getting out of the oil story right now from the iea. the rout may worsen as oversupply " grounds the market." areer key market stories we watching. everything is related at the moment. countries gdp number coming in at 6.8%. 6.8,ast three months, the lowest level since 1990. let's get to beijing. tom, can i say that china hit its targets? hit yeah, you can say china

its target and there's some good the in there, but i think negative takeaways are going to be what are going to be the impression which people leave with. a bunch of negatives, really. the lowest growth since 1990. a miss relative to expectations of 6.9% growth. so, concern that the very large amounts of stimulus the government pumped into the economy in 2015 have not done more. growth has stabilized but why hasn't it accelerate? the stimulus is not gained traction. underlying all of this continued concerns about the credibility, the reliability of the official numbers. the national bureau of statistics says it is 6.8. there are some cynical people in the market who would question that number. guy: yah. eah. if that's number is not true

then maybe we need to get more stimulus. even with the current number maybe we need to get more stimulus. it is not doing more. can we expect that to happen in fairly short order? tom: yes. an enormoust see urgency to roll out aggressive stimulus, but we do think growth remains below where the government wanted to be. negative, the gdp deflator was negative in the fourth quarter. our expectation is 2016.ued stimulus in we are going to see a shift in the way that seamless works. in the past it was all about monetary policy. industry cuts, ramping up bank lending. now banks are overextended. corporate's are not willing to borrow, limited space, limited effectiveness for monetary policy. that is going to raise excitations. we will see more and fiscal policy. -- that is going to raise expectations.

and it will raise expectations that the government is going to rely more on the exchange rate. yuan depreciation to give exports a boost. guy: thanks for the analysis. again, a related story. unilever shares up. the company managed to good performance and difficult market conditions. but the ceo expects 2015 is going to be tougher. he told anna edwards the business is preparing for high volatility. paul: i think it is better to be prudent. and some people did not believe it. if you look at 2015, we have continually on a global basis lowered our growth estimates. i think 2016, the minimum we can say from watching the news and reading the papers, it has b ecome more volatile. the emerging markets especially see a capital outflow, big adjustments in their currencies.

marty prices -- commodity prices. so countries like indonesia and some extent,a to com these are big economies that are pulling in more down than up. anna: when you manage a business to volatile times, one of the ways you do that is around cost discipline. can you flesh out what kind of discipline you're going to need? company like unilever is globally diverse in 190 countries. if you went on the swings you might lose on the roundabouts. good results.w the way we manage cost when growth is lower, you have to step up your cost as one of the initiatives we are going to roll out is zero base -- with theear choices categories we are going to invest in. continuous looking at organizational redesign.

leveraging our shared services better. these are the big buckets that we should expect improvements on top of what we are continuing to see. anna: one of the areas we have seen such volatility is china. does the story around the stock market and concerns about the global growth story and china, they dominate the news headlines -- do you see those transit reflected in the day-to-day business you are doing in china? inl: first, to put it perspective, china for unilever is 4% of her turnover. there are many other markets we have to deal with, but yes, the chinese economy is going to a change. from a production-based economy. and that changed has caused some friction, certainly in some parts of the industries -- infrastructure, construction -- all these industries, they have seen a significant adjustment. housing. so, i think in some of the sectors, increasingly in china,

if you want to grow, you have to look at the right -- and bring the right gear. the big cities definitely slow down but the tier two and tier three cities are still growing. anna: there are still opportunity. the long-term story -- paul: the long-term story is there. friendly any part of the world would die for 6.5% or 6.9% growth rate. so, we should still put all of this in perspective. - frankly, any part of the world would die for a 6.5% or 6.9% growth rate. guy: china cooling. but the long-term story very much in focus. 9:30 a.m. we get the u.k. inflation data. what is working, what is not? we will see how the phillips curve is in operation. talk about the corporate fallout from what we're seeing here to all of that coming up right here on "the pulse."

