tv Bloomberg Markets Americas Bloomberg December 15, 2022 10:00am-11:00am EST
hawkish, but markets find it hard to. we try to make sense of it with greg jensen and dan tarullo. pcd sees court inflation as staying at 2% between 20 55. yields catapult higher. finding a 40% return, it is commodities. goldman sachs says underinvestment will lead to shortages and a big price moves. from new york, i am alix steel with guy johnson. markets in the u.s. may not seem to be paying attention to jay powell, but every market is paying attention to christine lagarde. guy: we just had a lot from christine lagarde on how to get markets to pay attention. jay powell felt that test. we saw financial conditions easing during his press conference. he fumbled a couple of lines but lagarde nailed every single one. the market is paying attention.
that was a steep change from the ecb. alix: she crushed any conversation. the messaging was hawkish. she doubled down on the hawkish message. these moves are enormous. you are looking at almost 30 basis points on the 10 year yield in the. stocks here are falling in sympathy, but the rest of the market in the u.s. feels relatively calm compared to europe. guy: the expectation was we would see the ecb topping out at 3% but it could be closer to 4%. that is a big shift in terms of the narrative. this is an environment where they are downgrading growth expectations. they are not going to be derailed by that parent they see a tightly were market and that they have got an inflation problem. it has been imported but is starting to ripple through the economy yet, they nailed it. the bank of england has probably
won the honesty award but i think lagarde now wins it just in time for christmas. it is a fascinating conversation that we have to work our way through. is the acid underlying -- the message under this all that different? i do not know. yesterday, this is what jay powell had to say. >> the full effects of rapid tightening have yet to be rethought. today, we raised the policy interest rate by .5%. we continue return to survey that ongoing increases will be appropriate. changing our inflation goal is something we are not thinking about. we have a 2% inflation goal and we will use our tools to get inflation back to 2%. we are getting close to that level sufficiently restrictive. with today's action, we have
raised interest rates by 4.25% this year. median projection is for her will present at the end of 2024 and figure 1% by the end of 2025. i would not see us considering rate cuts to the committee is confident that inflation is moving down in a sustained way. guy: is the market the fed? is the market fighting the fed and listening to the ecb? let's try to get an answer. we are joined by mike mckee and ira jersey of bloomberg intelligence. mike, you were in the room. the market ignored jay powell yesterday afternoon. why did the market listen to christine lagarde? mike: the market is listening to jay powell today. we are seeing it both in big and equity markets. it took some time to process, but the market has been following the data.
they are looking at the cpi, pc, prices paid numbers, regional fence and they are all coming down. for jay powell to say we think inflation will be stickier and have to do more was a bit of a disconnect, but now they are observing the idea that if he says that, they will do it. farther out in 2023, they are still pricing in rate cuts and at a steeper pace. i think that is because they are still looking at the data and projecting that the fed is going to get the job done sooner than anticipated. but when alix was talking about what christine lagarde said, i thought if you erased lagarde and put in power, you would know the difference. ira: one of the issues markets are having is trying to figure out how to slower growth is going to feed into the fed's reaction function. the market's not believe the fed will do what paypal has been
saying since the summer, -- jay powell has been saying since december, which is that they will keep interest rates for longer than they have previously. the market has been trained for 35 years to think that there is a fed put close to the money when it comes to and plymouth. that when the unpleasant rate goes up, the fed is going to cut. they have not been convincing that has gone away, but i think that that punt is farther out the market expects. alix: what should the two-year be trading at two tell you it is listening? ira: if the federal reserve gets up toward the 5.25 upper band, you would still be looking at a 4.5% to year yield, another 30-ish basis points from the date entered that is important because the market is pricing for aggressive cut and that is why you have the two year yield closer to 4% then 4.5%.
