u.k. house builders are bucking the trend this morning after persimmon beats on the bottom line. ihg also trading higher on a dividend surprise. hi, everybody. welcome to the show. welcome back, nancy. >> thank you. >> good to have you back. let's get straight into it. this german confidence data indicating that the current conditions index stands at 112.9 in february. the consensus was for 112 even.

so current expectations coming in a little stronger. current conditions coming in stronger, i should say, than what had been forecast. when looking at the general numbers, when looking at the business climate index itself, 105.7 in february, which is slightly higher than 106.7, which had been anticipated as well via reuters. they're looking again at the business morale, falling for the month of february, they say. >> the 105 coming in light. that would have been the third month of declines, the lowest since january 2015. looking there at the euro-dollar trade, there was some anticipation that if we get a weaker trading, we could see that get the 1.1 level. something to keep an eye for. >> most analysts had been looking at the expectations weighing more than current

conditions. again, what we're seeing in general a little bit of weakness coming through from the actual current conditions, but the overall business climate index a little stronger than anticipated. >> well, the data on the one hand, and lots of earnings. strong rebound on wall street last night. right now, the stoxx europe 600 back in the red. that rally not holding for long. here are some of the sectors that really gained, now moving down. basic resources among them. more on that in a minute. let's look at how everything is faring. the ftse trailing by 0.4%. taking a look at the german main market after that data we had a bit earlier, we're looking at the main market off about 0.7% there. the french cac 40 just off about 0.1%. the ftse mib the only major in the green at this stage. let's recap exactly what happened in asia.

we did see that rally we saw on monday giving away, especially when you look at the shanghai composite. overall, the chinese main market off about 0.8%. the nikkei 225 back in the red, off about 0.4%. a stronger yen moving equities there in the session. again, it's not just brexit weighing on the u.k. and europe. we're seeing that sterling move quite a bit lower. that's giving a boost to the yen, always raising concerns for japanese equities. the main australian market off. >> lots of news this morning. shares in standard charter have dropped to the bottom of the stoxx 600. the em focus bank saw underlying profit before tax slumping by a whopping 84%. that's amid a sharp rise in loan impairments. this is what would be the lender's worst result since 1998. standard charter confirmed it will not pay out a final dividend, and it won't reward most of its senior staff either

for the 2015 performance. so overall, you're looking at a $4 billion charge on them having to write down the value of their loans, a $1.5 billion loss in total. maybe, even with bill winters, who took over just this past year, describing 2015 as very poor. maybe one of the bigger surprises was just how poor areas like the indian market fared, the commodity related slump, how much of an impact that's had. >> absolutely. so much of this was expected when we talk about negative earnings performance. we know this is a bank very much in the midst of a turnaround under bill winters. i think the real threat here, if market conditions continue to deteriorate, what that means for profits and wether or not that has to force them to rethink the cost cut plan already in process. >> definitely. then you have some of the bigger hedge funds out there apparently

disclosing a short position just recently. even after the stock itself hit a 30-year low. and this short position is equivalent to something like 0.6% of the bank's overall shares. so there is some speculation that the hedge funds might get involved and they might be wanting to push the shares further down. i have to then weigh that out. analysts with an average price target of 628 p. >> well below that at this moment. that's for sure. >> exactly. i'm not sure how they're getting to that. bob parker is from credit suisse. good morning. >> good morning. >> good to see you. thoughts on standard charter, the overall financials? >> i think there's a number of data that comes out of standard and charter which is consistent with what we're seeing in the banking industry as a whole. their tier one capital will be north of 1%. liquidity buffers being increased. risk weighted assets reduced.

