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00:00THE OIL PRICE AND I CAN TELL YOU WHAT HAPPENS TO THE RUBLE. THE KEY VARIABLE IS THE OIL PRICE. ABOUT 40% OF GOVERNMENT REVENUE COMES FROM ENERGY EXPORTS. IF THE OIL PRICE DROPS BY 10% IN DOLLARS, THE LINE OF RESISTANCE FOR THE RUSSIANS IS TO ALLOW IT TO FALL FURTHER. LAST DECEMBER WHEN THEY REALLY NEEDED TO STOP THE FOLLOWING THEY DID AN AGGRESSIVE OVERNIGHT, 500 BASIS POINTS OVERNIGHT IN A RATE HIKE THAT EVENTUALLY STOPPED IT COMING OFF. BUT THE ONLY REAL RELIEF THAT WE'VE HAD IN THE FIRST ORDER OF LAST YEAR WAS WHEN THE OIL PRICE WAS STRONGER. PARTICULARLY LIKE THE COLOMBIAN PESO, IT'S THE PRICE OF OIL THAT DETERMINES WHAT HAPPENS TO SOME OF THESE CURRENCIES. UNTIL COMMODITY PRICES STABILIZE, MOST EMERGING MARKET CURRENCIES WILL STRUGGLE TO STABILIZE. SCARLET: THAT HAS BEEN A THEME, BUT IF YOU LOOK AT THE TRADE BALANCE WE HAVE SEEN SOME ADJUSTMENT AS IT HAS IMPROVED SINCE EARLY 2013, EVER SO SLOWLY. TO THAT END, WHAT KIND OF OPPORTUNITIES DOES THAT PROVIDE? PAUL: AS YOU SAY, WE HAVE SEEN AN ADJUSTMENT. IT HAS BEEN INTERESTING. IT COMES ON THE IMPORT SIDE FROM PLACES LIKE BRAZIL. IMPORTS DROPPING OFF. IN DECEMBER BRAZIL REPORTED ITS MONTHLY TRADE BALANCE, THE FIRST SINCE RECORDS BEGAN DESPITE LOWER IRON AND SOIL PRICES. BUT THIS IS A LILLY BEING FELT IN THE CURRENCY MARKETS YET AND TO BE HONEST WE HAVE BEEN A BIT SURPRISED BY THAT. WE DON'T THINK THAT GROWTH IS GOING TO PICK UP UNTIL THE CREDIT CYCLE RETURNS, WHICH IS A REALLY LIKELY BEFORE THE FOURTH QUARTER OF THIS YEAR. BUT IT DEFINITELY IN CREDIT TERMS, IN TERMS OF STABILIZATION, IT'S VERY REASSURING TO SEE THE TRADE BALANCE SWINGING BACK WITH CONSIDERABLE DEFICITS INTO QUITE WIDESPREAD SURPLUS. JOE: I'M SURE YOU CAN SEE IT ON THE SCREEN, EMERGING MARKET CREDIT GROWTH SLOWING DOWN, SO WHAT WILL FROM AN ECONOMIC STANDPOINT -- YOU MAKE A POINT THAT IT SHOULD BE THEORETICALLY HELPING CURRENCIES OF IT. FROM AN ECONOMIC STANDPOINT WHAT WILL IT TAKE FOR THESE EMERGING MARKETS TO SEE ACCELERATION AND GROWTH? PAUL: WE'VE GOT DRAGON GROWTH COMING FROM THE CREDIT THE YOU MENTIONED. 20% TWO-YEAR THAT'S 10. THAT'S A VERY SIGNIFICANT NEGATIVE INFLUENCE. THAT WILL PROBABLY PLAY OUT ONCE A COMES DOWN TO NOMINAL GDP GROWTH IN GDP STABILIZES. WE THINK THAT'S WHAT TO BE QUARTER THREE, QUARTER FOR THIS YEAR. TREND ON GDP GROWTH WITH COMMODITY EXPORTERS WITHOUT THE BOOST OF COMMODITY PRICES FOR PLACES LIKE INDIA, POLAND, AND MEXICO, WE THINK THAT THEY CAN DEFINE. COUNTRIES THAT ARE LESS DEPENDENT WILL SEE THEIR SURGE SOMETIME BEFORE RUSSIA OR COLUMBIA. SCARLET: THOSE BEING ONE EXTREME, WITH SAUDI ARABIA BELONGING IN THAT CAMP AS WELL. A LOT OF INVESTORS TARGETING IT, BETTING ON SOME SORT OF WEAKNESS IF NOT A DEEP TAGGING --DE -- DEPEGGING. PAUL: THE SAUDI'S HAVE HELD THE PEG FOR OVER 30 YEARS NOW. GOOD TIMES AND BAD. AS IT IS NOW, THEY START TALKING ABOUT THE VALUATION, BUT WE THINK IT'S UNLIKELY THAT IT'S GOING TO MOVE AND YOU DON'T HAVE TO BELIEVE THERE'S GOING TO BE A BIG MOVE. WE ARE SEEING A 2% PREMIUM AND THE ONE YEAR SECTOR AND YOU COULD REGARD THAT AS A 10% CHANCE OF A 20% MOVE. PEOPLE ARE JUST BUYING THE OPTION THAT THERE IS A SMALL CHANCE THEY COULD MOVE BUT THE BASE CASE IS THAT THEY STICK WITH THE PEG. THEY KNOW FROM PAST EXPERIENCE THAT WHEN YOU DO THAT, YOU CAN'T JUST DO IT ONCE. THERE'S UNCERTAINTY. SCARLET: CALL MACKLEMORE A, THANK YOU FOR JOINING US. COMING UP, CORY JOHNSON SPOKE WITH EILEEN BEATTY IN LAS VEGAS. WE WILL TELL YOU WHAT HE HAD TO SAY ABOUT THE NEW ELECTRIC VEHICLE MARKET.

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