hi, everybody. welcome. you're now watching "street signs." i'm louisa bojesen. >> and i'm nancy hulgrave. these are your headlines. >> european stock markets brushing off a solid session in asia, not helped by weak services data out of france. >> the markets have gone a little bit too far. i think the fed will be encouraged by continued strength, particularly in the labor market, and the fed is also worried about the collateral damage of staying too low for too long.

>> and the feud goes to a new level, telling cnbc the u.k. chancellor has foot in mouth disease. >> does he really seriously believe that by mocking me he's doing himself any favors? well, positive messaging have the french advertising group, issuing strong guidance for the first quarter, sending shares to seven-month highs. and burning rubber. con nenal says 2016 has started off well and hikes its dividend by 15%. coming up, we'll be speaking to the tire maker's ceo later in the show. hi, everybody. good morning. welcome back, nancy. you've been out traveling.

>> i have. taking the pulse of the global economy in geneva. see what the automakers have to say. >> always good to get out and hear what the company heads are saying. we're getting a little data through on our wires. as it stands, we've been looking at this weaker data coming through from europe of late. the february services pmi figures now being printed. we're looking basically at february being the worst month for eurozone businesses in over a year. that's the message coming from these pmis. the final composite pmi reading, 53. the flash reading was 52.7. the final of january, 53.6. it stands at a 13-month low. a little better than the flash rating. still, we're somewhere around these lower levels. the february final services pmi at a 15-month low. expectations, 63.1, which is a little higher than the flash estimate and a bit lower than

the final. first quarter the gdp growth could be a little slower. the firms cut prices at their steepest rate for a year. so the weakness continuing. >> and also we were just talking about the automakers, what they have to say about the european climate, but also keeping this focus on what the voels kag gone diesel scandal means for the wider industry. as we speak, we're getting audi earnings. it does appear the scandal continues to take a bit of a toll. we're seeing earnings fall on the year. operating profit fall about 6% last year. that was somewhat to do with the cost tied to the diesel emissions scandal and provisions for the recalls of the vehicles. we know the recall plan here in europe still waiting on details of what that process looks like in the united states. i did speak to the audi ceo there, saying that continues to bring uncertainty on the company. overall, it's the operating martin. that did slink to 8.3%. some of this is due to a ramp-up

in costs tied to new models. we were looking at the q-2 there, the lower entry suv model. that is coming with significant costs, but they need these new products to keep boosting demand. audi, for a long time, has been a cash cow for volkswagen. >> absolutely. here in europe, our markets this morning, we're currently a little more in the red than in the green, as seen here on our main european map. the stoxx europe 600 off by half a percent or so. we're just trading a little bit in negative territory. still weighing up what's driving us, whether it's the central bank, the price of oil. >> let's liu look how these moves are playing out. it was a bit of a mixed day yesterday. now red arrows across the board. ftse 100 closed slightly lower yesterday. now off about a quarter percent. similar story for the xetra dax.

remember, we did see five straight days of gains for the european stoxx 600. we can't ignore a move in the oil price, however. we have brent crude giving up some of the gains we saw yesterday. off about 0.6%. wti crude also off about a quarter of a percent. we did see the strongest levels since early january yesterday. this was despite a creep up in inventories yesterday as well. a lot of optimism there. still about coming together, of opec, non-opec players. venezuela's oil minister says over 15 countries are now set to take part in an upcoming oil meeting. the crude producing nations are due to discuss the next steps in the output freeze agreement as well as other measures to prop up the oil price. this comes as china's services activity expanded at its slowest rate in three months in february. this is of course a worrying sign for beijing policymakers who have committed to

rebalancing the chinese economy towards more consumption and a way for manufacturing. well, let's get straight out to sri, who's in singapore taking a closer look at that market reaction. hi, sri. >> hi there. yeah, let's start with the data from china because i think the concern is that, yes, we saw growth in the services sector, but at a slower pace than anticipated. so this was a concern because the services providers, when you look at the rebalancing process, should be the more promising component of the economy. so if there is a sense that we are getting some infection from the malaise in manufacturing, that's spreading into services, then there's concern that the broader economy is being affected. the other factor is whether services can pick up the slack from the manufacturing sector. we've seen a considerable number of layoffs there. can those workers find jobs in the services industry?

