good morning. breaking overnight, chinese stocks plunge more than 6% in the worst session in more than a month. >> warning, citigroup fears the risk of global recession is rising. we'll tell you why. >> and apple versus the u.s. government. new this morning, why ceo tim cook says unlocking the iphone in question would be bad for america. it's thursday, february 25th, 2016. "worldwide exchange" begins right now. good morning. welcome to "worldwide exchange" on cnbc. i'm sara eisen. >> and i'm wilfred frost.

we could be in for another wild market ride today. a busy session in asia overnight. china in the eye of the tiger. let's get you up to speed on what happened while you were sleeping. china's finance minister warning of pressure on exports and the yuan. interbank lending rates moved sharply up at the open. reuters is reporting china's central bank injected more than $52 billion into the money market through seven-day reverse bond repurchase agreements. here's how things closed. let's have a look at it. it was particularly the china markets that declined. the reverse st of asia wasn't t affected. also, talk of relatively low volumes and a number of stories as well in the press over there today about the growing corporate debt pile. a number of factors weighing on this. a surprise sharp move down for the shanghai market. when the rest of asia really wasn't so affected. >> we haven't seen a move like this in china if about a month. a lot of people blaming the

money market, the liquidity concerns, but also just the fact that china's stock market has rebounded 10% from its lows in january. perhaps that was a little overdone. this as g-20 finance ministers and central bankers descend on china to talk about the global economy and some of the problems. wonder how much the host will be the focus as a point of worry an concern. >> absolutely right. i think both the g-20 and this move in the shanghai market just reminds you of one crucial factor. have any of them actually been sold? they're all still issues as they were. it's just valuations that flip around. we might get a rally, we might not. they're all still issues that are out there. >> absolutely. we're going to take you to china later in the hour. let's show you what's happening with stocks around the world. this is important because there is some resilience in u.s. equity futures. you might see a 6% drop in china overnight. futures are going to be ugly? not so. dow futures down four points.

really, little action here related to china. s&p futures up 0.75%. this after a wild reversal in trading yesterday. the s&p was down 1.6%, managed to close higher. that must have been crazy to see. i know you were on "closing bell." >> exactly right. if you wanted to see how much of an impact oil had, look at how europe closed yesterday. down over 2% because oil hadn't started its rally yet. if we look at europe today, it's catching a bid, even though oil is down, because it missed out on that late afternoon rally yesterday. this european gain today is a catch-up. >> here's the picture for oil. it is falling today. wti crude down 31.71. it's down about 1.4%. brent down almost 1.5%, 33.91. nat gas also lower. the question is, who's in control? is it the u.s. stock market now, showing signs of resilience?

it'll be important to see if what we're seeing in futures can maintain given a drop in oil prices and a shoarp drop in chinese stocks. >> either way, the volatility is back. the dow spreading over 300 points yesterday. so hard for traders to make calls when you're getting intraday moves like that. let's get more on the big selloff in china overnight and head to singapore. checking in with sri. >> i would say this. the volatility never really went away associated with the greater china mainland markets. it laid dormant for a while. there's a sense when we crossed 3,000, it's looking a little overdone. it's looking a little stretched. it's looking a little fatigued. weapon saw some profit taking. the other factor here is that there's still a lot of concern over what investors see as mixed policy signals coming from the pboc and coming from the stock market regulators as well. are they in the market?

are they interventionalists? we haven't got a clean read on that so far. the other new dynamic here is the credit profile. it's a bumpy road. you are going to see bankruptcies. you are going to see defaults. you're going to see unemployment as well. that's a key issue there with social stability on the agenda off beijing. it's all of that. we're just getting a sense of that. i think the market is getting a handle on it as well. that's the reason why we see these downside moves. interesting to note at this juncture, it doesn't seem to be having any spillover on the other markets, on europe, and in your side of the world. back to you. >> we'll see if that can last. sri, thank you very much for running through the action. we'll have much more on the global markets, what to make of a 6% drop in china, in a bit. first, today's top corporate story. that could be apple ceo tim cook

