gu: welcome to "on the move." we're counting down the european open. another interesting night for the markets. jonathan: what an interesting couple of weeks already. msci asia-pacific index down 20%. the rout continues around the globe. about what isk happening in japan to the worst week for the nikkei's 2008. the best two-week run for the yen since 2008. what will kuroda do? does he need to stable the equity markets first? all of that will be discussed on this program. jonathan: what constitutes a

crisis? are we there yet? stay tuned for that. later on, commerzbank, some good news. swinging to a profit. it is the consumer bank profit that surges. we have got to talk about that. of course, jpmorgan. jamie dimon mopping up the stock. guy: corporate buyback. let's get you up to speed with all of the news and detail. caroline: the reserve bank of australia is giving the door open for further rate cuts. governor glenn stevens told a parliamentary panel that the country's economy has the flexibility for further easing. he said the board is weighing the sustainability. the u.s., russia, and other powers have act and accord. it demands the immediate delivery of humanitarian assistance to besieged areas. >> we are doing everything to

try to bring an end to this conflict. in a way that results in a ,nified, nonsectarian minority-protecting, secular, whole state. dimon spendsie $26.6 million buying shares of yesterday. that is after they tumbled to the lowest price in more than two years. a source says he made the purchase because he believes the stock is cheap. jpmorgan is the largest u.s. lender by assets and it is down almost 20% this year. guy: thanks very much indeed. tokyo has had a difficult night. let's talk about where we think european equities are going to go. let's show you the fair value calculation. equities are pointing to a 1% bounce. it will be interesting to see how the cac opens today.

it looks as though we will see a fairly positive start. equities on the front foot. it is good to see that after a difficult week for some. a difficult two weeks for japanese director or of the ofona -- japanese director the boj kuroda. and october off 2015 hi. pretty much flat on the session this morning. a german 10-year yield of .22%. hsbc saying he would not be surprised if we made a move back down to five basis points. down 5%, upup 4%, 4%. guy: an interesting week, isn't it? jonathan: pretty bearish, as usual. let's go to tokyo.

a difficult week if you are in tokyo and your name is a rookie corona -- hiroki kuroda. there is speculation that authorities will intervene to weaken the currency. brian joins us from tokyo. great to have you with us this morning. ministry.e how likely is it that we are going to see some action, maybe not from the finance ministry, from the bank of japan sometime soon. brian: you could say that the fed has already done some action. the verbal intervention has been relentless today. all manner of japanese officials coming out of the wood work and the message has been is that the mood has been to volatile. in that sense, they have already sort of state a claim to protecting the dollar where it is right now. whether they are going to order

the boj to put some money where the mouth is is another question. i think even japanese officials do not think they can take on the global currency via self. i think you would have to see some sort of cooperation from the fed and the ecb and whether they agree that buying dollars would stabilize the market, put more fuel on the speculative fire, is another question. past history tells us that they would be a little bit reluctant. running through the fx terminal function allows you to look at what people are doing with dollar-yen and their expectations on dollar-yen. walk me through what you guys have been seeing. what are the banks projecting? brian: that is a very interesting function. you can see how recent the updates to those forecast are. all the forecasts that have been updated in the last two days have shown analysts slashing their targets.

i think the most bearish dollar forecasters, credit suisse, says it could end the year at 106. most of them are still between 110 and 118. a few banks have been slow to update those targets. the bottom line is, for the time being, analysts are saying that while the dollar-yen probably will not consider -- continue at the same pace we have seen, it is not going to rise soon either because there is so much pent-up demand to sell the dollar anytime it gets above 113 yen. jonathan: great to have you with us. team now.g in the fx mr. bloom, what constitutes a crisis? 112, is that enough?

>> we are suffering from reverse policy shock. .he market is expecting more qe same with the ecb. it is not going to happen. the market is waking up to a reverse policy shock. this massive policy diverted that people were looking for that drove the dollar just is not happening. the fed cannot raise rates and these guys cannot do more qe. the policy diverted his closing, hence the dollar, as expected, is falling. came outoon as kuroda with this, the stories started. people started factoring in this new reality. it has not worked. do they add more fuel to the fire? what does the ecb do in terms of the reaction function? i think there is a problem

with the bank of japan. but can qe all they like, it is the diversion's that is going to be key. this is where we are seeing big changes. ,f the fed is not going to hike we have pulled out two rate hike calls. if that is not going to happen, it is hard to get policy divergence. even if that the oj do qe, i fed is not- idf the hiking, you are not going to get a stronger dollar. jonathan: every economist that i sat down with praised negative rates. >> even though we saw the , it has gone straight up from their point of view.

