a different story for stocks. the s&p 500 hit another all-time high. that's what we are watching. beginningarkets just to loosen up. >> we are going to be checking on whether we can sustain this christmas rally. a festive feel inequities. could it be a sick -- a sixth day we see gains. we are in the green. record highs, not only on the s&p 500 and the united states but also the dow jones as well. saying, itne quote has become the perfect storm to the upside. u.s.e following up on the

in festivities. -- germany climbing. france climbing as well. gdp as expected, gaining .3%. we get u.k. final re-think for the third quarter, where we see u.k.sing -- we get the rising for the third quarter. many feel the final corridor could come in higher than previous -- quarter could come in higher. we could see gains for the third quarter. durable goods are going to be coming in. home sales as well. plenty of people to be analyzing on the economic front. what has also been gaining is oil. the second day out of three we sixseeing a climb up. dollars is your brent contract. interesting what you see in the

euro. it is basically flat. we have got key data coming out. maybe there is a little nervousness ahead of the politics going on in greece. the greek prime minister seems to be unlikely to get there his candidate in the second round of voting. he is likely to have to wait until the third round. the second round presidential vote happening today. eurozone fears. turmoil rearing its ugly head. standard & poor's taking some rating actions, saying they are going to be putting them on a negative watch. bp, total, shell rising. to is rising their output negative. they are threatening cash flow

for 2016. it looks for now as though we have a bit of a festive flavor on the equity market. >> they are certainly writing to new highs as we approach christmas. let's talk about whether or not he is going to give the greek prime minister what he wants for christmas. the prime minister has a second chance to rally support for his choice of president and in the process avoided general election that could see the antiauthority party take power. this is triggering volatility in the markets. investors are weighing the risks with the big move when the presidential election was first announced. we have been watching this story ever since. it's good to elliott god can. -- elliott. we have been tracking it. the third act is coming. are you ready for the third act? is everybody ready for the third act? >> that is what everybody is

expecting. round two might be slightly different compared with round one, where the government only got 160 out of the 200 votes it needed to get its man into the presidential palace. its buys up a little bit for a couple reasons. -- it's spiced up a little bit for a couple of reasons. it tried to bribe lawmakers. there are allegations the government has denied, and a couple days ago the prime minister went on national television and surprised many when he offered to incorporate more politicians and the greek parliament in his governing aslition if they vote president and also to offer the prospect of bringing general election forward for 2016 until the end of 2015. that may persuade one or two additional lawmakers to go to the side of the government to when it ishe names

called. i don't think anybody expects the government to win with its candidates. all eyes would focus on december 29, the third and final round, where he only needs 180 lawmakers. it's not impossible. still no guarantee he will get his man through. >> let's talk about the history surrounding this. -- could ituntry complicate what the ecb is trying to do? what are analysts saying? >> it can provide a couple of headache for the european central bank. february 28 is the kind of end of the current bailout arrangement, by which time greece needs to have sorted out

a credit agreement. if there are general elections, that could delay it. they have vowed to renegotiate the debt owed to the central bank. if that gets into power, that could complicate matters further. there is speculation the european central bank may finally opt for quantitative easing, renting money to buy government debts, government bonds -- printing money to buy government debts. if there is any question over whether greece is going to repay its debts to the european does, itank, if it would be the first to the fault the central bank -- default the central bank. if it includes greece that leads to further potential dangers down the line. >> thank you for the greek story we will be watching carefully. strategistbal asset

at ubs who joins us to talk about what he sees in the world right now. worried about this? >> no, i think this is going to be a contained problem. even if we see the worst possible outcome, if we will fix the debt it the problem. i don't think it will be a problem if they default. it is not stable. they have known that a long time. i think the real dangers lie elsewhere. >> stay with greek for a moment. default happens within the euro zone. that's not something that happens externally to the eurozone. >> yes, although i did see a gallup poll which shows there is a lot of support in greece for losing the euro, which is surprising, given the consequences. they have benefited massively from being part of the euro.