speaking out saying that complying with that court order to help the fbi break into an iphone belonging to one of the san bernardino shooters would be in his words bad for america. >> this is not a position that we would like to be in. it is a very uncomfortable position. to oppose your government on something doesn't feel good. and to oppose it on something where we are advocating for civil liberties, which they are supposed to protect, it is incredibly ironic. >> in that interview with abc news, cook also argues there should have been more dialogue with the government. >> fbi directed the county to reset the icloud password. when that is done, the phone will no longer back up to the cloud. so i wish they would have contacted us earlier so that would not have been the case. >> how crucial was that missed

opportunity? >> very crucial. >> apple has until tomorrow to respond to that court order, which it says it intends to fight. meantime this morning, "the new york times" is reporting that apple is working on an iphone that even the tech giant itself cannot hack. engineers are said to be developing new security measures. it's the front page of "the new york times." it came out right as that abc interview was airing. awat i have to say tim cook made a very compelling case. >> to stand on his side of this now? >> it's a tricky issue. it's not up to us. i think the point he's making, which he made better in this very personal interview, in which he was asked repeatedly, do you struggle with this, do you feel conflicted, we're talking about terrorism. cook was empathetic with the victims. he said hundreds of millions of americans would be at risk if we unlocked the iphone, if we created this back door. he made a case for it. he said he hasn't talked to the

president yet, but he will do so. they intend to fight this, as he said, even though it's a very uncomfortable position. >> absolutely right. as you say, he made that point very clear. i'm uncomfort bkfrcomfortable o government, but this is something i believe strongly on. anyway, that particular debate continues. >> may go to the supreme court. >> indeed. it could. although, it could be a split vote. the st. louis fed president saying last night that january's big inflation jump higher didn't change his concerns about inflation falling. the consumer price index rose to a four-year high in january, which raised questions about bullard i bullard's stance that the fed should pause hikes. and a programming note, james bullard will be on "squawk box" for two full hours starting at 7:00 a.m. eastern. >> two hours, not enough right now. they can talk about this. a new warning from economists at citigro citigroup.

marked down their global expansion to 2.5%. that's it. they're citing slowing activity in developed economies and weak emerging markets. citi also saying there's a risk the global economy may grow by less than 2%. the note goes on to mention a brexit, saying if britain does withdraw from the eu, the move would do damage to europe's economy. just to put that 2.5% growth figure into context, the imf is at around 3%. that's a pretty bear uish view the world. though, citi often does have a bearish view of the world. >> indeed. but the bottom line is it's another big bank saying where is the bright spot in the world economy. they struggle to find it right now. another busy day of economic data, earnings, and fed speak. weekly jobless claims are out along with durable goods.

best buy, campbell soup, kohl's, and sears holding results before the opening bell. after the close, we'll hear from gap and kraft heinz. let's get a trader's perspective on the day ahead. brian kelly joins us on the cnbc newsline. very good morning to you. thanks for getting up early with us. brian, we assumed overnight all the focus would be on oil. but china really front and center again. big declines for china. it doesn't seem to be contagious this morning. the west managing to shrug that off. the line with brian -- >> sounds like he's in a wind tunnel. >> if he comes back to us, we'll get back to him. that's really the lesson from yesterday. high, high correlation tuesday, wednesday with oil. will that stick today? china, as a concern, for some

reason, not being as contagious as it was in previous weeks this year. >> the resilience of futures. we'll keep an eye on it. let's bring you some individual stocks to watch, starting with ab inbev. the brewer was pressured by falling currencies in emerging markets. the company says it's on track to take over s.a.b. miller this year. hp's fourth quarter revenue falling nearly 12% on continued weaknes nesness in the pc and p markets. the stock down 1.5%. salesforce.com's fourth quarter revenue beating, rose 25%. that was ahead of forecast. it raise the its full-year outlook. customers are stepping up their purchases despite the economic uncertainty. sales force ceo spoke to jim cramer on "mad money" about it last night. >> what business did we not win, jim? this was a quarter where every single deal we wanted to take down, we did, including two of

the largest deals in our company's history, which were massive nine-digit transactions. we just had a phenomenal end to the fiscal year. >> still to come, world financial leaders gathering in shanghai this week for the g-20. tim adams joins us from there next. we'll talk global market turmoil and much more with him. >> but first, as you can hear, it is throwback thursday for us. in honor of the oscars this sunday, we're playing our favorite movie sound track music. can you guess the tune and the film that made it famous? tweet us. we'll take some requests. we have a brand new facebook page. we're very into this throwback thursday music. >> and both of our choices, i hate to admit, incredibly cheesy. they're still to come. stay with us on "worldwide exchange."

