>> welcome to worldwide exchange. >> these are your headlines from all around the world. >> european stocks kicking off trade with a boost from oil and resource stocks as crude prices kick off from multiyear lows. >> bg group rallying as it heres the home stretch. a shareholder vote on the merger is expected to come together. >> trading higher after getting the green light for its new blood pressure drug. the treatment can come to market

from next month. >> and the selling intensifies shares drop by another 12% in the asia session hitting a 6 year low after the company warns of a record annual loss. >> does she know this is the start of winter officially. >> really. i always forget it because the weather is so mild in december. i always anticipate it is going to be super cold and it hasn't been. except yesterday. it was raining yesterday. >> what are the odds of a white christmas? 0? or 0.1%? >> i'll bet you a really lovely dinner with champagne and lobster that we don't get snow here on christmas. >> that's a pretty safe bet for

you. >> exactly. >> it's the longest day in the year in new zealand. the sun due to set early and we have seen the asian equity markets and oil markets. it's all good. >> it's all very good. the shortest day of the year though here. so what do you do with that day? >> what do you do with that day? >> do you kind of write it off or do you say i'm going to make something out of it. >> do you go christmas shop something is it the panic tuesday? >> if you're out there and you're actually trading -- actually yesterday was the shortest day. >> they're saying it was yesterday. >> i got it completely wrong. >> same, same. if you are working out there and if you are sitting on a trading floor, if you're trading from home, what are you trading?

as volumes drop. >> are you shorting anything. >> you're going to be talking more like shorting on the show. you can write us here at the top of the show and get involved nice and early. >> chalooking at the markets, t stoxx europe 600 a little bit higher at the moment. we were called up a tad this morning. wall street closing higher. yesterday a bounce in apple and microsoft among others. a bit of a pull back here in europe. a drop in spanish stocks on the back of an inconclusive future for spain. uncertainty about how nobody has a clear period governing in spain. >> also want to show you what the asian equity markets are doing. volume dropping some what. the nikkei is down just a touch at the close off by 0.2%. in part because toshiba is down

in today's trading session off by 12%. that's after announcing that massive loss in yesterday's session but elsewhere some of these markets have a strong gain in part because of the stabilization in commodity prices, and speaking of, tle recovering some what. wti 36.15. brent crude 36.60 after the 11 year low yesterday. a lot of people are saying there's no change really in the fundamentals but a rollover of the contracts and the start of the winter demand season. let's see if it gets any colder. >> i know. it will come back in late january, february, march, snow in april. >> short selling activity has reached multiyear highs

according to markets with commodity players being the main target. it was the best performing short with anglo american also making the list. they do have the extended qe programs welcome, simon, good morning. >> thanks for having me on. >> really interesting pointers you sent through talking about how much short selling we have seen over the course of last year and what could come next year. let's just split the conversation in two and talk about why we're seeing so much and where the activity is. >> the first factor is that the market doesn't have this bull run that we've seen in previous years. when a market is up 20 or 25% it's hard for a short seller to have a high conviction about it and you can make so much money on the long side. when the market does lose momentum you see rising short interest so we have seen that

really kick into high gear in the u.s. and then in the u.k. >> now it's closer to 3%. so a big jump in that level. >> how about the u.k., europe, in comparison, japan. >> the u.k. and europe, people treat them as the same but if you look at it you have the monetary policy and different paths and short sells take to the u.k. market while really steering clear of the european euro zone market. the euro stoxx 50 is averaged on the year and we've seen a 50% jump year to date so the short sellers preferring to stay clear of quantitative easing and on to the market. just again looking to raise interest rates much like what we have seen in the states. >> you take a look at the most

successful shorts this year it's intuitive to say it was related to the commodity sector. shares fell by 99% but some of the high profile stories, glencore, some investors missed out on that. >> we saw shorts quite late to the party. so it's now about 6%. if you take 3% as the critical level that only reached that level a couple of months ago. >> but that tells you that many of the investors are behind dufsh. does it usually tell you when a stock has performed so badly it's still worth sorting the stock now? >> it's hard to tell. the commodity story is a narrative they get behind. they're very exposed companies. you have large debt piles so you have the monetary policy moving

against them and these are the scenarios where you see them continue. >> what does that mean for the companies? does it give the management added incentive to turn around the business? does it change anythingsor the added pressure of the share price decline, is that not helping things? >> it shows you that there's a lot of questions being asked about the equity portion of the balance sheet there's a growing consensus toward the down side of the equity value. you see that again with glencore. people questioning whether or not the equity is worth anything. now we're only starting to see the short sellers.

