welcome to the show. you're watching street signs. i'm carolyn roth. >> these are your headlines. >> north carolina claims it successfully detonated a hydrogen bomb for the first time ever causing a 5.2 magnitude earthquake. >> we will not give up a nuclear program as long as the united states maintains it's stance of aggression. >> and that nuclear test spooking investors with european equities in the red but the shanghai composite ends higher

after beijing will extend the ban on stockholders. >> the chips are down for apple suppliers following reports it will slash iphone production by a 3rd. >> and saudi arabia's foreign minister tells cnbc that iran has got anway with murder. calls on vladimir putin to weald his influence over syria. >> russia is a great power. russia has muslims. russia can play a positive role. >> good morning, everyone. let's get straight today at a. december services number came in at 54.2. this is versus expectations of 54.9. so easily beating those. the november number was 54.2. so really no change this. if we take a look at the composite number for december we

saw a print of 54.3 and this is also higher than the forecast. so by and large, beating slightly when it comes to the services print but in line with expectations when it comes to the composite number. we also saw the german numbers set for strong growth in early 2016. it seems the german private sector expanded at the fastest pace in nearly 1.5 years in the month of december. quick look at how the euro dollar responds to this. down by 0.2% on the day. after we saw that big slide in yesterday's trading session. in part because the inflation numbers came in softer than forecast. so we're well back below the 108 level. >> well, that will do very little to lift investor sentiment in europe. still off 0.7%. just off of session lows early on in the trading day here and keep in mind a lot of investors were hoping to see more of a

relief rally yesterday after the sharp drop we saw getting into the new year but that was not the case with wall street closing up with modest gains overnight. you can see here a lot of the trends we saw on the first trading day of the year with basic resources firmly back in the red. luxury stocks taking a hit after disappointing data we'll get to in a few minutes. >> north carolina sparked international condemnation with an announcement claiming it tested a successful hydrogen bomb. they say it was a measure for self-defense and described the u.s. as a gang of cruel robbers working hard to bring nuclear disaster to north korea. detection devices picked up seismic activity alleged to be an artificial earthquake caused by the test. quick look at how the korean currency is today at 1199. we're lower to the tune of 0.8%

close to a three month low but there is some central bank intervention around the 1,201 level. >> neighboring south carolina strongly criticized the actions saying the country will pay the price for its nuclear test. speaking before an emergency security council they called the test a serious provocation toward our security adding that it is a threat on our people's survival and future and presents a direct challenge against global peace and safety. >> meantime, i want to bring you the latest from the japanese chief government spokesman that says they're considering proposing to the u.s. various economic and other sanctions against north carolina in cooperation with the u.s. and japan is now considering further sanctions as we just said against north carolina in response to the test with prime minister abe saying the country's actions posed a threat to national security. >> north carolina's nuclear test this time is a major threat to our nation's safety.

this absolutely could not be tolerated and we strongly condemn this act. it is a clear violation of the united nations security council resolution and a grave defiance of international nuclear and non-proliferation moves. >> reports of a hydrogen bomb test run counter to the global goal of the nuclearization branding the action undesirable and unwise. >> the white house released an initial response saying it could take days to verify the test but it deplores any violation of un security council resolutions and said it will respond appropriately to any north korean actions. i guess the question is what sort of sanctions will be coming from beijing? because further u.n. sanctions, yes, they would be warranted but the sanction against north carolina they're already so heavy and the country is already suffering so much. but i think the bigger test and the bigger signal would have to come from beijing which is very much it's closest ally at this

point. >> we're getting strong comments from beijing of course. strongly coming out in opposition from the move. there's still a lot awaiting the results. confirmation of what the test is. it is a hydrogen bomb but some experts coming out against it given the test results. they say are more similar to previous tests around an atomic weapon. but overall we've seen a lot of comments today. some of which saying this does not present an immediate up tick in the actual risk threat here but still they want to be seen here and also noting going into the election in the united states too. they want to be noticed as well i think. >> you picked up on those comments, they said rather it's another step toward an escalated security threat in the medium term so even if this was a hydrogen bomb and his view was a little too seguin this does not

