Tom a lot going on. Oil, sort of a reset after davis. Francine Central Banks probably have been more interesting. Lets get to the first word news with vonnie. Vonnie it will take several days in the u. S. To get back to normal after they got more than two feet of snow. Airports are reopening for business over a fourday period. Bond and Commodity Markets will be opening in new york, but the federal government in washington warming closed. Released by the Islamic State shows extremists carried out the paris attacks and committing other atrocities. All nine militants in the video died in the paris attacks. Seven were seen shooting or beheading captives. France, Police Arrested 35 people after migrants broke through security. Children are camped out in northern france, hoping to make it to the u. K. Supporters shut down for a while before it was reopened. The discovery of a piece of debris off Southern Thailand raises speculation about the missing malaysia and air jetliner. They found the chunk of metal last week. Authorities in australia are searching for the plane several thousand miles to the south. In sports, denver versus carolina in the super bowl. England,os beat new 2018. As newton ran for two carolina beat arizona, 4915. Carolina is favored. Tom, isquinn anyone watching nfl in london . Tom last night, i darkened the door of the barbecue grill by the tower of london. Americans were there in force to watch. What a lousy game i dont care what mike mckee says. It was not championship football. Francine im lost. Me at half the european population of no idea what youre talking about. Tom francine asked an important question not only was it again, but the two quarterbacks lead each team, ancient. Tom brady and peyton manning. It was the game everybody missed optically wished for all season before they played a real team. That would be my assessment. I like the nfl coverage on london tv. Very informed. Francine lets go to data. Tom equities and commodities we have an important chart for you off the bloomberg terminal. Yield,o down, 10 year 108, nymex crude churning. Lets bring it right on to the vix. 22. 34, much better than the 32 we saw a week ago. Thats the davos cost. Francine, i noticed the german twoyear stay there, 0. 45. Francine this is an important one as we look at a lot of Central Banks around the year. It will be interesting to see how they treat a lot of these european bonds. The stock 600 is pretty volatile. Asia is still gaining at the close. I want to bring at the 10 year yield. Gary cohen of Goldman Sachs is saying that the treasury will probably rise, and Morgan Stanley predicted the opposite. Tom that goes to davos in the heated debate. Lets go to the bloomberg terminal right now. This is the most important chart in the world right now, and we will show it in numerous ways. This is west texas intermediate, a chart, a trend based chart. If i were to teach a course in a class, this is a really cool chart with three kisses. Those circles are called kisses were a well behaved goes right up against the presumed moving average. We are nowhere, fran, near where you can say it is a bicycle. That is an alltime elegant chart. Francine and it goes back to the opec secretary general being here in london, saying he wants evidence to the table and to cut costs. What is saudi arabia going to do, and why would russia play part in it . Lets talk a little bit more about oil, as fundamentals drive the market. In tumbling this month, the market selloff not fundamentally justified. The chief economist, larry hathaway, joins us now with more of his incredibly exciting insight. Thanks for joining us. What we going to call a bottom for oil . Larry the bottom is perhaps a bit away we have a lot of new supply coming on in the form of the run in the form of iran. The production is not down nearly as much. That said, i do think markets are largely driven by price. If we can find some degree of stability, a lot of people will stop selling and begin to form that bottom. Francine but do we need, as was suggested, a significant cut, and will we see it . Larry we have got, globally, 1. 5 billion barrels of excess. We say that will probably be cut by the middle of this year. We are still looking at for five months down the road before a fundamental supply demand. Tom i read, coming back on the plane from zero, every year just what you said a delay to clear the market. What is the distinction between your delay of midsummer versus his, at the end of 2016 . Can the oil industry went for the markets to clear in november, december, january 2017 . Larry well, if they wait that long, we will see a lot of delay. Tom and we will jump into oil in the next block. That is front and center. Francine one of the things we were exploring in davos is Central Banks, but also the fourth industrial revolution. Simon kennedy writes today, he talks about the fourth that with, says the assumption of delegates at the World Economic forum, but he goes on to say that this will have a huge impact on wage growth. What is your take . You look at the fourth revolution, talk about it as syntax and opportunities. The one about Central Banks . Larry for Central Banks, when those new technologies from products, the internet of things, become a part of this, become diffused in the economy, im reminded of computers. Into computers for decades or longer before they began to impact the economy, because people didnt understand how to use them optimally to improve productivity. While im a big fan of the fourth industrial revolution, that is my word of caution. Tom thank you. Cartoon, theobot panelists for all robots, the people were robots. That described my panel we did in davos. Lets bring up chart one four janet yellen. Larry, you will love this chart. This is our original textbook orthodoxy. It goes back, down we go at the great moderation, a little movement. Where is the accommodative end . How far are we from where Stanley Fischer wants to go . Larry we are still a ways away. Meaningless to the economy when you consider the Balance Sheet