francine: global markets run red. asian stocks lower. oil trades around 30. u.s. 10-year yield is close to a record low. markets but the odds of a fed rate rise at less than 50%. chem china offers $43 billion for syngenta. the country looks for way too feed the world's biggest population. so, welcome to "the pulse" live

here in london. i'm francine lacqua. eurozone pmi, that figure for the months of january, service has fallen to 55. figure.expecting a 55.4 that is for germany. euroarea in line with expectations. germany softer than yesterday. i would almost call it in line with expectations. i do not think we are expecting much movement on the back of this. we will continue to watch any breaking news out of the euro aone especially for cpi. i want to show you the markets. let's have a look at where stocks are headed. wti back below $30. they were up to 30.3. the mood certainly seems like it is risk off again. dollar-yen 1.19. european stocks are little bit flat. a little bit concerned about where the markets are headed.

let's get straight to the bloomberg first word news. offered tochina has buy syngenta fourth $43 billion. a plan to take over the swiss -- a state backed company extends at shopping spree. it would be the biggest acquisition yet by a chinese firm. trading higher. the focus of the 2016 u.s. presidential race shifts to new hampshire. today's results were kind outsiders. hillary clinton clinton declared her self-satisfied with monday's narrow win against bernie sanders. better no longer see then 50% also federal reserve will raise interest rates this year. as of yesterday, traders were

betting on better than even arts for the next rate hike by february 2017. on monday, chances were above 50-50 for an increase by november. treasuries are taking their cue. 10-year fell to david within 50 basis points of the all time low -- fell to within 50 basis points of the all-time low. you.ine: thank wti crude oil trading near three dollars -- $30 a barrel. after it's worse annual loss in 30 years, bp's ceo bob dudley told bloomberg he foresaw oil longer for lower. bob dudley: we have watched the supply and demand figures carefully. , which wills group do an outlook shortly, gave us some insight late 2013 that this was coming. and we have been saying that for some time. lower for longer. but it is not lower forever. francine: yesterday we saw

standard & poor's cut cut the severalfor shell and other oil producers. let's talk to s&p's director of corporate ratings for commodities. funthe european equities manager for mutual global investors. thank you so much for joining us. we have had quite a lot of news over the last couple of days on hadcompanies p yesterday we an extensive interview with bob dudley. he was clear he is going to pile up more debt to make sure that the dividend kept on being dished out. how concerned are you about balance sheets? >> sure, well, look, what can a company do when it generates cash? it can pay a dividend. not so good for creditors. or it can invest in the future. from a credit rating perspective, we see companies to sustain a dividend, that is not good for credit ratings. that is one of the reasons why we have seen some of these rate reactions.

francine: you think this will continue? one thing that when we are looking at these downgrades, exxon is still aaa rates. why is it doing so differently? simon: we put them on negative outlook in on him last year. even they are not immune. in the nextput -- three months or so, it is a question of saying where's this rating going to the best positions over the next 3-5 years. for some writings, not but taking axxon, more conservative you today. as things get better, we can always upgrade. we are talking about an adjustment of a notch. the sky isn't falling. francine: when you look at oil prices in the majors, they are so difficult to predict, why would anyone in equities own oil majors. >> they will sustain their dividends. they have strong enough balance

sheets for that. we think the oil price will eventually start to rise. it is getting to the stage -- francine: a year, five years from now? kevin: we don't know. we are neutral and the oil majors. because we think your price good move at any time. last week there was talk about the saudis and russians getting together to talk about their ting production. we could be caught unawares if we did not have a position. when the oil prices falling below $30, countries like saudi have got massive budget deficits. russia has to sell state assets to fund its budget. countries in africa and latin america have problems. francine: do you feel that big oil is putting equity holders above bondholders? simon: i think we see some differences between companies. some companies have been very explicit that they

are looking to maintain the dividend. balance will use the sheet. in the short run is ok. we try to take a medium to long-term view. in the near term, given the kind of operating cash flow decline we have seen, refining margins will not be as strong and 2016 as they were in 2015. that offset for the lower all price will not be there. you know, i think some company have gone for script plans, last year. from a credit perspective, if you're not paying up and cash, with sharep it up buybacks, that offset said. where we have seen script plans, xon, thattal and exoo give some support that you are right. there is this commitment, if you will, to maintain the dividend in many cases. francine: when you stress balance sheets for oil companies, what is your assumption for oil? simon: look, we have a price

