guy: welcome to "on the move." we are counting you don't the european equity open. i am guy johnson. here is your morning brief. oil bounces. wti starts to rise after having one touch under $30 a barrel overnight. surplus come exports jump, in a burst for the yuan. shanghai has now sold off. bearish bets. jeffrey gundlach paints a pessimistic outlook for the year. he warns of what could be a "really ugly" first quarter.

ok. we need to get you up to speed. it's been a busy morning, and we've got a lot of moving pieces we need to make sure you are aware of. let's get to caroline hyde. caroline: good morning. china's trade surplus widened, and exports recovered last month. the world's second largest economy and trade balance increased to $60 billion, taking the full your tally to $594.5 billion. analysts report a weakening yuan has rocked markets this year. persistent oversupply of crude means prices still haven't staved off the threat of further decline. the bloomberg commodity index, a gauge of return for raw materials, that has tumbled to

its lowest level since at least 1991. barack obama is to his final state of the union address to call for a more noble politics come expressing regret at america's deepening division. he hit back at claims that the u.s. economy is in decline. president obama: the united states of america right now has the strongest, most durable economy in the world. anyone claiming that america's economy is in decline is peddling fiction. caroline: just hours before that address, reports that 10 u.s. sailors have been detained by iran threatened to overshadow the event. senior officials moved quickly to quell concerns over the incident, saying they had assurances from the iranian government that the sailors were being treated well and would be released soon. guy: half an hour until the european equity market open. european fair value is pointing to a positive pitcher.

euro stocks are up by nearly 1%. what i want to talk to you about is the idea that we are seeing a little bit of a sellout in asia. shanghai has certainly turned around. the export data earlier on seemed to propel markets higher. we saw some fairly big moves in the aussie dollar, up right 3/10 of 1%. that is where oil is trading. remember, we had a wtisub-$30 o. you can see shanghai turned around into the close, nearly down by 2.5% to the export data is interesting -- by 2.5%. we are going to get into the export data. we will talk about that in just a moment. oil prices moved below $30 overnight. it's the first time in 12 years we've seen that. they have rebounded a little

bit. where is the next bottom? $20 a barrel? the nigerian oil minister has said every opec member is looking at the best way to deal with the situation. >> going forth, everybody is going to look at how each member survives. the price is decrying rapidly. everybody is looking at, what kind of prices do i need to run to survive? this is the time to talk. guy: let's bring in bloomberg's energy and commodities managing editor will kennedy, and robin akita. that touch below $30, significant or not significant? the market had a look at it. are we testing it? will: if you ask people six months ago, are we going to see this with crude, they would say, you are silly. here we are, people are

panicking, and there is a race for the lowest. : single digits seem to be in the cards. will: no one is sure where this bottoms out. i don't think anyone thinks we have seen the end of this. guy: is the market panicking? robin: i don't think so. u.s. high yields has blown out the energy spread. i think it's pretty much priced in. >> single digit oil is priced in? robin: where we are now is priced in. if we go down, that could cause high yields to blowout even further. we could see the contagion spread to other sectors. i think that is a major thing to worry about. guy: what is suppressing the oil price right now? will: what is supporting the price is that the price cap status love forever. .he market will do its work we saw bp lay off 4000 people.

when we get to the majors announcing that end of year results in a couple of weeks time, we're likely to see even greater cuts in. the market will come back into balance. the real problem now is the events of the last year led to stockpiles at record highs. on thet's stay stockpiles. how much more storage is there? this seems to be a critical factor right now. will: it's a good question. we haven't gone to the stage of 2008 where people are storing oil to make money on the trade, -- it's been a warm winter, which has brought surplus supply onto the market. we could get to a stage where it gets harder to store it, and that is when you could see will prices tumble. guy: draw the lines for me. what is driving what? i am trying to understand the reaction function of market. is it what is happening with oil?

