hello, everybody. welcome. good morning. you are now watching "worldwide exchange." i'm louisa bojesen. >> and i'm seema mody. we're going to get to a look at the health of the eurozone with some manufacturing activity data just broke, in fact. market manufacturing pmi for the eurozone coming in at 51 or 51.2, which is higher than expected at 49.69. so we did see growth in the manufacturing sector in the

eurozone for this month. we're looking at it coming in higher than the expectation. >> yes. so the december -- the december composite pmi flash estimate was forecast at 61.5 and it came in at 61.7. so a tad higher than anticipated. >> we're looking at the euro trade slightly higher against the u.s. dollar right now at 1.2487. but we should give you the full picture, which is that the euro has appreciated against the u.s. dollar by around 10% this year. but again, better than expected manufacturing data helping against the euro slightly. >> good morning, by the way. how are you? >> wonderful. and you? >> we were together on the show a couple weeks back. >> a pleasure. >> yeah. the german pmi data, the lowest since june of 2013, 51.4 for the month of december. that broke about a half an hour ago, something like that. it's still in expansionary territory, sort of above that 50

level. but we've now seen it at a lower rate, something like -- so, again, we are looking at a pretty low level with regard to these pmi figures. >> exactly. eurozone composite pmi, 51.7, slightly higher than forecast. but that german pmi, coming in weaker than expected, slightly higher than expected when you look at the individual numbers. let's move on. we've got loads going on today. some of the other headlines that we've been following, russia's massive rate hike failing to send the ruble full, the currency giving up early gains against the dollar versus the euro. the micex trading slightly lower. >> weak pmi data adding to the oil stocks, sending european stocks into the red. bill gross saying exclusively the fed will have to take the energy woes into consideration before hiking the rate. >> for the most part when they talk about financial conditions. to the extent that oil prices

are -- are moving currencies and moving real economy. >> and the bank of england gives most uk lenders a clean bill of health, following its stress tests. coming up, governor mark carney delivers his financial stability report. the future is orange. shares of the french telco getting a boost after bp enters exclusive talks to buy ce. but dp shares trading flat questioning whether the 12 billion pound valuation is just too high. >> you're watching "worldwide exchange," bringing you business news from around the globe. >> hello, everybody. well, the bank of england has given a clean bill of health to the uk's major bank. the co-op bank was the only lender that failed the central bank's stress test and it will need to revise the capital plan.

let's run through this because lloyds passed with a minimum stress test ratio of 5.3%. it will need to seek permission from the bank of england before restarting dividends. it was a similar story for the lender rbs. then you're looking at standard chartered. they exceeded the 4.5% threshold with a stress test ratio of over 8%. now, bank of england governor mark carney is due to deliver the financial stability report following the stress test results and will bring you that as soon as it happens. another big story is oil. crude prices have taken another leg down this morning with wti falling below $55 a barrel. and brent dropping below $60 for the first time since july 2009. it's at a 5 1/2 year low for brent crude. the oil shock taking its full on markets in the middle east, saudi arabia and abu dhabi's main stock indices have lost around 4%, while dubai is

currently down more than 7%. officials have tried to reassure investors on the back of these latest moves. the development minister of abu dhabi says the fall of energy prices will not hurt projects in his country while the minister says his economy is coping well with a difficult economic environment. and our own brian sullivan speaking exclusively with bill gross since leaving pimco, whether the fed is likely to factor in oil while making a decision on the rates. >> they won't admit it, but they do so for the most part when they talk about financial conditions. to the extent that oil prices are -- are moving currencies. certainly the fed has to take that into consideration from the standpoint of inflation instead of 2% inflation, we're looking at 1.5% and lower now.

>> portfolio manager at investec asset manager, hi, mac. >> hi. >> can you believe the price of oil now? nigh mix, 54 had and change. brent, 59 and change. we have a massive rate hike from the russians. what's going on and how are we supposed to be thinking about the markets, then? >> we're as surprised as anyone that the oil price ves gone this low. it means a dramatic cut in capital expenditure in the oil industry. whenever these people are saying, it's absolutely nonsense. they're going to have to cut spending and cap ex. in due course, of course, we're setting up the scene for a shortage of supply from years out. cutting cap ex will mean no new oil coming on to the market and that means -- i don't know when, three years, five years, ten

years, we're going to be short oil again. >> i just want to talk bmths bit more about russia. it's pretty substantial, the moves that we've seen there. despite the dramatic hike that we saw from the central bank late last night, are they going to have to do more? >> 17% interest rates are credible or sustainable. and so i think the markets have no -- it has to be said that the russian currencies are substantially short. and anyone who sells it is at risk of a major bounceback in the short-term. >> the central bank did warn russia's economy could sleep in 2015 did oil prices continue to depreciate. given that oil doesn't seem to find a new bottom anytime in the future, does that put the risk

of russia into a bigger reception than anyone expects in 2017? >> well, certainly. >> so how much more could it be, then inspect. >> i don't know, but it's a lot more than that. a dramatic fall in the oil price has to be a major negative for the russian economy. it's very important for government revenue and government finances must be in the power stages as a result of this. >> russia derived about 50% of its revenue from oil and natural gases. this is one of the economies out there that's dealing with the impact of tumbling oil prices. you look at india and indonesia, they're net importers, so their economies could, in fact, benefit from the drop in oil. >> you're right. other countries, india, indonesia, benefits from a lower oil price. what we're seeing in the short-term is the pain from a lower oil price, but we're not seeing the benefit of a low oil price from the consuming

companies. so we've seen the short-term bad news, but the longer term good news, we're not seeing it. >> max, where do you see value at the moment? in the medium term, equities are in value. but that said, in the german bund -- >> that was shown this morning. >> yields are still positive. and we're going to get an up is

cycle, a down cycle, and that's pretty good for inflation. >> we know how to sell bonds certainly because we're overly positive on the upside risk of yields. >> we'll talk more in a bit. thank you far now. >> the weakening of the ruble was a signal for the economy to adapt to new conditions. she also says that the central bank's overnight decision to raise rates was aimed as curbing the negative effect of ruble weakness and says russian companies were able to repay their foreign debt. she recently said the ruble is undervalued. please keep in mind the ruble has lost about 50% against the u.s. dollar, the worst performing emerging market currency so far this year.

louisa. >> all right, everyone, let's get you up to speed with what we're seeing here this morning. equity markets are flat to a little lower. we saw quite a negative session yesterday heading into the close. we were looking at some significant drops to the tune of 3.5% in a lot of our major european markets. a lot of people very focused on what was taking place in australia with the hostage situation there. a lot of people focused on oil and the impact that that could have, plus the general focus story. there tends to be some repositioning taking place, as well. the ftse, a little lower in today's trade. xetra dax off by 0.2%. cac 40 and the presidents if it is mib both trading a little lower in today's early morning trade, as well.

looking at the bond markets, i was talking about this all-time record low having been hit in the german ten-year yield. indeed, we're continuing to see that yield moving even lower now. the ten-year hitting 0.61%. so we're seeing a buying into this safe haven trade, as it were, into the german ten-year despite the yield is close to 0.5% now. with regard to the currency markets and the cross rates there, we need to focus in on what's taking place with regard to the ruble. you have this tightening coming through from the russian central bank. they raised rates by 6.5% from 10.5% to 17% in a very surprising move given that they had hike rates surprisingly last week. they're tightening their liquidity provisions. some are saying it still won't be enough. hence, also, why we've continued to see we were looking at the ruble weakening a little while

ago. we're looking at a little bit of an evening out with the dollar moving a tad bit higher against the russian currency. moving on to modtieymodties, stockholders both a little higher. again, some extraordinary moves seen in the price of oil. brent, continuing lower. down by some 3% at the moment. it's below $60 a payroll now. wti crude below $55 a barrel, as well. so continued selling taking place there, as well. you have the official uae oil minister saying there's no need for an emergency meeting coming through from opec. it does seem like many of the gulf producers, they're simply willing to sit and wait it out despite the fact that oil is moving substantially lower. >> and "worldwide exchange" viewers stay right there. we will be bringing you the bank of england stability report from governor mark carney. stay right there. that's coming up.