mike: they made the point of why the market is reacting differently after the news conferences. the fed put, powell is pushing against that. there has not been an easy be put in the same sense and so there is less pushback coming from the markets. guy: but, mike, if you think about it, everybody is terrified the ecb is going to blow up the market and the italian that story will become systemic again. that has always been the limiting factor on the ecb's ability to go too far. today we are going to that. she is potentially putting the btp market at risk. we are talking about qt coming to force next year, rates potentially going up to and around 4%. it has or is been understood that the ecb could not go too far because it has problems like italy and greece. mike: you remind me of the
announcement on the airplane about in the event of a water landing the life preserver is too they believe they have a 12 that day can use to keep italy's head above water if something starts to go wrong. there policy could be directed just at one country. whereas the fed for the entire u.s. has to react. because markets are systemic across the u.s., they have to been react in a different way. alix: ira, you are the bond guy, but to percent of the s&p, we are picking up a little steam now in terms of selling. do you think that is a totally european situation? ira: global rates will be correlated. the more central banks continue to raise interest rates, especially like to be, large market and an important economy, the more they raise interest rates, the more you are going to
have a significant down check. remember, there is currency conversion issues that will go on for some companies, especially in large cap markets, where a lot of the business is driven from abroad. insofar as the dollar might become weaker, that is good for some companies, bad for others. there will be some disconnect between how these companies operate guy: let's talk about the relationship feed boots and treasuries. if the ecb does deliver potentially 3.5, what is the effect into treasuries and bunds? how big a gravitational effect could be ecb have? ira: it will not be zero but not 1 for 1. where the u.s., but the big thing is it winds up being a
relative values. 10-year german yield rate be higher, u.s. yields, if they stay where they are, which is our call for the next two or three months, you could see a narrower spread between 10 year germany and 10 year u.s. that is probably what is going to continue to happen as ecb gets more hawkish and defense stays at its current hawkish levels. alix: who gets more worried about the economic outlook first? mike: europeans have good cause to be worried. they are facing a war and a rough winter with energy prices. it is going to be much harder for them to avoid recession. in the u.s., what the fed is forecasting is growth will only be .5% for the year, which will employ a recession at some point. markets are thinking it might come sooner, but the fed is not giving you the january forecast i think your has got a bigger
damocles hanging over its head, which made christine lagarde's remarks more interesting. she has a more likely recession ahead and was hawkish. alix: she is just going for it. thanks a lot. great conversation. thank you both. coming out, more on the question of the day -- do you fight the fled and listen to the -- the fat and listen to the ecb? greg johnson joins us next. this is bloomberg. ♪
optimistic. >> it is quite a hawkish tone, more hawkish than markets have been expected. >> that is as close today recession as they ever get. >> they have to slow the economy so that wages come down. >> that back-and-forth has a debate of whether we have seen the bottom. i think the jury is still out. a more cautious stance is still warranted. >> the key components are still sticky. that would suggest more tightening is needed. alix: those guests are weighing in on the fed's half-point height. do you fight the fed and listen to the ecb? greg jensen joins us now. is that the play? forget the fed listen to the ecb? greg: i would not say it got. i would say there's more some lardy in that central banks are
in a different position than in other sessions. tools are limited. they half to balance inflation from getting entrenched with the growth story. in europe it has already weakened and in the u.s. it is beginning to. that is what we think the story of 2023 will be, which is the fact of what happened in 2022. if you turn back to 2021, there were a few things everybody was talking about, which is that inflation would be transitory and nobody was expecting much tightening. the whole effect of the fiscal policy and the ease in monetary policy were not priced in, even though everybody was talking about them. here there is talk about recession. the recession priced in. we think, whether it is a next leg down, particularly in
profits, more of a dollars squeeze as the effect of the tightening in the u.s. lays through different markets, those are the big things we think are not fully priced -- market price in, tightening over the last year, move in real interest rates, we think in the next year it will be the effect of all of those things. guy: can you give me a sense of the magnitude of the pricing that will see? greg: this is one of the biggest difference we have seen between our systematic process, what it measures on the impact of profits and on currencies that we have ever seen. it is a once in 15 years pressure. you will cease relatively large moves as you shift from a world that is fully focused on the fed to one that is focused on recession that we see coming
into the next year. alix: what is your playbook for that? greg: the main things already recognize the type of environment we are in. we are in a multiyear environment that is difficult for stocks and bonds. a., diversify that event. b., we think this will hit in countries where inflation was bigger and more tightening was necessary, mostly europe and the u.k. there are a lot of opportunities in currencies and across the world. we think asia can diverse better and is better priced and able to withstand this because they did not have as much inflation shock and did not unleash as much fiscal policy. there is opportunities out there, but the big picture is if you were set up and the asset prices to go up coming to are in a difficult position. guy: yeah.