have a immediate threat. >> all week geopolitical tensions around the middle east and the war of words continues. iran's president has criticized saudi arabia claiming it cannot cover up it's, quote, crime of executing the cleric but cutting ties with his country. but in an interview saudi arabia's foreign minister hit back at iran saying it had got away with murder. let's get out to hadley that joins us live. you have been speaking to the foreign minister himself. take us through the key takeaways from the interview. >> good morning. so what the saudi foreign minister has been telling me is that this current crisis is the latest in a long line of transgressions by teheran and they really need to just back off and stay out of saudi's affairs. of course i also asked him about this offer from the russians to immediate between the two countries. he says that russia does have a role to play and i did ask him

as well about oil output. given the fact that both countries are hurt very much by the price of oil, is there any chance we could see a cut in output? take a listen. >> every country has a role to play as long as it's a positive role. with regards to russia, russia can play a very important role by putting pressure on bashar al assad to step down and allow for transition in syria and we have made this very clear to them. >> there's been a noticeable shift in terms of outreach from the saudi government and the russian governmented in terms of investments in russia. this say run hurt by sanctions for a coup of years now and also hurt by the lower oil prices as is saudi arabia. is there an opportunity there to come to agreement on oil out put do you think? >> well, oil is a commodity that's controlled by the markets and by supply and demand. with regards to our relationship

with russia, we believe that the extent of trade we have with russia is not in line with the size of our respective economies. we're both members of the g-20 but we have very little trade and very little investment. we wanted to change that. russia is a great power. russia has 20 million muslims living in it. russia can play a positive role and we wanted to engage with russia and improve our relationship with russia. not at the expense of our relationship with any other country but for the sake of having better tie with russia. so we began the process of reaching out and began the process of encouraging trade and exchanges and encouraging investment and we will continue to do that and on the areas where we may have disagreements we will agree that we will talk about them and try to resolve them and if there are areas that cannot be resolved we'll just wait until the time comes to be

able to resolve those. >> so continuing to invest in russia is important for saudi arabia. >> if we find investments that are profitable, yes. if we find investments that are good for saudi people and the saudi treasury, yes. but we invest the way any serious investor does. you look at cost and you look at returns. >> now i continued to push the foreign minister on oil prices. you have to remember of course that within the last few days saudi arabia announced a budget for the 2016 year and that's announcing subsidy cuts for the first time in the kingdom's history. many calling it an austerity budget. the foreign minister did push back on that one but i asked him at a time when oil prices are what they are can the kingdom continue to have this expansionary foreign policy?

>> with regards to foreign policy and security policy it's not a luxury. it's not like a hobby that you pursue and you decide at one point this is too expensive. i shouldn't do it. it's a necessity. we have to work to put our region in order and we have to do what we need to do to protect our citizens and our country. there can be no price tag attached. >> so the world shouldn't be worried about saudi arabia? >> absolutely not. saudi arabia has been around for 300 years and this is the third saudi state. the foundations are the same. the leadership is the same. saudi arabia is a country that is inclusive. we are not -- >> many would dispute that. >> inclusive in our own way. we discuss. consultations go on. we have very strong bonds between the country and the

people and the leadership. it's not an erratic country. we have clear sense of direction and we pursue that. our policies have been consistent for the past 70 year. you don't see them going from the western world to the soviet world back to the western world. we don't have u-turns. it's always very consistent. sometimes people think we're moving too slowly and then sometimes the same people think we're moving too quickly so i assume that if people say both things about you that you're probably doing it at the right pace. >> the saudi foreign minister there telling me that he is pretty much positive on his outlook for the kingdom and you have to remember in the coming weeks the kingdom is going to be announcing new economic news, the economic vision, in fact, for saudi arabia. so interesting things to be watching guys in the next couple

of weeks. >> meantime, we want to see how this filters into the oil markets. the saudi-iran impact on oil markets is short-term and the bigger issue real sli the oversupply that is the bigger issue longer term. the iranian opec official saying the oversupply is still the biggest threat and countries that raised oil production when sanctions on iran were imposed should cut output to stabilize the markets. quick look at the brent crude price. off by 2.22%. back at 11 year lows. 35.62. another big slide for wti down by 1.5%. this as u.s. crude inventories data actually surprised oil investors falling by 5.6 million barrels last week. the figure defied analyst expectations of a 440,000 barrel