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hi, everyone. welcome back. you're watching "worldwide exchange." the bank of governor mark carney is set to deliver the stress

test results for uk banks. we'll be bringing you that as it's happening. it's just starting right now. we heard already the stress test results for the bank of england, all banks passed except for the co-op. we're looking at lloyd's pass, a ratio of 5.3%. rbs, very similar. is the standard chartered 8%. uk banks are in pretty good shape. >> they're not going bust and they're not at risk of going bust. that's the good news. the bad news is they're uninvestble businesses from our point of view. to be investable businesses, they need growth margins of 3%. in a zero .rate environment, you simply cannot get a 3% gross margin for lending.

>> so you don't think these stress tests are a vote of confidence for shareholders who are bullish on these uk banks even though they passed? >> absolutely not. if the authorities want extra capital, that means raising the capital ratio. it's by sinking in the balance sheets, calling in the loans. this is a no-go for investors on a stroo teejic point of view. on a practical point of view, there might have been things to do. it's interesting, this is a very attractive and private equity business. so it's not to say there aren't opportunities in banks from that standpoint point of view, but it's based on the more interesting business, the core business is a dead business. >> and let's talk about the private of oil, how it's impacting different industries.

we're focused on the energy sector, but banks, too, could potentially be impacted. given that they've given out loans to some of the major oil producers and now taking the risks of not being paid? >> i'm sure they have given out loan toes lenders. i don't believe the stress tests in europe for a very good reason. the most important edition in the last year is being the preferred tax asset. it's bubbling which is only realizable as an asset if the bank makes large profit and gets the tax break. in the conditions in which a european bank and deferred tax announces is a problem, anyhow. >> and not forget, either, the bank of england back in june is talking about how the biggest

threat in the uk was the housing market. they said that was the biggest threat at the time. and so far, even the house full of debt seems very high, it does seem like many of the banks are cushioned enough to weather housing market volatility. >> we mustn't forget this is fundamentally constrained banks are good news. we're not going to get the credit boom followed by the credit bust. the strength is a very good thing. it means a steady economic growth rather than the boom/bust cycles. >> that is a different snapshot if you were to look at the u.s. financials. >> it is. the housing market, carney is just speaking and he seems to be talking about how momentum could return to the uk housing market after falls in mortgage rates. so he's talking about the

market, but he's basically saying the housing market momentum could continue, right? he says uk banks, they continue to serve the economy even after the severe stress tests. and, of course, the fall in the mortgage rate means the banks aren't making any money, so that makes it difficult. >> definitely. >> it's interesting, you look at the s&p financials sector so far this year has gained about 13%. some of the big banks, goldman sachs, morgan stanley, are up about 7%, but a very different picture if you take a look at our european banks which are down on the year. >> yes. the core banking in the u.s. is in a better position and the rooels rules are being applied and that means, actually, in some areas where the banks are less of a no-go area where they are in the uk in europe. there are attractive banking opportunities in the u.s.

not great. back lending in the u.s. is going to be constrained in the long-term as it is around the world. it's okay there rather than -- >> and we're back with some of the banks that did pass the stress test, maybe not quite as strong as what could be helped like lloyd's, for example, but how it's going to impact the dividend payout, as well. >> from that point of view, the more interesting area is to look at the bond. the bonds have done pretty well. so the banks will already certainly continue to play the coupons for the bonds. >> carney has been talking. let's listen in and hear what he has to say. >> this plan will deliver a level of resilience commensurate with the bank of its future size and business model. the pra board will monitor progress closely and hold to deliver this plan.

turning from individual bonds back to the aggregate level, the test reveals several features of the system that would be important determinants of its response to stress. first, the only management actions allowed during stress were those taken to reduce personnel costs and dividends. and the latter, in other words, dividend reductions were only allowed when there were published dividend quantities, quantified payout ranges. second, it's important for investors to realize that instruments could be triggered or their coupons withheld in adverse scenarios, those instruments should be priced accordingly. and third, the test revealed some issues with some of the banks' capital models and some differences across the financial cycle. the bank will undertake further work to explore this issue in more depth. it will all underscore the

benefit of judging capital adequacy against a leverage requirement in addition to a capital ratio as would be the case in future years and future stress tests. so to conclude, since the crisis, authorities have been working diligently to make the financial safer simpler, fairer and simpler. this year we've reached two crucial milestones, agree on total loss capacity internationally and the publication of a ratio domestically. with these and other agreements, the design is out. to realize its full potential, it must be implemented and that implementation is proelgd well. >> the stress tests and the associated capital plans

suggests our system is merry. however, these operational findings have highlighted rebuilding confidence in the banking system is more than the financial resilience. in addition, it's expected to manage capacity in the next three years. in this environment, strong, effective and well informed government and management effects will be essential. the fcc will remain vinl lent in an environment of evolving domestic and global risk. international risks are expected to figure prominently in next year's stress tests. we continue to work closely with the pra and the mpc to harness the synergies from having monetary policy macro prudential policy and macro prudential supervisor in a single institution to pro-moos sustainable and balanced growth

as the people of the united kingdom. with that, i would be happy to take your questions. >> thank you very much for your patience, everyone. if you can, as usual, say your name and who you represent. >> i know you've emphasized the stress tests are very much focused on domestic risk. can you talk about the next stress tests and some of the international emerging markets risk that are now dominating market sentiment, particularly when you look at the emerging markets, two of the eight lenders and associated with that, could i ask what work is the bank doing at the moment on risks stemming particularly from rush gentleman? >> three points. first, in terms of the stress, as i said in my opening remarks, this is on the eba tests. so it wasn't purely a housing shock. we added the housing shock to the test which had a european

session and a sharp back in interest rates. what isn't.captured is a more severe emerging market risk but specifically a sharper slowdown in asia. we have not set the precise outline and framework for next year's stress test. we're literally just finishing this today. but as i said in my remarks, we can expect that we will work towards global risks much much more closely. given the risk protime in asia, you would expect that would be a component of it. in terms of the work we're doing at present, we are monitoring the situation very closely across the range of emerging markets.

