of its u.k. corporate business up for sale. ross mcewan is said to hold a series of meetings in singapore today to consider a way to scale back the business. i am looking at futures. futures markets pointing a little bit higher. euro stoxx 50 up. dax futures up over 60 points. it is manus cranny. >> $6 billion. that is the number we have got in terms of deals. you mentioned the shire pharmaceuticals deal. roche in switzerland. shire in ireland. a bit of tax issues but it is pharmaceuticals month one, week two. pharma takes the crown. some interesting things in terms of how equity traders are positioning themselves for a

month of risk. whether that has been underwhelmed, bloomberg's exclusive story about how half $1 billion was being offered in terms of quantitative easing. in spain the cost of protecting yourself is rising. you are at the 20 month high. the cost has risen in spain. in italy it has risen 30%. the people are buying protection. i want to speak so much i lost my voice. in spain and italy that is what the key messages. the market is preparing for more bad news. it was the biggest quarterly decline in the periphery of europe in two years. you mentioned rbs. a couple of stocks i want to try to get through in this rundown. rbs down a third of 1%. the market is rising this morning. rbs putting the asian business

up for sale. they are doing this for the international division. they raised money from the sale of citizens. that would take 27 billion pounds off the credit risk. that would take 27 billion off the credit they are responsible for. what might they achieve? shire pharmaceutical up. carolyn will take you through the nuts and bolts of the deal. $46. this is a greedy deal. rbs has been unchanged. we will see whether it trades up. aer lingus. they are combined. it said they made a second offer on december 29. they raised the offer by $.10. that was rebuffed to 45.

let's check in on the markets, on the currency markets. the backdrop is the ruble. you have had a downgrade in terms of the debt. the ruble is falling. the dollar is rising. the most accurate forecasts are on the ruble. because i am such an optimistic chap, the chart of the day misery index in russia is rising. inflation and unemployment, up 39%. if you were miserable in greece and turkey, nevermind. the russians are almost as miserable in terms of sentiment. >> i think manus cranny is suffering from monday blues. that is the market open for you. the footsie just a little bit higher -- ftse just a little bit higher. scheier's bid for -- shire's bid for nps.

caroline, a change of focus or more of the same? >> this is what it has sold to its investor base. this is why investors are driving the stock higher. it is all about adding to its rare disease expertise. the chief executive of shire saying not only is it a good strategic fit, it is growth enhancing. he says, we can afford it. we can afford more than $5 billion. he says the deal hits more of the boxes. 5.2 billion dollars. that is 10% up on the closing price on friday but the premium is big if you are looking at december 16, which is when we first saw a boost in the reporting of this potential merger between the two companies. i think this is where shire wants to focus. it is betting big on two potential drugs. it is rare diseases, so they are hard to pronounce.

the worst-case scenario, this illness could ended seizures that cause death. they have a drug get to be signed off by the u.s. regulator, by the fda. it is due to get the a or nay on january 24 but -- to get the yay or nay on january 24. they want to be there to drive overall introduction of this drug. shire has done its due diligence. it likes the idea of this drug. it also likes another drug. it is a treatment for short bowel syndrome. $300 million is, to can add to revenues. the chief executive at scheier --s hire at shire says this deal has

not gone through. they now have more than $1.6 billion two/plus extra money -- $1.6 billion to splash plus extra money. they want to add to their biotech expertise, and this does just that. >> the market approves of the deal. stocks up. that is the story in the equity market. the big story is in the bond market. it has been a start in bonn treasuries. -- bonn treasuries. -- bond treasuries. what does 2015 have in store? let's bring in the asset allocation strategist at ubs. a lot of people got the call wrong last year. are we going to have a repeat year? >> what we're going to see is the fed hiking in june. i think it is going to be a bad

year for bonds. i think we are going to be right this year. some people who are contrarian say the fed might have to delay because of what is happening with the oil price. we saw fairly weak jobs growth. i think it might at the margin put it out but he is discussing the oil prices. >> it is a spring recoiling, and are we going to go lower before we bounced back? let's look what they're saying about growth and inflation. the fed rate should be much higher. at some point we are going to see the adjustment, and it's not going to be pretty. >> i see low growth, low inflation. is that not going to feed into hunger for dollar-denominated

assets? is that a reason why treasury yields can go lower and stay lower for the rest of the year? >> with the collapse of the oil price people have been de-risking. we said, we don't know what the causes. if it's demand it's very worrying. it looks like a demand shock which is bad for markets. if you look at the simulations this is a development. >> a look at brent dropping over 2%. the big discussion is what it meant for high yield, the amount of lending what we were at $100 a barrel. were we seeing any ramifications in the high-yield space stemming not just from energy but nonenergy assets as well? >> this is something we monitor.