i think leaving would be disastrous for them. i think the popular support is in for the euro. the public sees it as a source of pain for their economy, whereas the opposite is true. >> you are a little concerned about this. in terms ofove us the fear gauge for you? >> i think the repercussions of the oil price being so low are significant. i think that is going to have a big impact on the high-yield market. we will start to see default. i think that could have an important impact on contagion if we see mutual fund redemptions, acause they earned about trillion dollars. we could see affect. people have redemptions, it would lead to the equity market. theould see contagion from u.s. high-yield market. that is one of our big concerns. china there is always a concern

if the property market doesn't start to slow down. we should see deflationary impact. >> let's focus on that for a moment. is a low oil price a positive for the global economy, or is it actually a demand element something of a negative? that is the debate at the moment, and they have to wait for the data. >> i think there is an economic argument and the strategist argument. the economic argument is very clear. price of oil, it is a big beneficiary for economic market. generally except for places like india and the philippines. thoserket has punished countries, which should benefit. turkey we saw the turkish lira selloff white significantly. -- quite significantly. what we're seeing is not based

on the fundamental effect of the oil price fall. we are seeing people be risking. ing.erisk they want to take risk off the table until we have a clearer view. >> when does that happen? but i think the next quarter, but i think we are going to see downgrades in the energy sector. it is going to be a big shock for the market, because ridley the default rate is 2.2%. the average of four point 4%. -- because the default rate is 2.2%. average is 4.4%. >> outside of the energy sector, it is a net positive for equities? >> it certainly benefits certain sectors, some of which you wouldn't expect, so things like pharmaceuticals, beverages in europe. those are going to be beneficiaries. the effects are going to be subtle, and it is going to be

nuanced across regions. it is impossible to see what the repercussions are until this works across markets. the volatility we see, we see a is spike in vix, but it starting to come off now. that is the son of markets digesting this information. what is going to happen -- that is the sound of markets digesting this information. they with us. plenty more to discuss. i want to talk about this story from a russian stance. let's take a look at the stock on the move this morning. the company forecasting a profit drop. investors not happy with that. there is a lot of concern on the credit side, but the equity is being hammered this morning around a third. we will continue to discuss oil equity cutting its outlook for opec.

it says, you know what? of oil gets down as low as $20 a barrel, we can cope with that -- if oil gets down as low as $20 a barrel, we can cope with that. more when we get back. ♪

>> welcome back. european oil giants are the latest of the u.s. sales surge. a flood of supply threaten cash flows into 2016.

let's get more on this story. ryan joins us now. how big is this downgrade? >> is a big deal for european exporters. we should add conoco phillips, which focuses on exploration, had its output cut as well. this is mainly a european problem. oilreason is the european explorers as opposed to u.s. explorers have much higher dividend yields. s&p pointing they are a lot more -- have their hands tied when it comes to trying to deal with producing oil when the price is much lower. hugeis why you have this focus on cutting back capital expenditure. we had this not too long ago somebp where they had scope to cut overhead and reduce

their cost. a lot of the situation at this point is out of their hands. >> talk to us about what has been coming out of this meeting in abu dhabi as well. we had further comments coming from the saudi's, and they are , and they are not done yet. they are going to keep pumping. >> if anyone doubted the oil minister of saudi arabia was joking or didn't have the will to see this through, he is telling us that is not the case. saying that opec and saudi arabia will continue to maintain production, even if oil falls to $20 a barrel. he pointed out saudi arabia can produce oil at four dollars to five dollars a barrel. almost all of the opec countries need a higher oil price to support their budgets, but that doesn't mean they can use their reserves in the short-term to make up for the revenue shortfall, because if you believe the argument this is

about shaking out those high-cost producers in the united states, this may take some time. he is sticking to his guns, saying we are going to continue to produce at the levels we are producing. he has said repeatedly, not just at this conference this past weekend but the weekend before that that he expects the oil price to recover in any case in the second half of the year because they see demand coming back online. that, everything we have seen over the last few days demand is weakening. >> thank you very much indeed. our guest is with us from ubs. oil and the fed. let's talk about that a little bit. run through what the saudis are saying. they would continue to pump. there is a kind of correlation between the lower the oil goes in the faster the fed titans. -- tightens.