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♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. the g-20 meeting of finance leaders is getting under way today in shanghai. joining us live from the forum is tim adams, the president and ceo of the institute of international finance, which represents banks all over the world. tim, good to see you. thank you so much for joining us. with the 6% drop in china overnight, i would think all these discussions about the global economy are going to focus on the host, on china itself and some of the concerns there. >> sure. and good morning to you as well. thanks for having us on here today. obviously we're in china. china is one of the points of focus. but it's not just about china.

it's about the global economy and global markets, just as you mentioned. we've seen a lot of changes overnight here in china. >> tim, do you feel that china is going to have to significantly devalue its currency? maybe not immediately. maybe not on the agenda for this particular meeting. but at some point over the next year, is that now inevitable, and to the tune of 5% plus rather than these half a percent moves we've seen so far this year? >> sure. i don't know if it's inevitable. the message has been one of confidence that they're going to manage the exchange rate, managing the dollar as well. they seem to be confident they can mng their way through this. i think that's the messaging we're going to hear, that they delivered to their counterparts over the next 48 hours. >> that's the messaging. do you believe it?

>> well, this is a complex place. i've been coming to china for to years. i think there's a lot going on here. obviously there's enormous pressure with respect to net capital outflows, which you can't dismiss. there are a lot of things going on and driving that. the economic fundamentals have changed dramatically here in the last few years. there's some good news stories too. services sector, which is half the economy, is doing well. the consumption based growth is stronger than some estimate. it's an economy that's complex and has challenges but also some positive aspects as well. >> -- what actually gets done at g-20? >> yeah, i don't think there's going to be a lot of bold action. some of the officials i've spoken to here today indicate, in fact, they want to accentuate the positive, especially

fundamentals and where they think there's divergence between market sentiment and stronger fundamentals. i don't think anyone here is going to talk about a crisis or bold response. i think it's about accentuating the positive and talk about some of the longer term trends, importance of infrastructure spending, maybe fiscal support, restructuring, structural support. i think they're going to avoid the word crisis. >> they always reaffirm their commitment to stable exchange rates, even though we're seeing anything but. tim, you represent a group of banks, u.s. banks, global banks. we've seen what's happened with the european banks. u.s. banks, worst performing sector so far this year. what's the level of concern if your constituents about what's happening with their share prices? >> well, it's something we're certainly watching very closely, both globally and with respect to some of our key markets. look, it's a challenging time. we've gone through a long period of major regulatory restructuring. you've got -- we're late in the

credit cycle. you've got a flight yield curve in many parts of the world. it's tough to make money when you have a flight yield curve and a narrowing of net interest margins. compliance costs are going up. you have in entrants coming into the business. they're getting it from a lot of different directions. but i think they're very focused and looking for ways to reinvent the business model for the 21st century. >> would negative interest rates, tim, in the u.s. be something you'd be strongly against? >> oh, i'd be surprised if we'd see it. i think we may see it in other parts of the world. but you have to ask the question, is it on net positive? it doesn't help if your banks aren't profitable, if they're vulnerable. in fact, the biggest risk to financial stability is unprofitable financial institutions. it's in our interest to see vibrant, well-capitalized, profitable banks. if policies are being pursued that put that in jeopardy, i think we're worse off. >> tell that to bernie sanders.

tim, thank you. tum he's now the president and ceo of the institute of international finance, which represents the banks. >> "worldwide exchange" very worldwide today. there we go. >> as it should be. >> the white house reportedly vetting nevada's republican governor as a potential nominee for the vacant seat on the supreme court. the latest from washington coming up. >> but first, as we head to break, here's today's weather forecast from the weather channel's jen carfagno. >> sara and wilfred, what a storm. our two-day severe weather outbreak is about over. storms ending today in new england, of all places. severe thunderstorm warnings issued in parts of western massachusetts. this hasn't been done in 19 years. last time you saw a february winter storm warning. winds gusting, tropical storm force, hurricane force from thunderstorms in february. we'll get those out of the way today and watch the wind continuing to be a big story across a good chunk of the east. the snow still flying across portions of michigan into ohio and a bit of a wintry mix into the ohio valley. the rest of the country pretty quiet. a lot of sunshine out there.

