vonnie: catching up the ecb, the 10-year yields at an all-time low, and stocks gain. in a bloomberg exclusive, the manager saysy outlook talks are only possible at all exporting nations agree. and if amazon does not deliver a not so prime holiday season. good morning. this is "bloomberg surveillancee."

i am francine lacqua in london. matching estimates. again, since governor kuroda announced, it seems like much more of a race now. ecb vs. doj. that is one of the key things of this hour. mike: absolutely. it is definitely a "your move" time. now in the crosshairs of the japanese yen, it will be very interesting to see how the ecb reacts to all of this, fran. francine: we will have that next. let's get to bloomberg's first news with vonnie. vonnie: yen is just underneath $1.21 now, trying to jumpstart the nation's economy. kuroda japan governor announced the move today. he hopes it will push banks to sluggishpite japan's

economy. the central bank will be charged a fee. talks overws, peace syria resumed in geneva. andesentatives from russia syrian president bashar al-assad's government will meet. the u.n. is brokering the talks, saying syria's humanitarian crisis must end. all sides are using hunger as a weapon, putting up blockades. u.s. diplomats say they are having a hard time getting otherworld hours to get tough with north korea. promotings. is fo u.n. sanctions. among the ideas that's cutting off the country's oil supplies or finances. the yuan is not expected -- the

u.n. is not expected to back either plan. brazilng the zika virus, is hardest hit. in august, the world health organization well hold an emergency meeting monday about the crisis. the virus has been found in 24 countries now. and conservative lawmaker care and brady said according the eu will make it harder for british teams to sign. fans will face travel restrictions fear she is vice chair of a soccer team. she has a soccer ball in the game. let's look at japanese data, michael. you got what you wanted, and people are lining up to buy.

u.s. futures are higher. bonds around the world are moving lower. story.hole another brent is through 34. we will talk about that a lot this morning on "surveillance." second or does this morning has got to be all about japan. you look at the yen, it did go $1.21, a little bit below it now. record lows,s, corroded goes negative, that is the two-year yield. interestingly, not a big deal. francine: if we were in a discotheque, this is the board you would be watching. you can see stocks gaining. 2.8% higher. there are questions we do not know about, the vote was very

5-4., the ones who voted against said they argued it would give the wrong impression. becauseut oil in there we had a great interview with the energy finance minister of russia. they said they want to meet with opec producers, but nothing is on the table yet. mike: it was a very close vote in japan. here is maybe what kuroda used to convince his colleagues. we're looking at the trade weighted japanese yen. it was getting weaker, and then when the ecb and the fed acted in december, it was very weak. but look what happened over the last couple of weeks as the market turmoil in china took a toll on china. the yen starts to get stronger again, exactly what they did not want to see. kuroda makes that case today to

his colleagues at the bank of japan. francine: the bank of japan governor surprising markets, as you were just saying to we are joined by bloomberg news' jodi schneider in tokyo. saying just days ago that we were not looking a negative rates. was he trying to throw the markets off, or did he make the right choice? jodi: he likes surprises, we know. easebody was thinking to further, we asked that question last month. this month, he is surprised by imposing negative interest rates starting in february on a portion of the current account balances that financial institutions held with the doj. it is tough to tell what the but theotivation was,

press conference after the decision was made, he made it clear he will use every tool in his arsenal. this is a tool he has brought out. obviously, there are institutions in europe that are doing this -- switzerland, denmark -- and he is trying to take a page from that. the thing that was interesting also today is just hours before the announcement came, there was some negative data from december before the current market turmoil, therefore production way down, household spending way down. mike: their whole goal, jodi, is to bring inflation back up to 2%. they pushed back the date when that will be accomplished. right, for the third time in a year. that would have been our big headline today, but with this other bid in the arsenal, that is taking the second-place. but yes, the inflation target has been move forward.

kuroda's message is i will do whatever it takes to reinflate this economy. the question is -- will it work? and will it work here in japan? thank you, the trillion dollar question. jodi schneider in tokyo. we have antonio garcia pascua with us. i spoke for about half an hour to governor kuroda, and he says for the moment we were not overly worried about and inflation-- about expectations. he said he is not looking at negative rates. so what happened? is reallyhink it fascinating. you look at the first part of january, and what do you get? time and timeing again, "i am not thinking about the negative rates." the last time he said it was the morning before the ecb meeting

where we are finally going to do some more. he speaks again, he spoke to you, he spoke more generally and almost, he talked about how they may do something more, but he did not say they would do anything on negative rates, so it does feel that the moves he has been making here is in part a reaction to what happened last november. francine: i've always been told that if you are going to play divergence this year, forget said, ecb, because it is overdone -- everybody knows about it. but the best i've urgency -- div ergency was between the ecb and the doj. simon: i think that is exactly right. you the other thing it reminds me of -- this time last year when a swiss national bank was sitting there, there is one thing they thought the ecb was going to do, they had to change policy. it is fascinating. mike: you have got to ask at

this point, what does mario draghi do in response if anything? antonio, when you look at one of the things that mike was alluding to, when you look at governor kuroda, where is the? antonio: clearly inputs pressure on the fed with closed data. we do not know if it is the beginning of a weaker trend. questions -- it does pose some questions for the fed. is almostthe market potentially two put downward pressure on the euro, upward pressure on the dollar. it is not that inflation in the u.s. i think it clearly puts pressure, even if we believe

that indeed what we have seen is a soft patch rather than the beginning of a trend. we do not know that, but we see it from labor market data. the data is really the economy is doing ok, but the pressure is on for the fed, no doubt. this point, what does china due to react the chinese central bank was very clear that the chinese yuan was part of the problem. fascinating, it is the way all these elements in come together. governor kuroda was speaking precisely about problems in china and the yuan. the smartest thing they could do right now is not to devalue. given everything we heard from different chinese officials, both that doubles and in the press over the course of the last few days, i do think the

