sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. >> welcome to on the move. we are counting you down to the european open current i am guy johnson. asian stocks expanding a global rebound as investors bet on the central banks aimless. >> -- stimulus. . we begin the week with both contracts above $32 a barrel and -- iran's president

roadshow. >> let's get you up to date on everything you need to know. caroline: japan's crude oil imports last year fell to the lowest level since 1988 amid declining population and more efficient vehicles. data showed that japan's annual narrowed 80% from the record as energy exports fell and a weekend spurred a modest increase in exports. the shanghai composite has tumbled 70% so far this year. ubs says the slide is not over yet. officials say the index will drop to about 14% lower than current levels. at least 18 people have died in the blizzards that a paralyzed much of the eastern united states. many places solve more than three feet of snow while central

part had its biggest 24-hour snowfall on record. all broadway productions were canceled for the first time since hurricane superstorm sandy. 12,000 flights were canceled over the weekend. london's a third of staff expect a bigger bonus for 2016 according to a survey by a recruitment firm. two thirds of employees in the city expect to receive a bonus for last year. senior executives predict bonuses about 61% of their salary. global news 24 hours a day howard by 2400 journalists and more than 150 news bureaus around the world. >> cracking session friday. you need some good news. it looks like that will continue monday morning. european fair value pointing to an outside at around .501%.

-- .5 of 1%. looks like we will have a positive session. mr. pharaoh, welcome back. jon: biggest week since august. -- since november 2015. a short squeeze on brent on friday. a massive move. we come back this morning by .6 of 1%. euro-dollar, average for the last 12 months, just north of one point 10. -- when we can. if --guy: you did not do any shopping at all? >> nodded all. we are going to talk about

oil in a minute but i want to get a quick assessment. what was the biggest take away from davos last week? --l it be the central backs banks stepping in? >> might take away is the pain investors are feeling right now has not reached the sea suite. it just means it has not reached the corporate level you get and i wonder why that is. looking back at the last five market, for aeled lot of people it did not make sense. on the way down, does it need to match the economic fundamentals? maybe not. that is why a lot of corporate were scratching their head last week. what is this all about? china is ok. the feedback loop is something we will talk about for months to come. directat is a more

correlation with their business. they must notice the price of oil. the kind of collapse you have seen. even as a services company. >> let's bring in ryan chilcote. they bounced back friday. a big debate as to whether we have formed a bottom. ryan: there are people out there calling a bottom. davos, one oft the biggest oil traders in the world. think we've reached a bottom. coming outroup saying oil could be the trade of the year. there are people out there saying that. if you look at inventories in the united states, that is when of the best ways to judge the

extent of the glut in the oil market right now. 100 30 million barrels above the five-year average. the data is backward. you get these levels and people must be saying, i have had such a great read. it doesn't herald -- at thef you look relationship between hedge fund shorts and the oil price, it is a beautiful inverse relationship that is clear over the last three months. hedge fund shorts themselves. what we know from the data, it gives us a snapshot of where the hedge funds stood a week before last and they were decreasingly bearish. they reduced the number of bearish bets on oil price. and the increased the bullish

bets. it is a little bit of a climb down. they came up by 14.5%. there are a lot of bearish hedge funds out there. aey reduced their bets on lower oil price and then last week, the week after the data we have, we saw this nice uptick in the oil price. >> chasing the saudi's. and what on earth will happen to saudi aramco. if they do anything with the ipo, and the upstream business, the message is -- if we sell a stake in the upstream business, $30 is not as bad as it can get. ryan: and we are not going to give away the family china. the ceo of aramco was in davos. he is increasingly speaking. his third interview or speech since the deputy crown prince

dropped the bombshell in that interview with the economist that they were looking at this. one of the most interesting comments came over the weekend where he said -- one thing that is not on the table is the oil reserves. 265 billion barrels in reserve, 12 times the amount that exxon has. that will not be on the block. ability toe is our reduce oil and produce financial gains as a result of it. he also threw a bone to investors saying if we do have a listing it may not only be on the saudi market. guy: one thing that shocked the saudi's, we have not seen a big bounce back in demand. price goe the oil north of 30, you would see a bounce back.

