good afternoon, joining me for , we are all over so many stories today. for me it is such a game of musical chairs. executive suites being knocked around at the moment, adidas layering over taking over in the u.k., poaching the cfo, driving shares down the most since october. it's quite the merry-go-round. >> up silly. i am watching the oil price, hovering around $29 per barrel for crude. we are watching it, friday we 27 dollarsling 7% to

$.67 earlier. it has been climbing since. some people out there probably hoping that this is a bottom. we shall see. oil has fallen 24% since you were a first. >> before all of that, two and a half hours away, let's get a check on the markets. oil and gas are rising. >> it's the worst start to the year for global starks -- global stocks in the monday session. the stoxx 600 was up by 1.2%, falling as much as 1.8% and down ,/10 of 1% to a 2014 low dropping for a third week, entering a bear market on friday, down by 20%. this gauge, by the way, down by 10%, almost one trillion euros in value. what's interesting is that trading in shares are about 50%

greater than the 13 day average. the volatility index gaining for year,d day, up 59% this still below the china devaluation. it's stillbout oil, the big commodity. up by 1/5 of 1%. talk about a topsy-turvy market. brent crude falling as much as $27.67. we were below $28 earlier. the lowest since november of 2003. international sanctions from iran lifted today. the deputy minister for commerce and international affairs says that they want to raise shipments by 500,000 barrels per day. analysts think that that is bullish.

in six months hedge funds have never been so immediate. slumping by 24% in 2016. the darling has of course been strengtheningen the onshore fixing. onshore from overseas financial institutions, what they are essentially trying to do is curb the bearish bets on the yuan, trading it in hong kong premiere. pledging a stable exchange rate, he said the nation has no intention of stimulating exports

through competitive currency devaluation. therestingly even though yen is falling today, bullish bets on the end have driven -- risen to the highest level in three years. it's the best-performing major currency against the dollar coming off the back of four years of declines. what's happening in germany today? 4.5%. down by mr. ross said, the chief executive of this company is leaving to join this company. the share price movement tells you everything that you need to know. herbert heiner leaving on the first, the current executive with a big story. mr. ross dead, he could be the man to turn around and add to the fortune that had been lagging behind its serial competitor. nike, what a day, what a year.

>> starting in baghdad, iraqi forces are searching to find three kidnapped americans, a government intelligence official says that the americans were taken from the home saturday in the southern section of the capital. ,he three work as contractors police officials saying that they are being held by a shiite militia. of airstrikes on the islamic state, militant hideouts and vehicles were targeted by bombings north of baghdad. the strike video could not be independently confirmed. a suspect is in custody today in the killing of an ohio police officer, whose body was found late last night behind the municipal building in danville, 60 miles from columbus. detectives say that his gun was taken and his cruiser was missing. a woman phones saying that her boyfriend planned to harm

police. the richest 1% are now wealthier than the rest of the world combined. governments must do more to narrow government income inequality saying that the richest 62 individuals have the same wealth is 3.5 million people. that's right, half the planet's population. global news powered by journalists in more than 150 bureaus around the world. >> on the day that the brent dips, we got news that some agreed to buy canadian oilsands for a phenomenal i stack. will they propel more m&a activity this year? it's get more insight into the ongoing story for morgan stanley. talk to us about oil. what a roller coaster we are having. looking at crude we are currently at $28 90 on brent.

are we going to see more m&a from this, like we are in canada at the moment? >> absolutely. the industry is under an extreme level of stress, but it is those types of dynamics that provide a lot of opportunities for companies to think about it long term. thatere is one company does thing with long horizons, it's the oil industry. we know that there are a large number with severe credit stress and a high percentage of default . yet there are many oil majors with strong balance sheet and a capacity to pick up assets on attractive prices. we have seen them in the energy sector. >> i could not believe this, junk bonds were at 9.4%. some of that was obviously because of the stress we are seeing amongst shale producers. 2016w you've said that in the place to be if you want to make some money is in credit.