increase. >> well, carolyn, once again we're seeing equities move in tandem with the oil price to the down side and no surprise here, basic resources off once again about 2%. this despite some what of a modest up tick but we're back in the red also coming out of data from china. autos off 1.5%. we did see volkswagen drop nearly 4% on news of the civil suit in the united states but today the vw brand chief giving confidence that they're moving closer to a recall fix in the united states. let's take a look at the markets here one by one. as you can see all major markets in the red. the ftse 100 off by 0.8%. a similar story and the french cac 40 off about 0.8% as well with the ftse mib. this despite strong data on the european pmi figures. focus continuing to be on china. falling to a record low down more than 1% against the dollar in london trade. this comes after the pboc

lowered the chinese currency fix to the lowest level since april of 2011 but the shanghai composite closed more than 2% higher today following state media reports that the ban on share selling which was due on friday will remain in place temporarily. this despite the latest pmi showing the sector growing at the slowest pace in 17 months. let's get out to sri who is in singapore. great to see you. we are seeing some what of a relief here after the comments and the reports that the share selling ban could be removed here yet really disappointing data. so what's the take away. >> that's right. i think there's a number of variables and a number of moving parts here but broadly underlying sentiment does remain fragile. risk aversion broadly was the name of the game today and the perception was heightened because of the china factors. the pmi number on the services side. yes we saw growth. yes it was above the boom bust

line of 50. twitz slowest pace in 17 months. that raised concern that the malaise is spreading to other parts of the economy. namely the service providers and then the currency increasing as a lenses to which to view the chinese economy and when you look at the depreciation pressure on the currencies you to make this link to the worsening macro as well on the economic side of china. that's another big takeaway that causes capital outflows as well and then you have the geopolitics of the region once more on the agenda because of the heightened uncertainties in the korean peninsula. there is a sense, mind you, that the market did take this in their stride. you saw the classic dash into the relative safe harbor of the japanese yen. treasuries, u.s. treasuries have been higher as well but there is a sense that the dpr is

exaggerating it's claim that it has capability. underlying sentiment fragile. it will be interesting to see if the narrative does switch away from china back to the u.s. and the stronger dollar story with the fomc minutes. that had been very interesting. the market will be scrutinizing them for any hawkish tilt. that's where we stand. back to you. >> thank you. joining us is richard kelly head of global strategy at tdc securities. what's behind the greater tolerance to let the offshore depreciate. >> it's part of the package and they wanted to try to use it last summer. that didn't go well because of communication issues and this is their second attempt and they tried to layer in in december. they tried to move the focus of the market away from a strictly dollar focus to a benchmark to a basket. so overall you'll see it

stronger but there's plenty of scope for it to weaken against the dollar. >> but is that really a good strategy to support the economy? it also raises the cost of servicing offshore debt. it makes the yuan less aattractive for the international trade currency and makes overseas investment more expensive for chinese firms. does it really pay off? >> there's not a clear benefit. there's risks going both ways. this is why they want to keep it gradual. they had a structural addiction to the dollar. we had u.s. dollar strength last year and that was not appropriate for the chinese economy so they're trying to break that structural problem and that's what is going on here. >> among the china bulls and there's still plenty of them out there. they say don't worry about the manufacturing at a at a. it's all about the service sector. this rebalancing of the economy here but here we go with services pmi disappointing. still fwrgrowing but the growth slowing. should that be a real fear

factor here? >> services is always the less volatile component but it's going to decelerate. the reason you want to focus on manufacturing sits the more dynamic sector so when something goes wrong it goes wrong first there and when things are going right it turn first there. >> and this data from the private sector report is significantly lower than the official reading. where do you see the actual rate of growth in china going? >> you're much more likely to be closer to 6 flat as opposed to something at 697%. you're going to be lower. but it looks like we have firmed up a bit at least for the first quarter for chinese growth. >> let's talk about some of your favorite trades and those are actually to be found in the emerging market space which is really interesting. you actually like the brazilian but not turkish lira. both economies are suffering from political and economic concerns. >> you're look for -- there's