you have not seen that. you dropped the price that much and no one wants to buy a. in the u.s. was going to $30. worst year for retail sale since 2009. some of the retailers online did ok at that story did not play out. ryan: a lot of bullish bets. on gasoline prices in the united states. say, the ceo of aramco did he saw an increase in demand of 1.4 million barrels and there are an increasing number of people who think the oil market could be balanced as early as the middle of the year depending on how capable of the iranians are of getting their act together. guy: look at the japanese trade data this morning. incredibly weak demand for imported fuel. that is something to bear in mind. just maybe the saudi's are

talking a little bit optimistic. central bank story will play in this as will the machine story. why the rise of the machines may mean more central bank action. lower inflation is coming out of davos. we will take a break, we are always back in a moment. ♪

jonathon: we are 17 minutes away from the open. futures a little bit higher. let us go over the caroline hyde. caroline: twitter boss has announced a management shakeup. amongst those going is the head of engineering and product. they leave after the firm failed movement.

to learn about a reform process. this fourth manufacture was to terminate the deal early. adidas would not confirm or deny the report. thanis looking to buy more 100 jets from airbus. the president heads to europe this week. superjumboclude the as well as the a320 family. the planes are expected to be delivered in march. the country need -- needs about 1 -- 500 aircraft. a follow on from day of us -- davos. talking about the rise of the robots and what it means for inflation. if robots rise, it inflation

rates will fall. as machines become more and more advanced, many workers will see wages fall. those forces will combine to restrain prices meeting the era of slow inflation now challenging central bankers may only prove a sign of things to come. talking about the fact that sleep technology will change so we will all be taking inks to sop us sleep less, work more we can compete with the robots and inflation becomes more of a problem. jonathon: fantastic. going back to that point, is there an under appreciation for structural shifts happening right now. we have talked about a cyclical bounceback. and not enough on structural is used. >> that is fair.

one of my colleagues wrote a piece about a similar trend had emerged with the labor market. in western factories and how that had been very deflationary. the piece about how robots may be the next step in that story. it has got some links to it. guy: how does this manifest itself? will we be living in a permanently low inflationary environment? one of the things that gets ofrlooked in the aftermath the global financial crisis is that net debt has been passed along to develop to market governments. we remain very indebted in the western world. that debt is inflationary and the central banks are right to be concerned about the deflationary forces washing around in the system.

inflation andmine make chipping away at the net debt very hard. jonathon: i wonder if this is just a developed world phenomenon. stripping this conversation back and simon kennedy quoted a few central bankers. they would love to have this problem. what does it all mean for e.m.? i don't see inflation in the emerging markets. there are a few isolating cases. particularly with the fall in oil prices. it has proved very deflationary. getting nominal growth to come through is the principal focus. guy: you speak with the south africans. 2015 gdp down 3.7% year on year. the central bank there has and inflation problem. how do you tackle that?

they have a growth problem and and inflation problem. >> sodas brazil. guy: turkey has an inflation problem but not a growth problem. >> it is a real challenge for a number of isolated economies and it is difficult to see what policy measures they can implement to get growth coming through. west andowth in the their ability to export is a real challenge. jonathon: a drop of 3.7 percent for russian gdp, 12 months ago, dollar-ruble was called a currency crisis and now it is a buffer. which one is it? interestingeen some moves in currencies. markets are volatile and skittish. we are living's -- we are living

through some very uncertain times. the polder -- the policy measures we have seen are pumping liquidity into the system, asset prices are up. initial growth has come through. guy: druggie is talking tonight -- draghi is talking tonight. is it a stuck record? >> the fed is committed to raising interest rates. we have seen the first step. there are members of the fed who would like to see them become more aggressive. with a fall in the oil price and the impact on u.s. manufacturing, we are now seeing rising interest rate that drop -- backdrop. it has been a long time since we have seen that phenomenon and it presents markets with something of a quandary. jonathon: mark burgess will stay with us. we are minutes away from the open. a potential corporate move with

what is going on with siemens. of a monthg off rapidly after the end of last week. ♪

we need to tell you what the stocks you need to focus on. siemens: we understand could be buying a privately held company for almost $1 billion. this is being reported in the press. the have agreed to purchase cd -- go -- cd-adapco. that littled push bit higher in the open. another german stock for you to keep an eye on. the ramifications of if adidas

could pull back on their sponsorship of the athletics foundation but it could also be a money saver for adidas. four of a painful -- ahead of the open, bear market bounce. seeing that bit of turbulence in the futures market. it has been a convincing state of buying in asia, picking up the ball from where america lifted. if phenomenal opening in asia. less risk appetite in europe. this is ately assured risk on trade at the moment if we are seeing gold still trading higher. more bullish bets coming from the hedge funds over the last week to the record high.