anglo american, hugely volatile. we will talk about the oil story. we will talk about what is happening with the minors. all of that up next. ♪

guy: welcome back to you are watching "the pulse." let's carry on the conversation. thea data weaker than authorities would of liked but the market is pricing in a bit more stimulus, which is why

global equities are bouncing today. what is the right take away from the china data? >> i think the market has got it right. there is a bit of a slowdown below target but it is not terrible. ng probably means the easi policies will continue. i do not think we should expect anything to dramatic because the chinese authorities are in it did of a tough spot. the have to keep moving in direction of rebalancing, moving and direction of market determined currency but the more the currency weakens the more stimulus they do, the further they move away from rebalancing back towards investment and trade in all of that. i think they are going to juggle all these balls as best they can. guy: an ongoing source of volatility. >> indeed. guy: how bouncy is it going to be? >> i think they can keep a lot of them in the air because the reserve position is still high.

although reserves have been bleeding significantly the good news is they are stabilizing cnh and causing the basis to narrow by tightening offshore liquidity and imposing at the margin some capital controls. so, i think we're in for a fttle bit of a periodo stability but the general trendo is still for a slowdown in the economy as they rebalance and a weaker exchange rate and a about an export of deflation into the asian region and from there the rest of the appropriate we still face that issue. oil the iea says the market is droning in supply. the implications of this are not fully felt yet. if this is lower than longer, this is a story that stays with us 2016-2017. we fully understand the applications of that? china is probably responsible for what we are seeing but nevertheless it is broader than that. >> i think you're as lily right. when it comes to oil -- you are

absolutely right. relative tortfall expectations about growth and asia generally. one is on the demand side. two is a late market supply response. thee and the shift in stance of saudi arabia with respect to opec and iran. the third is the fed and the stronger dollar. all of these things are pointed to a period of adjustment where we have a much lower oil price much more in line with the -- exactly. i think emerging market countries that are exporters of oil are best served by treating this as a permanent shock and really adjusting. i think that is what we are starting to seep in we are not fully there yet because the fiscal break evens are still well above the spot price of the future but they are well below where they were. so, i think we going to have more adjustment pressure

andthe oil exporters importers for other reasons -- the strong dollar and the tighter fed policy. guy: will those oil exporters be aggressively selling assets? one of the things you have been thinking about since october i s starting to see maybe that being a big factor in equity markets and elsewhere. >> i think you are that already in some places. in parts of the middle east, particular saudi arabia. but even there, they have begun the process of adjusting. that is what the signal and a 2015 budget which is fiscal tightening at the margin, structural reform, and the interestly signaling of privatizing part of saudi aramco . all these things suggest not only are they selling assets but they are starting to adjust to lower oil prices. in other cases, there are reasons to try to preserve assets and make the adjustment, take the adjustment on the chin. in the case of russia, that is

largely what has been happening at an effort at fiscal austerity despite wars of choice. and a triage about who gets summer support on the ask colonel -- on the external debt front. guy: if i think about what is going to happen in 2016 and i think about maybe we are going to get more stimulus, maybe we see less tightening from the fed because of the dis-inflationary one of we are seeing, the captivating factors could be we could see some fairly certificate assets coming onto the market. and if that equity markets think they are going to go up is going to ask as -- act as a brake on that story. >> i think that is right. there's this hope this hwole process will slow down -- this whole process will slow down the fed but we are not quite yet seeing that and rhetoric from the fed. i think we are still hearing

four hikes. still seeing prices less than that. so, there is this "and when it comes to the feds of the dots versus market pricing. on the asset side of the equation, you're probably right. risky assets and general are constrained by all of these global macro factors which are reflected in this question of supply and technicals. like we were discussing, we will volatility inof difficulty. emerging markets are going to continue to be front and center in this adjustment in th markets. plenty more to talk about. up next, head of turkey central-bank rate decision we spoke to the prime minister about plans to rebalance the lira. we will talk to this man when we return. ♪