leverage reduced. and cost cutting and obviously linked into all of that and part of the process of increasing capital is basically cancelling the dividend. i think what has upset investigators over standard and charter is the impairments were greater than expected. i think there is some investor concern about exposure in the middle east. obviously with the low oil prices, and probably the oil prices here stay at sub-$40 per barrel, impairments are going to rise in the middle east as well as in asia. >> we've heard several european banks say they're comfortable with their energy and gas exposure, but this largely depends on oil not getting any worse. just now again, we have this talk of the output freeze between four key players, but a lot of doubts around this, given we're talking a freeze at

january levels, not a real cut. do you think investors are being too complacent that we have an agreement on the cards? >> i think the answer is absolutely yes. let's not forget the freeze is at a record or near record amount for production by russia and saudi arabia. so what saudi arabia is saying, yes, we're going to freeze production, but we're freezing production at north of 10 million barrels per day. likewise, russia is close to 11 million barrels per day. they're not cutting production. they're just maintaining very high levels of production. just a couple points on standard and charter, i think that it's not just a question of the exposure to the energy sector. let's not forget that we as investors also have to look at banks and organizations which have exposure to other commodity sectors. it's not just, you know, iron ore, which has fallen dramatical dramatically, but also soft commodities. the fact we've still got prices trading well below $400 a bushel

compared with over $800 a bushel just four years ago, there are going to be some impairments there as well. >> bob, you're staying with us. by all means, get involved. we'll float the e-mail address on screen in just a second. just want to ask you though, is derisking continuing? are we still going to see the amount of outflows out of the chinese market carrying through the rest of the year? >> two elements of derisking. first of all, deleveraging and derisking by the banking sector. that process, we're not in the end game there yet. i think we're going to continue to see risk-weighted assets being reduced. you see that in virtually every statement from the banking sector over the last month or so. i think you'll see that over the rest of this year. so derisking from the banks, yes, continues. derisking from investors, i think we are in the end game there. the reason why i say that is investors are sitting on record levels of cash and/or very low risk assets like government bonds at a time when very significant number of government

bond markets are now on negative yield. i think that derisking process by investors probably is not going to get worse. the interesting question, is it going to get better? i think that's going to be a very slow, long, drawn-out process. >> okay. as said, bob is here nicely next to us for the next -- >> very lucky. >> extremely lucky. you can e-mail the show. streetsignseurope@cnbc.com. we're also on twitter. >> @nancycnbc. >> @louisa bojesen. you can find a lot more on facebook too. >> and we were just talking about it's not just energy and gas. the broader commodities sector with miners in focus here. bhp among them with their shares under pressure today. this after the miner slashed its dividend by 75%. that was after recording a 5.67 billion dollar net loss in the first half of the year. bhp said the move aims to protect its balance sheet in a, quote, prolonged period of weak

commodity prices. it will also reduce its pay yoult to shareholders from 62 cents a share to just 16 cents, which was shy of what many were forecasting and it's scrapping its 15-year dividend policy. so louisa, here we have bhp following some of its rivals, reducing its dividend, but by more than many were expecting. although, some analysts are saying this could be perceived as good news for the long term, if it comes to improving its capital position and using it elsewhere, specifically when we look at potential for m&a going forward and more long-term growth projects. >> and it was actually up in australian trade. trading a little lower here. a lot of people saying this morning on various analyst notes that they're finally coming to a sense of reality. you cannot continue to pay out a dividend to have this progressive dividend policy with everything else going on. and the credit rating, how much is down to the credit rating? s&p cutting them to an a from an a-plus recently, saying we might

cut even more if you don't figure out how to stop paying out money when you don't have money. i think they've been borrowing money to pay out dividends. >> i think you're absolutely right. there's this trade-off between rewarding the shareholders in the short-term and doing what you think is best for them in the longer term picture as well. that seems to be the bhp approach today, although investors not liking it at the moment. >> no. swiss re has been trading lower after the ceo announced his retirement. he'll be replaced by president head of the company's reinsurance units. this happening after the insurer announced a buyback. speaking to our colleagues on "squawk box," the cfo laid out talking points. >> there's continues pressure on pricing in some of our pnc businesses. i think that's true across the industry. we've continued to position ourselves quite well. we have the ability to allocate

our capital to the most attractive risk pools while continuing to serve our clients. over the last several years, there's been a very low level of large losses. as long as that continues, it's likely there will be continued pressure on pricing in the market. >> bob is still with us. bob parker from credit suisse, senior adviser there. what are you seeing in the commodity based sovereign wealth funds? >> clearly some of them are under significant pressure. but it's not -- there's a lot of focus just on the commodity base sovereign wealth funds. let's look at some of the noncommodity based ones as well. if you look, for example, at china's reserves, largely managed by the state of foreign exchange, it peaked close to $4 trillion in 2014. now down to about 3.2 trillion. with that 800 billion reduction in china's reserves, clearly there's been selling of riskier assets there. there's been a lot of media

