in in the u.s. ai dw swings to a a big fourth quarter profit and the the bailed out insurance giant is is confident it generatin generating solid num several y severa and and ecb government lender says says there is no line in the sand sand for interest rates. >> we ha >> we have never said t flaw. flaw. so so private bondholders bracing bracing themselves for a loss on gr loss on greek bond holding as part part of a debt swap. up t up to 100 billion euros of the debt. debt. however, however, the documents object taped taped by "the financial times" suggest suggest european creditor countrie countries are still demanding further further spending cuts and tax reform as reform as part of bailout. german cha german chancellor ange is schedu is scheduled to meet je juncker in juncker in the northern german city city for talks likely to focu on on the preparations for next week week in brussels. in an in in an interview with cnbc, the governori governoring councilmember said a haircut o haircut of greek debt is the cards. the cards. silvia silvia is on the g spoke to spoke to him in frankfurt. silvia? silvia? >> reporter: the no haircuts on greece, greece, i'm not surprised is the is the official ecb line and i daresay daresay at the moment it's not on on the cards because we've had the the decision out of brussels, of course, course, only last week when we -- we -- or was it this week? we we knew the ecb would the centr the central bank. the the interesting take is that they gave they gave us. we never we never said that. >> >> we always focus on price stability stability and that, to me, was very very important, the inflation expecta expec follow follow them in the immediate long long term and there the situation has not created. as long as they are, of course, then we are delivering, so it's not out of the agenda. it's always there but it has not been upside. >> reporter: the markets have always said, and maybe us journalists have a line in the sand at 1% on the down side, is that -- >> we have never said so. that there's a flaw. we will never say so. no technical object staals but everything, of course, depends on the economic side and monetary and our credit side. on the other hand, of course, your margin starts. >> reporter: if you had a list of worries right now in the monetary context, of course, what would be the biggest problem that you see right now? >> we come back to this real economy on the market side. we do the long term. the banks probably and, third, keep moving with economic reforms. whether you are winning open markets or competition, huge incentive but it also gives you better growth for potential and unemployment. all these need to work at the same time. in the background, of course, the ecb and price stability and decisions. if you are not sure it will remain. decision makers have a second in their minds. they may do unreasonable things which don't serve any purpose for economic growth. >> well, it's also interesting, as i said, we've always thought there was this line in the sand that doesn't seem to be, on the other hand, the economy is picking up. maybe the ecb is not in a hurry for the rate cut but there could be further especially if the domestic money market remains kind of dysfunctional as it is at the moment. it's easing up a bit with the first ltro, the next three-year l it tro, of course, hitting the market next week and possibly when we talk to the ecb again we talk about more long-term ltros coming down the pike. so far, of course, we only knew about the two operations but i daresay the three year is here to stay for a while. >> silvia, thank you very much for that. let's get more on this particular topic. joining us as our guest host for the next hour, andrew ferris, chief investment adviser for bnp paribas. greece talking about it. ecb, we're still talking about it. what's your prognosis for the eurozone recovery is this. >> one is hopefully greece will drop out of the radar screen for a while, while the quarterly me meetings and there are monthly meetings of their performance, fiscal performance goes on. now whether this is going to be successful or not is going to, unfortunately, depend completely on the implementation of the additional rules that the european union has imposed. so now a couple of months greece looks on the radar screen. the next is what's going to happen with italy, with spain and with portugal and here, thank god, we are faced with a completely different set of problems because greece they ain't, in terms of their fiscal capabilities, in terms of their fiscal problems, and also of the implementation of their austerity measures. they're in a completely different class from greece. and i'm glad to see their two-year bond yels have been coming down quite significantly and there is a differentiation between portugal at roughly 50% and italy going down to well low -- the 5% level. so the markets are telling us that there is a differentiation between greece and the rest. i think this is very useful at the time that the european central bank is about to implement ltro number two. in other words in translated english this is quantitative easing number two. so it looks good for the time being. >> it looks good for the timing, andrew, because debt bailout, we seem to be trying to solve the problem with you austerity also means a lot of pain. how exactly are countries like greece, for instance, going to grow their way out into a recovery? t are there measures this place for are that to happen? >> two answers here. there is a huge controversy and the imf is backing these, us austerity is not enough. austerity is unnecessary because then the countries can not grow sufficiently in order to generate the revenues that will then pay for their debt. unfortunately, once we are seeing all these, i have a group of creditors in front of me saying, can i please get paid and in the immortal words of james maguire, show me the money. unfortunately, the money has to be shown first and that can only come out of austerity and it is a very pine if not impossible balance. now whether the greeks will be able to grow themselves out of it is going to be quite a tough proposition. effectively they did their work. quite a lot of structural issues that had to be implemented and incidentally in the famous linkeditems that they have to comply. in addition to austerity, one of them is the liberalization of a profession that was implemented by law but was never actually implemented in practice. very freaky. so the answer is, yes, sir, it is all very nice in our theory, but as a creditor i want to see the money first