i am wondering about the duration. you talk about 2023 being about feeling the effects of the lag from 2022. but if policymakers continue to tightness through 2023 at fairly elevated levels, how long is the effect of all of this going to last? pretty 24? -- 2024? 2025? greg: what you see in these periods of higher inflation when central banks ease more slowly into recession is they last longer and drawdowns in assets are longer. we expect double the normal length of the recession because the fed will not be at your back for a long time. this is -- the good news is the leverage in the financial system is not that bad and you do not
have a cascading effect like in 2008. you have the strong bond of possibly a couple years and asset prices start to present that in. until that is fully priced in and central banks are able to move toward easing, you get a recovery much later. our expectation is that you are in for a long drawdown and did not see the bottom in risk assets and it is going to be a couple years down cycle. alix: you mentioned the leverage bubble. it feels like we had a blowup in the gilt market, with pension funds. we did have crypto. is that a rolling leverage bubble versus in 2008 where it was a systemic wipeout? greg: i think you are right. it is interesting how little markets are expecting tightening, even though the move in interest rates of this negative has not happened in 40 years. while it is not like 2008, we
are leveraged as a world and it is complex. what often happens is at the periphery, the most extreme situations are crumbling and gradually coming to the center. the fact that the bubble in crypto or highflying tech names is occurring, that does not just get continued. those losses that those companies were running were flooding in as profits to other companies. you have got this cycle at the periphery but it is getting more and more central. that will be more and more part of the story. what i agree -- while i agree that banks are not as central to this as in 2008, because there is so much debt that is short duration that needs to be consistently rolled over is much higher that we are using to processing. there is significant areas of
risk that will create that feeling that it is one thing over the next and you get over one problem and find a new one. guy: if china reopens successfully, how much of a counterweight is that to the downdraft in western markets? greg: in some ways, it is helpful. in certain countries, it certainly will be helpful. we do think that while the timing is unknown, it will be beneficial, but it is worth noting that china did not do the type of balance sheets actions that u.s. and european policymakers did in the sense that chinese small and needy and businesses are coming out of this with worse balance sheets than they had. you have shut down businesses, allowed them not to default on their debt that you have not forgiven the debt that has been piled up while these businesses have shut down. you come out with bigger overhead in china, but as china opens, this is not a great thing
for the u.s. and europe. china has been a blessing to their economies because it has been a visionary -- this inflationary force. china opening and its effect on commodity prices and competing for raw materials, while the u.s. and europe are entering a recession, it will probably make the central banking dilemma worse and drawdown countries that do not benefit as much from chinese growth drawdown those economies while china picks up. this is not a great thing for the european and u.s. economies, particularly companies that cannot have tremendous force in china and have monetary policy that has significant inflation problems. alix: you are bumming me out. tell me where i should hide out? in cash for the next few years? greg: first, catch at these levels is competitive -- cash at
these levels is competitive. you saw that as interest rates change, the change had a big effect. now the bigger deal will be the level difference. the yield on cash is competitive with the yield and equity markets and in bond markets. i think you will see more people draw into cash and it is not terrible. at those levels, it is a reasonable choice. secondly, i think we are at a turning point where the growth story will be a bigger deal. while we do think inflation will lag and well reasoned inflation reports are no big surprise, you will get probably a of inflation reports going forward. where do you hide? we you think inflation bonds are attractive and long-term inflation has not been priced into market if the economy weakens, real deals will need to fall. we think that is an area that is reasonable. some of the emerging markets that have not had the inflation
problem, particularly those that can benefit from a telling from china, and a real -- those are decent opportunities. but it is not great and cash is not terrible. assets do not always go up. guy: final question, which cash should i be looking at? what do you see happening with the dollar? greg: we think we have one more wave of a significant dollar increase as the global economy weakens. revenues measured in dollars are going to declined significantly while global debt levels are high. as deaths were in and you have to refinance at these higher rates, there is still a significant squeeze to come. we do think there is one more big wave in the dollar. your picture overtime is the dollar will fade.