pressure has intensified, more than just trying to tighten up on capital controls. they do not want to benefit the speculators. they made it absolutely clear. but by the very fact that we have a cheaper yen, that encourages japanese producers to use manufacturing bases in china to onshore that manufacturing even more if the yen continues to weaken. devaluation -- the right capital controls are being times. mike: simon derrick and antonio garcia pascua are with us for the hour. how does the fed respond? coming up on monday, a conversation with that vice chair stanley fischer from the council on foreign relations. tom keene will sit down with mr. fischer to discuss. monday, 1:00 p.m. in new york, 6:00 p.m. in london. this is "bloomberg surveillance." ♪

mike: good morning, new york. if you have got yen, they are worth less this morning. this is "bloomberg surveillance." i am michael mckee in with tom keene along with francine lacqua. vonnie quinn has what is going on in japan. vonnie: in japan and elsewhere in the world, the biggest oil haveas producer, profits fallen because of the global slump in energy prices. citing lowers prices. gas and a grip on the european

rupertion company, murdoch's son, james murdoch, is the inner parent -- heir apparent. slowed in theery fourth quarter as terrorist attacks kept tourists away. gdp in france moved .2% in the final two months of 2015. meanwhile, spain maintained theth, .8%, unchanged from previous quarter. that is our bloomberg business. francine? francine: vonnie, it is interesting, looking at a growth that we saw in countries in europe, maybe a temporary reprieve, but now they have to deal with the doj. this is what i picked for my morning must-read, out of "bloomberg view." as the st. louis fed reports

help simmons straight -- helps demonstrate -- withine: so we are back our panel, simon derrick and antonio garcia pascua. these markets have been pushed into taking more risk because of central bank action. when you look at negative rates, simon, the side effects can be pretty bad. simon: i would absolutely agree. you only have to look at quite specifically increasing volatility in financial markets. this intense focus that is created has put some remarkable days. the move since last february, last march when janet yellen made her expectations. that is bad news, not good news. ishink what it really does

it drives and intensifies the search for yield. necessarily intensify investment in real industry, and that is where the problem lies. francine: antonio, how will this impact japan differently from countries like sweden, switzerland, denmark who have already done this? antonio: the issue of negative rates has negative results, and there is no doubt about that. you can add to those the fact that banks repeatedly have been squeezed, and you can see how bank equity has been reacting negatively, but it does help, and just to link it to the fiscal story, it does help those countries that are highly leveraged, those sectors that are highly leveraged. look particularly in spain. last year, they funded at the lowest interest rate historically, right, .8%.

the lowest on record. this is a country with the highest amount of public debt in this very low interest rate policy is making life a lot easier and allowing space to spend, which is the right thing to do at this time. so there is some positive effects of this low rates, especially in europe. mike: simon, the euro-yen exchange rate had been on a weakening trend. this reverses temporarily, but does it go back the other way in the long run? the action over the last couple of hours -- actually, it is a good question. there is a race to the bottom on monetary policy. it is genuinely a battle about who can win the game between europe and japan. the interesting bit about what japan has done in terms of the policy is actually by only doing it on the monetary reserve ither -- it actually makes

easier for them to cut further. maybe that can be one of the key stories here, having creative flexibility to do more monetary policy. that was the fascinating thing from mr. kuroda. for me, it is the yen that wee akens, not the euro. francine: thank you so much. we have plenty more questions on japan. we will also see whether it has an impact on japanese banks. we are back in two. the conversation continues. ♪

francine: welcome back. i have francine lacqua in london. mike mckee and vonnie quinn in new york. let's focus on oil. the decision to cut oil is crude-exporting nations are in consensus. that is according to alexander novak, who spoke exclusively to bloomberg's ryan chilcote. we heard they were ready to me. now it seems the possibility of oil production cuts is further away. ryan: we really saw the spike yesterday on the back of comments from the russian energy minister who said there might be producers andween opec itself. he said no, no, we have confirmed that we will attend the meeting that venezuela will have, but it has not been confirmed yet.

venezuela would like to have a meeting, russia said they will go, but there is no certainty that there will be a meeting, nor is there any certainty that follows that there is any production cut from opec and non-opec countries on the cards just yet. opec and saudi saying we will cut if opec cuts, russia saying i will only cut if saudi cuts. are they going to cut at some point? ryan: it makes it pretty easy not to cut if everybody is saying the same thing. agree, think most people it will be highly unlikely for russia to cut. first off, right now, all they are doing is increasing production of the price of oil falls, so it will be a complete change in direction. technically, it's difficult for them to do when it is cold outside. it is tough to turn off the cap for engineering reasons. i do not think russians really trust opec. even if they did agree to a cut. francine: ryan, thank you so

much. ryan chilcote with a great exquisite interview with that energy minister of russia. on the back of ryan's interview, opec was gaining when we were asked acting opec and non-opec to cut, definitely paring some of the gains today. coming up in the next hour, harry tchilinguirian of bnp paribas will join us. this is "bloomberg surveillance" on bloomberg television, streaming on your tablet, your phone, and bloomberg.com. the conversation today is focusing on the doj and the price of oil. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.

