drops to at suisse 1992 as it reports a loss. bloomberg will speak to this man, the ceo. shrink among the rout in oil prices. mark carney is set to present the boe's latest economic projections. so, while compared you are watching "the pulse live here in

london. manic morning for the markets. let me take you through the moves we have seen already. europe is seeing something of a bounce. london is up because the miners are trading higher. the normal names we have been tracking since the beginning of the year up very sharply. it is the commodity trade that is on. the dax up .3%. %.ock 600 up by .2 the banking sector has been putting focus on the cs numbers. we will talk about those in the moment. massive move yesterday for the price of crude. today we are trading at $34.97. dollar-yen, keep that in mind. you have got a 10-year german gbund trading at .3.

still incredibly low. we will talk about where bond markets are going very shortly adiinng u.s. 10-year traidin at 1.88. here is first word news. nejra: shell has said fourth-quarter profits fell 44% priceshe routes in crude deepened. profit adjusted for inventory 8 billion.rank to $1. shares are trading higher this morning. says thechancellor european union proposals will protect britain as a non-euro member. george osborne held out the prospect that the deal safeguarding london as the financial center can be reached this month. prime minister david cameron renegotiate the u.k. relationship with the e.u. the bank of japan negative interest rate could fall to as low as 01%. oj advisers says that

stimulus could be expanded if needed. of japan has signaled it has many options and it's armory. you can even lower rates further -1%.01 i'm sure the crimes policy is enough to lift japan out of deflation. nejra: euro strengthened as ecb willraghi -- the review and may boost its stimulus in march as the oil delays the return of inflation to a globe just below 2%. froml news 24 hours today the bloomberg first word desk. guy: shares in credit suisse have been pummeled after the $5.8 billiono a

dollar level. the ceo spoke to francine lacqua . >> we have also cut -- so, it's a tough cocktail. francine: by how much, the bonuses? >> total about 11%. for the divisions that have not performed by more than 30%. francine: talking about volatility, you're expecting a tough 2016. his stables by -- stabilizes by midyear, does it continue to be volatile? >> look, we had a long discussion yesterday. the economies ok and markets are not. --have a disconnect between if you look at the u.s. the lower oil price is good for

the consumer. most of the gdp is consumption. it has put more money into the pockets of the consumer. the consumer feels good. his houthise is worth much more. what is not happening, he is not yet spending. there is a lag. that is where the markets come into play. a bit of confidence of they can spend that money. there is an overemphasis on the oil sector. if you look at the price of oil over decades, we had a few years of abnormal levels around 100. and 35, 30 is an historic average. a return to historic average is not correct. francine: you think the correlation between the price of oil in the markets is wrong? >> we also feel strongly that the price of oil is low because

of oversupply. the market is reading lack of demand. we think it's clearly an oversupply. a strategy by major oil producers to drag the oil price down. u.s. high inventory, you have iran and new suppliers coming. so, it's a glut of demand. we do not see it as an indicator of a world crisis. again, we have $4 trillion of capital in additional capital compared to 2008. so, you have no threat of a global financial system, because the balance sheets are strong. yes, there'll always be an oil crisis here and there, but we think that most of the world is -- you've seen the pmi numbers in europe. an historic high.

consumers in your feel good. consumers in the u.s. feel good. countries like china and india -- consumers in europe feel good. capital expenditures have been cut in the oil sector. that is having ripple effect. guy: let's go to zurich to francine. tidjaneam listening to and he sounds positive and the market is in shock about what it's heard from him. how do we deal with that discrepancy? you're absolutely right. it was clear from the interview he was try to focus on the positive. the markets are uneasy. we just had a note from citigroup. they're basically saying they do not think, given the market environment and the fact that have not cut investment banks by moore, citigroup believes that m hasarget that theie

set for 2018 is unattainable. this is why the share prices under so much pressure. i was looking at some of the other analyst notes and a lot of them are saying we had ubs and credit suisse in the last five days, a lot of them would probably go with ubs. thiem is a new ceo. until seveng ceo months ago. certain investors may decide that because of these figures and because of what they say is lack of detail in his strategy, they may decide to switch them to another bank. guy: that is what appears to be happening. people are making that trade clearly. do you get the impression -- and you have known this guy for a the time -- do you get impression he has a grip on this? i looked at john cryan last week dour aboutded quite what goes forth from here.