pretty warm temperatures as well. dallas at 60. l.a., we're going to be in the 80s again. very warm in the east as well. temperatures dropping throughout the day. that's your latest weather update from coast to coast. i'm jen carfagno for the weather channel. "worldwide exchange" continues after this. empowering people making a difference to change climate change with passion and excitement earth hour is about inspiring climate action celebrating a global movement and impact ♪ join us at earthhour.org 19th march at 8:30pm ♪

welcome back to "worldwide exchange." in washington news today, nbc is reporting the white house is considering nevada governor as a potential nominee for the vacant seat on the supreme court. tracie potts joins us from d.c.

with the latest. tracie? >> reporter: hey, wilfred. good morning. looks like there may be movement in the stalemate between congress and the white house on whether they'll even question a nominee from president obama. now we're confirming that the head of the committee that would do that questioning is going to sit down with the president and talk about it. >> in short, there will not be action taken. >> reporter: but now the white house and senate confirm that chuck grassley, the republican head of the judiciary committee that holds supreme court confirmation hearings, will meet with president obama next week. nbc news has also confirmed the white house is vetting a republican, nevada governor and former federal judge brian sandoval, to replace justice scalia. >> i think it will be very difficult for mr. mcconnell to explain how if the public concludes this person is well qualified that the senate should stand in the way simply for

political reasons. >> this is a way for democrats in the white house to extract maximum pain on republicans. >> reporter: democrats have a petition. 1.3 million people who say the senate should not block the president's nominee. >> it's wrong, and the american people, i really believe, won't stand for this. the senate needs to do its job. >> reporter: republican leaders insist they won't even consider an obama appointee during an elections year. but it's still not clear when, how soon, how long it might take president obama to actually nominate someone to come up with a name. >> tracie, thank you very much for joining us, as ever, this morning. and sara, i have to say, u.s. politics just keeps on giving. >> it's a savvy political move, right, from president obama, to challenge the republicans by actually putting forth a republican. >> absolutely right. there's just so much to it. so much fascinating developments to keep an eye on. but we're going to switch focus to sports now. the golden state warriors took their show and their 50 wins on the road to miami last night.

they had to come from behind to take down the heat. steph curry hitting a three-pointer from deep behind the line in the fourth quarter. he finished with 42 points. the warriors winning 118-112. another number one team goes down in college basketball. xavier upsets the top-ranked villanova wildcats at home 90-83. it's the first time in three years the musketeers have beaten villanova. there we go. >> are you convinced yet about steph curry? >> i have been seeing a few of his clips. he's pretty epic. >> in other sports news, espn and verizon are making progress in talks to settle a fight over a tv package that lets customers choose bundles of channels. the companies have asked proceedings to be put on hold for a month. last year verizon launched a smaller pay tv bundle that moved some traditional base tier channels to an optional add-on package. those channels included espn, which sued verizon for breach of contract. last week, verizon revamped the package to offer a larger bundle

with espn. >> all right. there we go. still to come here on "worldwide exchange" -- i like this one. that wasn't my pick. >> not mine either. >> they're still to come, sara and i's picks. favorite throwback movie songs. still to come, world finance leaders gathering in shanghai today for the g-20. we'll hear from the chief economist for china's central bank. that's one not to miss. we'll be back out in shanghai shortly. "worldwide exchange" is back in a couple minutes. 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

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watch out below. chinese stocks plunging overnight, but so far the rest of the world is shrugging it off. a roundup of the global markets straight ahead. >> apple versus the u.s. government. new this morning, why ceo tim cook says unlocking the iphone in question would be bad for america. >> and show me the money. we'll tell you what country was just named billionaire capital of the world. it is thursday, february 25th, 2016. and you're watching "worldwide exchange" on cnbc. a very good morning to you and a warm welcome to "worldwide exchange" on cnbc. i'm wilfred frost. >> and i'm sara eisen. we're celebrating throwback thursday with throwback movie songs ahead of the oscars this weekend. try to guess the movie from each song. tweet us. in the meantime, let's check on global markets this morning. a big selloff in china overnight

dominated the action, has yet to spill over to u.s. futures. the japanese nikkei caught up with the u.s. overnight and finished higher by 1.4%. hang seng in hong kong down, but look at what happened in shanghai. down 6.4%. a number of reasons given, wilfred, including some tightness in the money market funds, the adjustment of the currency weaker for the fourth day in a row, and just general concerns that this rebound in china, 10% off the lows that we've seen over the last few weeks, is overdone. this as some powerful central bankers and finance ministers meet in the china to discuss it. >> a slow and steady climb of a rebound of 10%. more than 50% of that eroded this one session. the volatility coming back to the fore today. quick look at europe. bouncing significantly, despite oil sliding. that's because it missed out on the late bounce jed. it pretty much closed at the lows of the oil price yesterday and was down 2% and therefore bouncing back a little bit today, as you can see.

