let's have a look at the start of trading in europe. we are expecting a positive start of trading for the major indices on the back of the strong session that we've seen yesterday in the united states. we'll talk about it in just a minute with the ceo of sanfy. we'll get into the details in a similar time. but this is just hitting the wire. in the meantime, let's have a look at the europe stoxx 600.

we are in positive territory, 0.3%. nothing to do with the session we had yesterday in the united states. positive impact on the asian markets this morning and this is what's happening at the start of trading in europe. health care sector on the down side with, of course, sanofi very much in focus. we'll look at the stock in the details in just a moment. the real estate underperforming. the european markets at the start of trading. basic resources, up 0.9%. auto sector, up 0.7%. oil and gas in the industrial sector, much higher at the start of trading. let's have a look at the different markets in europe starting with the ftse 100.

up 0.5%, almost at 6,432 points. let's have a look at this british market with a significant decline for the stoxx 6.3% lower. next, full year profit guidance to between 750 and 790 million pounds. as rates on demand for its winter tock. let's have a look at this announcement. very negative reaction. >> yeah. it took a blow. i think we knew that it would gain from estimate. we know the full year will be impacted. down quite a bit, 3.5%. >> disappointing data has been hit by 8%, 20% in some cases.

it's limited, isn't it? >> it's limited. >> with what you told us earlier, we were expecting it. >> we remember expecting it. they put out a notice about a month ago basically saying they had torrid trading in those weeks and unless something mass ofly rebounded, it wasn't going to turn around. we saw that born out today in the numbers. >> i'm interested, if we can get the retail sector. >> the one thing that would help rivals is that seasonal weather doesn't really affect things like food, things like beauty products in the same way that it affects clothes. so people like m&s, they should be better insulated. of course, next, as you said, has been best in class. it has outperformed its rivals.

it is a bit exposed to warm weather, as you say. it's not just you. >> i don't think woolleys exist. >> they do exist. we have the ceo on yesterday. they may not be on the high retail expectations. >> so legal came up and we were saying it was the best on high street and value. you can't advocate the products. i went ballistic. >> did not not hear me destroying their business? >> i know it's probably the best description ever for woolworth. to hell with the rest of the

companies. >> well, he missed that. apparently they're all in. great to see you. what are the opportunities like at the moment? he thinks everything is overvalued. >> a classic from a macro investor. it's been a tough time after all this quantitative easing. i think you have to go with the fed. today is the big day. maybe not this cycle. we see substantial opportunities in the corporate debt market. >> you're waging on every word or every line from the fed, as well. why is that such a big event for credit sd? >> so i think that that would be an incredible surprise. i don't think anything is expecting that. the recent volatility we've had

brought up the question of how would that affect volatility. we're walking through this difficult time for growth. to the discussion you were having earlier, you have that same dynamic when it comes to corporate credit. you're going to have the wind to your back coming from central banks. there's lots of money out there and not enough opportunities. >> what do you think, last night i was out with the providence guys to have a credit fund rather worringly called benefit street which is also a reality tv show in the uk. but they were basically kruling the market saying where are we in the credit cycle? if you look at issuance, if you look at ratios, we're at the same levels we were in 2007. in fact, we've surpassed them.

so they're talking about shorting a lot of credit as well as buying it. what is your take on that? >> so i definitely think we're at the sage where you can make money on the short side as well as the long side. i'll tell you one thing, this cycle is behaving differently from the private cycle. we have seen ceos being more conservative this time around. private itself themselves is more conservative. it's a fantastic thing for bond investors. are people in the hunt for yeels gold further and further down the ladder and actually buying things that are much too risky, actually, than they should be, no? >> i think they are and i think that that represents opportunity on the short side. but people are saying away from the good yield, right, that may be more conservative, maybe

higher rated. on the up side, it still gives you multiples of what you're getting in the government market. >> and we shouldn't be worried about issuance being more than what it was in 2007? i thought they were supposed to be the alarm bells that would make us wake up to a really big issue. i think people have been immune because we're at these record low default rates because everyone is pretending and spending. but we're not going to hit difficulty necessary years to come. surely this is a major problem down the tracks. >> so you've had me on here talking about the problems. there is so much demand from loans coming from clos, coming from retail investors that it's taking the bad issues away from the bond market. having said that, i think you're right, that people are reaching and you have to be careful. you have to be disciplined at this stage of the cycle.

