manus: end of an era, apple forecasts drops for the first 2013.ince thousan2 we get the central banks first statement of 2016, setting the tone for the path of head. meanwhile, oil resumes the decline, and chinese stocks and for the worst today's lump since the summer. it is countdown this wednesday

morning. let us get straight to the markets. we have equity markets around the world under pressure. the shanghai composite is lower this morning. going for the worst rate we have seen in china since the slump of last year. the biggest two-day loss since last year. is view from the market critical levels, that would be a 50% retracement from that magical high that we saw two years ago. china stocks headed for the biggest two-date loss, margin traders have cut for the 18th straight day. they are getting out of this market. back to give you a basis. let us get to the recording season. it is really kicking in. let us deal with santander, spain's biggest bank. in terms of capital, that is the critical issue for the marketplace. core equity fully loaded, 10.05%. the mention is to raise the

capital level quite aggressively to match her peers in the marketplace for 2015. they made a profit, a net profit of 6 billion euros. that is the santander capital position. that is the santander net profit for the fourth quarter. let us deal with the net profit, it came in at 25 million euros. fourth-quarter net profit was 25 million euros, the estimate out there was for 1.4 one billion. as i keep an eye on the nosecone we look for any write-down, or any position they had to make. let me bring you know of artists numbers -- novartis numbers grade with a dividend, it was disappointing relative to what we were expecting grade we were expecting a raise to 2.8. it comes in at 2.7 buried

bloomberg forecast 2.8 grade. bane of it has been the novartis' life. we're looking for strategic overalls. let us give you the numbers. billion.arter is $12.5 they have a new ceo, he has been named as a new ceo. if you think about the compact lenses come all of these solutions you had to buy 25 years ago, they were revolution. that is the business they own outright medicaid over $40 billion for the business. dividendosed a 2014 below what the consensus was buried the numbers are back in line in terms of blockbuster sales. whatave the dividend under the market anticipated, 2.7. sales and core operating income 2015.e at a level of

as we get a little bit more detail on the santander story, i will bring that to you. in the meantime, you need your bloomberg first word. nejra: chinese shares headed for their biggest two-they loss since last year. its slide,o resumed after slumping industrial profits in china increased concern it is deepening grade japanese stocks have rally promoting the benchmark on course. we get the federal reserve first interest rate decision of the year later. while policymakers are exciting to hike this year, markets show some investors are taking out protection, in case rates go negative. a poll by bloomberg shows the interest rates sinking next year has risen above 10%. thewhile, a survey of economy shows most expect the bank of japan to add to record monetary stimulus this year.

but probably not at the monetary stimulus meeting this week. raising expectation, oil, and the yen decline has put pressure on the boj. sees softnesss he in china, especially hong kong, after forecasting the first quarterly decline since 2003. even with the new year shopping season, china may no longer offset the broader slowdown in the global smartphone market. that is your bloomberg first word news. for more on the stories, customers can head to top go. manus: we will check in with the asian markets with shery ahn. novartis is a miss. $1.20.ket was looking they missed on dividends, earnings per share. the headline on the bloomberg terminal for santander, quite a shocking detail. euros, we will

have a conversation with the ceo of it later. she is the head of santander. francine will undertake that conversation grade let's get to shery ahn standing by. manus.good morning, we saw some positive sentiment spending over from wall street, but i was not enough to help shanghai -- the composite down to its lowest level since november. as you mentioned earlier, it is the biggest two-day drop since last year's market rout. but itg seng is rising, has given up some of its earlier gains. sentiment positive coming through from japan. 2.7% higher, and we saw some gains in telecom and energy stocks. but it is down more than 1%, because we had

inflation data out this morning showing the prices grew more than expected. 1.7% on year in the fourth quarter, and traders reduced the central bank by midyear grade look at what happened. when that inflation data came out, look at this jump in the australian dollar. we are now seeing it rise 3/10 of 1% against all of the major peers, for the second day against the u.s. dollar. throughnt to take you some asian movers because we have to talk about those automakers in japan. we had so many headlines this morning. first of all, we had a report from local media saying that toyota was in talks to form an alliance with suzuki motors. then both automakers denied those claims. still, suzuki gained more than 11%. then we heard that toyota was going to buy stakes, but they did not already own them.

that ended 60% higher. manus: thank you, shery ahn. does little bit of parity around the samnatander numbers. this is for payment protection cost in the united kingdom. it will be focused on the bad loans. don't forget that two of the biggest markets are u.k. and brazil, along with a naturally. 4.63%,tually drops to down from 4.5% in september. the bane of every bankers life drops down from 7.8 billion. in a low rate environment, that is no shock. francine is in spain. she will sit down with the santander ceo to win the numbers in more detail. u.s. earnings are being hit by slowing global growth and fx moves. tim cook highlighted this, after

the world's biggest company reported earnings last night. tim: we are seeing extreme conditions just about everywhere we look grade major markets including brazil, southeast asia, canada, turkey, the eurozone, they have been impacted by slowing economic growth, falling commodity prices, and weakening currencies. manus: but there are plenty of other challenges that they are facing. here to break those down our caroline hyde. this is a pretty big report for them. their concerns are that the company forecasted -- that they will slow down. this is what everybody was worried about. have we pay? eaked? of sales they get 68% from the iphone. they make macs and services as well, this is a company so wholly dependent.