would you go into u.s. junk bonds? >> we would. this is a market where you are clearly going to get some rising defaults. i think it's a question of -- is that higher default rate already discounted in the market to a great enough extent to give you a great risk-adjusted return? i think we do, we think the market could return with material upticks in the default rate. returns of 6% to eight or send will look attractive. >> that's a pretty serious risk premium. >> i think so. what is interesting within the energy sector, ironically because of these high companies that were already considered to be in grave credit stress when oil was at fard -- 40, oil being at 30 doesn't change the story that much. the fact you have had continued volatility in oil prices, you have entered a place where you could see less relative volatility in these credits

simply because they were already pricing in a high probability of some further restructuring. >> potentially seeing some m&a opportunities going forward, what about the actual oil play right now? you are looking at the relative strength indicator index. are we oversold or about to turn a corner? >> we are unquestionably oversold. whether we are about to turn warner is a more difficult question. oil has looked oversold for a lot of the way down. oil fell in 2014 and then fell again. it has been there to exhibit the problems of commodity in oversupply. it is difficult for the demand to respond fast enough. with oil i think the more interesting things or the opportunity maybe in the volatility markets. is soonnt of volatility

to be enormous. markets are pricing oil to be in a wide range. it might be something more extreme than betting on the price itself. >> what i don't get is that we have it at $29 per barrel and most people think that by the end of the year oil will have headed higher. are justust go out and some oil backed etf's and play it that way? >> part of the difficulty is that the mark to market is so severe. i think a lot of those pressures on oil come from increasing supply from a strong dollar. as we look at the forecast it's hard to see those of baiting in the next month to three months. if we saw more signs, for example, that the federal reserve was ready to act like it was already pricing, it could potentially give the dollar a bit of a pause or a boost to the commodity markets, but until we see that it will still be a

volatile ride. >> still ahead, taking european and asian stocks into bear markets, showing no sign of abating, we will dig into the volatility that we just been discussing, next. ♪

>> welcome back to "bloomberg markets." on a day that the u.s. is currently on holiday. for now, let's check in on your business. youtube is back online in pakistan. ite than three years after went dark there.

they banned youtube to keep users from seeing a film that was said to be anti-islam. the decision comes just one week youtube page more from the report in sri lanka. buying canada's largest oil producer by market value, they announced today that they completed a $4.6 billion deal. a previous lower offer had been projected but the state -- takeover still needs the ok from shareholders and regulators. daimler is wasting no time returning to the irani and markets. under the been listed nuclear deal, announcing a joint -- to build mercedes-benz trucks. now, that is it for the bloomberg business flash. >> china is poised to record a slew of data tomorrow, including gdp that might show its to speed economy is intact, but the

stakes remain high and not just for the policymaker's credibility. still with us is the chief frost asset strategist. thank you for staying with us. everyone wants to know if gdp for the fourth quarter will come in at 6.9 percent. before we talk about that i wanted to ask about currency strengthening a bit. how big of a threat is that to the global economy and the investors sitting out there? to the currency in general? rights i think it remains a massively important story. maybe the most important story going along the markets at the moment. more important than oil, even. couple of things. first, the currency rightly or wrongly seen as a barometer for the health of the world's second-largest economy. secondly, the dynamics behind the scene and why are by some measures somewhat unstable. the weakness in the currency can lead to weakness in the currency

of trading partners that can cause the currency to weaken further. i think that what markets are concerned about is -- is this an unstable equilibrium? even though china would certainly like to keep it stable , and they have been, is it going to be a situation where they can hold? markets are looking at that as something clearly concerning them at the moment. what about the ongoing play and the stretch in it today that does, to a certain extent, also drain out a little bit with steps to drain the liquidity out of offshore betting? >> i think it is a positive step. singing, all dancing, i think that what we've seen instead are a number of policy steps that began since last

february. on the currency front it's been about adjustments around the edges. it's clear but i think you are right, there is a willingness and that the willingness is that they would like to keep the currency stable in the near term and we think that they will hold the lower end of that range through the middle of this year. >> moving to the united states for a second, your forecast was that the s&p 500 would finish at 2175. 16% higher than we are now. to be fair, you said that long before we had the turmoil on the markets at the end of last week. are you still that confident? clearly had events unfolding in the first part of this year have been much worse than what havoc affected. i would still say that that is in line with our most likely case. a backdrop where we think earnings growth will be better than what people expect for 2015

for the full year into 2016 with kicking ins season and the s&p trading 15 times earnings. ironically it trades cheaper if you strip out energy at the moment than you. if you leave it in. they have to be paid for the offensive in the higher holiday area yet when i talked to investors the market in the u.s. is seen as less attractive people would rather be in europe or japan. but the u.s. the higher-quality market and we think it is a premium for that. >> should you be going along europe as well, as many of the strategist seven saying? withdrawal? >> i would say that we are less confident about european equities mounting a rebound.