part of what is discussed is how contagion expressed in some less liquid markets and particularly markets which had appeared up until very recently appeared to be liquid but, in fact, weren't. and tlrve that is something we're looking at in terms of current. in terms of russia specifically, i think we have to recognize the direct exposure to the uk. if you look at the top of the banking sector, it's around 2.5% of bank and equities, capital exports to russia for sanctions. left about 1.5%. so relatively limited ties despite the hps of winter.

so relatively directific and the situation in russia is somewhat unique. certainly there are other major oil producing nations that have some pressure in oil prices but, obviously, few of them are subject to sanctions at the same time. i'm just going to wrap it up. we're not complacent at all about the dynamics in the global economy. we do see that there is some room for a sharper adjustment across emerging markets and that could then come back into core market, raise risk premium and challenge financial conditions and ultimately for growth. all that said, it's a position of strength we started from here

in the uk. >> if it is bbc, governor, can you tell us a little bit more about oil price risk and deflation risk and how that may affect not just financial stability, what exposure might the banks have particularly off some of the big oil majors that are being struggling because of the oil price fall, but also just general deflationary pressure and how you are working at looking at how that might have impact on financial stability and how that might change the way you do stress tests next time. >> in terms of oil, we still -- this is a net positive development. but i think we should be clear, the 40% plus drop in the oil price will flow quite quickly

through to consumers, it will increase disposable income. it's a net point of view for the uk economy and the relative exposure, the relative exposure in the uk financial system to the energy complex is manageable. and so unambiguously, net positive net. now, in terms of deflation, consistently low inflation, there is no question that it challenges the ongoing need to delever, particularly in the euro area. it's one of the reasons why the ecb is -- has been forceful and intends to be more forceful going forward, it's entirely appropriate, not given their core price stability mandate, but it happens to work in the same direction for what's needed in the financial stability area.

in terms of the united kingdom, you can expect, as we've indicated, that we would look through the direct impacts of lower oil price on inl flagz in the uk and look to underline inflationary pressures. >> can you give us a flavor of the conversations he's now having with the management of banks as to how they address this perceived capital shortfall? second, the only stress test you said the banks were not allowed to respond by cutting lending to the real economy. i just wonder how practical you think that would be in a real life scenario. >> i'll answer the second one and the first considering the most direct conversation. the important thing is that the

banks are in a capital position so they won't respond by cutting lending to the real economy. bank are in the business of lending, ultimately they're in the business of take risks. the risk appetite received when the economy gets tougher. but subject to the strength of their balance sheet, it's still lending opportunities. we expect to have a strength. that's what this is about. we have been building this system over the course of several years. the process of the financial repair is virtually completed. now it's about further building strength. so if the expectation is absolute, it's one of the main purposes of the ftc is to ensure the system as a whole, has this

type of resilience continues to lend to households and businesses. so by ensuring that, we can help ensure that that happened. templely if they have less of an impact, that's what happened during the course of the last crisis. >> the management now taken decisive actions to stabilize the bank in today's world. and you can see this in terms of the capital ratio, which has reached to the 11.5% on the latest numbers.

now, the stress test, is not a surprise. but it is, of course, very helpful evidence to provide the evidence of what needs to happen next. so to go to your precise point, you stabilize the banking space, it's not something we expect to happen, we expect it to be perfected against. so the revised plan is all about taking stronger action to provide the necessary -- >> so we've got the financial stability reports taking place and various government officials talking about that. central bank officials talking about that. looking also at what's taking place with regard to the markets right now, we've seen some moves in sterling and in the gilt yield after we had the inflation

data. remember inflation data for the uk. 1%, versus 1.3% we saw back in october, which means it's the lowest level since december 2002. bank of england, just a couple of weeks ago, reiterated that they anticipate inflation is going to fall below 1% before bouncing back up again. but we're seeing a little bit of a move in sterling. >> we should also point out a lot of this has to do with the drop in the price of oil. that sending inflation down even more. so we're seeing the price of oil impact economic data here in the uk, .sterling, as you were just pointing out, falling to the session lows against the u.s. dollar. >> and carney there at this evening that's taking place right now, talking about the oil was a negative positive for the uk economy. they're going to be looking through the impact of the lower oil prices, a net positive for the uk. versus russia, uk institutions are very modest. we're looking at the russian

story this morning. just wrapping up, heading into the last bit of the year, what type of themes would you be looking at? do we trade oil? do we get into some of the oil services sector companies that have been traded down so much? what do we do? >> you can't really sell the oil sector here. that would be the trade. we have to remember that oil companies don't make their money from the high oil price or low oil price. they make their money from adding value, keeping costs down, increasing efficiency, well time cap and expenditure. so there's no doubt that the oil price will be a shock to the oil companies. but they will bounce back if they're good companies. i think we get ready for next year. we're speaking about how we're going to perform for next year. a bits trade for next year, possibly the return amid the

forecast and i think actually that the recovery in emerging markets will step back by the quantity prices. that's going to be a better story since next year. the real story for next year is going to be reform in emerging markets. perhaps russia and sure that putin will change the prime minister and that's long overdue. >> max, thank you very much for being with us this morning. thank you. max king, portfolio manager at investec asset management. now, eurozone private sector activity inched made of forecasts w according to the flash pmi exit. french, contraction eased by more than expected. new orders rose for the first time in four months in a positive forward indicator. germany's composite index, though, slipping from the previous month hosting its slowest growth in 18 months. chris williams is with us. hi, chris. >> hello.

>> so we've got mixed data out at the moment. but net-net, it still seems weak. >> i think that's the april message, yeah. we can get carried away with these indices. it's trending rate is signaling gdp growth at 0.1%. eurozone is pretty much stag nating still. that's very mixed signals within the region. looking at the flash numbers, we select clekt data, but we only break down germany at this stage. boegz of those remaining very weak for the core is now. the real part of the eurozone, it's interesting to see that the rest of the region as a whole has accelerated for five months. what was really encouraging was employment growth in the rest of the region. that accelerates with the highest since 2007. so it looks like there are signs of life in the periphery. it's not being held down. >> how much is the price of oil

impacting manufacturing activity in europe? one analyst saying that's one of the prime reasons we did see some weakness in germany this time around. >> i think what's happening there is actually reducing costs, is providing some -- for manufacturers who were having to batten down the ultra competitive, reduce unit labor costs and so forth. i don't think it's actually hitting output growth. what wheelchair seen hit sales and production n northern europe and particularly germany is the situation in ukraine and russia. the sanctions impacting trade, but also the general air of uncertainty. companies are telling us that just getting a bit more cautious, the customer is getting more cautious and that appears to be overall levels of activity. >> another big story today has been china. the shanghai composite closed up more than 2% today, outperforming the rest of asia after china's flash pmi from hsbc. markets posted the first

contraction in seven months. beijing will implement additional stimulus measures. that seems to be the case, given that the weaker than expected data today, but not only today, but over the past couple of months. >> the pmi is showing those are moving in the wrong direction. so growth forecasts revised down 7.11% pmi confirming that that is the right way if forecasts should be going. we, of course, had some data for japan, as well. that was pretty weak, 52.1. japan is growing, but what was -- what is interesting is that japanese number is the export situation. so japan, even with its massive currency advantage, fairley -- and the export growth. this is a sign of just how weak global demand is at the moment, but also emerging markets as a whole. >> chris, can i just ask you, i'm dumbfounded by these moving we're seeing in oil, how quickly we've seen the retreat in the

