welcome to worldwide exchange. here are your headlines from around the world. chinese stocks bounce back after fourth quarter gdp slightly tops estimates but four year growth slips below the government's target for the first time since 1998. taking a look at stock specific news european markets fall with novozymes going to the top. the ceo says the oil slump will not impact the biofuel business. listen in. >> if you assume like a lot of people do that the oil price is

is going to move back up to the $60 to $80 range then certainly second generation ethenol will continue to move and i see investments coming into that area. >> a different story for s.a.p. after slashing it's profit guidance for 2017 due to trouble with it's cloud transition but the ceo tells cnbc that revenues are on a steady path. >> what i wanted to model for the investors is show them that the core is still going to grow. that cloud will grow even faster and the business model makes it's full transition will you have more predictable revenues after 2017. now our attention turns to morgan stanley. earnings taking center stage in the u.s. after the holiday weekend with investors honing in on fixed income and the banks commodities business. >> you're watching worldwide exchange. bringing you business news from

around the globe. >> and to our top story, china's fourth quarter gdp held at 7.3% growth year over year. while the reading wasn't lined with third quarter growth missed the official target for the first time since 1998. a good break down on what we've seen in terms of growth in china over the last couple of quarters. eunice is live with the latest. interesting to see this number of course missed estimates -- excuse me beat estimates but still nothing to get too excited about. this is the worst expansion in growth in 24 years for china. >> that's right. a lot of people were focussing on that gdp number for the year. it came in at 7.4%. that was more or less in line with the government's target of about 7.5% but it's the slowest growth the country has seen

since 1990? we have the weakness in the housing sector and also the soaring debt. not only that but some of the overcapacity in several different industries. those issues are likely to plague the economy for the coming years and, in fact the imf was the latest voice to weigh in saying that they're concerned about a multiyear slow down. they downgraded their forecast to 6.8% from 7.1% and for 2016 they see the economy slowing down to 6.3%. now the report card today really intensified the debate over what beijing should do and what beijing will do. there were several reports of brokerages coming out saying that the economy needed a boost. that the beijing policy makers would have to come in with some level of stimulus however the imf said the main reason for the downgrade is because they believe that the authorities were willing to now make

sacrifices to short-term growth in order to reach the longer term goal of pushing through reforms and rebalancing the economy. so they say that they believe that beijing's policy makers are going to take a more careful approach when it comes to policy. >> we'll be watching. thank you so much. let's talk more about the china story. is it a good investment opportunity with stewart richardson partner at rmg wealth management. thank you for joining me in studio. interesting data. china growing at 7.4%. slowest since 1990. does that confirm that the central bank will step in and do more to stimulate the chinese economy in 2015? >> we have been hearing stories for several quarters and they have been nudging around the sidelines. but it's clearly a match process. imf is right in terms of the direction. growth will be coming down and they're right to point out we can't go back to the old ways of printing money and infrastructure investment and so on. there has to be a real balancing

of the economy. as well as the structural concerns highlighted by a reporter we have the chinese currency being one of the strongest currencies in the last 12 months so from a trade point of view china is struggling. without the domestic consumption pick up there will be very little growth compare to history and demographically china is seeing a peak in the working population. so i think the overall picture for china is very difficult and they can't go back to the old way which is is taking on debt to build infrastructure and so on. it could be a bumpy road ahead for the chinese economy. >> a lot of concerns when you look through the data around the gdp report that came out this morning. what does this mean for chinese stocks? china was the best performing

emerging market in 2014. does the rally continue because we're betting on former central bank intervention or can this rally be derailed? >> i think you hit the nail on the head. people betting on chinese equities are betting on support from the chinese bank. that may well workout but the problem was you're seeing a slowing economy. a slowing global economy. that too. so you haven't gotten the fundamental support behind aggressively rising asset prices. who knows what they will do? they'll stimulate less than the bullish people expect. so i expect them to at least slow down and not stall out. i wouldn't be chasing them at the current price. >> at the end of the day should markets be moving on central bank policies. should fundamentals move and drive the market higher or lower. >> certainly the last five or six years central banks trying to intervene to influence asset prices and china hasn't been

immune to that and that narrative begins to be challenged after switzerland's move last week. you believe you put on trades and have the backing of the central bank behind you. that's going to be as we know quite a big loss. they'll be questioning other trades which i have on purely with the support of a central bank so this is a new chapter where support from central banks are the seoul reason or main reason to invest in certain assets. >> putting more on the poc and ecb might be announcing further stimulus announcements on thursday. we're following all angles of this story on cnbc.com so be sure to log in online. is the era of 7% growth over for china? economists are now suggesting investors get more familiar with the number 6. find out why on our website. plus after markets stabilize

following monday's plunge find out why analysts say it's not time to bargain hunt just yet. also want to get you headlines coming out of sweden. sweden cut it's 2015 gdp forecast to 2.4% from 3%. cutting it's 2016 forecast to 2.7% from 3.2%. the recovery around the world going slowly which means slow recovery for the swedish economy. we have been tracking all parts of the economic growth path for europe and here's one of the economies that have been hit. see how the swedish krone is trading against the u.s. dollar. down 13% against the u.s. dollar. >> after sizable gains in europe on monday let's look at how stocks are trading in europe. we're in the green once again. it did close at a 7 year high

and continues to move to the upside. gains around .6%. what mario draghi will unveil in terms of the bond buying program and how much will be put in place in terms of how much money will be put in place in terms of bond buying and especially which countries bonds will be bought. that will be a big catalyst. the other factor to put all of this into perspective will be the german sentiment data coming out in the next hour. driving into that we're looking at europe's largest economy. germany up about 40 points in today's trade. the cac 40 up 30 points. interestingly enough the swiss index another day of green. the second day of this rebound in swiss equities continue after last week's move to the down side when the snb made that

unexpected policy reversal. seeing a gain of around 1%. what does this mean for currencies which has been the story ahead of the ecb meeting on thursday? we did look at the euro hit an 11 year low, 11459 versus the dollar. plunging from its high it hit in may of 2014. got you that stat. let's look at how the euro is trading right now. it's weakening trading at 1.1578. that could change depending on how strong the survey number comes out in the next hour. commodities a big part of the story has been the significant decline in the price of oil. what does that mean for equities? specifically the energy sector which continues to weigh on stocks over the past couple of weeks. we're down once again. a lot of that has to do with what's happening in china. crude trading at 3714. brent crude also below $49

barrel down about $9. keep in mind last week wti crew did settle near the highs managing to halt seven weeks of consecutive losses but it doesn't seem like the losses are over just yet. you can see we are lower across the board when looking at the commodity index and interestingly enough spot gold seeing a little bit of a green right now or bright spot up about 1% after losing in yesterday's trade. bonds where we're seeing the action but of course you have been seeing the flight to safety ahead of the ecb meeting driving bond yields slower specifically when looking at the 10 year german bond. sri is live for us. take it away. >> thank you for that. most of the major markets in our region in rally mode. eunice was talking about the gdp