9:21 in london. you will watching "the pulse." i want to update you on the markets. we've seen this selloff this year. you may be aware of that but we are bouncing back a little bit today. the ural stoxx 600 is rating -- is trading up. we're up by 2% at one point. many of the markets around europe are down 7% and send some

cases 10%. keep an eye on sterling. euro-sterling trading. the cable rate. what is happening with the dollar rates. 9-2010 trading down at 200 levels. on the edge of something quite interesting. astral banks absolutely always seem to be in focus and turkey announced its latest interest rate decision at 12:00 p.m. london today. reforms it hopes will shore up the battered economy. it is an economy with plenty of problems and they are hoping that 2016 will be a better year than 2015. i spoke to the country's prime minister who told me that measures are in place that should help rebalance the lira which has been near record lows against the u.s. dollar, down .3% last year

davutoglu: so, performance, i am sure, meanwhile, we will be rebalancing these currency rates. guy: the turkish prime minister speaking to me yesterday. guest stimulus. the question i cannot get my head around is why turkey is not growing strongly at the moment. currency comes with issues, inflation, but lower oil prices, an economy that should be doing better, right? >> i think it is doing better than many other countries that are importers of capital and importers of commodities as well. i think, i suppose an external demand is not that strong. .here is a war on one border

iran potentially coming back. but that has been in the works for a while. and of course, trading partners in russia in the cis under pressure, trading partners in western europe doing better but not that great still. and everybody still thinks we need more stimulus in the eurozone which we would tend to agree with. of we have a constellation different things going on for turkey -- internally all -- that are constraining growth. but i would say that turkey, unlike many other emerging markets, dioes not have a close problem -- a gross problem. it does have a need for rebalancing. and i would say what needs to happen is i think there's som very good things. yesterday the prime minister and the economy minister made a strong point, very well taken, about the strength of the fiscal position despite all the political turbulence internally

and journal -- external and turkey. the bad news is we still have confusion about monetary policy. this complex jerryrigged arrangement of macro prudential credit constraints. the market is still waiting for some rebalancing there, a move away from quantitative resurgence on credit and other controls towards more price and interest rate based mechanism which without the lira. it would do a lot for inflation. minimum wage is growing by 2% which is not great when it comes to managing inflation as well. >> it could make the inflation problem much worse. the current account much more difficult as well deal of. guy: we saw last tuesday, obama the country which killed german tourists -- a bomb in the country which killed german tourists.

on monday they raised expectations. agree.ink, i tend to there was a risk that as you have instability in the region continue to be quite troubling and to continue to spill over into turkey that there will be a bit of a head on tourism, which will be another negative for the current account. the debbie prime minister yesterday made a strong point that the risks and their economic forecasts are somewhat balanced. i would tend to agree. they are probably to the downside both for reasons of what is going on in the region trade what is going on in turkey, and also the external environment is not supported. the risks are to the downside on growth and to the upside on inflation. so not a great environment. they could address this with policies and publication. hopefully we'll see some of that today. guy: 12:00, central-bank i with

this decision. he'll stay with us. tonext, low-flation is here stay. we bring you the uk's latest inflation number. that story up next here in london. ♪

guy: welcome back. you are watching "the pulse" live in london. my screen is populating with u.k. data. .1. month on month year on year, .2, bang in line. the cpi core year on year 1.4 versus a survey of 1.2 of some of the other things to break out, we are onsing ppi data and an

housing price, that is 7.7. we should see wage data as a guy will bring that to you in a moment. what is happening with sterling, this is the cable rate 1.4337. sterling backing off key levels, which is beginning to make some people nervous. so, we'll talk about this in a moment. later today, we get governor carney speaking. so, that is something to pay attention to a little bit as well. he is going to be speaking at 12:00, the first time we heard a conversation with governor carney this year. it has been such a tumultuous year thus far. are obviously looking at the data very carefully. later this week, we get retail sales and public sector net borr owing. we will be looking at the letter of those two numbers very carefully.