is it what is happening with the chinese economy? the market blew past the payroll data in 15 minutes, ignored it. ramin: whatg on? was interesting is what happened when the fed hiked. that hardly left a ripple in markets. we also saw conflict between the saudis and iran. where we find ourselves in is a different world in which the indicators that used to tell us what would happen to markets are no longer reliable. i bring it back to fundamentals. where are valuations now, and where are the opportunities? when you get these volatility events, that is when investors can make money. you get some locks, which are justified. the price-earnings on european stocks at the moment, 12.9. the average is about 14 times earnings. timess., however, is 16 forward earnings. even after the selloff come it doesn't look cheap for u.s. equities.

this creates opportunities. places were inflation is low, we see a positive credit impulse. that is where fundamental investors should be filling their boots. guy: we will talk time in, which is a difficult subject, in a couple minutes time. ramin is going to stay with us. will kennedy joining us from our commodities team. up next, stocks struggle before a buying opportunity. that's the view of jeffrey gundlach. we will get the details when we come back. ♪

guy: 19 minutes until the equity market open. this is "on the move." a bright and chilly morning. it enables -- we will start burning more oil to keep our house is warmer. let's get to caroline hyde. caroline: volkswagen has dealt a blow as it comes to overcome the omissions cheating scandal, that

as the california air resources board rejected its engine fix. the news will put more pressure on the chief executive who is scheduled to meet u.s. regular tours to discuss ways out of the crisis later today. sainsbury's reported third-quarter sales that slightly beat estimates. fell 0.4%.sales telefonica has agreed to pay 2.4 billion euros for spanish football rights. the three-season deal includes the spanish first division and the european champions. hackers who say they are affiliated with a group anonymous have claimed responsibility for taking down nissan's global website. it's the latest major japanese company to be hit in protests over whale hunting. a nissan spokesman stressed the company has no stance or connection with whale hunting.

guy: caroline just mentioning sainsbury. let me give you the latest from mike. i want to address the issue of home retail acquisition. we will get more as we work our way through the call. it's time for our morning must-read. , a bear, gavech his view on the markets in 2016. >> we will see a continuation of the things that began in the aftermath of the fed's rate hike. we will see market struggle and then create a potentially good buying opportunity later in the year. guy: let's bring back in our global market strategist at ubs. an ugly first-quarter? ramin: it's been volatile. the move and oil has trickled into volatility in other markets. for fundamental investors, this can be an opportunity. guy: now or later? thatey makes the point

it's going to be an ugly first half, but it's a question of when the opportunities are visible and best taken. ramin: i agree. if we see oil took another leg down, that could mean we see another selloff in u.s. high yield which could lead to redemptions in these mutual funds, which could lead to a funding problem. if you split the u.s. according to large caps and small caps, for small caps, it's poor ratings. what we are expecting is that small caps will underperform in 2016. by large caps. guy: to come back to what is happening in high-yield stress, there seems to be an anomaly in that space. a lot of people have been buying distressed. they need the equity markets to carry on rallying, but we caught classes inese asset the headlines.

are we going to see this unraveling. ramin: the contagion route i've looked at in detail is by these mutual funds, and particularly those that hold so much in assets. $18 trillion in assets. the ones that worry me are the hybrid funds. if there is a shutdown in the high-yield market, they will be forced to sell liquid assets, and the liquid stuff is the equity. i've looked at the equities, and it is things like microsoft, phillip morris. it's not junk companies. its high-quality companies, which they will be forced to dump. what we're looking at is a freeze up in the high-yield market, which is on the thin trading. guy: they spillover into equities. can i spend a couple minutes talking about china? the data we will come back to a little bit later. the beating that the chinese authorities have given the market is spectacular. put that in context for me. ramin: if you look at the

devaluation of the onshore renminbi versus the dollar, if you look at it relative to the trade-weighted basket, it's much negligible.ost they are not using the basket. we have shown that negatively correlated. what they are seeming to do is to use that as a reference. this could be used as an excuse for devaluing the renminbi further. 6.8%.recast is that gives it a 5% devaluation. we think it's going to be a rough ride. it will be a two-way market. all of these people were betting on the one-way movement and will be shaken. more volatility. of course, that spills over into competitors throughout asia. particularly, i'm thinking about the korean won.