is due,here credit record revenue and profits for the last quarter. they are making $50 million per hour. to put that into perspective, a 40% decline in sales. that is why you saw shares fall in after-hours trade because they are being hit by the slowdown in our demand for smartphones. this year, smartphone growth was just 10%. we have never seen it at that sort of level in decades. we could see also the double whammy of the china slowdown affect. this is affecting growth potential in the second-biggest market we are getting into. but the consumer is not picking up the slack quite as much when you have the decline from brazil, canada, japan. this is a company reorienting itself. made $31o point out it billion from the ap store, apple

pay, the icloud. they are the biggest internet services company in the world, as well. but they are really trying to shift and reorient themselves. manus: that is bring in vasei leois. the apple store he is the very suffocation of two major stories. one, the devalued yuan rebalance is the consumer. and the dollar is causing issues. and this is a ceo this is the world's causing him issues like he is never seen before. it is almost the very personification of every fx risk there is. >> i think that is right. it is actually the fed that has been communicating that for some time, in the sense that it has grown a number of worries about the strong dollar. i far as this is concerned, think it is not going to play

the most important part and the policy going forward. but it is definitely one of the things in their. apple, the2014 for strength of the dollar, there were up $85 of them in revenue in these current years. quite phenomenal news in the f they are notx subscribing to the doom and gloom in china. manus: we will spend a lot of time on the fed throughout the show. obviously, it is that two-day meeting. we will see that statement tonight. we focus on china, the yuan, and the big question -- i had this perennial debate, you were here and we had it been -- i love this article on the terminal this morning. the numberys that as of times the boj, fed were

mentioned, there is this huge correlation in terms of and theip spikes immediate moves of the asian currencies. down> yuan movement or is there much more to come? ? asia is critically important beyond china. asia's number two for china. >> we have nothing the full extent of the downside in the war. what has been playing out is that, on one hand, you do have china and the pcob moving towards liberalization. on the back of this, you have easier monetary policy, so you have capital outflows. and to the extent that you allow the currency to move more freely, the capital outflows should lead to further weakening of the yuan. that is the broad overview.

in terms of implications for the rest of the region, definitely implications. simply, when the yuan depreciates, it makes it much more difficult for competitors. so from that respect, the big competitors in the big asian arena, like south korea for example, they will have to follow policies that will favor largely weaker currencies. manus: who do you think will sort of fall over first in 2016 battle for the most defensive against the yuan? >> south korea will definitely be one of them. it is going to be a country that will spend a lot on the chinese industrial cycle in the global industrial cycle, which is currently weakening. competitors with china, as well. i think south korea -- japan is another case -- however we have

seen a lot of yen weakness. i am not entirely convinced. manus: do not necessarily be fooled, in the market has presented itself. caroline, great details. that is it you up to speed. 9 a.m. in the u.k. shareholders get to vote in the hague, and the planned takeover. today, we get mortgage applications and new home sales out in the u.s. that is going to be an intriguing number to get. and the main event is the federal reserve they released their rate decision at 7 p.m. have a coffee, you don't need to do anything until 7:00 this evening. unless it is the central bank somewhere else in the world. stay with us. ♪

back, a little

bit of breaking news from a global chemical company that also has global gas exposure. the german company will take an impairment, 600 million euros. this is in the fourth quarter, 600 million euros in impairment. the prices for oil and gas for many low in 2016, so we have been hearing this sentiment come through. lower for a lot longer, as we got off the airplane in davos. billion euros. that is breaking news. nejra: toyota shares have risen on the news it is planning to buy out the remainder of its unit. they hold a 51% stake, considering several possibilities, including it making it a wholly-owned subsidiary. that came as they announced

global sales of 10 million last year, meaning it is the world's top automaker. capital management says it made important mistakes last year. they said they also learned humility in its worst annual performance ever come with a net loss of more than 20%. rose 20%, after oprah winfrey tweeted about losing weight after using the program. she posted on twitter, and she said she lost 26 pounds, despite eating bread every single day. that is your bloomberg business flash. manus: i could talk you about weight watchers, but i will not. i am with oprah. it works. let us talk about a much bigger issue, the fed set to release its first policy statement since the rate hike last month. while reserve officials are expected to continue raising rates this year and next, bond

traders have a very different perception of what is going to happen in terms of the second hike. our treasury reporter joins us now. that is the understatement of 2016, between the trader community and the fed, what are they expecting today? bloomberg surveyed over 100 economists and each one, every single one, says the fed will hold rates. they just raise them in december. they said they will go gradually. it is really too early to expect them to move again today. which leads us to focus on the statement. a lot of people i speak to seems to think there will be a repeat of what happened in september. in september, despite now, there was a lot of global market turmoil. the fed mention this in the statement, using keywords like global -- focusing on global developments and developments abroad. people are expecting a kind of repeat of that today, that the fed will give a nod to these