comment about saudi arabia's reserves. i think it's open knowledge their reserves have come down significantly indeed. i think the speculation they've been derisking their portfolio is probably correct. the largest sovereign wealth fund, x-chex-china, is obviousl norway. there doesn't seem to be significant pressure in the case of norway. so some of the middle eastern based funds, yes. the smaller fund in chile, which is copper based, that's obviously under pressure. the biggest one is obviously china where we've seen this 800 billion reduction in reserves. >> bob, i want to recap about the data with the european growth picture. overall, it did miss expectations. now we're seeing the euro-dollar turn to negative territory. how concerned are you

specifically about the german growth picture when we look ahead to the ecb meeting, for instance? >> i think when you go through the detail of german economic data, the german economy actually slowed down in december, and that slowdown has continued in january and february. the ifo data is consistent with that. to quantify that slowdown, it means that the probability in the first half of this year of germany achieving 1.6%, 1.7% growth is very unlikely and that growth acceleration which we had hoped for towards 2% growth, i think that's delayed towards the end of the year. first half of this year, german growth annualized probably close to 1.5% with exports disappointing and consumption weakening as well. i think that all fits the picture of monetary easing by the ecb in march. that also fits the picture of one further leg down in the euro. i stick to my view that as we go into the second quarter, we will see dollar-euro probably close to 105.

>> monetary easing as in further into negative interest rates? >> i think there's a high probability we'll see a further move into negative interest rates. i think that we could see a situation in the bund market similar to the jgb market. i think we could see a further yield down to unthinkable levels to perhaps only ten basis points. i think we'll also see with qe -- and potentially, what draghi could do, which would be dramatic, which i don't think is discounted, is an increase in qe. >> okay. i hear the speculation starting already. bob, thank you very much. >> thank you. >> bob parker, senior adviser for investment strategy and research at credit suisse. now, the so-called london whale has broken almost four years of silence. he's accusing his former

employer, jpmorgan chase, of letting him take the blame for trades he says were, quote, initiated, approved, mandated, and monitored by senior management. in a letter sent to several publications, he said his role was to execute a trading strategy that originated from the london operations of the chief investment office. he added that he was unfairly scapegoated for trades that led to more than $6 billion in losses for the largest bank of the united states. nancy? >> well, louisa, we're still keeping an eye on oil prices, which have steadied after rallying as much as 6% in yesterday's session. opec's secretary general said a production freeze would be, quote, the first step in supporting crude prices, which he says should be back at $80 a barrel by 2020. we'll be discussing those forecasts as well as the upcoming conference in houston, where industry leaders are meeting later today. a speech from the saudi oil minister will be happening just on this network at 15:50 cte.

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hi, everybody. welcome back. you're still watching "street signs" here on cnbc. shares in thales have been trading higher after the french company posted record orders and better than expected profits. >> another bright spot in an otherwise down day here in europe, shares in danone are trading higher after they forecasted further upside to sales and profits in 2016. the company says it expects underlying sales to rise between 3% and 5% this year.

however, danone also warned about volatile economic conditions in emerging markets and the possibility of deflationary consumer trends right here in europe. >> building a beat, persimmon shares hovering near the top of the ftse 100 after full-year operating profits beat forecasts. the home builder also announced a higher than expected 10 cent per share dividend. we asked the ceo if home builders could keep up with government demands to alleviate the housing shortage. >> it is challenging because it's about skills and training more people, but as a business, persimmon is committed to that. we've got over 600 trainees at the moment, primarily focused on the production end of the business. so we're keen to drive that volume forward. we've increased our volumes by over 50% since 2012, which is significant for any manufacturing business. i think we're responding to that

demand. >> well, shares are jumping in today's trade after it announced a rise in full net rev you thanks to a favorable fourth quarter. its mercger is on track. it announced a 3% dividend. ubs has raise the its price target on the stock as well. >> have you ever bet on anything? >> i have to admit, identi've d few horse betting. just when you're actually at the event. >> how do you choose what to bet on? >> the name. a few football matches here and there. but that's because my better half is into it. >> intercontinental shares trading higher after profits hit $680 million, beating forecasts. the company saw its highest room openings since 2009.