data out of china. the markets over here taking it in their stride and front running and building the case of further policy accommodation by the authorities in beijing over the course of the year but the emphasis is going to be on a very graduated fine tuning. no bold moves here given the fact that they don want to create asset bubbles. the nikkei 225 is the one to watch this week. i'll add to the alphabet soup and give you the boj tomorrow. very interesting commentary. cheap oil creates a challenge for inflation targets. so it raises the questions in the minds of many. are we going to see further policy initiatives and the boj easing further to counter cheap oil or are they going to end up tinkering with their inflation target? just ahead of this very

interesting developments in japan's government bond market. we've seen record highs for prices and the five year rate in the negative zone for the first time so perhaps the bond market is pricing in some further action by the bank of japan tomorrow. there's also a lot of foreign interest in the japanese bond market as well. so all in all a fairly positive session. most of the major markets in rally mode but i'd say a degree of caution ahead of the boj and the ecb in your neck of the woods. back to you. >> thank you for that update from asia. coming up on worldwide exchange president obama heads to capitol hill for the state of the union address. will the big speech set the stage for a two year fight with republicans? >> plus twitter snapping up zip dial. is this a sign for more acquisitions to come for the

struggling social media giant? and we get a check on the face of the growth. we get that at the top of the next hour. right! now you're gonna ask for my credit card - - so you can charge me on the down low two weeks later look, credit karma - are you talking to websites again? this website says 'free credit scores'. oh. credit karma! yeah, it's really free. look, you don't even have to put in your credit card information. what?! credit karma. really free credit scores. really. free. credit karma, i love you!.

welcome back to worldwide exchange. let's get you up to date on some of the big stock movers in today's session. shares trading at an all time high after fourth quarter net profit beat analysts estimates. the leader raised it's 2014 dividend and said they expected good underlying sales growth and high profitability in 2017. speaking earlier on squawk box europe the ceo discussed the impact on lower oil prices on the bio fuel market. >> if you assume like a lot of people do that the oil price is going to move back up to the 60 to $80 range then second generation ethenol will continue to move and i see investments coming into that area. >> now on the flip side take a look at uniever sales lower after missed expectations growth was hit by weak demand from emerging markets including a 20% sales decline in china. they don't see a significant

improvements in the markets this year and also trading lower in the red despite a robust fourth quarter. they continue to boost it's market share despite a route in prices. lastly look at s.a.p. cutting the 2017 guidance for operating profit. the german software group says it's expansion into the cloud will reduce profits into the short-term but the ceo told cnbc earlier his business is evolving and he expects improvement in two years time. >> what i wanted to model for investors is to show them the core is still going to grow and the cloud will grow faster and the business model makes it's full transition where you have more routable and predictable revenues after 2017. still with me to discuss earnings and what to expect is stewart richardson partner at rmg wealth management. this is the second big week for

earnings in the u.s. the focus will be not so much on financials but we have to gauge the consumer with mcdonald's, ge honeywell and netflix reporting. >> u.s. earnings season sets the tone for the whole global equity market and first of all i think the market is still trying to catch up with the lower s&p profile. but it was one of the bigger head winds for the global exposed hedges. so we're looking for earnings to be relatively disappointing. of course for some consumer sectors, especially domestically they may be okay. you begin to see consumers away from gas and toward other consumer goods you could see some particular sectors do well. >> so you don't have a strong forecast i guess i should say

for earnings season this quarter despite the acceleration in the u.s. economy, 3% gdp and a pick up in retail sales that confirm the u.s. recovery is here. >> the u.s. q3 was 5%. that will be revised down. estimates will start coming down for the u.s. the u.s. cannot be an island of serenity when you have the rest of the world in economic malaise. we're expecting the global head winds to begin to impact the growth picture looking forward. when you look at the energy sector the consumer probably benefits from that but they were seeing big job cuts and cutting back and so on so it's not a very easy situation in terms of who wins and who loses but the overall impact. so we expect u.s. growth -- actually we think trend growth is 2, 2.5%: we expect earnings growth expectations to be cut

for 2015 as a whole. that's not been factored in. >> when looking at the energy sector analysts brought their expectations down a lot. do you think that provides an opportunity to outperform expectations this season? >> i think we do. maybe the quarter after as expectations come down they just overshoot for the short-term. oil price versus more than halved in value and i think the market has been keen short oil, short energy sector. >> he was last week telling squawk box u.s. he's joining oil. >> it's become a popular trade. also within the market we're beginning to to see it hunting out of short positions or popular trades so we could see some short squeeze on those trades. oil might be moving back toward 60 for the trade. back to eight years but you could see a short-term bounce which could see energy out perform for a short period. >> it was the worst performing

sector down about 5%. we want to get you a check on which companies will be reporting. u.s. investors get back to work with a busy day of earnings on the agenda. morgan stanley reports ahead of the open. johnson & johnson also in focus. after the bell we get results from ibm and netflix. a lot of focus also on the fed. the fed is still on track to raise short-term rates later this year even as long-term rates are falling. lower consumer price inflation also will be the focus. the wall street journal says the fed is likely to repeat. they can be patient about rate hikes at their meeting next week. fed fund futures are pricing in a more than 50% chance of a rate hike in october. the imf is calling on governments and central banks to step up reforms and support growth as it cuts the outlook for 2015. lower oil prices and the

depreciation of the euro and the yen will help boost the economy but says these benefits are more than outweighed by risks including euro zone stagnation and china's slow down. stewart you're still with us. that stagnation in the euro zone, some of that might be cured, i guess i could say, given ecb and what they're expected to unveil on thursday. that bond buying program. >> everyone wants to believe the narrative that qe is good for the economy and so on. frankly we're 10 trillion of qe in the last years from global central banks. and we're still having the debate about where's the growth. we're seeing the imf cut their forecast. we're not even have the debate about the longer term consequences of this policies and what are the costs to them and so on. it may have a marginally positive effect for a quarter or two or three. will it solve the longer term head winds?

no it won't. we have a declining population in germany, greece stagnant populations elsewhere. lack of productive and cap x and investment. there's serious issues not even talking about the debt that europe is facing. and a little bit of qe here and negative eights there isn't cutting the mustard in terms of the real economy. i guess it helps a little bit. we've seen this with japan for two decades. monetary policy can become very ineffective and when there's no physical offset. >> that's a big scare that europe will enter this japanese style deflationary trap. >> it's now the japanese trap. >> dipped into negative territory the first time since 200. the question is will it continue to see prolonged proration of lower consumer prices? >> what happened with japan, we had a burst bubble with them and a demographic problem where the population is declining and an

aging society and increasingly problematic debt pile. this is leading to zero growth. you can do short-term stimulus programs which has a little boom bust cycle on the economy. so europe is entering that multidecade stagnation phase but is putting forth measures to try to tackle problems. we need solutions here we're just not seeing so europe is already japan in our mind and the policies aren't helping. >> we'll get more clarity on thursday when mario draghi does make his announcement. global news turkey has been in focus. the central bank is expected to cut rates later today. the government is pressuring the bank to lower rates for the first time since last july. yield versus fallen heavily in the past month on speculation that policy makers will act to spur economic growth. now with central banks stepping