the bank of japan has done negative rates. dollar-young has gone down. the bank of japan possibly competing with a massively undervalued currency. we have the u.k. with lower unemployment rates. and we have the fed with a weak u.s. economy and a global downturn raising rates. it is no longer the market -- no wonder the markets do not know what to do. central banks are taking completely different views with similar circumstances. jonathan: you go back to december euro-dollar, the ecb meeting. negative rates. we expected that. the market wanted a bigger amount of qe. is that it now? the size and scope of the program?

the ecb iss concerned, no. we do not think we are. inflation expectations keep falling. they are going to do what they can to reach their target. it is a long way off. it gets back to the other side and what is going on with the fed. qe can be powerful if you have policy divergence. if the fed is not hiking -- >> closing from both sides. this idea that the ecb is going to come with some magic. i was hopeful. >> this idea that the ecb is going to -- it is nearly over. there is a recovery in germany. noware going to start realizing that the bank of japan cannot do more qe. on the other side, the fed

cannot raise rates. the huge policy divergence is closing. they realize it is killing the banking sector. >> what do you mean? gdp growth in sweden is 4%. guy: i get that. look at what is happening with deutsche bank. we will talk to the ceo later today. what is happening to a commercial bank because of negative rates? >> did that stop the ecb? they do not understand how banking works. i think not. do you think that drag has a good understandinghi? >> there are as many negative numbers as positive numbers. you can cut from zero to minus infinity. the reason they were bullish is because they think profits stop

at zero. there is a negative world out there. do not worry. they are going nowhere. .p next, do not blame the fed that is the message from janet yellen about the recent market volatility. we will discuss that on this program. that is next ahead of the open. ♪

jonathan: hello. welcome back to "on the move." good morning to you waking up in the city of london. good afternoon if you are in asia. .6%.futures up by about the message from janet yellen, do not blame the fed. that is what she said yesterday. she told congress the central bank was not at fault for market turmoil. >> around the turn of the year, we began to see more volatility in financial markets. some of the precipitating factors seem to be the movement

in chinese currency and the downward movement in oil prices. i think those things have been the drivers and they have been feariated with a broader that has developed in the market about potential for weakening over. growth which spills let's talk about the ramifications of what janet yellen had to say yesterday. steven, let me start with you. her credibility is shot to hell now, isn't it? the market has significantly priced out any hikes from the fed this year. steven: we think that is correct. clearly, what is happening now, we would argue that what she said yesterday the markets have

already priced in. we do not think market conditions will be sufficient to allow them to come through with the hike. the point we would make his we are going to struggle to see the dollar appreciate from here. however, it is going to struggle against currencies like the yen, euro. you could see the dollar do well against commodity currencies. one of our calls is we think it still goes lower, even in an environment where the dollar struggles. jonathan: your thoughts on that? david: this idea that inflation -- where did they get that from western you walk along the corridor and open a steel door. there are a lot of boxes. there is inflation in it. it is called inflation. as soon as there is a small sign of it somewhere -- come on.

jonathan: last year, around march, it was just after fed chair janet yellen spoke. you said it was over and it was all priced in. your colleague said that 10-year yields would come down. we did it yesterday. you can take the rest of 2016 off. my question to you was this. haven't we just shifted completely the other way? the bias is already one and done. isn't this move done now or is there more to come? david: that is a good point. where do we go from here westmark we went from the possibility of normalization in december 2 two months later, complete have normalization -- abnormalization. we do not go -- we do not know.

when the negative cuts, we are looking for another cut. are they going to cut more? this whole negative world is a whole new dimension to the markets. something that all of us have to digest properly. back to the inflation in brooklyn under a very big manhole. you look at the inflation outlook and you wonder whether there is actually -- we are going to talk about this later on. is there an undisclosed element to negative rates? it could actually be just deflationary. do we understand yet what that could do? it is not working in the way we thought it would already. could it be dis-inflationary? steven: we can see a lot of this from the easing of the funders. it is focused very much on fx. guy: they are not operating on any other channel, just that

one. steven: it is not working at the moment. if you look at the fed, it is a different scenario. financial conditions here are very important. going to the financial conditions are the dollar, equity markets, and print markets. these things are really not allowing the fed to go. until we get a recovery in those that is sufficient in time and magnitude, the fed is going to be -- it is not working at all. switzerland tried it. called the turn in euro-dollar. when they cut rates, the euro-dollar has gone up. dollar-yen, same thing. sweden keeps doing it. if they started to weaken the currency, fail. 10 basis points is 10 basis points. 10. zero-plus 10, it is

jonathan: what is property in david bloom's book. you raiset like rates, you cut rates. it is very possible -- guy: interest rates at 15%. are you saying there is a symmetry here? ared: that is what we starting to consider. that is the shock that we are coming to terms with in the markets. is that possible? we never thought, two weeks ago, such a thing would be possible. now we are asking questions that no one has asked before. jonathan: where is it? guy: there isn't one, apparently. david: four major central banks with negative rates and each time one of them cut, the currency rallies? that is a really interesting point.