is it strong enough? some question mark, really, over the rebalancing process. the markets seemed to shrug off the data. still riding on the coat tails of the rrr cut we saw earlier on this week. i think it's safe to say we're in a holding pattern as far as market sentiment is concerned. we got the npc. that's a main policy forum for longer term economic management. it will be interesting to see, get some insights on where the reform agenda is, where are we seeing reform. so that's going to inform the trading sentiment in the near term. very quickly, i want to say the real driver of the confidence today, and we are seeing gains but on a more measured pace today, seems to be externally driven. it comes down to the u.s. data. it's going to come down to the payrol payrolls, what that does to sentiment and the u.s. dollar. that's where we stand. >> back and looking a the that

old horse, the payroll data. sri, thank you. really fantastic to have our next guest with us. by all means, get your e-mails through so we can pose them to him. streetsignseurope@cnbc.com. we're on twitter as well. bill rhodes joins us. he's of course former senior vice chairman at citigroup. good to have you with us. >> nice to be with you in person rather than doing it indirectly from the u.s. >> i know. always nice when it's in person. you've seen a thing or two in your time, i hope you don't mind me saying. that's a compliment. you've helped to restructure billions of dollars of debt. i'd like to start off by getting your general thoughts on where the economy is now because you've put out a couple pieces recently, and they don't look too optimistic. >> i think we're in a very difficult situation. you were talking about china. we can start with china.

there's no doubt china's growth is slowing. this new normal of china moving from export-heavy industry to consumption is going much slower than the chinese leadership thought. in addition, they're having problems deciding what they want to do with the yuan, their own currency. you can see how concerned they were. the moment the g-20 meeting was over, my good friend who runs the people's bank of china, decided to drop reserve requirements by 50 basis points. normally they do it by 25 basis points. the reason they didn't give a rate cut is they're concerned about the significant outflow you're getting out of their reserves. a year ago their reserves stood at almost 4 trillion. they've dropped something like 700 billion in that period and 200 billion in the last two months. so they're concerned about that. and they haven't posed any exchange controls, but they're making it difficult in a lot of areas for the chinese to get money out. so they're concerned with growth in china.

there's no doubt about it. and if china doesn't grow, that's a real problem for the world. >> what do you think they should be doing? are they going down the right path in terms of cutting reserve requirement ratios, in terms of continuing with stimulus? >> well, i think the real problem there is they're not tending to questions like the oversupply in housing, the tremendous debt that's been built up by municipalities, provinces, and state-owned enterprises. they really have to move on doing something about the debt overload and really doing something more aggressively in the state-owned enterprises. so this is a short-term move to get them to 6%, 6.5% this year. evened -- so i think we're in a highly volatile situation, which i just mentioned my latest

op-ed, and i think that'll continue this year. of course, what's going on here in the u.k. with brexit and the deflationary situation in the eurozone is not helpful. >> and bill, you just touched on the fact that of course what's going on in china, in your view, continued slowdown, is not good for the rest of the world. let's bring this back to the u.s. we continue to get solid data out of the united states. we're waiting on the nonfarm payrolls number, but are concerns over china enough to keep the fed from raising rates this year? now we see markets pricing in one again more likelihood of a rate increase. >> well, i think the fed was caught out by waiting too long to raise rates. then they gave indications, as you know, two months ago that they'd probably move forward four times this year. i think janet yellen is backing off a little bit on that. so the question mark is are they going to do something this month or not. i'd be kind of surprised if they do something. the united states, among the