the luxury resorts company also surprised investors by raising its dividend from 77 to 85 cents. we spoke to the ceo in a first on cnbc interview. we asked him what impact a potential brexit would have on his business. >> we operate in 100 countries. the u.k. is about 5% of our business. continental europe, about 10%. the impact i think will be manageable. i think we'll have to listen to the arguments as the discussion continues. >> meanwhile, shares in united technologies rose more than 4.5% in yesterday's trade after it confirmed honeywell had approached the company about a potential tie-up. david faber has the full story. >> honeywell and united technologies have held discussions about a deal for cash and largely stock at a premium that couldn't be determined. the two sides have held talks before. early in 2015 utx initiated

talks. their stock price was hit when earnings expectations were missed. and also because the two companies could not agree on who would run the combination. after that and with a change in the respective market caps so that honeywell became more valuable, they approached about a potential deal. they would offer a small premium for a merger of equals deal. once again, they've entered into discussio discussions. it's unclear where those discussions will go at this point. utx stock was up, honeywell was down on our report. back to you. >> well, it's interesting to see. some of these bigger deals,

they're taking a longer time to come together, right. i know we've got a couple guests coming up. we can talk more in detail about this. but at what point after it's taken a year to try to get a deal to come together, do you say it's not worth it any longer. do you keep hiking the share price? well, we tried three times, we tried twice, we're going to leave it for now. >> it's interesting the moves, changing the sides on the m&a table. the first attempt we saw united tech approaching honeywell. now it's the other way around. people undoubtedly trying to take advantage of some of the dips we've seen here in certain stocks. a lot of perspective on that. we want to get to our next guest, chairman and ceo at clayton and rice. he joins us from berlin. pleasure to have you with us this morning. we've been talking about the revival in m&a activity here. you've mentioned that last year

it was quite a difficult market to find opportunities. are you seeking out finding more opportunities given the current market climate here? >> private equity investment usually thrives in periods of extraordinary volatility, and i think we are likely to continue that trend over the course of this year. having seen four or five cycles since i got into this business over 25 years ago, this year is setting up as a particularly attractive year for making investments at more reasonable values. i'd say that for a couple reasons. one is some of the m&a activity of the big corporates that you've seen, inevitably, those big combinations often lead to divestitures. those become next year's acquisitions. we'll see some of that. secondly, i think in terms of valuation, the weakness of the high yield market usually means

less leverage is available for buyers, and that has a dampening effect on valuations, making things more attractive. so it's always difficult to predict over the course of a year, particularly one as difficult, perhaps, as this one. but it should be a good year for buying if you're a private equity investor. >> and specifically in which sectors are you seeing the valuations most attractive? because of course, we've seen a lot of downward pressure and energy on gas, oil. is that an area you're looking to get into at this moment, or is it still too dangerous, would you say? >> well, i would say energy is still a bit early. there are perhaps opportunities, but no someone ready to predict $50, $80 coming back any time soon. i think across the board, there are opportunities in almost any industry. there have been major corrections in health care, for example, which is 16%, 17% of the u.s. economy in a very attractive space longer term.

i'd say our industrials have been bufted by some of the last six, eight, ten weeks of change. slow growth is going to accompany most of their fortunes for our while. but selectively at the right valuation, i think we're seal some industrial activity as well. consumer retail may be slower to come back, at least in europe and the united states. consumers, although the personal balance sheets are better and the negative impact of having housing crisis, it may well be past, consumers have not really felt they're quite ready to spend at the levels that maybe their discretionary income would allow them to. so the recovery in consumer and retail is slower, but i do expect that to be coming back over the courts of the next year. >> i just want to ask you, because i find it very interesting yorinterest i ing, you say you've seen four,