tremendous amount of value but is there enough value given the risk going on here. when you look at brazil, they have gone through a very dramatic long recession and i think you have seen the bulk of that and you'll start to see that turn around. we have seen the printable amount of the political distress that's come in there and when you look to somewhere like turkey that's someone that probably hasn't passed in enough of the economic problems that hasn't come in. certainly hasn't crushed in the region mall geopolitical issues and inflation is probably going to be pushed higher if we get any support on oil and the central bank is probably set up to lean the other way and start to ease into rising inflation. >> you're going to stick around for a little bit longer. meantime, nancy, what's coming up on the show. >> from a summer sell off to winter woes we learn lessons from china's market slump last july to see if 2016 will bring another rough ride and also coming up, step aside,

presidential hopeful bernie sanders says greed is not good. stay tuned for the major changes to investment banking that he's plotting if he gets the oval office. >> and also it's that time of year to work off the extra holiday weight and fit bit has released the new fitness tracker to help you with your efforts. so why are investors not feeling the love? we'll tell you more. coming up. on the floor! everybody down! nobody move! on the floor! hey, do something! oh, i'm not a security guard. i'm a security monitor. i only notify people if there's a robbery. there's a robbery! why monitor a problem if you don't fix it? that's why lifelock does more than free credit monitoring to protect you from identity theft. we not only use proprietary technology to detect and alert you to a range of identity threats, if you have a problem, we have a u.s. based team of specialists who'll work to fix it. we'll even spend up to a million dollars on lawyers

and experts to set things right. considering how often you use public wi-fi, shop online, and give out your social security number, it's no wonder that one in four people have experienced identity theft. it's not too late to join. lifelock memberships start at $9.99 a month. join now and get lifelock risk-free for 60 days, using promo code "bank". protection begins immediately. call 1800 lifelock

welcome back to the show. you're watching street signs. we also want to get you the latest on the conflict between south carolina and north carolina. according to a south korean spy agency. north korea may have tested the a-bomb and meaning not the h-bomb. so there's still a lot of confusion as to what this bomb actually consisted of whether it

was the h-bomb or not. now let's shift focus. the stocks of european apple suppliers are under quite a bit of pressure today. this after the nikkei and other newspapers reported the tech giant will cut production of its iphone 6 in the january to march quarter. apple will reportedly slash manufacturing of the flag ship hand set by only a third due to rising inventories and lower than expected emerging market shares and apple shares did shed 2.5% in yesterday's trade. i want to show you what the european suppliers are doing this morning. we're seeing big declines. already in big trouble hitting a one year low in december after it cut it's revenue guidance on weaker than expected demand for chips used in smartphones. there you go. off by 4.4%. arm off by 2.9%. this stock for the worst day in about three months and also shedding 1.65%. i mean, overall, nancy, it's a

surprise because we knew that there were saturations in the smartphone space. we knew that apple can't really beat it's own success that it saw back in 2014 when it launched the iphone 6 so it's going to be very difficult for them to actually beat those very heightened expectations as the base effects come in. >> absolutely and maybe not a huge surprise because as you mentioned we also have problems with the s line as well. people not as enthusiastic. perhaps they're waiting for the apple 7 to come out but over at fbr markets they said it's actual through quantity when we're talking about a 30% decline in production. that was the real surprise here. so everyone knew it would dip a little bit but the 30% could explain how we're seeing the move in the stocks but apple itself has not actually commented on this report. meanwhile, credit suisse updated price targets on some consumer goods and tobacco stocks. what we're seeing is this is a clear currency play. in some ways they're revising

their eps forecast but just modestly and in the real takeaways here they're citing relative weakness in sterling when you talk about it compared to the euro and dollar of course. that could benefit the ftse 100 companies. we're looking at imperil tobacco. that's an upgrade from 3800 and the out perform rating there has been held. a similar story listed in the u.k. as well. just ticking up that price target to 6500 with an outperform rating. conversely when you look at the european firms they're saying that companies that report in the euro could see a bit of a head wind when we start talking about the earnings season. listed at an underperform with the price target there at 58 compared to 59 euros. so not a dramatic change there. but they see that as an underperform as well. so drawing a line under the fact of how significant the currency volatility could be in earnings season. >> another interesting story that we're keeping our eyes on. lewis is maintaining it's full

