good morning, everybody. you are now watching "street signs." welcome. i'm louisa bojesen. >> and i'm nancy hulgrave. these are your headlines. >> in a shock move, the bank of japan cut interest rates below zero. the governor called it the third dimension to his easy policy. >> the shift to negative rates propels european equities higher, but it's too, too late to save an ugly january as we enter the last trading day of the month. >> peripheral banks powering ahead after swinging to a profit in 2015.

sabadell almost doubles full year earnings. we'll hear from the chairman later on. >> and amazon fails to deliver on quarterly profits, sending shares sharply lower. this despite record revenues. hi, everybody. good morning. it's friday. >> finally it's friday. and the end of the month. >> loads of volatility as well. we'll be checking in on some of the most volatile markets later on. let's bring everybody up to date if they're just joining us with what the markets are doing at the moment. we are an hour into trade. we're seeing a little bit of a rally. that rally continuing on from what we saw overnight. after we had this unexpected move from the bank of japan which we'll talk more about in a second. as we said, adopting negative interest rates. nobody was expecting that. everybody jumped on the back of it. whethethat's grounded or not grounded, we can get on to that in a bit. let's show you some of the european markets.

we're higher by 1% to 2%. and we've got green across our screens. all of our european boards trading in positive territory. the rates could go even more negative if need be. they're trying to ensure that inflation moves toward the 2% target. hasn't always been easy to reach that point. again, we saw this immediate reaction across the board. china rebounding to the tune of some 2%. they're still on track for their biggest monthly fall since the height of the financial crisis. haven't seen a move like that in shanghai since 1994. >> it's been an ugly month across the board. finally this move from bank of japan giving a bit of optimism. we'll have to see how long it lasts. we've seen this before as central banks come into the rescue and equities rallies fade. >> and it doesn't change their money supply base. disease it fit with quantitative

easing? just to recap, negative rates could go lower as long as need be, according to the governor. this after the central bank made this move. it was a 5-4 vote in favor of cutting the bench mark rate below zero, as said. let's talk a bit more about this. jeffrey yu is an ultra high net worth strategist. good to see you. what do you make of this very unexpected move by the bank of japan, and how is it going to impact other asset classes now? >> firstly, no one was positioned for this. so you are seeing the reaction in markets right now. we need a bit of unexpected good news from central banks. so there's a rally going on. secondly, be a bit cautious insofar as if you look at the initial reaction and intraday trading, japanese equities jumped. then they both fell quite swiftly.

if you look at the topixx, it's above our six-month forecast. i think that initial skepticism of is this going to work and like you said earlier, it's not expanding the monetary base. the qe program is going to be in place too. overall right now, i think this will allay some fears. even though the fed is normalizing, teveryone else is still using. >> not expanding their monetary base, is it even compatible with quantitative easing, or are they two separate strategies? >> well, i think the jury is still out there on whether these are mutually exclusive strategies. if you look at switzerland, they're going to sort of intervene when needed. but negative rates seems to be doing more of the work. sweden is doing qe and negative rates. in japan's case, if you look at the boj, you now how they released this in english at

least, they just called it a new dimension to quantitative and qualitative easing. i think they're treating it as one big package for now. >> presumably a big part of the aim here is to impact that yen trade there. a lot of concerns as we've been talking about, about the safe haven flows going into the yen at this level. is this enough to satisfy t government to sustain profits going forward? >> corporates at 120 will be okay for now. the key is will it work in generating higher wages. you can get an fx translation in your earnings, but if you don't pass it on, you're not going to get the inflation kick. there seems to be a bit more urgency. i think the boj and bureaucracy, the muensters in general are going to try to push the corporates on this front. >> and it's not just the boj we're talking about. we've heard there needs to be more done on the fiscal side. yesterday following that announcement, the economy minister is now out. they've replaced him with a new executive here. what does that suggest to you about the pressure building on the fiscal side, or does this

measure from the boj simply relieve some of that pressure? >> as we know, when the boj did their last round of surprise big easing, there was some dispute as to, you know, whether they were letting the government off the hook on the fiscal side. i think they've made peace with that for now. this does open the way for additional supplementary budget to come through. that injection is needed. but the underlying story is this contributes to growth only if we get the cash to be deployed, if corporates pass on the earnings and wages go up. that doesn't seem to be working as well as they hoped. maybe this time will be different. >> jeffrey, thank you very much. jey yu, ultra high net worth investment strategy at ubs wealth management. >> thank you. >> so january is coming to a close, nancy. can you believe it? >> a month to forget, really, when you think about it.