have a look at a couple of others docs we could see on the rise. we could see the likes of adidas and airbus. iran, how many put they buy of planes from airbus. 140? worth $3 billion? airbus may get a bit of a bounce on hopes of an iranian order. anothercement company, one to keep an eye on. reports that they could be selling assets by 2018. european futures pointing to a positive open. a fairly decent and to the week. in the european markets. two steps forward, one step back. or the other way around. nevertheless, european equities

do look like they will open on the front. jonathon: is it a bear market why is the magnitude of the inter-day moves in europe so much bigger than what is happening in the u.s.? we will talk about that. guy: market opening in just a moment. we will see you after the break. ♪

jonathon: good morning and welcome to "on the move". from the start of the european trading session. guy johnson has your morning brief. guy: asian stocks extending a global rebound. investors bet on central-bank stimulus particularly in europe and japan. crude recovery is on as well. the iranian president roadshow.

the billions in potential deals. a post sanctions european tour. jonathon: ahead of the open, futures that little bit higher this morning. crude back at $32. brent crude, 31.67. 10 seconds away. oilline: as we start to see come off of its recent bounce, will at once again dictate where we see stocks go. gary cohen in goldman sachs saying the market is listening to much to the oil prices at the moment. weare holding onto gains saw, significant gains in asia. the risk appetite fuel in from friday. three days of gains on world indices. friday was a best day since 2012.

money moving in. bit of money moving into the equity market is coming out of oil. -- down 1.3% with brent. some riskll seeing nervousness and risk aversion paying out in gold. money is still moving into gold. hedge funds more than doubling their positions. they are bullish bets on bullion. some appetite to get into gold at the moment in getting out of oil this morning. a turnaround in the treasury market. treasuries selloff slightly earlier but it is coming back down on the u.s. tenure. is it a buy or a cell? -- sell?

morgan stanley says it is time to buy. we could go down as low as 1.55%. let us look at some individual movers on the stock margaret. -- market. airbus, up .6 of 1%. there is a speculation that they could get a big order for their planes. up to 114 from iran. the cement maker says it is selling off assets by 2018. siemens up .3 of 1%. speculation it could be sealing a deal with a private company. it is all about software engineering. let us talk to david inglis. rally extended for a second day and we are looking at the first day of gain -- string of gains in 2016. was still athere

fair amount of risk appetite. not to the extent of friday. if you of asian blue-chip stocks. markets,ese individual what is also encouraging was that we are back above quayside -- key psychological levels. we back above 17,000 for the nikkei 225. that said, within the sector groups, resource and energy shares head and shoulders outperformed. by largeabout 2.5% led state owned energy producers and mining and oil explorers in australia. off what wasshing mostly a fairly negative day as eco-data. singapore reported a 14th straight month of deflation. they had a wider than expected trade surplus but that was overshadowed bay a slight

drop in trade activity. exports still though down a percent. toot of this came down valuations in technicals. oil prices seemingly stabilized. these oversold stocks and even with the rally on friday, asian stocks are still down .9 percent on the year. see thisinvestors today string as too much. it was a very good start to the week. first must they -- first monday of gains in 2016. the bank of japan announces its latest policy decision on friday. governor kuroda play down easing. trade data out this morning showed exports fell in december while the trade deficit narrowed although -- because of the

energy cost. let's talk a little bit about what is happening here. a mixed bag in terms of the data. how will this affect us looking forward? when of the key points in the trade data is that exports fell again. this is a negative outcome of what is happening in china. japan being china's biggest trade partners, there is concern how much china's slowing economy will be impacting shares in japan. there are a lot of companies that have been increasing their sales in china. this will be a concern. looking to the boj, whether it will ease, it is something everyone is watching. the consensus seems to be all