in october we saw a big selloff in high-yield. we saw it again over the last month. the spreads are still very wide. the widest ones are for the illiquid royal names. i think we haven't seen the credit crunch yet, but i think it is likely to happen. what we have seen is mutual funds in the u.s., which hold $1 trillion worth of this high-yield vapor. >> do we see follow-up from credit -- high-yield paper. >> do we see a fallout? can you avoid a spillover effect from credit to equity? >> because the backdrop is strong growth in the u.s., that will provide a bottom for the equity market, but i think it will be a shock. i think if we see large default in the high-yield market, the long-term average for the default rate is 4.4%. currently we are 2.2%. we have forgotten the risk in the market.

i think the reminder will be quite ugly. >> i want to check on brent before we go to the break. oil is down. brent at $48 $.77. what does this mean for russia? after the break, russia gets a credit downgrade. -- brent at 48 dollars $.77 -- at $48.77. ♪

>> welcome back. the big news friday. russia's reddit rating was cut to the lowest grade by fitch -- credit rating was cut to the lowest grade by fitch. everybody had left the office already, but how do investors react to this? >> the way investors react as they hold less russian securities. many fund managers cannot hold these types of securities if they are cut to this level. you take a look at the dollar-denominated index of the russian stock market, and it's down over the last 12 months 43.5%. that makes it the second worst-performing in the world after the composite index, which is down 47%. it must have been a bigger deal if fitch had cut russia's credit

rating to junk. there was an expectation that could happen. they reviewing the credit rating for russia, and they say they are going to get back to the market. >> talk to me about the thinking with this downgrade. was this deal by sanctions or the absolute epic collapse in the price of something they depend on? >> i think the oil is the issue. that is one thing driving the rubles depreciation. it has gone from 52 on christmas day to about 63, sparking people to talk about another run on the ruble, as if anyone has any assets still in rubles in

russia, but the other issue is sanctions. i think well that wasn't an issue over the last few months, it might reemerge as one. what we have is a worsening of the situation when it comes to ukraine. we have seen a pickup in the fighting over the weekend. we were supposed to have peace talks on the 15th. those look like they may not go ahead. merkel, hollande, the russian and french leaders were all going to discuss a path forward for those countries, which could have led to a de-escalation of sanctions. the foreign ministers are meeting in berlin, and the takeaway is no one expects them to accomplish a lot at that meeting. that is a negative for sanctions. i don't think anyone is talking about increasing sanctions, but that negatively affect the ability for the european union to remove some of the existing

ones. >> i'm going to bring in the global asset allocation strategist at ubs. there seems to be an unwritten rule about dollar ruble. you only talk about it when it goes higher. when it weakens in the ruble get stronger, no one talks about it anymore. things seem to be stabilized they stun that. >> -- based on that. >> i think there could be more. if we start to see defaults in russia i think that would rattle russia again. there would be 17% rates. i think that's not going to be a good place. i think a much better place would be india. we saw the ruble selloff. we saw the turkish lira selloff. it made no sense. those are the markets that should get a boost, which took a pounding. >> let's talk about the currency situation. we were looking at this chart.

we saw the fall in brent. i saw a different chart. when we talk about russia getting hit, how much of a buffer is the currency? >> i think russia has further to fall. i don't think we should get into that market. emerging markets generally we are still keeping well away. if i had to, those are the countries i would go for the ones which should get a benefit if we look at gdp growth from falling oil, and russia is not one of them. the countries which really gets a big booster places like the philippines. i think those are the markets we should be looking at. >> when you look at russia and the rate of 17%, is that going to do the damage? >> historically the u.k. did the same thing. remember what happened to the u.k. we had to go to the imf shortly afterwards. i don't think this is going to do for surly stave off disaster. >> up next we will talk about something -- can we use the word

disaster potentially? greece's prime minister pledges to cut taxes. with a key election was than two weeks away is it too little too late? we are in athens after the break .