global developments, as global turmoil, and buy some more time. manus: that janet yellen is losing that with the dollar, and terms of it still accelerating higher. what about the u.s. economy? is it on track to support a hike cycle? are we seeing enough momentum? not exactly. wes: well, the strong point of the economy is the jobs market, the labor market. the fed took note of that in its last statement. however, there is a sort of growing kind of laundry list of things that could certainly give the central bank pause. we have manufacturing shrinking, inflation stuck near zero. the fed wants to percent. that is not happening. retail fell in december. we get numbers tomorrow which are supposed to be down.

on friday we get the big 1 -- fourth quarter gdp.that will be up based on our survey, not even up 1% economic growth in the fourth quarter. i say, a growing list of reasons for the fed to pause. manus: let us see what the statement brings. wes goodman, our treasury and fed reporter. we bring you full coverage of that statement and reactions to it at 7:00 this evening. let us bring in vasileios back to the conversation. there,istening to wes they are chipping away at the confidence level. do you concur with that? : this excitement seems to be normalizing.

and at the same time, you've seen the downsize and the number of data releases. there is no question that the job market in the u.s. is doing well. the big question is whether we will start seeing it filtered through the strong labor markets to inflation. and the other thing which i think has been worrying a number of analysts, including the fed officials, is we have seen a dramatic decline in oil prices. and we are not seeing that start, as part of the consumer is concerned, don't be wrong. it is still strong. but we would have expected it to be stronger. the big question in 2016 is whether there has been structural change between the relationships between inflation and the labor market. manus: personally, i think it is a rate of the psychological

contract. there is an irrevocable change in human behavior since 2007. hdat is my personal, non-p opinion. these correlations do not hold up anymore in terms of what we should do. let us talk about the dollar. there could be a correlation there. that you and the boys, and girls, have put together. this isey hiked rates, the effective exchange rate i'm referring to back in december, the dollar. keeps on going more so because the rest of the world is under pressure. but this is a battle for janet and in termssider, of the reporting season, we're seeing it come through in apple. this is going to be one of the biggest currency headwinds for the economy and the reporting since 2011. how much basis do you think the dollar plays into the conversation?

vasileios: right, i think you showed the broad dollar. this is good to be a key distinction. if you look versus majors, and especially the euro, the dollar has not done anything. as a matter of fact, it is actually lower since the ecb's surprise in the beginning of december. so i think the bottom line out of this, and this is what we have been saying all along for the past four or five months, the dollar, especially against is up more than the current interest rate is pricing in. and i think it is largely, substantially overvalued against major currencies. i can only see the dollar going down from here, but it is going to be slow growth because the other central banks will try to push back to ensure currencies are weak. markets,ally balanced

the ones that have high deficits as well, and the currency is very high, it will be a different story. manus: stay with us. of next will talk about shell. it is their shareholder vote today. ♪

it is earnings season. erickson gives us the numbers. fourth-quarter net sales, 73.6 billion. excluding the restructuring, 36.6. 37.5, they have missed on sales and dividends, expecting a 3.7 swedish krona that i just made up a currency. for 3.55.te was

estimates were at 70. more to come. in the meantime, let's talk about the rest of the earnings we will get. as the micro, and less than 30 minutes, we will also get numbers from boeing, facebook. and ebay, those are all to watch today. in the meantime, the bloomberg first word. shares headed for the biggest two-day loss since last year. oil has also resumed its like him after slumping industrial profits in china increased concern the slowdown is deepening. japanese stocks have rally, on course for the drop. we get the federal reserve first interest rate decision of the year later, policymakers are expecting a hike this year and next, the market shows some investors are taking out protection in case they go negative. data compiled by bloomberg shows

the u.s. interest rate sinking below zero next year, it has risen above 10%. a survey by bloomberg shows they expect the bank of japan to add to record stimulus this year at its policy meeting this week. expectation,tion oil prices, and the reversal in the currency decline hasbro pressure on the boj. tim cook admits he sees softness in china, especially hong kong, after forecasting the first quarterly sales declined since 2003. even with the lunar new year shopping season, china may no longer offset the global decline in smartphones. donald trump says he will not take part in the public and instead, he will post a rally in iowa for wounded warriors. he has previously accused fox news host megyn kelly for treating him unfairly.

thanjournalists and more 100 euros around the world. manus: thank you very much. we saw shanghai take another battering in day two, in terms of the shanghai pressure. caroline hyde has the details. caroline: a very mixed picture, really sliding back, concerned about the profits from that nation. meanwhile, though, we are seeing a rally picking up from the u.s. spilling into the likes of japan. check out the rebound, up more than 3% if you're looking at the index, after the s&p 500 rebounded 1.4% yesterday. all of the seems to be the opposite of what is happening in china, better-than-expected numbers coming from procter and johnson,ohnson & helped to drive a pickup in overall share prices in the u.s. that is spilling into japan.