>> you have a list with a couple of names to watch. >> the name we're watching in the u.s. is game core. so we have the holiday shopping period in north america and what we're seeing -- game stop, sorry. game stop. again it's kind of a bricks and more to retailer. if you look at the retailing environment now there's a lot more content being delivered through these games. >> an outerwall you mention at the same. >> very same. it runs kiosk, red box retailing. that used to be quite popular. but now it's come full circle and now we have got content being delivered through mobile networks. so that cuts the loop.

swatch group has struggling china sales. we have known about that for awhile now. i'm just curious about why it would be included in that list. because there's so much support coming from the retail and the institutional investor. >> there's about 20% of swatch shop again. it's a massive name. stoxx 600. so not exactly what you do see the levels for interest and again you have china, the swiss watch industry is down for the first year in five years in overall volumes and on top of that you have the rise of the smart watch coming in. i'm seeing an increasing number of people wearing the apple iwatch and these are luxury pieces able to compete and you can take the growth away from these.

>> it's the down side this year. >> historically when we see such a big interest overall, what we see sometimes toward the end of the year or when conditions improve is a massive short covering rally. do you think we'll see that at some point in early 2016. >> it's the change in the underlying fundamentals. what you're seeing is the u.k. retailers were heavily shorted into september earnings. these are less negative than a lot of people are expecting but we have the new christmas shopping period and they're looking back and seeing further market share erosion and the short sellers have really added back to their position. >> you mention morrisons. >> let me also just ask briefly,

people missed out on glencore last year and you're saying there's a lot of interest in glencore and same goes for noble group as well. >> yeah. they see much more shorter high interest than glencore and there were a lot of questions asked earlier on. he was busy with the muddy waters there so it looks like the short case for them was a lot more developed by than glencore. so it's been much more profitable for short sellers. >> thank you very much. interesting to get the names you think we should be watching. thanks a lot. happy holidays as well. >> thanks a lot. >> get involved. what will you short next year. are you also worried about commodity stocks? will you continue to be? that was this year's short. maybe it's something else next year. do you see this slow down in tech as well? how about the retailers? let us know if you want to join

the conversation. or twitter as well. >> i forgot my own twitter handle. >> oil prices ticked up from multiyear lows but no change in the trend is expected. in addition to a global oversupply traders believe it will heat more downward pressure on the cost of barrel. morgan brennan spoke to the ceo asking him where he saw prices heading in 2016. >> he is the ceo of luke oil which is the number two oil company in russia and accounts for 2% of global production. now on a day when the price of brent has fallen to an 11 year low, this is his forecast for oil in 2016. >> so somewhere in between 40 and $50 barrel is where the price will sustain during 2016. because the current prices taking place in the industry do

not incentivize projects. it will be going down and it's price will be climbing back but that will happen during the mean term in order to achieve dramatic changes in the situation. we require decisions from the country which is make up opec, which would stabilize our price. >> so he's hopeful that when western sanctions of iran are lifted they can regulate production volumes to, quote, undermine the oil and gas markets. they're also in discussions to reinvest in certain oil fields there as well. the company has a $7.6 billion investment in the oil field in the south of iraq. he calls that a quote very stable social situation. not in an active combat zone. not one effected by terrorist attacks as we have seen in other parts of the country. luke oil is focused on reducing investments and driving down service costs that only dropped 25% but the one bright spot in

all of this, the devaluations of the russian ruble down 18%. that has cut costs on operations and equipment produced in russia. >> now, after lining up for days to buy tickets, the big day has finally arrived for spaniards. yes, the el gordo lottery is taking place later. it translates as the fat one. more than 2.2 billion euros will be paid out to lucky winners. but with thousands of winning tickets, most of the individual pay outs won't all be enormous. although 160 people across the country will win 4 million euro top prize. but it will also mean an early christmas present. have you ever won anything? >> no. i do the little scratch cards and most i have won. the other day i won 10 pounds.