guy: it's interesting that they left out of their major investors from that basket. you understand the reaction function? ramin: from the chinese authorities, no, which is why i would be cautious about investing in the onshore equity market. that is driven by leverage and issuance. leverage is determined by the regulatory body, and i can't forecast what they are going to do. i would be cautious about investing in domestic chinese stocks. i think there are much better value opportunities in dm. everybody likes europe would we like japan. that is where we look. we like those sectors which are domestic, maybe even domestic use in the u.s. -- sectors in the u.s. think the opportunities are very clear. guy:guy: it will be interesting

to see when they get taken. plenty more still to come from you, ramin. we are going to talk about what is happening in the u.s., the data, what comes next. how data-dependent are we? we are only a few minutes away from the european open. supermarkets are one area of interest. big movers yesterday, sainsbury out with numbers, mike gupta talking about his m&a strategy. we will have all of that in just a moment. london, waking up. a lovely morning. a little frosty out there. ♪

guy: 7:51 in london. let's get you up to speed. caroline hyde has details. caroline: everyone is talking about the rebound we are seeing an oil coming off that sub-$30 low. i want to focus in on an oil stock that could jump about 4%. tullow gave us its results.

it paints an optimistic picture if you are hedged. they had been hedged to the tune of 52%. they hedged an average of $75 a barrel, more than double where we are seeing trading. analysts say they are liking the revenue. admittedly, it was down 26%, but the fact they have positive cash flow, that hedge seems to be helping things. this is a company cutting their capital expenditures. big contract charges to the tune of $900 million, but production keeps on going. here is one thing to be worried about. production is going to be cut 21%. what does that mean for an area in an oversupply gekko it looks like those hedges are paying off. vw, meeting with regulators in the united states. the chief executive meets in washington, and it seems they have been dealt a bit of a blow

with the california air resources board rejecting that plan. vw,getting mixed calls for some saying they will buy back that doesmany say deal a blow. watch to see how that opens. sainsbury, it was a beat. third quarter like for like sales, excluding that does deal a blow. fuel, coming in line. sales up 0.8%. the second half is going to get better on a like for like sales basis than the first half. helpedry's looks to be from the fact we saw w m morrison doing so well. retail wasn't outperforming yesterday. we have already heard from the cfo on this very channel. hays, positive results. overall, it looks like we could get higher today.

net fees 7%. excellent growth in continental europe and the rest of the world, up 12%. is still with us. bank of england tomorrow. you are not a fan of u.k. data at the moment, but we are starting to see some softening. the wage growth should be much, much stronger. ramin: this is something we see across developed markets. we see it in the u.s. we see it in the u.k. -- we shouldto see see higher inflation given where we are wh the jobs market. the is, where are we going to go with inflation? how are ways that going to affect policy -- how is that going to affect policy? if you combine that with an uptick in the credit market and the lending by banks, that could be positive.

it's not necessarily about disinflation. it could be positive for risk assets. we are looking for that magic combination of low inflation and a positive credit cycle. where do we see that? japan and europe. guy: the markets have priced in the u.k. hike at the beginning of 2017. it's getting shunted further and further away. ramin: if they decide to hike soon, the risk is that sterling is good to strengthen. guy: they are happy with recent market action, the sterling weakening. ramin: it's given them a little bit of leeway so that when they do hike, they will have room to maneuver, but i think the markets pricing in the beginning of 2017 for the first hike, we expect it to be around may for the first type, given the strength -- first hike, given the strength of the data. that's going to affect our trade. , the open is just a

few minutes away. european equities, broadly higher. euro stoxx up by 1.3%. the open, up next. ♪

guy: good morning and welcome. you are watching "on the move." i am guy johnson. we are moments away from the start of european trading. wti, but theyon had a sub 30 touch yesterday. surplus hase boosted the u.n. and asian stocks. he warns of what could be a really ugly first-quarter.

we are 15 seconds away from the market open. let's get to caroline hyde. just too much paint already. --too much pain already. today we are looking for opportunities to buy. we have yet to get into the details, but overall there seems to be a rebound in the asian trade. we are still down on the dollar basis. the ftse 100 is up. the cac 40 is up by 1.1%. we closed higher yesterday. u.s. stock market gave a shot of caffeine to the markets in asia and now in europe. trade is starting to pick up with the risk appetite building in the united states.