on the table and all the more better later on. >> andrew, if we are going to see problems in other european countries coming center stage, why does the euro keep tracking higher against the dollar, for instance? we're around 1.34. >> simple answer. all the headlines are of the demise of europe, of the euro, they're going to go down the drain. you know, europe to call. an expression is toilet paper. january, the beginning of january, when greece went from 1.36 to 1.34. this simply tells us that the markets don't believe their stories. the european central bank does not, n-o-t, does not support in the forex markets. the bank of japan may but the ecb doesn't. it may buy euro denominated assets. that supports interest rates not the exchange rate. so my completely stupid answer to a very, very wise question is, it's the markets, stupid. >> andrew, thanks for that. andrew sticks around for a bit longer. andrew freris will be with us for some time to come. thank you to silvia. she'll be back in the show to bring us more comments from that ecb member as well. christine? meantime, asian markets mostly higher but trade cautious. we had good data from the u.s. but, you know what, we had high oil prices and that's tempering some of the gains we see here in asia. the shanghai composite is up. sixth weekly gain. apparently the property developers are leading the way higher on talk, on speculation that could be reforms in the household registration policy. the hang seng modestly higher, 0.1%, mostly on profit taking but holding on to the key 21,000 level. over in taiwan modest gains. australia 0.5% higher. politics not really affecting a leadership crisis. not affecting the sentiment right now but we had, of course, u.s. better than expected economic data that was offset, of course, by the sevcentral ba to say rates are going to be on hold for now, dashing hopes for a policy cut there. nikkei 225 is up 0.5%. once again holding on to those levels. kospi 0.6% and the sensex, one of the few markets that trade lower down more than 1%. becky, how does your heat map say on this friday? we have lots of green around. this is the picture as it's shaping up across europe. it's a positive one, too. overall the stoxx 600 is higher by 0.3%. it's still positive nonetheless and this is how the picture is shaping up around the region. the ftse mib 0.7% higher. outperformance there. half a percent higher for the cac. the dak up nearly 1% and here in the uk the ftse 100 is marginally higher to the good. i do want to point out some individual stocks that are moving quite large way in each direction. eiffage is the biggest duanway p over 12%. earnings down by 11% but they are optimistic on the outlook on revenue growth and margins. that is sending the stock higher. telecom italia 6.7% move to the upside. they have cut the dividend as they try to reduce costs. they can increase the revenue and core earnings on the back of growth in south america in particular in cost cuts so the markets are impress ed with the efforts that company is making. a couple of stocks to the financial sector moving lower today. 2.4% down for dexia which came out with a poor set of numbers yesterday. this is a franco belgian bailed out institution continuing to have problems there. yesterday reporting a loss of 11.06 billion euros and telling us their very survival is at risk this stage. reports out overnight suggesting that the government has agreed -- the belgian government has agreed to more state guarantees so that stock is continuing to decline. one of the big earning stories, lloyd's down by nearly 2.4% after that company reported a net loss of 3.5 billion pounds. of course this is another company which is 40% state owned in this instance. they also said they see a challenging 2012, too. so let's move on and talk about the oil markets. christine mentioned this a few moments ago that we continue to see oil gaining. i want to give you that six-month view of what's going on with oil because we can see clearly that since the very end of 2011 oil prices from late december have really pushed a great deal higher over the past six months up by 12.4%. this is for brent, of course. in fact, from the january lows we are up by even higher than that. gains coming through because of political tensions around iran, also the positive u.s. economic data has sent oil higher, too. currently trading for brent at 12 123.84. just off the high, up over 124 a little bit earlier on but gains for the oil market in general. let's also talk about what andrew thinks on the oil market. christine, to you. >> totally, beccy. andrew, you heard what beccy talked about, giving us a six is-month chart as well. market gains are being capped on what's happening in the oil market. at what level would it start to choke off the global recovery? >> whoa, whoa, whoa. let's take a break here. united states at best is going to have very flat growth over the course of '12, well below its potential. in the case of europe, we do expect negative growth. we do expect a real recession. year to year the euro will shrink. japan had three quarters of negative and only one positive. every economy is slowing down from a very high level and a very modest basis. so really i can't see growth demand coming out from any of those economies. what we might see is the pressure on oil that has come partially out of the supply constraints and out 0 of the fact that demand has not dropped very significantly so i reckon the price of oil even if i'm looking at crude, let's say no more than 110 is just about there. now we enter into the completely uncharted territory where an enormous amount of, let's say, well informed nonacceptsense, w iran is attacked and what if this happens and what is going to happen to the oil price. looking at pure micro economics, let's say i'm neutral as opposed to bearish in terms of the impact of further increasing the price of oil on 0 global growth. >> all right. $110 is what you mentioned. andrew, thank you for your thoughts. you will continue to stay on with us as our guest host. still to come, the battle for the top job in australia's current labor government steps up a notch. he will contest the leadership. we'll take a look at the implications of that after the break. i look at her, and i just want to give her everything. yeah, you -- you know, everything can cost upwards of...