>> i'll kick it off with an obvious one. an oil price chart. the price of oil hasn't been able to be ignored over the course of this past month. there's been such a massive correlation between what we're seeing in oil and what we're seeing in other asset class, especially equities. we don't usually see that. remembering we hit these highs of some 50, 60 back in november. there have been these reports about whether or not opec could be working together with russia or saudi to try to decrease production, although we've also been hearing those reports aren't true. we heard that from an opec official. those are not confirmed comments at this point in time. definitely oil is going to continue to be one to watch heading into the year. >> definitely a factor, louisa, as we talk about the correlation with equities prices. i want to take the lead with the dow transports. when we talk about the relationship between that dramatic falloff in oil prices and the equity space, you can't ignore the fall yuf we've seen in the dow transports.

we're talking about some of the train carriers, major train companies that carry oil. they've take an hit. also, airlines making up a large percentage of this index. some of these our lines are hedged quite far out when it comes to oil prices. >> well, we need people to make the conclusion. which chart will you be watching? >> win, lose, or draw. >> exactly. as usual, it's always nice to have you guys involved, to be part of our conversation here on "street signs." you can e-mail the show. the address is on screen right no uh. streetsignseurope@cnbc.com. by the way, thanks for all your e-mails yesterday. >> you can always get in touch with us on twitter as well. @cnbc. i'm @nancycnbc and you can find louisa @louisa bojesen.

>> the market economy functions based because the opposite is socialism, communism, and central planning, which has been a complete failure. but now democracies, they have implemented a system which is run basically by a bunch of professors. they kind of target inflation, target exchange rates. they target the quantity of money. is the world crazy to give them so much power? and their policies have been a complete failure over the last 20 years. now the same people, they are now desperate because gradually they're losing their prestige. they're losing their credibility. and they double up on medicine that hasn't worked. it won't work. as long as the central bank --

we are now in power. >> joining us now around the desk is the senior analyst at danska bank. pleasure to have you with us. we were just listening to mark really sticking to his usual doom and gloom, saying look at what's been happening with the central bank. so much hope, so much anticipation, but it's simply not working. as you look at the european economy, where we are, do you think that's true, given the ecb policies thus far? >> we think it's a very important step from bank of japan this morning. we had the ecb last week trying to calm everything down after a volatile january. now it seems that the bank of japan is stepping up, and that's very supportive for risky assets going forward. >> so we have the bank of japan stepping up on one hand. still leaving question marks to what the ecb will do. we did hear from mario draghi, suggesting march wasn't on the table when it comes to

additional stimulus. do we have a rift here at the ecb? does that suggest investors could be disappointed come march? >> i think there's a risk for the market and uncertainty about whether draghi will be able to convince the rest of the governing council to do more again. we did see a disappointment in december. we had been used to draghi convincing the rest of them. now there seems to be a bit more of a split. with the very low oil price, the ecb will have to lower their price at the march meeting. we expect them to announce a third year in a row when inflation is expected to be below 0.5%. that's very low inflation. that's not something the ecb can live with. we do believe they will announce more the a the march meeting. >> we're outnumbering you here with the danish. that's okay, you have the american coming later. we were just talking about the charts that could be lead

indicators heading into the year. what in particular are you looking at, at the moment? which metrics are the ones you're in particular paying attention to? >> of course, the oil price. it's very important for the ecb. that's what they are concerned about in terms of the outlook for inflation. but i also think that the euro is very important for the ecb. if we see a financial tightening, that's something that could force them to ease again. the euro is strengthening. we look for euro-dollar to go higher on a 12-month horizon, so that's a head wind for the ecb. >> what would drive us? at the same time, if you've got a strengthening u.s. economy, shouldn't the dollar then be heading up? do you still anticipate the fed is going to be tightening? with the bank of japan's move, you could argue that's become less certain whether or not the fed is going to still be hiking the four times they seem to be forecasting. >> that's definitely what the market is speculating about at the moment. only one hike is priced in now.

we think relative rates have been in play for quite some time now, but it's more going to be fundamental. that's why we look for it to strengthen. >> okay. thank you very much. very good to see you. let's move on. the age-old sides zero debate is finally over. all shapes and sizes on that team winning. after 57 years, mattel is transforming its barbie doll into a raft of different real women. the 2016 range now comes in 33 different models with body shapes including curvy, skinny, tall, different skin tones, even different eye colors. also, she even has flat feet.