five cycles in the past. the current equity cycle we're in, some point out we're seeing it's twice as long a bull market than what we've seen in the past. are you finding that it's a different environment as well for private equity based on this bull market having been twice as long? >> well, it's hard to say that history repeats itself all the time, but if you look at the current valuations in the market and p.e. multiples or any other measures that you'd like to have, we're getting much closer to what would be considered fair value and in some sectors below fair value. that's really what prompts my conversation. really, you can look at that historical record over the last 25 years or more, see the gyrations. but when the public markets are trading at 15 p.e. and below, they're likely to be some pretty interesting opportunities for private equity. >> donald, let me also ask you,

we didn't see any ipos during the month of january. where's the actual deal flow going to be coming from, do you think? and do you think we're going to see the ipos, you know, during the next cycle then? >> well, it's hard to really complain about the ipo market taking a step back. i think we've had four or five years of very attractive exits for private equity, the ipo market being among the most attractive. the net return or distributions to private equity investors has dramatically outpaced the new investment activity. speaking just our firm alone, we invested maybe 20% of what we ended up returning to our investors, which was a lot of money. the ipo market slowing down is part of that natural cycle. i don't expect it to come back

gangbusters, certainly in the first half of this year. it'll see more normalization. but the benefit of private equity is we're not pressed to sell. we have two companies in registration, and if we do not end up getting out in attractive markets, our ebitda will increase by 15% over the course of the next year. we'll take them public next year. >> but donald, you are getting ready for an ipo of u.s. foods, what you back with kkr here. do you regret having to go that way rather than the takeover, which was in the works with cisco? >> you know, regret is not an attractive characteristic of a private equity investor or a public market. we always look ahead. we think we've got an extraordinarily strong company that will compete on the merits with anyone in the industry. both kkr and our firm look forward to that launch. >> donald, thank you for joining

us. pleasure to have you with us this morning. before we go to break, let's give you another check at the movement in the 4x markets after that disappointing ifo data coming out of the german survey. that's helped the euro move significantly to the downside. the euro/yen now trading at about 1.2. we'll keep you up to date on these markets as we come back after this short break.

welcome to "street signs." i'm nancy hulgrave. >> hi, everybody. i'm louisa bojesen. your headlines this morning. >> euro/dollar dives to a three-week low after the ifo think tank says there's no bright spots in german industry. >> banking blunder. standard charter sinks.

the lender insisting the ceo, bill winters, has what it takes to weather the storm. >> and dividend plans scrapped. bhp slashes its payout after nearly 75% after the global miner posts its first half-year loss in six years. that dragging down miners in the u.k. >> bill gates breaking ranks with silicon valley, backing the fbi's request to unlock iphone encryption. melinda gates shared her husband's view. >> i think that's a delicate balancing act, both between privacy of information but also what the government needs to keep us safe. welcome back to "street signs," everybody. so much optimism after that sharp rally we saw on wall street yesterday. a very different picture this morning, kicked off with asia trade, moving back into the red here in europe. as you can take a look there from u.s. futures, the main u.s. markets also called lower. president dow jones called lower

by 89 points. investors taking their cue from earnings. also keeping an eye on the oil price. some of the gains we saw in yesterday's session now retreating as we get ready for that big meaning with the saudi oil minister down in texas. investors will continue to keep an eye on those oil prices. let's give you a look of where we are here just in europe today. earnings playing a role on the ftse 100. the likes of standard charter, bhp moving to the downside. we'll get to those stories in a minute. the main german market off about 0.6%. disappointing info out of the ifo survey. the main french market relatively flat at this stage, off by less than 0. 1%. and the main italian market the only major board in europe outperforming. let's give you another look at the 4x trades. louisa is looking at the sterling reaction as we speak. >> we're just seeing sterling

flat against the dollar as seen here. i'm just actually keeping one eye on the wires because as the standard charter ceo, mr. winters, making a couple comments, saying 2015 has been a tumultuous year, another difficult year, as seen ahead. he says they think britain is best placed in europe. ceo winters saying they have no intention of exiting indonesia. he's also saying they've started brexit contingency planning. that a brexit vote should not have an impact one way or another. but they think britain is best placed in europe. now, this comes of course after we saw some very controversial moves over the weekend. the london mayor now backing the people who want to leave, backing the no-voters.