tag. francine: which is 40 for this year. year and 50xt long-term p the reason we have that is because -- we are modeling exxon -- francine: you must stress tested for lower? simon: we do. first up, we are talking about -- an a or a minus. so, liquidity is not the first thing in our minds. we stress test for it but that is not what we're focused on. it is a question of sensitivity. that is where the is outlooks come into play. if we think there is a one in three chance we could be moving a raining down under dagain. we took it down a notch but we plan a stable outlook. even if prices remain longer for lower, we do not think we need to take out another breakup. that 30.at models

but for consistency we use 40 across the board, brent wti. isncine: kevin, $15.000 something that is being talked about. it is impossible to predict. foreign investor, -- for an investor, if i want to buy something among the oil majors, i keep them for two or three years? kevin: you have to say that viewpoint. the same people calling for $15 now are calling for $200 several years ago. there is a big credibility gap here. so, most commentators seem to think the oil price rises hit from here to around the 40, 50 level. francine: and then stabilizes? this is the problem. it is impossible but we are not getting any noise of opec and non-opec to meeting. game changer was the opec been in and november

couple years ago. as you say, ultimately the way ourook at our modeling and ratings to say on average where do we think the price is going to be? if the price is spot 20 in 2016 any givent price on day is not hugely useful piece of information from our perspective. fromine: simon redmond simon and poor's. with us. stays offers what monsanto could not as it agrees to buy syngenta for $43 billion in cash. yahoo puts up the for sale cost as it tries to slash costs. will the change in small print be enough for the brexit?

all of that and much more coming up. ♪

francine: welcome back. this is "the pulse." we were just talking about some of the oil majors that had been downgraded. when you look at brent, wti over the last couple weeks, it is one of the main worries that investors have out there. they are concerned that there may eat something more sinister thathey are concerned

there may be something more sinister out there that there may be some oversupply. you so much for sticking around. simon, i want to get your thoughts on minors. we talked about oil majors. are focusing on equity holders and not so much debt holders. what is your take on miners? they seem to be having a tougher time than the oil majors. cut bhpook, we billiton on monday from a plus to a. we wanted to look at any a mouse the company makes for results, not just 2015 numbers but dividend expectations. -- we want to look at any amounts the company makes. the cost curbs has come down for these minors in particular. prices we some of the see today without what event un- economic two years ago. there is not a one-to-one

offset. we have seen a huge decline, have to year, a 30% decline in ebitda. it is not pretty. that means companies have to look at the tools they got to protect the balance sheet and defend their ratings. at some point, having cut capx, and benefited from fx costs working in their favor, at some point they may be need to do something else. that is something we are very interested in. we saw someide, script programs. we will see what comes up. at some point we have to say these credit measures, it's just going to be too low for too long. that rating is going to be better placed in a lower level. francine: i had a guest from fitch yesterday who says it is difficult to look at glencore. how do you look at glencore? bbb negativere,

outlook. they have the mining business so they have all the woes there. the trading on the market business should be a bit more stable. they are not just speculators. they take a logistic position timthey are arbitraging e, location. that is quite a dead intensive way of running a business. thin margins, a lot of short-term debt. that short-term debt is -- as a pointed glencore to, there is some flexibility. think it isain, i an investment grade rating. are we concerned about liquidity? no. do we see some significant stresses on the mining business? has the market slightly on the performed? yes, it iddid. if that continues to not be an

offset for the mining business, we might take a different view. francine: i want to talk to about syngenta but let's get the news on syngenta. i know you are an owner of the stock. chemchina has agreed to buy syngenta for $43 billion in cash. it will be the biggest acquisition by a chinese firm. nejra, take us through this morning's events. nejra: what we got was chemchina agreeing to buy syngenta for just over $43 billion. we're talking about about 480 swiss francs a share. yesterday bloomberg was reporting we could see a deal at 470, higher than the previous officer of -- previous offer of 449. what this allows come china to do is become the world against supplier of has to sides and agrochemicals. it also allows it to push into which is alsoess part of a chinese national business in being able to increase food production for a growing population. for syngenta, what does it get