the version goes down and therefore, bithe gold is going down. the yen is lower and the dollar is higher. market currencies are starting to get a little pickup. the south african rand is building back up. we are starting to see the rand gathering strength. meanwhile, oil is trading higher, up 4/10 of 1%. this is not brent. it hit $30 for the first time in 12 years. may bes about that glut rising today as we get supply numbers coming out of america later today. yesterday we heard reports that ap regarding the api. meanwhile, we are waiting for the stocks to open.

earnings a looking particularly strong because of hedges paying off. $75 per barrel is the price. volkswagen is up 4/10 of 1%. boardrnia air resources is rejecting the plan, but does that mean we might actually see an overall buyback of cars? some analysts think this will be a positive thing. vw will go to meet the regulators in washington today. ury is downj sainsb 1.7%.

but down inline, terms of sales over christmas. back to you. guy: just ringing you a bit of breaking news. in the last couple minutes, fadavi says the u.s. sailors incident is only way to being solved. we will bring you more, but that is the latest we have on that story. let that you the latest on hong kong. reporter: the overall sense in the equities dropped. what we see this midweek is a reversal from what was the normal in the last session. the asian shares are just under

2%. the yen backflip, which is good for risk appetite. lar has higher yield as emerging market currencies are strengthening. here is the latest set of trade numbers out of china. beijing released a report from december. there has been a pickup in trade activity on the chinese exports. another factor regarding the currency is the dollar-yuan fixing. to spreadthe yuan between the offshore and onshore. spikedn interbank rates ridiculous levels on tuesday. i have come back to earth to below 10% right now. the pboc and its intervention

did manage to impose some discipline, which allowed investors to focus on these evaluations. we had a 9% drop into this morning. let's hope this continues throughout the course of this week. guy: i just want to bring you breaking news out of the corporate sector. a possible bid for the control of the samsung agency. i don't have details on value, b considering the bid. the data has come out of china. exports are unexpectedly recovering last month. billion.reased by $60 that offers support for the weakening yuan that has rocked several markets this year. for more, let's join malcom

scott from hong kong. malcom, can i ask you first of all about the quality of the data here? i was talking to one of my colleagues earlier who highlighted the fact that there are a few anomalies in the hong kong numbers. malcom: that is right. that is often where these anomalies will show up. it is taking some of the optimism out of this trade recovery that we have seen. the data we saw for december will tell us that shipments to the city of hong kong in dollar value was worth more to the entire united states in the month. an increase of about 11% from the euro. currency tensions spur some

invoicing, but we don't have any confirmation that this is what happened this time. we have economists saying these numbers don't seem to add up. we will get the import numbers from hong kong. matching those against one other can often reveal some discrepancies. guy: i will look forward to seeing those numbers. talk to me regarding the currency story more broadly and the effects of whether or not we see the weaker currency starting to generate positive news for the chinese economy. malcom: we're talking abo the weakness we saw, not in this most recent episode. the devaluation move we saw in august, you know, some economists are saying that should take four to six months to come through. we are in the period where we will see the early signs of this come through.

the currency move looks a little bit muted. saying itomists are is too early to see meaningful impact. customs officials and china are discounting any real currency moves. guy: when we look ahead to the gdp number, what are people ?alking about ful malcom: 6.9% is the view for the full year. the government was targeting about 7%. there are always question marks regarding the credibility of that data, but there is no way to resolve this. it looks like the gdp will come in at the government's targeted level of 7%. for this year, we don't know what the government target is.

a have given signals that it will be at 6.5%. that is the guest. whether the economy continues to trickle lower tomorrow whether it dives down we will have to wait to see. guy: malcom scott, joining us with that data. guest is still with us. the visibility surrounding chinese data is will documented. had we judge what really is going on? it seems to become more and more of a parlor game. is it the hard data? where do we get the truth? we look at the iron-ore price. ourave actually revised forecast down for this year and next year.