backing an exit. but around a third of ftse 100 bosses have signed a letter supporting the campaign for britain to remain in the union. david cameron defended his deal to parliament yesterday after setting the referendum date for the 23rd of june. this comes in the middle of mounting support for the brexit camp, including the london mayor and the u.k. leader. joining us here in the studios, ann summers, chief executive jacqueline gold. one of the signatories as well. >> good to be here. >> you represent ann summers. you started ann summers. first of all, you're backing the companies who want to remain in europe. why? >> absolutely. i think britain is best served to stay in the eu. i think from a business perspective, it's for growth. who wouldn't want to have access

to 500 million potential customers and trade freely throughout the eu? i think growth means investment, and investment means jobs. it's a no brainer for me. >> how big an impact do you think we could see on british business if we were to leave the eu? >> well, you know, i look at my own business, and it takes time to, you know, set up partnerships, to build trust. i think the impact could be phenomenal. we don't really know what it would look like, but we know that, you know, the chances are there would be increased costs. we know there would be increased workload. that could go on and on, as indeed my main concern would be, you know, the uncertainty and the impact that would have on the consumer, which wouldn't just be a one off. it frankly would just go on and own for years, in my view. >> and there are two sides of this. other companies have expressed concern that the reforms do not

go far enough, the reforms david cameron has agreed with brussels. where do you stand on that? would you like to see additional reforms? >> well, you know, the free movement of people is an interesting one because my business is based on the edge of london, where there's a difficulty with lower skilled positions. british people don't always want to go for those positions. with our warehouse, for example, we employ two-thirds of people who are europeans. we wouldn't have access to that pool of talent. i think it's definitely about the bigger picture. for me, they're hard working, they're committed, and do a very good job. >> so for you, having most of your business operating here in the u.k., is it safe to say the labor side is a bigger concern than perhaps the revenue that you get from selling within europe? >> well, i think it's both. and i actually think this is something that impacts other businesses up and down the country, where there are pockets where you have this problem.

>> i'm just assuming that many of our viewers maybe watching from the states might not know the ann summers brand we know here in braitain. you're a large retailer specializing in sex toys, lingerie. >> yes, we have 140 privately owned stores up and down the u.k. obviously a very good web business, we do wholesale internationally, and we have a large party plan business. >> so what is business like at the moment? we're still kind of halfway in the recession, is what some are saying, even though it doesn't feel that way any longer. when looking at what markets did in january, maybe you could argue differently. are consumers still spending on the sex industry? >> we had a challenging christmas. january was good for us, which is really demonstrating the change in consumer habits. it's much more around always

looking for that special offer and the discounting. i think there is still uncertainty, and i think this whole question of whether we're going to stay or leave the eu is also unnerving customers. >> we've heard 80% of your customers are women. is that right? >> yes. >> and we've heard from other e reer retailers here in the u.k. who have refrained from getting into the debate. they don't want to be seen taking one stance, perhaps risking backfire. is that something you worry about? should this be left to the people? >> i've chosen to come out because i think people need to see the bigger picture. this isn't just about the headlines, which is often about the immigration, and i think that, you know, business plays such an important part in our economy. we have to do everything to keep it as strong as we can. for me, i think it's important

to share that with the public. >> on consumer habits, you mentioned your online business. are most of the purchases still done in the physical stores, or are we seeing a real shift in this particular area as well? >> retail is still our largest sales channel, 63% of our business. obviously online is the fastest growing. we can obviously see where it's heading. >> jacqueline, thank you very much. jacqueline gold, the ceo of ann summers. meanwhile, for another perspective on the brexit debate, let's bring in jonathan stubbs. thank you for joining us this morning. we've just heard the case from a business leader here in the u.k. on why the u.k. should stay within the eu. we've heard various arguments on the economic side of what the real benefit, downside will be. from where you are looking at the equity space, how should investors protect themselves? >> first, uncertainty is the keyword here. uncertainty about what happens if the vote goes either way and uncertainty over the votes.