price of oil. again, nymex, 54 and change, brent 589 and change. what do you think the impact is going to be and how quickly are we going to see a -- in the economy? >> obviously, it depends how long it lasts for and what is causing it. i don't think it is just due to people downgrading their global growth forecasts. when you look at commodities like the benchmark, we've not seen the same fall. it suggests there is a bit of a knee jerk reaction going on here. a downward momentum that maybe it should connect. if it stays at, say, dollars 60 a barrel, you've got that. the most of the developed world is going to benefit from that. japan should, of course, benefit, because japan is having to import so much energy now. there is a net gain for the uk. enjoying the energy price already. >> chris, thank you very much for being with us this morning, chris williamson chief economist

at markets. chris was just mentioning japan after a couple of days after the ruling coalition election. the company is looking to lower the corporate tax rate starting next april. we have more on the story live from tokyo. hey, louisa. the government is planning on 2.5% cuts, which is much larger thanl initially expected. prime minister shinzo abe hopes to use the corporate tax reduction as a measure to revise the economy by creating a better business environment in japan. but japanese corporate tax rate is high compared to other major economies. with firms paying more than 35% of their profits in tokyo. the government will try to offset the tax reduction by alternative revenue forces at that expanding of corporate enterprise pack tax based on company's total salaries and interest payment. the government is expected to let smaller businesses off the hook for some time being. companies that raise wages will likely qualify for tax breaks,

as well. the ruling liberal democratic party will draw up the reform plan on december 30th. it will likely include a world map for corporate tax cuts for the next two to three years. through fiscal 2016, the cut is expected to exceed 2.5%. with these measures, the government ames to bring the rate under 30% within a few years. louisa, back to you. >> thank you very much for that. we'll talk very soon again. >> still to come on the show, tributes for the victims of the sydney -- are pouring in as the prime minister praises sis citizens for their resilience for what he call tess nation's most difficult 36 hours in history. we are on the grouped in sydney, next. act i. scene 3. open port twenty-two-oh-one-seven on the firewall for customer db access. install version two-point-three of db connector

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volatility in the russian rouble continues overnight. the currency remains undervalued and on monday, the ruble reported its most significant one-day fall since 1998, prompting the central bank to increase the maximum volume of foreign currency provided to russian banks in terms of how

the russian markets have been responding. it's been volatile over the past couple of days. right now, trading down around 1.5% on the micex index. how do you trade russia? tatiana, great to have you. >> good morning. >> now, this is russia's sixth interest rate hike this year. will this be enough to stop the ruble from depreciating, which is down about 50% so far against the u.s. dollar? >> yes. this is very interesting question, obviously. this is a very generous rate hike. and i think in the current context, it should have some impact on the markets' behavior. i think we will be watching now the behavior of russian companies. the main factor in the recent months influence global exchange rate is a big gap between supply and demand with foreign currency in the market.

and in the past few months, russian have preferred not to sell the proceeds of their export and the holding of foreign currency v created this shortage of effect supply in the market. so this is obviously very strong reason blind the ruble depreciation. so i think now we will have to watch the response of exporters to this measure. >> cross border capital control, do you think it's going to happen? they've raised rates matsively. they've increased the maximum volume of currencies, as well. and i've heard that there's talk about these capital controls. >> there is definitely concerned in the markets. so far, we have observed strong resistance for production of capital controls from technocrats in the government and, obviously, also from the russian central bank.

for now, the central bank has chosen to go for more market measures. >> but higher interest rates may help strengthen the currency, but higher interest rates can slow economic growth. of course, that is the fear and that's not good for russia which is expected to enter recession in 2015. >> this is true. for this reason, we think if the central bank succeeds in anchoring devaluation expectations with this rate hike, it will not be able to keep its key rate at this very high level for long. >> i look at what took place with the ruble and the measures after the tightening.

first it strengthened and then weakened. there's no way around the central bank continue to go intervene. we're going to continue to see intervention. >> i think one more development would be that the oil price fell below $60 per barrel. >> obviously, this is a negative development. this is a psychological level for the brent oil price. and recently from opec, then the carpetel is not prepared to cut production during this time. this is a negative. >> bt shares have been trading higher this morning after news that it's in exclusive talks to

buy ee for 12.5 billion pounds. the capital share at the end of negotiation negotiations. they take a 12.4% stake in bp respectively. >> the fact that they've come out with a price and 134 basic conditions, exclusive talks, there's a due diligence process going on. if something comes out of that process, it would probably be adjusted in the price. >> is it a good feel? do energies make sense? >> i'm hoping it does. so you don't have to scratch very much to find high liquidity. if you're looking at 2% to 3% of

combined bt cop assumer and savings, you get to a present value of 1 is.5 to 2. 5 billion, which looks quite good compared to the $5 billion side of the deal. but, you know, lots and lots of telecom deals in the past have come out looking very, very good on paper and seeing them declining prices followed by massive write-downs. so you have to be -- you know, i think in this sector, you have to be cynical about m&a just because the quantum and frequency of large bad deals. >> and if you just look at this, it seems like a win for bt. ee leads the market. it has 24.5 million customers and holds about 34% of the uk mobile market by revenue. that data, according to citigroup. the question is, would the bt acquisition be good for ee customers, as well? >> i think that's very impressive and, you know, historically, you know, lots of deals have had similar stats.

will it be good for customers? why not? if you're an ee customer, you'll be able to have your landline on the same bill. chances are the cost of that overall bill will fall. so why not for customers? it's great. that doesn't necessary le mean it's good for bt. >> there's been a lot of consolidation already in europe. the question is whether there's more cross border consolidation. the prospect of a europewide -- you know, more europewide operators operating across the board. i think that's something the eu is trying to get on the agenda.

>> we're going to leave it there. thank you for your time. two victims killed in the sydney siege on monday have been identified as 34-year-old cafe manager tori johnson and a 38-year-old mother of three, katrina johnson. they were killed along with the gunman, an iranian born refugee noens to authorities and is said to have a history of extremism and mental instability. matt taylor is in sydney with the latest. >> hi there, louisa. look, the shock has almost been 24 hours since we had that dramatic siege come to an end here in the center of downtown sydney. the shock is giving away to a sense of grief here. i'm mott sure if you can see behind me, but we're standing in front of what is becoming a

growing flower tribute here in the middle of sydney. thousands of people have been flooding into this part of sydney throughout the course of the day because they woke up to this news, given that all the events transpired around 22:00 a.m. australian eastern time. so thousands coming down here to pay their respects and laying flowers there, literally thousands of bouquets of flowers mind me. the australian prime minister, tony abbott, he's been very visible over the last 24 hours as you can well appreciate. he made a stop here today and laid a wreath and signed the condollance book and has been in sydney meeting with those first responders and the new south wales premier to thank them for the job that they did. gentlemen, it was a tragic outcome to an event that had australians and many around the world glued to their screen for some time. now a sense of reflection here in sydney. next hour on the show, we'll be

back with you and we'll bring you some comments from the lord mayor of sydney. guys, back to you. >> thank you very much for that, matt. thank you. coming up, is janet yellen ready to strike a more hawkish tone? we'll debate that next on "worldwide exchange."