it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. the bank of japan surprises, and here is the reaction. japanese yen significantly

weaker against the dollar and against the euro. the japanese government bond at record lows this morning. bloomberg's first word new spirit vonnie quinn have the details on what corrode ut kuroda has to offer. the central bank is using negative interest rates to spark the nation's economy -- or at least try to. kuroda announced the move today. he says he hopes it will push inks to lend -- banks to lend. the bank of japan will continue with the quantitative and qualitative monetary easing with a negative interest rate, as long as it is in a stable manner. going forward, we will examine risk factors between economic factors and prices, and if necessary, we will implement initional easing measures

terms of quantity, quality, and interest rate towards price stability. news, peacether talks aimed at ending syrian civil war in geneva, but there are worries there will not be -- they will not be effective. the main opposition group is not expected to take part. the u.s. state department is urging them to attend. they must find a middle ground about the future president a thought. -- assad. iran took pictures of a u.s. carrier over the -- a u.s. drone ove hovering over an aircraft carrier. the u.s. is not commenting. global news 24 hours a day, powered by our 2400 journalists and more than 150 news bureaus around the world. i am vonnie quinn. back to you in london. economists were

expecting -- we talked at length about the economy and russia. we talked also at length about the ruble weakening. cameron news, david also traveling to brussels today to meet with jean-claude juncker, stepping up his efforts to force through a deal of the eu membership. antonio garcia pascua and simon derrick are still with us. for, thank you so much sticking around here we do not have a referendum for a day. we came up with june 3 in our calculations. the timeline is extremely uncertain, and what we find out today, david cameron rushing to brussels. it does not sound like negotiations are going very well. antonio: it is a tough one because one of the key issues is

migration, which right now is very live. it is one of the pieces for the u.k. as well, so providing some concessions for that area is complicated, but i think it is unavoidable. i think there is a potential risk of a u.k. exits, and i think they really want to accommodate what is impossible so that the february 18, 19 is a success so that the june is indeed the time for referendum. remember that the summer is bad so toms of flows, squeeze in the referendum right before the summer seems like a right thing to do if you want to give a good chance for the u.k. to stay. so i think it is critical. february 18, 19 meeting will be very important. francine: the concern of the market is we do not really know exactly what we are looking at. we have the old markets, and we

do not really know what we are looking at. there are so many unknowns. is, why areroblem we having these extreme moves? of it is what we were talking about earlier, the fact that people are pushed into taking more risks. but absolutely, it is the great unknown risk, and it is not just the direct risk for the u.k., which we cannot really model yet. what, for example, happens if scotland decides to go for a second referendum? do we start talking about the scottish currency question again? we have the membership with the eu -- what does that mean for everyone today? there are so many different forces that what i think it means is volatility remains with us. wonderingnio, i am who have the leverage in the conversation here? both sides seem to have a lot to

lose. who needs the other more? antonio: clearly, the impact is for both. on financialrade links, they are very tied. in fact, the most notable ones. so i think, and all the research, an institutes have come up with a range for the u.k., but they tend to be quite costly. from a european perspective, it matters not yet because of what matters from the trade perspective, but also what it means for some of the elements within the different euro, european countries, but some of them are also containing a potential exit, so i think it is truly in the interest of both to find some agreement in this discussion because indeed there is a lot to lose. mike: how much leverage or how much power does juncker have in these negotiations? is he able to make any concessions that will stick with

the other members of the eurozone? antonio: that is a difficult one because indeed other countries are going to be looking very closely to whatever concessions are provided, and as i mentioned the matter preoccupy the most, the u.k. and u.k. politicians, is the issue of immigration. what can they do to provide more sort of self-control on the issues related to border, on the capacity to provide welfare benefits to migrants, to inflows? this is an issue that matters the most for voters. and there is not a whole lot that you can change in those areas, but it is better, otherwise it will be very difficult to comment, but this is the key issue. the key issue is migration. francine: i was going to ask that, simon. vonnie: how much of that helping david cameron's case and the

rest of europe for them to come together on a solution that might actually satisfy cameron in the end? simon: i think the very fact that it is becoming an issue across europe really does drive the need for some kind of compromise. and again, i think the point has isbe made that seven months where you have this huge pickup in the migration story. i think is key here because there will clearly be a concern that if we have a repeat of last will weigh heavily on voters. so the desire to get something that is an amenable compromise that david cameron can use will pick up quite substantially. vonnie: if we get an actual date for referendum some point soon, how much does that factor into the markets given that we have so many other things going on at the moment? simon: well, it is interesting hasook at when volatility

picked up. there are other events in the united kingdom that have been so closely contested here we can go back to september 2014, the scottish referendum, we can look at the general election last year. votes.ere nine page really is volatility has picked up six weeks to eight weeks beforehand. what you would probably end up with is a q2, which will have increased volatility. antonio: i fully agree with that, indeed. when you look today at what the markets are pricing, they are still thinking that it is going to be an october-november event. because thell be europeans tend to delay things, as they always do. but if they really manage to push it through before the summer, which is what we expect, then you should see an increase in volatility. and we have not seen that yet in the market. that will affect pricing because

i think they were really try for june. francine: the poles of seen everything from 50-50 to 60-40, 80-20. what polls do i believe? there is so much uncertainty, and we get a vote in six months. simon: let's go with no polls whatsoever. you look at the polling ahead of the scottish referendum, ahead of the u.k. election -- there are explanations as to why that was the case. they were not given sufficient portions to certain demographics. how is it doing this time around? for me, i think this is the problem for investors right now, and even if they come back and change that, and they explain how the methodologies change, i think that will feed into the volatility. antonio: and the issue that the campaign has not yet started. francine: it is changing. antonio: that is why the february summit matters.

what campaign taxes we use and then that will shoot to some extend into the volatility and the polls. so again, to focus on investors, i think that matter is very important. forcine: thank you so much your coming up on monday, a conversation with vice chair stanley fischer on the council of foreign relations. tom keene will sit down with dr. incher on monday, 1:00 p.m. new york, things a lot p.m. in london. i'm looking forward to that conversation. this is "bloomberg surveillance." we talked macro economics and finance. ♪

vonnie: this is "bloomberg surveillance." i am vonnie quinn along with

michael mckee in francine lacqua to we have to start with japanese data. let's take a look at yen, 1.21 twojust below $ the u.s. dollar. the bank of japan deciding to move into negative interest rate territory. it is affecting all asset classes and japan. of course, what is bad is good once again for the stock market. nikkei rose by 2.8%. dropping to the seven-years premarket trading in the u.s. this morning, looking at amazon, dropping precipitously. now, down more than 10% even though results were not that bad. the point about those results is that now, amazon is spending again, moving into other areas, which is typically what the company does. quarter midyear, then toward the end of the year a good quarter.