over the place. about 50-50 on -- among investors. a lot of people are not sure the boj can do anything. it is a global issue and china issue. theypeople are saying that are running out of bullets and there is not much they can do. investors will be watching carefully how the boj explains what is going on in terms of the eco-data in japan. at what isooking happening on the nikkei 225. biggest one-day pop. is that a bear mountain -- bear market bounce? >> people are starting to expect something. whether they expect it to have a proper effect on the economy and a long-term boost to japanese stocks is still questionable. people are starting to expect that there will be a change in stance or how they explain how

concerned they are. almost one of the most important things because so far the boj, all they have been saying is that the low cpi numbers were because of the oil but if they start to say that we are concerned about what is happening in the markets, then people can be helpful they will be supporting this route we have been seeing right now. jonathon: thank you very much for joining us. let us welcome back in mark burgess. my take away for japanese equities is that you can have a bear market despite the central bank with the pedal to the metal on easing. is there a message there? in japan scale of qe is very significant. 50% of gdp. -- 15% of gdp. a significant impact in terms of

lowering the currency and raising the quiddity. the offset is they face a demographic time bomb that is slowly chipping away at their ability to grow. debt as have as much japan has, it is a looming catastrophe. the positives are that for the first time we are seeing japanese companies being able to focus on the shareholder, being able to focus on the improving cash flow. generally interested about the outcome the shareholders experience. that is one of the reasons why japanese equities have done as well as a have done. we should not overlook that. it is an ongoing trend. it will spread. of positivitytone but china is a large trading partner. globally is more challenged. as a traditional exporter, that will all be softening the

outlook for the japanese economy and japanese profits. guy: a list of positive things. is there anything that will convince you to put fresh money to work in japan? to see ald need bottoming out of chinese growth. the amount of heavy industry getting exported to china is significant. are stillaluations relatively attractive and it is the one area in the world where we are still seeing a large number of positive numbers. youecome more positive, need to see the currency fall further or china's growth to stabilize. we are not sure where we are on either of those. i wonder what it takes for you to come back to the table and put more money to work. what you need to see happen? mark: you need to see growth expectations and we need to work through some of the sharp false

we see at the markets globally. we are seeing sharp dissipation in a number of markets. some of the emerging markets under a lot of strain. we talked about brazil. , we want to see that still in business. a lot of big financial considerations. will this migrate to their economy? >> i don't expect i financial accident that the chances of it happening have risen. falling commodity prices have put a big break on certain aspects of u.s. manufacturing and growth expectations have come back for that reason. guy: where do you expect the accident to happen? in the commodity space? markets have been

skittish as a result of those concerns. we are seeing an uptick in defaults from energy producers. all of that is coming under some pressure. jonathon: mark burgess will stay with us. we will develop that story. up next, brexit risks. why the u.k. may have the most to lose from an eu exit. 10 minutes into the open here in europe. only four00 up but by point this morning. ♪

>> simply the worst start of any year on the record in financial markets ever. the market is very worried about china. growth in china. ask .9%. the market does not necessarily believe the 6.9%. it also believes there may be hard lending in china. on theimplications commodities on oil in other parts of the world. world economic forum. ftse 100, just running into negative territory. your bloomberg first word news. nejra: the shanghai composite

index has tumbled around 70% -- 17% so far this year. index will drop to around 2500, about another 14% from current levels. at least 18 people have died in the blizzards that have paralyzed must -- much of the eastern united states. central park had its biggest 24 hours snowfall on record. all broadway shows were canceled for the first time since hurricane sandy in 2012. resuming normal service today after more than 12,000 flights were canceled over the weekend. one third of london's finance staff expects a bigger bonus according to a survey. almost two thirds of employees in the city expect to receive a bonus for last year. predictxecutives bonuses amounting to about 61% of their salary or about 100,000

pounds on average. global news, 24 hours a day, powered by our 2400 journalists. guy: let's get back to the markets now. allten stock market has it to lose in the brexit scenario. ftse 250 stocks. that trend has started to reverse. here to explain it further is sophia. mark burgess still with us. sophia, walk us through the 250 trend. 2008, it has only been since 2011 since the ftse 250 didn't do better than the ftse 100. it was when european debt crisis was all over the place, bond yields spiking. where we arenario nowhere near at the moment.