and if you're just tuning in, thank you for joining us on "worldwide exchange." i'm seema mody. >> good morning, everybody. i'm louisa bojesen. these are your headlines from around the world. >> first up is oil. u.s. futures pointing higher starting off with crude's free fall as oil and all eyes turn to the federal reserve meeting. bill gross saying exclusively the fed will have to take the energy prices into consideration before a fall in rates. >> they talk about football conditions and the extent of oil

prices are moving currencies and moving real economies. >> russia's central bank shocks with a massive rate hike overnight. global markets on a wild ride. china pmi krks for the first time in seven months as germany manufacturing growth at the slowest pace in several months. most british banks passed the central bank stress test. the zew german economic sentiment index coming in at 34794 the month of december versus the 11.5 in november.

expectations were for the zew to rise further after bottoming in october. and this coming in well above expectations. of course, the zew, a measure of business sentiment, investor sentiment, and, again again, coming in stronger than expected. the euro trading higher against the u.s. dollar right now up about 0.7% at session highs, trading at 1.2522. let's get you some of the statements the zew institute saying that we should be aware of current optimism fueled by factors that might seem and data this jump in zew survey when they get to favorable economic conditions. >> yeah. and they talk about the weekly euros, the lower crude oil prices, as well. this number is better than expected. >> much better than expected. >> but anyway, there are a lot of things going on that are having an impact with regard to the confidence coming back. i want to mention to you the eurozone trade surplus offer coming in, rising more than expected for the month of october.

and that is thanks to a strong rise in exports and flat imports. so the unadjusted trade surplus in october, 20 billion euros up from 16.5 billion year on year and 18.1 billion from the previous month. european markets, slightly higher across the board in today's trade. xetra dax up by 0.87%. ftse mib up by just over 1.5%. good morning, patrick. >> good morning. >> how are you? >> good, thank you very much. >> what are you thinking about? >> well, we're looking for some reason in the markets. the santa rally traditionally starts about now. we need a catalyst to get the center rally going. this new information could be interesting. the pmi numbers this morning were disappointing in china. but just before i came, i did actually look at the chinese

data. the market was up nearly 25% following that literally in a month. so there are a lot of gears they could pull. could see these markets sharply high he in the next weeks due to the santa rally. >> the zew came in higher than expected at 34.9, above the expectation of just 20. clearly the mood is improving. is that a reason to get bullish on germany and the broader eurozone? >> sure. the valuations in germany is cheap. if i was managing money now, i would want to be carrying the equity market rather than the

bond market on the back of those fergs. >> you're saying with us, patrick. so we can chat more. get your e-mails through and your tweets through, as well. find us on twitter. we would love to get you involved in the conversation. i see many of you writing in already, so good morning to all of you who are just joining us. what's going on with regards to how we're setting ourselves up for the market to strayed stateside, seema? >> u.s. stocks did close lower on monday. the s&p settling lower for the first time since october 30th. but right now, futures indicating towards a higher open. dow up about 63 points in premarket trade. the nasdaq up 16. s&p 500 up just about one point in premarket trade. maybe that has to do with the gains we're seeing in europe. the ftse 100 up about 0.5%.

uk inflation fell to its lowest level in 12 years. the xetra dax, up about 56 points. of course, german private sector growth falling, but yet again, investors still feel a reason to stay positive on the german markets. we did get into that zew survey at 34.9, much higher than expectations indicating an improvement in sentiment across german businesses. right now, the index up 54 points. france, italy, showing gains. italian markets up 255 points or about a 1.4% gain in italy. so right now, green across the screen for the most part when looking at europe, louisa. >> yeah, no, a lot of green seen in equity hes. we saw quite a bit of red on the close yesterday, you might recall. looking at the bond markets this morning, quite a bit of green with yields being pushed back to multi year lows once again. looking at the ten-year in the uk, 1 is.7%. the ten-year in germany hitting a new record and the ten-year stateside around the 2% levels.

we're looking at deals continue to go drop across the board here in europe. when looking at the currency markets, and keeping in mind what's been taking place with regard to russia, you're looking here at a leveling out of the dollar against the russian rouble. you had the russian central bank late last night deciding to hike rates in a surprise move from 10.5% to 17%. that led to a lot of nervousness about whether or not we could potentially be looking at full capital controls being put in place with regard to russia. they're doing everything they can to stem the severe drop that we've seen in the ruble. and let's just mention the price of oil, of course, continuing to have an impact on trade at the moment with oil dropping to new multi year lows. nymex right around $54 at the moment. brent, somewhere around $59. right here, we've got -- in fact, brent 59.35 and nymex trading lower by 2.8%, right around 54 and change at the moment. so, seema, we continue to see these oil moves taking center stage. >> yeah the and, of course, the

big question, will the fed comment on the partnership tuesday drop in oil? they're beginning their final meeting of the year. the decision is expected wednesday. the fed is likely expected to drop its pledge to hold rates low for a considerable time. it's facing that with a softer verbal commitment. bill gross thinks the fed may not raise rates next year due to the threat of disinflation. in his first interview since leaving pimco back in september, gross says u.s. gdp will likely stay at 3% for another quarter or so before falling to 2%. he attributes to decline to oil prices. >> oil determines currency movements. currency movements determine the spread markets, risk markets, high yield markets, the potential for bankruptcy or solvency not only with companies, but countries. and so once you have a major commodity, like oil, that affects not just the real

economy, but financial economy in motion, like it has been down rapidly, then financial markets try and readjust. >> gross also see tess yield on the ten-year treasury holding near 2% saying the high quarterly bonds are a bet, but not a high returning bet. securities are easily called now look like the right pick. >> patrick spencer, a reaction and director of international institution equity sales at buried. what is your trade on the ten-year yield or the ten-year bond in 2015? so many people as we've been saying on "worldwide exchange" did get the bond trade wrong this year. we saw the yield on the ten-year around 3% early january. now it's around 2.1%? >> well, fisher, who has been the outspoken man on the fed has been saying we're going to see higher interest rates. i suspect he's holding the party line. but the fed isn't stupid. yellen isn't stupid. they're not going to make the policy mistakes which they made in the 70s.

now, they see what's happening in the deflationary world where yields are. we see what's happening in china, in europe, and i think they will remain dovish. and as a result of them remaining dovish, i think the santa rally will start and you'll see a strong market. >> we're sneaking into the territory on the first rate hike in almost a decade. >> sure, sure. on the desk the other day, you know, i remember when interest rates were 15%, moving from 1% to 2% is not a material move for companies in the stock market. so it will only move if the underlying economy and the rest of the world is moving. so that is positive for equities. >> that's an interesting point because even bill gross yesterday said he sees economic growth in the u.s. falling to 2%. so if the growth rate in the u.s. slows down in 2015, then the fed has no choice but to continue to keep rates low. >> sure. and the fact that you have the lower oil prices.