up intervention around the world we're asking you dear viewer whether monetary policy makers are doing more harm than good. should markets be left to their own devices. you can get in touch with us. e-mail us at worldwide at cnbc.com. tweet uts a cnbcwx and stewart would love to get your thoughts on what you have to say. >> we're a little bit more old fashioned. we think central banks should do less and not more and clearly in the sort of look at the really good times, they should be leaning a bit against the stronger growth and trying to calm things down and so on and when we see situations like say 2008 central banksadd adding liquidity. >> but you could argue it's one of the reasons the economy has been accelerating. >> but 2% is what can be

achieved. >> it's not the by product of quantitative easing. >> if for example they try to unwind qe which they wonlt but if they did that could tip the economy back. qe brought in a little bit of short-term growth the u.s. will have to pay for down the road. the problem came not with qe 1 in 2008 and 9 but in 2010 with qe 2 when they thought we need another short material boost. that created an expectation that we'll get some stimulus from the central bank. >> so short-term positive and long-term negative. >> they should be operating at the margin and a lot less communication at the markets. central banks need to keep that power of surprise and they totally lost it. they lost credibility. >> it's a great debate to be had. some would say central bank intervention is needed. >> but we've had six years of central bank intervention and we're still having this debate. central banks need to keep the power of surprise. they need to be acting at the

margin and let free markets price everything in between. >> thank you for joining us here on worldwide exchange. a pleasure to have you on. still to come on the show what goes up must come down. our next guest says regulators are are leasing some air in shanghai stock rally. but where do we go from here? we'll discuss that after this short break. stick with us.

>> welcome back. chinese stocks bounce back after 4th quarter gdp tops forecast but it falls below the governments target for the first time since 1998. they're jumping to the top of the stock 600 after solid earnings or an upbeat forecast. the ceo says the oil slump will not impact the bio fuels business. >> if you assume like a lot of people do that the oil price is going to move back up to the 60 to $80 range then certainly a second generation ethenol will continue to move and i see investments coming into that area. >> shares of sap moving to the down side after slashing profit guidance due to trouble with the cloud transition but the ceo tells cnbc that revenues are on

a steady path. >> what i wanted to model is to show them that the core is still going to grow. that cloud will grow even faster and the business model makes it's full transition where you have more routable and predictable revenues after 2017. >> and morgan stanley earnings take center stage in the u.s. with investors honing in on fixed income and the banks commodity business. >> let's take a look at european markets after a positive session for european equities yesterday. we're looking at gains across the board. there is it up about .3%. the xetra dax seeing a gain of .2%. we're getting that german survey in an hour which will give us a good look at sentiment across german businesses. it's a compilation of 315

financial professionals that provide their indication and sentiment around german business. cac 40 up around .7%. where are we seeing the gains and the losses. the euro is weakening against the u.s. dollar. it's down about 18% from its high in the month of may of 2014. the euro trading at 11586 after breaking that level last friday in response to that policy reversal out of the snb. russia a focal point for investors. the deputy central banker insists there's no need for capitol controls even after outflows reached $151 billion last year. three times more than the previous year. this as europe restates it's commitment to sanctions against moscow until the cremlin agrees to terms of a cease fire with ukraine. dozens of people were killed as fighting escalates in parts of eastern ukraine.

they reported heavy weapon fire in several areas where a hospital in the city was hit. meanwhile in brussels the european union said it will not consider relaxation of sanctions against russia unless moscow agrees to a cease fire with ukraine. there were reports some countries were beginning to question the effectiveness of sanctions against russia. >> starting a strategic debate does not mean and has not meant changing the course of our relations with russia. we stay the course as it is stated in the issue paper for the ministers and we are united on this. those that were expecting divisions, major divisions today on russia will be a little bit disappointed. >> the conflict will ukraine will be a key issue at the world economic forum this week.

hadley spoke to the forum's founder and asked him how the threat of international conflict could weigh on business sentiment in 2015. >> there's a certain responsibility in terms of creating livelihoods which in the future help to avoid such conflicts because when we look at those conflicts, they are driven by poverty, they are driven by a lack of access to the same living conditions we have and this is very much used by extremists who instrumentalize those people. >> we see what's happening in ukraine. we continue to see intense fighting there. do you expect any progress to be made on that specific progress

this year? >> at least we can bring together some of the main people concerned by the conflict. we have erased ukrainian delegation here. probably the time is not yet right to come to a final solution. many efforts are undertaken and i hope that we can contribute with some activities which we have to repair since russia comes back in. >> you mention russian delegation. they're fighting an uphill battle this time around to ensure the international community that they'll be able to get their economy back on track. but can there be an end to the economic difficulties they're facing if we don't see an end to the fighting in ukraine? >> probably not or certainly not

but i think we cannot have a situation in europe where one major country and the rest of europe are in a kind of struggle and even fight. one day it will have to end. i'm sure. i'm optimist and and i hope we can do a small step this way. >> do you have a message for him? >> i had already a message for him when i invited him. i said dabos is the right place to present a comprehensive plan. how to get out of the situation. probably the time is not right but he has sent a powerful delegation here. >> to discuss the important role of leadership. with me is the ceo of a global executive search firm. you're headed out as well.

i want to talk about what he was discussing there given the rise in geopolitical tensions. does that make it a priority for firms to find the right leaders that can steer them through the right path during this uncertain time. >> no, absolutely. what we are seeing is that really the game is changing and this is a man made dilemma. we have got ahead in terms of how to deal with this change and the landscape is changing as you're seeing earnings are more volatile. the technology disruptions happening. the mix of teams are becoming more diverse. so clearly the landscape in which leadership needs to

operate has completely changed. >> what are companies asking for these days? you head up an executive search andal atlanta management consulting firms. what kind of leaders are companies looking for. >> so maybe it will be good to put that in context. what we are finding today is there's a shortage of leaders to deal with the more complex problems of today and also more leaders are failing. it's becoming much more difficult to predict success and also organizations don't seem to be really well equipped to deal with developing pipeline of talent for the future. >> is that because of the lack of training? what's the reason for that? >> we're living in a different era and the task of leadership has changed completely but the tools that we are using to assess and develop leaders are still very traditional. we are focused on experience and competency but i think today in

this era the trump card is potential. it's about identifying potential leaders for the future. >> and i also want to get your thoughts on i know egon is a global firm. i would love your thoughts on the swiss national bank's description to scratch the national peg of 120. what's the response been like in switzerland and how is your company responding? >> i'm probably not the right person to be answering on the head of the swiss national bank. >> you're head of a company based in switzerland. >> we're a global company and operate 70 offices around the world and we're fortunate to have a global portfolio so switzerland is only a small portion of our global revenues. we're probably the most international. >> understood. >> i do think this is what the world is facing. there are constantly going to be

seismic shifts. this is something japan has done before and the u.s. did before. this was likely to happen even though probably the swiss wanted to hold the peg for a long time. >> how does this unexpected move for the s&p impact your business, if at all? >> it doesn't impact our business. i do think this will probably enhance business opportunity in the euro zone where we have a lot of activity and that will make it more competitive so i do think there's more opportunity but coming back to -- this is about what leadership needs to do. be dealing with these volatile changes. it's the ability to be able to adapt and deal with these changes. this is what clients are asking for. you asked me earlier what do clients look for. i think in today's age clients are looking for leaders deeply committed, high degree of humility. these are, you know individuals

who can deal with change. people able to build business models. >> it's an uncertain time for sure. uncertain landscape if you will. clearly the need for right leadership in place. whether central banks or multinationals. we'll leave it there. thank you for your time. and enjoy your time. >> thank you. >> cnbc will be kicking off it's coverage live from the world economic forum this afternoon at 1700 cet. tune in for interviews. and you can check our website out as well. davos website full of analysis and news from our team at the world economic forum. head to davos.cnbc.com. couldn't be easier than that. i want to get your attention to some of the big movers in asia. we're looking at it hitting a new high.