going to bet was 6.2% for this year and 5.8% for the following year. that is largely because of what is happening with the property market in china. his seen this overhang of property. there is still a massive property overhang. for one city, it is one year of sales infantry. for the property market, fallout is still spilling into the sectors that feed into it. that is building companies, the people who make concrete. those are the people suffering. however,ce economy looks very good. almost like the u.s. where manufacturing looks very weak. guy: one cannot replace the other. we know that. as the industrial side of the economy suffers, we could see credit issues. that will spill back into the

consumer side of the economy, the service sector. walk us through how those relate? ramin: we don't think the service economy will be able to offset the weakness in the property sector. propertyof wealth, the sector is much more important to the average chinese person than the equity market. moreis what we think it is important to focus on the property market and see what happens to chinese house prices and nonperforming loans. the loans will continue to increase in china. there are many positives. he five-year plan actually sets out good ways of turning the economy around. positiveve a very impact if implemented. making the funding of local government more transparent. having their own municipal bond market, those are very positive things. ultimately, you have ratings on these bonds. everything is on the table.

lessonsy have to learn about how you run this stuff. ramin: they are running everything in fast-forward. china, they are doing this in the space of five years. guy: stay with us, plenty more to come. up next, the last state of the union from president obama was delivered. we will talk about the u.s. president's economic record. that is next. [applause] ♪

guy: 8:15 in london. let's get you up to speed. reporter: exports recovered last month. the world's second-largest economy increased to $594.5 billion after an increase of $60 million. oil has bounced back after tumbling below $30 a barrel for the first time in 12 years. will this oversupply of crude means prices will not stave off further decline? returns on raw materials have tumbled to the lowest levels since 1991 at least. bears, moreiggest

bad news ahead. the cofounder of double line capital warns of a potential really ugly situation would be more likely if the fed keeps with his path of hiking interest rates. >> high yields are very unlikely to rally in the reduction cycle. we could be looking at a very ugly situation during the first quarter of 2016. that is particularly likely to happen if the fed keeps banging this drum of raising interest rates. that is your bloomberg first world news. delivereddent obama his last state of the union address and highlighted his economic achievements. president obama: the united states of america has the strongest economy in the world. anybody claiming the economy is

declining is peddling fiction. guy: i just love watching paul ryan's face in the corner as he talks about the u.s. economy. our international correspondent on's nichols was watching. -- hans nichols was watching. describe how different this was compared to previous speeches. the upbeat tone that came with it as well. hans: the upbeat tone is somewhat to be expected. most of the unions are glass half full speeches. what was different as we did not have a list of laundry list proposals. ones herevious couple aise jobs.uld riase

obama: unemployment rate cut in half. our auto industry just had its best year. the manufacturing surge created nearly 900,000 new jobs in the past six years. we did all of this while cutting our deficits by three quarters. hans: he did mention income, inequality, and terrorism. he did concede his biggest regret was not reducing the partisan tensions that have blossomed during his presidency. for the most part, this was a speech that was a counterpoint ofthe republican dark image america. he wanted to be optimistic. one of his former speechwriters gave this quote. he said, tonight was the president's response to the malais speech the republican

candidates have been delivering for the past year. seemthe empty chair stuff to get quite a lot of following as well. he chose not to mention the iran situation. what was it reason behind that? hans: we don't know. what we do know is this is likely going to dominate a lot of coverage. there is usually an echo chamber after the state of the union. the white house usually tries to play this to their advantage. air force one will try to ring a little more media out of it through local markets. i expect this to play into the republican's hand. president obama, at least abroad, has lost american prestige. guy: thank you, hans nichols.

does obama have reasons to be happy over what he has delivered? reporter: i think for main street this has been a fantastic story. the payrolls have been bumping the ground. in terms of unemployment, they have done a fantastic job. yellen talks about the reasons behind her policy choices, she always focuses on main street. guy: some people would take a different view. say that the middle class has been wiped out. if you talk to guys in the u.s. retail sector, that is what they talk about. this disappearing middle class and how that is hurting their sector. reporter: if that were truly would not see such good consumer confidence numbers and such good car sales. i think there is a lot of good in the u.s. economy at the moment. if you look at the manufacturing pmi, that is been very weak. saying it is that a defendant is