you've had a huge tax increase, as well. so that should underpin, you know, the markets. so that should actually allow reasonable growth. but it is still slow growth. and the rest of the world is slow growth. >> oil prices good for the consumer, inflation is well below the fed target. >> and where does that leave the ecb, then, in q1? >> well, the ecb, whatever it says, it's like fisher. it's holding the party line. certainly with these numbers, it makes it more difficult for dragdy to do full blown qe. bit has to happen if we get deflation. because central banks company -- they don't have the tool to fight deflation. you know, they have the tools to fight inflation, but fought deflation. so they're going to do what it takes to reinflate the economy. so draghi may say -- the german he may say they don't want it, but if it continues, in my mind, it will come. >> what if the market recovery continues? can't that kind of weigh up for

what the ecb should do? >> that's good news. so bad news is good news, good news is good news, i think. and i think given where the valuations are in equity markets, and given the recent declines, i think things look attractive. >> when do you think we'll actually get bond buying next year? what is your time line? >> well, i'm not predicting it. i'm just saying if it rolls -- you know, look at the greek economy. it was the strongest economy. everyone has been worried about the presidential elections. but everybody is thinking that's going to break up europe. but, you know, that certainly hasn't happened so far. i suspect greek actually grew 3% in the last quarter. it was growing strongly. i spoke to manpower in chicago basically and they told me employment growth in spain was up 20% in that division. so the actual headline numbers don't tell the full picture.

maybe there is a bit of refer in europe, but we're not giving it -- i suspect it only happened if it's needed. >> we're going to leave it there. patrick spencer at buried, thank youer for your time. >> thank you. >> let's get you a rundown of what to watch this trading day. november housing starts are out at 8:30 a.m. eastern. new home construction is expected to rebound after a surprise drop in october. and building permits are expected to slip after hitting a 6 1/2 year high in october. now on the earnings front, look for results today from darden restaurants, the parent of olive garden, dave & buster, which by the way, louisa, some analysts i was speaking to say the drop in the price in oil and the drop in the price in gas is supposed to help some of these restaurants because those in the u.s. will spend money to travel to these restaurants. >> what is dave & buster's? >> they have an arcade. kind of like a chuck eempt

cheese. >> chuck e. cheese? >> you grow up going there, there's a bunch of games you can play. >> oh, the mouse? >> yes. >> i saw the pictures of that. >> what's the equivalent of that here in the uk? i don't know. we've got dominos. >> but you don't have games there. >> no. i have to admit, i haven't been to a gaming arcade for -- a long time. >> winter wonderland. >> have you been there? >> i need to go with our wex team next year. >> i went last year. it's a really good fun. lovely. listen, let's take a look at some of the other stories that we've been following today. the bank of england has given a clean bill of health to the uk's major banks. the co-op bank was the only lender to fail the central bank's stress test and it will need to submit a revised capital plan.

standard chartered exceeded the 5.3% threshold with a stress test ratio of over 5%. the bank of england governor mark carney welcomed the results earlier saying lenders proved they can support the economy in future shocks. >> there is some pressure in oil prices and they're subject to the sanctions at the same time. so there is a bigger adjustment going on in russia, arguably, than some other emerging markets. keep your tweets coming through. we'll read some out later on. what do you think of the markets at the moment? how do you trade them? many of you are writing in on oil or quantitative easing. when good news is bad news, find out why the latest round of

disappointing chinese data is lifting the mainland stocks. we talk about the updates in just a couple of minutes.

welcome back, everybody. i'm louisa bojesen. these are your headlines.

u.s. futures are pointing higher as they await the fed decision anticipate ago hawkish tone from the central bank. european markets shrug off weak german pmi data. russia's central bank shocking with a huge rate hike, but the ruble remains volatile in this morning's trade. global investors eyeing china. in fact, the shanghai composite closed up more than 2% today, outperforming the rest of asia as you can see on the screen. this after china's flash pmi from hsbc and markets posted its first contraction in seven months. the recent expected data is raising expectations for additional measures. out to singapore with the latest on asian trade. over to you. >> hi there, you're right quite. this is one of those proverbial situations where the bad economic news translates into

good news for the financial markets. look at the composite at the close. up by 2.3%. and outperforming all of its regional peers. a fairley grim day for asian equities because of equities, because of russia, because of the falling oil price. you're quite right, we got some data which pointed to worsening macro picture in china and the world's second largest economy. hsbc market pmi for december, industrial activity and contracting for the first time in seven months. falling below that crucial 50 level that de-march indicates expansion from contraction. we could very well see between one to two interest rate cuts across the banking sector. and that is really what the markets on the mainland are

front running. that's why we saw the shanghai composite. remember, this is an index which has been on a tear over the large part for the past six months. elsewhere, 6.5% low to the nikkei 225 and market concerns about this tumbling oil price, concerns about russia, global growth concerns, as i said earlier, seema. one very last point i want to say is that we saw some very pronounced weakness in the currency space in the indian rupiah, and the indian rupee, as well. it begs the question whether those currencies, the em side are front running the possibility of a more hawkish bill as we pointed out in the headline and the impact that could have on the stronger dollar. back to you now. >> sri, thank you very much. india is one of the outperformers in today's trade. next up, we're going to talk about the price of oil in one sector. the agricultural sector that is benefiting from the drop in the price of oil.

we're going to speak to the ceo, that's coming up next.

and traders continue to focus in on the price of oil. brent trading under $ 60 a barrel. u.s. crude hovering just below

$55 after it dipped for a fifth straight session yesterday. oil dropping once again after the uae minister said there was no need for an emergency opec meeting in order to impact prices. i want to get you some headlines from the russian energy minister because russia has been negatively impacted by the drop in the price of oil. the energy minister of russia says the decline in oil to say what the oil price might be hard to distinguish and that russia will not cut oil production to avoid losing markets here. the minister says it cannot rule out the possible freezing of some of oil company's projects in russia and the minister says so far oil companies have not made any changes to ongoing projects in russia and that will maintain its current oil output. joining us now is martin

siegenhagen. welcome officially this morning. >> thank you for having me, louisa. >> in your own words, tell us about what your company actually does. >> we manufacture farm equipment and you might know some of our -- in england. massey ferguson in germany, challenger in the u.s., valpar and gsi. so we are basically producing everything a professional farmer needs. >> and your presence in europe, 50 fers? >> 50% here in europe, then about 25% in south america and the rest is mainly in the u.s. >> talk to us about how the price of oil, the drop that we've been seeing is now down over 45% sips june of 2014. how is that impacting your business and your farm machinery equipment? because from what i can understand, from some of the analysts that i spoke to, is that the drop in the price of oil is helping your business because now it requires less output from your machinery. >> yeah.

diesel, mainly diesel fuel, one important input for farmers. so farmer invest and farm income is strong, so that might help. >> and what about europe? you were saying 50% of your revenue comes from europe. how much has the economic down turn been impacting your business? i know you cut your guidance in october. we saw a sharp reaction, about 10% back in october? >> yeah. this year we will lose about 10% supply, which is quite a downward trend. next year, pretty much the same. and that is coming back. we have our investor and analyst meeting yesterday. we gave guidance, so we are very conservative on 2015 but still our stock was up because we took immediate action. we reorganized the company, released back to the company and this actually will help us to be very productive and efficient in the future. we think that our margins will be up very soon. >> so you're cutting costs. >> yes.