s&p sensex at 28,755. up about 500 points in today's session. a big move in the indian markets. of course we have been seeing india as one of the best performing markets in 2014. a lot of that predicated on the new prime minister. what kind of reform he can provide the indian citizens but right now markets continue to move to the upside. take a look at the one month performance. it's up about 5%. now switching focus to china. china central bank says to advance it's international station in 2014 it's strengthening against the u.s. dollar but ever so slightly. we have put a lot of focus on china. it's slowest rate since 1990. closing higher after china's full year gdp came in at that

level. a day after chinese banks drew the market lower but the tip should be kept into perspective since mainland chinese stocks were among the best per post mortemers last year. joining us down the line to talk more is peter from hong kong. he's the asia editor at reuters breaking news. what's your big take away from when looking at the gdp number out of china? >> it's an encouraging miss in some ways if they had gone ahead and hit the target given the weakness in the chinese economy that would have given credibility and the number itself is open to the discussion but the fact that china is willing to admit that it came short of its target even by .1% is a significant change because it said this target isn't set in stone the way it was before. but a lot of people are

questioning what happens, what this means for the growth outlook in the future and china has not yet set a target if it's even going to set a full target for 2015 and that's where the big discussion is now. how much of a slow down are we looking at and to what extent do the chinese authorities feel it's necessary to intervene and stimulate the economy to keep the growth slow down from getting too severe. >> do you think there's a reason why chinese stocks should be moving higher? it's the second largest economy in the world and just reported it's slowest pace of growth in over two decades. >> i mean i've given up trying to understand or correlate the movements of chinese stocks to the chinese economy. they bare little relation to each other. serious slow down. problems in the housing market. slowing credit growth. possible risk of disinflation and at the same time this all mighty rally in the chinese market. one thing that did happen

yesterday which brought home how it's been is when the chinese authorities took steps to reign in the big growth of margin trading and margin credit people buying stocks on margin that triggered the big sell off in the market. that stabilize today but tells you what's going on in the stock market is people looking for a way to find an asset going up in value. it's not working in property anymore. so they're struggling to find banking investments to invest in so it's a place to play on the roulette wheel. >> authorities cracking down on the risky lending practices. when do you think we get more clarity around this story? that was one of the reasons we saw the shanghai index losing around 8% in yesterday's trade? >> well there's a general view

that they're pleased to see the market go up. whether they encouraged it or not is a different question and what we saw over the weekend was the first time that the regulators stepped in and said some of this stuff is getting out of hand and to the extent this rally is driven by retail investors borrowing money and pumping it into the market that means the adverse effects of a sell off would spread throughout the economy if people were making losses and getting debt as a result. what they probably didn't expect was to have quite such a big sell off and it shows how volatile the market is at the moment and how unanchored it is in terms of overall performance. i would expect the chinese market to be very volatile and to bear little relation to what's going on in the underlying economy.

>> more on a debate we were having at the top of the show. thank you for your time. >> sticking with the chinese story they're in line for a major investment from a trading house. that story is live from tokyo. >> thank you. china's economic growth slowed for 2014 along with japan's foreign direct investment into china according to the ministry of commerce. they dropped by 40% compared to the year before marking the biggest dip since 1985. but this doesn't mean the active between china and japan is all quite. the japanese trading house together with the cp group will invest about 5 trillion yen in citic group. this marks by far the largest single investment ever made by a japanese company into china as well as the biggest investment

by a japanese trading firm into a foreign company. this will cover a wide range of businesses including consumer real estate energy and financial services. all of this will give better access into china's highly regulated business sectors. as for the chinese company the deal will help it cultivate new overseas markets through resource development. that's all from the nikkei. back to you. >> thank you so much. japanese prime minister abe expressed deep anger at a video threatening to kill two japanese captives held by islamic state militants. earlier the terrorist group released a video claiming to show a militant threatening to kill two japanese hostages unless the country pays $200 million in ransom. if genuine the video is totally unforgivable. still to come on the show following the snb surprise move

last week our guest says the competency of central banks is called into question. we take a look at the implications for gold. stay tuned.

welcome back. fall out from the swiss policy moves continued to be felt outside the country. they say they have received a number of inquiries from potential buyers. however new york listed fxcm ruled itself out saying it's not true that it's interested in buying the firm. the wall street journal says they could be interested in the assets. that's a developing story in response to the unexpected move. meanwhile denmark cut it's deposit rate further to stop it's currency strengthening after the swiss franc cap was removed. the country's policy makers reiterated that the krone's peg to the euro is not in doubt. the weakness ahead of the ecb decision continue to support safe haven bids. it's hit the highest level since september of 2014. take a look at where it's trading right now up about 1% in

today's trade. let's bring in mark o'brien, executive and research director. a pleasure to have you on. given the lackluster performance of gold over the past two years investors are questioning whether gold is a good investment but last week's unexpected move by the swiss national bank confirmed that gold is still seen as a safe haven by investors during a time of rising volatility. would you agree? >> absolutely. >> the snb decision is icing on the cake because there were strong fundamental factors in place and gold prices start to move up even prior to the decision. then the decision last week caused a degree of turmoil in the markets and you just mentioned it there. it shows how volatile these markets are and that's an environment that suits gold and speaks to the need of having gold and a diversified portfolio. >> approximate you're expecting rising volatility going into the

new year should one be buying gold and how much of the portfolio should be allocated toward the metal? >> there's a huge amount of academic research. but also from specialists and a lot of research shows a small allocation of gold -- >> what is small? >> 5, 7, 10%. >> so 5 to 7% should be allocated toward gold. >> physical gold. >> it's not really a trade. there's no point in owning it as a future's forecast so physical gold is a safe haven. the research at 5 to 7% is an old wall street adage which is you put 10% of your money in gold and you hope to god it doesn't work because if it was work the rest of your portfolio isn't performing well. >> let's talk about physical gold because slowing growth in china and india could result in

fewer consumers buying physical gold. do you see that as a head wind that could result in shares not rallying this year? >> it's a possibility and nobody has a crystal ball. the chinese economy slowed down and in india there was a huge amount of repression and that didn't so i think there's a cultural factor there that people tend to not realize. >> indians do have a love affair with gold. >> and chinese people as well. it's bought for savings reason. >> it's seen as auspicious in india as well. >> exactly. but the other thing that -- china is actually playing catch up on india because it's huge in the chinese psyche as well as india and the per capita consumption is increasing.