the difficult environment in which we are going to be operating in bank. and i compare that to tidjane, i'm not getting the same feeling i got with cryan that i'm getting with him. francine: i think you're right. there is also a personality, thiem has stayed quite cool under pressure. when you look at the main issues -- there was a huge loss in capital markets. this is what they seem to be wanted to hang onto. his reasoning when you look at the investment bank's that will give him a platform to attract the wealthy individuals from asia. yesterday, i thought it was significant because the share price around 12:00 yesterday was up 5%. that was on rumors that u.s. bank wells fargo was buying larger chunks of the investment bank. now, that has proven to be completely wrong. thiem told me they are keeping the investment bank. there is appetite from investors that maybe he goes further and restructures in overhauling and

even maybe getting part of the investment bank which he thinks is not in the cards. guy: great work. chilly work. francine lacqua joining us in zurich. let's talk to our next guest about what the banking sector looks like right now. 2016 has already been an incredibly difficult start. so, we will get pimco's take. it's a company that runs the world's biggest bond fund. and actively managed bond fund, i should say. we need to talk about those bonds, but let's start talking about what is happening with the banks. very nice to see you this morning. you would've thought looking at how the year started that it would've been the mining stocks, the oil stocks that would've been the most being up -- beaten up. stocks, horrible start to 2016. is that an overreaction? >> yes and no.

i think it depends when you look at the globe. in europe, they are operating under a difficult environment. not only banks have been under pressure to raise capital but they also have a negative interest rate to deal with. the news we had so far this year is that negative interest rates are going even more negative. and they might they there for even longer. in terms of profitability and net interest margin, it is bad news. the light at the end of the tunnel is still not there. when you look across the atlantic in the u.s., we have more holds there. the move might be overdone. banks are trading at a substantial discount to the market and earnings have been rather healthy. not only that, we are still hoping the fed will be hiking interest rates further in 2016, which will improve profitability. an interestingot call on goldman sachs. should they be cutting

investment banking fast? you wonder whether or not there is a danger that the answer coming into muscle -- cutting into bitse, cutting of the business that can proffer -- that can generate profit. >> the ones last to stay in the business will see good profitability. a specialisth of to be commenting on this. guy: your expectations of the volatility, the light at the end of the tunnel, it feels like a long way away. >> the market is very unsettled. china and oil prices are very critical. when you look at china, with the has abi floating, asia growth,are of global 30%. it is right when we have uncertainty about the growth pattern in china that we should be worried. oil prices, we have hopes there. in the second half of 2016 oil

prices will look much better. it is true that there is an oversupplied market but in terms of demand, we are not so concerned. demand has been healthy. lower prices generate more demand. the problem is on the supply side. ll advertised.we we have our eyes on libyan, this is the wildcard. second half of 2016, especially in the u.s., we should finally see the oil discount and the market should be better balanced. guy: we will talk about your bond call. she'll stay with us. still to come, plenty coming up with shell reporting declining profits. remember it's super thursday at the bank of england. as market expectations for a u.k. hike get pushed back. some are putting in a cut. what will we hear from governor carney? ween the talks on brexit,

have got a summit in london as well. which is talking about syria, but we could hear from david cameron talking about his referendum plans. how do these get built in? we will do all of that next. ♪

guy: welcome back. you're watching "the pulse." a finnish oil refinery beat in

the fourth quarter. his outlook for the are head, we are joined on the phone by the ceo. good morning to you. i have a simple question. do people drive further the lower the oil price? >> yeah, i think that is a good starting point for this discussion. we really saw it last year, 2015. with the low oil price, we saw the mileage going up significantly last year and this oil demand and basically 1.7 million barrels put a growth that we enjoyed on the volume side. that was very clear. yourwhen you look at how kind of pricing oil price into your plans, what he working on? 8% swing yesterday. how do you run a business based on that? >> we feel -- that, like last