it out of this? they got a deal, don't froorget it rejected a deal from on santa last year. ince then, -- here are still some risks which we have got to talk about. what is significant is that this agenda share price has not gone up to what cam china was offering. why? nejra: absolutely. the offer is a 20% premium to yesterday's close of a 15% premium. number ofnt, a reasons for this -- first of all, the deal was pretty well telegraphed. some ther e are still risks, not necessarily from the antitrust group, one citigroup analyst was saying that even with the combination we are only looking at 19% market share for chemchina and some agenda. the other risk could come from

the u.s. i'm talking about the committee on foreign investment in the u.s. syngenta now u.s. company but it does have two business units in the u.s. to look at is going this and see whether or not it poses a risk to the food chain, but also national security in terms of looking at whether any tothe units -- close military or other sensitive basis. that is where the risk seems to be coming from. also, the fact that we have not seen the share price rise as much as some expected could be a sign that investors not fromcting a higher bid monsanto. it has been left out in the cold. one analyst saying, it is not going to be able to match chemchina in terms of the all-cash offer and the price, but could we see perhaps talks between monsanto and basf? francine: thank you so much. syngenta. really surprised that they share price did not move up? kevin: no, it has been typical

in most of these m&a deals we have gone through in the last few months. they discount the offer just in case the deal does not go through. francine: do think it will go through? hopeful it will go through but clearly there are questions on national security grounds. more so, hoping that will flesh out a higher bid from on santa. we will hang on to the shares -- more so hoping that we will flesh out a higher bid from monsanto. did.uld make sense if they people are estimating at the moment that the chinese currency will gradually devalue overtime. you do it before that happens, while it is worth more. we do think m&a will continue across the board. francine: thank you so much for both joining us. simon redmond, standard and poor directors of ratings for commodities. kevin talking about syngenta. up next, one turnaround too many for yahoo!.

the struggling business says it may be open to a sale. we will discuss that next. ♪

to "the: welcome back pulse." haso!'s ceo marissa mayer

argued she can put the web business back on the path to growth but could she be out of options. mayer said she would consider putting yahoo!'s core assets up for sale while announcing the latest turnaround efforts to cut staff and close offices and exiting production lines. she's optimistic about her plans. ms. mayer: i have never believed more in this company, in the people, in the products and in the inherent value of what we do. to be clear, this is a bold plan. re embarking on with the full support of the board. francine: caroline hyde discusses the company results. dramatic changes are what we are expecting. a for sale sign to go on. says she has never believe so much and a company. she needs the investors to believe in it, too. to split of on her the business. now she seems to be acquiescing to some of their demands. they want changes at the top as

well because dramatic changes being outlined, 15% cuts and workforce, will save $400 million. by the end of the year, shutting offices in dubai and mexico. exiting games and smart tv. this is all about trying to retrench and trying to make what is the core business actually work. mail, finance, sports, video pitching needs to get more than -- of the ad market. and win back against facebook and google. if she does not -- if she does not manage to push through those changes and do a reverse spin off, separating it from the asian acquisitions, alibaba and yahoo! japan, if she cannot do that, that she says she will put the for sale light on. she will consider any transactions, open to any proposals that are well-

qualified. maybe this deal could be done with a company having to sell itself. at the moment, the investor base are clamoring for leadership changes. she's trying to save her job as well as the future of for company. francine: thank you so much. very latest on yahoo! when you look at a lot of the technology stocks, you like cap gemini. kevin: we tend to like companies that make strong profits. we steer clear of internet companies. asm has been weak over the last year. it is going through a transition. it has almost a monopoly position and equipment. it is a new generation of technology that is about to be adopted within the next couple years. we think it will give it strong profit growth. gemini has been going through a good rationalization. francine: thank you so much. on gets anamer

emergency brake under donald tusk's deal. will it be enough to prevent brexit? that much and what -- that and much more coming up on "the pulse." ♪