i would argue the market is changing. january of last year, they went to -75 basis points. i think that changed the thinking of the markets. the europeans followed. guy: what would have happened if they would have stuck to it? where would we be? steven: i would focus on switzerland. if there is one currency that has not strengthened dramatically, it is the swiss franc. you could argue it is because they had the lowest deposit rate. i would also argue that maybe they do not need it. that may lower the bound further and other central banks would follow. it may not have the desired effect. david: in 2012, they had 150 billion euros in four months. some of the deposit rates were negative. did not work. guy: what happens if they --

what happens if they had not done it. they could read the data. they had not done it, they could read the u.s. data and know what is going on. they know the fed is not going to cut rates. happenedat would have if i had not beat my son every day? i mean, come on. you could justify anything. guy: we are justifying some extreme action here. david: what is extreme? look at what is going on in the world. it is not a normal world. up to the idea of a low growth, disinflation world. central banks going negative. the german bonds, .2%. after 10 years, the german

government buys you breakfast. in switzerland, you have got to buy them lunch. [laughter] guy: stay with us. thank you very much indeed. a quick look at where we stand on the futures right now. we are going to get a positive open on european equities. ftse is probably going to open up about .9%. it looks like we are going to get a positive future. that is the bond market story. very different end of the stick. let's talk about what is happening with some of these stocks. caroline: one stock that really rally today, commerzbank. it is already trading that much higher in premarket trade. look at the erosion of value we have seen over the past 12 months. it haspast year to date, lost 30% of its market value. we would like to see a little

bit of a pickup in some of these losses. better profits in the fourth quarter. the consumer banking unit, is this the area of growth going forward? they plan to pay a dividend for the first time since 2007. innwhile, renault up 44% terms of profit. that is what i am seeing on this particular carmaker. they are still managing to do well in europe. they have been beefing up their market share. they are trying to make themselves more profitable by sending more suvs. the more spark -- sport-utility vehicles they can get, they are trying to roll out the forecast. in russia, they are taking a hit. on the downside, look out for rolls-royce. they are cutting their dividend for the first time since 1990. futures up by 59

points. commerzbank is the stock to watch at the open. we will bring you that market open in just four minutes. ♪ we live in a pick and choose world.

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jon: good morning and welcome to on the move." guy johnson has your morning brief. guy: the equities were deepened in asia and japanese stocks a suffered their worst week since 2008. the german bank bucks the trend expecting a slight increase in profits this year. we will be speaking to the ceo, martin blessing. , tumbling toase the lowest price in more than two years. jon: jamie mucks up the stock.

20% -- 20 seconds away from the open. decent drop on commerzbank stock. could we see a bit of a turnaround. we are seeing a movement out of the risk aversion trade slightly today, but the yen is still driving higher. will we hold on to the green? equities try to pick themselves off of those lows. we are in a bear market, down 20.5% on the overall world index. 600k 600 down 7% -- stoxx down 7% this week. we are driving higher today. the likes of anglo american and the miners getting a little bit of a boost. gold down. we are seeing money move out of

gold at the moment. the cac 40, we are up 1.1%. keep an eye on those sorts of stocks at the moment but let's get quickly to the other asset classes. still, money moving into the end, really trying to stop this talk up verbal interventions trying to lean on the bank of japan but we are seeing the dollar lower and the yen higher. coming off of those real highs that we saw yesterday. we are seeing oil move higher. will that leave the rest of the equity market higher? gold selling off this meeting. risk aversion just down playing a little bit. let's look at the bond market. similar move sing a bit more risk appetite. money moving into greece. 21 basis points lower. those stock look at markets because we have had a

flurry of earnings. enault.to get onto righ 44% increase in profits? they are trying to ramp up their profit margin by getting more suvs out the door. come on, open guys, but rolls-royce likely to be utterly on the upside. -- even though we saw the first cut in dividend since 1992. it came in slightly ahead of estimates. at last, not another profit warning. that has clearly been an issue for rolls-royce. they do better than expected in terms of profitability. guy: financials and oil stocks doing well in europe. but find out what happened in tokyo. in asia asp mode