>> executive research director at gold core thank you for your time. >> thank you. >> still to come on worldwide exchange two days and counting until the big ecb decision. stay right there for the report.

10:00 a.m. in london. 5:00 a.m. in new york. thank you for joining us on worldwide exchange. here are your headlines. chinese stocks bounce back after fourth quarter gdp slightly tops forecasts but four year growth slips below the target for the first time since 1998. european markets continue to push higher. hopes that mario draghi will pull the trigger on quantitative easing. morgan stanley earnings take center stage in the u.s. after

the holiday weekend with investors honing in on fixed income and the banks commodities business and president obama heads to capitol hill for the state of the union address but republicans are already fighting back at a plan for tax reformful we're going to discuss that with politico's ben white. >> you're watching worldwide exchange bringing you business news from around the globe. >> all right we got the german survey. sentiment index reached the highest rating since february 2014. also reporting that january current conditions index came in at 22.4 points versus 10 in december. now what about economic conditions? well, economic conditions came in at 48.4 versus 34.9 which was

a number we saw in november. so clearly better than expected and you can already see the euro strengthening against the u.s. dollar at 11606. the economic survey compiling 350 financial experts. the indicator reflects the difference between the share of analysts that are optimistic and pessimistic for the expected development of germany in the next six months. a lot of focus on the health of the german economy. that number coming in higher than expected. the highest reading since february 2014 when looking at the january sentiment. that's the number. let's look at how european markets are responding. the euro strengthening against the u.s. dollar and gains across the board. holding on to the initial gains around .2%. the ftse 100 at 6,606 up about .3%.

cac 40 up .3%. seeing a gain of around half a percent after of course two days of volatility where we did see stocks move to the down side in response to that unexpected policy reversal by the swiss national bank. but what does this all mean for u.s. futures. of course yesterday u.s. markets were closed for the national holiday. right now futures indicating a higher move. the dow jones industrial up about 35 points. the nasdaq with a gain around 15 points and the s&p 500 up. they did stage a rally halting five days of consecutive losses but did fall short of the week. the biggest loser was energy on the back of the declining price in oil. that continues to be a big concern for investors. now a look at the bond market where we have been seeing multiyear low yields. the treasury yields falling when

looking at u.s. treasuries. posting their biggest weekly rally in a month amid concern of slowing growth. something that was with china's biggest growth on gdp. wti crude settled near the highs of the day managing to halt seven weeks of consecutive losses. the oil story is in focus with investors with brent crude trading lower by about .3%. nymex seeing a move to the down side by about 3% in today's trade. so the oil story, the sell off, if you will, continues to be in focus. now back to our top story which has been china this morning. china's 4th quarter gdp held at 7.3% growth year over year. slightly above expectations. while the reading was in line with third quarter, it missed the target for the first time since 1998 and breaking down the

data and what this means is eunice live in beijing. take it away. >> thanks a lot. well china gdp came in at 7.3% for the year and this was in line of the target of about 7.5% but it was the slowest growth the country has seen since 1990. what was weighing on the economy? the housing downturn and soaring debt and there's still plenty of overcapacity in several different industries. now there are many economists that believe that the economy here is now set for a multiyear slow down. the imf is just the latest to weigh in. they are downgrading their forecast for 2015 to 6.8% from 7.1% and 6.3% for 2016. the report today really just intensified a raging debate here about what beijing really should

do and what it will do. there were several calls today about how beijing really needed to come in with some sort of stimulus in order to prop up the economy and reach what many people believe is going to be the government target for this year of somewhere around 7%. on the other hand though the imf said that the reason for their downgrade for this year is they believe that the authorities are going to be willing to sacrifice the short-term growth in order to try to achieve their longer term aim of restructuring the economy and putting forth some reforms. so there, very optistic that beijing is going to be careful in it's policy responses for 2015. >> eunice thank you so much. let's now get market reaction with brian reynolds. chief market strategist. brian a pleasure to have you on so early this morning.

>> let's talk about china. beating expectations. what are your thoughts on china's gdp number this morning? >> their problem is they set their economy up to make stuff for the west and the west is sluggish. we're not buying stuff from china the way we used to. when your major customers have a slow down you have a slow down as well. >> could you think the slow down in china could weigh on earnings? this is a big week for u.s. corporate earnings. s&p companies due to report. >> probably not. china in terms of u.s. companies exposure it's been growing but it's not a major force in their earnings. what is a big force has been buy backs and the more companies buy their stock back the higher their earnings per share growth will be. they were enormous last year and will be this year. that helps boost earnings. i know it's artificial but that's the way the game is

played on wall street. >> do we expect the buy backs to continue if we continue to see a rise in volatility? >> definitely. the volatility means there's more ups and downs this year. we'll is more sell offs but it should still be an overall goodyear and the reason it will be a goodyear for stocks is because of the buy backs and the volatility increases the opportunity for companies to buy their stock back because they outsource to wall street trading desks who are great at taking advantage of this volatility. >> last week the s&p 500 lost 3.4% volatilities. losing about 5%. are equities heading higher and if so what's the catalyst? >> the whole bull market the last six years has been about financial engineering in the u. suspect and financial engineering is going to intensify this year. you'll see with the volatility

that comes about from markets you'll see more opportunities for the buy backs to grow and while it's going to be very challenging this year with those sell offs i think point to point from the beginning of the year to the end of the year it will be a goodyear for stocks but only the financial engineering going on. >> stick with us. we know we'll continue to talk to you about the markets and the busy week ahead for earnings. that's brian reynolds. chief market strategist. now we have been following all the angles of the china story. head to cnbc.com for different angles. is the era of 7% growth over for china? they're suggesting investors get more familiar with the number six. find out why on our website. plus after chinese markets stabilize following monday's plunge. why analysts say it's not time to bargain hunt just yet. u.s. markets reopen after the weekend. let's get you a run down of what to watch this trading day. check with the monthly survey from the national association of

home builders. the nahb which rates conditions for the sale of new homes now and over the next six months as well as traffic of perspective buyers. the fed governor is speaking this morning. as for earnings look for results from j and j, morgan stanley, delta airlines and ibm and netflix. the top stories at this hour google is close to a $1 billion investment in spacex. the company backed by tesla ceo elon musk. it will help support google's efforts to deliver internet access via satellites. the investment would value the company at more than $10 billion. taking a look at how shares of google are trading, up about .2% in frankford. gaining about 7.5%. but let's stick with tech.