our economists now think it's a 30%, 40% probability that the vote goes to leave. with that would bring huge political instability, potentially a change of prime minister, potentially the scotland referendum coming back. in that scenario, it's quite likely house prices go down. a lot of uncertainty on the political and economic side. that obviously brings in risk to the ek withquity market. >> and one risk are the downward movements in sterling of course. on the other side, you can say this has a stimulus impact when you look at the more globally focused companies who ship overseas. are you still saying the negative impacts offset those benefits? m >> the negative impacts are clear from an economic perspective. as you say, sterling is likely to be one of the victims if we go down a path to sort of

deliver a brexit vote. we think sterling could sort of fall 15%, 20% if we go through and sort of see a brexit vote returned. and historically, when you've seen very significant weakness from sterling over the last 40 years, u.k. shares have done very well. there have been five occasions in the last 40 years where sterling's been very weak. the average return from u.k. equity markets in those five occasions is plus-30%. actually, there's a major offset here from sterling. >> are there certain areas where you think, well, we're going to have winners, and you're going to have losers, but you're going to have one happening before the other? we had a guest on just the other day who was arguing that you're going to see a whole portion of losers first and then the real winners are going to be emerging. the losers, primarily, are going to be in the financial sector. >> yeah, i mean, the work we've done, myself and all the macro sort of folk at citi, have done major reports on this. all the work we've done looks at the correlation that we can

observe historically between companies and industries and gdp sensitivity because we're talking about maybe a negative gdp hit and currency sensitivity. the stand-out sector, which is most likely to be most negatively impacted, both from a gdp and sterling perspective, is financials. on the other side, you have energy. energy has least sensitivity to a u.k. gdp, as you may expect. actually, being overweight energy and underweight financials is the biggest hedge. it takes another couple because you get protection against two-way moves in commodity prices if we get more rational behavior going through this year on the supply side in oil. we think oil prices end the year higher. our oil guys are looking at $50. it also provides a bit of a hedge against a china hard landing because a lot of that bad news is already priced into oil. >> we do have the shell ceo

among many coming out against a brexit. sop there is something they are concerned about, obviously, over at shell and presumably other oil companies. >> as you heard from jacqueline, business leaders don't like uncertainty. we've got uncertainty, whether we like it or not. we have four months until the referendum. when we get the outcome of that vote, we'll still be in an uncertain period in an uncertain world. business leaders will do anything to try and avoid an extended period of uncertainty. >> do you think we maybe could be surprised that we might actually see people putting money into u.k. assets or into the pound as a safe haven compared to what's going on elsewhere? if we start seeing more ecb action, as was suggested earlier on the show, if we see more of a softening to the u.s. data as well. >> data softening everywhere. it's hard to find somewhere to hide in these markets.

the u.k. historically has been a safe harbor. brexit puts a cloud over that harbor for sure. >> jonathan, thank you for being with us this morning. >> well, still so much coming up on the show. stay tuned as we cross out to the new york, as we caught up with melinda gates.

welcome back. here in barcelona, privacy around mobile phones, a huge industry issue. bill gates has just come out supporting the fbi's push to force apple to unlock its

iphones. on the other side of the equation, mark zukckerberg from facebook, has supported the rest of the industry. >> it's certainly true that we believe sort of lawful intercept should be supported by legitimate use of judicial powers to help with securing against rogue elements. >> i think the idea of just unlocking all devices without that, we don't support. we're sort of sympathetic to the argument it shouldn't be a blanket opening of being able to scrutinize what's going on with people's very personal communication devices. it should be legally mandated and permitted on an individual basis. >> nokia itself is not currently operating in the mobile phone space after selling its business to microsoft.

there's been much speculation here on the ground about whether they'll do just that. take a listen. >> we're always looking at it, but i know we all love the old nokia phone. no, we're not getting back in mobiles yet. we are getting into devices. you've seen our camera, this 360-degree camera with very clever soundscaping. that allows us to do live 360-degree video so you can see all around you at different venues and locations. we're getting into devices. maybe in some health care devices. but not yet phones. >> let's talk about your major announcement. $350 million investment fund. 5g your focus. >> that's right. in fact, those two things are related. iote, internet of things, you can do before 5g. but it gets better with 5g. it also gets integrated into 5g.