>> so what about the demand story? because many people assume, while we talk about agriculture, it means you're looking at a lot of demand because there are going to be more people and more people eating more, basically. >> yeah. 7 billion people right now and we will be 9, 10 very soon and by 2015, which means that we have to increase food production globally by 70%. so that is good news for the farmers. we have basically a changing diet in emerging markets like china and india where people start to eat more meat, more protein. if you eat chicken instead of rice or corn, you need to put in about six times the cost and for a pig and beef, it's even more. then we have renewable fuels. so it's not so much that renewable fuels are much better for the environment, but they are renewable and i think we might want to save some of the good oil for future generation sfleps so in good ten seconds,

if you had to choose a commodity where you think there is a potential upside here, which one would it be? >> i think it's all -- it's basically soybeans, maybe wheat also. so i'm not that pessimistic. and i think 2016, the markets will come back. >> martin, thank you very much for being with us. martin riegenhagen, the ceo of agco. and still cocome on this show, desperate times call for desperate measures. find out why the rate hike is failing to make headway with the russian rouble. we'll discuss that, next.

if you're just tuning in, thank you for joining us. you're watching "worldwide exchange." i'm seema mody. >> and hyme i'm louisa bojesen. here are your headlines around the world. >> all eyes turn to the federal reserve meeting, bill gross telling cnbc exclusively the central bank will have to take the energy move into consideration before hiking rates. >> they won't admit it, but they do so for the most part when they talk about financial conditions. to the extent that oil prices are moving currencies and moving real economies. >> russia's central bank shocks

with a massive rate hike overnight. the drastic measures failing to lift the ruble with the micex concentrating sharply lower. what about europe? will mixed markets send markets on a wild ride which china contracts for the first time in months? and the bank of england governor mark carney is saying the oil fall is a net positive for the uk, this after most major british banks pass the central bank stress tests. >> it was a wild ride for u.s. stokts. the s&p 500 closing down in five of the last six trading sessions.

oil continues to fall, falling below $56 yesterday. a 5 1/2 year low. right now, u.s. futures point to go a higher open after what was a sell-off for the dow and the s&p, as well as the nasdaq. volatility, still an active discussion around the vix, which is now up about 28% since last week, its largest weekly gain since may 2010. we were talking to you about the move in commodities. let's briven up what we're seeing across the commodities space. right now crude trading at $54 a warl. down 2.7% just in today's trade. brent crude right below $60 a barrel. down about 2.8%. this traders said saying this is like catching a falling knife. we're taking a look at gold. many times seen as a safe haven against the market. it continues to get a bid today, up just about $6, trading at

1,198 appear ounce. european markets, we've been get ago whole host of data today. in fact, uk inflation falling to its lowest level in 12 years. markets right now brushing that off and looking at the ftse 100 up just about 45 points. the xetra dax, interestingly enough, private sector growth dropped in the month of november. but given that the german business confidence survey came in much better than expected at 34.9 for the month of december, we're seeing markets cheer that data. the xetra dax up just about 58 points indicating an improvement in business sentiment across germany. the cac 40, the french markets up just about 10 points in today's trade and the ftse mib, the italian markets, showing a gain of around 1% or 156 points in today's trade. but louisa, the big story, of course, is russia, isn't it? >> definitely. that has to be one of the big talking points today. russia's ruble has been on a volatile ride after the central bank made a late night decision to raise rates by 6.5% to 17%.

yesterday, the ruble reported its most significant one-day fall since 1998, prompting the central bank to increase the maximum volume of foreign currency provided to russian banks. the micex has been trading sharply lower off the back of that move, as well. steven englander is global head of g-10 fx strategy at citi. steven, good to see you. i'm looking at the move from the russian central bank alongside, i think, with a lot of investors this morning scratching my head thinking, well, now what happened? and what happened with the ruble, especially when i look at the ruble moves, initially 64.44 was where moscow limited trading yesterday. since then, though, it's been kind of all over the place. what do we do? >> well, look, it's a very volatile situation and it's going to be hard for the ruble to find a floor until oil prices find a floor. and, you know, with the russian

central bank looking at the price of oil. we have huge capital outflows from russia, probably. we have the weak oil prices. it will take a while before these monetary policy measures actually kick in and it's not clear that there's enough yet. >> so far this year, the russian rouble has lost about half of its value against the dollar making it the world's worst performing currency. we talk about fundamentals. how much is this impacting sentiment? >> well, you know, obviously, if you're an oil produces in the united states, if you're an oil producer in canada and anywhere in the world, the business is -- if you're a consumer where, you know, the consumer confidence numbers in the u.s. are inverse to that of the oil price, confidence is booming spop there is a reason of income. and it probably remains positive for the global economy as a whole and particularly positive for the u.s. economy. but the -- it's painful if

you're involved in the oil sector, that's for sure. >> steven, stick with us. we definitely want to talk more about fed policy and what that means for the u.s. markets. but in the meantime, let's get to our viewer exchange. >> we have been asking will russia's monster rate hike spell trouble ahead? what do you think? jeff tweets in and says russia may need to mince ruble coins out of chocolate so at least the ruble coins will have some value. some of you writing in talking about ecb and oil. david writes in and says, i've been there all along, louisa. the solution are too low oil prices. it is low oil prices. gross calling on the fed is an obvious call and it's very priced in. the ecb will be doing quantitative easing. draghi has to follow through. it's not happening. >> yeah. and listen, this is the sixth interest rate hike by russia. the question is, will this be enough to provide a floor to the

russian currency which has dropped 50% already this year against the u.s. dollar? >> i just wonder what happens with oil next year and when the trade is going to change. historically, oil goes up, it comes down. it goes up, it comes down. at what point do you step in and start buying? >> and the impact on russia. given that russia makes about 350% of its revenue from oil and gas, that's a huge month to its economy. >> that's a major play. get in touch here on "worldwide exchange." find us on good old fashioned e-mail, worldwide@krcnbc.com orn twitter, @cnbcwex. our twitter handles are on screen. let's get you a rundown of what to watch this trading day. november housing starts are out at 8:30 a.m. eastern. new home construction is expected to rebound after a surprise drop in october. building permits are expected to slip after hitting a 6 1/2 year high in october. now, on the earnings front, look at results from darden restaurants, the parents of olive garden, longhorn

steakhouse and dave & buster's. >> we'll leave it there for now. we need to look at some of the other top stories. two victims killed in the sydney siege monday have been identified as 34 cafe mrld tori johnson and 38-year-old mother of three. the gunman was an iranian born man who was known to have mental inabilities. matt. >> as you've been detailing this tragic end to the siege situation, happening about 2:00 a.m. australian eastern time. we're approaching now the 24-hour mark as to when this all unfolded. many australians, of course, were asleep when this transexpired. so they woke up to the news that

there had been a tragic end to the siege that gripped the country and across the world. initially, this situation was met with shock, but behind me, you can probably see a large gathering of people, thousands have been flocking into martin place. we're just a few meters away from where the cafe is located. thousands are coming in here to martin place to lay floral tributes and sign condollan dod book. but b of course, what is this incident going to mean for sydney? we spoke to -- and i asked her if sid fee would be the same post this event? >> it will not change sydney. we are still the same city we were yesterday morning before he took hostages in the cafe.