the ftse 100 up 2%. germany up 0.75%. >> let's show you the wall street setup. futures have been resilient. they're positive just barely. pretty flattish, which is unusual to see after a 6% decline in china, at least this year. remember, the early part of january, we saw those sharp moves lower. u.s. futures followed right through. we're also seeing losses in oil. nasdaq up three. dow up five. s&p up 1.5. the question yesterday was, what was that wild turnaround about? is it more than just oil? is something fundamentally turning in the u.s.? it's been hard to predict. wti crude down 0.7%. 31.93, so just below the $32 a barrel level. brent off by about 0.75%. >> let's have a look at bond markets. the u.s. ten-year currently looking at a yield of 1.72%.

again, a great risk sentiment gauge that has been. it hasn't moved too much this week, despite equity market selling. again, highlighting it's been oil that's been driving things as opposed to broader fears about the global economy. a quick look at gold as well. we have, of course, seen a rebound so far year to date where we have some currencies first. not too much in the currency markets. the yen pretty much flat today. 112.20. the pounds, thank god it's holding up for once this week. >> thank god for wilfred's bank account. >> and there's gold. >> look at that move higher today. >> nice moves through january and february for gold to the upside. >> as we turn our focus to the u.s. market, i want to highlight one chart, which a lot of people are talking about. this is the u.s. small cap stocks. those more economically sensitive, smaller, as tracked by the russell 2000. they've been beaten down more than the broader market this year. they're down about double, about 10%.

they're still in bear market territory. this is where a lot of the pain has been felt, leading some to wonder whether this really is about downgrading growth forecasts for the u.s. economy. a lot of people are going to be watching that one. rebounding today. we'll see if that can hold, given what it's been through. >> and the russell 2000, small caps, growth stocks, meant to be. >> as we mentioned, finance leaders are gathering in shanghai today for the g-20 meeting. >> reporter: thanks so much, sara. g-20 finance ministers and central bankers are meeting here in shanghai. they're basically here to discuss ways to try to support the global economic growth. there's been a call from the imf for many g-20 nations to take bold action. the conversations have largely been centered around fiscal policy or the use of structural

reforms to offset some of the pressure on monetary policy and exchange rates. china, of course, came up since this was the host country this year for the g-20, and it came up as a risk. i spoke with the pboc central bank chief economist, who was talking about some of the market volatility and the concerns that investors had. he said that the investors' concerns are mainly overblown. this is what he had to say. >> i think the investors are overly nervous about various aspects of the chinese economy. if you look at the more fundamental aspect of the economy, for example the consumption, it's actually quite robust. what i saw from recent statistics is that during the change in the new year, retail sales were growing 11%, which is a quite impressive number. >> reporter: and of course global market volatility, though

it is front and center as we saw in the shanghai market, down 6% today, a lot of different reasons thrown out there for it. tighter liquidity concerns as well as just the fact that there's been a bit of a run-up over the past several days. some people are looking to sell out. i think it underscores, though, the fragility of the stock market. >> absolutely. eunice, thank you very much for bringing us those important comments from the pboc. you have to wonder whether this idea, the scary idea, a policy error by the most powerful people in the world, the central bankers. it's going to be discussed by them because it's certainly being discussed by the market. it starts in china with the exchange rate policy. this idea that the fed raised rates in december and the world fell apart. >> but what would be worse than policy error is the inability to act. have they been losing control of the currency and it's sliding

more than they were allowing it to? the big development, i suppose why there's not con today onfrom the chinese stock market today, they've been able to bring back stability. >> we'll see. confidence is key. here in the u.s., it's another busy day of economic data, earnings, and fed speak. first, weekly jobless claims out at 8:30 a.m. eastern along with january durable goods, which are expected to have rebounded last month after a big drop in december. on the earnings front, best buy, campbell soup, kohl's, and sears before the bell. the consumer theme continues. >> ibm's annual investor conference is today. shares of the dow component hit a seven-year low.