>> welcome back. less than two weeks away from the greek election, the prime minister's parties still lags in

the polls, but he vows to cut taxes. is it too little, too late? is it too little, too late? >> the indications are it probably is too little, too late. it's not a new policy. he laid out the most detailed during this election campaign. this has been a central plank of his policy for a while now. he laid it out in his speech last year as well. reese have been hearing his argument that -- greeks have been hearing his argument. now is the time for it to come down again so it will give space for the economy to grow. greeks will turn around and say,

you have been in power for a couple years so why haven't you done it already? it is probably too little, too late in terms of the polling which shows a fairly steady league. >> we sit here in london and germany as well talking about a debate over greece exiting the euro zone. are they the types of conversations everyday citizens of greece4 are having -- greece are having? >> they are talking about the fear of the euro exit, because this is something that has been raised a lot within the country and outside the country. this is something the greeks are hearing and people are discussing it. the overwhelming reaction is although some are afraid, some

of the sounds over the last weekend -- for example the prime minister said the idea of a greek euro exit is nonsensical. when you get those kinds of mixed signals, it plays to the argument that it probably wouldn't come to that. in his speech on saturday he said the only person talking about a greek euro exit was the man himself. he probably struck a chord with voters. >> no doubt you will join us quite a bit in the next two weeks. you put out some research, the big risks for the year. greeks on it? >> yes. i think if you look at the fiscal deficit, it's not looking

great. that's one of the worries. there is the worry this will make markets pay attention to deficits once again. >> the ecb question, they meet three days before the election. they may have come up with a political issue by only buying investment-grade assets. it creates another question. what kind of monetary easing is it if they can greece from bond buying? >> they have to implicate the germans. that is the elephant in the room. i think they will have to be animatic about it. i think they can understand why they are doing it. they will have to hold greece's feet to the fire to get the story under control. i think it is unlikely they will repudiate the debt. there is no way they could have an exit because they depend on imports for food. if they have a weakened

currency, they cannot buy and drop us if you have a weakened currency. >> the ecb question, we get an opinion on whether the unlimited bond buying program is illegal. will it be a game changer? most people say no. >> i think it is most likely it will have very little impact. >> we talked about almost every single asset class. thank you for joining us. coming up, we get the outlook on u.s. stocks. is he still feeling bullish? you are looking at features of the largest demonstration in french history. turning out the unity rallies after last week's terror attacks. reported 7 million people took part across france -- 3.7 million people took part across france. rallies also took place across the world here in london, d c

and berlin. among individual tributes were pencils and memory of those who died in the charlie hebdo attack. a quick look at the equity markets for you. the ftse 100 up about a third of 1%. the dax also climbing higher. maybe the big headline this morning is in the commodity market. i am looking at oil lower again. brent $48 a barrel. goldman sachs slashing the forecast for crude. ♪

>> welcome back to on the move. live from bloomberg european headquarters here and london. this is the stoxx 600 up. the footsie is up 27 points. some gains this morning. the dax is up 95 points higher. let's get some stock movers. >> pretty high up there and getting a bit of boosts. the bank of merrill lynch double of grated and it was underperforming. it is now up.

there is a little bit of a warm breeze and we get the chinese car sales in december of 13% in december. it got big exposure in china and it is trading up. it is all about oil and energy. it is up by 2%. keep in ion some of the energy stocks. there is the opposition leader and the labor party leader talking about energy prices and saying that they should be given the power to cut energy and gas prices when oil prices are down and wholesale prices are down which is driving down investors a little bit who are worried about the exposure and the downgrade in prices.

meanwhile, one of the most volatile stocks, when it comes to oil prices and oil trading below. we are seeing the pain and it is down as the worst performer. >> thank you very much will stop those of the stocks to watch. these are the top stories. down today and back a little bit the big move is after the drop in u.s. wages. the most since the records began. the week numbers combined with a slide in oil. the u.s. labor market may be weak and affect the rates right away. after hitting a five point low last week, that comes as goldman sachs cut its benchmark on prices. crude is trading at $41 a barrel. the bank also said the u.s. prices need to trade near 40 a barrel.