year, we lost 5 billion euros in but improved our profit. we are focusing on the things that are important and what we can make matter. things arefineries, really in our hands. whate improving every year we can do internally. and that is the way we like to say that the only way is forward with neste. guy: do you think you will have to work harder? you've clearly done a lot to take costs out. t think it is going to be a tougher challenge going forward from here-- do you think it is going to be a tougher challenge? environment that everything is volatile. you have to work hard every day. saw record high profits last year but we are humble and we

look for months by months and by quarter, how you can improve. yo always found wayus to improve your performance. guy: when you look at how you how muchg your oil, is it going to change as a result of things like iran coming back on the markets? do things like that make a meaningful difference in the way you manage cargoes? >> that is a good question. what is now going on in europe and iran since we are buying 65% of crude oil from russia. the pressure with the russian crude because iranian crude is the same quality. that is a very positive thing that we have more sources available, especially the quality we find important in our biggest refineries. guy: one final quick questions on something else you can't control which is what happens to the currency exchange rates. the expectation is that the fed

is going to keep raising rates and the dollar will stay strong. if that turns out not to be the case, what will that do to you this year? >> yeah, i think like last year, it is very favorable for us. we made 70 million profit out of the stronger u.s. dollar. we are seeing -- in the market is reviewing the situation today. the dollar space pretty strong. we are not seeing any big dramatic change for our profit this year coming out of the dollar-euro balance. guy: thank you for taking time to speak with us. the neste cfo joining us on his numbers this morning, which the markets likes. we will take a break. we will check in on the markets. we will find out what the pim call calls are -- pimco calls are. ♪

23 minutes past the are. i need to take you to the credit suisse share price. a 13% drop in the price of the stock. trading at 14.44 this morning. the market is in the state of shock at what has just been announced, the share price getting lower. we see that continuing to trend to the downside. let's carry on the conversation on where markets go next. let's bring back in geraldine

sundstrum. a lot going on this morning -- treasuries going up 3%. 3%, but- you are not at you still see people getting out of the fixed income market. why? at thene: when we look u.s. economy, growth is rather stable. the job market is externally healthy. the housing market is doing well and when you look at this, there are many, part of the mandate that the fed achieved. the part ths is missing is inflation. when we live at core measures of inflation, those are almost the re. so, always need is for gasoline prices to bounce for the fed to continue hiking. we think this is definitely going to happen or most probably going to happen by the end of the year. this is why we think the fed three morewo or

times in 2016. i believe the confusion in the markets is that people look at the u.s. economy and it will feel that rate hikes are warranted. then you look at the u.s. stock market and you think we might need a cut. there is a big confusion there. earnings give abilities of u.s. incorporated is not the same as what is happening in the domestic economy. around thecentered domestic economy. they are going to fulfill the mandate. we think more hikes are coming. guy: i want to bring in the manufacturing versus the no i.s. m., numbers, the server is going to follow the manufacturing sector. ointment?flyi in the geraldine: given the health of the job market it is difficult to see consumption falling off the cliff. we do not think this is the channel by which it is going to come. it's more likely if the

corporate sector is doing badly and the stock market has to go down further, that will hit and come confidence back onto the domestic economy. so far we would say we see no reason to change our forecast. going uphave got oil had you expect gasoline induced inflation price move is going to happen. geraldine:. yes. towards the second half of the market when we see better balance. if demand for oil were to collapse all of a sudden, which is not part of our forecast, we have to revise this. more of a slowdown in china than we forecast, but currently we were forecasting certain slowdowns in china. it is still part of our forecast we do not see any reason to change that. if the slowdown was to be more marked, then we would have to review that but not for the moment. feel we have not

gotten into all the subjects that i would've liked to. it has been a pleasure having you on the show. up next, we look of the bank of england rate decision. could the next move be a cut? we will talk about that next. ♪

back.we arelcome live from london . i'm guy johnson. let's get you up to speed with a busy morning. here's the first word with nejra cehic. nejra: shell has set fourth-quarter profits falling 44% after the wrap in crude prices deepens. it matched analyst estimates and shares are trading higher this morning on the news. the u.k. chancellor says the eu proposal to protect britain as a non-euro member.