mike: it is fascinating because we have seen jeff bezos do this before -- disappoint investors, not put money to work. the company reported in the last quarter $7.5 billion, but it is not going back to the shareholders. you have to wonder at what point do they lose patience? the stock down in premarket trading -- does that continue? vonnie: analysts are saying there will be some upside here. what will happen with the cost? and of course the spending on the super bowl next week or the first amazon add. -- ad. mike: they do not have a problem satisfied customers right now -- they have a problem satisfying shareholders. vonnie: web services -- amazon breaking out the performances. sales,up 69% in terms of so really a blowout quarter for

amazon web services. microsoft as well, in the cloud, also really performing well. mike: interesting because when was the last and we heard about word or windows as a microsoft product? it is all about the clad now -- nadella. for satya francine: i love amazon, so i've been trying to figure out, guys, they said two days ago that they want to suspend in japan. makes a big part of their sales. i know it makes me a better mother when i travel. one of the yen, vonnie, the things we have not discussed is when this really filters through to growth. central banks delving into this negative territory, what does it mean for bank depositors? what does it mean for japanese banks? that is what we will try to

figure out, especially as these negative rates go even more negative. mike: interesting. it is not all take deposits. it is a fraction of new qe that comes out, so will the impact be as much as people are talking about this morning? we will continue that conversation, and coming up later today, how does this impact the united states? wells fargo's chief economist will join me on surveillance radio, boston 1200, san francisco 960, and in washington, pay attention, presidential candidates, 99.1 fm. ♪

mike: this is "bloomberg surveillance." i am michael mckee with francine lacqua in london. good morning from tokyo. and as aof japan acts, major impact on global markets. let's get to the bloomberg business flash now. announce itx will is splitting into two companies according to the "wall street journal." one unit will handle hardware

operations with the other handling business protocols. meanwhile, carl icahn will get three seats on the service company's board. that now stands at 8%. games.od, music, and fell 33 -- sony saw a 33% 99tain income to nearly billion dollars. sony is crediting the james bond movie "spectre." 25" anddele's " playstation 4 consoles and software titles. making compliance with air-quality rules. according to the "new york times," citing a lawyer for vw, it is the clearest indication yet that did the automaker may not have the technology to clear the admissions. that is your latest.

francine? francine: vonnie, thank you so much. ,oday, we get our gdp numbers all to do with oil to it on monday, the presidential primary season kicks off as i was holds its much-anticipated caucuses. now, let's welcome back our guests antonio garcia pascua and simon derrick. what i'm watching his market volatility. it will impart be dictated by the price of oil, which is fluctuating because we do not understand whether they will cut or not or whether opec and non-opec will agree is some point to cut production. will they? it can't go forever lower. simon: what is fascinating here is clearly there are great debates about russia and saudi and what they will and will not do. this clearly is going to carry on. we do not know better supply-side. that the thing

that gets left out of the debate constantly with china is the other side of the debate, which is the pricing. if you look over the course of the last 18 months, so much in the moves of the old price, prices shifted dollar demand. so if we are talking about here japan making a move at a time when the fed is actually looking to essentially make rates higher, that makes the dollar more attractive. if so, outward pressure on oil. it is fascinating today. francine: ben bernanke seven days ago said he has seen the dollar rally. in thewell, he is right sense that if you look over the course of the last few months, clearly there has been a sense that momentum has slowed down on the dollar index, but look what is happening now. makes, relatively speaking, the dollar a more attractive currency. that is why the fed is in a difficult position.

mike: that raises the question, simon and antonio, where this all ends. we are already seeing devaluation on a lot of asian currencies this morning. thate japanese moves and forces the ecb to move, are we in currency wars now? simon: i certainly think it is a risk. -8ink about it -- four g nations now have negative deposit rates. england -- it clearly is a fairly fundamental issue. and talking about negative deposit rates, it is hard to think about that not being connected with a desire for the currency to weaken. i know everyone denies that they are involved in currency wars, but let's be fair. vonnie: isn't the problem here that there is no inflation anywhere in the world, so countries are shifting this all around, but it is not going to come out to anything positive? antonio: yeah, that is a major

headache for central banks, and the one that really symbolize that well is the ecb. we have positive inflation today, but with the strength that we've seen in the euro in part because of the weakness and prices, what you will see probably next month in february is the area going to deflation again for a few months. remember, the ecb's single sodate is an inflation one, that was really the ecb on the spot because they need to markdown. what can they do? back to the question of the positive rate cuts because that will cut their currency, as simon mentioned before, and that will benefit with inflation. so not many choices. francine: antonio, what inflations can you look at?

mark carney gave a great speech where he was saying this is what we should be looking at because it showsisinflation, up in court inflation. as a central bank, how do you know how to predict where oil goes? antonio: it is true. headline -- inflation. they escape from that mandate, but they are right -- but you are right, the best way to go coret is to look at inflation. it is very persistent, the weak oil prices, and you have a problem. the core issue here is asset price inflation. i think that has been the story for the last 15 years and has been inflated by what central banks are doing. what they are looking at now is concern and they will see a rapid unraveling.

that is where the european central bank is right now. i am not saying that is what they should focus on, but that is what they are focusing on. francine: guys, thank you some mustard we did not even touch on the fact that the central banks have the tools to start fighting. that is a show for monday. coming up in the next hour, geoffrey yu of ubs what join us. this is "bloomberg surveillance." we continue the number station on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.. the conversation today not only focusing on the risk of deflation, what that means for central banks, but if what we heard from governor kuroda. is it a race now to have negative rates around the world? that is the conversation coming up next. ♪

market gets what it wants. more stimulus.