there is a shift in central banks away from the dollar savings will have to move away from the dollar. probably the next big cycle is a bearish dollar, but over 2023, we think you will see a decline in dollar revenue and one more significant blow off in the dollar. alix: one added point before we let you go -- where might you be wrong in the dollar? i am looking at the price actually today. the euro has studied spiky but it is down. despite hawkish rhetoric and how firm lagarde was, the euro is down. i am wondering that -- if that will disrupt this thesis? greg: that is what i think you're right about. this year, i think you will be. this dynamic of central banks tightening, revenue dropping and global growth having a bad year,
is going to be dollar bullish. i would agree that the market today, even though given the inflation story there is a need for tightening, the growth story and the debt squeeze is bullish for the dollar in the short-term but it is just in the longer-term that i was referring to that big sigh. if you look at 2023, you will see a new high in the dollar associate with the pressure from the squeeze that occurs when normal growth falls while central banks continue to take because of relatively high levels of inflation. guy: genuine pleasure. we appreciate your time. greg jensen, bridgewater associates: cio, have a happy holiday. coming up, dan tarullo, former fed governor. is it time to fight the fed? is it market fighting the fed? it is, but is it listening to the ecb?
christine lagarde was unbelievable today we talk more about that next. i slightly wondered whether christine lagarde watched jay powell, looks at the market reaction and went, i have got to up my game. alix: yep. saying your hawkish is not enough. s&p is down a bit but nothing like what we are seeing in europe. this is bloomberg. ♪
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alix: we are about one hour into the u.s. trading session and it is brutal out there. >> you are seeing the selloff in equities. bed one night to us sleep on what jerome powell said. big tech off by about 2.6% that we are seeing a lot of action the currency market and as stocks drop it's the dollar it's rallying right now. a lot of that coming from the
euro, euro weakness after we heard from ecb president lagarde. the ecb following the fed in downshifting to a 50 basis point hike. let's focus on the dollar. the dollar being falling under some pressure. as you can see, it's just following weeks and weeks of diptych -- decline prayed it has been a great year for the dollar. but go from the currency market to tesla because this is a really interesting story, rallying with elon musk selling 3.6 billion dollars worth of tesla shares brings total sales for about $40 billion or so. don't know if we will see tesla's price. with today, still down over quite a bit. guy: tesla is fascinating. the ripple effect out of this deal is something to behold.
thank you very much indeed. let's get back to the main narrative today. fed chair jay powell certainly wants to dispel the notion the fed is backing away from its fight to bring inflation down. mike mckee was at the press conference and asked the chair the markets don't appear to be taking his or anyone else's remarks too seriously. >> i'm wondering if you're reacting to the fact the markets have loosened financial conditions or if you feel the fed may be a little bit behind on inflation with the decent -- with the recent disinflation or not. or how it's affecting a soft landing if you're projecting half a percent growth. >> we are getting class to that -- close to that.
it boils down to how long do we think this process will take. we welcome these better inflation reports for the last two months. i think we are realistic about the broader projects. guy: mike mckee as ever putting the fed chair on the spot. the press conference where most people had one eye at a press conference and a football. the point of the day is fight the fed, market seems to be looking at the ecb. dan, good morning. let's talk about the markets belief in the fed and whether the fed is convincing enough, what do you make of chair powell's performance and why do
you think the market barely batted an eyelid. >> i think what we've seen through the last year or so is a lot of volatility around the press conferences. sometimes the markets are reading his message is somewhat different from what the, -- fomc statement was telling them. i think yesterday the markets were trying to figure out is this as hawkish as the dot plot suggested or is it not. i tend to agree with what katie said in the update a few minutes ago that part of what's going on is the market digesting, digesting the total of what powell said. this bubbly little bit of sympathetic negative reaction to the ecb move as well. particularly to christine's love rhetoric. -- to christine's rhetoric. alix: does he -- is the reaction
function of the markets different and it comes to the fed versus the ecb? dan: to some degree i think the fed and the leadership of the fed is still feeling a bit of credibility hangover from last year. and that is affecting i think the way markets respond. someone earlier said there's not an expectation of the ecb put the way there is an expectation of a fed put spread i think that's number one. i think that powell is probably reflecting some more nuances on his committee than perhaps christine lagarde has on hers right now. we saw a few crack's in the federal reserve bank presidents, which they evidenced a little bit of concern of the pace and tightening.