many feel that the number is a low, must be time to buy. dog that wags the tale of the asset market, still at $30 a barrel. a contractrently right now, we are coming off the current high. and that is taking the ebb of the chinese stock market this morning, showing that crude stockpiles increased in america. later today can we get numbers coming out of the u.s.. will they indeed show $4 million rise in overall industry glut we keep on saying? that is the supply concern always weighing down. oil coming down off the previous high, and that is the sentiment for the rest of the day. keeping an eye on the dollar, we are expecting after the end of the two-day meeting. and a dollar coming off that slide we have just seen,

starting to study itself. the biggest slide we have seen in two and half weeks for the u.s. dollar, answering to ramp up the fact that the federal reserve will take its foot off the rate hike pressure, starting to just realize the rest of the repercussions that are happening globally. the slowdown we are seeing, could we see the federal reserve that less rate hikes are to come? that certainly set the dollar tumbling. risk a neutraley statement this evening? in the meantime, let's get back thate corporate m&a story relate to the whole of the market, it was shell. of a, there on the brink takeover. to someonete spoke who advises the biggest investors. >> we support it because this is

what you want, a good management and board to be doing in an environment where they're not making acquisitions. the key thing about this for shareholders is that you are substantially lowering your cost, replenishing reserves, getting assets to natural gas in australia. making for the dividend coverage, you saw a lot of problems and a time where it is relatively cheap to do it. i think ultimately, the value of this deal is delivered over decade. to the spot price of oil next week or even towards into this year may not be the most relevant benchmark for building shareholder value over decades, when you adjust the business equation like this, it is really the reason we are supporting it. ryan: as is represented with what we will see in 2016, or should we expect different kinds of deals? seeing smaller

companies, but this one is gargantuan. we are seeing changes in midstream. i suspect we will see more of that. you will certainly see it where companies are becoming distressed. outlastrrel, shell will a lot of competitors that are not major, multinationals. the things that we have not seen so far, the other big majors making large acquisitions. there has been an attempt, one other deal that has been announced, but you do not see a flurry of them. you do if you need to create you do it if you gain access to gain balance sheets that will sustain you for a period of time. but you do not sell cheap if you do not have to. and i don't think we will see an awful lot of big oil transactions. ryan: but if you are a buyer, it follows from what you just said, it is a good time if you are a big oil company looking for other companies to merge with. >> if you have the balance

sheets to sustain it. and nobody knows how big the trough is. it is really a chasm, how deep it goes, but if you have the balance sheet in the management teams to sustain you, if that is what turns up to be, that is a good time. ryan: any deal you like to see that has not been announced? >> i am not in the business. i was surprised to see this one. but the more we got into it, the more shrewd it seems to be. manus: no one knows how deep it would be. advises 35ris, who of the 50 biggest shareholders in shell. ryan joins us, some lines from him turning a great balance sheet. this was a gargantuan deal. i think that is a good point. ryan: yeah, absolutely. it isespite the fact that

sort of a long-term play can we ever a lot of the shareholders that are supporting it saying they think it makes sense, even if the share price -- the oil price is below $60 a barrel. which is what shall told us they would need for it to make economic sense. it might even make sense at $50. but clearly the deal was predicated on the ideal that this is a transformative one, and it makes sense in terms of a 20-30 year horizon, predicated on a oil prices much higher. and another thing that chris said, i thought it was interesting, if you thought the price was they around $30 from your biggest issue should not be this transaction. it should be should you really be investing in shell? if you're that bearish on the oil price, sticky where he are now, maybe you should not be investing in a company like shell. manus: let us bring it back to the prism of foreign exchange. the price of oil was a lot

higher the middle of last summer, when people were talking $10. $50, not $20 or into your language and your view, some of the major commodity or currencies have been ravaged, no pressure. : i think there will be differentiation. for me, the bank of canada last week, that was a big shift in rhetoric. because it pretty much told us that there are limits to what monetary policy can do, meaning they are trying to curb expectations about further interest rate cuts. at the same time probably hinted that they have seen enough of the witness. hand, you the one have central-bank community, and you have commodity prices, and at the same time you have valuations that are fundamental. i think, if i am to look at the

fx, a lothe commodity is already in the price. unless of course you think that oil goes down to $20 or $10 a barrel. i think there is going to be plenty of volatility in the ruble. and it is largely because these guys have a certain extent of expectations about the revenues they have from the oil industry. manus: interesting because you caught up with the head -- let's bring to our viewers' attention, the volatility of the ruble. thursday, youd, call that a baseline in canada relative to the oil. : they see and appreciation here. ryan: volatility is a big concern for them. i think they're more concerned