the 250 has two things going for it right now. one of them is the exposure to the british economy. businesses that are more domestic and not international. nothing to do with the ftse 100 which has very little to do with the u.k. economy and its exposure to the european recovery. those two things are at wrecks -- risk in a brexit scenario. jonathon: does that trend make sense? >> it does. the mid caps have done better as a result and also because they are not the large caps. they are significant parts of the ftse 100 index that has weighed heavily on the market. we have the banking heavyweights also facing structural issues. mid caps have done well by default. people workout out

what the brexit exit looks like? >> we don't even have a date for the vote. you have marked tiny -- mark carney saying the growth could be worse by george osborne said we do not see any signs of investment getting slower or people getting -- where businesses getting worried about a brexit scenario quite yet. you need to play that into your portfolio. not only have these companies done three times better than the ftse 100 since the financial racist, so there is obviously a valuation issue. also, what companies are going u.k. isbusiness if the isolated from the european union? these are companies that are depending on the european rebound at a time when it is showing signs of accelerating. for them it is the worst

possible scenario. jonathon: i spent last week in davos and i spoke with some u.k. corporate leaders. where there is consensus, it is the in between moment and it will be damaging and there is consensus whether you see the future is bright. for a u.k. investor do you deal risk -- de risk? we have seen the currency weekend. the studies i have seen would suggest that if we do have brexit then we will lose about 1% of u.k. gdp for a couple of years. that is a big number. it would be an extremely bad decision and a poor outcome for the market and the economy were the british population to take that decision. jonathon: for the rest of 2016, what is your big call? >> i think markets are going to

trade sideways. growth expectations need to bottom out and china needs to stabilize. of impact of the volatility markets and the impact on the financial system and we need to see what corporate profits will do. jonathon: mark burgess. big thanks for joining the program. news.phia from bloomberg up next, iran's post-sanctions shopping spree. we look at the billions of potential deals as the nation's president begins a european tour. week four a20 -- 2016. ♪

back to: welcome bloomberg tv. iran's president begins a two day trip to italy today, the first european visit since sanctions were lifted. president is rebuilding the ties with countries before sanctions. that they have always had historical ties with. >> he is heading for italy and then france and he has chosen italy is the first leg because italy was actually the biggest

european trading partner for iran before sanctions were tightened in 2011. the president said before leaving iran that he wants this to try to create drops -- jobs and trade. jonathon: let us talk petrodollars. hoping, i spoke to one of the prime minister's aides and he says they are hoping to return or get more than the 7 billion euros a year in trade which made italy the biggest european partner. and a lot of ceos and businessmen hewing up to me the president. there is a business forum tomorrow and this evening, he is hosting a dinner for the president and for ceos above the roman forum. thank you very much for

joining the program. interesting what is happening right now. jonathon: persia renault wants this market to start developing again. to get back into iran and put money at play. that money does exist. it wants to invest in iran even if you are in energy. guy: if you're trying to sell a 380, which u.s. struggle to do. the iranians may see -- we will have a few of those. ben if it is just one would a happy man. other aspects of the oil trade, what is happening with the norwegians. caroline: stocks moving once again in lockstep. fx has been hits. check out the euro versus the norwegian krone. 15 percent decline since last year.

with moving in lockstep brent crude coming down. unsurprising. norway getting 20% of its gdp through the oil industry. there are an emergency talks, extraordinary meeting being i'm norway's prime minister and the finance minister and the central bank governor. they are all discussing whether the oil industry crisis, does it mean their economy is in crisis. at the moment, they do not believe it is. they felt the norwegian krone selling off has actually helped support their economy. all of this in some way helping some of the pain. 30,000 jobs going in the oil industry. when does the crisis in the industry become of -- a bigger crisis? jonathon: for me what is interesting, you can have a dollar-ruble look similar to

that one as well. if you inverted wrench. 12 months ago, the narrative has shifted so much. dollar-ruble is now a buffer. where does the truth actually lie? jonathon: -- guy: indications they are happy with the drop they see in the ruble. jonathon: more on oil. ♪

♪ oh remotes, you've had it tough. watching tvs get... ...sharper... ...bigger... ...smugger. and you? rubbery buttons. enter the x1 voice remote. now when someone says... show me funny movies. watch discovery. record this. voila. remotes, come out from the cushions, you are back! the x1 voice remote is here.