not quite el gordo. >> i once one a nail and i was a child. i bought that scratch things exactly. and i think looking back. did it change my life? yes it did. >> tell us what you won so far. have you ever participated in el gordo if you're living in spain? isn't there one village that does really well. >> you're right. >> why is that? we need to crack down on that. >> i don't know. >> 2-thirds of people win that play. twha that's where producers told us. >> that's brilliant. >> probably. >> why don't we do that here? >> let's do that here. >> later on in the show we're getting into the holiday spirit here on worldwide exchange. we will be crossing out live to the north poll later. yes, you heard me right. to hear about santa's last

minute prep from his busy weekend and the real business behind christmas. that's one story you don't want to miss.

>> welcome back, everybody. you're still watching worldwide exchange this morning.

the sleigh bells are almost ringing. you're just waking up in new york to this if you haven't been outside yet. that's the live shot from rockerfeller plaza. it doesn't look all that christmasy in terms of the weather but the decorations are there. we're heading in the right direction. >> hopefully. meantime let's look at some of europe's biggest stock movers today. they received the green light for one of its treatments. the fda has given approval for the treatment for high blood pressure to come to the market. it will be available for you as consumers from january onward. shares up by 1.3%. bg group also trending higher to the tune of 2.2%. as the firm nears completion of it's deal with shell, court approval documents for shareholder vote on the mega merger are expected to be filed today. meantime marks and spencer is trading lower. off by roughly 1%.

that's a pretty weak reading on u.k. retail sales. the business lobby group warned that sales growth in december was weaker than expected adding that the outlook for january isn't that strong either. >> well, shares in toshiba have continued their slide losing over 12% in tokyo and falling to the lowest level since march of 2009. now over $2 billion has been wiped off the japanese c conglomerant's market cap. the company is planning to ax almost 5% of its work force as it reels from $1.3 billion accounting scandal. >> interest paid on your dollar denominated requires reserves following the fed's lift off. this is to get the grip on rising inflation.

let's talk about the outlook. so more divergence expected for 2016. what we have right now is a fairly dovish fed but a fairly hawkish ecb. >> i would disagree completely. >> why? >> i think that the fed was more hawkish last week than expected. it's clearly pencilling in rate rises next year. so i think the fed will be more hawkish than the markets are thinking and ecb, draghi would love to be more dovish. >> but he can't. >> i think there's a clear arbitrage. you're able to be paid to borrow money by the ecb and it's very

nice. >> what's the risk that the first hike by the fed last week was actually a big policy mistake? what if the u.s. economy actually flounders. a small minority believe it could slide back into recession. how difficult will it be for the fed to backtrack on what they have done and start easing again? >> yeah, i think it will be weak and it's not tremendous. all the manufacturing data are weak and services are slowing down. the fed is in a very difficult economy. i think it's appropriate and you have a very high hurdle out for the fed to turn that ground and say oh no we need to be easing again. if there is a slow down in the u.s. there isn't a policy for quite sometime. >> how good or how bad is this going to translate through to the equity markets? are we going to see a massive

reaction next year if the fed continues hiking? >> you had seven years of unbelievably easy monetary policy and that's valuations of all financial assets in the u.s. and that's been the monetary easing that boosted valuations and i think that's reversed now and therefore valuations have to ri rise. >> it's funny because at this stage after we had lift off from the fed you have people saying there's no way they're going to be able to hike even twice next year. we just don't have that many hikes and then we have the other camp saying they went to 6 or 5 or 6 and would be a lot faster than what we expect and are we really that far apart on the u.s. economy/global economy? >> i think so. there's people that don't want to see the fed hiking because