investors questioned central-bank -- in fill up mode in asia as investors questioned the central banks ability to stop volatility. capping the worst week since 2008. if you look across the region at the asia-pacific regional benchmark, financials in focus as well. we also crack technology stocks. if we look at the broader raising concerns that the yen continues its advance and will it require central bank intervention and the current impact on the stock market as well. the index down 8% today which triggered a circuit breaker in seoul. one of the stocks we were following was shunned i merchant

shyundai merchant marines. all eyes will be in china on monday when it comes back from .he lunar new year holiday will it be able to offset what we have seen in this friday training -- trading session? big atmmerzbank already the open. the biggest move since august 2013. down 30% so far this year. matching one-for-one what is happening in deutsche bank. we will do that conversation later on. the main one up 2.8% but hot on the heels. kind of a role reversal coming

out of this. we are seeing the most beaten up stocks down singh today. ony felt more retrospective what happened yesterday in the states. this is the first look post yellen yesterday to what is happening and what we expect asked week when china reopens. jon: a lot going on in the markets and in the next 60 minutes. commerce bank swinging to profit. andill be live in germany we will be speaking to the ceo later this morning. the negative rate debate. pimco is skeptical of the virtue of negative rates. eurozone gdp.iew due out this morning. ♪ a blessing coming up, a little bit later, commerzbank with a strong quarter delivered by germany's second-biggest bank.

the consumer units doing the business here. let's find out all the details that we need to know. let's talk about that consumer unit and the relationship we have seen today versus the weight that the market perceived the stock yesterday. this huge drop-down we have seen in the value. >> we're all trying to figure out why this is popping so much. it could come down to the tier one ratio. 2118 levels. in the third quarter it was 10.8%. deutsche bank is at 11.5%. those are the most recent ratios that we have all stop the concerns about those convertible bonds or if you have ratios that drop down, five and 8%. areg the things investors looking at are the ratios and how well capitalized it seems to

have been done. slight increase for 2015 and i also think that 2016 will be challenging. there are a lot of loans in eastern europe. david bloom might be able to jump in on the currency fluctuations especially those who took them out in poland. these are the challenges they have on their non-core businesses. it doesn't seem to be waiting on the result is much as their positive side on consumer banking. i am really interested to hear what mr. martin blessing has to say. we have to ask him, is he going to be purchasing commerzbank stock on his own? jon: hans nichols in berlin, thank you very much. down 33% coming in today. negative rates in the banking sector. here is what newsmakers have

been saying over the last 24 hours. >> there is nothing magical about the rates. they could boat -- could go lower. we have not got to that point yet. the important thing is that each central bank and region assesses whether the benefits of that are higher than the cost. if that is the case, negative interest rates will remain. >> in light of the experience of european countries and others that have gone to negative rates, we would want to be event that wee needed to add accommodation. we have not finished that evaluation and we need to consider the u.s. institutional context and whether they would work well here. >> so far, in this economy, these things have worked the way

one would expect. at this level there does not seem to be an issue and in terms of the impact from a monetary policy side, generally speaking the rates have come down so the system seems to work. jon: from the big names in the world of finance to pimco in your morning must-read, at a minimum, negative interest rate policy is a country beating factor to volatility and contrary to central-bank dogma, negative interest-rate policy is one of the major catalysts behind a tightening in global financial conditions. . david bloom still with us. david bloom. the point here, negative rates are going to push you out along the risk curve. the problem is that they have made the safe assets even riskier and is pimco say it forces people to de-risk elsewhere. would you agree with that?

forcesne of the driving was to drive the currency down and that is what we all thought. when the ecb did it, when the swiss get it, they have been absolutely explicit that it is striving currency down. totallyt perspective it failed. every single one of these currencies has not responded by going lower to negative rates. from a currency perspective, it doesn't work. if everyone does it, the differential stays the same. most of the central banks has a mandate that has some sort of inflation aspect. negative interest rates and the isering of yields -- this directly at odds with the central-bank policy returning inflation to target. >> these guys have a mandate. they have a single needle in the compass.