major world economies, looks pretty good in some ways. but the united states is not an island. there's a lot of concern about manufacturing, which is not strong in the u.s. and the consumer has been pretty conservative. most people would have thought the consumer would have been more aggressive with the cuts in gasoline prices than they have been. so i think while the u.s. doesn't look bad, i don't think 2% growth coming out of the great recession, which ended a number of years ago, is very good. >> bill, you're with us for the first part of the show here. so again, by all means, get your questions through for bill. streetsignseurope@cnbc.com or @nancycnbc on twitter or @louisa bojesen. we'd be happy to pose your questions to bill. the french economy minister has given a stark warning about the fallout from a brexit. speaking to "the financial times," he said britain's

financial services sector would lose its passport, allowing it to operate across the eu. he also said the french government would, quote, roll out the red carpet for bankers fleeing london. he also warned the migrant camp would relocate to britain as border control agreements would be breaking down. now, speaking to cnbc in abu dhabi earlier, he said the pro-brexit campaign had a strong intellectual case. we also asked greece's former finance minister about his new role advising britain's labor party. >> we have to bind together and find common solutions to a common predicament. i talk to jeremy corbett because he talks to me. this is what we're doing in europe now. we have this movement that we've started for the purposes of having, at last, a conversation

amongst democrats. the purpose should be to consolidate and find a common problem for arresting this slide into an abyss. and we're sliding into an abyss in europe. just look at what's happening. we have divisions within our countries. it's about time that we pull together and stop playing little political games with one another. >> let me just nail this down for a moment. can you confirm, are you receiving any money from the labor party for advising? is there a contract in a business sense where you give advice to them in return for something else? >> let me generalize my answer. >> no generalizing. it's very specific. so when george osborne says you were recruited because chairman

mao was dead and mickey mouse was busy or cameron says it's acroplis now, to paraphrase, and tom says is beware of greek sparing gifts, how do you react to this onslaught? it doesn't seem very polite to you, does it? >> i don't mind that. two things upset me. firstly, the country that's given us some of the best comedy in the world is being subjected to such low-level, unfunny jokes. more seriously now, it intrigues me that he should have this foot in mouth disease. thub it. he and david cameron are facing a referendum. who is their worst enemy in this referendum? people from their own party. people like boris johnson, like

michael howard. they have a very strong intellectual case against the european union in favor of brexit. when boris johnson, for instance, declared he's going with brexit, he said quite correctly that brussels is suffering from a serious lack of democratic controls. he was utterly right. i'm campaigning in favor of britain staying in. but the intellectual strength of the johnson position is very good. when osborne comes out and pokes fun at me, obviously trying to luxuriae in the fact i'm a defeated finance minister, which i am, trying to impose upon us another bailout, and the british people know that, does he really seriously believe that by mocking me he's doing himself

any favors in his intellectual class with people that are more soundly intellectual than he is? i don't think he's doing mimhimf any favors. two weeks ago he had another such incident when i believe he said joe mcdonald and me, we have a similarity, we've lost our marbles. i responded to that saying, well, our marbles were stolen. so he seems to be unable to prevent own goals being scored. >> the former greek finance minister speaking to our colleagues there. look, there has been mud slinging on both sides of the fence. and he was not in an easy position, having to try to get greece out of the severe difficulties it was in and still continues to be in now as well. whether or not you're a fan, that's a different story. the insults justed a flames to

the fire. >> well, two points. first of all on the comment about the french finance minister and welcoming english financial firms and others to come to france, that's just payback time for what was said by cameron and osborne a couple years ago when the french economy, which is not in good shape, was even perhaps in worse shape in saying they would welcome any french companies that want to relocate to the u.k. i view that a little bit as payback time. one of the things i think he's correct about is the refugee problem. i really think that chancellor merkel opened up pandora's box and she and her government don't know how to close it. what he's talking about, the split in eastern europe, is a reality. the eastern european countries, members of the eu, really do not want -- and some of them are members of the eurozone -- do not want to participate in this. the germans really haven't come up with an answer.