having said that, it's pick up 5% versus zero. 25 basis points. that is a nice yield to pick up. >> let me hold off on this conversation, phil. i want to talk about deutsche bank shares 1.3% lower trading in frankfurt. just to recap on this one, they swung surprisingly to a net loss in the third quarter. trading revenue is rising. saw a 9% rise in revenue in debt trading climb 15%, a modest increase. an 87% rise in earnings from increased debt trading, as well. litigation, another big issue.

in total, it spent $7 billion euros now on fines and settlements since 2010. a bit of caution on their profits saying conditions remain challenging in many areas. making the point they are broadly on track to deliver on the promise of 13, 15% profit gain in the division. how do you see it? >> liquidity is challenged. but i think that represents an opportunity for incresters willing to take a contrarian approach. >> i think it's a great opportunity. >> it's a great opportunity if you've had prepared. that is the thing. we've been preparing for this for five years. we expected regulations to drive opportunities lower. >> you want to come in on this?

>> they were pretty cautious on the credit markets. they believe the liquidity from a regulatory point of view has become very poor in many corporate names and, really, the investor basis right now and we've seen this hick up in the markets in the last couple of weeks and liquidity was poor. if we see what they're invested in, how will these markets survive? so the one place i'll disagree with you is that there isn't a mismatch -- >> oh, just one? >> we'll start with one. >> the massive markets.

so the etfs don't have to redeem any catch. so they're wrong on the mismatch. i will say passive investing and mixed income don't work because you're forced to take the other side of the benchmark and you don't want to be investing more in the debt of people issuing lots of debt. this is not a great idea. the imf is highlighting that liquidity is poor. i think it creates opportunities for investors. you make the point that there's a mismatch between investors and bonds. i expect to be working for at least another 20 years, living for hopefully more than 30 years. that's a long time horizon.

most of the ponds in my portfolio is going to mature. you made the point that as long as they pay you back, you're in good shape. that is what we focus on is making sure you get paid back. >> if you work another 20 years, you'll see returns in the corporate market? >> i'm sure i'll see a lot of things. >> let's have a look at the markets with the rbs and oslo slightly higher. focus today on oil, the company had a surprise net loss of almost 5 billion hit by charges and due to the pressure of lower oil and gas prices. shares are trading almost 11% lower. let's move to the french markets, the cac 40 up almost 1%

a few minutes after the start of trading. let's have a look at total. warning the quarter will remain under pressure. net profits fell to 3% in the third quarter. market reaction despite this cautious warranting. sanofi also in focus and still under pressure after a decline yesterday for the stock. it's down more than 4% on this part of trading. the ceo of the company has been forced out by the board of directors which decided anonymously to remove him from the french pharmaceutical company. we were expecting for the time cost of the strike at air france has been announced this morning.

416 million euros. that's the impact on the revenue of the strike from the pilot these month. the airline brought operating profit almost -- in the third quarter. and the management will accelerate the cost production and the investment plan. shares of air france klm trading 2.2% lower. and still on the french market, the fourth quarter revenues because of stock market continues despite this. the company beat expectations for the third quarter net profit, up $72 million the outlook is weighing on the stock, down 6.5%. and it was widely expected. the french cable company has launched a 4.7 billion euro capital hike. the hike is intended to finance the acquisition of asset bark

which is the telecom unit trading 2.3% higher. >> it's interesting. thanks. every bit of news flow we've done in the headline seems to be concerns with deutsche, next with numbers, and yet had market has done really well. and, of course, the comments made. it's love back. we've talked about the macro quite a lot. let's talk about fundamentals. both european and u.s. financials continue to show fundamental improvements. what does that ? >> you've recently the stock buybacks, the shareholder friendliness, the assets for equities it's a bit more challenging. and it's a bit like going through a minefield. you have to do a good job