>> inflation expectations are very important and we know that the ecb is targeting it. we look very much at this and what he is trying to do is to boost inflation expectations. he is running out of tools. we know what he is aiming to do, but the point that i would like to make is to get back to these negative interest rates encouraging investors to go abroad -- that is great when the policy diversions works. gence works. unfortunately, the fed is likely not going to hike and the boj bank of england are powerless. it, people say this is central-bank impotence. there is nothing left in the tank and we will finally see the endgame. is that where we are headed? >> the answer really is in

effect. if you look at the u.s. economy, things are not ok. we have unemployment at 4.9% and the endgame will really depend on how that pans out. if the u.s. goes into recession, that is a difficult outcome. >> but the economic recovery, that is about the length of the u.s. economic recovery. you cannot say that is why people are looking to a downturn. general u.s. recovery is six years. we are long in the tooth and recovery. cannot understand why the fed is raising rates in december. i have no idea. i don't know why they raised rates and that is the problem that i have with the divergence argument.

guy: is there an argument that says once you get rates back to normal territory, will investors act normally? >> what is normal? me, you. we all have our own madness. where is this normalization? guy: historically normal. >> what does that mean? from 1820? we do not know what the word means. it's the same thing with the taylor rule. we don't know, we do not know where we are. it is an abnormal cycle and that has become the normality all disinflation is normal and that is the world we are living in. if you don't believe me, go ask for a pay rise like jonathan is trying to achieve when he goes to new york. jon: did he just break the

bloomberg embargo? guy: i think normality as he has described and anybody trying to impose it does not work. is this the moment we talk about monetary financing or fiscal policy? >> it is a tricky one. from that perspective, the bank of japan has been very anti-doing that. the bank of japan is focusing to shift much more on negative interest rates than qe. the swiss led the way and they may be laying down the gauntlet. jon: what is the trade? what is left? you call the dollar. >> i'm afraid that i have to disagree with you. i think dollar-canada lower. that has been oversold because of the lower oil price. if we don't have brexit in the u.k., cable will go flying upward. you want sex and violence, there is lots to do. it is an amazing trade to be

done and london is the praise -- place to be and you are leaving it. jon: what can i say? guy: goodbye. [laughter] jon: for our viewers that do not have a clue, i am leaving london. this is my last show. i will talk about that a little bit later. tune into "on the move." you will get it all here. thank you for taking some time here. goodbye tosaying stephen, he has many more minutes to abuse jon ferro on this program. also, record u.s. inventories. the lowest close in 12 years. we will break down crude oil's

dramatic week. ♪ jon: 18 minutes into the

session. a beautiful day guy johnson. guy: are you going to miss it? jon: he is taunting me. let's check in with caroline hyde. caroline: the reserve bank of australia is keeping the door open for further rate cuts. does the country's economy have the flexibility for further easing? he says the board is waiting the sustainability of recent job stress. the u.s., russia, and other

powers have backed into court calling for a truce in syria's civil war. it demands the immediate delivery of humanitarian assistance. >> we are doing everything in the power of diplomacy to try to bring an end to this conflict. in a way that results in a unified, nonsectarian minority protecting secular whole state. dimon, the ceo of jpmorgan spent 26 billion dollars buying shares of his bank yesterday. a source says that he made the purchase because he believes the stock is cheap. jpmorgan is the largest u.s. lender by assets. global news toward four hours a -- with 12 400 journalists

global news, 24 hours a day, journalists. guy: he has never sold any of the stock he has bought. amazing. let's talk about crude and what else is going on. rebounding from its lowest level in two years, comments from the ea you oil minister adding to speculation -- eau oil minister adding to speculation. >> everybody has got a cut or everybody has a phrase production. thereality is much all of countries are saying the exact same thing. i will cut if you cut. if we see other countries cut, we are ready to cut.

i do not want to call this a mexican standoff because that suggests that no one has an advantage in this. in this battle for the market, some countries fare better than others. nothing there is going to be a deal. it is in everyone's interest to you getch as you can into the argument of how you are producing which is a separate conversation. jon: the rules are, you ignore the opec rumor mill unless it is the saudi's speaking.

if they agree to production cuts, why should i believe we will get any? reporter: you should listen to the saudi's. keep in mind that the uae as part of the saudi camp and saudi faction. they do float ideas through the listen to alley on my lmayeni. you do see a lot of movement. the nigerians will be going to saudi arabia. the saudi king will be meeting with putin. we could get some movement. iraniansat what the are doing right now. we just got their first pricing and their undercutting with iran heavy. their version of crude they are