year 2016 profit guidance of between 270 and 320 million pounds. that's a decrease on the previous year. meanwhile, britain's biggest department store chain reported total holiday sales growth of 4.1% in the six weeks to the 2nd of january and that comes off the back of terrible numbers over at next. so seems like once again lewis is defying all the odds. they always seem to be doing better. even in a very tough environment and despite the bad weather that everyone seems to be blaming. >> a reminder that despite everyone wanting to blame the weather there are some bright spots i suppose. still to come on the show, it's all about electric. why sprvolkswagen is looking to pick itself up from rock bottom by steering toward none other than the electric car. we'll be back after this short break.

hi watson. annabelle, your birthday is tomorrow. i'm turning seven. what did you ask for? a princess. and a pony. you like things that begin with p. i like pink frosting too. will you have a cake? yeah. i was too sick to have one last year. the data your doctor shared shows you are healthy. are you a doctor? no. i help doctors identify cancer treatments. i want to be a doctor someday. i can help with that too. watson, i like you.

welcome to street signs.

>> these are your headlines. >> world leaders promise a tough response after north korea claims it successfully detonated a hydrogen bomb for the first time ever. >> we will not give up a nuclear program as long as the united states maintains it's stance of aggression. >> beijing will extend the stock selling ban on major shareholders. >> and the chips are down for apple suppliers following reports the company could slash iphone production by a third. arm on track for the worst day in three months. >> meantime, saudi arabia's foreign minister tells cnbc iran has got anway with murder for years and called on vladimir putin to weald his influence over bashar al assad. >> russia is a great power. russia has 20 million muslims

living in it. russia can play a positive role. >> welcome back to street signs. let's give you some breaking data we're getting out of the u.k. that's on services pmi for the month of december coming in at 55.5. that compares to 55.9 in november so just down slightly on the previous month. also just shy of a reuters forecast calling for 55.6 but roughly in line when you look at other forecasts from around the morning. now they were 54.6. that's slightly higher than 54.2 in november and also taking a look at the composite pmi at 55.5 versus 55.7. that's roughly in line with forecasts. sterling off slightly by 0.3%. >> that was actually before the flooding. so the account of the flooding over christmas has not been taken into full account and still shows you there's cracks in the economy because we saw the downgrade for third quarter

gdp. this is pointing to fourth quarter gdp of 0.5% again and flat lining on the quarter and we had very mixed numbers so far this year. the manufacturing pmis are weak and construction is better. it's tough to see the general trend but overall you would think it's weakening some what. >> a bit of a shift because construction was one of the weaker points. so different trends going on but here the growth in the services slower than many had expected. moving on let's take a look at how the overall markets are trading. we did see the broader index moving higher in yesterday's trade. slightly by about 0.2% and the u.s. dollar slipping against the yen. we had seen a lot of buying into the yen at the start of the week and the aussie dollar off about 1% and taking it's queue once again in commodities. >> let's check in on u.s. futures. grim at this point. s&p 500 down by 17 points.

dow jones said to fall by 150. almost seen off triple digits on all of the geopolitical risk. the bad data coming out of china and the nasdaq seen off by 42 points. the dow and the s&p closing higher but the nasdaq was off. lot of data today. fomc minutes and services pmi. in europe we're not hookilookinh brighter. plenty of reds across the screen. off by 0.9%. the xetra dax off by a similar percentage. many of the tech plays are suffering from the apple effect on reports of apple cutting orders for smartphones. now the latest on north korea. according to ap south korean spy agency has told lawmakers that north korea may have tested the a-bomb and not the h-bomb, not

the hydrogen bomb so there's plenty of confusion as to what actually went on in north korea. now to give you a little bit of recap, north korea sparked international condemnation with an announcement saying it has successfully tested that h-bomb. in a statement they said the nuclear test was a measure for self-defense and described the u.s. as quote a gang of cruel robbers working hard to bring nuclear disaster to north korea. detection devices around the world picked up seismic activity along the country's northeast coast. alleged to be an artificial earthquake caused by the test. quick check also on the korean currency. sliding against the u.s. dollar today. we're off by 0.7% but it seems as though there is some intervention coming from the central bank over in seoul around the 1,200 level but overall the korean yuan at the