unfortunately, greece is bearing the bankrupt runt of it. i have a piece coming out today in one of the leading greek newspapers talking about the need for the eu to clarify their policy with greece. here's greece really still in depression, not recession. remember, this started in 2010. to lay on them this refugee problem, which was none of their own creation, has really made life difficult. so with all of the insults and everything back and forth, he has some points when he talks about his own country. >> do you think we could see a situation where we sacrifice greece as part of the european project because in an essence, as some argue, has become a prison for refugees who cannot get in and those who are in can't get out? >> i think that's one of the dilemmas. of course, merkel now, who thinks she saved greece for the eurozone and the eu, now is

saying we've got to go to the support of greece because that would make her decisions look bad on greece. i think the problem here is we have a crisis of leadership in the eurozone and in the eu as to what to do on the refugee problem. this is something that i'm sure boris johnson is going to exploit very strongly, you know, with his calls for if not leaving the eurozone, modifying. >> we've got to leave it there for now, bill. thank you very much. if you want to find out more about the war of words, head to our website. cnbc.com. >> and still to come here on the show, we're talking about a good deal hunting. the movie studio behind hits like "pulp fiction" and "good will hunting" finds itself on the trading block. we'll tell you more after this short break.

welcome back to "street signs." let's give you a check on some of the individual movers here this morning. the markets appear to be cheering a major management shake-up at schroders. dobson will become nonexecutive chairman. the current chairman is retiring as well. this comes as the british asset manager reports profits before tax rising almost 8% year on year. that beat forecasts thanks to strong investor inflows. the stock higher by about 2.7%. >> jcdecaux shares jump after a strong full-year income. it also increased a 12% jump in the dividend.

>> also hovering at the top of the successtoxx 600 is aggreko. the u.k. power provider said it's now on track to deliver 80 million pounds of cash savings from reorganization and procurement. >> investors looking very closely at whitbread, trading up this morning. sales in the 11 weeks to mid-february grew 11%, which is seen as being a bit light compared to conconsensus. the company is on track to deliver full-year results in line with expectations. >> and adidas reported a worse than expected fourth quarter net loss of 44 million euros, but the german sportswear brand remains optimistic, and it's guiding for rising sales and profits in 2016 thanks to big sporting events and marketing. well, louisa, this is a stock we've been watching for quite some time. of course at the center of the athletic leisure wars.

adidas always seems to be trailing a bit. we know they're trying to make big improvements in the women's wear, which is a hot sector. always waiting for the new ceo. >> they bought reebok back in 2005 because they were trying to gain inroads. hasn't quite worked. i want to know whether or not he might be wanting to get rid of reebok. do you know anybody who wears reebok? >> well, they're trying to do a little trendy push. i actually have a pair. i wear it to my before core class. >> are you in athletic wear? >> i'm a swimmer. i'm into all of that stuff. >> and the materials, they've changed. they're so comfortable you don't want to take them off ever. but yeah, more coming up on that front. >> exactly. you can tune into "squawk box" at 12:30 cet as cnbc speaks to the company's ceo herbert

hainer. >> now, ahold shares beating forecasts thanks to online sales and a strong holiday season. the dutch supermarket group said its acquisition of delhaize is on track to be completedly mid year. earlier today, "squawk box" spoke to the ceo and asked him about the group's focus on online markets. >> including the online proposition we have in the u.s., i'm sure we bring the omni channel world to our customers, focusing on investment, price, and quality is something we continue to do. that consolidation in the market is a big benefit of further growth opportunities for the company. >> and continental 2015 net profit rose 15%. that was 2.7 billion euros. this as the german autoparts

maker also hiked its dividend. meanwhile t confirmed its full-year outlook. stock trading higher by about 1%. we will get into more on the outlook and details coming up here on an extended version of "street signs." we'll be speaking to the ceo at continental. now, japan's asset management business is being reshuffled as two major players are going to be merging to create the largest firm in asia. >> yes, mizuho financial group and daichi life will merge to create a new firm. the new company called asset management one is scheduled to launch on october 1st. its combined assets will be worth about 50 trillion yen or around $430 billion. the firm would be asia's large

nest terms of asset size. scale is key in the business, as top asset managers' recent earnings show the larger the size of assets, the more the growth in revenue. both parent companies hope the increase in scale will help boost returns. at the same time though, they say more people are seeking an alternative to place their bank savings. they say opportunities arising and more demand for low-risk asset management. while being the largest in asia, the new company will still trail far behind top global players, such as black rock and vanguard group, which managed several trillion worth of assets. that's all from the nikkei. back to you. >> thank you very much. now, stay tuned. we'll be crossing out to the global markets forum in abu dhabi where hadley and jeff are joined by camels, by the looks of things. we'll be back in a second.