switer is buying indian mobile marketing firm zip dial as it looks to expand in the world's third largest economy. report sas the deal is worth 30 to $40 million. zip dial capitalizes on the local tradition of missed calls. it gives clients phone numbers to use in marketing campaigns. they include ibm and procter & gamble. take a look at twitter. it's been one of the underperformers over the last six months. but now seeing a fractional gain. it's all about the banks but now it's time for some of the pharmaceuticals to be in center focus with earnings. full analysis of the u.s. earnings and what to expect this week. that's coming up next on worldwide exchange.

welcome back. chinese stocks bounce back as fourth quarter gdp comes in just above estimates. the euro takes higher at sentiment hits it's highest level in nearly a year and a fight is brewing on capitol hill as president obama gets set to deliver the state of the union address later today.

s.a.p. cut it's out look saying the push into cloud based technology is eating further into it than expected. the operating profit of between 6.3 billion and 7 billion euros versus previous expectations of 7.7 billion euros. despite this bill mcdermont tells cnbc they're on a steady path. >> i wanted to show them it's still going to grow and the cloud will grow faster and the business model makes it's full transition where you have more routable and predictable revenues after 2017. >> now u.s. investors get back to work with a busy day of earnings on the agenda. they wrap up earnings reporting ahead of the open. after the bell it's all about ibm and netflix.

tomorrow american express, ebay report after the close. thursday thursday,verizon. brian reynolds is still with us. it's been a bumpy start to the earnings season given the mixed message banks were telling us last week but do you think with the focus more on the consumer netflix, mcdonald's, others reporting this week that earnings could pick up? >> definitely. they had a lot of problems at the end of last year because trading slowed down but once you get into the real economy it's still a very slow economy but getting better so overall we think earnings are going to beat expectations. >> what about energy? analysts have been lowering their expectations but are expectations so low that some of

these energy companies could beat expectations? >> that's the one bad spot for earnings is the energy sector. i have been talking about how wall street sub primes technologies. we wrapped them in the same way we wrapped mortgages last cycle. with structured finance deals implode it stays down. i think oil earnings will be very low for a long time to come because most people think that oil is going to come right back up but if you look at the history of structured finance once we're done with the asset, the asset stays low for a long time. >> you were saying in your note that history suggests oil prices are more likely to go to $20 and remain low for over a decade. that's quite the statement there brian. explain. >> well, you look back over 150 years of history, every time oil has gotten above $100 in real terms it's been associated with a mania helped by structured

finance and then after that bubble period pops then it's gone down to 20. so i think it's more likely that we see 20 than 80. most equity investors and energy analysts think it will go right back up but we'll start fracking all over again and drive the price back down. meanwhile almost all the wall street banks are fleeing the commodity business. that's why they had trouble in the last quarter. >> you think lower oil prices are the new normal. where do you think we'll be? where will brent crude be trading at? >> there's going to be balances along the way so it's tough to predict but i doubt it goes back to 80. it's more likely we see 20 before we see 80. in fact i'm more likely to be dead by the time it hits 80 again. in other words probably not for decades and decades to come. we sub primed this whole commodity sector and now that bubble is bursting and people -- when a bubble bursts people are

in denial. they don't recognize that we had a bubble but it was most clearly a bubble because of the way that structured finance was involved with it. >> yeah well despite last week's gains oil is down about 36% in the past 8 weeks so a significant decline in crude and the sell off could potentially continue. that's what you're banking on. brian reynolds chief market strategist, thank you for joining us on this early morning here on worldwide exchange. let's get you updated on tech news. amazon is moving from the small to the big screen. the company plans to begin producing and buying original movies released in theaters. amazon won the golden globe for transparent and signed woody allen to develop a show. look at how amazon shares are trading. up about .2%. although it has been gaining a bit of momentum over the past three months up about 5%. dreamworks animation has reportedly begun a round of lay offs this week. the studio could cut up to 400

people. the cuts come months after dreamworks failed to find a buyer and some high level management changes. shares are trading flat at the moment although up 22% over the past three months. now with central banks stepping up intervention around the world we're ask whether monetary policy makers are doing more harm than good. should markets be left to their own devices? we have been getting your tweets throughout the morning. in theory central banks always have economies in mind and not the markets but it's all ultimately in the same basket. some interesting comments there. if you want to join in on the conversation e-mail us at worldwide at cnbc.com. you can tweet us at cnbcwx. my personal handle is on the bottom of the screen. take a look at u.s. futures and how they're trading. we are looking at gains in premarket trade. the dow jones higher by around

40 points in premarket.

welcome back. european markets are trading in the green after yesterday's session. the big focus will be the ecb

meeting and what mario draghi does unveil. it ticked higher after the business survey came in much stronger than expected. economic sentiment rose to 48.4 in january up from 34.9 in december. the current conditions index also climbed sharply higher. the think tank said in it's release that quantitative easing was already priced into the current level of the euro. an economist from the group also said that the decision by the swiss national bank did not change the outlook for the german economy. now the shanghai composite closing higher after china's gdp growth came in slightly above forecast at 7.4%. this a day after chinese banks drove the market lower resulting in it's worst one day loss in over six years but the dip should be kept into perspective since shy these stocks were among the best performers last year. let's get market reaction. the chinese equity fund manager

at henderson global investors joins us down the line. a pleasure to have you on. would you be more cautious investing in china given the economy just expanded at the lowest space in over two decades. >> morning. the most important thick is investing is not about the rate of gdp growth and investors in china realized that a lot over the last 1, 2, 3, and 5 years. so slower growth shouldn't mean worst outlooks for equities. >> it was the best emerging market in 2014. >> it was. sentiment was very negative. people weren't invested and valuations were cheap. valuations are still pretty cheap. sentiment is perhaps not quite as negative because there's a lot of reform and a bit of policy support so i think they're a descent place to put a small part of your investments. >> are there other emerging

markets that might not be as fully valued? >> we don't really invite them to trade. we invite them to invest and put money aside for the long-term and that kind of perspective means that you want to invest when markets are quite cheap and when there's some policy support. so with those two things together we're quite constructive. >> do you think china is cheap at these levels despite the rally we saw in 2014? >> yes. >> easy enough answer. and what about other emerging markets that you think would be seen as a good investment in 2015? india had a great run last year. a lot of that being on the back of new leadership in place but are there other emerging markets you think might be a good opportunity for your investors? >> i'm really a china specialist but one thing about emerging market is that country returns are extremely variable now and there's not so much correlations between markets so you can need

to be secure and choosey in your country allocations. that's a very important factor. >> we'll leave it there. thank you for your time and for giving us your perspective on china. still to come on the show president obama heads to capitol hill to deliver the state of the union address. but with republicans already balking at some of the key proposals are we gearing up for a long fight in congress? we're going to discuss that next and take a look at futures and how they're trading ahead of the open on wall street. right now green arrows across the screen.

30 minutes to go until we hit 6:00 a.m. in new york. you're watching world wide exchange. here are your headlines. chinese stocks bounce back after 4th quarter gdp slightly tops forecast but four year growth slips below the government's target for the first time since 1998. european markets push higher on hopes that mario draghi will pull the trigger on quantitative easing as german business sentiment hits the highest level in nearly a year. morgan stanley earnings take center stage with investors honing in on fixed income and the banks commodities business.