numbers look a little bit healthier. is that the pound having an effect? the weakness of the pound would not have tickled into those numbers yet. the core jumped. what i would say is that the falloff in oil prices, the fall off and fuel price we saw in december was quite large. in december 2015 was not as large. food prices as well. 2014. poor through flat lines in 2015. a little bit of a bump there. the headline picking up as well. but core prices, that is the thing that carney may be on in his speech today. if that happens, 2016 rate hike may be back on. guy: the markets push it out to mid 2017. when you look at where we stand ate,terling, on the cable r

we're looking at key levels. getting quite interesting on the cable rate. how critical is it that we now see some sort of stabilization? governor carney had complained about the pound. what are we going to get? what is the trajectory ? jeremy: hopefully we stabilize around these levels. we have not been down to 1.43 sterling-dollar since the realties of the global financial crisis. technical support that sterling can rely on is few and far between. breaks of those levels could veryst -- deeper falls quickly, which from a confidence point of view is something the bank of england would want - sorry, would not want. a weaker pound but not in two weeks. guy: the market seems to be capable of doing anything at the

moment. this conversation sounds negative. we have pushed out the first rate hike. the pound is under pressure. how does the u.k. stack up? >> i think we have a lot of issues going on. this question of the brexit referendum, the question of a large current account deficit. all these things are, require quite a lot of care by foreign u.k., andfor fund the as a resident who is long sterling, i have to say that u .k.'s place in the world is much better served by remaining in the e.u. i will have to say this will as with a rational response as happened in the scottish referendum and so on. right now in a world with increasing concerns about various kinds of risks, the threat of brexit is clearly a negative for the u.k. guy: second to last your people were talking about the phillips sn'te and why it wa

functioning. at least the u.k. had some sort of a slope attached otto it. can we make it work? >> i think we can. factoid of glimmer of a that comes out is that among the economies in the world that were hit hardest by the crisis, many of them have rebalanced and among them one that appears to have gone back to business as usual is the u.k.. so probably explains why the phillips curve is behaving more normally in this country compared to others. having said that, i think we still have this problem of productivity, this productivity paradox that contributes to that issue. jeremy: absolutely. we as seen a very swift return to unemployment levels that have come back to pre-global financial crisis. the wage picture refuses to take up. we are first from many policy

makers in the past six months that wages are the silver bullet for the uk's economy. guy: sounds good to voters. ild market has seen a fairly big move. are we done without? jeremy: i think as long as emerging markets start to stabilize, then the gilt picture starts to stabilize as well. i do not think it is too much further rates can be pushed off from where they currently an opinions we get poll that says 90% of the people want to vote for the u.k. to leave the e.u. that wiki get out to 2017. that tail risks in there. as it stands at the moment -- year, a lot of people made a lot about these pockets of strong growth. car loans. by and large, is the consumer getting too geared here?

is that something we need to fear or do we want the consumer ms, maybe not in specifics, to gear up a little but more? jeremy: the consumer is still economy.lood of the the savings ratio is part of the last gdp announcement was pretty poor. we know the consumer credit is still picking up. if wages pickup that scenario is likely to improve. maybe people can pay down a little bit of debt. in the meantime with the pound still at a relatively strong value come the manufacturing sector is not going to do anything with weak demand. if we have not got the consumer, we have not got much else. guy: is the market right? 2017 is most likely time for the first rate hike? >> i suppose, as long as the eurozone is seen to be easing and the market rackets -- slow, ands the fed is

will be tough for them to move anytime soon. all more so when you throw the brexit into the picture. spot.k it is a tight it looks like pressures are for delay rather than for bringing for the first rate hike. guy: we will come back in a few minutes' time. thanks for joining us this morning. interesting morning. such a selloff since the beginning of the year at some point we were going to get a bounce back. let's check markets. mark: i want to start with emerging-market stocks. this is the msci emerging-market index which on monday hit its level sincewest 2009. today it is rebounding. investors have sifted through the batch of chinese economic data and concluded that further stimulus is warranted. 6.8 percent in the fourth quarter for the year. it rose by 6.9%, the weakest since 1990.