selling in europe. they are undercutting the saudis by 25. guy: you talk to the big refiners and they say it is the uranian versus the russian because they are comparable. that is where the pain will be felt. jon: what is fascinating is that the oil is the tale that wakes the dog -- tail that wags the dog. we have a brilliant chart that i want to bring to your attention. guess who is behind the global stock selloff? one theory is that the gulf state struggling under low oil prices have been threatened under pressure to dump their stocks. look at the gulf sovereign wealth fund's share of equity investments. financials north of 30%. that could be one of the selloffs we are seeing in bank stocks. guy: they will be completely

repatriating all of this as soon as you see the gold move. i think that kind of chart speaks for itself. if you overlay that on top of the stock selloff, it tells you an awful lot. back to the oil story into your thinking surrounding the fed and the dollar. the fed doesn't cut, the dollar will come down. crude goes up. walk us through the ripple effect of that. >> the point that we would highlight is we are only looking for a moderate rebound in the oil price. our forecast is in the high 30's. the key point here is inflation. the fact that the lower oil price has reduced the inflationary outlook for the fed. it gives the fed more time in needing to hike rates. if you go back to the changing call for the fed, the fact that oil is down contributes into that fed all. -- fed call. the fact that oil bounces from

$30 per barrel to $37 per barrel is not a great game changer. jon: yesterday, i see your headline come through that there could be a production cut agreement. oil is high and stocks recover. that seems ridiculous, but everyone accepts that is the rule of the game. what do you make of that dynamic? it is still there to that extent. to get risk on, you need oil prices up? what kind of a market is that? >> because we have had oil come so hard, it is the energy sector suffering. what you're talking about is exposure to the energy sector, whether its banks or whatever. i think the inflationary carry through is more important. we spoke about the fed, an even bigger problem for the bank of japan or the ecb. makes their life much tougher. guy: then we get them reacting

more strongly. >> i think that we do. we were discussing before on the impact of easing. it is very good to say that we do not think it will have much of an impact. i think these policy makers do not have much choice. i think that you are going to see the ecb easing more, p robably expanding asset purchases, even if it is against a risk of environment. to your point, what happens if they don't do it? >> if we get a rebound in the oil price, the ruble has been beaten up by the oil price -- does that mean you should go by the ruble because it has been beaten up? >> probably in the very short term, but if we broaden this out to commodity currencies generally, we do not think there will be a strong rebound and a lot of this is because of china. the chinese economy is trading away from strong manufacturing

to the service sector. guy: stay with us stephen. -- up next,on bringing in an independent economic advisor. stay with us. ♪

jon: hello, and welcome back to "on the move." let's get a look at where stocks are trading. it is fair to say that it is risk on. hits a benchmark in frankfurt, germany. the ftse 100 up one full percentage point. the commodities basis, miners, oil, the franc. switch of the board very quickly. we will get to the other asset classes. dead flat today, but the biggest two-week gain for the japanese yen since 1998.

1.1278.lar at brent crude just below $31 per barrel. let's get to your stocks stories this morning. caroline: talking about the industry that has been battered recently, banking is one of them but one beats the charge. today, the dow swells 10%. commerzbank leads the charge on the stoxx 600. we are getting a dividend from this company and better than expected profits. picking up for the fourth quarter. compared to last year. remember the charge that they took investigations into sanction violations. this is a positive unit. consumer banking where they managed to post the growth. meanwhile, rolls-royce doing very well on the back of its numbers. they are not doing as big of a

dividend and are not paying as big of a dividend for the first time since 1992. 1992, the energy maker up 11%. the reason is that the numbers are not looking nearly as bad as has been expected. indeed, they are managing to have a profit before tax. if you cast your mind back, we have had six profit warnings from rolls-royce in the last two years. the new chief executive trying to clear the slate. for once, we do get a change on the outlook for the company. many people are relieved. oil servicesde company very volatile. we are down some 8% nevertheless. fall aseeing this one

we are seeing it raise money. we have a rights issue but it doesn't seem to be fully exercised. on exercised options are less than the rights we subscribe for that 3.7 billion euro increase in capital. back to you. jon: want to give you some of the comments are on the commerzbank story. linear deval of capital? they're citing the low interest rate environment. question yout asked martin blessing -- this is what happening on the share price, the first question i will ask martin blessing later on is, give me your thoughts on negative rates. how is it working through the financial sector. look at what is happening here. what would your advice be to mario draghi?