>> it is going to be more likely to high. there is a massive disparity between where the raid should be and where it is. that is not part of the mandate. they are very concerned about market volatility. it may be delayed too long. that is where we see the risk when the fed hikes. that is good to be the worry this time around. we start to see wage pressure on the upside. they are going to have to hike much more aggressively. >> of oil gets to $20 a barrel and that has a direct feed -- if oil gets to $20 a barrel and that has a direct feed to the u.s., it is going to make that problem even worse. price that's true. it turns out -- >> that's true. it turns out it's the top 40% of of earningstop 40%

as well for the u.s., which benefits most from the falling oil price, so in fact, these are the people who save. they invest that money and the stock market. this would probably be beneficial for u.s. shares at the margin, but we see this overall as a benefit for the than formuch less so europe. it only gained 10 basis points, whereas in europe it is 20. >> we tax oil much more aggressively over here. you would think it would be much lower. >> i think this is the effect of the shale boom in the u.s., and it effectively affects the services that feed into that. >> he would favor european equities over u.s. equities. >> on oil definitely. it's roughly the same in terms of composition of energy. 10% in the u.s.. if you look at the dax index it has the exposure.

in the investment-grade credit market, that has very little exposure. will probably benefit more from lower. >> the flip side to that story is russia. do have exposure into russia, and russia has exposure into the oil story. is this just one degree removed, .nd you can see a strong link how big a drag is the russian story? ?ow big an opposing force >> it is about 2% of the european market. the thing to bear in mind is the ruble has fallen by a factor of two. that is a 1% earnings drive. that is significant. for some companies it is going to affect them more than others. it is going to be a stock specific basis. we have companies directly exposed to my about 40 names

directly exposed to the russian .arket >> a queue for joining us. we are going to take a break, but north korea -- thank you for joining us. we are going to take a break, but north korea left in the dark. the question is whether this is the latest twist in the fog or just a fluke. stick around. we will have that story when we come back. -- this is the latest twist in the saga or just a fluke. ♪ ♪

>> welcome back. days after the u.s. government accused the country of hacking into sony's files, the country has experienced an internet outage. is this what the u.s. has been promising? proportional retaliation, or is this somebody pressing the wrong button? caroline hyde is here with more. how reliable is the north korean internet? >> pretty patchy at best. somecould be happening is if itf cyber attack, but is the united states government reaping its revenge, it's pretty school board. that is my technical expertise. talking ton technical experts, and it seems there was an outage lasting about 10 hours.

this has never happened before. this is not normal. the networks have been saying what they think this comes down to is relatively simple distributed denial of service attacks. a sickly somebody could have -- beenlly be flooding flooding the network, and it brings down the infrastructure of internet provisions. it's unlikely to have been , becauseut by the u.s. they feel any hacker could have done this. it could have cost $200 to do this kind of damage. you have got to remember what korea has very little internet. it has four official networks provided by china. the u.s. has 152,000 networks. they just have four. if you are going to try to take any cyberattacks i north korea offline in the future, many believe it is off-site -- by north korea offline in the

future, many believe it is off-site. isn't the u.s.. they will investigate what happens next. does china really investigate? >> they say they will. i think this could be quite unprecedented, these superpowers working together on this. china says they will investigate whether north korea is behind this attack. the reason they have such a crucial point of view is they supply all the networks to north korea. they should be able to a certain -- ascertain whether it was by them. what is so interesting is this is a turnabout in terms of the actual relationship between the u.s. and china. it was only and may the u.s. accused five military -- only in may the u.s. accused five military personnel of taking significant data. they're having to ask for help.