jonathan: good morning. welcome back to "on the move." equities rolling over after the open. ftse 100 down by 0.3%. stoxx 600, solid week last week. best week since november. the rollover continues, as does that positive correlation between equities and crude. equities lower, crude lower. let's look at brent crude. brent crude this morning at 31.12. the german 10 year at 0.7%.

lots of market moves out there. let's dig into some of the stock moves with caroline hyde. and ase: one key gainer we head into lower territory, i'll show you some of the downers. up is yes for bank. of 6.7%. the bank reports better-than-expected numbers. they're coming out with 2.5 billion danish krone in terms of profit. they say the return on equity is above expectations. 11.6%. their overall target is 10%. here's your up performer. some of your underperformers, as oil dips lower, see drills. it is off by 8.5%. so many other oil stocks are starting to dip lower.

seadrill was up 24% on thursday and friday. no wonder we are seeing a selloff. it seems as though oil is dictating rhythm market is going in terms of equities. kingfisher as well. from thetting notes chief executive, saying how they are going to return money to the investor. millions of pounds likely to come back in the form of share buybacks. doesn't seem to be living up to expectations. this is a strategy from the chief executive, really spelling out how she wants to improve over the next five years. she says the opportunity is significant. thanks, caroline. let's talk about oil. we've all seen a volatile start to the year. 32, significantly below that. an oil analyst at barclays joins us now.

you look at the reaction in these companies, and it is almost as if the markets believe we're going to get a v-shaped recovery in oil. you don't thing that. >> i don't think so. what we are seeing is that huge snowball effect. that is slowing down. which is a good thing. it also suggests a few things. most of the negatives for oil have been baked in for a while now. evidences ofearest that was last week, when we saw iran coming back to the market. the headline selling that we saw in asia once iran came back was -- we ended the week higher on oil. it suggested most of the factors were out. all of that had been priced in. the move we're getting now is a mixture of that positioning getting adjusted and very little

more negative news to be added on. that said, the price still needs to work its way through balances. jonathan: i'm going to ask you where that point of rebalancing is, and look at the intraday move of crude. down 3% from nowhere. i want to talk about the magnitude of the moves we are seeing. 8% one day, down the next by 3%. what is the message for you? whichis an equilibrium the market is trying to focus on. the market is only seeing a trickle through of supply adjustment. it wants the big chunks to be removed. this photo to let he is a mixture of positioning getting squeezed out as well as the market trying to get to that pain point as well. it is a battle between these two extremes in a sense. we are not getting there yet, but we will soon. guy: what does soon mean? >> in a sense, i'd say one thing

to look out for would be the determination people in april. that would be one point in time where you will start to see more clarity in terms of the supply side. where the big chunks will be removed, in the u.s., or opec members. venezuela is having a massive issue in terms of exporting the oil. they don't have the money to import light crude. there are a few factors like that. that could change the supply-demand dynamic more sharply than expected. jonathan: the real story on the supply side is, you've got no choice but to keep on pumping. you need the cash flow. the real story is, when does demand pickup? what happens to u.s. retail sales? it hasn't had the effect on

demand that many people thought it would. when does demand pickup in a material way? >> that's where it gets very tricky. china's news today that they are not going to adjust gasoline prices lower, but put consumption taxes, just slows down the process. the retail consumer needs to feel the benefit. that is not being passed through. e.m. governments are putting extra taxes. than giveb it rather subsidy removals. on top of that, the u.s. dollar strength as well. that's where e.m., where the biggest potential is for oil demand to actually recover, is not having the same effect. these prices are not adjusting. india is a great example. their prices are higher than two months ago. guy: we've kicked this around a little bit. what the saudi's are signaling by putting bits of aramco on the

block. are they signaling that they think we are lower for longer, in fact lower for a very long time, and we need to start making structural changes? >> i find a few angles interesting. one is, from the capital market perspective. imagine the capital markets available for energy investment as a finite series. just whenning aramco iran is asking for foreign investment as well is a great boy. -- a great ploy. jonathan: you think it is a political play? >> absolutely. it is not about the money alone. guy: they are trying to squeeze the iranians out of the credit markets. >> not only the iranians. capital markets for u.s. shale are up. i would look at this offering. they've got the lowest cost base for producing oil when oil is