powell did an impressive job of getting everyone together, a very tight dot plot. a suspect underneath of there still some fissures. part of what people picked up yesterday which is an occasional qualification, and occasional nod to the policy changes i think may be his effort accurately to reflect where his committee is, i think it's probably a difference in style. ever since christine lagarde was finance minister of france, she has had a firm direct but very calm style, a very effective communicated style but i have not seen many public officials be able to replicate. guy: she had a few wobbles at the beginning. let's talk a little bit about what comes next for the fed. my sense was that in some ways jay powell was setting the
market up for a further downshift. in my misreading the situation? dan: my sense has been that sometime before the november meeting there was either a formal or to factor compromise reached on the fomc, a downshift in the pace of increases in return for the messaging that rates would stay high longer and more recently that the endpoint would be higher and rates would stay there longer. so i think that's basically where -- how the committee is trying to accommodate the different views that are there right now and a 25 basis point increase in the first meeting of 2023 would be very consistent with that. jay powell did not commit to it but he did not try to push back either. >> based on what they are looking at, a loss of 1.6 million jobs in the cycle if you
believe that 4.6% unemployment rate. when you are at the fed and you were talking about the employment rate you needed to see to cool inflation, what was the conversation behind it. what would freak fed governors out, what makes them re-think a more progressive policy stance based on the picture. >> in my eight and a half years at the fed, we did not have a problem of too much inflation and we certainly didn't have a problem with tightening. in my time there there were a couple of tentative steps taken but i think that still relevant for how we should be thinking about the issue now. back in the 20 teens, there was some hawkish voices saying with unemployment this low we just have to start raising rates because it can lead to higher inflation. and the response to that was on the taylor curve, the relationship between inflation and unemployment has flattened out.
so you can push unemployment down quite a bit with not much impact on inflation. if the taylor curve is flattened out on that end maybe it's flattened out on this end as well which could mean you will need higher unemployment for more impact on unemployment in order to get back down to 2%. guy: why is the labor market proving so resilient? sought claims number coming out, but nevertheless we are at 200,000 on claims. but doesn't feel like a labor market loosening up to me. >> i agree with you. one of the analytic points, it's a little in the weeds but i will mention it anyway because i think it's important for what the fed thinks about it. one of the points that i money unclear on is what kind of lags the fed thinks are operative in the different sectors of the economy right now. chair powell spoke yesterday
about the housing market and he was pretty clear, mortgages more or less immediately affected, rents probably the first or second quarter of the year. but on everything else, although the reduced growth for next year kind of reflects a sense of lag, we do not know what the fed was expecting, that's from the beginning of the rate increases early in the year how long did they think it would take and right now if you think it should operate, it should have an effect in two quarters, if you think the lag is three or four quarters and it wouldn't be a surprising we are not seeing it yet. guy: we were talking him up -- alix: we were talking a moment ago saying the pain in this tightening is being felt where the leverage is on the outskirts prayed it will wind its way in to the center of the market. i'm talking about crypto, you were front and center on
financial stability when you were at the fed. i'm wondering what responsibility you think the fed has to answer for things like crypto and ftx. >> i don't think the fed bears much or any responsibility for what happened with crypto and ftx. if you look at the allegations launched by the government agencies that's a fraud story. that i do think alex that rapid increase we may not have seen the financials impact of the rapid increases in rates yet. i've been surprised to see people sending the all clear signal because it seems to me we still have to see what happens with rollovers and floating interest rate loans for buyouts and the like. i'm still very concerned about what's can happen with emerging market countries as they have to refinance in a stronger dollar. so i agree with greg jensen.
i think you're can begin to see some of these effects moving out and although i don't think it's likely, i don't think they are likely to be big financial stability events in a day or two. i do think they bought a macroeconomic effect. if you have more companies that have to go on a tighter rein because they cannot finance themselves as their data rolls over that will have an impact on the economy. so if you step back, what are we looking at. we are basically looking at the question i said a moment ago how much constraint on the economy is already baked in they some of the fed has done. the markets up until today have fought to much, the fed has thought not quite enough. that's the question everyone will have to be looking at. alix: so great to catch up with you.