>> and president obama heads to capitol hill for the state of the union but republicans are already fighting back and a plan for tax reform. we'll discuss the latest with ben white. >> you're watching worldwide exchange. bringing you business news from around the globe. >> and if you're just tuning in thank you for joining us. take a look at u.s. futures right now. they're higher across the board. yesterday was a holiday in the u.s. dow jones indicating it up by by 3.5 points. halting five days of consecutive losses but did fall short for the week. financials closed down for the 3rd consecutive week.

they lost about 6% during that time. the big story has been asia given the lackluster data out of china. beating estimates but coming in at 7.4% over the year. taking a look at how asian stocks have been trading, shanghai composites seeing a gain of around 1.85%. and the hang sangeng seeing a gain. gdp 7.3% growth year over year. slightly above expeck asians. but full year missed the government's official target since 1998. markets have been higher across the board. the europe stock 600 index has been trading at a multiyear high. an 11 month high beating expectations so positive data ahead of the ecb meeting on

thursday. taking a look at the currency space, the euro did tick higher immediately after the german business survey came in much stronger than expected. economic sentiment rose to 48.4 in january up from 34.9 in december. the think tank said in it's release that ecb quantitative easing was already priced into the current level of the euro. an economist from the group also said -- this is what makes it interesting, that is swiss national bank decision did not change the outlook for the german economy. now, politics will be a focus -- in focus today. president obama will deliver his 6th state of the union address tonight at 9:00 p.m. eastern. he is expected to call on the republican controlled congress to raise taxes on wealthy americans and use that money on tax breaks for the middle class. now republican lawmakers are giving the president's proposals a cool reception so far. president obama's speech comes as a new nbc wall street journal

poll shows that americans are in a better mood. about 45% say they're satisfied with the u.s. economy amid strong hiring and gdp growth. nearly half approve of the president's handling of the economy while his overall approval rating has risen to 46%. still more people disapprove than approve of his performance and congress's approval rating is just at 16%. to talk more with us about what to expect tonight from president obama is ben white. chief economic correspondent. pleasure to have you on. we already know broadly what president obama may touch on given that he has been speaking to the public ahead of his address tonight. what do you think the main priority will be? health care? immigration? tax on the wealthy? >> his main priority is to associate himself with the recovering american economy. you see in the poll numbers you talked about that his rating is

on the rise. the washington post had it at 50% so. he wants to let people know that it's his policies in his view that have lead to the job creation. the increased economic growth but then he also wants to talk about what he plans to do to deal with economic inequality in the u.s. the fact that median incomes have been stagnant so he'll talk about those tax increases on capitol gains on inheritances, on people that have massive amounts of money in the iras to boost middle class income through tax cuts for families. a lot of that stuff isn't going to become law but those are the themes he wants to talk about. >> what about imposing a big fee on financial firms and the big banks. that's keeping wall street up at night. do you think president obama will address that tonight? >> he will. he'll talk about the bank tax on the 100 largest financial institutions that is intended to hit at leverage in the banks and make it less attractive for them

to borrow a lot of money. that proposal or version of it was in a bipartisan tax proposal that came out of the last congress that didn't go anywhere so it's had republican support over the years but much more broadly the republican party opposes that as most tax increases. banks don't need to boar ri about that becoming law but what they do have to worry about is the general rhetoric moving more antibank, antiwall street propopulous and some of that is in the republican party too. they'll have to come up with a new set of proposals to deal with economic inequality so wall street has some things to worry about but not the bank tax. that's not going to happen. >> one of the initiatives the president has unveiled ahead of tonights a speech is free community college. sounds like a great program. education at the end of the day is power. but how is the government going to pay for this? there's still a lot of questions around that. >> there are a lot of questions

around that and some of that cost of that two year basically free tuition for two years of community college for people that qualify have to maintain a certain grade point average and apply yourself to get the government support but it would come from increased taxes on capital gains and banks and other areas. republicans might like the general idea of promoting education but they don't like raising taxes to pay for it but this is a very popular proposal with people because one of the problems in the u. s. is the skills gap. we don't have enough educated workers to take advantage of the job openings that exist and community college is a popular way to deal with that. how do republicans argue we shouldn't fund this? it will be hard for them to do that. they'll have to dom up with an alternative proposal that doesn't cost as much money or require tax increases. all of this is rhetorical positions by the white house to say we have a set of ideas to get to the economic problems in the united states on inequality

and stagnant incomes and a lack of skills and republicans what's your plan? what are you going to do? that's what we'll see the president do is layout that vision for the economy of the united states in the next few years. >> speaking of the republicans, we're still focussing a lot on the 2016 presidential race. what do you think is the likelyhood of mitt romney running? and do you think he has a chance of winning. the first of those questions it looks like he wants to run. it made it clear to supporters that he was looking very seriously at a run. as you've seen over the last few days as the party has reacted to romney suggesting he might run. it's not been a positive reaction in the party leadership. a lot of people associated with his last campaign said we love mitt and we think he would be a great president but we think his time as a candidate has passed. so i'm not sure that he'll make the call to go.

the problem is he sees polls in early states showing him leading. i don't think the polls mean anything this early. they just reflect that people know who he is. at the end of the day romney probably decides he doesn't have a path to the white house and doesn't run and jeb bush is more likely to be the establishment candidate in the republican party. there's going to be a lot of candidates running for the republican nomination and that will all shake out after the first few caucas and primaries. we'll be left with three or four for the long haul. my guess is romney says i had my shot twice. i'm not going to go a third time. >> we'll see if you're right. thank you for your time. tonight is the state of the union address. now the fed is still on track to raise short-term rates later this year even as longer term rates are fall ago mid worries about global growth oil prices and lower consumer price inflation. the fed is likely to repeat. they can, quote, be patient about rate hikes at their

meeting next week. fed fund futures are pricing in more than a 50% chance of a rate hike in october. with central banks stepping up intervention around the world we're asking whether monetary policy makers are doing more harm than good. should markets be left to their own advices. you can e-mail us at worldwide at cnbc.com tweet us at cnbcwx and my handle is on the bottom of the screen. i want to get you headlines. the finance minister of germany is saying they must accept the ecb's action and we're look agent the euro trade slightly higher against the u.s. dollar. we have seen the reverse of the trade over the last couple of weeks. the euro is down about 16% thanks to ecb president mario draghi but the question is what will he deliver on thursday at that meeting? and expecting some type of bond

buying program to be unveiled. now a look at other stop stories at this hour. google reportedly close to a $1.1 billion investment in spacex. the company backed by tesla ceo elon musk. it will help support google's efforts to deliver internet access via satellites. it's unclear how much of a stake google could get in spacex but the investment would value the company at more than $10 billion. taking a look at how shares of google are trading, trading flat but up about 7.4% over the last three months. twitter buying zip dial as it looks to expand it's presence in the world's third largest economy. reports say the deal is worth 30 to $40 million. zip dial capitalizes on the so-called local tradition of missed calls. the company gives clients phone numbers to use in marketing campaigns. clients include ibm, and procter