good morning and welcome back to "street signs," everyone. i'm nancy hulgrave. >> hi, everybody. i'm louisa bojesen. your headlines today -- >> european stock markets brush off a solid session in asia, not helped by weak services data out of france. >> the markets have gone a little bit too far. i think the fed will be encouraged by continued strength, particularly in the labor market. and the fed is also worried about collateral damage of staying too low for too long. >> well, varoufakis takes his feud with osborne to a new level, saying the u.k. chancellor has foot and mouth disease. >> does he really believe that

by mocking me he's doing himself any favors in his intellectual class with people that are more soundly intellectual than he is? >> a positive message from the french advertising group, issuing strong guidance for the first quarter. that sends shares to seven-month highs. >> and continental saying that 2016 has started well. they're hiking their dividend by 15% incidentally. in around half an hour, we'll be speaking to the tire maker's ceo. stay tuned for that. welcome back to "street signs." we want to the give you a check on australian dollar trade because we have seen sterling hit session lows just on this data we're getting as we speak on services pmi coming out of the u.k. showing that pmi of january at 52.7. that's down from 55.6. it's also the lowest level since

march 2013. and keep in mind this is well below forecast as well. reuters poll was looking for a reading of 55.1. that services reading in the u.k., however, at 52.7. interesting to note here, we've been talking about the brexit debate for weeks now. for the first time, u.k. services companies are citing the eu referendum uncertainty in this pmi survey. as you can see there, the sterling-dollar trade off about 0.3%. >> we were just talking about the migrant or the refugee cries is as well here in europe and greece's role in it. the greek prime minister being quoted via reuters, stating that europe has shown a weakness when it comes to dealing with the migrant crisis and dealing with unilateral actions of member states. he talks about how greece has already undertaken a disproportionate burden from the refugee crisis, and he expects the eu will acknowledge that it can't carry the migrant burden on its own. a whole bunch of flashes coming through, talking about how the relocation of ref you fwu through, talking about how the

relocation of ref you fwgees ha start immediately, that financing will be needed and that the situation is exceptionally crucial for the future of europe. so those comments just coming through via reuters. >> well, let's give you a closer look at how the european markets are faring. a rather mixed session after the five straight days of six. the ftse 100 turning positive just barely. after that data showing u.k. services lower, we're seeing a slight turn. the xetra dax off by just about 0.1%. the ftse mib holding in positive territory, but just barely. >> now, the u.s. futures and what's happening in the fixed income markets as well, here

fair value indicating a flat hope in the united states. we're still a couple hours away. when it comes to the bond market, another leg down. expectations of more hikes to come from the fed because of the improving economic data. well, that's helped to lift treasury yields to a three-week high. the two-year note also hitting levels we haven't seen since mid-january. a little rejigging taking place. let's head out to abu dhabi. jeff and hadley join us once again from there. you've had some really interesting interviews. >> it's been fascinating this morning. >> he did signal he's willing to work with anybody he thinks believes in it at least.

