oil demands seen growing by less than 1% this year with rising prices and an economic backdrop straining the increases in demand. they warn tensions in the middle east and cuts have dented supply. we'll be speaking to the executive director of the iea. that's first on cnbc in just around 50 minutes' time. so we'll stay tuned for that. jackie. >> hey, becky. the fed says 15 of 19 u.s. banks have passed its latest stress tests, releasing the results two days early. that may have been forced by the fact that jp morgan announced around 3:00 p.m. time that it will pass and boost its divid d dividends and buy back millions in stocks. four banks failed. citi, ally financial, metlife and suntrust. others are boosted dividends. the feds say total losses under the doomsday scenario would be $534 billion over two years. cit citi,al ly aa a citi,ally financial, metlife and suntrust. >> he's the global head of gt epic strategy. i want to talk with you in terms of the reaction of what we saw yesterday. some people were called it a market melt-up. we saw the dow up by 217 points and we saw a lot of action in stocks and the financials. we saw jpmorgan wigan the announcement, prompting the fed to do something it wasn't prepared to do. what's your reaction to it? >> think clearly this exercise has had a positive outcome, more positive than we expected. i think it's also in sharp contrast to what we see in europe. the markets would drop off because we didn't know. i think the exercise is gang credibility and the results were quite favorable. >> james, i want to get your take on it as well. he brings up a good point, talking about the credibility in the toast. we're very stringent. i do think there is some confidence obviously behind this that was driving the rally. what's your take? >> absolutely. there's a huge difference between the stress test that the u.s. is carrying out and the stress test that we've seen in europe. the stress test last year saw them come out of 11. so relatively speaking, we have to assume, and that's under very, very benign stress assumptions. we have to assume european banks across the board would not survive a rigorous streft test. so the fed is now looking at banking system where even under really, really extreme assumptions the losses would be somewhere in excess of $500 billion. but bear in mind since the crisis system has begun has lost in excess of $800 billion. so therefore you're looking at a system which is now a long way through. i think one can pretty safely say more than halfway through its crisis, and it is robust enough to withstand a really rigorous test. >> yeah, but, james, how much do investors really need to take the stress test results with a grain of salt given that there's still a lot of subprime mortgage losses that the banks might be holding onto? but it might be off balance. citi for one has over $100 billion in mortgages and a lot of the majors have still held onto quite a sizeable amount. >> we know what the macrr macro assumptions are. we know it may be questionable. we know it's not questionable in terms of size and magnitude, so that's the most important thing. if we look at citigroup, in the 2009 stress test when the fed was insisting we get losses on loans, which quite rightly happened, we were looking in the case of citigroup at 10% or so on its portfolio. this time around, the fed's looking at a loss rate of 11.2%. but crucially in the interim, citigroup has realized losses on its loan book equivalent to that 15% of its peak assets. so we have a bit of an issue here as to whether the fed's running a proper balance sheet exercise or a sensitivity analysis that doesn't take into account what the banks have booked and realized. >> what do you think comes next for citi? >> well, i think overall these results are having a set of assumptions we can always take. they can prove to be relatively realistic over the years so i think this exercise is getting credibility and that's the most important thing. that's why the market is rallying, and think that that vindicates their approach is something that's going in the right direction. >> thank you both for speaking to us on these issues. we do have you staying with us. we're going to break. coming up later in the day, we'll be speaking exclusively to meredith whitney who made her name with a 2007 call that citi would need to raise its capital and call its dividend. that's at 3:10 eastern time on "closing bell." all right. it's time for your global markets report. let's start here in the united states and take a look at the futures, see how we're poised for trade after the melt-up rally on wall street yesterday. it does look like it's going go a slightly higher open. the dow higher by 11, nasdaq by 0.50 and change. we saw the dow, the nasdaq, and the s&p posting their largest percentage day gains for the year. so there us with no real catalyst early on in trade, becky. the announcement was in line with expectations but it was really the announcement from jpmorgan and the bank stress tests that pushed the markets higher. i do want to note we made a little bit of history yesterday as well. it was first time the dow closed above 13,000 and the nasdaq closed above 3,000 on exactly the same day. becky, over to you. >> we like those little snippets of information. thanks so much, jackie. here in europe we're seeing another day of gains. this is the sixth day of gaines. yesterday was the 2012 high. we're pushing higher still today. we're up by over 0.4%. 6,000 there. in the dax in germany, we're over 7,000, up by almost 1%. the cac is higher as well by 0.6%. and across italy it's trading higher by three quarters of 1%. a quick check on what's going on in the bond bund. in germany the bund is yield 1g.9%. so for your the ten-year in the uk, we're looking at 2.2%. we have unemployment data coming out too. watch out for the impact that will have. in spain we are looking at levels of 1.