about the volatility of the ruble and they are the weakness of the ruble. when i spoke to the deputy head of the central bank, she said thankfully volatility has declined. which is extraordinary, considering it is still the world's most volatile. but that was last year. you said you expected to be volatile this year. you don't think they would try to do something to stop that? i mean, weakness him ashore. that helps with the budget. but if you are in business in russia, you're getting a headache on a daily basis now. : i think you are right, but at the same time, as you mentioned, the volatility -- if you isolate what is happened, the volatility is not as high as it was about a year ago. i think, right now, the sense i'm getting from the communication from the central bank of russia is that they extend back a bit and allow the free-floating to

do some of the business. because, you know, we're not talking about $60. we are talking about crude at $30 a barrel. that is massive. manus: this dollar-ruble, let us take the message off. rather than see who is to be decaying with me, we are going to introduce a live chat for our viewers. they will eventually be able to communicate and have a go at ryan, and anna when she is here. i read a lot of different notes. this is all overdone, over dramatized on the downside for the ruble, the upside for the dollar in this case. and he will see back to the mid-70's level in the very near term. what would your i suppose -- vasileios: if you look at the fundamental case, right, both of these things have been very much

stretched. probably the oil price, but that is. doubt that oil will be higher than it is right now. but over the next 3-6 months, you have the sentiment that is playing in all of this. you have all of these followers, the hot money that is actually compounding the trend. this is where i am getting a bit worried about how things are going to pan out. from a fundamental perspective, let me be very clear. the global economy is not as bad as the oil price is showing us. manasquan that is what everyone was saying in davos. like, at growth look 2.5%, we need to get used to that normalization. and ryan, thank you very much. up next, we are talking toyota

-- shares rev up. as the takeover and positions are confirmed as the world's leading carmaker. ♪

it is the 6:48 in london. let us get you the bloomberg/. flash. sees softness in hong kong, after sales declined for the first time since 2003. china may no longer offset the broader slowdown in the smartphone market. profits weres almost wiped out in the fourth quarter, as it missed estimates. they were trying to compensate u.k. climates. net income fell 25 million euros in the three months after

december, down a year earlier. and you can see francine's exclusive interview with ana botin later this morning. in global gast euros, a $16.2 billion decline of the prior year. after watchers rose 20%, oprah winfrey tweeted about the program. in a video he posted on twitter, the entertainment mogul says she lost 26 pounds, despite eating bread every single day. toyota shares have risen on news that they are planning to buy out the remainder of its unit. they hold a 51% stake, and they are considering making it a wholly-owned subsidiary. that news comes as global sales top 10 million last year, retaining the title as the world's top-selling carmaker.

manus: thank you very much. let us talk photos now. editor craig rs trudell,. what does toyota get? grcraig: a couple of major strengths. one is that japanese have mini-cars, exclusive to japan. and with the shrinking car market, it is the one sort of bastian of strength that is growing as a portion of japan's market. but there was a price war going into this most recent fiscal year, between daihatsu and suzuki. you saw as a not performing very well. car sales have not been that strong for daihatsu lately.

and you have a real strength in southeast asia, but even within indonesia that we learn that ford is pulling out of the market. it is a tricky one for carmakers to navigate. but by owning daihatsu completely, toyota can perhaps improve some of the operational challenges that they experienced over roughly the last year or two. volkswagenta beat again in terms of the global sales list. what is the outlook for this race? specific set of issues in terms of reputation, risk, and damage. is toyota's of doing it on their own take? or the issues that are challenging volkswagen? craig: yeah, absolutely. i think this deal could be a reflection of just how relentless toyota is about, you

know, kind of protecting its strength and building on them. as you mentioned, volkswagen has some reputation risk going into 2016. they also have risks in terms of, you cannot sell cars you are not allowed to. and in a market like the u.s. might still have a stock decline because the diesel cars -- where agentissions scandal was zero in the market. you have real tangible challenges going into 2016. for toyota, you have some challenges with daihatsu. japan is a market in structural decline. but they do have things going their way. for 2016, i would point to the preius. it just dominates that market. in as much as gas prices, the biggest market of the u.s., they've been very low.

but this is a car that is in desperate need of a redesign. so the fact that this was the first time in seven years this car is at a major update should bode well for improving sales of that model in terms of the biggest markets, u.s. and japan. manus: i can vouch for the fact it needs a bigger backseat. we come to work in one of them every week. becky so much craig. let's bring in vasileios, head of global ethic strategy. we were just talking about toyota. and in many ways, a large part are about to embark on this wage renegotiation period. the abe was hoping for wage, it was all predicated on the different value of the yen. : absolutely. that is right. i think you are referring to the

appreciation of the yen. but from a big perspective, again, it has to proceed massively over the next three years. the big question is whether these guys are going to pull the trigger on friday or not? it is a bit difficult because we always have to keep in mind, we have to get our view of what we think the central bank should do. but at the same time, we think the central bank will actually do. listen, from a fundamental perspective, i do not think that the elements are there for a sustained recovery in japan. having said all of that, you know, i keep hearing governor kuroda saying wage negotiations are not going like we would like them to. but the underlying pace of inflation is around 1.5%. so that does not sound to me like a central banker who is just right there to pull the trigger on friday.