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welcome to "the pulse" live herre in london. i'm francine lacqua. getting breaking numbers from the u.k. market economics saying today its headline activity index for the sector rose in january. we are talking about the u.k. services industry. indicators of sentiment and order backlogs mean there is little reason for optimism. confidence at the u.k. services companies, falling to the lowest in three months this month as a litany of threats taking their toll. the report comes a day before

the bank of england announces its latest rate decision. is set to announce in inflation and growth forecast tomorrow. no change is expected. the economy is growing. it grew by .5% in the last quarter the risks include china's economic slowdown, the upcoming referendum on e.u. membership. those two factors seem to be pall over the outlook for the services industry, which has been the key driver of u.k. economic growth. lliamson wayneson -- wi continue to appear in the country's resilience to head ways. he cited worries about the chinese hard landing, financial market jitters, high interest rates and the u.s., more austerity at home and the possibility of a brexit. food for thought. for the bank of england tomorrow. want to move it on quickly and show you what is happening to

the oil price. this is a 7 day chart for wti. as you can see, we are just nearly above $30. what we get has been because we are little changed. by 11.2 percent on monday and tuesday, the biggest drop since march, 2009. heaven risen the previous four days, it wiped out all those thens -- having risen ou previous four days. stockpiles are expected to rise. but the outlook for oil does seem to be rosier. analysts are predicting the crisis will climb more than $15.00 through the end of 2016. wti will reach $46. reach $48. according to an estimate of surveys compiled by bloomberg. oil hovering around $30 after

dipping below it a little bit earlier. francine: mark barton with the latest on some of your asset check and the u.k. let's get straight to first word news. ina has offered to buy syngenta for more than $43 billion. the plan to take over the pesticide maker comes as the state backed company extends its shopping spree. the all-cash offer would be the biggest acquisition yet by a chinese firm. syngenta shares are trading higher on the news. the focus of the 2016 presidential race shifts to new hampshire. mondays results were kind to outsiders. hillary clinton arrived declaring herself satisfied with monday's narrow win over bernie sanders. also-ransblicans trained their sights on the three leaders. markets no longer see better than 50% chance that the federal

reserve will raise interest rates this year. as of yesterday, traders were adding on better than even odds for the next rate hike by february 2017. charters were above 5050 for an increase by november. treasuries are taking their cue from theisuch sentiments. 10-year yields fell to an all-time low. the bloomberg first word desk, i'm née vucevic -- nejra. draftne: e.u. presidents futurent on the u.k.'s relationship with the european union could pave the way for a brexit. let's welcome richard reid who is with an investment company. us., thank you for joining yesterday was crucial. yesterday we had this draft what you have in front of you.

i love when reporters, drafts. how comprehensive was it? i was not coarser -- quite sure what we negotiated. >> i do not think this a be troubling the best seller list. it is a treaty text. when i was reading it yesterday at great speed, thinking really i wish i was a lawyer, because then you would understand, you would know -- i was or was an international lawyer and then i went make a lot of money off make a lott i would of money off this. the headlines. this is coming to come down to how it is framed. david kram and promised -- toid cameron promised get a lot of stuff. and he did not. we were not shale -- pay child benefit for migrants at home. we should not paid child benefits for migrants. l, we will be paying child

benefit. it will be indexed to 28 different countries, and that will create its own nightmare for the government. he said that he wanted a full stop forever on people claiming in work benefits for the first four years. be a taper, and he needs european commission to apply. he has not really gotten what he wants. probably -- francine: he has come back home. you can see in the newspapers. he has come back home and said look, i got what i wanted. this is a basis for renegotiation. we need to stay in the e.u. but we still do not have a referendum date. >> we dnoono't. but we do think it is going to be june. i was here last week when we thought it was going to be june. we really think it is going to be june now.

the government is not doing anything to dampen expectations. if it were not june, that would be a surprise. francine: you firmly believe we should stay. is it at the cost of anything? >> my personal position is clear. even if we did not renegotiate a single thing, we are better off in europe than out. if we come out of europe, jobs go down, prices go up. that is good for no one. these reforms that david cameron most like we delivered our a material win. they give us and has powers to block benefits and block legislation and block -- people we do not like the look of. it is all the thing that the lead guy says they wanted. we're getting them. there is no semblance of logic, no semblance of region for coming out of the e.u. francine: whom do you see a germain opponent? your major