>> maybe they appreciate a good movie. what some of the currencies are doing. the dollar index down a little bit. the ruble is gathering strength as well. we will have a full round up when we come back.

>> welcome back to on the move. we are in london. it is the night before the night before christmas. there are few people and volumes are lighter than then good normally be. marketssee the main trading a little higher. yes, another record high. let's look at the stocks we are watching. i will show you what is happening here. caroline, what you have? >> near the top of the leaderboard is the holdings.

makedo to ship designs and the chips that go into your apple iphone or your samsung. the designs are going to be in demand, it would seem. analysts say it is one of the favorite picks. technology stocks did well google, facebook, and amazon are at the top of the leaderboards, helping to drive the dow jones to another record high. it is performing well today. a different story. the oil company had a rocky ride and we see the route on the oil markets. the credit rating company comes out and says that they are putting it on credit watch negative. negative is ach little more imminent.

bp seems to be feeling the iron forhat and the cash flow 2016. meanwhile, check it out. seen the move since december 2011. today, the have another profit warning because of the demand they expect. they selected tesco from the and facerocers here reduced orders previously expected. they are a little bit worried about the warehousing difficulties. if you are cheer thorton. >> thank you. >> let me run you through. >> it seems like a distant

memory. time the s&p0th 500 has. for the the outlook annual decline since 2008. the prime minister will make a second attempt for the choice of presidents. and if they fail again, there will be a third round. we saw uncertainty ripping and stocks drop the most

since 1987. with the u.k..es what does it mean for the currency markets? let's ask the senior economist and strategist. good morning. risk is there for the euro-dollar? >> not that much. is focused on what is happening and that is where it comes in. dynamic within was announced. we can see the dissension between the northern countries and central banks.

>> could the greek story upset that? his basis makes up the entity. could it muddy the waters? it is an anti-euro party elected next year and that is some of the risk. >> one final thought on greece. promised in the past. d think it holds true? long as greece does not to report the contract that they have, they will feel compelled

to do it they can. obviously, the greek government needs to do a step forward. >> we will find out fairly soon what that looks like and develops into next year on the 29th. story beingut the asymmetric. understand theo theof the land, what is downside risk? greece and the ine of the european union france. dynamices a hard

bringing everyone together to solve the european situation. there is a lot the government needs to do in terms of labor and economic reforms to help the ecb achieve their mandate. let's talk about the flip side of that. how big is the policy spread going to be next year? the further the oil falls, the more it will tighten. it will have a positive effect on europe. and not inum-term the short-term. what does the policy spread look like? >> it looks bigger and eger. you have the ecb that has to take measures. you have the fed gearing up with monetary policy and growth.

place insion is in some areas. it is a positive and we need to be careful that we are not in linear territory. it is probably not profitable. how much will it be for investment next year and 2016 is an open question. . would be more cautious the further it goes down, the more positive it is. itdefault rates rise and will have negative feedback. longer in linear territory. does that cap the downside for the euro? >> it probably cap's a bit the downside. it is the euro around 115 or

112. what will the swings be? will that be the lowest extent? concentrated in haveand financial markets the repricing of the curve in the u.s. and it will be positive for the u.s. dollar. you are seeing european data and investors selling fixed income products. does the flow reverse as we get out to the lower levels? does that foot the story around? >> at the point where you have , it would betion not that compelling for foreign

investors. >> the ecb would be stepping in. have weak outlooks. >> you think the yields continue to impress? see political risk being priced into the yields. nevertheless, is there a danger that, if u.s. yields lot -- rise, you can look at the political story and differentiate more? because of the base of the spread continues to go lower, they level. >> do you think they continue to go lower? we should continue to see deflationary pressure and the shock will be negative on inflation.

thinking that we could see a negative number. that will have an important impact on the rates. treasuries.is was rise. yields >> it is always the same thing. investors preempt what a bank will do. holding.de to sell the you could see them going slightly lower. >> nice to see you. have a nice christmas. greek political drama is entering the second act. it will once again take center stage. his mario draghi ready to do what ever it takes? we will talk about that when we come back.