>> absolutely. mohammed was fascinating. he told us the banking system just isn't set up to work with negative rates. and that the consequences would not be good if that's the way central banks continue to go. >> also heard from the ceo of the national bank of abu dhabi, saying he's not really that worried about liquidity. and he didn't think there would be much consolidation. >> andrew wilson is with us. good to see you. >> thank you. >> let me just start off with the market. we've had a little bit of a rebound in risk appetite here. i wonder what that tells us now about the tone of markets and what we might expect through the rest of this quarter. >> yeah, well, it maybe tells you we started the first four or five weeks with a really negative tone. to some extent, it was getting back to reality maybe. whilst the global growth picture is soft, it's just not that bad. the fall in the oil price to us was not a precursor to much

weaker global growth but really a sign that the oil market just is in excess supply. i think to some extent, that rebound in the oil price, that's been part of that recovery in risk assets, is just recalibrating people's views of global growth may be around 3%. that's what it was in the '80s and '90s. that is not so bad after all. u.s. economy looks pretty good to us. so i think to some extent, we're getting back to perhaps a more realistic outlook for the rest of this year. >> but is there a disagreement still between the fed view and the market view? mohammed said he thought that the fed would still try to get two more rate hikes in at least this year in spite of the market's histrionics. what do you think? >> i think that's right. there's definitely a disagreement. if you look what's priced into the market, there's not two hikes priced in by the end of this year. i think something like one or two hikes seems like a reasonable estimate. i touched on it before. the u.s. economy is doing well. think about some of the inflation numbers, whether it's

core inflation, average hourly earnings, all of those have come a little above market expectation. i think the fed will sit there thinking we ought to really accommodate a policy, a really tight labor market, and some upward pressure on inflation. i think they will want to move and acknowledge what's going on in the global economy. clearly it has an impact at times. it's not going to be enough, i think, to prevent them from moving. >> speaking of those pressures, we're coming up on an election cycle. obviously the u.s. presidential election. we've been talk abouting what a donald trump presidency could look like and what that would mean for the markets. have you been able to sort of price that in? >> i think it's really difficult to price in an event in november. we don't even know if he's going to be the candidate. then you've got to work out who wins between the democrats and the republicans. so i think it's a little too early to tell. there's just enough things going on in other asset markets that we touched on to try and price that in. i think as we get closer to that date, the markets will start to focus on that issue.

>> where's the value in the market right now in fixed income? >> with yields this slow, it's very difficult finding value. i think we would point to high yield bonds. i think there's areas there where you're starting to see value as a result of some of the distress in the energy market, but it's spread out right across the high yield. i also think the select places in emerging markets as well where you've got value being created. >> jeffrey gundlack, who's a bond market investor, talked about carnage potentially lurking in the high-yield space. you think that's wrong? >> well, i think you got to differentiate between the energy sector and the non-energy sector. there's undoubtedly going to be a wave of defaults in the energy sector, unless we see a big rebound in oil price. i think that distress the energy sector has created gives you opportunities outside the energy sector. >> talk about those opportunities, particularly here in the uae and in the gcc countries as well. obviously this is a region very

much impacted by the price of oil. at the same time, this is a country that's managed to diversify to an extent. what's your outlook for this country? do you see opportunities here? >> well, you know, the markets here are pretty small from an investment point of view. but it's interesting. traveling in the region now for four days, and i would say from outside of it, we all think with oil prices here, there must be a lot of distress. when you talk to senior officials in this region, they're much calmer, they're taking a longer term view. they've seen these cycles before. i think it's undoubtedly putting some fiscal pressures, we've seen some adjustments taking place. there's been a real diversification in terms of their gdp growth. it's nowhere near as reliant on oil. some of it is diversification away from just being oil reliant. some of it is actually some sort of good management of economies as well. it's interesting. the distress here is much calmer than new york or london. >> what does a goldman sachs

asset management negative deposit rates playbook look like? >> negative rates, they're a challenge from an investment point of view. of course, clients are being charged to hold liquidity now. it's interesting that we're having a lot of discussions with clients of, well, how do i get away from negative? can i move further out the curve? can i perhaps go down in credit quality to try and earn some small but positive yield? so i think the focus for us is how can you do that without giving up licked withty because that charge is real. interestingly, of course, retail investors are still not being charged by banks. i think that's the challenge from the banking sector's point of view, how do they cope as well with negative interest rates. it gives them a real dilemma. >> it's been a pleasure catching up with you. thank you for joining us. andrew wilson coming to us from goldman sachs. we've been on the ground for a couple days in abu dhabi, enjoying the hospitality at the global financial forum. if you have to come up with two