i think it will be a very close call. i think they're not going to do anything on friday. manus: you are right. you are correct to bring it back to this perspective of why we are getting a little bit perhaps focused in. dollar-yen, the major currencies around the world, this is the start of the year. you see all of the majors. they have dropped. the yen has appreciated against all of the major currencies. on a segway, is looking here, the yen appreciation of maybe 5%, on that last meeting on the 18th of december, it is becoming a bigger issue? vasileios: it is. at the same time, just wondering, we have been through three full weeks of massive risk aversion. typically, we know the yen

benefits on the back of this. does the central bank respond to this? i think they need to see the bigger picture. convinced thatot what the central bank has seen over the last few weeks will be enough for them to pull the trigger. manus: who will be the bravest central banker of them all, the fed, the ecb> ? mario draghi's rate will go in some form. we don't know, but in march. vasileios: listen, i think it is going to be quite less homogenous central-bank response throughout 2016. it started with the bank of canada. they hinted that all of that being the volatility of the market, we need to see through that. kuroda also mention this. mario draghi, at the end of the

i thinkt as i said, some of the central banks will try wearing inflation close to targets. no way that canada, that is a good point, will try to see through that. manus: thank you. more to come, at the top of the chair. ♪

manus: end of an era. apple forecast its first losses 2003. tim cook says conditions are unlike anything they had ever seen before. fed in focus. we get the central bank's first statement of 2015, setting the tone for the miles ahead. oil resumes its decline as u.s. futures slide. chinese stocks are on the off-again. welcome, its "countdown." time to get into the breaking

news flow. let's talk about aberdeen asset management. we have the ceo -- we had the ceo here a few weeks ago, talking about their exposure to the emerging markets. billion, in at $296 and this is the view from aberdeen asset management. the outflows in the first quarter amounted to 9.1 billion pounds. aberdeen asset management, net outflows 9.1 billion pounds. this is merely a symptom of what everybody have been feeling in the management game between the sovereign wealth funds, retrenching, taking their money back out of the market. that has been one of the big issues. 2016-2017 outflows. let's check in very quickly on futures.

what you have here is london -- the biggest two-day drop since last summer in the chinese market, so that's dropping. but what you are seeing is this lack of conviction in the european open, euro stocks opening down. i am going to call it flat. u.s. equity futures at the top of your screen doing a little bit better. keep an eye on those. it's the start of the european trading day, and what of those companies you will make your decision about is novatis, one of the world's largest drugmakers. they missed and with estimates. care, unitr eye continuing to plummet. the ceo joins me for the first interview of the day. great to have you with us. joe, i look at the numbers, we can get hung up on the profit

miss, concerned about sales. well want to know is that you have appointed a new ceo. you have an asset worth $41 billion that you took control of. changing the ceo -- is that really going to help change the direction for alcon? >> well, look. we this morning announced a thorough growth plan, and it really comprises three elements. we will focus the business on the core surgical business can take the pharmaceutical piece and put it into the pharmaceutical division. this will give that management 100% focus on the core alcon business. the second thing we will do is strengthen the foundation by investing more in some customer service, and we will surround the surgeon with some of the service levels that they have not seen in the past. finally, we will invest the hind some of our new launches.

-- behind some of our new launches. we have new ocular lenses for cataract surgery, are increasing marketing support, and believe that this will allow us to turn that business to growth, probably in the back half of 2016. manus: joe, there is a proposition out there, many in the market saying that you are a ceo who delivers transformation. we saw what you did with the vaccines business. my proposition is this, if i were a shareholder -- i and sitting across the table and say, i see what you are doing, wrapping it into the pharma business. take a $41 million, get rid of it, get me a better return on equity. divest yourself of alcon. it's not delivering as you expected, do something more radical. this is piecemeal change for the sake of change. look, we have said we are not going to sit with any

business that underperforms for elong period of time, but when you think about ophthalmology, it is a great space. think about eyecare in the aging population and it continues to grow. with the demographic changes we expect, it will be a growth segment of the market. alcon is number one, so what we are doing right now is focusing on turning that business, getting it to return to growth. expect tothat we see that sector return to growth by the end of this year. manus: let's talk about the peyton cliff. you have almost $10 million worth of sales rolling off in february. what is the plan? >> ok. we announced that our guidance for 2016 is sales and operating income in line with a year ago, and that is with losing patent protection of our largest drug. if you look at the innovation

machine that novartis is, we have generated a number of new medicines that are right now growing significantly, like for multiple sclerosis. we are offsetting a large part of that patent expiration. we have two potential mega-blockbusters for chronic heart failure and psoriasis. a couple other for autoimmune diseases. we will invest heavily and offset that. most companies in the sector when they go through patent expiration have a patent class. clif.a patent wf. we aren't going to do that. we expect to grow. manus: part of the structure you did last year was in regards to the oncology assets you taken. -- you take in. benchmark it for me. where ar e you?