-- sorry 5.17% on the yield under spain. we had seen yields push gragt deal lower in that country but moving in the other direction today. and similarly in it will i where rates have been elevated in recent months, a level of 4.89% on the italian ten-year. >> they certainly did a complete u-turn into the afternoon session. we saw decent gains coming through. the nikkei closing above 10,000 after testing that level only to intraday highs. seven-month highs for the japanese and korean markets as well. certainly take a look at the big blotch of reds on the chart. we had comments that property curves are here to stay and that housing prices are not at reasonable levels. if you take a look at people's income levels and also construction costs on the ground. overall if you sum up the myriad of comments that came out of the npc, it seems like china is really doing some soul-searching, trying to really rebalance its economy. when you sum it up you get the sense that china wants to cut the fat and you have agencies saying that they will go up anywhere from 2% to 3% this year. they also said the growth levels in europe and the middle east probably mean that china's growth level might come down. that also had some analysts talking up the potential of china heading into a hard landing as well. australia and also india putting on decent gains. overall a lot of that risk potential moving through but china doing a complete u-turn and taking down hong kong as well. thanks for hloechloe. in the meantime coming up otown show, some of those comments. our own kerry and joe g. standing by with a live-up date right after this break. carfirmation. only hertz gives you a carfirmation. hey, this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the speed of hertz. . . . ten-day parliamentary session mpc with a promise for political and economic forum. but the markets worry that the call for change may spell further pain ahead for investors. cnbc has been following the national conference from the grounds in beijing. what is your assessment after watching this for the past many days? do you get the feeling that china is out to rebalance its economy and that could spell a dose of pain for investors, especially in the mainland? >> reporter: well, thii think reaction that we've seen is very puzzling, especially because investors going into this npc meeting had very low feelings. premiere will be vacating his position and a whole new leadership will be in place by 2013. there was very little direct reference as to how deep and how quickly these reforms maybe, especially on the capital market side during this three-hour press conference with the premi premier. he did have specific comments on the trade balances, especially after the u.s. opened up a case at the wto together with the u.n. and japan on the rare earths. here's what the premier had to say about the trade balance. >> translator: cooperation is the way to address trade imbans between china and the united states as well as the difficulties and frictions arising from it. >> a lot of people expected pro growth. they didn't get it. when it comes to the comments that the rnb might be at an equilibrium level and theyer comfortable with wild swings on both sides, how did you interpret those comments? >> i think the pboc, the central bank, made similar comments earlier this week suggesting that they'll play a market role in determining it. i think those were reiterated by the premier in his press conference today, but let's first listen in to what he actually had to say on that. >> translator: the real effective exchange rate of rnb may have reached its equilibrium. >> reporter: i think the market is eiga little bit nervous beca they have slowed a recently in month. this year in 2012 it is down about half a percent. so maybe that's where some of the nervousness stems from, but as i mentioned earlier, i don't think anyone going into this meeting was expecting any kind of radical change and policy. if anything, the message was of stability. but i think this rebalancinging at that you're referring to, chloe, this is not going to be an overnight process as we know. this is going to be a multi-year process, shifting the economy away from an investment-driven model to one that is more consumption-driven. and i think it's important to note the issue of rebalancing is not one affecting china alone. look at the balancing going on in other markets like india and brazil as well in recent months. >> good point. like that. thank you so much for that. reporting live from beijing. jackie? still to come on the show, hong kong's flagship carrier tells us why it sees darker skies ahead. we've got a first on cnbc with the company's ceo coming up next. less than 1%. that's the view of the international energy agency which makes its observations in the monthly monetary reports. yusuf has more. >> good to see you, becky. the meetings are still ongoing at the international forum. again, wheevd a lot of comments about the markets being well supplied. but let's get more on this with the executive director. maria joins me this morning. thanks for your time. let's kick off with the latest report just for some more perspective. you talk about tightening in the supply & demand balance. what's the key risk here. >> yes, there is a certain amount of tightening that we have seen in the last few months. we receive they're down in syria. it means there are from those companies less oil on the market. that's true. on the ore hand we see the gulf countries doing less than they had before. the other thing is that demand is dismal. that's a little bit less than we forecasted. but, of course, it always seems it can happen and that's something you don't know for sure i mean in europe, you also highlight the continuing impact of sanctions on iran and this whole realignment that we're seeing in the market. how do you see that going forward? >> well, you know, this is something that we assess. we assess it. and, of course, the sanctions on iran will come into effect later this year. but what you can see now is that, well, some expectations from traders and so about what it might mean. but, of course, we can only make some comments on that if we have new facts and figures because we always base it on facts and figures. but what we can see is that there is, of course, the high prices and that these high prices also have an aspect of uncertainty because of the possible -- possible risk. >> i mean there's no going about it. when you look at numbers, there's some highlights. saudi arabia, 10 million barrels a day. opec is pumping at three-year highs. would you make the argument that there's no lack in physical supply in the market? >> well, at this moment, at this moment, the opec countries, they are producing more, so they are really doing what they need to do, and i think that's a very good thing. but as i said before, we can also see some problems in other markets, in other non-opec countries where they have problems. sudan i mentioned, syria, north sea we had problems. so it's important that we look at complete balance. >> in 2012, you always said it ooh going a rocky road ahead. now in march, where do you stand? >> it's still a rocky road. we