they don't think it's necessary, their views of stagnation. it's just not necessary and you have others that think we're back in a normal cycle in which case the fed is far too easy and if the economy does strengthen next year and inflation starts to appear you could see a need for six or so. >> is the price of oil going to throw everything off kilter? we had a massive drop in oil. >> you see the impact of oil on inflation. you can see what's underlying and in terms of growth. but the u.s. consumer is happy to spend a lot more next year because they're coming through. so you ought to have a stronger real economy. in fact, you ought to have it now but we're not seeing it now and therefore if you do get that

it's not so clear whether it's down to the oil price or fundamental stronger use economy. >> jeremy, i think there's really some underappreciation of two major trends at the moment. the fact that at some point the ecb is going to taper it's bond purchases. i know they're going to continue a little bit longer than we all forecast at the start of the year but then also the pboc at some point when the economy recovers will become more hawkish. what happens to volatility then? what happens to global growth then? because we saw what happened when the fed was getting ready to taper and to tighten. >> i'm sure you'll have reactions in those local markets. we're quite a long way away from them actually happening though. i don't see those happening next year but you might just begin to start worrying about it toward the second half of next year, i suppose. but globally we had an amazingly easy policy. supportive financial markets. not huge for the real economy but whenever they reverse those policies it will be bad for

markets. >> the boe is caught between the fed and the ecob. what's it going to do? >> they raise second half of next year. i think the big wildcard next year is the referendum. there's a chance the u.k. is going to vote to leave the eu. sterling is going to be very weak. that's typically a 4% down move in sterling is the equivalent to 1% on rates. so if sterling is very rate, the bank of england may feel it has to raise rates to counter act that. >> jeredmy, thank you your for insight. >> we just spoke about a couple of moments ago the el gordo lottery is being drawn right now in madrid. live pictures of that. the excitement. >> but this usually lasts hours and hours.

looking at that last year. >> we need a bit more emotion from the girls there. but 2.2 billion euros or 2.14 billion dollars in prize money will be given out to the winning ticket owners. unlike lotteries, they handout a variety of winnings on thousands and thousands of ticket holders. >> good luck to everyone. >> yeah. >> oh, look. >> there is some movement, you know. >> you're right. anyway, we might check back in on this wonderful happening here within the next two hours. still to come on the show, shares in nasdaq magnegas fell sharply yesterday. we have an exclusive interview with the ceo at 11:00 a.m. cet. join us here on worldwide exchange.

>> european stocks kick off trade in positive territory. this as crude prices pick up from multiyear low. >> shares rallying as the mega deal with shell reaches the home stretch. vote on the merger is expected to come today. >> swiss drug maker trading higher after getting the green light for its new blood pressure drug. u.s. regulators say the treatment can come to market from next month. >> and the selling in toshiba intensifies.

shares drop by another 12% in the asia session hitting a six year low after the company warns of a record annual loss. >> i have u.k. data to share with you. 14.2 billion pounds. that's versus an expectation of 11.7 billion pounds and that's up from 12.9 billion pouns a year ago. so slightly higher number than what people are anticipating. the budget deficit widening in november is bigger than forecast. quick look at the sterling dollar. 148.95. well below the 150 level but higher on the day up by 0.1%. >> glancing on our european equity markets we're a little bit lower. we were called a tad bit higher initially this morning and we saw some green but we just changed tack just a little bit over the last half an hour or

so. the ftse hanging on to slight gains after the dax, the cac and ftse mib all down by a tad. when it comes to stoxx 50 you have stoxx 50 off a little bit lower as anticipated. >> not too much happening in the bond space. values are getting quiter. a mixed picture there for yields. the ten year treasury note yield at 2.18%. all eyes on the data out of the u.s. today. part of that is housing stats. we also get the third print of third quarter gdp and tomorrow the goods numbers. 10 year gilt yield at 1.8%. in the currency markets the dollar index is pretty much unchanged today. the euro dollar is the 109.28 but the dollar index is still off the two week highs that we saw in last week trading

session. it's because of the commodity prices. >> and now the economic backdrop remains supportive of fundamentals in the high yield market and high yield issuers are in a solid financial condition overall. that's the outlook for speculative grade bonds. he is the cio of european high yie yield. >> the high yield funds, though have been holding up relatively well co well co well come comparitivly speaking. >> just overleveraged generally in that sector that has had contagion, particularly recently into the rest of the u.s. high