how is it fitting in? below five, above five? >> we are about seven on that acquisition, so we closed it about five months before we expected, back in march of 2015. we have completely integrated that business into our oncology business and we are off to a very good start. we saw double-digit growth in oncology, and we expect that to continue. if you take out the effect of the patent expiration, this oncology business is a good business, and we are very pleased with the assets we got. we're performing at level that is at or above what expectations were. manus: 7 out of 10. talk to me about the u.s. there is a lot, there is a lot of bad press out there about pharma pricing. it will be a tough year. how does this campaign look to you?

what are you most worried about in terms of pharmaceutical pricing in the united states of america? what is the risk to me as a shareholder holding your stock from your pricing, coming under severe pressure? think one of the things you have to remember is that historically it has been a place where there have been price increases. i think those days are over. you have to assume that there is going to be decreased price pressure in the u.s., and we are planning for it, which is what we announced today. not only are we going to focus our divisions, but we are going to centralize our manufacturing operations. right now we have individual manufacturing operations for each division. we will centralize, which will allow us better capacity planning, and it will allow us to lower our total costs. as we enter a pricing environment that will be more difficult than it has been in the past, novartis is taking decisive action, so that over the next few years we will be able to lower our cost base and

still be able to invest in r&d, which is really the lifeblood of this industry. we have to exist no matter what the pricing environment is going to look like, and that is why we are taking the action today. manus: joe, we wish you well. all about action today. joe jimenez. -- breaking news for you rbs, this is coming down to ross mcewan. rbs is to take 3.6 billion pounds in empowerment provisions from pensions and resell mortgage backed securities. they are taking a 1.6 billion pound charge, accounting charge, from pensions. 1.5 billion pound provision for u.s. retail mortgage backed billionies and a half pounds of ppi. it may have been the accelerator -- i didn't get any -- but you s

aw them take 600 million euros this morning, rbs another half billion. the combined expected impact -- this is the critical -- of 1.6% on the capital buffer, referred to as core equity tier one capital ratio, or 30 points. this is a lumpy charge for ross mcewan. they see 50% at the end of september, that it will reduce the attributable profits to shareholders in the fourth quarter by 490 million pounds. russ mcewen wants to get the bad issues out of the way, more for the retail backed mortgage securities litigation in the u.s. this is the one that is hanging over rbs. i want to welcome a couple people want to set. we's bring in my guest -- have had a lot to get the.

this is rbs. if you feel like talking about rbs, great. if not, talk about the industry. more ppi, more empowerments. it's tough -- >> let's talk about the sector. it is a sectorial issue. we see the european banks really trashed in the last two weeks, and i think you have to look at the data about slowing economic growth and that you have got these kinds of issues about ppi in those impairments coming on top. situationto get to a where there is a clear out of the stoxx and there is a willingness to buy and a clarity about the regulatory environment these organizations will work in. that is what has been undermining the sector. manus: if you look at it, the italian banks got really heavily, heavily smacked. that was -- when do we get a bad bank? this morning, fourth-quarter profits come in. we were looking for a market of

over 1.4 billion, and again, it is about getting their capital above this 10% level. the italians are under pressure, the spanish are under pressure. are the u.k. and u.s. ahead of the pressure cooker? >> i think the u.s. is definitely ahead. the reaction around the gfc, that stabilized the american system much better than the european system. the u.k. is ahead of the eurozone, and what we have to see is -- we are not going to get global growth going until you have an active banking system that is able to get the credit cycle moving, and i think that is at the heart of some of the largest global problems. the other issue is -- you talked about sovereign oil funds. they've in big investors in the sector. our people worried that if they had to let go of their equity holdings, at some point they have to start getting rid of some of their assets in the banking space. manus: if i look at the banking

landscape, deutsche bank's transformational change program, barclays -- getting the bad news in small drips. hsbc, will they stay or go? there are many issues around this -- >> what's interesting to me is that although we see equity prices hit so hard, cds has been relatively stable. but i feel is that this is an equity issue. it is less about nonperforming loans, less about that credit side, and i think that is why come back to these specific equity issues is taking place. that is where you come back to the sovereign welfare. manus: would there be an opportunity on the other side of the equation? you will be reasonably well remunerated, i would imagine -- >> the differentials are still there, and that will be what people look for. manus: thank you so much.