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>> you are looking at a live shot of the principal room. coming up, currency acting chief. this is bloomberg. keeping you up today with news from around the world, here's the first word. america's demand for merchandise appears to be easing retail sales fell by the most in almost eight years down by 6/10 of 1%
excluding gasoline and cars. retail sales were down 2/10 of a percent. in the u.k. nurses have begun a round of historic strikes as many as 100,000 nurses are expected to take part in the strike across england, wales and northern ireland. the protesting amid low inflation may offer another strike next week. in peru, violent protests led the government to declare a state of emergency and suspend basic rights for 30 days. the new president is trying to establish her authority, at least seven people have died in clashes involving demonstrators demanding the release of the former president. he was arrested after trying to dissolve congress. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta this is bloomberg. >> european luxury names all underperforming and this comes as chinese consumer activity
really dropped off a cliff. the lowest level since the spring. so what's going to go on here as china reopens with the data still coming in really lumpy. she joins us now, also this also fell about 5% today got a downgrade over at brian kerner analyst. he expects it to lag most of its peers in 2022 because of the uncertainty. >> i think the luxury sector definitely has been down in sympathy with a lot of the growth stocks following the ecb rate hikes and more generally concerns about the trajectory of rate hikes in europe. i do think the china data is backward looking in that it's well understood november was well before the path to reopening began and the shares actually reacted quite positively to early news about eventual reopening that appears to be underway which signals a catalyst for the luxury sector in terms of demand recovering
into early next year. so while this is a short term concern i think the bigger issue with china is a longer-term path of reopening and to what extent that can help the support sector which may be affected by slower demand in the u.s. and europe. >> basically signals that they have greater exposure to china through gucci. is that how we should be viewing luxury names looking through the portfolios, looking through other brands, looking at their exposure and figuring out how that works and then backing that into the price we are prepared to pay. will that be the name of the game next year. >> to some extent absolutely. they've been suffering from some specific issues in that brand it's more reliant on a younger consumer cohort in china and perhaps other brands and it is in some need of rejuvenation which is why the designer who has left is about to be replaced by another and that's hopefully
can it catalyze a recovery for that brand. that said china is going to be a key catalyst for the sector in 2023 given that there used to be a huge component of luxury spent by chinese nationals that before the pandemic was taking place outside of china has tourists traveled in europe and other parts of asia. but virtually came to a standstill and even though demand in china grew significantly in 2020 and 2021 it's not completely offset the impact of the lost tourism. as and when the outbound travel or recovers that will be a further significant catalyst for luxury demand taking place in europe or maybe in the u.s.. >> what do you think the catalyst will be for that, this is based on the present -- premise they will spend a year after they reopened. >> the differences chinese consumer terms of luxury spends a lot -- is a lot less mature than the u.s. or european consumer.
it's estimated that may be a little class -- middle class, luxury consumers on some estimates number no more than 30 million. it's a narrow sliver participating in this market and even with slower anticipated chinese economic growth this is still a recruitment sector in that it's constantly recruiting new consumers so even if that pace is slowing down its able to recruit new consumers. guy: we were talking to greg jensen earlier. he was making the point china has not had the level of social spending care that we've seen in the west in the united states and in europe. as a result of which consumers are carrying more data as they come out of this downturn -- more debt as they come out of this downturn. back balances were full. in europe, jobs were protected.
how much does that undermine the investment case? swetha: chinese consumers of already had higher savings rates than the rest of the world which has helped cushion some of the blow for them as well even though you point out the chinese government has not been as generous in terms of welfare schemes during the pandemic. the government has periodically during bouts of reopening engaged in consumption stimulus activities such as voucher ring, cutting people to spend money on food and services and we expect similar moves will take place once reopening is taking place within china. the chinese consumer overall is starting up from a healthier starting point. savings rates were much higher than the last. this has always been an investment led economy. the government strategy to move to more consumption led and we suspect some stimulus measures will support this. alix: what's your top calls
then? swetha: what is undeniable is larger companies in the sector are making hay and gaining share from some of the smaller upstarts and this plays into the hands of the top lifted companies. i would think that the consumers concentrate their spend within these top brands which is also supported a healthy resale market for these top brands and plays into the hands of the larger conglomerates who own these brands. i wonder if the person he has supplanted feels very good about it. the goes to show a very well diversified over 75 different brands spanning a wide range such as fashion and leather goods. but also wines and spirits, watches and jewelry. and really a testament to the
guy: the markets having a moment today across the board and across the assets. we are down by around 11 points right now. we -- even the euro is starting to roll over. the markets running over a little bit to the dollar. you've got that on the downside to the pound. the bank of england complete nonevent today. christine lagarde was the main story absolutely devastating and that is definitely reflected in what we are seeing right now.
guy: thursday the 15th of december, what a day. seeing a reaction to christine lagarde in the markets. currencies are down, a bond markets are being battered. the countdown to the close starts right now. >> the countdown is on in europe. this is bloomberg markets, european close with guy johnson and alix steel.