>> getting rid of the high heels. >> i was always mystified as a child how she could walk on high heels. >> sporty barbie still had high heels on. >> her foot is curved like that. but this happening as the toy makers look to keep up to date with modern trends amid declining popularity for ken's other half. the issue is whether they're going to sell. are kids, girls, so engrained that barbie has to look a certain way. >> but it's no surprise mattel is hurting. i think they're trying to modernize. it's a good step forward. when you look at something like american girl dolls, all different ethnicities, backgrounds, cultures, those are selling very well. >> i was shown one the other day. it's almost like a monster girl but very sexual for, you know, you would think for something that you as a parent want your kid to be playing with.

i had one that was very politically incorrect. a big blue eyelid. you pressed her on the back and she winked. i loved her, and my mother hated her. >> i saw one at a tech conference recently. it wasn't barbie. it was a tech girl that actually coded. she was an entrepreneur. lots of variations. >> we absolutely love that. >> still to come on the show, is there an end finally for the commodity collapse? we'll round up what's been another tough week for miners. stay tuned for that. and the prodigal son is returning. james murdoch is back at the helm of sky as chairman. we'll also check out the broadcaster's latest eninarning. plus, the show must go on. republican candidates revelled in taking pot shots at front runner donald trump, who decided to boycott the event with ted cruz leading the charge. >> let me say, i'm a maniac, and everyone on this stage is

stupid, fat, and ugly. and ben, you're a terrible surgeon. now that we've gotten the donald trump portion out of the way --

hi, everybody. welcome back to "street signs." this is nancy. i'm louisa. shares moving higher after posting its first profit in five years. the troubled lender brought forward its release by a week to reassure investors about its liquidity position. separately, the o has told an italian paper that a merger with ubi would make sense, but he also added no m&a options are on the table right now. bank of sabadell shares also trading higher after 2015

profits and net interest income beat forecasts. fourth quarter earnings were lifted by the purchase of u.k. lender tsb banking group. sabadell currently higher just over 6%. >> well, louisa, it's been a tough week for miners. we've been following the declines throughout the whole mont they continue to suffer from the crash in commodity prices. as we saw earlier in the week, antofagasta is pledging to up its production after missing 2015 expectations. anglo american seeing a boost in its iron-ore output, but a tough year when it comes to cost cuts. let's talk about lonmin for a minute. they saw a healthy boost in production after playoffs. the miner is also targeting 700 million rand in cost savings for

the upcoming year. and vedanta is still reeling from the collapse in oil in aluminum prices after seeing about 99% fall in its q-3 profits. the indian miner is hopeful the new cost trur will turn around its fortunes. >> let's talk more about the metals and miners. good morning. welcome. >> morning. >> we just saw a couple of examples there of the various companies and what they're dealing with. some of them pledging to increase production. we're looking at some dividend cuts as well. the environment, though, remaining pretty tough for the miners. i think it's fair to say. and we're still seeing decreases on a lot of the underlying metals. although, a little bit of a rebound over the last couple weeks. how do you put it all together? what's your view? >> yes, well, certainly the last few years have been very tough. the next few years will probably be just as tough. what we're seeing is the mining sector and mining executives are slowly but grudgingly coming to

terms with the new paradigm they're facing. they're helpless to influence flagging commodity demand, but what they can do is influence the supply glut we're seeing across the commodity complex. quite frankly, we just haven't seen enough mine closures yet to at least start to bring equilibrium back. >> so it appears you're suggesting once we get to equilibrium, when that happens, which companies are positioned best here? >> we think rio tinto, for example, is pretty well positioned. certainly amongst the major miners. they're, of course, also under pressure. the dividend is questionable, whether or not it's sustainable certainly over the next few years, if commodity prices persist at these levels. but it does have a strong balance sheet. they have very high-quality assets, particularly in iron-ore. that should stand them in very good state over the long term. >> and you have companies where you maybe need a bit more ice in