or three takeaways, where would you start? >> certainly would talk about oil quite a bit. the fact everyone here is talking about they are diversifying, they've got a long way to go, but there are certainly opportunities here for investment that are not within that part of the energy sector. also, of course, everybody is talking about the u.s. presidential election. >> u.s. presidential election. that one is going to run and run for the rest of this year. >> it's the gift that keeps giving. >> certainly does. the global financial markets forum here in abu dhabi. thanks, everybody. >> jeff, hadley, great coverage. we've enjoyed it. jeff, i think you need to get one snapshot with those camels before you go. thank you. meanwhile, we've been talking this volatility kicking off the year. not very kind to emerging markets. one potential bright spot, argentina is edging closer to a $15 billion bond issue. this would be its biggest emerging market bond issue since 1996 as the country looks to put to bed a long standing debt

argument. bill rhodes is still with us. who better to talk to. you have extensive experience in this area. what's your view on argentina? they've finally struck this deal with elliott advisers. but is there stilt a considerable challenge when it comes to getting this approved? >> i think there are a lot of challenges overall, but i'm very impressed with how he's organized himself. he moved very rapidly to unify the exchange rate. he also moved very rapidly to take off the taxes on agricultural produce, which is the big export of argentina. i knew he would move very rapidly, and i predicted it two months ago when you saw my piece here that he'd move very rapidly to get this debt restructuring over. so he's really ahead of schedule in what he said he's going to do. now he's got to get it through congress. they're fractured. i think he's going to be be able

to get it through. so if you want to look at a bright spot in the south america, no doubt it's argentina. and it's not just huim. he has a great economic team. in all the years i've been covering argentina, which goes back a long time, the men in government had some bright spots. but i think he's understood all of the mistakes those governments made. so he understands he's gott to move rapidly, and he's doing so. >> do you think venezuela is going to default on its external debt? a question coming through from gary. >> there's no doubt that they want to, particularly with arrangements with chinese. their budget is about 90% dependent on the price of oil.

if oil stays anywhere in the 30% to 40% dollar range for the next year or so, they're in real trouble. so they're doing everything possible to avoid defaulting. i think there's a big possibility they may be forced to do some restructuring. >> and we can't leave the region without asking you about brazil. day after day, the situation there seems to be getting uglier. what is the outlook here? is there any hope for change unless we get a political change at the top? >> that's a very good question because the country is going through what i call perfect storm. some people think it's of biblical proportions. now that you've added the health problems with dengue and zika virus, they've really run away with inflation. the central bank is afraid to raise rates because they're so high. at the same time, unemployment is growing very rapidly.

the gdp was 3.7% negative last year. some people think it could even be 4% this year. the question is leadership. they've got to be able to put together an economic program like 20 years ago with the real plan. instead, she's defending herself from impeachment. so it's a very difficult situation and will continue to be for the rest of the year. >> bill, i'm getting the eyes from your posse. they're here to sweep you away to your next meeting, which you're supposed to be at right now. we'll let you go. thank you very much, bill. bill rhodes joining us, the president and ceo of william rhodes global advisers and former senior vice chairman at citigroup. we really appreciate your time. feel free to run off set. >> i'm happy to be back with both of you. i think you'll find it interesting, particularly talking about argentina, brazil, and venezuela.