george osborne held up the prospect that a deal safeguarding london as a financial center can be reached. davidmments come as cameron renegotiate the uk's relationship with the eu. the bank of japan's negative interest rate could fall to as low as -1%, according to an ally of haruhiko kuroda. says there is no floor for negative rates and its stimulus could still be expanded as needed. the bank of japan has signaled that it has many options in its armory. you could even lower rates further, to -1% of absolutely necessary, to achieve 2% inflation. however i'm sure the current policy is enough to lift japan out of inflation. nejra: the euro strengthened the dollar this morning as mario draghi says global pressure is pushing it down. the ecb will review and may boost its stimulus in march as goal ofslumped to a

below 2%. global news, 24 hours a day. from the bloomberg first word desk, i nejra cehic. guy: thank you. nejrea bringing us up to speed. let's bring it to mark barton. index against its global peers -- the dollar sank by 1.7%. this is the bloomberg dollar spot index year to date, falling to its lowest level since december. $esterday's 1.7# wiping ou% wiping out its yearly gains. it expanded at the lowest level since 2014. the odds of even one rate hike in 2016 is now below 50%.

now we look ahead to tomorrow's u.s. jobs report, which could determine whether the dollar selloff continues. economists forecast that it will he u.s. created fewer than 200,000 jobs in september. interesting words from the senior market strategist at the rbs in singapore. he says the dollar weakness looks like a correction within its multiyear bull run. two big fed officials have spoken in the last 24 hours. they said policymakers need to take into account tighter financial conditions when they need to next month to determine whether to raise interest rates again. but the dollar has given back 2016, allmes for

because of yesterday's massive 1.7% slump, the biggest drop since march, 2015. back to you. guy: super thursday -- bank of england announcing later today. the latest economic forecast says market expectations of a hike are even further. short-term, there is even talk of a cut. joining me now is a rate carney came upf today and said you are too dovish -- >> quite possibly. well we need to look for today's medium-term inflation forecasts. that will be the signal that carney wants to send, monetary stimulus implied by the market curve is too much to bring inflation back to target. the bank of england's job is to hit that 2% inflation target.

it's not to let the economy overheat. i think you will try and tame markets slightly. guy: is this out of his control? and that cut built in, is less to do with what the bank is doing and more to do at downing street. >> yeah, it's funny, isn't it? decanting knowledge the fact that there is likely to be a referendum in the next few months, that it will potentially damage activity, and clearly, depending on the outcome, it could affect the u.k. for years to come. but because it is a political event, it's something he can't comment on. i agree, i think there will be an attempt to tell the market that it's got carried away, but he needs to be careful, and not only because of the u.k. there is a lot going on elsewhere, which will be grounds for concern. in: the move we have seen

great expectations in the u.k. is huge. give us a sense of the context of what we are looking at. >> it's almost unprecedented. this being with which the timing of the first hike has been pushed out from the last inflation report, it was priced in around the end of this year and has now moved out almost 18 months . as we are saying, there is a referendum, the external terms. you have to go back to the middle of 2013 to see a market as stylishly priced at this. that was when carney just arrived and they were introducing forward guidance. that was an experiment which ended earlier than expected, but at the time they introduced it, they were essentially forecasting that unemployment would remain above their threshold. it fell more quickly, but it was a deliberately signal that

they wouldn't think of raising rates. now the message is very different. the market is looking at something that the bank of england isn't and can 't acknowledge. guy: the data are pretty good, certainly compared to the states. in many ways, better. are there any problems with the data? jon and i were kicking around the forward components in the pmi data. are there concerns that maybe the u.k. economy isn't going to stay as strong as it is? >> what you have to look at is the fact that the economy is now quite close to what you would call. afte. after the. full capacity. thepoint there is that economy has absorbed all this labor, and the only thing now is productivity growth, which has been extremely weak.