your stomach to go for them. >> yes, valet is an interesting one. it's facing some tough times at the moment. of course, the fall in the iron-ore prices hit very hard. it went into the downturn with quite a lot of leverage on its balance sheet. it needs a bit of time to work that out to divest certain assets, but if it reverts back to previous margins, for example previous returns on capital, it could be very attractive. >> and what are your thoughts o glen corp.? we talked some about them through the end of last year. the stock really plummeting. has the story really turned yet? >> the story is beginning to turn. glencore was leacertainly on th back foot, certainly at the end of the quarter last year. they did come out with some decisive action, which the market appreciated. that was in stark contrast to some other peers who had put out new strategies, but it was

really long on talk, short on action. so i think glencore is doing the right thing. they're making the right noises. more still needs to be done, particularly if commodity prices don't recover. >> materials, when looking at some of the worst and the best performers, materials on the s&p, the worst performing sector for january down by some 13%. throw energy in there, down by around 5% since the beginning of january as well. most commodities close to multidecade lows. you say that the commodity marks will normalize eventually. what does that mean? if you hold a position long enough, you know, you're likely to be right at some point. when is eventually going to be? >> correct. it's a very good queson. there isn't a clear answer for that but we have to remember commodity markets are cyclical. the very low prices we're seeing today will illicit a response from the industry. more than two-thirds of the nickel industry is unprofitable. a third of copper mines are

unprofitable and iron ore mines. we will see supply cuts starting to come through. but we need to see that accelerating in 2016. >> thank you very much. have a good weekend. >> thank you. >> couple hours to go. >> and keeping an eye to the commodities picture. we're just getting some statements coming out of a spokesman within the kremlin here saying that russia is interested in discussing the oil market situation with all participants. this comes just a day after we heard reports that the russian oil minister said that saudi perhaps was talking about doing production cut of about 5%. some signs there was more perhaps cooperation on the cards between opec and non-opec players. but then members came out and said, not true, squashed any speculation. that brought the oil price back a little bit. still, once again, russia saying they are interested in discussing.

>> an old report put forth a suggestion like that a couple months back. but it's true. they can take the pain of some $30 oil per barrel for some time but not forever. then it starts to pinch in all areas. >> and some concerns, too, that even though you're squeezing out the north american production, the shell producers are getting more efficient as time goes on so they break even. still, we had this comment cong from the kremlin that russia is interested in discussing the oil market situation. oi prices, as you can see, brent and wti both up about 1%. i think there are a lot of nonbelievers out there when it comes to any moment between opec and non-opec. >> there's a great piece on cnbc.com called "why russians and saudis could cut oil output." take a read of that online.

i'll tweet it afterwards. >> even if they aren't talking about, some saying they should be. >> another story, james murdoch returning as chairman of sky to replace nicolas ferguson. this as the company reports its highest operating profit, sending shares into the green. this one is really interesting. james murdoch was booted out or chose to leave four years ago, after the phone hacking scandal forced him out. so he left. in the meantime, while he's been gone, he went to new york, reinvented husband care eed hisr 21st century fox. massive job in the industry. now he would be coming back to a sky that's really expanded. they're gaining ground very quickly. they have a record number of customers now. on friday they posted a 12% increase in their profits as well. so it's very interesting to see these changes happen within sky and wonder how james would drive it forward.

>> and of course just before he left sky, there was the bid from fox trying to get outright control. we heard from the ceo at sky saying they do not look at any of the speculation of another fox bid as a disfraction, but you have to wonder if these talks are going on just given murdoch is coming from fox back to sky here. >> they own 39% of it already. mig >> of course, the phone hacking scandal came along. you wonder whether or not the interest would revive itself here. >> let's move on and talk about jc decaux. they posted full-year revenue that beat analyst expectation. these are the guys when you're waiting for the bus, when you see the changing posters in front of you on the platform. fourth quarter profits rose more than 17% to 984 million euros.

iran has sealed a deal to buy 118 airbus planes, including jumbo jets. president rouhani finalizes the agreement during his visit to france following the lifting of economic sanctions. airbus' chief technical officer has resigned following ten years with the company. airbus higher by some 3%. >> we've been watching this one for a while. the troubles over at rolls royal royce. now the ceo is set to cut a number of managerial jobs. they've issued five profit warnings in recent years. they're under pressure from activist investor value act to improve margins. off just barely. an otherwise positive session. >> shares in honda closing around a percent lower after the carmaker saw its third quarter operating profits plummet by