choosing your credits. you're hoping for not too hot, not too cold, just right. we just went through the aqr. regulators are saying, look, we want you to take this exposure and bring it down. we want you to raise capital. we want you to take less risk. those are troubling time sometimes for equities. it's a fantastic story for bonds. >> what about cocoa? pushed by the regulators, it's supposed to be the cure all for all capital requirements. but if you're talking about a mismatch of understanding between risk and return, surely that's an example. >> the date the bank has to pay you back, but alternative tier one securities, they're more challenging. i'd like to know that i'm going

to mature the bonds that we're buying. i'm pretty sure i'm not going to be around for perpetuity. >> just under the european banking center, i think the aqr was probably seen with success, consistent rules across the area. we're going to talk about the stress tests, i think this is probably underdrivering, you could say. and it's set for review. the deflationary worst case scenario is hundreds of billions of euros. how does that affect some of the bond market pricing? to me, it's a whole deflationary risk and scenario.

yet here we are again. >> very much like the u.s. market, i say the process as a process. they're going to raise another 25, you know, and beyond that they're going to raise another 25 and another 25. and all the while, they're going to take down their risks in their portfolio. so this is a profit by which the regulators can keep the banks in line and keep them from taking too much risk, derisk the overall system without creating that deflation that they're concerned about. because the banks pull back their lending all at once. that's going to be a problem for the economy. >> this is the whole ecb balance sheet. they don't seem to quite marry up here. how can the bank get any sort of momentum? >> kng came out with numbers this morning.

they were crawling through the aqr details, which i can't believe more people haven't done. so they're saying basically that the nonperforming loans that they've seen when you apply it across the balance sheets of all those banks, the samples, you're looking at 1 trillion euros not going out into the real economy as lending. do you think that it's going to be this water fall of credit now to smes, to companies? because that's where the growth is going to come from, but are they there? >> i think you would see more credit coming from the companies if there there was demand coming from the company. this is a catch-22. if you gave me money at zero interest rate, i would be happy to borrow more. i may not pay you back, but i'd be happy to borrow more. i think that's the fine line banks are treading. how do we lend but also make

sure we get paid back. that's how we got here in the first place. >> let's move on. stephane, vbba. >> spanish markets slightly higher a few minutes after the start of trading with, of course, a big focus on vbba. it has reported a nearly 40% drop in nine months profit. bbva said interest income was broadly flat o year, but its ratio improved slightly to 6.1% up from the end of september. moving to the german market, the dax higher. 8% of 1100%. deutsche bank are still to the surprise third quarter of 92 million euros. a modest rise in investment banking phased to upset the impact of the higher litigation

costs which have now topped 3 billion euros. germany is the largest lender. they expect headwinds to persist and that's the reason why the stock is trading lower, 0.6%. let's have a look at facebook. the company reported quarterly earnings and revenue that fit expectations. but the stock tanked yesterday in extended trading after the social media giant issued a disappointing outlook with a -- with a worrying announcement regarding the cost. facebook is down 6.4% this morning in frankfurt. and moving to the italian markets, with still the focus on bmps, the italian treasury says it would not -- a request to delay the repayment of the state aid. the bank's chairman says it may have to make the move after becoming the most high

profile -- of the banking stress tests. they said they could not rule out a merger. shares of dnps higher by 1.7%. steve. >> all right. a couple of days ago to corporate bond yields could fall even further, as well. i'm just looking at the broader story, as well. but do you believe the corporate bond yields will continue to support the bonds themselves? >> the technicals are incredibly supported. we are talking about how investors or end companies are more -- to borrow. you know, when you look at the global economy, people aren't borrowing enough. that's one of the reasons year not seeing growth. it's also one of the reasons we think you can see debt spreads compress from here. there's a shortage of fixed income. that's why people are paying the german government money to buy their bonds. literally, here is 100 cents on the dollar or a hundred euro