opponent? >> there are lots of campaigns. francine: but no leader. >> it is very hard for the guys on the outside because there is not any logic or facts or reason that they can put forward to explain coming out. it is coming from a position of personal bias. everyone has a vote and every vote has to be respected but you have to look at a clear-sighted way how is the world and where are we best placed in it? europe whichnside gives us a influence, greater economic prospects. to come out would be a deeply damaging thing for this brilliant nation. we should not listen to them. isncine: what they say brussels to size the rules and it is a union that is fundamentally not working. >> the very straightforward answers as we will have the regulation whether we are in it or not, because if you want to

trade with a free-trade zone, which we do, you'll have to comply by the regulations. that is one of the terms of trade. it is our biggest customer. the difference of being in the outside, weg on the are one of the decision-makers of what that regulation is. i do not want to come out and then be held hostage to regulation to it i want to be in and shape it. as a business person, and makes business easier for going into europe. for 27 of rules countries. it is so unbelievably beneficial to businesses. based in the u.k. that is trading over there. before we do business with 17 countries, and the one that is not we have to hand sticker a label on to every single bottle we sell. it is madness. it brings sand into the machine. what businesses need is unfettered access to the biggest

market. loved your piece a couple weeks ago saying that if you look at the football, soccer fixtures, it should be the 20 june.une -- the 23rd of what will we decide on? >> there is going to be one argument. what you had there is a slightly businessy argument. there is going to be and above that argument to the public which is going to be, it is a scary world out there. all sorts of things are happening. there are problems in syria, problems around the world. it is better to be with other people. don't lets go it alone. you are going to get warnings of economic chaos, warns of administrative chaos. someone said to me last night, everyone would have to redraft their own employment contract because they are all governed by moment. at the there is going to be lots and lots of scary stuff like that, and that is quite effective. on the other side, it is not

clear what we get. the best argument seems to be the e.u. is going nowhere. it is an organization that is incapable of reform. a sort of, the trouble with that is that is really quite technical for a big mass-market, the argument is kind of we have never liked the french. true, but thats may not get us out of your. francine: we have not heard from big business saying whether they are pro-europe. a lot of them will playoff the record but there is no one really leading the charge. is that because they think it might be counterproductive? tremendous support across all businesses from small startups to bigger established players. i do think there are people waiting to hear what the reform is going to look like, which is pragmatic heard now is the time to get, we've got good reform. get behind it. let's get back to business.

one of the big potential costs of this whole debate is the uncertainty it is going to bring. we do not need that. we need to get everyone behind it now, saying this is a good deal that is making a strong position for the u.k. even stronger. let's give it our full support. let's show the confidence in the leadership, and let's get on with business. francine: thank you so much. now up next, more on why political pressure at home. we will see angela merkel had to london tomorrow. we are also getting a news conference from the italian finance minister with chancellor osborne. we will keep an eye on that as well. ♪

to "the: welcome back pulse." let's get straight to the bloomberg business flash. nejra: thanks. ford is asking some of its european employees to quit as part of an effort to boost margins. the company aims to save $200 million annually by paring back person european network for space mostly in germany and the u.k. and illuminate some models in favor of popular and lucrative sports utility vehicles. barclays is planning to dismiss 150 staff as it restructures its middle east banking business. the bank will close its offices

in dubai and relocate support staff to its office at dubai international financial center. has reported 2015 earnings that missed analysts estimates, as sales decline for the first time in six years. operating profit declined 17%. by sloping demand in hong kong and the new strength of the swiss franc. shares in lvmh have jumped after a reporting earnings beat estimates. and will profit advanced 16 percent from 6.6 one billion good salesather exceeded expectations in the final quarter. yahoo! fell and extended trading after saying it is considering strategic options for its web business and cutting 15% of its staff. the company says it will devote more resources to increased user engagement. marissa mayer is forcing -- facing calls to step down as active as investors question her

strategy to boost growth. we will speak to marissa mayer at 2:30 u.k. time this afternoon. francine: now, germany's angela to londonads tomorrow. as she comes under pressure at home to stem the -- crisis. the instability could threaten a fragile recovery across the region. let's go straight to hans nichols in berlin. hans, where does angela merkel stand ahead of her visit to london? hans: her position is tenuous. not within her own party, in part because wolfgang schaeuble has backed her. know whether or not her proposed solution is going to fly with her rank-and-file. the sbd, her junior partner in the coalition is backing her. they are proposing extending the list of safe countries where arriving refugees can be sent back quicker and faster and