part of that is that europe is a bifurcated market slip between value sectors that looked very cheap -- cheaper than they have since the depths of the greek crisis. energy and a price to book basis has rarely been cheaper yet the sectors continue to sell off and at the other end you have followed the defenses that are very rich. market being bifurcated like that is a challenge for investors trying to find the value and i think that for the moment we would rather look at risk or deploy into weakness in the u.s. rather than europe. >> in terms of europe and the credit story that we got, investment grade right now with a high-yield at 5.9. cash bonds, is that the way to access the story? prefer to go at it synthetically with credit default swaps and the like? >> the cash market is a reasonable way to access it.

in europe you have an environment where the supply of bonds is pretty low. governments are issuing less. i think that that provides a fairly healthy technical. since the synthetic side sold off recently, that is reasonable. >> that was the chief asset strategist for morgan stanley. up ahead, the turkish prime exclusively down with bloomberg television. we look at the depreciation of the lira and what he thinks about it. ♪

watching bloomberg television, live from london. chinese stocks found their footing a little today after beijing announced that they would reduce reserve announcements onshore by overseas banks, looking to limit betting against currency the

chinese offshore yuan strengthened building on the biggest weekly gain in three months. nic joins us on the phone from beijing. look, we get the gdp data at 2:00 in the morning here. how are things looking for the chinese economy? >> right now it looks like the gdp will come in just under target, so that the government set a target earlier this year of about 7%, our survey forecast is 6.9%. line.rgely in there is a fair amount of skepticism about that number. obviously when they set a target and meet it, precisely there are that are broader about the state of the economy with a massive debt overhang and things like that. we expect the number to be largely in line.

it will be an encouraging sign to investors but we will have to deeperper for signs of a slowdown that analysts are expecting. oftaking deeper into some the views stated by leaders of china, friday they said that they were trying to remain stable when it came to the exchange rate. are people buying that? or are they as critical as they are of the gdp data? >> as you mentioned just before i came on, they will spare no efforts to control the currency and put it where they wanted to go. the moves to raise the reserve requirement for offshore banks, that was specifically designed to make it more expensive for speculators to short the offshore yuan. they were concerned that it was devaluing to rapidly. so, they stepped in. they stepped in to buy the

offshore yuan and they have stepped in with this move to slow the slide. they have really shown that they will defend it at all costs. update for saw an the shanghai composite. what is that down to? we have seen so much turmoil. so many declines over the past couple of weeks. what should we read into that? uptickink that a slight day, obviously this market is so volatile, this is not a market for value investors. there are not a lot of people ascribing to the warren buffett philosophy of investing. they are soothed when they see the government intervene because it means a serious telegraphing that they won't let stocks go to low, but fundamentals remain, p/e ratiosvervalued

him at they are u.s. him some point there is a wide believe that there will have you had a broad adjustment in the market. >> nick, very late for as there in raging. we appreciate it. sleep well, thank you very much. into european moves in a little bit, the stoxx 600 is off my half of 1% with oil and gas managing to outperform. below $28 per barrel. stick with us as we dig into what is driving these markets lower once again, today. in a bearwe are market when it comes to the stoxx 600. ♪

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sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. caroline: welcome back to "bloomberg markets." we are live from london because the u.s. is off on holiday.

martin luther king day being celebrated in the u.s.. let's check in with how markets are looking. oil and gas outperforming even though we saw brent and wti at $20 a barrel. stoxx 600 falling. it's down for four consecutive weeks or for a fourth consecutive week. just digging deeper into what is happening in germany. henkel is added as the chief executive at adidas as its ceo. both chief executives are expected to stay out the rest of their contracts. that will not happen. the head of the beauty care of business at henkel will take over. what a day, what a week, what a month. dictatingsteams to be the move. we are down and we have been up here we are down by three quarters of 1%. brent crude falling as much as