cents on the dollar. i'm not going to get a hundred cents back. >> and yet the story even earlier than this, the journal was talking about why corporate bonds to meltdown, as well. the debating idea is that we had already seen the spreads widen on the corporate bond yields. actually, it was a precursors to a much wider spretd. and then the s&p falling itself, as well. it's a very good indicator of both of those things, as well. yields will disagree with that. look, credit markets are ksh tend to be sensitive to liquidity conditions. and what we did see in september is liquidity conditions deteriorated. and so when you see that, it's going to be a foreshadowing to equity markets performing poorly. guess what? as a bond investor, i can't get liquidity in the corporate bond markets. coming into the equity markets, that's why i'm going to source my liquidity. it's fought going to be good for equities. >> so when i sell my corporate bonds, i'm going to have a panic

sector and then i'm going to start the s&p, yes? >> yes. >> but you don't believe that's going to happen? >> i think it already happened. i think that people -- >> that was just a little canopy. that was before you even had your starter. that was before you had your -- let alone your big grill main course. no? do you think that was a fail? >> he's going down 25%. >> that doesn't sound like the meal i had last night. but then again, i'm a bond investor and not an equity kqui equity investor. >> i think you're going to see a nice rally into year end. next year is a new year and we're going to have to deal with new challenges. i think the opportunities in the credit markets will continue. we do think you have to be more and more careful. and we think there are going to

be more opportunities on the short side. >> you fully disagree, don't you? >> i think yields go down. -- >> but if the bond market is a precursor to -- >> absolutely. >> that goes back to your valuation argument and your concerns on cape and on her measures, as well. the fact remains that you think the market is overvalued. whether it's the equity market or the corporate bond market, they're in the same direction. >> i think the key is that the markets have been increased on the value for two years now. that does not stop the s&p going up. this is all back to liquidity and momentum and is sentiment in the market that they have your back. >> if those are going to get challenged as they were in september, then the market is going to get more difficult. i do think when you look at the spread of junk versus treasury, that's been widening since early

july and that has been a precursors through several cycles of the s&p. if the equity recovers and those bonds get the continuous high, then that indicator is not valued in that sense. the market, the fed hasn't got your back more in terms of qe and we don't believe it's out there and we believe this is a liquidity problem, this market could fall very, very quickly. still you get the net benefits. those guides will do whatever it takes. so this is a central bank supported market in all that. >> we will leave it there, actually. thanks so much. is that it for you today or are you back in the next half appear hour? >> i think i am back. >> oh, good. is investing in britain mortgage still a good bet? we'll look. nesses, from fashion retailers to healthcare providers, from jewelers

to sporting good stores, to help their customers get what they want and need. banking. loyalty. analytics. synchrony financial. engage with us.

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a single ember that escapes from a wildfire can travel more than a mile. that single ember can ignite and destroy your home or even your community you can't control where that ember will land only what happens when it does get fire adapted now at fireadapted.org after the miles hit sales. total wants earnings will -- to the fourth quarter of the week and it continues to wait with the set of numbers for the

incoming management team. air france faces a 640 million revenue due to the strike action of its finest. the airline posted a net loss and says it will accelerate production. european markets have been open for a bit more than a half an hour. the stoxx 600 up by 0.4% on the back of this strong session we have here today in the united states. plenty of corporate stories to digest with plenty of earnings. we're going to talk about it, still, including total. air france, of course, from deutsche bank in the banking sector. >> spanish bank bbva has drovt

and is sending shares lower in madrid. its bad loan ratio did dip slightly to 6.1%. trading in the red after posting a surprise net loss of 5 billion krona. the oil firm was hit by a number of impairment charges and the pressure of low oil and gas prices. the company has maintenance maintained its production in capital spending forecast for the year. >> the fourth quarter revenue citing market conditions. they beat expectations with $72 million. the shares down more than 77% on the french market. tmt says operating profit fell 3% in the first half of this year on challenges in the uk and the u.s. but the drunk manufacturer raised its dividend almost to