lowest level against the u.s. dollar. >> the fed is releasing it's minutes from the meeting in december when the central bank hiked rates for the first time in nine years. investors will be on the look out for any hint in rate increases. and steve will be sitting down for an exclusive interview with federal reserve vice chairman stanley fisher live from washington in 14:30 cet. >> still with us is richard. do you think that a march hike by the fed is a done deal? at least for the fed? it doesn't seem like the market fully priced that in, has it? >> i don't think it's a done deal but it's much more likely. this is a fed that has a conviction that growth and inflation are going. that 25 basis point hike every quarter is a marginal impact on the economy and that's still the base case or should be. >> but then manufacturing slid again. should the fed not be more

worried about the weak patches in the economy. >> you're seeing externally lead weakness really driving the manufacturing side. it looks like you're getting softer trends within u.s. gdp at 1 or 1.5% that would be a below trend but overall it's an economy growing around 2 or 2.5%. the service sector as you talked about before on china is still holding resiliently and slow steady wage growth getting in here. >> slow and steady may be the thing there on growth but what about this inflation problem. we still have oil prices well below where many would have have expected and now when we talk about china and the yuan depreciation they're exporting deflation. what does this mean when we talk about the rate hike targeted on inflation inflation metrics? >> inflation is much more likely to disappoint to the down side. we're still in a low inflationary environment.

if we get halfway through the year and we have low inflation, strong growth, the growth is what you'll want to see but for a central bank for the fed especially they don't care where inflation is 12 months from now. they know they're targeting things two years in the future. when you look at how resilient the growth profile is that gives them the conviction that lit get there. >> we heard there will be no mechanic path going forward. a lot of people trying to get a better clue of what it means but do you think the fomc is leaving the door open for global downturn? >> they want to leave that open. they don't want to set out to commit where every meeting we're going to hike and when something goes wrong it sends a bad signal. they want to heave that open and have that but we already had williams out earlier this week talking about 3 to 5 over the course of the year is reasonable and he's fairly dovish within the committee so that should be your base case especially seeing the more hawkish ting the fed has taken this year.

>> finally, buy or sell the dollar? >> you start to selectively sell the dollar. it's not a unilateral currency. >> thank you for that. richard kelly head of global strategy at t.d. securities. >> as you know it's been a rough start to 2016 for china and some say it's reminiscent of the summer sell off when the authorities weakened the yuan and cut rates to revive investor confidence. they also put in place a six month ban to avert a heavy slump and this week that ban was due to expire. it was triggering a circuit breaker that halted trading in major markets and the central bank has since intervened to prop up markets. just this morning, beijing decided to extend the share-sell ban sending it up 2.3% in today's session. let's get out to frederick new man. co-head of economic research. thank you for joining us this morning. flour have you on the program. when we look at the reaction

today a lot of optimism presumably more taking a note from regulators potentially halting this share selling ban but when you look at the data, how concern redirect examination you about the slow down in services pmi? >> well, that's right. we had another discouraging data number today and that's the service pmi signals another slow down. it was part of the economy holding up reasonably well but there's no sign of that cooling as well. so from a data flow perspective, not terribly encouraging but the market reacted more today to announcement that share sales will further be suspended at least reducing the risk of excess supply coming on to the market. >> this announcement in the fact is really just another crutch we're seeing from the government. presumably we could see the volatility return. we talk about the monetary side. what more can the pboc do for instance? do you expect we'll see

additional cuts from the interest rates? >> well, more interest rate cuts and also rrr cuts will likely come this year. but pboc also fine tunes the market and almost a weekly basis. so early this week we saw them inject quite a bit of liquidity into money markets. just to calm any tightness, potential tightness and calm nerves as well and we do think that more of these ad hoc measures will be coming with the pboc always ready to inject liquidity. just to make sure that money markets remain stable and short of interest rates to relieve debt servicing costs. >> but frederick the problem is that so many of the measures that the pboc has taken not just over the last couple of days but the last months or so seem to be incredibly heavy handed. that's what it was criticized for over the last year or so. when do you think they'll finally let go of that approach