22%. the japanese carmaker blamed the figures on recall costs related to the faulty air bags. >> and shell's acquisition of bg is all set to go ahead in just two weeks' time. this after shareholders overwhelmingly approved the oil giant's $52 billion offer. the merger will create the world's biggest trader of liquefied natural gas. if we can just take a look at how the shares are trading, bg group off about 0.6%. also, keep this in perspective. we did see quite a bit of a rally when it comes to the royal dutch shares yesterday once the deal was approved and bg group as well. this could be profit taking here. going into this deal, the big concern was the fact shell had said it would work with $60 a barrel of oil. of course, we're far off from that now. the message seems to be this is a long-term play.

a lot of optimism for the long term. >> absolutely. and you have to wonder now whether companies are looking at teaming up if you see real value in some of these companies that are struggling because of the drop in oil. >> well, let's give you another check on how european markets are faring overall. despite the gains we're seeing on the board today, it has been a terrible month for most of these marks, especially the xetra dax there. off almost 10%. more on these market moves coming up.

hi. welcome back, everybody. you're still watching "street signs." i'm louisa bojesen. >> and i'm nancy hulgrave. these are your headlines. >> in a shock move, the bank of japan cut interest rates below zero. governor kuroda calls it the

third dimension to his easy policy. >> and that shift to negative rates propelling european equities higher, but it's too little, too late to save an ugly january as we enter the last trading day of the month. >> peripheral banks have been powering ahead this monk. swinging to a profit in 2015. we'll be hearing from the lender's chairman a bit later on. >> and amazon fails to deliver on quarterly profits, sending shares sharply lower after hours. this despite record revenue. >> hi. good morning, everybody. happy to have you with us. if you're just joining us, maybe watching from the states, very early. happy friday. incidentally, we've had this rally seen in asia overnight after the bank of japan's move. that rally continuing here in europe to some extent with many markets higher by 1% to 2%. somewhere in the region.

and when it comes to our european markets, we're hanging on to those gains as seen here across the board. the main indices still higher. the ftse up just shy of 2%, helped along by some of th banks. but it's really a broad-based rally we're seeing with many asset classes being bought up. of course, people also questioning now what the other central banks will be doing, whether this will impact them. for example, whether the fed still could be set to hike rates over the course of this year. if we're looking at stimulus being put in place elsewhere, what does that say about the economy? but lots more going on, on this friday, nancy. >> that's right, louisa. as we head into the weekend, a lot of chatter will be once again on the u.s. presidential race because on monday, the wait is finally over with voting officially taking place in the u.s. presidential race with the iowa caucuses. but what exactly is a caucus? we've been trying to crack this one all morning.

steve was talking about it a bit earlier. now we've got the answer here. exactly what makes it so different from the other primaries, which are due to start in two weeks? well, let's set it straight. a primary is a traditional secret ballot, where voters pick their preferred candidate. in a caucus, voters gather together and decide which candidate to support. then they directly select delegates for nominating conventions at a later date. historically, the iowa caucus is not a great predictor of who will win the nomination, but it can predict the losers. since 1972, not a democrat or republican candidate who finished worst than fourth place in iowa has gone on to win the nomination. and we should point out there in that overall description of caucuses, it is quite different from what the democrats do and what the republicans do. republicans will still hold somewhat of a secret ballot. on the democratic side, they have the gatherings, in which you can switch sides, try to convince others to come into your group. a lot of focus on the iowa caucuses after the debates. but the big question is whether or not it will predict the

eventual nominees. >> and we're months away from the election. still early there. the show has to go on, in the meantime. in a debate on the fox news channel, the republican presidential candidates seized on donald trump's absence to take shots at the front runner. meanwhile, trump managed to stay in the spotlight at his own event. nbc's steve handlesman sent this report from the event in des moines. >> he's an entertaining guy. he's the greatest show on earth. >> reporter: donald trump was missing at tonight's debate on fox but still mocked. >> i'm a maniac. and everyone on this stage is stupid, fat, and ugly. and ben, you're a terrible surgeon. now that we've gotten the donald trump portion out of the way -- >> reporter: nearby at his own event, trump fired back. >> look at all the cameras. it's like the academy awards. >> reporter: carried on several cable networks, trump raised money, $5 million he said, for wounded warriors. invited low-polling rivals on