1.4 percent at $26.67. that's the new low with international sanctions on iran lifted. glut into the global crude prices that we have witnessed. iran wants to raise shipments by half a million barrels a day. the big news from the hedge fund community is that we are bearish on the price of oil. we have never been so bearish on lux texas -- west texas intermediate on record. 24% in 2016. we are roughly $28.69. i want to show you the darling in the currency markets this year. it's not so much today as the dollar rising after china took further measures to stabilize the yuan. let's check the bloomberg

first word news and now. a shiiteice think militia group has kidnapped three americans. government forces are going house to house in the capital today to try to find the captains. an intelligence official says americans were taken from their interpreters home saturday in a southern section of baghdad. at three work as contractors baghdad's main airport. south korea since the north deployed about one million balloons today and the latest round of their propaganda war. the balloons dropped leaflets. the two countries on edge again after the north tested in a topic women earlier this month. -- an atomic weapon earlier this month. noise with huge speakers. hillary clinton is now allowed herself more closely with the obama administration's record. debatethe democratic last night in charleston, s.c., she criticized bernie sanders for what she called lukewarm

support of the president's policies. comments that senator sanders has made which just don't affect me, i can take that. but he has criticized president obama for taking donations from wall street. senator sanders called him week, disappointed, he even in 2011 sought someone to run in the primary against president obama. ryan: sanders and hillary about healthed about how play r care. sanders pushes for a single-payer system while clinton says changing obamacare right now does not pay cents -- make sense. martin luther king day in south carolina has pictures significance for demonstrators wanted the removal of the confederate flag. this is the 30th anniversary of

the federal holiday honoring the civil rights leader. denver's ageless quarterback keeps the broncos on the road to the super bowl. , yesar-old peyton manning he was around 20 years ago when i was a kid, taking them for a ame-winning touchdown in 23-16 win over pittsburgh. manning will face tom brady and the patriots on sunday for the afc title. carolina and arizona will play for the nfc crown with the winners going to the big game. news 24 hours a day powered by 2400 journalists and more than 150 news bureau's worldwide. caroline: taking you back to your roots. ryan: it's the nfl. it's serious stuff. caroline: on to more serious stuff. we've got to talk about central-bank policy. what are economists now thinking? are they boosting more stimulus from the ecb?

it seems as though they are. the bloomberg survey showed 60% of respondents think that mario draghi will of the anti-this year. that is up from 40% last month. expectations for more divergence from the u.s. may be overstated according to our next guest. and 11 is a former advisor to ben bernanke and janet yellen. take you for joining us on the phone today. to see the great and good out anin davos. the central-bank policy on the top of their minds? oil glut a little less typing from the u.s.? andrew: it's great to speak with you today. --hink there was something some very important data for the united states economy that was released last friday that adds to the concerns that the u.s. economy is not as solid and

resilient as fed officials had bought a month ago. at that time, they saw the risks of the u.s. economy as roughly balanced where the last few that of data has confirmed there is some very significant grounds for concern. just to give you one example, the u.s. retail sales data for december released last friday. the core retail sales number was negative, which means that probably the broadest measure of personal consumption expenditures will be released in a few weeks could be dead flat. the idea that american consumers are the source of strength for and a source of divergence in some way from the rest the world, i think there's a big question mark around that. ryan: on the back of a retail

data we got on friday, we saw expectations for a rate hike in the united states get pushed really right back to september. you have to get back to september of 2015 to the point where the probability of a rate hike as far as the market is concerned is above 50%. carolyn was talking about expectations for perhaps more theg -- using and qe in ecb. how did those two bits of data and exit tatian's -- expectations, what does that mean for the euro in europe? andrew: the next meeting is coming up in little over a week. unfortunately, there will not be a press conference. i think one important difference between the fed and the ecb is that the ecb has a press conference after every meeting. i think that's the direction the fed needs to go because it would be really helpful for fed

officials to explain next week how they are reading the latest data and what implications it has relatives to what they were thinking in december. as it is, we will have to wait a few more weeks. janet yellen will give testimony in february to congress, monetary policy testimony. that will be in important opportunity for her to explain how the thinking is evolving. that said, i think there are two scenarios we should have in mind here for the coming year. one of them is that payroll growth continues to be strong in the united states. consumer spending picks up again. i think that scenario would be closer to what fed officials were thinking a month ago. in that scenario, they seem prepared to tighten several times this year will probably bring in the short-term interest rates up to close to 1%. scenario, which is the one i'm concerned about, is the