yield bond market. european high yield significantly out performed largely because you don't have those issues within europe. there isn't a commodity and energy sector and european corporates continue to do well but this is an isolated sector problem within the u.s. high yield market. it dragged a lot of things wider and as a result there's a lot of attractive assets within that if you look at the energy x commodity space. >> do you anticipate this trend to continue over into next year or are we going to see a shift ought of some of the sectors that you mention. >> energy and commodities are tough to call given what's happened to the oil price. a lot of companies hedged until next summer at much higher levels and i think if we stay around the $40 mark i think you'll have problems in the second half of next year as some of these hedges roll off and these companies don't have the cash flow to support their debt. we don't think we've seen the heights of defaults you're likely to see in the energy and commodity space but it's creating opportunities elsewhere

because everybody has seen the headlines in energy and selling high yield and it results in companies benefitting from a low oil price. >> why is it seen as a safe haven for so many investors? is it because of the default rates? or is it really monetary policy? is it the ecb? >> a lot of it has been qe driven. when you saw what happened to bunds, you're seeing investors now looking for yield and european high yield has not been an asset class that's been hugely allocated to by institutions and we think that's changing. but spreads are very, very wide. you can buy single european high yield bonds so this is not an interest rate sensitive asset class. it's all about credit risk and very benign at the moment. >> the default rate for europe. i saw a recent report. versus 3.3% in the u.s. 3.3% in the u.s. that's largely down to the

energy sector, isn't it? now that we have seen a sell off and the subsequent stabilization on the back of a fed hike, how attractive are yields? how attractive is it for investors to come back in and do some bargain hunting? >> the index yields are misleading. so the high yield market now is at 9% because you have so much distressed credit. it's been dominated by energy commodities and it's likely to continue to be dominated by commodities and we think 2% is your normal rate outside of those sectors and that's far too widespread. >> just wondering, is there an argument that we're in a bubble in some areas? i mean, especially when looking at some of the energy areas as well? >> i don't know. i think we were in a bubble. i mean, i think there was a lot of -- were risk on high yield is there's a lot of frustrated

equity analysts that end up in high yield and there's never any cash flow and i think we have seen lending standards hold up in the last two years like we should have done and i think in terms of energy there are -- there's going to be winners and we think there's some attractive names within the energy space and a bit of throwing out the baby with the bath water at the moment but i think we haven't seen the height of the problems in terms of the sector. >> zach, finally, let's talk m&a because we saw mega mergers and it's been so high in the high yield space in part because of the merger activity. 2016, are we going to see more of that? >> it's really the time to buy. we have seen some deals really struggle. it was an indication, 5 billion in debt. that didn't get away. that great to risk aversion at banks and the new deals we'll see getting underwritten are going to be better quality. this is the best time when

everybody doesn't like high yield. >> all right. thank you so much for that. cio of european high yield. >> now with just over a week left of 2015, what does next year have in store for everybody? we asked paul donovan for his 2016 out look. in his opinion the economies which have done the most deleveraging are the ones that are going to be looking at the biggest pick up in growth next year. take a listen. >> the focus for growth is going to be on the u.s. and europe. that's important because markets emphasize u.s. data very strongly. if you look at what data markets care about it's u.s. number 1, 2, 3, 4, and 5. that's the dominant issue so this creates a more upbeat perspective from the markets that tend to view the world through the prism of the united states and countries like germany but the second thing and i think this is a longer term issues that investors need to

look at, what are we seeing is perhaps a degree of a narrowing of the gap between emerging markets and developed economies growth as a trend. so as you know for a number of year emerging markets have strongly out performed by several percent and that's been one of the traits since '97 and '98 in the asian crisis. now we're getting more beleveraging from asia and that gap between emerging market and developed economy growth is starting to narrow back in and that's going to be a more sustained play and raises questions about what should we expect from emerging market ifs the economy is going to be growing maybe 1 or 2% stronger than developed economies. >> well, apple has bitten back at u.k. surveillance plans. can we take a picture of this. >> can we just show adam? >> he's running. catch him.