5%. it would offer an enhappensed position in the important markets. facebook is sharply lower after reporting previews that beat expectations. but julia has more details. >> facebook shares dropped during its earnings call on its forecast for q4 and for next year. cfo david renner projecting revenue will grow between 40% and 47% in the fourth quarter. that's on the liest end of expectations. he warned appear list nongap will grow as facebook invests in hiring new employees, in new ad technology, as well as in global growth and different things to support its acquisitions. ce on mark zuckerberg talked

about how the company is delivering more targeted ads and more targeted content. he also talk about wanting to grow facebook beyond the social network to be the infrastructure for the mobile webb. >> over the next few years, our goal is to make facebook the cross platform platform that allows developers to build, grow and monetize their apps across every major platform. >> so there were plenty of questions on the earnings call about how instagram and video ads are doing. ceo cheryl sandberg said they're playing it very slow, they're rolling those ads very slowly and carefully. she didn't reveal any details, just said there are significant opportunities. >> share hoilders with britain's tui travel has reached an agreement. the deal will great the largest tourism group. shares in tu i, they're 28% higher. tui travel trading 4.6% up.

>> from the uk's land registry, house prices edging lower in england and wails during september. that's an extraordinary turn around. london saw its first monthly fall since last october with a 0.7% dip. uk property fell, countrywide, investment manager hermes formed a strategic partnership creating a property investment fund. the funds will invest in existing uk residential assets. helia is around the table. we're welcoming chris taylor, ceo of hermes real estate. chris, the question i asked you off camera and i'm going to ask you now is why do we need a private investment fund? >> it is compelling. if you go to the u.s., if you look at europe, most institutions have significant holdings in residential.

if you look at the long run it is a perfect hedge. one of the reasons why there hasn't been a fund has been the lack of confident of the ability to operate. so we have found a operator, very credible operator. this is not a london-centric fund where we would agree there are concerned about the bubbles. this is buy pan uk and we can deliver a 5% net-net yield with stable -- >> might say this is another leg of a story. we have had the rally driven by this extraordinary rally and mow the property markets are looking for new investments to get in somewhere near the cost.

>> this is a long-term trade. >> and the yield is around 5%. what is the long-term yield? obviously, it's not been brilliant in the uk. >> you have to make it essential to london and the rest of the uk and the other investment thing we think is compelling is the theme of urbanization, for changes in lifestyles, demographics. we're seeing more households. there's a shortage of homes across the uk. this is not a london product. >> we've never really embraced it. >> there's a shortage of homes in this country. >> would you consider this kind of fund?

>> this seems to be appropriate for long-term pension fund. is it underinvesting? we've invested in new york, we've invested in germany. if full disclosure, i put my funds into an a property fund. it's 6.5%. sorry. but i think since the financial collapse, there's been a lot of niche. a lot of private equity have put their money into that because there is opportunity. there is a way to convert

private equity. what's your angle? >> the angle is that we have got reach and ability to get scale. this is not london-centric. this is uk centric. it picks up this theme of urbanization. young people want to live in an urban environment, in a new environment, close to your class structure, so the retail, this is -- >> it's two and three. >> exactly. that is part of that. >> going back to my previous point, institutional money, pension money, rather than -- >> this is not a cyclical play.

this is not saying let's be smart and play the cycle. this is a long-term play for institutions looking for trns, looking for this match against inflation. >> we have to leave it there. thank you very much indeed for joining us, chris taylor, ceo of hermes real estate. sanfy has named the replacement of its ceo after two days of intense speculation. the chairman of the board says mr. veingard will replace the ceo. the decision came from the poor relations between the ceo and the board. the board is already in contact but mr. viehba vanguard has ref comment on the situation. >> i think there's a lot of

excitement at the moment. they're coming up quite right. i think maybe there's money to be made in this whole aging theme. >> giving the poor pension plan and now you're talking about the aging population, talking about long-term demographic changes, as well. >> well, yeah. so -- 18%. >> interesting in the fact that they are replacing him because of the poor relations between the board and the ceo. twrael, he had quite a good track record. he improved the situation of sanfy in the last five years. >> he was a very good ceo. he -- >> if you look at the numbers, you know, when he joined sanofi, the company had difficulty in the pipeline. it's not about creating value or poor strategy. the problem is that there was lack of personality in compatibility with the members of the board. >> lovely.