falling. that is one angle to look at. jonathan: teasing that a little more, they sell the downstream assets? >> that's what they're looking at. given we are having a refinery capacity glut globally, is that valuable? the only reason the downstream is valuable is because the refineries can source crude directly from aramco. guy: in some ways it doesn't matter which bit they sell as long as they -- >> exactly. jonathan: if this is a political play, the next question is, how does this end? >> they are trying to squeeze them out in terms of the capital markets, in terms of meeting demand as well. saudi oil ministers have been very vocal. there will be extra demand this year. that is part of the reason we think balancing will

be difficult. it is not just because iran is returning to the market. saudi arabia is ready to supply more to the market. this going public brings another story in play. will saudi arabia maintain spare capacity. name a publicly listed oil company where the shareholders are all right with the company maintaining spare capacity. these are questions to look at. guy: i love the political angle. jonathan: are they going to maintain spare capacity? how much serviceable spare capacity is left in saudi right now? 1 milliont it between and 1.5 million barrels per day. in terms of their upstream capacity expansion, they are trying to maximize that as much as possible. one thing to remember, is they have -- guy: the average costs go up as they push that out. >> to an extent, but not as large as $15 or $20 a barrel.

still below those levels. that is where they are getting squeezed. jonathan: this is the first time i've heard. fascinating. guy: genuinely interesting. it fits with the political story and the military story. great conversation. thank you very much indeed. italy's finance minister says progress is being made to help banks offload bad debt. we hear from the former unicredit general manager. ♪

jonathan: hello and welcome back. stocks down, the ftse off by 16 points. let's cross over to nejra cehic. twitter boss jack dorsey has announced a management shakeup. among those going on the head of engineering and the head of product. the firm failed to reverse a slowdown in user growth. adidas says it is in close to learn ah the iaaf reform process after the bbc reported the sportswear manufacturer was to terminate from a deal early due to a doping scandal. as would neither confirm

nor deny the report. a gamer from denmark has started a gambling site to allow players to choose which companies they think will be the day's top performers. they can also bet on the losers. among the stocks included are tesla and netflix. nike and berkshire hathaway didn't make the cut because they are too stable. guy: thanks very much indeed. the italian finance minister says the government is conducting a "very good conversation" with the european commission on a plan to help banks also that debt. speaking to francine lacqua, he said that additional measures to ease the sale of nonperforming loans would soon be introduced. >> the basis is we all agree pl's have to be reduced. we have put in measures on the

credit market that has dramatically shortened the time to a resolution on those disputes. the elimination of deferred tax assets in balance sheet, which allows balance sheets in banks to be much less linked to the timing of those deferred tax assets, and new measures which would be introduced by the government this coming week, which would further facilitate npl treatment. guy: earlier today, roberto, chairman of the rescue banks, told bloomberg he expects interest to come from a range of players. >> these banks present improvement potential as well as cost improvement potential. the type of interest that will be expressed. to come both from private equities and from banks.

both foreign players and italian operators. jonathan: let's get more from bloomberg's milan bureau chief. the key sticking point to resolve the issue of a bad bank in italy, what is it? >> as you know, italy's been talking to the european commission on this issue for several months. talks have been bogged down largely on the issue of, how much of a guarantee can italy provide this mountain of bad onns and not violate rules state aid? that's really the key issue. it looks like they are moving towards an agreement, possibly a preliminary one as early as this week. we won't see one entity that will manage all these deteriorating loans, but setting up a mechanism with some sort of guarantees for these loans when they are purchased by several

other entities, probably. guy: why now? why is it important that we fix this asap? >> i think there's a couple issues. one, italian banks, if they really want to get this issue resolved, it's going to help the economy. there is not lending going on right now. it's filtering through to the real economy. italian banks have been fighting this issue for several months, if not years. i think it's really crucial also to get this resolved. we're expecting a round of italian banking consolidation, mergers and acquisitions, to get kicked off soon. unless they can get this issue resolved, that is going to be further delayed. jonathan: just quickly to follow up on npl's, they are high, but