a exclusive conversation with bloomberg television. weber said it is a given they will highly -- hike rate's. the slide and oil helps spenders. it cues a move for next week and if one that will have a big impact on the euro. >> you can see the discussion around the program that has helped the euro come down to 118. we will likely see further depreciation towards the end of the year around 110. the next guest has turned cautious on stocks and remains bullish, long-term. the founder and president joins us here for a discussion about equities. great to have you. you set here and in the summer

as well as. we peaked. it is a decent call. let's look at things. where are we going question mark >> we are positive and near a timeframe in 2120. >> talk to me about the oil situation. is there an event like this? >> i remember the banks. the oil reminded me of the banks and i brought it back at 18. i'm not trying to catch a falling knife here. i want to buy them on the way up and be the smartest person in

the room. >> we're talking about the death of the bull market. >> we find that most people think the characteristics are at the edge of the bowl barkett bed -- bull market and anecdotal. >> this is a bull market and recession hits. is that what you're looking for? it >> every time. you have the curve it the recession. >> is that when you start looking at things differently? >> the bear market can go on for three or four years.

it is a canary in the coal mine. >> what does it tell you about how we come out on the other end and how deep it will be? how prolonged are the gains off of the back of that? >> it is vice versa. it is a bull market. absolutely not. it is an experience in the financial crisis and we have had a very strong bull market. it goes back to the russian crisis of long-term capital and we had a very abbreviated the klein. i do not think it is difficult. abbreviate -- we have had an abbreviated decline will stop i

do not think it is difficult all stop >> i want to talk about oil a little more. is the unpredictable something you think might happen? >> it is clearly out of the clear. i cannot subscribe to the fact. there is something else going on. that is why i'm concerned. >> most people hear the term "black swan," and think something tragic has to happen. >> it is a significant unknown with tremendous impact. no one saw it coming. no one thought it would be as deep. we bought oil stocks cheap and they got dirt cheap. it is the lack of today and the rationale for it.

the impact is significant. >> where is the tremendous impact? >> the thing that has surprised people is the benefit. the retailers have done well. the thesis is that people can now drive and into new york city. the stock has done well. >> when i talked to you, the bond market says growth is low and inflation is low. that is not going to hike anytime soon. salomon brothers, he did your thing. does anything instruct you to look at equities in a different way? >> three years ago, i was asked

to speak at the society to address the same issue. i said there is no reason they needed to trade with one another. they are following their own and it is continuing to do that. >> can they tell you different things? the bond market says we are looking at a place with the equity market saying nothing to see here. >> we have had more and can have more. the stock market does not have rules of gravity. we will go on. >> in 2009, you came out and turned bullish. you said it was coming. you keep predicting gains and people say he is going to keep saying this. what do you say back? >> it is the next crash and i

did not predict the financial crisis. they are moving in different directions and a lot of things concern me. it is a mixed crash. i think we certainly raised the red flag. >> anything constructing close? >> if you look at the markets we have a long way to go. we have that phase and we looked at it 3-6 months at a time. >> you have mentioned you were getting close to that. one of the signs they should be looking for?

>> the conventional wisdom is that we just did a piece on it and we are looking for more sentiment and they are not worried about how things are. that's when you get a little fear. we hear the same mantra we have heard. they are not technical. if you go back to last for-five years, you have also to technical indicators about corruptions -- corrections. >> everybody is still worried and you are bullish. the founder and president of associates. here is the picture. the dax is up 100 points this morning. we will have more about europe

after the break.