we'll leave it there. we're going to chat about uk budget wrangles now. i suppose you want to stay for now, don't you? >> it's a good party. why not? >> we'll talk about how the uk chaps lore can smooth things over. does he want to smooth things over? eu bummer bill is coming up next.

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with germany's schlobler. back at home, prime minister david cameron is set to face scrutiny of what and when from the uk labor party. he will not pay 2 billion euros to anyone on the 1st of december. over on the desk, research

analyst at oppen europe. first question to you, richard, you think that the application is politically inept. why? >> david cameron is saying he wants to create reforms in the eu. but the idea that you should have 1.7 million demand is clearly going to mix badly with what's going on. >> why so much time to make public? >> the danger that we've got is that, you happen, the political point scoring, particularly for the labor party, they will want to go on when david cameron happens. but the real question is how much is he actually going to end up paying?

and david cameron is going to be in trouble to make the case for the british people. it's actually the right choice for britain. >> the problem here for david cameron is trying to secure a coalition of members who rejected extra payments is that many of his closest allies, you know, they're receiving rebates. and you are hardly going to see france, germany, the dutch saying we don't mind paying a bit more. the same way david cameron is unhappy about paying more into the eu budget. those companies which are receiving a rebate need more. >> the same metrics are being applied to the rebate that this country gets, too. we know different the slide rule

that's being put across the uk account is not different to the one that's going across france. >> there's a couple of fascinating things about the rebate. do i apply tony blair's rebate or margaret thatcher? britain's rebates has done down by 10.7 billion pounds in the last six years. >> same question for you, do you think this application of the pitch r budget rule is politically inept? >> i think it's certainly inept. really, there should be the fiscal rate on the commission. it's no good to pretend it's a purely technocratic measure. but also, i think there are questions to ask about the uk side of things. the policy knew that it was reviewing the process of

britain's economy. in fact, the government was quite proud when the size of the economy was up graded. >> it was made worse by the fact that you had people from the european commission coming on tv saying the uk was going to get fined if it didn't pay up. it was a politically sore spot and rubbed in pretty well by the people in europe. >> and the commission itself struggled to explain exactly what was happening. they were briefing brussels on thursday night well into friday morning that this was to do with the new system of accounting. however, it turns out -- >> which they are in -- of recently. >> it's a pretty difficult tax. >> talking about areas such as prostitution, drugs, this isn't one area where they're cutting red tape. this is one of your big

arguments, as well. >> do you think the eu is fueling the uk/euro skeptics by refusing to cut red tape quickly enough? >> it's an euy demand. we've seen the eu acknowledging its own report that needs to get cutting red tape. but actually, if you look at the success so far, say the government eu task force has put together practical issues. in fact, in the last year, you've seen about a thousand more eu business regulations. does the eu need to be determining the containers of that olive oil should be stored in? does it need to determine how we make smoked flavorings? at the moment, the public and eu member state leaders, they want to see the eu do less. quite frankly, when you look at what's going on in the commission and the particlelity, they want bigger bills, as well. >> lovely numbers out there, haven't you?