said it before and it still is. there are too many uncertainties. that's why we keep monitoring the market and we not only look at price development bus we also look at the developments of the industrial stocks. we keep consider we have a look at what's going on in the opec and non-opec countries to bring these things together in our monthly report. >> thank you very much. of course, the action still considers here in kuwait. for now it's back to you, chloe. >> thanks so much for that. certainly opec trying the best they can, but certainly they are balancing out issues involving the non-opec issues and that also explains why energy prices have been high, and that factor plus falling passenger growth some of the headwinds hitting asia's top airlines. cathay say they're feeling the impact. they say its cargo business will continue to remain under pressure. you've got some numbers from its earnings today. cathay lost 8% of its value last year. let's try to get some more insight. we have the ceo from cathay joining us from hong kong. thank you very much for giving us your time. your revenues were higher but profit down 60%. you attribute that to high fuel costs but you actually got a gain from fuel hedging. so if you didn't do this, the results would have been much worse? >> well, indeed. i mean fuel is the single biggest cost for us, think for every airline now. for us, more than 40% of our operating costs are fuel. our incremental fuel bill last year was 12.5 billion hong kong dollars. although we had a hedging program and did it very effectively, smartly, and made 1$1.8 billion in fuel hedging. continued high and staying high, oil is very difficult for aviation to deal with. >> what about pricing, though, when you actually try to book tickets on cathay, your prices are higher than competitors. dwlou deal wa that given that demand is quite reasonable, particularly around the asia-pacific? >> fairs, i don't think, are any different in the marketplace. we have to price ourselves in the marketplace. if we're not getting people to buy our tickets at the fares we're offering, they're not the right fierce. we're doing well at that. you're quite right. it's been reasonably strong and it's one of things we've been focusing on in 2012. because you're flying short haul, it's only part of the cost. i think 2012 is going to be more regional achlt we have a long haul to europe and north america. we see more opportunities intra-asia at the moment. >> john, let's break it down. how's the premium business doing against the economy business? >> you know, premium business is a real strength of cathay. it has been for a long time. a lot of the product we brought in focused on, you know, giving premium passengers every great reason to come back to cathay. for 2011, that market was pretty strong. it tailed off toward the end of the year, but by and large it ended up quite significantly. we've been happy with that. economy class has been more of a struggle, especially long-hall. the yield's been under pressure. >> john, it's jackie in the united states. my question is some of the consolidation we're seeing in the industry. how are you competing with some of the larger companies merging together to create more price sensitivity, et cetera? >> well, you know, it's an interesting question, jackie. we've -- you know, we generally don't see consolidation as an end in and of itself. we did a significant consolidation move a few years back when we brought dragon air, giving us a great network. some of these airlines to make an even bigger airline, we're not sure that that really is going to satisfy the customers ultimately. we compete, thing, with the best airlines around the world every day, whether it's north america, europe, intra-asia. ultimately, like all businesses, you have to give customers a reason to buy your tickets, whether it's great service and great products onboard, whether it's great fares, you've got do what it takes. i think we've been doing it pretty effectively, so we're happy with that. >> all right, john. thank you so much. ceo of cathay pacific, john slosser. coming up, markets rally on the back of stress tests. is this setting for a bigger move higher? and the fed had a little bit of business to take care of yesterday, holding firm-onraits and strengths in the economy. we're going to dissect both stories straight ahead. raits and strengths in the economy. we're going to dissect both stories straight ahead. welcome to the show. the headlines from around the globe today, here in the united states, relief and a market rally as the fed says 15 banks passed their streft test, but four big names failed to make the grade. in europe financial stocks follow them highly leaving markets in the green in early trade. here in asia, chinese stocks dropped to a 3 1/2-month low after premier wen jiabao dashes for a near policy easing. so we're just getting some breaking news out from the uk. it's the uk february jobless figures. and, in fact, more people joining the unemployment lines than have been expected. the rate was 7%. the february adjusted claimant rate is coming in with forecasts up 5%, coming in right at 5%. the ilo jobless rate coming in at 8 347.4% which was in line w analysts' expectations as well. we should be paying attention to what's going on in the bond markets, the currency markets as a result of that. sterling is at 117.19 against the dollar. sterling moving onnen the backside of that news. also, hitting a record-high too. we've seen unemployment ticking higher. youth unemployment continuing to gain as well. jackie. >> thanks for that, becky. meantime we're watching futures in the united states as we're getting set for trade on wall street this morning. let's take a look at the board. it looks like we're seeing a little bit of positive momentum. the nasdaq, just above the flatline and the s&p 500 just above the flatline as well. this as the equities finish hider yesterday. we had a market melt-up as we're calling it. they posted their largest percentage gains this year. and, in fact, becky, i want to highlight the fact that we saw theest close. the highest close since 2008. over to you. >> and we've had -- in europe, even after yesterday's close, five days up, which sends us to fresh closing highs for the year for the ftse, the cac, and the dax, and we're continuing to add some ground today. the ftse is up by 9.4%. the dax is up by 0.9%. the cac is up. gains in italy and switzerland as well. continuing add ground there. the ftse, although it's come off of highs earlier in the session is