from russia with love. talk of oil. and amazon -- it does not deliver for shareholders. good morning. this is "bloomberg surveillance ," or should we say ohio? .'m michael mckee in new york francine lacqua is in london. in a complicated, confusing world, we get another twist that nobody expected. francine: we spoke with governor kuroda at davos. the new dimension -- what does it mean and how far will central banks go? this is not a huge move but extremely significant in central-bank psyche. michael: it was not a big move by the japanese central bank, but it got the market possible tension. let's get to "first word news" with vonnie quinn. vonnie: to let you know, the market reaction, the nikkei is

below 8%. investors are surprised by the latest move of japan's central-bank. the negative interest rate policy being used to jumpstart the economy, or to try to, at least. governor to rhoda -- governor kuroda announced the move. in other news, efforts at ending the serial war in syria continued in geneva. representatives from russia and -- the rebel fighters backed by saudi arabia are not expected to take part. the u.n. is brokering the talks. health officials at the brazil olympics will speed the -- health officials say the brazil will speed the spread of the zika virus. nearly half a million people are

expected to attend. -- w ruling means the princess is the sister of -- and for the republican presidential hopefuls in the u.s., the show must go on, even without donald trump. the leading candidates squared off last night in their seventh debate. but the front runner was still on the minds of his rivals. rubio: it is not about donald trump. this campaign is about the greatest country in the world and a president that has systematically destroyed many of the things that made america special. played while the debate out, donald trump held a fundraiser for veterans. global news 24 hours a day,

powered by 2400 journalists in more than 150 bureaus around the world. michael: it is a current rhoda -- a kuroda data check this morning. s&p futures are higher by three quarters of a percentage point, and the yield curve has moved down, the 10-year well below 2% today. possibly discussions about maybe, maybe cutting production. but it is really all about japan this morning for most of the markets. the japanese yen really moving on the japanese central bank's move. now, now over 1.21. over 121., now the dollar index, interestingly enough, barely moving on the

day. fran, the currency wars are underway. certainly feels like currency wars, and when you here what governor corona told parliament let -- when you hear what governor corona -- governor cure rhoda -- the boj is surprised because they were directly trying to target ecb action. i also wanted to bring crude oil up there. 3.325, apparently flat. there was an important interview with the russian energy minister, and he said he is looking at possibly meeting with other opec members, but there is nothing scheduled. that means the markets are nervous and we will not get cotton production. why did the bank of japan do this yak of you could see this in japan's forex.

abenomics over the last couple of years has pushed the yen weaker. as you could see, when the ecb and the fed moved in december, it had a major effect because of the change in exchange rate differentials. but since the first of the year with market volatility, we have seen nothing but the yen getting stronger. that is not what they want to see. kuroda-san may be seeing -- may be showing this chart to the board. geoffrey yu joins us from london, a clear rich investments portfolio manager. i want to start with you. the forex market, you have been following it for years. was kuroda back into this? and will this force mario draghi to respond? eoffrey: it feels like it. only a few weeks ago he was

pushing back against the notion of negative rates. it is not just against mario draghi even. it is the fear of global liquidity seizure, global risk that willn china, and continue to drive risk aversion, the yen higher. francine: governor corona also -- i-- governor kuroda spoke with him in davos last friday. we did not discuss negative rates, but he said he would do whatever it takes to get to his mandate. kuroda: this is the underlying inflation trend. can expand ore further strengthen qe in many ways. tore are many ways

strengthen or expand qe. francine: what are the bolsters against this negative rate? there was concern the markets would imply from the move today that there would be a limit on asset purchases. this does not feel like that. this is governor kuroda trying to do what he can. am i right? geoffrey: if you look at the initial reaction in the stock market, it rebounded and then it fell. then we ran it close to the 3% rise. it was not a quantitative element. so was that a problem? all of this is an experiment at the end of the day. no one knows what the impact of negative rates will be, so it is a very small step right now. there are marginal rises and balances. if it is going to be affected, the yen does not strengthen or weaken, they will not rule anything out. it will be a combination of the

two. michael: from an equity investors point of view, as g whywe do not really know markets have gone down. is there a psychological floor underthings that will end the market route? ryan: i don't think so. they were that he used that was most poignant was "experiment," and the central banks are still more or less experimenting. if you think back to the credit crisis, it was unprecedented. the only comparison we could make was the depression. so we needed an unprecedented policy response by the central banks all around the world, the fed, and we got that. the unwinding of that policy response -- why shouldn't that be just as unprecedented and call for experimentation that g

jeffrey just mentioned. vonnie: it is definitely making a difference to the global stock market indexes. bryan: i tried my best to ignore it comes to -- as much as i possibly can. as a mid-cap manager, most of the companies i invest in our companies that have most of their operations here and the vast majority of their sales here, and they are bringing great growth and innovation to the market and to the world and i will tell you, in speaking with these companies, they are doing important work. whether the dollar-yen exchange the -- is x, they are still working hard to bring great innovation to the u.s., to the global markets, whether it is in enterprise security, keeping the bad guys out of our networks, or bringing other technologies. it was interesting,

brian, going back to the rates are -- negative much weaker than we had here , but what do we know about the side effects? are you uneasy that everyone is experimenting with negative rates? geoffrey: if you look at the comments from the swedes, the danes, and the swiss, they have not seen any side effects in terms of market transition. that is good for now. the problem is, what about the fiscal side effects? willnks pass it on -- banks pass it on to retail? if this happens -- if japan banks pass this on, and you get banks, that ism a risk, but so far we have not seen it. michael: we are going to continue our decision with the

bank -- our discussion with the bank of japan upsetting things today. things are better across the board. coming up monday, we will find out what the fed thinks about all this. tom keene will sit down with stanley fischer, a life counts -- a live conversation with the council on foreign relations. monday at 1:00 in new york, 6:00 p.m. in london. ♪

francine: welcome back. you are looking at live pictures of the city of london. the bank of england may force lloyds banking and other big this has tobanks -- do with the banks being able to withstand shocks. i am francine lacqua.