stays with me. apple is forecasting their first sales drop. nothing lasts forever. for sales drop since 2003. caroline hyde is here to tell the tale of woe. ♪

manus: it's; 17 in london. -- it's 7:17 in london. let's get the business flash. caroline: shares have risen on news that it is coming to buyout of the remainder of its unit. it said it is considering several possibilities. slumpeds comes as sales to 10 million last year, making it retain its title as the top-selling carmaker. profit was almost wiped out in the fourth quarter as it missed

estimates, as the bank set aside u.k. clients to a mismanaged morgan loan insurance. it is down from a 1.4 6 billion euro net profit. you can see francine lacqua's exclusive interview later this morning. se micro closing unprofitable units, making chips for set-top boxes. biggest semiconductor maker also forecasted that sales will continue to fall. the ceo of australia and new zealand banking group has reshuffled management. -- willprepared to have "hard conversations" with clients and are willing to pay for regional services. that is your bloomberg business flash. manus: caroline, thank you very much. i just want to draw our viewer''

attention. i will click on the asia-pacific index. we are now just down 3/10 of 1%. the shanghai composite is down .5%. we've really lifted ourselves back from that quite dramatic drop, the biggest two-day drop since last summer. you are seeing a little bit of a turnaround. this is like terminal action, a little bit of a turnaround. european markets are set to open flat. what have we got? london up 1/10 of 1%, so give or take, u.s. equity futures are down 4/10 of 1%. the earnings have been hit by growing, slowing, global growth. apple ceo tim cook highlighted this after the world's biggest company --

>> -- and weakening currencies. manus: there are plenty of other challenges for them to faint and here to break them down as caroline hyde. this is all about the outlook and whether we have reached -- caroline: the market braced itself for this and that is why we saw the shares down.

this is why you are seeing for the next quarter than saying not only will we see sales fall, we will see them decline much more than the market had expected. it had braced itself for a 4% slowdown for the next quarter. up to 14% slowdown -- 68% of the revenue comes from the iphone and they're not selling like they used to. concern,this is a key a company desperately trying to become more services orientated with music, pay, icloud -- but it doesn't pick up the slack. manus: caroline, take me to the good signs about china. it's something that manager may very clear, isn't it? caroline: they did clearly. and one side has the concern about the iphone, but on the flipside you have china now the

second-biggest market for apple. they were hoping this would sustain their growth potential, making it the number one company in the entire world. the biggest technology company, that's for sure. but the china slowdown will hit them, too. we heard it from tim cook -- softness in china, particularly in hong kong, a very different environment is with the cfo called it. not only got the china slowdown, but america sales slowing. win all last season, iphones and ipads were flying off the shelves, the america sales slowed 4%. that is almost half of their revenue. clearly that is a key concern in terms of regions, although we did hear from tim cook saying that yes, there is a slowdown, but he sounded relatively optimistic about the longer-term, as we keep hearing from ceo after ceo, like we heard from siemens, from phillips. he's saying "i don't subscribe to the doom and gloom predictions.

this is a country that will shift from manufacturing to consumer. yes, there will be a slow down but they still feel they will be able to pick up going forward." for the time being, we are seeing the first downgrade in revenue since 2003 for apple in the next quarter. manus: thank you very much. i want to bring you breaking headlines. john kerry in a joint press conference at the moment. regards to then chinese and the u.s. position in regards to the size of china, in regards to korea. they need to agree to reach a consensus on the u.s. resolution. -- the u.n. resolution. china needs to accelerate with north korea on an effort to reach a resolution. they need to curb korea's ability to advance its nuclear program. this goes back to a couple weeks

ago when we saw those explosions in north korea. in the meantime, let's bring in aed hartnett. let's set aside the politics of north korea for a moment. caroline ran us through the apple story. you've got to go to this -- it michaelen by i g reagan. the biggest drag on the stock market is not what you think. erased almost, it a quarter trillion dollars of market value. push the boat out for me. >> it is the the weather stock of the u.s. tech sector, and what we have here is a focus on growth stocks. therowth stocks where valuations have been pushed up don't hit their numbers and give

warnings about the slowdown in growth as we have seen from america and china, that it is going to be very difficult to sustain those valuations. the bottom line is we have had a very good run-up, and those are being pulled back. but the real question is where are you going to get that performance from other stocks? this is still going to be a stock or the underlying growth profile is very much better, and from that point of view the downside risk is quite limited. when you are looking at the world with very low interest rates, the discount factor on those future earnings is still very high. i think the downside risk is being played out to a large extent here, and we are still going to see a willingness to have these growth stocks at the center of people's portfolios rather than a willingness to go back into the more cyclical value plays of the oil stock. that is the real choice that investors are making. manus: do i need to add an addendum to that growth part of -- portfolio, which is su

>> yeah, and you will still see people heading for things like pharma, food and beverages -- those will play a very well in this environment. we haven't yet turned the corner, and those stories warning about fourth-quarter u.s. growth -- we know the number will be very weak, .8% is the current forecast, we no china is slowing. we think it is a round up to 6.5%, not the 2% -- manus: more stimulus to come from china? >> absolutely. we have seen it in the monetary form. money growth is picking up much faster in china. i would say that china is going to re-accelerate faster than the u.s.. the only question is whether they will try to stabilize the exchange rate and are switching currency stability for economic stability. it's going to be a tough call. manus: thank you so much for coming in. 30 minutes away from the opening

start of the trading day. you have got ppi hitting santanda. novartis missed. ♪

guy: welcome to "on the move." we are counting it down to the european open. i am guy johnson alongside jonathan ferro. jonathan: central banks for statement of 2016, setting the tone for the path ahead. . the biggest company forecasts 2003iggest drop since