--y helpful, data dependent saying it is data dependent is very helpful. lowe do see inflation stay and we started see problems in the high-yield market, if they start to pop the bubble, i think they will probably hold back on the hike. the terminal rates come down to about 2.9%, we think. the endpoint is lower and they will be much more cautious and look out for bubbles popping on the way. guy: thank you very much or your time, ramin. made the most has of the economy's drought with irone ore and crude. ♪

guy: welcome back. the are watching "on the move." china's surplus has been widening. exports are recovering as of last month. the world's second-largest economy is capitalizing on low commodity costs. caroline hyde has the charts that matter. they are buying anything. they are buying on a phenomenal

scale. china in december increased their iron ore imports by 17%. we are at a record of 96 million tons per month for december. we also see record imports of surging.ll that the moment, are using 6.7 million barrels per day. this outlines that they are bringing in and will be hurting the rest of the world. they are bringing in iron ore when it is relatively cheap. that is helping some australian miners, big scale iron ore miners because they are able to build market shares. it is hurting the steel makers. we are seeing them export phenomenal amounts of steel at very low prices and the glut continues. this is a country managing to ramp up how much they are able to bring ing. in the end, they are hurting the rest of the world.

interestingly, they are rallying today. but i think just because of the mood up there, we have seen overall miners faring rather well. and the longer term, this is not good music because of the continuing glut. ragedade war is being with the import tariffs in south africa. guy: they are using this stuff, not storing it. caroline: they are using it and pushing it out. at the moment, they are managing to bring in cheap imports and exports steel at cheap prices. guy: thank you, caroline. recoveringude is after a slide to $30 per bale. -- per barrel.

could we go lower from here? we will talk about that, next. ♪

guy: welcome back. you are watching "on the move." we are 30 minutes into the trading session. of a positiveo trading story. shanghai finished over 2% lower. european equities are turning positive this morning. the ftse 100 is up 7/10 of 1%. the dax is up by 1%. the cac 40 is up by 1.2%. the stoxx europe 600 is up 1.3%. let's show you the second board and look at the other asset classes. the aussi dollar is responding

positively to the export data out of china. it has risen 96%. the hong kong export numbers are a little bit hard to fathom. brent is up 1.3%. 1.5%.crude is up shanghai is down 2.5%. let's get back to the brent story. we have rebounded a little bit. plenty out there are saying things will get more negative from here. citigroup says the world is confronting the reality of $20 per barrel of oil. today i think, from a technical perspective, maybe a short-term bottom out of oil. when i was watching financial broadcasting today, it had the feel of a reversal kind of moment. >> 2016 will be a very challenging year for oil produces.

it is not all bad. these prices translate into lower gasoline prices for consumers. generate muchices stronger driving activity in the united states and around the world. we think there will be strong demand and this area. . thehe clamming markets -- cure for low markets is low prices. we do think we are getting to the point, particularly since everything else we see in the u.s. economy points to good growth and continued consumer confidence. guy: let's go to singapore right now where we are joined by a chief market analyst. what is supporting the price of oil right now? guest: today we have basically seen a rebound from our excessively low levels. he chinese data was very positive for oil. we have had record import oil

levels for december. they are of $500,000. there were a lot of concerns last week about the health of the chinese economy, about the over there. perhaps this is providing them a little bit of hope about the economy. we don't think the stock market necessarily reflects real-world views about the economy itself. it only reflects about 5% of the population. the data today provides a bit of a relief, however. numbers in almost single digits. amrita: what has been interesting over the last week or so is everybody has come out with lower price forecasts. i think this is interesting because if you look at the physical oil market, which is the cash crude prices, none of them have reacted like the future market has.

this is telling you this is a sentiment driven correction in crude. chinas to do with the worries every dollar. it is nothing to do with the crude market per se. the crude market is still very weak, but the future market is getting a little bit carried away with the negative sentiment. that does mean the downside pressure is still absolutely intact. we can trade into the 20's and have said this before to you. you can choose a number and you can absolutely go there. guy: how much spare storage is there out there right now? amrita: this is the interesting question right now. european storage is pretty full. we have probably got 25-30 barrels of crude storage available and that is not easily accessible. weather there is storage available is in the u.s.