and let market reforms take over? >> we have seen a tremendous rally in chinese stocks and the chinese authorities were worried about broader repercussions of this. not just financial but broader economic but it's about letting the air out of this balloon that was created in late 2014 and 2015. very gradually. so whenever it has expect the chinese to come back in. the last thing china needs at this stage with the economy so fragile is another financial uncertainty. so that approach might continue. but investors should really be looking for is any signs that the structural reforms are going to start. we hear time and again that they want to accelerate structural reforms and that's what ultimately matters for the economy. we need to see more of that. >> hsbc is saying that one of the key risks for the global

economy this year as we can see on the screen is the china currency move. we saw another five year low for the offshore yuan overnight. do you think the pboc got this under control? surely they want a weaker currency but are they moving too fast and too furiously. >> remember the pboc has a lot of leeway over currency markets. they have a big war chest of foreign exchange reserves. they control the regulatory frame work for cross border flow so there's a lot they can do really to make sure that the currency doesn't descend too quickly. we have confidence in the pboc's ability to manage that process and we think they'll continue to tread very carefully because it's such a big topic. not just for china but the entire world. remember what happened in august when they depreciated a mere 2 to 3% so the chinese will be keen to avoid that so we think that we'll stay in control and

the gradual depreciation is the most likely outcome this year. >> thank you so much for your time. really appreciate it. frederick newman. head of economic research at hsbc. >> volkswagen suffered a 9% drop in december u.s. sales. speaking in las vegas the chairman of the passenger cars said he was confident that vw would reach an agreement with u.s. regulators to make half a million diesel cars compliant we mission laws. and stay with us here on cnbc as later this afternoon we speak with mr. diess in las vegas where volkswagen is set to unveil it's electric vehicle prototype. >> and fitbit hitting a record low. it's new blaze finances tracker

costed $200 and is positioned as a challenger to the apple watch. never a good sign. but a lot of concerns that it's trying to go straight at apple. >> is it really? the apple watch is more like a computer and fit bit is like a health tracker. i'm not sure that it's fair to compare the two. >> but with a selling price around $200 a lot of people are saying it needs to be well below that to find it's own niche. >> meantime, huawei made a 44% rise to deliveries of 108 million hand sets. that gives them a nearly 10% share of the market putting it in 3rd place behind samsung and apple. they kicked off the new year in las vegas with five new products releases including two smart watches, two phones and a tablet. now jay grey is in las vegas with more from 2016. what's the buzz about? >> good morning, well, always what's new and great in tvs.

we expect to see that later with a tv that actually folds up if you can believe that. there's so many gadgets and gismos here it's like a kid in a candy store. 2 million or more square feet of exhibits. more than 170,000 people expected to take it all in. drones still a very big deal. this is from prodrone and it's the next level. it's a foldable, retractable take it where you want drones. they're all armed with the cameras now and they even have a 4k camera for this unit and you can get it all for 1,000 to 1500 bucks. so prices coming down. the gadgets and gismos getting better. i feel like i'm on the price is right. smartphone case, yes. extra power yes. need to charge it up, plug it in. this is called stacked and you can stack more of these energy units so you can get as much

energy as you need for whatever device you have. a lot of fitness things here. let's talk about the head phones here from urban ears. you can take all of this off and wash it. it's wireless and has touch technology on the side. it's really a neat deal and not bad for the price. they're not as expensive as you would think. crystal here on the polar fit band. the activity band. you don't have to get the crystal. these are coming down in price and going up in what they do. they'll regulate and watch just about everything including how you sleep, your heart rate. this is a really neat deal. this one with the crystal sells for 150 or so. so that's not bad. more ear buds here. again they are noise reducing. you can answer your phone and do whatever you want here. this clock kind of cool because not only does it tell you the

time, one touch call if you want uber to pick you up it will turn on and off your lights when you want it to. it will start your coffee machine and wake you up to whatever music you want and sounds you want and light you want. speaking of lights, mood lighting a big deal now. you can do whatever you want with this. it's totally run by an app on your phone. you can use any light, any color. it will react to music. like i said there's so much here i could talk forever. i'm out of time. back to you from vegas. >> thank you for that. it seems like consumers are going to be spoiled for choice. >> still waiting for my big break to come on down. >> now you're here. >> price is right is the dream. >> so many fwgadgets. we'll bring you the latest including interviews with top

tech ceo. >> what makes a tech super hero. as part of the tech transformers seri series. here's what justin peters had to say. >> tech moment that transformed by life was probably when i first saw amazon on the internet which is an amazing moment of my life and the tech moment that transformed my career was definitely the iphone. it's hard to live without your phone. connected devices. which i think will transform everyone's life. definitely the founder of the internet. it would be good to see vinyl make a comeback.