the growth was always bound to slide. the economy hit that buffer. i don't think we are in for a big slowdown. i think the economy is nearing its trend rate. over 2015 we saw something slightly weaker, but as we move to 2016, you will see up to .6%, growth picking up as such. guy: the phillips curve -- it should do that, but it doesn't. why not? >> they do have concerns about the weight picture, but there are reasons why it is slow. actually -- and we try to make this point a lot -- if you look at real earnings, stripping out what has been going on with inflation, it is behaving pretty well. real wages are up, near 2% year on year. that's not far off from where they were prior to the crisis. if and when inflation picks up, do nominal earnings keep going? there's still some concern about

that. but i think this supposition that everything is broken because wages have been soft this is the fact that in the u.k., inflation fell from 5% a few weekyears ago to nothing. guy: one final question. are you happy with the communication strategy from carney? is he doing a good job in terms of telling us what is going on, compared and contrasted to yellen? >> there is always a balance to strike, and there may be things he has said in the past which in hindsight he wishes he hadn't, but he is reacting to a fast-changing landscape. i remind, in the u.k. -- bear in mind, nearly all borrowing is fixed, so they have to communicate much more actively. when it sees signs of trouble, it needs to talk rates down. when rates are too low, it needs to talk them up. that's a pass into the economy.

the fed is much less sensitive. i have some sympathy for the government, because he needs to communicate and keep changing in ways that aren't for seattle. guy: great conversation, thank you. john, dan. as crude rebounds from the biggest drop in seven years, we will bring you the latest on how producers are coping with this world of cheap oil. ♪

guy: 9:43 in london. welcome back. we're live from bloomberg said quarters. let's find out what's going on with narrow change. nejra: astrazeneca has reported fourth-quarter earnings that met analyst estimates as sales from heart medicine surged. operating profits rose to $1.6 billion. the rate of sales growth will slow down for mercedes-benz, following a record year. the fourth quarter operating profit rose to 3.4 6 billion euros. credit squeeze shares have plummeted after it slumped to a $5 billion net loss, writing off billions of dollars to set aside

provisions for litigation and booked a multibillion-dollar loss. the bank also said it would accelerate plans to cut bonuses. --we have also got policies it is a tough cocktail to absorb. the total is about 11%. --for the divisions nejra: that was the ceo of credits these, speaking to francine lacqua. guy? guy: thanks very much. let's get more on that story we were just talking about, absolutely pummeled this morning. the market is in a state of shock about what we just heard. francine lacqua, that conversation was absolutely fascinating. is volatility story for 2016 going to be something i think a

lot of people will listen to, but the big question people are asking is does he have to do more and does he have to do it quicker? francine: right, and that is why it is so fascinating. when you look at the earnings, they had that impairment loss, but what investors are really worried about is what he did not say. first of all, we had that blasting citigroup notes saying they are worried that they won't be able to achieve their target. we know him pretty well. he came to credits these last july, announced this big overhaul, expecting pretax profit to double. that's what the citigroup note was putting in question. given the numbers we had today, given the struggles and the investment bank and the fact that he is not saying he will go further, how can they achieve those targets in 2018?

guy: to pick up on this story yesterday, why doesn't he just sell it? sell the investment bank, get it all done? that would be one solution. francine: yeah. right. yesterday, we had this report saying that fargo was looking at the investment bank, and actually on that news, which was then denied by wells fargo, on the back of that, the share price was gaining 5%. youreasoning is that if give away the investment bank you don't attract the wealthy clients a nation. he wants to be different from ubs, trying to target the entrepreneurs, the individual that is wealthy, where they use credits suisse. this is the beginning. i asked him straight -- do you not want to sell part of the

investment bank? that would be a solution, clear-cut. he said no, it doesn't fit with the strategy. it is his strategy now being put in question. if you are an investor, you are looking at a new ceo, that previous to this job was in insurance. and if you don't like the numbers, you may decide to take your money elsewhere. guy: yeah. the focus on asia is what has worked really well for him the last year. fran, great conversation. everybody really interested to hear what he has to say, given the extent of the drop. the banklacqua, as produced results that i think the market is concerned about. some notes already out suggesting that targets may not be hit. the other big story comes from the energy sector. you would have thought the energy sector would be the worst performer, but it's the banks. crude's collapses definitely

heading people, a 4% drop in fourth-quarter profits. ryan chilcote is here. what do we get from shell? we have known the numbers would be bad, but what did we get specifically? ryan: the market likes what it got. that drop in profit is, first off, bang in line with expectations. the street was looking for $1.8 billion in adjusted profits and that is what they got. we saw a lot of misses, bp reporting a drop. not a bad performance in terms of managing the decline in the oil price. beyond that, i think we have a little bit of a window into what's going on. he saw they were not able to replace their reserves, and that is part of the issue when you cut back spending and stop exploring, or explore less. and that's pretty much it.