& gamble. an interesting deal there. acquisition from twitter. twitter shares just up fractionally but keep in mind it's been one of the underperformers in the tech index in 2014 and over the past three months as well. coming up, jump in the pool. the water is fine. a group of big money managers get set to to launch their own private trading venue or dark pool. details on that coming up next.

some of the world's biggest institutional investors are getting set to jump into the deep end of the dark pool launching their own separate trading revenue. landon joins us live from cnbc headquaters. >> good morning to you. a group of nine big money managers are close to launching their own private trading venue of dark pool. it's the first by side to by side venue and is re-signed for the largest stock trades. it's set to be formed by a group that includes blackrock and jp morgan and state street and bank of new york melon. they'll each own about 5%. the move is unusual for these firms because they're rivals and use similar trading venuing but

they're trying to cut costs and weed out traders criticized for having an unfair advantage. the companies also had trouble making large stock trades in other pools. the venue will require all trades have a minimum share amount. u.s. regulators are investigating whether they are firms. and u.s. attorney general sued barclays for leading clients in it's dark pool and they paid over 800,000 pricing violations. details are still being worked out but the venue could launch in the second half of this year. back over to you. >> landon thank you for that story. have a great morning. some of the other top stories today. amazon moving from the small to the big screen. the company plans to begin producing an buying original movies. that rb released in theaters.

once films hit theaters they'll debut on amazon prime a month or two later. amazon just won the golden globe for its tv series transparent and signed woody allen to develop a show. a mystery buyer is paying more than $100 million for a duplex on the top two floors of this building overlooking new york's central park. the new york post says the buyer shelled out about $100 million for the residents on west 57th street. the most ever paid for a man hat tan apartment. look at that. the billion on the so-called billionaire's row boost walls of glass that frame the park. half the buyers are from outside the u.s. other top stories, chinese stocks bouncing back as fourth quarter gdp comes in above forecast. german business sentiment hit the higher level in nearly a year. qe is already priced in. and a fight over tax reform is

brewing on capitol hill as president ball balmobama gets set to deliver his state of the union address later tonight.

welcome back. european markets pick up a little bit of steam here. why do we care about the number? it's seen as a leading indicator for the german economy. it's a survey compiling 350 financial experts. their view on germany's economy coming in higher than the street was expecting. the xetra dax up 14 points. the cac 40 with a gain of around .9%. interesting to see another day of gains for the swiss equity

index. the smi up about 50 points in today's trade after significant moves to the down side in last week's trade after the snb made that unexpected policy reversal scrapping that national peg of 120. they're ticking higher after the survey came in much stronger than expected. economic sentiment rose up from 34.9 in december. the think tank said in it's release that ecb quantitative easing was already priced into the current level of the euro. an economist from the group also said that the swiss national bank decision did not change the outlook for the german economy. so gain across the board for european equities. euro holding on to 1.16 against the u.s. dollar. after a tough week for u.s. stocks we're looking at futures across the board.

keep in mind the best performing sector. the s&p energy index losing about 5%. right now the dow jones industrial indicating a higher move by around 45 points. the nasdaq up 21 points. but that's just premarket trade. u.s. markets reopening after the long weekend. let's get you a run down on what to watch this trading day. the latest check on the u.s. housing market from the monthly survey from the national association of home builders which rates conditions on the sale of new homes now and over the next six months as well as traffic of perspective buyers. the fed governor is speaking this morning. as for earnings look for results before the opening bell from johnson & johnson, morgan stanley, delta and m & t bank and later ibm and netflix.

fixed income performance and asset management fees when morgan stanley reports results ahead of the open. joining me for more on what to expect, is the director of banking and equities strategy. a mixed message when you look at the financials that already reported over the past week. what are you expecting from morgan stanley this morning? >> we actually think that morgan stanley can follow suit with goldman and beat estimates out in the marketplace. so we look at the earnings that we have seen so far as we enter the second week not nearly as dismal as what we have seen talked about or bantered around in the media with you know operating earnings being pretty much in line with what we expected coming into the quarter here. >> now you would expect given the rise in volatility that would mean an up tick in trading revenue. do you think that would be seen in morgan stanley's results

today? >> not today. we've seen fixed income pull back across the board of 30 to 40%. so, you know whatever we're seeing today wasn't really reflected back in the 4th quarter. we would expect to see a pick up in the first quarter which is seasonally a strong fixed income quarter for the money center banks. so what we see in the fourth quarter will pass shortly and we'll start to see a resurgence of fixed income here in the 1st quarter results we won't see until april. >> let's take a step back at look and financials. the sector closed down for the 3rd consecutive week. they lost about 6% during that time. worst percentage loss since june of 2012. what's the reason we're seeing such a sell off in the financial space and at what point does this sector look attractive in terms of valuation? >> right now when we're looking at the large cap banks coming into the year what we're looking at in the dynamics is to get a significant upside move from where we were going into 2015.

we were going to need rates to move higher. what we have seen is a flattening of the yield curve which does take some earnings out. we would estimate about 3% of your earnings are at risk if rates stayed where we were today through the rest of the year but if we could get a fed rise in the back half of the year then all of a sudden you see real potential for revenue growth. especially with some of the banking origination in the first quarter. >> we have been seeing big moves in the bond market. u.s. based stock funds saw $4.1 billion in outflows over the last week. in contrast bond funds added about $4.3 billion in that crash. do you think bond trading volumes, that could provide a lift to morgan stanley's earnings? >> like i said as we move into the first quarter we could definitely see a change of the tide that we ended on 2014 and going into this new year. so fixed income could start to see some pick up like i said seasonally it's a positive first

quarter for most of the money center banks so i think we have seen a trough here. we'll start to build forward. >> we'll leave it there. director of bank and equity strategy. morgan stanley earnings due before the bell. thanks for your time. a reminder cnbc will be kicking off it's coverage live from the world economic forum this afternoon at 1700 cet. tune in for interviews with the chairman and tomorrow worldwide exchange will be live from davos throughout the show. we kick off the show with ceo and ceo of hinkle. thank you for joining us here on worldwide exchange. next up is squawk box. have a fantastic day.

the president ready to unveil plans for new taxes and new tax cuts. we'll tell you what to expect. china's challenges. stocks trying to rebound from the big drop. it's not all about the big screen. amazon planning to bring a dozen titles a year right to you. it's tuesday, january 20th national disc jockey day and squawk box begins to spin right now. >> live from new york where business never sleeps, this is squawk box.

good morning and welcome to squawk box here on cnbc. we are sitting in for becky, joe and andrew who are all on their way to davos, switzerland for the world economic forum. becky will join us live later on this morning but first the day's top stories. earnings season ready to kick into high gear. among the names set to post quarterly results before the open johnson & johnson, morgan stanley and delta airlines and after the bell we'll hear from ibm and netflix. meanwhile they're siting sluggish numbers out of the eu japan and the so-called bricks. today's report argues persistent weakness will outweigh the benefit from lower oil prices. the big bright spot stronger than expected expansion here in the u.s. that's something the