but the quality of the music and the enjoyment and the care that people have when they have vinyl. we could see that make a come back. >> you can hear from other tech innovators in the digital world ahead. that's all on cnbc.com. we'll be back after this short break.

a move to stop mass shootings which he says have become quote routine in the united states. the president wiped away tears as he spoke about the child victims of gun violence across america. an antigovernment militias

occupation of wildlife refuge. the fb is working to bring a peaceful solution to the situation. >> and bernie sanders layed out a plan to break up too big to fail commercial banks if he is elected saying, quote, the greed of wall street and corporate america is destroying the very fabric of our nation. he also threw down the gauntlet saying hillary clinton was wrong to oppose the plan. >> and a statement from twitter ceo has hints at the possibility of a much longer character allowance. tweeting a screen shot of text he says we've spent a lot of time observing what people are doing on twitter. we see them taking screen shots of text and swetweeting it. now what if that text was actually text. >> european apple suppliers are under quite a bit of pressure this morning. the tech giant will cut production of its iphone 6 in the january to market quarter.

let's have a look at the u.s. fall out with wilf at the nbc headquaters in new york. >> good morning to you. and nancy. that's right. that's the big corporate story of the morning that we'll be tackling on worldwide exchange in about nine minutes time. apple off sharply yesterday. off that story from the nikkei that they're going to cut back on orders. they fall heavy today and we'll try to workout what's going to happen in the u.s. market for apple and other related tech names as well. i saw you had jay grey from the consumer electronics meeting in vegas earlier. that so far has been about evolution and not revolution and that phrase very apt for apple because everything in investor's minds is still about the iphone and none of the new products they have announced over the last year or two got the stock moving and that continues to be the focus. what will happen for the iphone and we'll be discussing that on the show. of course international events is still really what markets are

focused on and career adding to the middle east and china bargain that's dominated the week so far. how long will international events lead u.s. equity markets throughout 2016 and to answer it peter oppenheimer joins us at 10 past the hour. one not to miss. >> quick peak at u.s. futures. expecting some sell off to continue in today's trading session. dow jones off by 174. the nasdaq seen off by 47. joining us now is the global market strategist at jp morgan asset management. another down day after we seem to stabilize yesterday. clearly the year has started on a very sober note. do you now believe that investors have a bit of a better gauge orbit of a better idea the latest prints from

around the world. also still well above 50 so at the moment i can't see a cause for concern in a big part of u.s. gdp. >> we'll leave it here. thank you so much. global market strategist at jp morgan asset management. >> worldwide exchange is up next. the flu virus hits big.

with aches, chills, and fever, there's no such thing as a little flu. and it needs a big solution: an antiviral. so when the flu hits, call your doctor right away and up the ante with antiviral tamiflu. prescription tamiflu is an antiviral that attacks the flu virus at its source and helps stop it from spreading in the body. tamiflu is fda approved to treat the flu in people two weeks of age and older whose flu symptoms started within the last two days. before taking tamiflu, tell your doctor if you're pregnant, nursing, have serious health conditions, or take other medicines. if you develop an allergic reaction, a severe rash, or signs of unusual behavior, stop taking tamiflu and call your doctor immediately. children and adolescents in particular may be at an increased risk of seizures, confusion, or abnormal behavior. the most common side effects are mild to moderate nausea and vomiting. anti-flu? go antiviral with tamiflu.

north carolina announcing it's successfully tested a hydrogen bomb and a slightly lower open here at home. >> the regulator extending a ban on major shareholders selling stakes in companies. >> and shares of the tech giant hate hard and now hovering $100 a share. worldwide exchange