we believe there is over 100 barrels of storage available. this is why have seen the consistent strength of wti prices. it has been trading above brent. i think the reason for this is the only way you can get access to is the storage is to send crude to the u.s.. you therefore need u.s. crud to trade above the international prices. guy: the longer this is going to last, the longer you fix prices. isita: we forget inventory at record levels. there is no way getting away from that. that means the recovery will get longer. let me say one thing, whether prices are in the 30's or 20's, we are already starting to get news of production starting to close down. there are increases in canada and some parts of asia.

there is real pain across the oil producing economies and companies at the moment. the rebalancing will become even quicker. guy: how much is coming out of the u.s.? we would assume the 70's are targeting the capacity -- we assume the saudi's are targeting the capacity? losta: so far, we have 70,000 barrels. the important year. we do think production can 400,000-500,000 barrels. i think this year will be the one to watch out for. guy: just walk me through it. we heard from nigeria earlier on in the program. what is their thinking right now? what do these marginal opec

producers have to do at this stage? how can they responded how much pressure is there within the group? the pressure is immense at the moment. not just because oil prices are so low that they are pumping maximum. that means they are not doing any maintenance, that also their finances are in dire state. nigeria would love to get the emergency meeting and get the saudi's to agree, but that will happen. from a saudi point of view this is a long-term strategy and they will continue with these low prices until the high cost producer cuts back on production. it is starting to happen, that it needs a little bit longer for the market to rebalance. watch out for production. producers are at a real risk because they will struggle to keep production growing. most likely, the marginal

producers will start to decline the cousin of the lack of investment. potentially got a political deal. it looks like some of my capacity could come back very quickly. how does that get factored in? amrita: one thing i would say about libya is initially, we thought with the deal you could get some extra barrels coming out, but given how much of the eastern part of libya are in control i think the damage done to the infrastructure is huge. we have seen that with of the storage the has been targeted. you might get a cargo here or there because they have to empty the storage, but i really am very doubtful if we will get any meaningful volumes back from libya anytime soon. guy: amrita, always a pleasure. thank you very much. up next, was it a good

christmas? we will go through the numbers. howre going to assess sainsbury fared against other markets. ♪

guy: welcome back, 8:41 in london. this is "on the move." let's go to caroline hyde. caroline: there are a few

leading the charge is this morning. the stoxx 600 is giving cash back to the investors and are charging up 1.4%. 400 million-year-old will be in by back coming from the dutch insurers. speculation is sweeping up the banking industry. out for the other performers. all of them are amid speculation that we could see consolidation among this subsector, among the banks in italy. in of this is big reported the italian press. this is helping the industry in italy today. of aow oil is on a bit bounce today and it does seem to be helping the oil majors. oil.at tallow

they are gaining traction because of the earnings out earlier today. this is a company that has phenomenal hedging programs in place. at about the rest of the industry. they have 52% of the oil for sale currently hedged at $75 per bale. that is the same figure as 2017 as well. down 26 percent, but not as much as had been feared. the company is cutting back on capital expenditure, putting hedging in place, and increasing production. that is one area of concern for the entire oil industry. back to you. guy: thank you very caroline. let's get to the bloomberg business flash. there is a bid for a controlling stake in the samsung advertising agency worldwide.

the french advertising company is considering an offer for a 30% stake, which wouldake it the largest shareholder. this is publicis. full flag and has been dealt a blow -- volkswagen has been dealt a blow. has beensed engine fix rejected. they are scheduled to meet u.s. regulators to discuss ways out of the crisis later today. hackers who are affiliated with the group anonymous have claimed responsibility for taking down a global website overnight. it is the latest company to be hit over protest regarding whale hunting. the company has no connection with whale hungting. guy? guy: let's go through the numbers now with sam chambers.

the sales were still might have. that tells you a lot but you need to know about the u.k. isis at the moment. prices at the moment. backtruggles can be traced to what we have been talking about. data came out that suggested an extra one million force them to go prices in december. guy: the bid for home retail is dominating the talk. this deal allows them to compete more forcibly with john lewis and amazon. fell.ales

amazon is clearly a factor in this as well. they are looking to expand in the u.k. they were fairly adamant that this deal was due to changes in behavior. amazon is clearly on his mind. he talked about it an awful lot. they arey that destructive and they keep trying until they get it right. there is also an argument about retail isquiring the a good way of countering the problems. guy: i guess it depends on the price. how does the deal work its way through? what is the timeline? sam: the news only came to light last week. they are talking about the second of february.