i suspect the answer to that would be a big no. wantpect that they do not to see it going any further. jon: the commerzbank cfo saying they cannot reach the 2016 goal citing the low interest rate environment. that tells you what you need to know. guy: it does. putting that in a little context, let me show you what it has done over the last month. we are back to the level that we were two or three days ago. the downdraft has been fairly large. not as big as deutsche bank, but substantial. jon: policy at the big asian central banks, is it hindering recovery? they face amplified calls when chinese markets reopened monday. i am pleased to say we are now

joined by you be a senior on the phone. of the and farewell bnp paribas. -- if the chinese are on holiday, you wonder if they are taking any holiday at all. what will the thinking be in the chinese government if this plays out? >> i think they will be looking at what is going on slightly a cost -- slightly aghast. they may not like it, but they know they are centerstage. for most of us, we will be really focused as we were before on how the people's bank of china proceeds or evolves to manage the situation regarding the stability of the yuan. that 99.5 holiday was

billion drop in january reserves. as far as we are concerned, as far as everyone else is concerned, that does not seem to have stopped. the big battle -- there is a lot going on in china, but the big battle in the immediate weeks ahead, between having a currency that they want to keep stable, and capital outflows. guy: do you think that the last -- >> i cannot really see how there could be some durable resolution of what economists call this, the impossible trinity which is that you cannot have a relatively fixed exchange rate or free capital flows and an

independent monetary policy. outa will not sacrifice the of the of its monetary policy so it is rapidly having to make a decision about how to deal with this conflict between wanting a relatively stable exchange rate and having a kind of closed but horace capital account -- closed, but porous, capital account. there have been some changes. my hunch is that we will see more of this. i think that over the next few weeks we will see china clamping down on capital flows incrementally and progressively. add ispoint that i would that the problem china has had is that it has been having to link its currency with that of the u.s.. the fact that the outlook for the fed and the dollar is probably changing may take a little bit of pressure off the remedy -- off the renminbi.

from our perspective where you have less of a dollar appreciation trend, that may also take some of the near-term pressure off of dollar-renminbi. we also agree that the most likely scenario here is for further depreciation of rnb. the change in the fed is having an interesting impact. jon: what are your thoughts, george? do you think it is alleviate's any of the pain -- alleviates any of the pain? or are they looking at the next chapter? where are we on that debate? >> i agree. obviously, the dollar is taking a bit of a backseat here because of the change in u.s. interest rate expectations. that will be something of a relief but the problem from

capital flight in china is forrester and their money out but it is domestic residents with their citizens or officials finding ways to get their money out of china. it is not interest rate differentials and it is not the dollar-rnb rates specifically motivating that. fearfulre very -- or with what is going on in china and they want to find ways to get their money out. all of the rhetoric about, we are not happy with the dollar's prominence in the global system and we introduced a new currency basket as a way of moving away and decoupling from the u.s. dollar, this is unnerved public confidence. it is kind of unhinged. it is quite difficult to get this back in the bottle. >> walkway through the policy

outlook that you now see animating -- emanating from beijing. what do you think the policy response will look like? before the national people's congress in march, we will see the outlines of a new fiscal stimulus or graham. -- program. government spending is already rising in double-digit rates. we will see other areas of social security speeding up social security reform. and i think we will see the government clamping down incrementally on capital movements, too. these are the two things that i think we will see. whether they will succeed and revolving china's fundamental problems about rebalancing and all of that remains to be seen. between now and next month those

are the things that we will see more of. jon: george magnus, thank you, very much for joining in this program. this morning, stephen, the -- bnp paribas. thiss isi a market that ism very fearful of almost everythingp. we are oil, the fed, high yield. on china, the fear is around an outright the valuation. they will pull the floor out of s&p euro swiss. is that possible? >> i would say that there are two key themes to focus on in china. firstly, renminbi. we think they will only allow modest appreciation. member the point i made before that the fact that the bullish dollar trend may be mitigating

helps them play into their hand. hereecond point i focus on are commodity prices. we are all used to it being the last big demand or of commodities. that has changed and is changing and we think that even if chinese growth is ok, china is not going to lead its commodity price down. we think we are stuck with low commodity prices for quite some time. jon: you said they will allow modest depreciation. it infers they will have control as they leak fx reserves and quite a direct way. b ined to talk about s and the word allow. do they still have control to that extent that it is all up to them? >> i think that they do in the short term. we saw over the weekend that

they hit reserves, but they have a lot of reserves. there is no issue, whatsoever. regime wherein a the dollar renminbi is not determined by policymakers. guy: a big conversation happening next week. ?ow does it trade around it could it dominate the summer? >> we are bullish for the pound, particularly this next week. we think that the tide is turning in favor of david cameron with europe. it looks like a deal is in the making now. if that is the case, it is hitting a market that is usually beaten up on the pound. we had the biggest short position in the pound in eight years.