stage. no tough questions. his mike, his message. >> my whole life i've been greedy, greedy, greedy. i've grabbed all the money i could get. now i want to be greedy for the united states. i want to grab all that money. >> reporter: back at the debate, ted cruz was center stage. >> rebuilding our navy, rebuilding our air force, rebuilding our army. >> reporter: but polling second to trump, cruz was a target. >> the only budget that ted has ever voted for is a budget that rand paul sponsored that brags about cutting defense spending. >> marco, please attack ted. jeb, please attack ted. let me just say this. >> it is a debate, sir. >> reporter: four days until the vote, trurp with a seven-point lead in the polls over cruz with marco rubio polling third in iowa. i'm steve handlesman, nbc news, des moines. >> so with only three days to go now until the first ballots are cast in iowa, let's take a look at where things stand. the latest nbc "wall street

journal" poll shows donald trump with a 7% lead over ted cruz. marco rubio sits in third place with 18%. trump had trailed cruz by four points in the same poll just three weeks ago. meanwhile, the democratic race is much tighter with hillary clinton holding a narrow 3% lead over vermont senator bernie sanders. joining us now for more on this is the managing director at mercury. morr morris, pleasure to have you with us. we're finally getting there, the first caucus in iowa on monday. the big focus here, of course, is on the debates last night and the big man who was not on stage, donald trump. was this a victory for him in the end? >> absolutely. he was the star of the show not even being there. and he's been consistent. donald trump commanded the stage. he didn't come, he stuck to his guns, and hwas able to be the star of the show without being there. it's consistent with who he is as a superstar, as a person that comes out with different ways. can you imagine anyone else not showing up? no one would be talking about him.

so donald has a way of really galvanizing. i think he's been good for the process. a lot of people don't like what he says. i don't like what he says. but 40 million people start to tune into these debates. if you noticed, the debate was off because he wasn't there. >> if you look at the polls in iowa, a fair amount of people there like what he says. 32% in the lead. getting closer, when we talk about iowa, how often does it actually predict the eventual nominee? still quite some time to go after this process. >> it is. but for donald trump, this is the most important one. this is the first election he's ever been a part of. if he's able to win this, i think he'll steam roll. he's going to win new hampshire easily on the republican side. the question is, can ted cruz use the south to slow him down? my prediction is, if he wins the iowa caucus, he'll be the nominee. >> apart from trump, was there a winner on stage last night, and who walked away the loser? >> i think the winners were the veterans, quite frankly.

no one has been talking about the veterans. that's an issue that's been down played. i think besides donald trump, the veterans were a winner. i think the person that was a loser was ted cruz. he became the center of attention. people went after him. he didn't perform as well. the dark horse is rubio. he picked up a pretty good endorsement. it's always interesting when you're in third in these races. you can always be the consensus guy. rubio might squeak out and come into second. >> so what happens if bloomberg dt decides to run? >> i think that he won't run if hillary gets the nomination on the democratic side. however, if it was a bernie sanders, cruz, or trump and mike bloomberg was on stage, he would be the adult in that debate. i think he could win. he would be the first guy i think as an independent that could win because he'll spend a billion or $2 billion. if that scenario played out, i think bloomberg could do well. >> and how much trole is

hillary clinton when it comes to the prospects of her getting the nomination here? we talked about so long here that she was a shoo-in for the nomination. then bernie sanders really has caught many by surprise. what do you think when it comes to the odds of her giving the nomination? >> the last time she was a shoo-in too. i supported her then. i support her now. the big story that's not being reported is bernie sanders. if not for donald trump, he would be the big story. the good thing about the democratic side is that you can lose iowa and new hampshire and still become president. i think because of the way it structured her ground game and the money she has, even if she lost the first two, i think she could still win because she's got the money and the organization. >> okay. morris, thank you for joining us. we'll all be watching monday to see what happens in iowa. that's morris reid, partner at mercury. putting the focus back on earnings here. we're breaking down tech earnings.