vonnie quinn and michael mckee in new york. let's get to the "bloomberg business flash" with vonnie quinn. remindingff bezos is the world again that amazon is always in investment mode. shares were sent lower in extended trading yesterday, down 11% in premarket. amazon is increasing spending with its ion growth. eye on growth. forosoft, once mainly known personal computer software, bought more cloud services and internet-based tools. more than 75% of fortune 500 copies are using two different microsoft cloud services. walgreens says it will stop sending lab tests to california

after u.s. regulators found severe deficiencies at the lab. the companies were providing lab tests to consumers. is majority of its analysis not affected. that is latest bloomberg business flash. corona wasvernor clear in saying that china was also one of the big reasons -- governor kuroda was clear and saying china was one of the big reasons. let's -- let's take a look at what the impact of that has been. over the last year, we have seen the white line shipping out of on ahai exports from china regular decline. then you see in august the yellow line. the u.n. gets revalued. it starts to move lower and we start to see the exports from shanghai flatten out and move higher. so the chinese engaging in a little bit of currency wars

already as well, and now we want to know what happens next. geoffrey yu, is china going to be forced to respond as well? geoffrey: for now, probably not. china and japan are complementary economies rather than competitors. that might change in the future, so i do not think the pboc will be too fussed about this. the pboc will be word about how the currency moving lower will be. shore that will get their money out. a different dynamic. a three-tier system right now, getting quite complicated. giving -- given that most of the jake peavy's are hosted -- the effect on the japanese population? geoffrey: they have to be careful that negative rates will

not be charged on retail deposits. i think in denmark, last january, about 97% of danish deposits were charged negative, but that was not passed on. up ahead, japanese custom he -- japanese companies will have to invest more overseers and pay more wages so they can pay more taxes. francine: who has the toughest job among central banks? where would be the smartest play in 2016? geoffrey: all central banks would say they have the toughest jobs right now. if you look at what separates the fed from everyone else, everyone else is trying to ease. the fed is trying to normalize. if you look at market pricing, what came out of the fed decision was they are not pushing back against the market's more conservative pricing. michael: this is one of the many things that have overhung the markets. other oil prices -- u.s.

companies very much affected by oil prices. it is a cost for many of the companies that you buy. now that change things you have put a floor under oil as well? brian: when i look at the dynamics between companies that use oil as their feedstock versus those that benefit from a lower oil price, i am surprised by the market possible hader. right now we are -- by the -- et's i am a little bit surprised that the market is equating lower oil prices with armageddon or something horrible. are you making any investments because of the huge drop in oil? brian: as it relates to companies that are earning money from producing oil, refining

oil, etc., we are to appoint where you -- we are to a point where you have to look. earlier in the week you had your first oil emp do in equity deal, raise equity to appease the bondholders and stave off what most emp companies were heading toward, which is zero for an equity price. that is a good sign. as it relates to the suppliers of oil in the world, the united states is rolling over in its production. you will see probably a million barrels of oil a day come out of u.s. production. at the same time you have the saudi arabians and maybe the russians beginning to talk about, is this really what we want? neither of those countries want $30 oil. they are hurting. michael: is this going to result in something? that is the question we will put two harry tchilinguirian of pnb paribas -- of bnp paribas.

this is "bloomberg surveillance ," streaming on your tablets, your phone, and bloomberg.com. ♪

francine: welcome back. the surprise of the day. cuttinggovernor kuroda rates. a lot of strategists are saying let's get back. let's talk about this but also the impact of oil prices on these deflationary pressures. we are back with geoffrey yu of ubs.

if you look at oil, he says it is clear that it is a demand and supply issue and we should not read more into it. yet the markets are testing something. it something more sinister, or are we looking at much slower growth? geoffrey: growth is a worry -- but if you agree with brian, the oil should not be pointed up again. i cannot identify anything systemic. we are longer on the norwegian kroner. that should be a long that. francine: what is your favorite place this year? onffrey: we are long dollar-yen. michael: brian, we have to ask you your favorite play for this year. has it changed, given what we have seen? brian: i have so many of them now after volatility in the last

three weeks. even since yesterday, you are seeing right now stocks react to earnings releases that just missed by a hair and fall 15%, 20%. it is an overreaction. incredible overreaction, and as a result, great opportunities. i think about a company like alliance data systems, which reported yesterday. not armageddon. one of their businesses slowed a little bit. but the rest of the company is fine and the stock was down. vonnie: are you judging based on earnings, based on sectors? brian: earnings. we are not top-down investors, starting with any great prediction of gdp or oil or interest rates. everything we do is from the bottom up. vonnie: how many quarters will we see this? earnings missing by just a little bit? brian: difficult to say because

a lot of the revenue miss that we are seeing right now is not so much volume driven, it is currency driven. all those companies with sales overseas are importing that weaker currency, and it is showing up in their top line. a lot of these companies are doing everything they can and quite successfully to continue to improve margins and generate cash flow that was higher than last year. michael: we are going to continue our conversation with brian angerame and find out more about what he is investing in. maybe he is looking at xerox could coming up on "bloomberg ," xerox ceo ursula burns will join us. the company splitting in two. this is "bloomberg surveillance ." ♪

francine: welcome back. this is "bloomberg surveillance ," and you are looking at live pictures from london. i am francine lacqua and london. michael mckee is in new york.

vonnie: pending on say more help is needed to defeat islamic state. -- pentagon officials say more help is needed to defeat islamic state. they say that the white house and its allies will have to send more commandos, advisors, and trainers in the coming months. the u.s. has 3700 troops in iraq and a handful in syria. aimedlks and -- the talks at ending the civil war in syria resumed today in geneva. u.s. officials will sit down with representatives from russia and with bashar al-assad's government. but the main opposition group is not expected to take part. the u.s. state department is still urging them to attend. negotiators must find middle ground about the future of president bashar al-assad. and what if the front runner of the debate did not show? the republican seventh debate of was held last

night, but donald trump sat out because of a few with fox. is why you need to send someone from outside of washington to washington. i think i need a washington english dictionary converter. let's get things done. vonnie: chris christie there. trump was elsewhere in des moines, attending a fundraiser for veterans. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i cannot wait for the voting to start because maybe then we will see something we can rely on as an indicator as opposed to polling. areael: a lot of people wondering how we got here, leading us to our "morning must-read." sarid zakaria writes in his "washington post" column