drop in the manufacturing sector and mining and industrial output, which we also saw on friday. the slowdown in consumer spending, the contractions, the nonresidential construction -- all these red lights are flashing now for the u.s. economy. there is another scenario where i would say they do not tighten at all this year. my colleague has suggested the next fed move could be using to go back to the zero. in that scenario, i think the fed officials will need to communicate clearly what is their backup plan if they need to provide more accommodation. caroline: and 11, thank you very much. -- andrew levin, thank you very much. get more ind to line with where the market seem to be going. that was andrew live in

dartmouth college. ryan: coming up, now that sections have been lifted on iran, what does it mean for an already overflowing oil market? stay with us. ♪

caroline: welcome back to "bloomberg markets." i'm caroline hyde. the u.s. are holiday celebrating martin luther king day. we are seeing a big dive in the european markets once again. ryan: the prime minister of turkey has kicked off his two-day visit to the k today. attend the conference hosted by bank of america merrill lynch. earlier this morning, he sat down for an exclusive interview

with our own guy johnson and marco volatility -- market volatility and its impact on the economy. >> market volatility is the key concept. it is affecting all currencies including the turkish lira. negatively discriminatory or separate from the term of emerging markets. that position, we will look at it as well as other emerging markets. as i said, this is not because of our platforms, but because of global economic turbulence. >> you would expect the lira to appreciate? >> with these reform packages, we declared transformational package and also eight macro structural reforms. i'm sure after implementation of these reforms, in the last month, we have updated 30% since

the first three months. platforms, i'm sure meanwhile that we will be rebalancing this currency rate. >> you are going to be raising the minimum wage by quite a out. and mark -- i'm that should in theory have an inflationary impact. are you worried that inflation is too high? the minimum wage is a 20% increase. aroundas some concern turkish budget and fiscal policy, but everybody turkishtes that fiscal policy was not affected by this. we have a balanced budget. this 30% is not absolute. way, it will be at least a 12% increase in minimum wage that was regular increase every

year. share the welfare with the people. ryan: that was guy johnson's exclusive interview with the turkish prime minister. he joins us now. the lira right now is not too far off its lows back in september. what you have to say about the country's currency? guy: he says the reforms that he will put in place will lead to a situation where the lira appreciate. he has been in power for a while and that has not necessarily happen. we're going to see people pay attention to what we are doing rather than getting word out to everyone else. they've got a lot of problems to deal with. caroline: how much of that can start to show they are separate from the rest of emerging markets? it is well below in terms of multiples. we have it far weaker and cheaper than china is in general.

how much of this is impacted by the emerging markets selloff? do you want to separate that? look on aave the case-by-case basis, but they are being painted with the same brush. the way you do that is with the data. they also have a geopolitical problem as well. there's also stories that we are focusing on in the moment with the syria migrant story and what is happening with iraq. all these issues are front and center. the bomb that killed so many german tourists a week ago obviously resonates. there hugely focused on the tourism sector. if that is impacted, there will be a significant problem. just upgraded their numbers while that tourists story starts to act as a negative. they don't think so at the state. ryan: turkey has its own set of problems. city touch on that? -- did he touch on that? guy: it's all the same conversation. it is very hard to separate what

is happening in russia because that affects the tourism sector. it also affects syria and the situation there. they are big beneficiary of the low oil price. they are a big user of oil. that is affecting the current account deficit start. there's an increase that it will increase further. like?ne: what was he how do you talk about his relationship with erdogan? guy: he is part and parcel of the entourage. as a result of which, he sees what they're doing as being good for turkey. he says the previous constitution was written as we came out of her too. dust came out of a coup. understand how market friendly mr. erdogan is going to be. ryan: guy johnson with the exclusive interview at the premised are of turkey. caroline: let's turn to your

bloomberg business flash i know. saying spacex engineers that ice buildup may have caused the crash landed for the company's booster rocket. sending aeded by satellite into orbit, but the attempt to land the rocket on a jump -- john in the pacific ended an explosion. spacex tetra tech launch costs by reusing booster rockets. shares have a five-month low today on where that is finance director is leaving. the defense contractor issued a profit warning two months ago living the energy slump and weakening demand in asia. adidas is getting a new chief executive. ross that will join the board and august and take the reins two months later. your state's chief executive of the german consumer goods maker henkel. that was your latest bloomberg business flash. dustt to be dinging sticking to this musical chairs game.