landon dowdy joins us with three things to watch. >> good morning. ceo will present to investors in new york city and add a little color on what's behind the curtain of big blue. here are three things to watch. first, details on its software business. weakness that is sent margins declining for quite some time. so see how they plan to grow that again. second, strategic imperatives with the cloud, mobile, and data analytics. watch to see if growth is enough to offset software declines. and the third thing to watch, how they spend their money. ibm has been known to spend aggressively on stock repurchases as well as acquisitions as of late. investors will want to see if management will keep up that pace or if they start pumping the brakes. back over to you. >> landon, thank you very much for that. ibm one to focus on today. the other big corporate story of the morning, of course, apple ceo tim cook says complying with a court order to help the fbi break into an iphone belonging to one of the san bernardino

shooters would be, in his words, quote, bad for america. >> we have no more information about this phone. the only way to get information, at least currently the only way we know, would be to write a piece of software that we view as sort of the software equivalent of cancer. we think it's bad news to write. we would never write it. we have never written it. and that is what is at stake here. >> apple has until tomorrow to respond to the court order, which it says it intends to fight. "the new york times" reports apple is working on an iphone that even the tech giant itself can't hack. engineers are said to be developing new security measu s measures. that story certainly continues to garner a lot of attention. >> and play out in the court of public opinion, which clearly tim cook was responding to in speaking out and really opening up in a very personal way on abc. sort of defending the apple stance and saying that hundreds -- >> you found it quite convincing? >> i found it compelling to have

the answer in more than just written form, to have him really talk about it and what it means to him and this idea that it is pretty dangerous to let hackers and foreign governments and everyone else have that back door access to our iphones. all right. time for today's top trending stories. did you see this? one of president obama's prep school teachers is now auctioning off a hand-written note from his now-presidential pupil. the president sent the teacher named only as bill an 80th birthday card last year, recalling fond memories of the hawaiian school. the teacher has since turned around and litsed the note for a staggering $12,500. >> two things i'd say on this. the first one, to get a hand-written note, that's pretty epic. i cannot imagine the president does many hand-written notes. seriously select and unique. i think it's sad to sell something like that. i don't know what they'll do with the money. i'm sure it's going to go to useful areas, but i just think that kind of thing you treasure. >> that's one for your great

grandkids. >> another one, the faa has assembled a panel to explore allowing drones to fly over people who are not associated with the aircraft. may not sound like a big change, but this could have an impact on where and how drones are used at sporting events and for deliveries. until now, the faa has sought to discourage drones from flying over or near people other than its own operator. either way, these drones are getting better and better and just awesome. >> and more scary. >> they're pretty awesome. >> flying over people's heads? >> they're quite easy to control, for someone who's not very good at these things. they're so advanced now. they're pretty easy. >> i see accidents. turns out there's a new billionaire capital of the world. china has now taken over the united states for first place with a total of 568 billionaires in its ranks. the u.s. dropping to number two with 535 billionaires. despite the second place finish, the u.s. can claim the richest person in the world. that would be bill gates. beijing takes the top spot with new york a close second.

>> i wonder if a couple of those are hurting from today's 6% declines. >> i wonder how much of them are actually in the chinese stock market. >> i doubt large portions of their finances. anyway, coming up this morning, we've got our must reads, including the note from citigroup everyone is talking about today. here's a hint. the risk of recession could be rising. we'll discuss that and much more on "worldwide exchange" when we're back in a couple minutes. cathy's gotten used to the smell of lingering garbage... ...in her kitchen yup, she's gone noseblind. she thinks it smells fine, but her guests smell this. ding, flies, meow febreze air effects heavy duty has up to... ...two times the odor-eliminating power to... ...remove odors you've done noseblind to [inhales] mmm. use febreze air effects, till it's fresh and try febreze small spaces... ...to continuously eliminate up to two times the odors...