-- it is interesting that if donald trump or ted cruz were reelected with a republican senate and the republican house, there is a chance they could indeed repeal obamacare. you can bet that will be a talking point for the democratic candidates on the campaign trail this fall. vonnie: it is absolutely fascinating. it is still theater, but it will get down to brass tacks and policies. francine: when i was in davos and i spoke to chuck hagel, your former defense minister, and we had a one-hour conversation, i was trying to get to the bottom of voters' angst. in greece when you look at the

rise of tsipras, and the rise of put demos in spain, there is -- even hagel was having a difficult time pinpointing what it was. it may be the economy, or just that the politicians are becoming that much more bland, but the associated policies that they bring with them, these extremists, is also dangerous for the world economy. vonnie: and talking about how some far right politicians are dealing with far leftist policies to appeal to voters. amazon is down 11% premarket. apparently the results did not deliver, but i want to bring in paul sweeney, the head of research for bloomberg intelligence. amazon is one of the only companies out there that is investing, trying to work toward the future. analysts do not have a problem with amazon's results.

why do investors? paul: they said they would -- them thisgot used to bike the fact there was not much profit. 2015 they dial back the spending and profits jumped and the stock reacted favorably, so investors were saying maybe we are in a new world for amazon and we will get more profits today. those issues were quashed a little bit last night when the reported earnings and eps missed pretty badly, and because expenses rose more. now we are back to the same old, spending money now for future growth. investors have to reset their expectations for spence is an near-term profits. michael: you have to wonder how long it keeps on because there was a big cash build during the quarter. it is not like they could not return some money. paul: exactly right. investors are looking at amazon

and saying i know this is a great long-term play on the growth of e-commerce. we saw disappointing results from ebay, so if you are an investor looking at the e-commerce story, amazon is it. but the question is, how long do i have to wait for profits? business, new businesses such as media and technology, investors have to --alibrate their need term there near-term expectations for this company. investors are able to get comfortable with that and return to pretty good progress. francine: you stole my question. how long do we have to wait? at the moment they are in investment mode. do i wait five shares -- five years, or is it longer-term? paul: i think it is longer-term. investors up until mid last year were comfortable with the fact that this is a story that is a long-term play on the growth of

e-commerce. is about 7% of total retail sales today. a lot of forecasters are looking for that to be closer to 9% to 10% over the next several years. it is a strong long-term secular growth story behind amazon, so i think investors, given that tailwind, are comfortable with the company investing in their businesses. vonnie: how much is amazon eyeing alibaba? paul: it is a very big story. alibaba is the dominant play, the amazon of china. ma,alibaba has said jack the cofounder, expects half of their revenue in long-term to come outside of china. if you are amazon, you're saying alibaba is coming after my turf. that is one of the reasons amazon has stepped up spending again. how good has amazon been

for small and mid-cap companies? amazon has been devastating for a lot of their old-school retailers, spending a lot of their time investing to thwart amazon. there are a lot of breakup company's, whether they be in retail or in tech that are spending lots and will be better for it. vonnie: what about the web services part of amazon? ryan: it is a behemoth. we will see how stock trades for today are going for amazon, but up to this point investors have given them a pass. why do they get a pass and tim cook at apple does not? paul: i think the reason historically amazon has gotten a past is because jeff bezos and his management team have

articulated a long-term story, which is the growth of e-commerce and how that is a 10 or 20 year story that we will see play out as more retail sales go to e-commerce, and therefore, give us the benefit of that as we invest in this great long-term story. more recently, amazon has been able to deliver some strong profitable growth come out of their web business, their cloud business. amazon web services, we saw them grow 70% last quarter, and it is very profitable with mid to high 20's operating margins, versus amazon's core business, which has been a very low margin business. investors look at the large growth story as a plus and they look at amazon's position in the cloud and say that is another big plus. michael: somewhere down the road. paul sweeney will be back with us. thanks to the bloomberg intelligence analyst. coming up on "bloomberg ," ceo,ll look at the xerox

ursula burns, as she plans to split her company in two. you are watching "bloomberg surveillance." ♪

francine: welcome back. look at these live beautiful pictures of washington, d.c. it looks like a painting. you could not tell that behind the is this presidential race which is really putting at the forefront investor angst and also a lot of presidential angst. even absent show, donald -- even absentia, donald trump dominated

the picture. the bank of japan unexpectedly stepped up monetary stimulus. you can see the neck a -- the nikkei finishing the day higher. the energy minister of russia is saying they are not going to meet for the moment with opec ministers to talk about production cuts. let's get to the "bloomberg business flash." is splitting into two companies, unwinding its biggest acquisitions. one unit will reportedly handle hardware operations with the other housing business services. "the journal" says activist investor carl icahn will get a seat on the company services board. sony got a big boost from hollywood, music, and gains, shifting from its consumer hardware roots. the company saw a 33% surge to nearly a billion dollars, beating estimates.