of the Federal Reserve. Over the next year, they will raise rates. Tom did you see bring the chart up again. I feel old. Bring this chart up again. I go deflation and ultra accommodative, and no one knew that was a rip francine there was no surveillance back then. There are some things that struck me in davos, tom, and there seems to be more talk that there was a policy error from the fed. I would like to get your thoughts on it. If you say that rate hikes are still in the cards, they were definitely right to hike in december. Larry i think they were right. The economy is not all that weak. We have a pretty tight labor market, anecdotal evidence that wages are increasing. The u. S. Economy is pretty darn close to full employment. The fed has no business with a super accommodative monetary policy. Its appropriate to begin some degree of normalization. Tom great to have you. Hour, we in the next are thrilled to bring you someone who writes brilliant notes on china and asia. David goldman on deflation. David goldman on george soros. Stay with us. Tom its called rochester thats what new york got last week. Unbelievable. The snow new york got is just another january day. We welcome all of you, seriously, digging out of a serious storm on the east coast. We hope that you are safe today in your travels as you move forward. At some point i will explain where men are men and the snow is deep. Ive done my research. It is time for our business flash. Johnson ends talks to buy tyco, which could have been valued up to 20 billion. It says a deal may be announced today. They make commercial fire in and securities. People expect bigger bonus and they got a year ago. Senior executives predict the average bonus will come to 143,000 u. S. Dollars. Up theirnco may open ipo to international investors. They say all options are being considered, but their oil reserves wont be put up for sale. Francine vonnie, thank you. Will continues to trade at 31 per barrel. Lets bring in our chief energy correspondent. Javier, there seems to me, when you look at what happened, a lot of nervousness on the market there is quite a significant price in oil. Is a very nervous market . Is, but all the notions we are hearing its we may have reached the bottom toprices around 30, may be 25. But investors have not mistaken a bottom for the green light to go to 50. This is a bottom, but the market is not bullish. Its way i think there will be a lot of pain for the oil industry. Tom one thing i have learned is years ago, the Deutsche Bank chairman both said the same thing we dont know. Do you know when you are reporting the dynamics of russian oil . Javier well, the ruble was at a record low, and putin had the russian industry with a number of executives with exposure to russia. Expecting any bank collapses in russia production is complete nonsense. Russia is going to remain very high, and that will be another reason tom when you look at the ruble chart francine right. We hear what we touched on with the opec secretary, saying it is up to opec and not opec producers who must tackle it together. This is what you were saying if you are rusher and you look at this, will you take a risk . What is the floor . Is it 20, 15 . Larry kid is hard to know what exactly it is. The real indicator to watch his inventory. Everybody is producing, consumption is not keeping up. Next the supply is selling the storage tank and increasing we will reach capacity before too long, probably in the spring or summer. At that point, the curve will sell off, and that will be the biggest indicator we have reached the bottom. The secretary said that lets opec and not opec talking together. They cannot put opec together the saudis and arabians are not talking francine hold on. Wasderstand, but saudi at the table javier saudi arabia needs russia and iran at the same table. The idea ofnt summing up the ittybitty countries, they equal in iran uctions. Prod had to they affect the dynamics Going Forward . Javier one problem with all these Companies Reaching the crunch point is that the only way they will extend longterm is if you halt production. We know that it is a low price, 70 exactly. They areappening is driving prices. This problem and the shortterm when these companies go over, it could turn bullish. Over the next few months i guess we wait and see. Tom quickly, a single point you davos . And thain javier oil may be close to the bottom but any expectation of a rally is completely wrong. We will not see it at 50 and 2016. Francine no one has. Tom we are just over there having fun. Francine great. Javier, thank you. Coming up on bloomberg , we are joined by roger altman. Tom we will talk to him about the boston red sox. Also, we will talk to the founder of Evercore Partners about the state of investment, and particularly competing in the major houses. Look for that at 8 30 this morning. Francine lacqua, tom keene, in a nonsnowy london. Googood morning. Francine welcome back. This is bloomberg surveillance, live from london. Let me tell you the elephant in the room is the risk of brexit, and it also means that when you look at the various returns, in lot of investors are telling us it is the small intimate cap they want, because they would be risking with exposure than the big companies. Now its time for my morning must listen. I spoke to the italian finance minister, and he said that talks are advancing on help for italys bad banks. We are working on a guarantee scheme, which is part of a strategy, and we are in good conversation with the commission to agree on a model. Talks will not be sold. In any case, we already have in place measures that will help. Francine larry hathaway, there been so much pressure spain is going through a huge political upheaval and italy is not dealing with the bad banks. Larry italy is making up come back. Making a comeback. Gate,re faster out of the and the reforms will push through. Italian banks are a cleanup situation, but from my perspective, at least the macro fundamentals look good. Tom ask this question when you are sitting on the