that captureste it perfectly -- knows the prizes, which is good news. -- no surprises, which is good news. investors like the results even more even though statoil was a mess, even though earnings came in at half what they were supposed to be. programthat is this they announced which would go through 2017. the whole idea is this is what you do if you want to maintain your dividend policy. guy: a different strategy from bp? ryan: a different strategy from bp. they are cutting spending. they are shaving it back by about $1.5 billion from where they were last year. it's this measure you can use to lay or hopefully shove away the need to cut dividends. cfo were just on the phone saying they see dividends flat over the next three quarters. investors like what they see.

it's all about the dividends these days, isn't it? guy: interesting. ryan, thank you very much. ryan chilcote on the oil story. leaders gather in london. david cameron is hoping to get her for britain's renegotiated relationship with the eu. we will bring you the details, next. ♪

guy: welcome back. we are live on bloomberg television, streaming on your phone and on bloomberg.com. 30 heads of state are in syria today for a summit hosted by david cameron and angela merkel. the aim of the meeting is to boost international aide to the victims of the syrian war. david cameron is also gathering support for a compromise on britain's relationship with eu. let's get more with hans nichols in berlin. first of all, let's talk about the summit. what are they hoping to achieve? hans: well, there's going to be more money. we just heard that merkel plans to announce $2.3 billion through 2018. when you look at merkel and how she thinks of this problem, she thinks in trenches, in the north

african problem, where they are returning refugees. then afghanistan. clearly, you look at the interior minister, he just came back from a trip, he's focusing on making parts of afghanistan acceptable for refugees to stay, warning them not to come to germany. then there is the syria question, and merkel has been talking about how any solution needs to have some sort of peace process. you look at the numbers alone, i think it is 16.5 million internally displaced people. million.yria, 4.6 you look at the month on month numbers, this january we have already had a lot more than january, 2015, making that dangerous ocean crossing. they need -- and there is a -- thattion you need a political solution in syria, and that is the biggest

section. guy: these two in the same place at the same time -- they will be talking brexit. there is this growing view in the u.k. that we need to see something will are to the constitutional court in germany that allows some sort of ability to deal with legislation coming out of brussels. hans: yeah. thef the counterpart to constitutional court in southwest germany. merkel voiced her support for the general principle. she says he could potentially get a deal. cameron will be pressing his case, then he is off to, i believe, poland and denmark on friday. he's, selling job to do. guy: he certainly does. it will be interesting to see what a bore celfin says later on. a quick check on the markets before we go. mark: two charts, one minute. credit suisse, 1990-2016. shares today falling to their

lowest level since 1992. they sank 12%, the biggest drop of the year after that bigger than forecast lost. ahead of super thursday, when the ble releases its rate decision minutes from the quarterly inflation report, this is the morgan stanley measure, which measures the month from the first u.k. rate hike. guy, it is 25. no rate hike, according to this morgan stanley measure, for over two years. come on, carney, bring it on. guy: that will certainly be the focus of our coverage. we will bring you that rate decision as it happens. it's all in focus. interesting to see the market is effectively talking about this rate cut, but everyone i am talking to says that cut is a reaction not to what carney is doing but to what cameron is doing and the brexit risk. the shell ceo in the last couple minutes saying he hopes the u.k. does not leave the european union.

the bank of england rate decision, 12:00 p.m. london time. it's super thursday. ♪

tom: credit suisse traders back to a 1992 valuation, taking significant loss on "existing positions." mark carney is not janet yellen. the bank of england will delay and delay and delay. and oil is more than the sum of its pipelines. good morning, everyone. this is bloomberg "surveillance," live from new york. thursday, february 4. i'm tom keene. with me in london is caroline hyde. good morning, caroline. the bank of england today -- any