sony shares rising by 5% after the tech giant saw an 11% increase in third quarter operating profits. that exceeded analyst examinations. the turnaround in sony was helped by the playstation. >> microsoft shares up by as much as 8% after hours as cloud services continue to be the silver lining for the company. josh lipton has the full report. >> microsoft reported, and investors liked what they saw. the software giant reported 78 cents on revenue of $25.7 billion. analysts had been expecting eps of 71 cents on revenue of $25.3 billion. so both bottom and top line results besting predictions. but it was the deferred revenue that really excited investors. that clocked in at 25 billion. it's an indication of future business, a gauge of consumer and commercial demand. fbr's dan ives says it shows momentum is building for

microsoft in 2016 rather than slowing, and that's different from what we are hearing from other enterprise tech companies. it also beats the street's forecast of $23 billion. so what is driving that good news? well, microsoft is still executing on its cloud services, meaning office 365 and azure, which is its answer to amazon's cloud business. for cnbc, i'm josh lipton in san francisco. >> and the big talker yesterday after the bell, of course, was amazon. they actually missed expectations in the fourth quarter. this was despite strong growth in key areas. but earnings per share came in at $1 while analysts were looking at around $1.56. but the bright spots were its cloud business and amazon prime, which saw 51% growth in membership. shared finished down 13.5%. louisa, this one kind of caught me by surprise.

really strong performance from amazon in many ways. profits were great. the best they've had in quite some time. yet, investors are selling off here. it just goes to show profits did miss expectations. although, they were quite strong. you have to wonder here if investors are losing patience with all amazon is doing, always promising they return the money into investments. although, several analysts have said this is a buying opportunity. there was also a piece on cnbc that said actually amazon could spike another 15% this year. >> not sure if it's end of the year fatigue. we had a very volatile end to the year as well. whether that just kind of was reflected in some of the underlying showings over the christmas period for some of the retailers. >> also, amazon being the best pchler last year on the s&p 500. >> exactly. so taking a bit of profit, repositioning for a new year. i'm not sure. but as nancy said, head online and take a look at the online

piece for more analysis on that. and of course, the earnings continued. a lot of earnings. we also had news on xerox, the technology company falling in after-hours trade on the back of reports that the company is splitting in two. according to the wall street journal, xerox will be confirming the separation of its software and hardware businesses later today. carl icahn is to be given three seats on the board of the spin-off services company. we'll be hearing from the xerox ceo first hand on u.s. squawk at 7:00 a.m. eastern. >> and the earnings focus keeps on coming here on "street signs." up next, we'll be speaking to the chairman at spanish lender banco sabadell.

welcome back to "street signs." let's bring you up to speed with some of the top stories today.

rio de janeiro's mayor says he doesn't think the zika outbreak is a problem for the olympics. this as the world health organization warned the disease was spreading explosively in the americas and could affect as many as 4 million people by the end of the year. the fbi has released a video that shows one of the oregon wildlife refuge occupiers reaching into his pocket before being shot dead by law enforcement. and the swedish interior minister says sweden could send back 60,000 to 80,000 refugees in the coming years. however, the director of operations sought to clarify, saying as the number of migrants increased that more people would be seventh back, but more people would also get permits. now, iranian president hasan rouhani says defeating terrorism is his country's main concern. speaking from paris, quote, the west should never imagine it is complete in its human rights and

that other countries are backward. this is totally a mistake. >> now, banco sabadell shares have been trading higher as net interest income beat forecasts. fourth quarter earnings were lifted by the purchase of tsb banking group. the chairman of banco sabadell joining us. josep, thank you for being with us this morning. you're outperforming, and your profits are 91%, boosted by this acquisition of tsb. what happens next after the acquisition scenario wears off? >> well, what happens next is that we continue on our plan. i think that this year has been a very crucial year in order to integrate the teams. we're working towards two directions. one direction is delivery of the

bank, following the tsb plan. that has grown at 14%. we acquired the portfolio from the northern rock. altogether, that's been important. deposits have gone 5.5%. and that's all we're aiming at. we already have taken the first steps towards the migration that we announced. the systems will take some time. we're working and focused on our internal project. >> sure. sir, there continues to be a lot of speculation about bad loans and whether or not we have to go through a whole raft of new bad loans, especially in some of the periphery european countries, and spain being put in that basket as well. you had higher provisions for

bad loans. are we going to see more of that through 2016? >> we have done a lot of cleaning this year and last year and the previous year, but just to give you an idea, we've told 2 billion of real estate assets. of course, there's still some production to be expected. we've given some guidance for the next year. we don't think that it's necessary to do any special thing there except cleaning in house.