desk, a manufacturer handing over trust company. He knows about bank takeouts. Larry actually, i am a dinosaur. [laughter] tom i think it is a serious question how in europe do you do bank takeouts at italian banks . Somebody buys them. That doesnt happen here. What doesell, happen is that bondholders will get in on the fray. We found out in portugal at the end of december. That overhangs the bond italian isso i think a longer set up. Francine we moved share price and i asked the ceo whether he would be interested in taking over. He said absolutely no way, and even if the government pressured him hed need to get the european bank. Is there an appetite for consolidation . Larry i think at this point there still isnt. The currency of the takeover banks is low, given the low valuations in the sector. There really isnt a white knight out there. I think the opportunities on that appealing. Tom i would suggest a white knight on the newcomer of bloomberg markets. James daimon. Bear stearns can you spell it . Happening. Is not coming up, we continue our conversation with lawrence hathaway, on crude oil. Helping us, Brandon Warren to make you smarter. He will join us on the dynamics of oil equities. Today from london, bloomberg surveillance. Francine this is bloomberg surveillance. A davosa little bit of cough. Prime minister Alexis Tsipras marked when youre an office with another crisis, a showdown with creditors over Social Security reform. He wants to raise contributions from taxpayers will not cutting pensions. Spain, the idea of the coalition government, sanchez is the leading candidate become Prime Minister. The current Prime Minister declined an offer to win a confidence vote. A demonstration in the netherlands underscores the refugee crisis. Filled anternational boat with manikins to show the danger of asylumseekers face. As mentors are discussing the crisis today in amsterdam. And israel, former president shimon peres back in the hospital. His doctors say he is doing great. He suffered a mild heart attack this month. He is 92 years old. The mid atlantic coming back to life after a blizzard brought the region to a standstill. The house has canceled all votes for the entire week. In your, Financial Markets will be open. More than two feet of snow fell in some places. Thousands of flights were canceled over a fourday time span. Tom, i know you were one of the casualties of canceled flights. Back to is getting normal quickly, but washington, d. C. Is different. Worldwidehose of you washington, washington is a world away. They have one snowplow. The schedulesully us not, we have to give a shout out to jfk la guardia for getting it done. These people are out there 24 7 with a few planes landing. Hes get a do some work down there for us. Tom some public good. Turmoil in the euro market. We spent a lot of time talking with economist at 35,000 feet. Equity analyst at bmo capital markets. I love talking to you guys. Everybody is humble. Confidence and belief level, buy, hold, sell . Thank you for having me on this morning. Lesslad london is a little than the u. S. I think we will see further pain. Its hard to say. We have been saying to investors if youre not in the sector, stay on the sidelines. ,f you need to be invested state relative overweight names that are a little boring, and the underweight companies that need to do something this month. Tom thats where i want to you go. Do i want to be opportunistic and look at companies i have never heard of, or do i want to find comfort . You might be too early with the european exotic names. There are good ones, london petroleum, most of it is production, growth out of norway. We have companies doing turnarounds, questions over Balance Sheets, but i would be relatively weighted towards the integrateds. Its total over shell. Francine are they in a better position . They are looking to gain market share in iran. , he has total in good place. That does not have to transform itself. Who tells an oil company to restructure or file for bankruptcy . What is the catalyst for that to happen . It is normally a long road before you get to that point. Coming into this year, we will see more of it. Tom bankers, the board, the government . What is the process . but this is a decision process that is not immediate. Tom that they played the geography game. Tell me about midland, texas in the fields of texas, is a different than the 1980s . Its different. I have a question that maybe the best is breaking, but there is always stuff lower. And the bank of montreal . Other provinces dying . Seen thesestry has times before. That. Going to see more of francine what did you make of saudi aramco, sustaining investment . Does it point to the fact that markets are jittery or these oil majors will displa delay invest . I think we see that with all the big guys. It takes time to slow down your investment profile. Cuts. L see further saudi aramco has not changed their tune. It is about market share and pressure on the iranians. I was going to come back on this point of investment, doesnt it make sense that the lowcost producers in the gulf actually increased investment. The shakeout in the oil markets we are seeing here is shifting productions to the margins in that part of the world. He would have to inspect expect a bit more investment. Investors have seen the fear the oil to one in price. It is still early. We have not seen any hint of rebalancing. Stepping up investment is a brave call at this point. Tom where is the terminal value . Big oil is responsible for the lower oil price. It depends on which company. I dont think the market is looking that far out. Your for your timeline is as far as you will go . I think its a 12 month timeline. Its hard to make a call. Tom tell me about Spare Capacity. Its tight. Thats the amazing thing about the energy market, such a tight Spare Capacity. Tom does that go to original condition because it is so tight . Its like this to that. When it goes, it goes, or where we have time to get on board . It seems any Political Risk in the price, Spare C