>> there he snchis. >> we have producers walking around between the shots. >> he brought us a glass of water. >> that's what happens behind the scenes, right? we were talking about apple. it frees up. >> it's access to u.k. citizens internet without the need for permission. crucially the new laws they would demand u.k. access today at a held in other countries. it's understood that apple's concern is shared by other tech titans including google, facebook and twitter. it's the course of 2015 and calendar year in the red. and first stop for the global credit crisis. apple watchers highlighted fears over slowing demand for the firm's main product.

the iphone. it's quite aggressive to try to catch up with apple. there's still a long way between apple and whoever. >> apple is the victim of its own success. especially when it comes to iphones. that makes up 50 or 60% of the overall revenues now and that's why they have been under so much pressure. share prices down 10%. higher market territory up from the record levels that we saw in april because there's concerns that iphone sales could miss estimates. but shares last year, it's going to be so difficult for apple to beat that and obviously with it

comes a little bit of disappointment. it's a very widely held stock and it could end the year down. shares off some 4.1%. >> but we say it's going to be hard for apple to beat whatever last year's sales were for whatever device and time and time and time again they proved us wrong. >> it's true. >> even if they have come out with a device where there's been some problems and they have gotten it and come back with the upgraded device and after that they have done a phenomenal job so far. >> maybe the watch, the apple pay, maybe that's going to be hard. and they see apple and it's up 2% in china. it's not all bad for apple. >> on many other devices, many of us use the little emojis, well, now something new kimojis

are here. kim kardashian unveiled a range of emojis in her latest digital stunt. he unveiled them to her instagram followers and promptly crashed the apple store. she has 55 million followers. $2 per app and it crashed the store. do the app. in true kardashian style there are a few pretty racy emojis out there. there's a bum. there's a couple of bums actually on there. you had a hair dryer. a hair flicking emoji as well. this is massive. you know, in terms of what she is doing in the digital space as a business. >> it's huge and even she herself is surprised at how much traction this has gained and the app is being fixed after thousands and thousands of

complaints. >> how many other times has the app store crashed? and because of what? i'm guessing not a lot of times. >> i don't remember any incidents. >> no, i don't remember either. but she has lips on there. you see hips. she tweeted and said i'm sorry i broke your app store. there's a donut. breasts where part of it is kind of hidden i'll bet. but yeah, anyway, if you're a super star of this magnitude, you can run with it, right? >> yeah. >> it's kind of different. maybe we should launch some apps. >> i don't think that's a good idea. >> business news apps. >> it wouldn't gain as much traction as the kim kardashian emojis. >> i doubt it. >> it's sad. >> anyway. let us know what you think. what do you think of the kimojis

and what are you shorting? a number of you read in with your short suggestions and read out the e-mails or tweets later. >> and meantime as we head for a quick break. take a look at these very beautiful shots. the christmas tree. >> it's on now. >> the christmas tree is now lit and all kinds of colors. it's only two or three days to christmas depending where you are. we'll be back after the short break. the flu virus hits big. with aches, chills, and fever, there's no such thing as a little flu. and it needs a big solution: an antiviral.

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>> however, inflation is still expected to fall short over the next two years. >> the chinese yuan is trading firmer against the dollar. authorities say they will seek to make monetary policy more

deficit. >> but how will china's economy fair in 2016? that was the question that we put to the head of global em and fx strategy at rbc capital markets. take a listen to his forecast. >> china has accumulated lots of debt over the past few years and a lot of it is dollar based. so there is a currency risk there that they need to be very cautious of and as a result i wouldn't see the dollar depreciation that much. >> which side do you want to play in china? the debt or the equities side? they're trying to convince us to take a look at the debt as they open up the market to international investors. but is it still too risky? >> i would be more interested in the equity side and the reason is because china is still growing faster than the rest of the world and they are ease heing. so they are injecting liquidity. >> after such an extraordinary year if you take a look at the chart it looks like ski slope.