industrial production, fixed assets and investments all september. we saw a rise in china shares. the shanghai composite gaining ce novemberost sin 2015. possibly aided by state fund by state fund buying. emerging-market stocks are rebounding today. the msci emerging-market index has slumped by 10% this year. 33% below april's high. the move away from safe haven assets has caused treasury yields to rise for the first day in five. have a look at the 10-year yield. it is a one-year chart. what is interesting about the chart is the yield is bouncing around 2% on friday. the firstlow 2% for time since october. investors doubting the fed will be able to raise rates by four times this year. the bond market saying one might be the height of the fed's achievement. and unilever shares are rising today, the company's's products

are used by 2 billion people worldwide, gave investors some tuesday morning cheer. sales rising 4.9%, benefiting from beauty products and premium ice cream. guy: thank you very much. up next, the corporate fallout from the quality rout as oil hovers around 2004 lows. a 20% profit drop could be a really. freezes settlers. anglo american becomes the most volatile stock on the european index. we look at what company seven hit hardest this reporting season thus far. which companies have been hit hardest this reporting season. ♪

guy: you are watching "the pulse .". the second-largest iron or exporter has a slow expansion of production this year in the wake of slipping prices. let's get more for my show called. rio -- from ryan chilcote. rio has said what? ryan: it is not as if sam walsh is telling the boys took to -- e a down your tollols and taka year off. they are scaling down their output. in the fourth quarter last year they produced 87 million metric times of iron ore. the expectation with a

half-dozen analysts we spoke with was that they would produce more, somewhere between 88 and 100 million tons. they produce less. in 2016, they said they are going to do 350 million metric tons, which is not a production cut. it's actually an increase of about 7% compared to last year. thethat's less than increase we saw between 2014 and 2015. is that enough to change the supply glut? probably not. it was welcome news, i have to say for rio investors. but we will have to see what the other big producers do, including bhp which reports tomorrow. guy: looking for to those numbers. normally we have to wait a couple weeks until we hear from the oil majors but we are getting an early look. ryan: that is right. we will get some interim numbers from shell tomorrow, europe's biggest oil producer. a chance to look at how the oil producers are being affected by these low prices.

analysts going into the earnings statement we are going to get tomorrow think that adjusted profit may have fallen by as much as 39%. obviously,g drop, and profit. we heard earlier today from the ceo of total saying he expects profit to fall by 20%. be cutting won't your dividend and saying it is thanks to the fact they are an integrated oil company that they do not expect to lose any more than the 20%. histhen his -- came out, press secretary, and fact he was talking about the nine-month figure, suggesting not talking about the fourth quarter. with the integrated oil companies, what we have seen up until now over the last couple been saved byve refining margins. refining margins and the fourth quarter tend to be a bit softer

than in the rest of the year. seeing al, we are shift where we are finding -- refining margins are declining. it will be interesting to see what shell has to say tomorrow. us. jeremy cook still with guys, we at the beginning of the year, the turn of the year would mark a point in which we can understand what the dynamic of the oil market would do. that does not seem to happen because prices continue to fall. when we going to get clarity? jeremy: that is the $64 billion question. clarity?e get hopefully we will see clarity of the price continues to drop lower. i think we need to go another leg lower between -- before opec or oil generating countries come out and say enough is enough. eds another clear all. guy: the consumer, how long does

it take for the consumer to think, this is he apparently. as a result, i can start spending this money. is it that shift we need to go through? it has been hitting the wall is, the savings you made and filling up whatever you drive around the countryside. there's always been this assumption it will not last forever. do you think the consumer will go, you know what? actually, i think this is here to stay. jeremy: it is the job of policymakers to make sure they don't. we will continue to hear from carney at noon and other policymakers and governments about the course of 2016 that as much as these low oil prices are beneficial at the moment in helping you, and the longer they cannot be guaranteed to status low. guy: you think they can't? jeremy: no, i don't think can for those higher marginal cost producers in the

countries in which they are attached. we can see $30 barrel oil. guy: $60? but not 110, 120. jeremy: no, because at least the inflation picture the other way. >> i think we could have a period of adjustment where we have quite a low oil price near current levels. in the medium-term, the price has to go back up to reflect the marginal cost of production. what i would say is that if the price stays this low for a few years, going back to the u.k. versus the u.s., where a lot of the oil dividend appears to have thissaved, the more that generates a consumption push, u.k.ore on balance the economy becomes. in western europe, the oil dividend appears to have been more spend then saved. i think there are a lot of different things going on in different places. where consumption was pent-up for other reasons like in the eurozone, it appears the, the oil dividend appears to have