over 4,000 eu business regulations, this amounts to -- you know the number. 19.8 million. i can't say that one quickly, can you? now, just tell me, in terms of what the business in britain really wants, i don't think you really give a hoot about smoked food, but the point you do really care about is what, immigration, employee regulation? what are the key issues here that cameron could get from brussels that would mean business is happy and staying in the eu? >> well, i think for business they absolutely want to see fewer regulations coming from the eu. they want to see, you know, the cost in europe coming down. >> but this is the point that the anti-lobby missed. there are going to be regulations. do they come from eu or westminster, as well? >> absolutely. but they need to be accountable. in terms of immigration, i think what business has to accept is that the public at the moment

wants very different things from the relationship with the eu. i think this is what david cameron has recognized. unless he gets some kind of jump, it will be -- >> you know as well as i do, the dirty secret here is that british business loves immigration. it loves having all of these people who they can actually get much lower wages through than having british employees, as well. why is this such a one-way chat at the moment? why does it seem to convincing for the euro skeptics? they seem to be winning hand over fist with this one. >> i think people are very frustrated with the relationship that we've had with europe. it's developed in a different direction and they haven't been consulted. we saw that definitely over the fact that there wasn't a referendum. but i think, you know, it is very interesting that public opinion seems to be fluid and inconsistent. at the same time, there is a lot of concern about eu free

movement. we've seen the highest level of support for 23 years. it's quite a complex picture, i would say. >> rimp ard is on the phone with us. good morning, thank you for being with us. you also believe that it's 2.1 billion euro deal? >> not without first checking whether the figures are right, whether it's right to make the calculation of britain's underpayments going back so many years as they seem to be and whether it's -- if it does have to be paid, whether it can't be spread out over a number of years. >> why are they taking so much time to make this announcement, do you believe? >> i think it's very strange. the risk could not come as a surprise to the british

government. it's as a result of the uk saying our economy was much bigger than we thought and has been for several years. well, of course, then logically everything that's fixed in terms of the size of your economy, whether it's contributions to the united nations, whether it's your commitment to 0.7% gdp for overseas developments or indeed your contributions to the european union are likely to be higher than you thought. already back in may, the national ta statistical office drew attention to this in the opening paragraph of its report on the subject. so it's very strange that it's only now suddenly on the occasion of the european summit meeting where, of course, the prime minister can get maximum publicity by having a rant against the eu. but suddenly at that point, it comes out. >> richard, the long and the short of it is -- and this is such a contentious issue. we need a referendum. it's very clear the british people need a voice on this.

>> well, we don't decide membership of the u.n., the eoed or whatever by referendum. but it's a parliamentary democracy. now there's a case for a river republican dumb if there were a proposal to transfer new responsibilities to the european level. that is not on the table. and if we were to have a referendum now, when the idea that we might leave the eu would put a big stop on inward investment and accentuate or economic possibilities, that does seem odd. >> no one is sailing the economic outlook is gray, but it is significantly better in the united kingdom than they were elsewhere in the g-7 and indeed more generally, as well.

you mentioned u.n., and you mentioned nato. they want to have a void heard on europe. surely the time now is right for mr. milliband and yourself to say yes, we think this is the right policy, it's something people specifically want a voice on. >> but the real question is how we change europe and how we improve the european union, not the false trites of staying in or going out when leaving is economic suicide and in an referendum campaign, that would be suicide. the real question is how we want to reform the program, how we want to improve it and make it better. a simple yes/no, that is not a sensible way of proceeding. >> richard, thank you very much for joining us today. >> i wanted to know whether you could get any of the changes in

immigration through under the current treaty. there's a lot of talk if you switch powers to the parliament you could get some of those changes. is that true? >> nothing is easy in this kind of game. it is a fundamental treaty, but you would have to see reviews. we're going back 40 years and it was a very different eu when we signed up. do you think you can get those changes through? >> i think there's a lot of reform that can be done under the existing treaty, but some will require more change in the longer term. >> thank you very much indeed for joining us, pavel. robert, nice to hear your voice today. from helia, i'm stephane and myself, have a lovelily day.

welcome to "worldwide exchange." i'm seema mody. >> and i'm wilfred frost. >> the dow closed back above 17,000. >> you're fired, sanofi's board removed their ceo and sends shares sharply lower following in its 10% slump in yesterday's session. shares of deutsche bank in the red after surprised third