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it's throwback thursday. we're celebrating hollywood ahead of the oscars by playing our favorite throwback movie songs. this one was my pick, revealing my true cheesy colors, i'm afraid to say. it's not just the song i like. it's more the film, sara. i love this film. i think it's a great blockbuster, popcorn munching movie. bruce willis, liv tyler. >> it wasn't the song, getting ready in the morning? >> only like once a day. that's my choice. we've still got yours. >> i think i can out-cheese you. >> i think we're closing out the show with yours. >> it is the grand finale. time for this morning's must-read stories, the ones catching our attention this morning. i chose that research note from citigroup out titled "the rising risk of global recession." citi economists writing, quote, should the u.s. economy falter, it would be difficult to identify any major economy that could be the growth engine for the world in the near term. this has been a lingering fear. has to be for financial markets and for those that are tracking

global growth. that is china was the growth engine, really, out of the crisis along with emerging markets. those have since faltered. europe, not growing at all. japan not growing. the united states has been the bright spot in the global economy, but we're starting to see some mixed signs. yesterday's services number was a little worrisome. the new home sales number fell. we'll have to continue to watch this economic data. >> i think at the margin for global growth, which emerging market's delivering now? >> india. >> but not as significant as you might want. very important read. there's a cnbc.com writer of the citigroup note. have a look. my pick is "the financial times." it's titled "boris johnson is wrong, parliament has the ultimate authority." this of course relating to the brexit debate. the author writing, to take back sovereignty can be to surrender control, high on the list of british interests today would be the security of the european

continent. these interests are best pursued through alliances. boris johnson coming out this week to really highlight the issue of sovereignty as why he's opposing membership, favoring an exit. what i wanted to add to this as well, whether or not boris johnson's right about sovereignty, it's the correct issue in my eyes for him to focus on to garner support with voters. the kind of approach of focusing on immigration. that doesn't swing the swing voters. i think the people that focus on that issue, they've already decided they want to the exit. boris johnson correctly is going for the jugular on the key issue that really affects most people and may swing people either way. >> and we had an editor on "squawk on the street" tell us that boris johnson is more popular than david cameron, which i didn't realize. >> i don't know if there's any definitive evidence of that, but he can certainly galvanize popular support in a cross-party nature. he's popular in all areas because he's a bit of a fool and he plays up to it. >> which is probably why the

pound has gotten slammed all week long. we are coming up on the top of the hour. that means that the crew is getting ready for "squawk box" in new york city. andrew ross sorkin joins us with a look at what's coming up. got to ask if you saw the tim cook interview on abc last night. i thought it was very effective to hear him argue the apple case in his own words. >> i thought it was pretty effective too. i think ultimately, you would never tell a door maker or a key maker you shouldn't try to make a stronger key, but the problem, of course, is not only are they doing it -- obviously not only are they trying to block it in this instance, but in all instances. i don't know if you read "the new york times" this morning. they're trying to make it even tougher. effectively, throw away their own key. then, to me, there's larger questions long term about what means. i did find it effective. i still have mixed emotions though about where it ultimately will land on this entire debate. i should tell you, beyond the

apple conversation, which i know we are going to continue here on "squawk box," we have james bullard on at 7:00. if you want to understand what's going on with the fed and what the fed may or may not do in the future, i think it's going to be an interview to watch. i did want to give you that little plug. >> a must-see interview. push him on the possibility of negative interest rates in the u.s., please, andrew. we'll certainly be tuning in. >> i will do that. >> still lots to come on "worldwide exchange." our next guest says it's not just the british pound and the threat of brexit that's dragging down the euro. citi's head of america's g-10 fx strategy joins us after this short break. stay with us here on cnbc. nobody move! get on the floor! do something! oh i'm not a security guard, i'm a security monitor.

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it's throwback thursday. as an homage to the oscars, we're play manager our favorite throwback movie songs. this is mine. it does not get better than

celine dion. >> look how young leo looks. i love leo. i'm glad you picked this. >> you agree with me? >> i'm as cheesy as you, i'm afraid to say, despite being the man of this partnership. this has piqued my interest. i'm going to watch "titanic" again this week. >> it never gets old. never let go, jack. >> we need to move on. joining us now is a titanic of the foreign exchange strategy industry. we're going to talk to him right now about what to watch. very good morning to you. thanks for joining us. >> my pleasure. >> we teased up already this idea of brexit. i want to tackle that first. is this really just an issue for euro as well as the pound? >> i think it's a matter of how currency markets really look at the risk. you know, the immediate news was