been spent. where it was not, in the case of the u.k., first and foremost, and maybe the u.s. to a lesser degree, part of the increase has been saved or should be saved because, as we were discussing, the u.k. consumer -- guy: do you think that will be the case? >> there is one of the thing i would throw into the mix which is that in the u.s. because the taxes on the final price are so low, people feel it in their pocketbooks much more than in western europe where you have this huge tax wedge. i think we do put all those things together, the u.k. consumer has been, as we were implying before, very healthy, maybe too happy. so, i tend to agree with jeremy that maybe the messaging from policymakers here in the u.k. will be somewhat more restrained. i think going back to emerging markets, i think what we see is a significant benefit flowing threw two india, to turkey, to some extent even to south africa

which is an oil importer which is being paid for by the commodity exporters any oil exporters including south africa and brazil and russia. so, there is a big shift going on in the world because of this price shift. even if the price is $60, it is still a major shift. i think that is the bigger picture here. guy: thank you very much. both of you for your time this morning. right. european stocks snapping a three-day decline on the back of commodity producers, energy shares, carmaker sponsor a little bit. to bounce. that is what is happening in europe. european equities and agreed. for is up by 1%. we will check on the markets in more detail in just a moment. ♪

guy: welcome back. you are watching "the pulse, on tv, streaming on your radio and bloomberg.com. nejra: donald trump's husband push the companies, including apple, to bring manufacturing back to the united states. it was speaking at liberty university in virginia. america greate again. i actually think we can say now and i believe this, we are going to get things comping. --

coming. we're going to get apple to build the computers in this country instead of other countries. to reportault is 15,000 vehicles to check their engines. their investment can be done in half -- the adjustment can be made in half a day. their stock is falling and four days. il markets could drown in oversupplied sunday prices even lower, according to the international energy agency. oilt trims estimates for demand. is to a says the response china's slowing economy. is exploring the sale of stakes in three dozen regional banks. the lender says that it will improve its financial flexibility and enable exclusive club -- cash dividend.

shares are trading higher on the news. that is your bloomberg business flash. guy: thank you very much, indeed. we are going to talk about cats living or dead. but let's talk about the markets. talk i thought we would about sterling. this is the pound versus the basket of nine developed currencies on her bloomberg correlation weighted indices. it is interesting because it is rising today. headline inflation . 2%, a far cry from the medium-term 2%. what was interesting was the 1.4%.ate, which raise mark carney, the governor who speaks later, has cited core inflation has his new preferred measure. he admitted that to our editor-in-chief after the quarterly inflation report in november. core inflation is ticking up. headline inflation is still low. the pound has fallen from its highs in november. since november it is down by 5%,

which should help boost inflation. been one strength has of the reasons why we have downward pressure on prices. there should be some relief from the decline in the pound. maybe carney will allude to that little bit later. emerging market stocks are rising today. they fell to a 2009 low yesterday. lots of data from china today adding to the impression we will see more stimulus. treasuries are falling for the first day in five as we are seeing a move away from defensive type plays. and unilever shares rising today after sales beat estimates in the last quarter. there you go. guy: thanks, mar. k. seems to betainly affected. what if we got coming up later? we have had the data out of the u.k. now we get carney coming up a little bit later. he is speaking at noon. we get cpa in the eurozone. the zew coming up shortly. we have the imf world outlook. that is it for today.

remember, tomorrow we kick off with davos. plenty of great guests. tom, john farrell all leading the charge there with great interviews. we will see you tomorrow. ♪

been 26 years since china has seen such slow economic growth. the trent this morning is in the wrong direction. markets find a business this morning. oil hovers below three dollars a barrel and on bloomberg surveillance, gary shilling on the continued repression. ind morning, i am tom keene zurich, switzerland. with us in new york