adele'sreaking sales of 25 album. volkswagen made by back -- made in thek some cars made u.s., according to "new york times." it is the clearest indication yet the german automaker may not have the technology to bring emissions for some vehicles in line with regulations without hurting performance and fuel economy. that is our "bloomberg business flash." still with us is care bridge investments' brian angerame. nms going ones the in the u.s. equity market. with the fed unwilling to reverse course, there is good reason to stay on the sidelines into february. any release -- any relief from china, oil,s from

and central-bank policy appears distant at best." brian, should investors stay on the sidelines in february? brian: i do not think there is any reason to be a hero and run straight into the burning building, but i think back to mark and recent -- to mark -- pessimismquote sounds so much more sophisticated and consummate pessimism sounds so much more sophisticated and cosmopolitan than optimism. where the price of oil is going arey versus tomorrow, we obsessed with this, but underneath the surface, you have this economy, which is consumers and services, and we have unemployment at 5 and going lower. we have wage inflation, which is picking up, and, i would guess,

probably accelerates in 2016 because you have all these minimum wage increases that have basically been set in stone. i see that are things for the u.s. economy then maybe most do. michael: leave all the external factors out and focus on fundamentals and earnings. the top line is not growing for american companies, so maybe we have more money in our pockets but we are not spending it. brian: that is true. eight years ago we were criticizing the u.s. consumer for not saving enough and saying they consumer is going to be in tough shape. the credit crisis changed things in the consumers' minds. we are suffering a little bit of posttraumatic stress disorder, it which is resulting in different consumer behavior. if the consumer saves a little bit more than they did in the 1990's were the early 2000, then that is not a bad thing. vonnie: xerox is out with

--rth-quarter revenue miss the estimate was $4.73 billion. was for $.28. xerox is separating into two public companies. the services part will have three seats on the board from carl icahn, and the hardware part. once again, the bottom line beats, the top line missed. michael: we have an activist situation with carl icahn demanding action. shareholders want money, companies are not making it. realitys this the new for investors, for ceo's, that they are going to have to start finding a way to grow the top line so they can give money back, or will they be faced with the same thing that ursula burns was faced with? these companies, you are

ultimately accountable to your shareholders. those who are not wind up with activists like carl icahn breathing down there next. we do not spend a lot of time with companies that are not accountable to their shareholders, so it is -- michael: do you look for companies that could be targets, though? to invest ind not companies that are poorly managed, is the way i would say it. as far as being a target for an activist manager, there are certain instances where a company is trading too cheaply relative to what we believe it is worth, so maybe somebody comes in like carl icahn, but we are not looking for companies that are being poorly managed or that have technologies that were great in the 1970's and the 1980's and are no longer relevant today. michael: thank you very much. coming up today on "bloomberg ," much more on what is going on with xerox, two

companies. ursula burns will join us at 1:00 p.m. in london. we will talk about oil prices coming up in just a moment. ♪

michael: welcome back to "bloomberg surveillance." time for a forex report. there is a currency war underway. forex, youedition of can see the yen getting weaker after the bank of japan goes to negative interest rates. much weaker against the euro, and a not-on effect, the korean won getting weaker, as is the 4.1%sian ringgit, down today. vonnie: let's get back to the breaking news on xerox. we got earnings, and the announcement that they are separating into two public companies. carl icahn has about 8% stake in the services part of the company . that will be one of the public companies. recapping earnings -- -- revenuer-share

the coanchor of our next show, "bloomberg go," david westin joins us. david: we have a lot of news to cover, and leading it will be ursula burns, the ceo of xerox, joining us at 8:00 a.m., to talk about earnings, the stock split, and about what lies in the future for xerox. that is coming up on "bloomberg ." francine: we have some great news -- we have some news on oil , great because it was a bloomberg exclusive. the russian minister said there is no meeting with opec. let's get straight to our guest, an expert on oil. he is harry tchilinguirian. when you look at the price of oil, are we sure that it is oil supply, the equation, that it is not growth stalling? definitely oil

supply. that is why the last couple of days have been so important. declarations of intent around the cuts and production have market move higher, but in the end this may be a case of rumor and self effect. francine: half the people that come here say the problem is that we do not know if it translates into a real plan, that there is something a lot more sinister in china that we have not picked up on that we're seeing in the energy market. certainly the macro environment poses a risk. beyond the fundamentals we have seen in the early part of this year, the markets coming down, the possibilities of currency wars, etc., etc. -- the most recent development in the last couple of days have refocused markets on fundamentals, which are supply driven. michael: is there any way they could put together a deal to cut production that would stick, some way you can monitor what each side is doing? harry: i think that is highly

unlikely. any accord is going to prove to be very elusive. i am not sure how they would commit and monitor the commitments. if you take russia and opec together, we are looking at some 43-plus million barrels per day. they have proposed a 5% cut across the board. 2 million barrels a day is not dramatically shift even if they could achieve such an outcome. vonnie: how much of a relief is russia, or isa, five dollars not enough to make any kind of a difference? harry: i am afraid that five dollars is not enough to make a difference. these countries have a fiscal break-even price for oil, a lot higher, particularly for venezuela. a number of oil-producing countries are producing in the sub 40 or even low 30's.

producers will go through some tough times. francine: are we going to see bankruptcies? the more bankruptcies we see, the more investment will be cut down, and the more we risk a spike in the price of oil. harry: absolutely. a saudi strategy is to crowd out producers, and that is working. if you do crowd out supply in this fashion, we get bankruptcies and banks cut their credit line. further down the line, you are sowing the seeds of the future price rally. francine: so in two years we could see oil bounce back at a hundred? harry: maybe not 100, but you can see -- $80 is certainly a target. that is very reasonable. francine: if we do not see real growth, that will be a wes that it will be a mess for the world economy. thank you. michael: currency wars, oil

prices, a lot to talk about. what does it mean? a conversation on monday with stanley fischer with the council on foreign relations. tom keene will sit down with him to discuss the economy, the fed monetary policy, and all of those issues, monday at 1:00 p.m. in new york, 6:00 p.m. in london. the bank of japan goes to negative interest rates. "bloomberg " is up next on television. "bloomberg surveillance" continues on radio. this is bloomberg worldwide. no ♪

japan stunsof

investors. amazon's net income more than doubles to a record for injured $82 million, but much less than what analysts projected, causing shares to plummet 15%. welcome to "bloomberg ." i'm david westin. stephanie: i'm stephanie ruhle. coming off a long week of volatile markets, a heated night with a debate. we have a special guest, a man who always walks on the sunny side of the street, matt winkler. welcome. we have a lot to cover, but first let's get you to vonnie quinn with first word news. vonnie: thank you so much. round overt flew age top of a u.s. air