both the referendum in the agreement between the u.k. and the eu, how that was received at home. we all saw the news about how cameron's cabinet took it. that's immediately going to hit the pound. expectations are now this has gotten very real. i think the secondary response is, what does this mean for europe? you look forward down the data calendar, you have the ecb coming up. you have a selloff in peripheral spreads. you have italian yields winding. you realize this is something that the ecb also has to begin to address as well. so i think the pound move is the right one first. now you have to ask the deeper risk, what does this mean for the eu as well as the eurozone? >> do you think on the ecb point that kuroda has now forced draghi's hand and we're going to have to see much more meaningful easing from the ecb itself? >> i think there's definitely a need for more easing out of the

ecb. i don't think it's been a forcing of a hand. but what i think markets are coming to the realization of is more cuts and more qe just hasn't been enough. it hasn't been enough on the inflation front. it hasn't been enough on the growth front. specifically with the eurozone, you now have issues within the banking system, within eurozone risk premium getting priced in. so really, i think the question that markets are looking for from draghi is how is he going to address this? just cutting rates by ten basis points, that would be a disappointment if that's all we get on march 10th. if they begin to look at how they purchase the bonds, how they can begin to address this issue of the widening spreads, that's much more meaningful. not only just for the euro and where the currency would trade but really, what is the tact of policymakers from here going forward? they're certainly getting challenged by the market. >> rich, let's talk levels. when the pound dropped below 1.39 yesterday, it's like, that's it. we're taking "worldwide exchange" to london. i remember when it was two to one. how much lower can it go?

>> you know, there's a long time between now and the vote. our expectations, it's not going to be just the pound that pushes it lower, but we do have some optimism on the u.s. economy and the u.s. dollar. i think, you know, for a broad range of where we should be by june, between 1.35 and 1.30 would be my expectations. certainly when you talk about euro sterling, between 80 and 85 would be where i expect it to trade before we come to the vote. this uncertainty is not going to go away. your polls are going to remain 50/50 up until the date. then you have to think about, to a large extent, what are you going to do with your portfolio risk? to a certain extent, you have to hedge your exposure. investors have been significant investors in the u.k. since 2012. so all of that does mean some exchange rate risk from here up until bed. >> so more room to fall quickly as we look to the u.s. session and wall street. the strong dollar has been such a pain for corporate america. has the dollar done the bulk of

its strengthening for now? >> it's always in fx. which is the least worst off, which is the best worst off. i think you're going to find there's more resilience in the u.s. economy. that's going to make it stick out against both europe as well as japan, as well as asia, as well as, you know, most of your g-10 economies. the dollar strength is probably going to be with us for a period of time. i wouldn't look for significant outperformance. certainly if i had to go long a currency from here until midyear, that would be my favorite right now. >> okay, rich. thanks so much for joining us today. very much appreciated. >> all right. we've only got about a minute left. quick, a few things to watch. i'm going to be watching durable goods as a sign of whether businesses are investing in capital equipment. that report coming out at 8:30. it was a disappointment last month. >> i'm going to be watching "squawk box," particularly the latter two hours, to see james bullard. he can move the market. negative interest rate, that discussion very important.

that's it for "worldwide exchange." thanks for watching. "squawk box" is coming next. have a very good morning.

breaking overnight, a selloff in china. stocks plunging more than 6%. that's the worst session in more than a month. apple versus the u.s. government. ceo tim cook speaking out. he says the software that the fbi wants apple to create would leave millions of americans vulnerable. the ceo of restoration hardware blaming bad quarterly results on stock market volatility. the shares getting crushed. details straight ahead. it's thursday, february 25th, 2016. this stands for x. we'll talk about that as well. "squawk box" begins right now.

live from new york, where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" here on cnbc, first in business worldwide. i'm andrew ross sorkin along with joe kernen. michelle caruso cabrera is with us today. becky is off. the shanghai composite plummeting overnight. we'll vl more on that china selloff in just a minute. by the way, you might have seen the chinese makes comments about donald trump. >> great minds think alike. that was the lead on grudge, that china actually warned -- they said, we're not going to speak about u.s. presidential candidates specifically, but one in particular, it's troubling he's winning all the states. with his fiery rhetoric about currency