what i mean is 5g will be the network that can do things and people. it can do low bandwidth, high bandwidth, all the things you like to do. those things are clearly related. now, why is that such a focus for everyone? is it just irrational exuberance? no, we're getting excited about the possibility of automating our existence. as we digitize the world with the internet of things, we take data from that. you get the idea you can automate everything, automate processes. that's very exciting to everyone. in other words, 5g isn't just about consumer life. more entertainment video, more gaming, more media content. it's about automating your life in a brand new way. >> marcus weldon, the ceo of nokia. coming up tomorrow, we're going to be speaking to orange about what telcos are doing.

also, very interesting conversation to be had with mastercard, talking to us about using selfies to authenticate online purchases. that's going to be interesting tomorrow. and let me throw into the mix millicom. guys, back to you in the studio. >> thank you, karen. yeah, the person who invented the selfie stick, they're laughing all the way to the bank. >> to be fair, i did see one of those in thailand years ago and said we've got to bring those to europe. >> but you didn't. >> i know. >> head online as well, cnbc.com, for all the latest news. there's tons of stuff on there. >> and karen was just talking about how the conference, the mobile congress was really picking up this debate going on between apple and the u.s. government over essentially hacking the devices to get information that the fbi deems essential to national security. that's now really dividing tech titans around the world.

tania brooiier joins us now. >> reporter: hello. good morning, ladies. that's right. i talked to melinda gates yesterday here in new york. she's here to talk about their annual letter and what they're hoping to achieve in the next year. but of course the raging debate here in the u.s. is apple versus the fbi. i asked her and bill's thoughts on it. >> i think that's a delicate balancing act, both between privacy of information but also what the government needs to keep us safe. i think that'll get worked out in the courts in the next few weeks, but i think it's an important debate that all societies need to have. >> reporter: of course, she was announcing the initiatives for the year ahead. the bill and melinda gates foundation is the biggest private foundation in the world.

they have over 40 billion in endowment to give away. some of the initiatives she was talking about were women and girls around the world, bill's passion is clean energy, and what she also said was very interesting about who she thought would be winning in the presidential race. here's what she thought about a first female president. >> having an important role model is important for all boys and girls, whether that's a man or a woman. i think then taking on the right policies for men and for women and for family and work life is important and also role modeling that. to me, it needs to be -- you need to have a man in that position, and you eventually need to have a woman. whether it's in my lifetime, that would be fantastic. i certainly want it to be in my daughter's lifetime. >> would you want to see hillary clinton as the first female president? >> you know, bill and i always keep private who we are voting for in elections. so i'll wait to see what the outcome is and cheer on the

other end. >> reporter: so she's not giving everything away, girls, but i think we know who she would like to see win. she's quite an incredible woman. she's just come out more and more public in the last few years. it's always been bill talking about their foundation, but melinda is taking on a much bigger role, and she's taking on a role to empower women and girls in developing countries around the world. >> tonya, thank you very much. tonya brieer joining us live from the states. nice and early, tonya. ready for your day. it is an extraordinary balance to have if you're such a public person, as these giants are. >> that's right. >> these tech giant founders and their wives and what they can do with it. you compare and contrast that with some of the other superstars out there. >> understanding that great responsibility. i think she's made a wise choice there, keeping quiet on their political leanings at the moment at least. >> absolutely.

u.s. futures, we're a couple hours a way from the market open in the states. we're being called a bit lower. dow jones being called down by just over 100 points. remember, though, yesterday at this point in time, we were called up by some 200 points. here in europe, still seeing slightly soggy markets today. >> that's true. a little bit of weakness, especially in the basic resources. well, that's it for today's show. i'm nancy hulgrave. >> i'm louisa bojesen. a pleasure to have you with us. we'll see you tomorrow for another "street signs." over to our u.s. colleagues now. the flu virus.

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good morning. no deal. honeywell and utx hold merger talks, but utx pulls out, citing anti-trust worries. >> big techs, big fight. new this morning, bill gates breaking with silicon valley. we'll tell you why he's backing the u.s. government in its fight with apple. >> not so healthy. shares of fitbit getting slammed right now after quarterly results fall far sohort of estimates. it's tuesday, february 23rd. "worldwide exchange" begins right now. good morning. welcome to "worldwide exchange" here on cnbc. i'm sara eisen.