we will see about this in the next few weeks. they are still laying out rationale. that shows they are definitely still interested. there were certainly be talks -- the likelihood look for should loowe with tesco? it was actually recently positive for tesco. expectations have gone up slightly. they have a steeper sales decline. guy: a big increase in the share prices. thank you, sam chambers. now, positive trade news out of china helps support the yuan. more from what is happening in china with its economy, next. ♪

guy: 8:50 in london. let me show you what is happening in the markets right now. european equities have had a decent rally over the last couple days. my question is, is this basically the short week positioning taking a step back,

waiting for the next wave? we will talk about that in a moment. have several voices from within the fed speaking today. eric rosenberg will give an economic outlook. we will get the central bank's beige book tonight at 7:00 p.m. that is the day ahead. one of the big stories that has done well in how it is trending at the moment is discussing oil. >> the movement of oil can be attributed to movement with the dollar. we have a three to one ratio. if the dollar changes by 10%, oil changes by 30%.

oil could be bottoming for the near-term. guy: remember, this is a fairly big bet. richard jones is here with more. we have a rally on our hands in equity markets. we wonder where the reaction function of the market is exchanging a little bit. now, you sell rallies. is whatis interesting he talked about regarding the outlook for 2016. i think he is talking about the early part of the year. be more about capital preservation. this is not consistent with his view. the reaction we have seen in many asset markets outside of commodities in china has been a bit stronger than i thought it pointse and may be, it

toward investors being nervous. sentiment is not as strong as it was at various stages in the past. does not feel like it yet, but it is hard to say. you don't want to be too alarmist, but it feels like we will have a challenging year. guy: one and that gives me hope is the fact that there is an incredibly bearish cause out there on oil. when you start to get that kind of moment where all of the analysts are out competing for the lowest call, you have to wonder. richard: it almost feels like they are locking the barn door. there is a potential for these trades to get crowded. it is never a straight line. i think it will be a choppy trading year and one where traders will have to be quite nimble. true toil markets hold

havet form, any spikes been seen as selling opportunities. it will be interesting to see after this time around if this dynamic holds. we have yet to see, but it will be an interesting few days. guy: hold that thought. i have another quote. let's have a quick listen. there is asee if continuation of what began before the rate hike. markets will struggle and the first part of this year and then create a potential good buying opportunity which are in the year. guy: is that what you are hearing from investors? richard: again, i think it will be a here where you want to be number -- be a year where you want to be nimble. there will be opportunities on both side's of the market. lach'seasily see mr.gund point of view. guy: have you seen people change their position on the fed as

well? we continue to see lower for longer on crude and the deflationary impulse coming out of china. iron ore imports are up sharply again, but they are turning this stuff again and selling cheap steel that will obviously give pause. richard: one month ago we had the fed minutes. we know the thoughts price in more in 2016 then the -- we know in 2016s pricing more than the market. dot's more accurate. will the two converge? probablyots will finish for the market. guy: i think payroll had an

impact on the market for ten or fifteen minutes. other markets are doing the heavy lifting in terms of impacting trade thinking. richard: there are so many moving parts now. you are getting mixed messaging from different parts of the macro picture. startedthe way we have is quite pessimistic and i think you are getting investors looking at the glass and saying it is half empty. if the data continues to be strong and we get any traction, that can change very quickly as well. her haps speaking to what jeff gundlach is saying. ulse" ise p coming up next. we have a very interesting insight into what is happening in the energy sector. you can talk to us on the bloomberg terminal, or join us

on twitter. it is a bright and chilly morning in london. maybe the thermostat will get turned up. the ftse 100 is up 1.24%. ♪

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francine: asian and european tocks rebounds. oil that is below $30 for the first time in 12 years. the u.s. president rebukes those who question u.s. values after obama warms of fear -- warns of fear and cynicism. we break down the state of the union address. welcome to "the pulse" live here in london. i'm francine lacqua.