[ indiscernible ] >> josep, getting back to your expansion plans here in the u.k. market, you had mentioned at the time of that deal you're continuing to look at u.k. assets. you just mentioned the northern rock assets. are you continuing to lock at other acquisitions here in the u.k.? >> not for the time being. we're not looking at any other acquisitions. we know there are som that are being set in the market, but we are focused for the time being. we need to be closing our house and our activities and our migration. we'll leave that for later. >> and getting back to your home market, some concerns still there about the inability of the government to form in spain here. we did see spanish banks dip after those election results

came out inconclusive. how concerned are you right now that there's yet to be the formation of a government, and what do you expect in the coming weeks here? >> we are a little bit concerned, but the only concern is how long will this uncertainty last. i think that worst-case scenario that can happen is the results of a new election. that would lengthen that two, three months. in the end, no dimpts would be expected from such an outcome. therefore, at the end, necessary d expectations of a condition that can governor the country is up there. maybe spain was not used to this kind of government and conditions. that is the first time. maybe it's what makes it a little longer. that eventually will have to be there. >> okay. josep oliu, chairman at banco sabadell. thank you for joining us following your results.

meanwhile, it's the end of the month, big trading day here. a look at how u.s. markets are set to open. we have seen some gains in the last few days, but it was quite a bad month when we look at the s&p 500. a very volatile one at that. >> an atrocious month. >> and the volatility, only a few days where the s&p 500 hasn't seen the swings of around 1%. but the good news is, set to end the week in positive territory. we'll take it for now. the dow jones called higher by about 150 points. let's go ahead and show you what that picture looks like on the month. we can look at the dow overall, off over 10% at the close of trade yesterday. the s&p 500 has been down significantly. the nasdaq, we've seen a lot of weakness closing out the week. not a pretty picture hoping to kick off the new year on a strong note. another story here in europe as well. >> or maybe it is in terms of the buying opportunities. maybe this is the capitulation so many people have been hoping for. nasdaq on pace for its worst january ever.

even through the financial crisis. you're looking at this record drop in january of '09 of 9.89%, to be exact. we're more than 10%, right. s&p currently on pace for the third worst january ever. again, behind the january losses in 2009. the dow on pace for the third worst january ever. historically, it's been the best month of the year for the nasdaq, but it isn't this time around. historically, january usually is an okay month. >> as you say, the big question is, is it the bottom and do you get in. you have to be quite brave to call that at this stage. >> i think so. who knows what february brings, right? and of course the big story that we're closing out with today, the negative rates that could go even lower for as long as need be according to the bank of japan governor. this happening after the central bank shocked markets by voting 5-4 in favor of cutting the benchmark rate below zero to

minus 0.1%. if you're just joining us, sri comes at us from singapore. just tell us what the market reaction was, what do viewers need to know if they're just joining? >> well, it was unequivocally positive response from the markets. very, very market friendly. it was quite choppy for the nikkei, though, in the beginning because of the immediate aftermath of that headline. negative interest rate policy adopted by the boj. we did see the market run up. we saw dollar-yen off to the races, a spike above 1.21. then there was a bit of a rethink. the market thought, hang on a minute, this was aggressive, but was it aggressive enough? so we saw some selling on the nikkei. we were at negative territory at one point. similar story for the doll dollar-yen. there is a sense that mr. kuroda is running out of road here, and it's interesting to note that the boj did not expand the pace of asset purchases beyond 80 trillion yen a year.

that's an important point to bear in mind. the other factor here is that there are implications for the banks because they now have to pay to part those excess reserves, fresh excess reserves, with the boj. so the banks got smoked today on the market in japanese equities. the other factor here is i want to talk about this point about running out of road. rbs warning fade the strong rallies in dollar-yen above 1.20 as the current qqe framework appears exhausted. so that's where we stand. back to you. >> sri, thank you very much for that. that's it for "street signs." we'll be back on monday. thank you for watching. have a lovely weekend. bye. on tv working with canines. are you a dog lover, watson? i do not own a dog. but i work with veterinarians. how do you do that? i help them analyse over one hundred thousand pages of medical studies. that's great... 'cause they can't exactly tell us what's wrong with them.

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good morning. breaking overnight, a global market stunner. bank of japan adopts negative interest rates. >> happening now, amazon shares plunging after its holiday quarter results miss wall street's market. >> and a debate without the donald. gop presidential hopefuls square off in iowa. trump wasn't on stage, but the front runner's presence was still front and center. it's friday, january 29th, 2016. "worldwide exchange" begins right now. ♪ >> welcome to "worldwide exchange" here on cnbc. i'm sara oo