i know you're going skiing over christmas where you have to chair the lift up to the top and you ski down the slope. that's the curve from about february right through to october. it was very alpine looking. it will be closing up negative. >> even the winners have had them and basically a lot of volatility. >> what does the japanese corporate do? they're pretty much out of it where it's supposed to go. >> it was vague to see the contrast. japan with the yen above 120 is cheap. the yen is undervalued at current levels so it's great for corporate japan. >> it's funny you say that

because this is meant to be the year of 2016 where japanese corporates unlock more money to employees. they pay out more of the profitability to those that they hire which is to cause a consumption effect across japan. if the good times are suddenly over with the currency depreciating a little bit, how are they meant to be feeling enthusiastic about more of their profits when they're getting squeezed on the currency and where they may not necessarily have the growth. as people point out inflation may be more challenging to achieve than first thought. >> you're going to see a transition toward exporters. they're gaining in dollars because their revenues is in foreign currency, they'll do outgoing forward. so you need to look into sector exposures rather than the overall corporate japan. there will be a transition away from those that profit more from a weak yen going forward. >> and that was the head of the

global emerging market and fx strategist at rbc capital markets speaking to us earlier this month. >> the european union has extended economic sanctions on russia which were implemented in july 2014 on the back of military involvement in ukraine. along with a recent slump in commodity prices the move is expected to delay russia's economy going further in 2016. joining us now to discuss all things russia is tom. good morning to you. look the ruble lost roughly 15% against the u.s. dollar over the last two or three months. this is as brent prices dropped some 30% so the ruble has been resilient. there's not a one to one correlation here is there? >> that's correct. those that look into the details slightly more will see that the ruble has been quite resilient to the fall in oil prices. when we look at it, ruble stands out there over the course of the

year as being the most tightly connected to the oil price. so there's the reason to be resilient. >> so if we take a look at how the russian ruble faired against the dollar over the course of the year it hasn't done so badly. it's actually risen some what. we were at, what, 80 levels in december of last year and since then we have seen all the forecasts about the economy sliding deeper into a recession. massive capital outflows. that didn't quite materialize. why not? >> the first thing we have to say is the ruble remains volatile. throughout most of this year it's been the most volatile currency out there. but people are beginning to say what's priced into the market. a lot of the negative stories regarding russia are well-known to the market. and those capital outflows

already occurred. when you look at next year maybe that's where the other emerging market currencies haven't gone through. >> but also keeping in mind that we haven't had the sanctions put on russia the year before. so some are arguing that a lot of it is priced in before because of the sanctions that we kind of got that volatility out of the way and then in round two with the oil price which is had an impact on russia but they were more weathered to take it on. >> absolutely. a year ago russia went through the perfect storm. it had a central bank which was forced to move it's currencies. from a managed currency regime, that was unexpected. the oil price was slumping and people look ahead now and say that's well priced. for example, the sanctions extension, well priced by the markets. >> so why aren't we seeing more of an impact from the fed rate hiking cycle on the russian ruble? why isn't there a feed through? shouldn't we treat it as an emerging market as well? >> we should but first of all the ruble is almost entirely correlated to the oil price as

we already said t. capital outflows already occurred because of a domestic story in russia but equally a lot of the currencies that are very vulnerable are countries that operate large current account deficits. and they simply don't do that. it has the same problems. they're different from the other ones. >> let's talk about the geo political issues over the last couple of weeks or so. we have the flight bands from egypt for example. to what extent is that propping up the ruble? they are due to go on holiday in egypt and to turkey. how big of a factor is it? >> it's a factor and another part of why the ruble is resilient to the price of oil prices. russia is in a recession so a lot of people aren't traveling and also the two most popular foreign destinations are off the

list. and that redemption schedule and that's another reason. >> thank you very much. thank you for joining us and also just to mention, they may sign the deal in the first quarter where they could provide $5 billion in a load to iran in 2016. that comes by ira. still to come, shares in nasdaq listed. magnegas dropped shortly. we have an exclusive interview with the ceo after this break.

>> court approval for shareholder vote on the merger is expected to come today. >> the u.s. disease center investigates a new strain of e.coli linked to chipotle saying it's unclear whether it