ryan: the shares up right now just over 5.24%. they were up as much as 12% today. that's it short. caroline: they've got a lot to battle with. toy have under arming start -- under armour starting to eat into their market share. nike is eating into the game as well. i love the fact that all of a sudden we're having to announce henkel losing their chief executive and suddenly they are tumbling and their share price. meanwhile and the united kingdom, you are also seeing a similar game of musical chairs going on. you have caught them -- co bham's chief executive will leaving. there's a whole game afoot here. davcy be in time for the os get together. ryan: henkel shareholders are not very happy.

henkel sure is down 4.2%. they were down almost as much of 6%. it's a huge move, the biggest since august. a down day for them, but adidas are the shoes to wear. caroline: now of course, we will be looking much more into the business story of the day. it has been oil. there's been on a roller coaster -- today. you're looking at the vti crew. we will talk will after the break. -- oil after the break. ♪

>> if the analysts are right, the oil slump has some way to go to $20 or tend oil -- $10 oil seen as key levels. brent broke $100, u.s. shale reduction was booming and chinese demand was waning. below $50, theng

impact on russia's economy came into focus. fitch cut the countries rea credit rating. with brent hovering around $30, bp will cut an additional 40,000 jobs, highlighting the pressure on the oil majors. where do we go from here? we know oil exporting nations like iran, venezuela, and nigeria have been under pressure. even now saudi arabia is feeling the pinch and being forced to cut spending. at the corporate level, exxon alll, chevron, shale have reduced investment. conoco phillips loses close to $2 billion each quarter for every $10 drop in prices according to barclays. cheap oil also comes with benefits. indonesia haved cut fuel subsidies according to the international energy agency. airlines are getting a boost as our carmakers.

it is a positive for consumers unless falling prices lead to deflationary cycles. it's another headache for the central bankers. let's take a look at where wti is trading right now. it's extraordinary. we are just north of $29 a barrel. down 1.22% today. brent really hitting the ruble today. the ruble trading at just above $79 to the dollar. it just shows you how those commodities backed economies are getting whacked by the falling oil prices. caroline: it's good straight into this -- let's get straight into this with julian lee. you're not just talking about the vti. we're talking about brent currently at the lowest since 2003. we are only down 1.3%. what is the market listening to?

as the opec going to see countries cut back on their supply? julian: it's not that opec is saying they're going to make a voluntary cut. what opec is saying is that the lack of investment into non-opec output, particularly into maintenance and oil fields, business so we going to lead to an involuntary decline in opec output. they hope to increase the size of the involuntary decline from the report a month ago. i guess the market is looking for any bit of news to cling onto. ryan: iran's return to the market was well telegraphed. we had brent fall, 7% on friday. going forward, where is the surprise with iran? they telegraphed to the whole world they would raise production by half a million barrels. we've got 45 seconds, but what will surprise us in 2016? julian: the surprises from iran are going to be if it fails to

meet those targeted it has been very adamant that they would make those targets. it is been very adamant that they would do regardless of price. the big surprise perhaps will be if it does not do it could we have already got many analysts saying that they expected to be able to do half of what they have said. there a great deal of uncertainty out there. caroline: meanwhile, rsi says brent oversell. thank you very much, julian lee. that is the rat. -- the rat of the rhine intel line take over. coming up, the untangling of the most complex regimes. we will be digging into that more with mark barton. stay tuned. ♪

mark: it is the clock p.m. in london and 10:00 a.m. in new york. welcome to "bloomberg markets."

♪ mark: life from bloomberg and me isdon, joining nejra cehic. looking at the global equities and 2016. just to put that into perspective, the u.s. stock markets were 21 trillion. no other stock market is is is big -- is as big. one company's losses and others gain. 's chief is often adidas. henkel sure sliding. what have you got frozen the markets? -- for us in the markets? >> we are seeing day three of the declines in the market. we have seen it take most of the endurance here. we have volumes at 40% higher than average over the past 30 days volatility spg.