under expedited procedures. morocco, algeria, tunisia. then maybe have it more difficult for refugees to bring their families here. have a two year waiting period. all of this needs to be hased the-- hashed out in parliament. they do not want to see the numbers increase when you have utter weather with a spring coming in a couple months. what that will do to the flow coming in. here is something that the foreign minister from the netherlands said. netherlands has the rotating e.u. presidency and captured it. he says the migration pressure has not decreased. time to address this crisis is running out. meanwhile, the interior minister and germany, he was in afghanistan yesterday. he made the argument that if you do not actually increase methods to kepe people fro keep people from

coming, they could slow aid. francine: when did we know if we have fresh elections if they cannot form a government? hans: it seems like the socialist have an opportunity. they could form something as well as the pro-business party. that is the question in spain. we saw the economy minister. he says all this instability could threaten the recovery. a big question what this stalemate could do to growth. we did get pmi figures. they were better than expected. the services came in at 54.6 fo. it is a slight slowdown but you still see spain is coming along. i guess the danger is the question about the new government, could impede hiring and investment. we saw that happen in greece last summer. francine: hans nichols there with some of the political tribulations in europe. up next, european stocks fall for the third day.

we break down the mornings trading. ♪

francine: welcome back to "the pulse" on bloomberg tv and streaming on your tablet and phone and bloomberg.com. we are getting lots of news on the markets. let's get straight to mark barton, who's following what is

going on was japan 10-year government bonds. we heard from kuroda. mark: the yield on the 10-year 0.045%, which was a record low. the lowest ever yield for a g-7 nation. germany held that title from april last year when its 10-year yield touched 0.049%. japanese yields are negative up to 8 years. this is the one-year chart. the big move, of course, happened on friday when japan implemented its negative interest rate policy. .06.me from about .20% to very quickly, want to show you the interest rate possibility -- probability in the united states. what matters is this number, the u.s. a 50% chance

will hike rates this year. how things have changed in the last six weeks. francine: you're absolutely right. how things have changed. can you run this through some of the things we saw in town, because we had some services. they looked pretty good but there was less reason to be optimistic. mark: the concern is optimism among services countries. -- services company because the headline data from market economic showed a slight uptick, which shows the industry is accelerating. what is worrying companies is austerity, is fears of brexit, is chinese economic slowdown, is have beenence we seeing in financial markets. why this really matters is that services, as you know, have been pushing this economy forward. when you look at the last data which we had from the u.k. on fourth quarter gdp, when we

drill down into the .5% growth, the entirety of the growth came from the domestic economy, came from the services industry. we are seeing a sluggish manufacturing industry, a industry asort well. it matters because it means the bank of england when it meets tomorrow to decide on rates to issue its latest inflation report, it means this date for the first rate hike is being pushed back further and further away. we think we have a wonderful story here today. even touting the possibilities, the next move and u.k. rates could actually be a reduction. didn't actually say that six months ago. he was laughed out of time. who would've guessed the next move in rate -- it's a small chance, but the fact that people are talking about it makes it relevant. francine: let's get straight to bloomberg first word news. hina has offered

to buy syngenta for $43 billion. the plan comes as the state backed company extends at shopping spree. ffer would be the biggest acquisition yet by a chinese firm. syngenta shares are trading higher. presidential race shifts to new hampshire. monday's results in iowa were kind to outsiders, setting fresh challenges for the candidates ahead of the february 9 primary. hillary clinton arrived declaring herself satisfied with monday's narrow win over bernie sanders. the 8 republicans trained their sights on the three leaders of their race. global news 24 hours a day, powered by our 2400 journalists around the world. francine: now, stay with bloomberg. plenty coming up. we will speak to yahoo!'s ceo marissa mayer. don't miss that conversation at 2:30 p.m. london time. 9:30 in new york. coming up i'm joined by tom keene. as mark was just saying, look

out for the 10-year u.s. treasury yield rising from a ten-month low. look for jgb's. all of that coming up on "surveillance" ♪

♪ francine: risk off. global markets run red following the asian stocks lower. the 10-year yields close to a record low. themarkets could be on to fed rate rise less than 50% of traders pricing in the possibility of a bank of england cut. china offers $43 billion, the largest ever chinese takeover. good morning. this is "bloomberg surveillance." i am francine lacqua in london