>> welcome back to on the move. couple ofey vote is a hours away. it is the second round of the presidential elections. pushing his candidates through. what happens next? what does it look like? ceo has served as a board

the economic adviser for the greek prime minister. good morning to you. he is still short, the prime minister, in terms of the votes that he needs. of the lay ofense the land. it is unlikely that he gets more than 170 votes. it is needed in the second round -- it appearss unlikely. if that happens, then the moment is resolved and the national elections are called. it is for january and the beginning of february. >> at how did he make the mistake?

did he think he was going to get the votes that he needed? why would he put governments on the line in such a tight scenario? knew special elections would be in february. ofavoids the protected fear uncertainty and clears up the everyonee so that understands. polls and itinion looks like we will be heading to a series with quick decisions. programnsion of the will end in february. after that, we have no backstop.

it is not associated with the current review. >> a lot of people i'm talking represent the elite review. i am wondering about that. maintained the political whytion and i am wondering everybody thinks she will make some kind of you turn. >> it is a good scenario. under whichenario the more moderate party or both of them. let me it on the junior partner in the coalition, it depends on how long it takes.

social unrestee with capital flight. lasts more than a few exit is not off of the table. >> a default and euro exit. can you handicap that for me? how high is the risk of those of events happening? >> the probability is low. and ending the government maintains access to funding for the international monetary funds and stability. eventually, it regains market

access. greek government bonds and eligible andot be will fail to have adequate funding. >> he has always made it clear that he feels he has better cards them what people give him credit for. the view will be that that is a lower risk story. i wonder if that is always the case. do you think there may be a few in the ecb and else where that we can be a bit more aggressive this time around?

do you think there is a possibility he is misreading the situation? they are in good shape and the ecb is ready to embark on she we. is carrying a little risk of contagion. over 10 years and below 3%. is an idiosyncratic situation that is the untimely prospectent and by the of the government. little more a

expendable this time around. we will wait and see. thank you very much for your time. we had into break. let me show you the equity markets. and you can see what that is down to. andother markets are higher the ftse is up by a half of a percent. return, we'll take a short break and see you on the other side of it.

>> welcome back. you are watching on the move. rising closer. let's find out. i guess the assumption has to be here that it is bouncing back to a more reasonable level and it is aggressively lower. since tuesday, the ruble back 33%. come weeks said that, in the leading up to that, it lost half of its value and we are back where we were two weeks ago. you have to ask yourself why is that. some of that is a crisis of confidence in the ruble.

the exporters have been taking the dollar reserves and bringing them back to where they were on october 1. exporters are spending $1 billion worth of reserves every day and that is about a fifth of the turnover in the ruble market. about 40 billion or 50 billion. he does not want the bank to spend its reserves. the last week heard the finance ministry is going to kick in $7 billion. it is like looking for money in the back of the sofa. >> a big pocket of money. the banking story is beginning to look more serious than first thought.

are we beginning to teeter on the edge? >> there is concern about that and that is why the parliament fast tracked a bill to recapitalize the banks. that used to be a lot more money. the fear of the financial crisis. we had the bank of russia step in and support a midsized bank. dollare offering accounts and borrowing on international markets. and have been sanctioned the rates are higher. are we on the brink of a financial crisis? we do not know. we are seeing that russia is concerned about that and is taking action to preclude that from happening. >> ryan chilcote will follow the

story throughout the morning. stay with us. the pulses up next. we are one hour away from the crucial vote. you can follow me on twitter. we will take a break. ♪

>> high noon in greece. we're less than an hour away from a vote in athens. in the balance, a general election. and even the future of this country in the eurozone. oil spillover. standard and poor's downgrades its outlook on the crashing crude price and the ruble rebound. currency lures its way back. we're going to tell you why and what's going on in a couple minutes' time.