this isn't cyprus. how serious is the nonperforming loan situation in italy? is it getting worse or staying the same? >> it's already much staying the same. i think a lot of people thought the level of this mountain of deteriorating loans was going to shrink, particularly with the economy starting to pick up in recent months. the finance minister makes the ,oint, defending italian banks saying, yes we have this high level of debt. still, we haven't had a public bailout of an italian bank that performed pretty well after the financial crisis. the solution was found for these four rescue banks, a so-called bail in solution. there wasn't public money involved. soundness ofverall the italian banking system is

good. guy: thank you very much indeed for the coverage. jonathan: the big trade last year was long italian banks, get that consolidation, didn't happen. if you turn last year's performance on its head, worst-performing this year was the best-performing last year. it seems that the fundamentals are in play now more than the expectations of improvement. you wonder what it would take to sort out the italian banking sector. guy: italian banks already being halted this morning. it is the story that we see on a daily basis. the markets struggling to figure that one out. jonathan: up next, from banks to central banks. we give you a preview of what to expect. it's all about the fed and the bank of japan. 49 minutes into the session, equities in the red. the ftse 100 down 0.5%. the dax off by 32 points.

if you're are looking for the positive correlation with stocks and crude, stocks down, brent down. is it a good morning? ♪

jonathan: welcome back to bloomberg tv. waking up in london, maybe it is cold. snowmageddon on wall street.

that is new york. i missed the storm. i'm very thankful. .uy: you went to davos there was a little snow there. jonathan: it is part of the backdrop. guy: how many traders are going to be at their desks today? working from home, i think. busy week for central banks. decision days across the leak. israel today. israel has a lot on its mind. deflation a big team. we get the big one wednesday, the fed rate decision. we got south africa and new zealand at the back end of the week. we've also got ecb speakers. draghi speaks later on. jens weidmann wednesday. bank of japan, and of the leak is going to the party important as well. rate decision from russia as well. busy week for richard jones from bloomberg first word.

you look at all the central banks and think about what happened last week, the stimulus bounce that we saw. we got to think about what kuroda is going to say friday, what the fed says wednesday, how the ecb backs up what it said last week. tease all that apart for me. >> i think the first thing to point out is that we have the german wing testifying to the eu parliament today. i think that is going to be very interesting. we know what draghi is going to say. we know what his line is. i would be interesting to see what the ecb members from germany have to say. there was talk that there was some dissent. jonathan: that was one of the things that was perhaps neglected by the market. market participants seemed to a consensus. going into march, you wonder

whether it is december volume two. are you expecting that? >> if you look at the run up to qe, 6-8 months before that, there was talk then that they should embark on qe. it seems to me that the ecb takes its time to work through different scenarios and get to the decision to ease in a much more slow way than other central banks do. i don't know if i would expect december redux in march, but i think we should get some clarity tonight. guy: we get new data from the ecb in march as well eerie at -- as well. projections on inflation are probably coming down. >> i think the december numbers were based on oil north of $50. you are going to get some rejigging to that. jonathan: business conference at the top of the hour. are you expecting that feedback

loop from what's happening in markets into the confidence of consumers, investors, and the real economy? >> economists are expecting a giveback on those numbers from the previous readings. you'd be really surprised given the amount of turbulence across markets this year. wouldn't surprise me if there was some feedback into that. jonathan: twos and tens, the lowest since 2008 last week. the market spacing their petition on treasuries. you're not going to hike anytime soon. if you do, one, maybe two. if the fed has to catch-up with that view, i wonder whether it is that using or the pessimism. [indiscernible] >> that will be the turnaround. we had a pretty positive assessment in december. if they suddenly change course,

your idea that perhaps there's pessimism is a problem. guy: richard jones, thank you very much indeed. equity markets following crude. ♪

♪ bend me shape me, any way you want me as long as you love me, it's alright bend me shape me, any way you want me you've got the power, to turn on the light shape the best sleep of your life. sleep number beds with sleepiq technology adjust any way you want it. the bed that moves you. only at a sleep number store.

francine: back from davos, central banks take center stage. we break down the decisions you need to know. can they fight deflationary pressures? about a dozen deals are said to be signed between italy and iran. they say they are sustaining investments. italian finance minister says the government is working with brussels on the plan to help offload bad debt. italian banks remain volatile. welcome to "the