– This is the script of CNBC's news report for China's CCTV on December 14, Monday.
Welcome to CNBC Business Daily, I'm Qian Chen.
The highly anticipated week of the Federal Reserve's policy decision is finally upon the market.
As Wall Street braces for what could be the first interest rate hike in nearly a decade, one top economist warns it's time to buy insurance against whipsaw price action.
The probability the Fed raises rates from near zero on Dec. 16 rose to 90 percent from 70 percent in the latest Reuters poll of over 90 economists, taken Dec. 4-9. What has not risen at all are expectations for inflation next year.
David Mann, Chief Economist of Standard Chartered Bank, is expecting volatile market movements after the announcement of the Fed's decision.
CLN Street Signs 12_14_2015
[David Mann, Chief Economist, Asia, Standard Chartered Bank,]"104538 Short term, we are going to see some pain. It's hard to avoid, even the Fed's almost 100% priced in. It's going to have a negative impact, we have seen even stocks coming off. But that should not put off the fed. It put off them a few times before, but this time, they seem determined. 104551"
On CNBC's "Futures Now" last week, Gluskin Sheff's David Rosenberg said that historically, when interest rates increase, so does volatility. "The VIX [CBOE Volatility Index] is going to rise in the next year. Typically when the Fed starts to raise rates in that first year, it doesn't mean you have a bear market but you do have heightened volatility," he said.
The VIX surged above 20 for this first time in a month on Friday to its highest level since early October. This as a sharp sell-off in U.S. and global equities had investors running for cover. Rosenberg expects the market to stay flat over the next year.
"It could go as high as 28," Rosenberg said of the VIX. Super spikes in it tend to correlate with selling in the S&P 500.
Rosenberg said there are two identifiable risks in the coming year: one being the heightened volatility after a Fed rate hike, and the second being geopolitical factors. These two combined factors made him coin 2016 as "the year of the barbell" -a term for an investment method focused on finding an equal balance in risk and reward.
"You want to barbell [your insurance] against the geopolitical risks," added Rosenberg, who identified the biggest threat as the war on terror. "If all NATO countries live up to their commitments, the incremental spending on global defense would approach $100 billion," Rosenberg said. "How you hedge that is buying defense stocks."
"Be long the VIX and long global technology," Rosenberg said.
CNBC's Qian Chen, reporting from Singapore.
FROM A SHOOT OUT IN SPACE....TO THE PEAK OF MOUNT EVEREST....THIS VIRTUAL REALITY HEADSET PLUNGES VIEWERS INTO A 3-D ENVIRONMENT... GIVING THEM A 360 VIEW - EVERY STEP OF THE WAY.
00.00.09 [*SOUND UP BEFORE SOT*]
12.15.27 "The difficulty is you have to try it. But the amazing thing is when you watch people try it. "
[Cover transition with Broll of users wearing headsets, US PKGS 0610HRS FRI]
12.51.41 When something's coming at you, they freak out, because this car is flying at me or this robot is coming towards me and they know it's not real but they can't help but feel 'oh god."
AN EXPERIENCE THAT WILL COME TO CONSUMERS, FOR THE FIRST TIME NEXT YEAR...
VO: FB Occulus rift launch, With CEO
STARTING WITH FACEBOOK'S OCCULUS RIFT, SCHEDULED FOR RELEASE IN THE 1ST
NIVIDIA, WHICH PROVIDES SOFTWARE AND HARDWARE POWERING THE V-R EXPERIENCE SAYS, THE TECHNOLOGY IS FINALLY READY FOR PRIME-TIME.
12.07.12 "On VR, the requirement is so much higher. You've got 2 eyes, you've got higher resolutions, you've got really high refresh rates that isn't compromising. You can't let it drop to 30 frames per second if you're good. You quite literally feel sick if you're moving."
THE V-R HARDWARE MARKET ALONE, IS ESTIMATED TO GROW TO 60 BILLION DOLLARS IN THE NEXT DECADE, ACCORDING TO PIPER JAFFRAY.
...THE CONTENT - WORTH MORE THAN 5 BILLION.
VO: VR OCCULUS 14.01.18 2-shots
WHILE GAMING IS EXPECTED TO GENERATE THE BULK OF SALES NEXT YEAR, BOB PETTE SAYS THE POTENTIAL GOES BEYOND THAT.
13.46.51 "At the end of the day, I firmly believe we'll see more and more people designing their own cars in a virtual showroom, be able to walk through their homes, being able to walk through their office, being able to put a building in a new part of town."
13.47.15 "And we'll actually see virtual surgery, augmented surgery."
THAT "VIRTUAL VISUALIZATION'S" ALREADY USED IN SOME SHOWROOMS.
14.31.37 "In the showroom now, I might want to be able to go inside the car,
NVIDIA'S I-RAY SOFTWARE ALLOWS DRIVERS TO CHANGE UP THE COLOR, THE TEXTURE OF THE LEATHER AND WOOD...
BUYERS CAN TAKE A VIRTUAL TEST DRIVE....BEFORE THE CAR'S EVEN BUILT.
134946 VR Oculus
"The ability to do that in the design process will produce a better car for one, car that I believe will sell more because they'll be able to picture it in different environments and certainly set people up to design their own."
PETTE SAYS PRICING AND CONTENT WILL BE KEY TO TAKING V-R MAINSTREAM.
Use clip or photo from Samsung? GEAR-VR, POWERED BY OCULUS LAUNCHED LAST MONTH... SLASHED ITS
PRICE IN *HALF TO $99.
H-T-C'S VIVE, MICROSOFT'S HOLOLENS AND SONY'S PLAYSTATION V-R, AREN'T SCHEDULED TO BE RELEASED UNTIL LATER NEXT YEAR. //