[ whistles ] i did not want to think about that. relax, relax, relax. look at me, look at me. three words, dad -- e-trade financial consultants. so i can just go talk to 'em? just walk right in and talk to 'em. dude, those guys are pros. they'll hook you up with a solid plan. they'll -- wa-- wa-- wait a minute. bobby? bobby! what are you doing, man? i'm speed dating! [ male announcer ] get investing advice for your family at e-trade. welcome back to "worldwide exchange." focusing on australia, the country looks set for a leadership showdown. at stake julia gillard holds as prime minister. >> reporter: the stage has been set for a bitter leadership ballot that will take place monday morning at 10:00 a.m. after foreign minister kevin rudd confirmed he would challenge julia gillard for the labor party and claim the job she took from him in june 2010. mr. rudd spoke to the media in brisbane saying he believed he had to do what was best for australia and finish the job that he started back in 2007 before being ousted. says rightly or wrongly prime minister gillard has lost the trust of the australian people. >> it's no secret that our government has a lot of work to do if it is to regain the confidence of the australian people. rightly or wrongly, julie has lost the trust of the australian people and starting on monday, i want to start restoring that trust. that's why i've decided to contest the leadership of the australian labor party. the ballots and the focus of the us a tr australian labor party on monday. >> reporter: earlier in the day mr. rudd arrived back from the united states where he told reporters he had been shocked by the personal attacks leveled against him by the prime minister and some senior cabinet members. for her part, julie gillard says her record of implementing tough reforms speaks for itself and that she should be re-elected to party leader. >> the choice that the nation faces and my parliamentary colleagues face on monday is a choice who has the character, the temperament, the strength to deliver on behalf of the us a trail ian people. this isn't is celebrity big brother. it is about working out who can lead the nation. who has got the ability to get things done. >> reporter: over the weekend both of these candidates will, no doubt, be working the phones to try and drum up support. so far reports say that julia gillard has the numbers to be re-elected on monday. back over to you. >> that was matt taylor talking to us. australian stocks largely dismissing the unfolding political drama. take a look at aussie/dollar. the aussie/dollar is tracking higher in tandem with what's happening in the eurozone, in tandem with the stronger euro. let's get more reaction, more analysis with adam lyle, a member of the chamber of commerce here in singapore. good to have you with us. watching this drama unfold in australia, rudd is saying that gillard has lost the trust and confidence of the australian people. do you share those comments? >> i think he's obviously going to say that and he wants to challenge her. i think tough times at the moment. she is is dealing with a lot of tough issues. so i don't think you can say that she has lost the trust of the australian people. >> you look at rudd, according to the polls, he is popular with the people. can he muster support to pose a se serious challenge to gillard? >> i think that's exactly the issue. if you look at the numbers, 69 to 28 and a few swinging, the numbers are very much in the prime minister's favor. but then again there's a weekend ahead and a lot will happen in a weekend in australia. >> what happens if rudd wins? that's going to be a problem. it could trigger early election. >> we have to wait and see what happens. if he wins, julia has said that she will go to the back bench and whether or not he feels it's appropriate to call an early election or not. i couldn't speak for him at this point. >> adam, let's look at this from the outside, clearly there's party politics and an infighting story within australia but sitting here in europe, what difference does it make to investors and watchers elsewhere in the world who is in charming in australia? what are the issues they will differ on? >> well, as you can see if we pick two, mining tax, they're both in favor of that. what foreign investors are looking at is certainly stability, the record of the australian economy, both under rudd and gillard. investors are looking for stability. we just had great low unemployment figures release this had week so the economy is in great shape. so it's very much an internal matter and i think the rest of the world will get on with it and wait for the results on monday. >> now if this was to trigger an election, it isn't likely that the labor is not going to keep its incredible majority of one. what is your position to be bullish for the aussie dollar? looking like a hawk on the aussie dollar. >> stability is something that's key, isn't it, adam? this is the last thing the australian economy needs right now. are we going to get that stability? where is that stability going to come from? >> the stability is going to be once it's resolved, what business wants to see is stability. get on with the business of doing government, what government should be doing, and let business continue to get on. it's a distraction. but australian business just is very resolute. it's going on, yes, it's a distraction but it's getting on with its daily business and doing good business at the moment. >> adam, thuchl for your thoughts. let's see how things develop next week. that was a board member of the australian chamber of commerce. beccy? >> we'll see what occurs next week. coming up on today's program we have more from that exclusive interview with government councilmember liikanen. >> it is very clear here what the ecb did was done for public policy purposes and we are outside of bsi. on the other hand, of course, it's not to create profits. it's not a profit seeking operation. the revenue is to get on these we pass. it is part of a normal dividend policy. and it's for the states to decide. welcome to the show. the headlines today greece is set to launch its mega debt swap with private investors after the measure is passed in parliament. its first step to a much-needed bailout fund. ecb governing councilmember liikanen tells cnbc the central bank is not going back to the negotiating table on greece. >> i think now we need to implement what europe has decided as such. >> and tokyo stocks near the best performers in two decades after wrapping the week at a seven-month high. in the u.s. aig swings to a big fourth quarter profit and bailed out insurance giant is confident it can keep generating solid numbers for several years. so we have the revised fourth quarter gdp numbers for the uk just coming through. fourth quarter gdp unrevised on a