if that is the case the market is very susceptible to positive use so i think a sterling rebound is a good deal. us: crate to have you with on this program. up next on this program, the final push. we will discuss david cameron's eu renegotiation methods -- efforts. 44 minutes into the session and a quick update. equities here up by one full percentage point. let's call it 71 points higher in the city of london.

jon: hello and welcome back. 47 minutes into the session. ergy, and miners, enge the banks leading europe. caroline: jamie dimon, the chairman and chief executive a jpmorgan spent twice $6.6 million buying shares in his bank. that's after shares tumbled to the lowest price in four years. he made the purchase because he said he believes stock is cheap. rumored sources say that three bankers have left goldman sachs. they were involved in revising a in a foodbuyer

company out of the middle east. rumors also say that boeing has become the subject of an fcc -- review.unting they are looking into account in sales forecasts. boeing fell almost 7% on the news. both the airline and the sec failed to comment. guy: thank you very much indeed. david cameron meets angela merkel in a final push -- this after the euro area envoy change euplans to rules. hans nichols is in berlin for more. walk me through this. plenty of people are paying a great deal of attention. hans: they need to start reading

the french newspaper because according to four people familiar with the matter, the french are leading the opposition to this draft proposal. david cameron is celebrate in this as a potential victory. firm you think the opposition is tells you if something will get across the finish line. the dispute on the bankside -- we will do another one in the second, but can the eu in the eurozone have rules? how quickly can they implement and effectuate those rules. the others want a little bit more autonomy. that's what the french are objecting to. controlsown to, who the regulation and how quickly can it it be put into effect? there is still an east-west

divide on that. there noting that mr. cameron still has a different -- difficult sales proposal at home on what you pay for child benefits for children living outside the u.k.. always hard to tell how firm the opposition is. it seems like there would be shuttle diplomacy. berlin,to paris, bucharest, athens, and pronk. -- and prague. i hope he gets frequent flyer miles. jon: hans nichols, thank you for wrapping that up. up next, the 10 year yield falls to the lowest on record in the face of brexit fears. we will discuss this further and check out sterling as well.

jon: hello and welcome back to "on the move." we will bring you that live on bloomberg television. later today, we get u.s. retail sales which economists expect to have risen in january. david cameron will give a speech likely to focus on britain's role in the eu. joining me now is richard jones from bloomberg's first word.

britain's role in the eu, a lot of uncertainty. if anyone has had concerns about guilt, it is not in the market yet. >> we have seen a repricing of the whole u.k. curve. easing priced into this year now. a 50% chance that they cut what he five basis points in august and a three in four chance that they cut by the end of the year. five weeks ago, we were pricing hikes. guy: is that exit or the banks -- is that brexit or the banks? there are many things being priced into the same market and telling different things as a result. i think it is broadly what we have seen in global rates everywhere. .ecause of the uncertainty because of a lot of the repricing we have seen it is not too different from the u.s. curve. we have had a fairly good chance of hikes this year another is little to no chance. >> rate differentials, all that

matters now is the rate of change in either side. now that brexit will start to take up more of the narrative -- which is to say we will have a date for the referendum soon enough, i think that brexit will now start to weigh on the pound. just a little bit more than they have up till now. guy: where does the pound go in all of this? where does the cable rate go from here? certain people have a lot of vested interest. look atnk -- if you both sides of the trade on the interest-rate differential side, there has been a big move in the u.s. side and u.k. rates. there is probably going to be some downside because of the brexit concerns. jon: bloomberg's richard jones

from first word, thank you for joining us. guy: don't go anywhere. that is not good news. jon? is it not good news, jon: this is my final show. david bloom broke the embargo. i will be joining new york city in a couple of weeks. that is nice. guy: it could have been good riddance, jon, see you in new york. jon: not to get sentimental, i started here a number of years ago over there helping the cameramen and taking people there water. it takes a special company to let someone like me go from there to here, then back to there. i would like to thank the team for bearing and sticking with me. guy: stephen thinks we will see a drop in the pound next week so the timing could be excellent. a brave new world in new york. what is our loss is there gain.

we will wrap it up, stay with bloomberg television. we will speak to commerce bank's 's ceo, martinbank blessing. it is the pulse up next. jon ferro, up next. ♪

jon: europe opens higher after the global equity selloff continues in asia. japanese equities suffer their worst week since 2008. commerzbank swings to a profit. the german bank expecting a slight increase to profit this year. we will speak to the ceo. buys more thanss $26 million of shares in the bank after they tumble to their lowest price in more than two years. that is roughly his annual salary. welcome to "the pulse