>> time to bring you corporate news now. rbs focuses on the markets and plans to sell the bulk of the asian unit. the ceo looks to scale back the region a little more. >> we learned that they are raining back japan from that country and we understand the

chief executive is out there and conducting meetings today to sell off most of the corporate business in asia that would affect across 10 countries. crucially, they are continuing on the strategy to bring things home. interestingly, it is fairy small when it comes to assets. only about 5% of assets are currently based in asia. smaller when you compare it to the united states and the united kingdom. the strategy is clear. the units that are not crucial scale back can boost your capsule. those of the shares in financial raising $3 billion and they are over in central and eastern europe with the debt capital markets, which is a clear

strategy that is about reducing exposure abroad and hopefully the taxpayer owned bank will become private when it boosts its capital. >> christmas is gone and we are getting close. will it be like christmas day for the people looking for the bonuses? >> it is coming out and we're starting to hear how they pay out the bonuses. it looks like christmas will not be coming for rbs. they are likely to be reducing the bonuses and paying out to the ford exchange traders. those were fined in excess of $4 billion for rigging the foreign exchange market and it looks like all of the banks that did that scaled back the bonuses. we understand they are shrinking the funds and using the money to

pay the fines that they are due on rate rigging. all the ones exposed and hsbc are scaling back after facing the fines. the bonus pool was reduced by 5%-10%. bank of america is also looking to reduce. deutsche bank and barclays need to pay out. i am not sure it is going to be joyful. they are sticking to the same pool. they're going to be the winners. >> those of the financials. thank you. we're joined by ryan chilcote. the auto show is kicking off this week. the big announcements come from volkswagen. >> the announcement before the

show get started. i am not sure investors care too much about the fact that volkswagen sold with 10 million cars for the first time. they are pleased with the direction of the company and one of the reasons is china. they produce as many challenges as possible and really one overtake toyota and perform in china. that is what they are doing. we will not know if they have overtaken until later in the month when we get the figures from toyota and they close the gap in september. they were behind and we talked about double digit and millions of cars. not too far behind. china is central. you have this country with 23.5 million cars in china. way more than double than the united states. the forecast is for 25 million

in this year. volkswagen capitalized on that and the sales were up. they sold 3.5 million cars, more than one third of the sales globally. they are on the course and investors are pleased. one of the reasons things are going well is because they are getting the rate. >> they had a pretty good year. >> it is not just the car space. it is about making money and a big profit margin. do you know how much volkswagen makes on the brand? 2.3%. a supermarket. the luxury car space is higher and they want to sell as many as they can during the battle with bmw. you see they are pushing out the second-generation. they have to overtake bmw and

the big seller if they want to get the money they need to spend the $20 billion they plan to spend over the next five years to get the be number one in the luxury car space and expand the product line volume-wise. >> ryan chilcote has to buy more. we have a discussion about certainty from axel. we'll have more when we return.

>> welcome back. let's get back to the interview with axel. he expects moves from mario draghi next week. >> he will announce some action on the 22nd. the recent oil price has given a lot of pressure in europe to consumer price inflation falling low. they have indicated they will not postpone the action. it will not just be a government bond purchase program. it will be a mix of issues and sovereign debt. it will be corporate bonds and there might be some conditionality on buying higher grade government bonds. >> what are the consequences for

the devaluation of the euro? >> it has already helped and you can see the discussion around the program helping the euro come down. we will likely see further depreciation of the euro and it will help the european economy. every time a country profits among those who profit most, this policy eliminates gross differential and helps to rebound on growth. >> it highlighted the difficulties that europe had tried to get out of the quagmire in fines itself in and in very much looks through a prison of an environment with the united

kingdom going in one direction and the other going in the opposite. >> that would assume every time that we have been proven wrong. you will have basis datable deke operating -- decoupling and you will see lower interest rates in japan. we have the greater china conference and the monetary easing that will develop the interest rate reduction with a differential that is there. i do not think the affairs will continue because there will be repercussions. >> i will talk to guy johnson, who hosts the posts -- the post -- the pulse.

for you guys, politics is at the forefront. >> it will be in the next weeks and months with the elections coming up. they are focused on what is happening. we will talk about this and focus on things like the borderless security area across the euro zone and europe. we are not just talking about the european union. there are many others looking for ways to do it. if we start to see security, we will see what is likely to start to emerge and terms of policy formulation with the clear desire of leaders to do more on that front. >> looking forward to that. here is a picture of the

markets. the ftse 100 is trading higher. we have brent under $49 a barrel. we will continue the conversation on twitter. good luck for the rest of your day.

>> tightening security. europe looks for cooperation and monitoring of borders. >> qe suggests chairman axel weber suggests the ecb will unveil bond buying. >> plus, predator, not prey. pharmaceuticals to combat rare diseases. good morning, everybody. you are watching "the pulse."