were a sole rant city. this hasn't changed. this was a person with a very volatile background and his actions led to tragic consequences. >> as a result of the understand, police say they're going to be stepping up visible police patrols right across the city over the next three weeks, over that holiday and new year season. seema, back to you. >> thank you so much for that live report from sydney. now, we've also been keeping an eye on a tragic situation in pakistan where taliban gunmen have taking a military-run school and killed at least 84 children. that according to reports. hundreds of students and teachers were believed to be taken hostage in the attack. reuters reported just moments ago that three explosions were herd at the school. we'll keep you updated on that story. coming up, it's the tale of two blue chips, the latest on

financial outlook wab coke and boeing, just after this.

hi, everybody. coke may not be it for one big shareholder while boeing is flying high. landon dowdy at the cnbc

headquarters joins us with the details. it's the first time we've spoken. good to see you. >> good to see you, too. let's start with coke. the company says it doesn't expect earnings growth in 2015 to be significantly different than this year when numbers are adjusted for currency. coke expects profit growth of 4% to 5% in 2014 and that's in line with estimates. in october, the company warned it would mix long-term earnings targets to currency fluctuations. it announced cost cutting measures and a timeline to sell its bottling operations. so it doesn't expect sales volumes to improve from the third to fourth quarter as it continues to face challenges in emerging markets brazil and china. earlier on monday, activist investors stepped up its criticism calling for the ceo to be replaced. winter green, run by david winters has been in a battle with coke for much of this year. winters says management along with a board and conversation plan has them taking value of

the stock in half. a coke spokesperson says wint winter's claims are without merit. and on to boeing, it's boosting its stock buyback program from $10 billion to $12 billion and is raising its quarterly dividend by 25%. the company promised cash flow would be very strong in the fourth quarter after reporting an 18% rise in third quarter profits. in a statement, the ceo citing the fallen output for aviation and boeing has been working towards a record backlog. today in europe, shares are up more than 3%. back to you. >> landon, thank you very much. before we go, let's get you the latest headlines. u.s. futures point higher as investors await the decision anticipating a more hawkish tonight from the central bank. and russia's central bank

shocks with a huge rate hike, but the ruble remains volatile.

hi, everybody. welcome back. higher across the board yesterday was a pretty soft close. we saw these europe cran markets lower. ftse mib outperforming this morning. xetra dax off -- higher by 1% and the ftse 100 higher by 1.25%. a lot of focus on russia, though, with regard to what the russian central bank did late yesterday, deciding to hike rates unexpectedly from 10.5% to 17% to try to stem the very

steep fall that we've seen in the russian rouble. today in trade, the dollar a little bit higher against the russian rouble right now. but having said that, it has been all over the place since we saw the central bank coming through with this news. so keep that in mind. until the floor is found in the price of oil, we will probably have a hard time finding the floor in the russian rouble, as well. the micex index trading lower by 1.5%. >> and louisa, beyond tracking the move on the investment in oil, investors will be keeping an eye on the fed. they begin their final policy decision on the year. the fed is widely expected to drop its price to hold rates low for a considerable time, replacing that with a softer verbal commitment.

now, bill gross thinks the fed may not raise rates this year due to the threat of inflation in his first interview since leaving pimco in september. gross says gdp will likely stay where it is before falling to 2%. >> oil determines currency movements, currency movements determine the spread markets, risk market, high yield markets, the potential for bankruptcy or solvency, not only with companies, but countries. and so once you have a major commodity, like oil, that affects not just the real economy, but the financial economy in motion, like it has been, moving down rapidly, then financial markets try and readjust. >> still with us in washington is steven englander, global head of fx strategy at citi. steven, in terms of the decline in oil prices, what type of comments or reaction should we expect from the fed?

there is a belief that the decline in oil prices are just for the consumer. but it's truly not good for inflation, which is still well below the fed's target of 2%. well, i think the fed is likely to -- excuse me, likely to distinguish between a temporary drop in inflation because of oil prices. stanley fischer characterized that as a supply shock. the reason they look at inflation is to gauge wh demand is adequate. i think they're going to look at the stronger economy, the improvements in labor markets which seems to be accelerating. and i think that's going the be the main focus. i expect they'll give some indication for a gradual normalization. i do have some swamp land in florida whose price i'd like them to support.

they've said in the past they wouldn't raise rates despite a financial bubble except in a last resort. the oil decline is painful in the sector, but i don't think they'll see themselves right now as having to adjust policy to deal with it. >> and do you think, steven, that the fed will have to comment on growth, projected growth for 2015? how strong the u.s. economy can be when you have russia and china .other emerging markets projected to slow down in the next year. >> well, i think the answer is strong. the u.s. economy still benefits from lower oil prices. we've seen the production numbers, the retail sales, the confidence numbers. most of those numbers are domestic production in the u.s. you know, i think that they would wait until they began to see some signs that u.s. gdp was being affected or confidence was beginning to wane and that was and decisive than s&p being off by 4% or 5% from all-time highs.

oing right now the focus is going to be that they expected it to be three months ago than they expected six months ago. interest rates may be a little bit low compared to where they ought to be. >> steven, looking at the global story today, lows being hit in a norwegian quarter, we've seen moves in sterling, off the back of the uk data, too. what is your preferred trade at the moment? >> rights now, we looked at the year ahead, setting trades in december. liquidity is very poor and markets are -- acid we see, very volatile. i think that the same trades that we had in november, long dollars, short euro, short yen are going to come back. i think you're going to have to

wait with next year, be careful about the positions you put on. it's a long dollar situation that we anticipate, but that doesn't mean that every week and every month is a week to be long dollars. i would say that the yen looks particularly vulnerable this week if the fed comes out on the hawkish side. >> steven, thank you very much for being with us and getting up so early, as well. >> thank you. you've been writing in. madeleine writes in and says today's interest rate hike 17% unsustainable. they've spent some 80 billion to prop up the ruble. >> the drop in the price of oil, the volatility in emerging markets, all these are going to be digested. the day before the s&p 500 rises about 55% of the time.

>> and lots of you writing in to tell me what chuck e. cheese is. >> excellent. >> good. >> see you tomorrow. bye. xxx

good morning. the ruble in ruin. bren dropping below $60 for the first time since 2009. and he could be the world's richest sports fanatic. buffett, warren, heads to cleveland to cheer on lebron james just a day after catching an nfl game in detroit. it is tuesday, december 16th,

2014, and "squawk box" begins right now. >> good morning, etch. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and stees leave liesman in for andrew this week. if you are like most electric car owners, you probably see your vehicle as greener than its gasoline guzzling counterpart. we'll bring you those findings in just a bit. first, though, the fed will begin a two-day policy meeting in washington. no rate hike is expected. at least not yet. economists are looking for policymakers to remove the language to keep rates near zero for a considerable time from that statement. steve will bring us the exclusive cnbc fed survey in just a few minutes. and the global market story this morning is russia. the central bank there hiking its base interest rate to 17% late yesterday. that came after the