>> by all means. >> very good to be with you. >> lovely to have you back. thank you very much, bill. keep your e-mails coming through. the address is streetsignseurope@cnbc.com. we're on twitter as well. >> i'm on @nancycnbc. >> and i'm @louisa bojesen. you can also find the actual show on there. >> we want to hear your views. meanwhile, we've been watching the story around miramax. known for their popular films like "pulp fiction" and "good will hunting" will continue to operate as an independent tv and film studio.

welcome back to "street signs." spain's socialist leader has failed on his first attempt to become the next prime minister. only 130 out of 350 deputies supported candidacy. if a decision is not reached later this week, they'll have just two months to form a new government. >> and european council president donald tusk said the eu must restore the schengen rules. however, tusk added he sees further entry controls on the outer firm of the eu. and the australian transport minister says it's too early to tell whether debris that washed up in mozambique is from malaysian airlines 370. north korea launched multiple short-range projectiles toward the sea of japan

following a u.n. resolution enforcing tougher sanctions on pyongyang. now, south korea's defense ministry said it was working to determine what exactly north korea had fired. now, the former chesapeake energy ceo aubrey mcclen don has died in a car accident hours after he was indicted on charges of rigging bids to buy oil and natural gas leases. >> aubrey mcclendon was a natural gas titan who revolutionized the energy industry. he died in a single-car crash in oklahoma city. the only occupant in a sport utility vehicle that slammed into a concrete bridge support. >> he went left of center traveling at a high rate of spied, and collided into the west embankment wall of the overpass. his vehicle was engulfed in flames immediately, and he did not survive the accident. >> mcclendon's death follows an

announcement tuesday he had been indicted for allegedly conspireing to rig bids to buy oil and natural gas leases in northwest oklahoma between december of 2007 and march 2012. mcclendon a key player in the u.s. shale boom helped to found chesapeake energy in 1989 before stepping down in 2013 after a series of investigations into his business practices. chesapeake filed a lawsuit against him in 2015 accusing him of misappropriating company data. he founded american energy partners after leaving chesapeake, where he served as chief executive. the company put out this statement. >> aubrey's tremendous leadership, vision, and passion for the energy industry had an impact on the community, the country, and the world. we are tremendously proud of his legacy and will continue to work hard to live up to the unmatched standards he set for excellence and integrity.

mcclendon, a duke graduate, was a part owner of the national basketball association's oklahoma city thunder. he denied the charges filed against him yesterday. he was 56 years old. >> now, chinese policymakers say they will maintain their easy monetary policy as leaders in over 3,000 delegates meet for the national people's conference in beijing. joining us now is head of research at ashmore investment management. pleasure to have you with us. once again, we're looking to see exactly what chinese authorities can do to prop up some of this economic slowdown we're seeing. but you're more optimistic than the consensus when it comes to investing in china. particularly, you like the fixed income plays. walk us through that and why are you so confident? >> china is trying to rotate its growth model away from a very, very successful export-led model that's worked for the past 25 years and taken china from a back water to the most

successful export-led economy in the world. but that trade is over, if you wish. the future for chinese exports are not as bright as they've been before because they were essentially predicated on debt-fueled demand in the western world and the ability to keep the currency weaker in china than the rest of the world. but with the rest of the world printing money and the debt crisis hanging over the western world, the chinese are rotating towards consumption-led growth. china has a savings rate of 50%. the room to increase consumption is enormous in china. >> yet, this transition you're talking about is part of a normal flow in china. some say it's not working as the government would like. the services data today really uninspiring. so what if this transition fails? are you still confident, especially when it comes to the bond market there? >> here's the beautiful thing about the bond market. if the transition fails and their growth is slower than expected, they're going to ease more and bonds are going to perform even better.

the opening of the capital account is by far the most interesting aspect of this because the fixed income market in china is $7.7 trillion, and nobody has any exposure. >> what do you make of some of the other emerging markets out there? i know you think they're in a better position now, but some would turn that around and say usually when you see something happen, emerging markets are the first to gain but also the first to drop. >> sure. well, em has been beaten up badly for the last four years. if you could be god for five minutes, not a benign god, but maybe a greek god, the kind of gods who like to sit up on olympus and play with humanity and you wanted to destroy em, i suggest the following recipe. first, start with a taper tantrum. then drop oil prices and commodity prices by 60%. then throw in a 50% dollar rally. just to twist the knife, throw in a rate hike as well. we've just had all that. when you look across em, we've

had no sovereigns default in respect of the sharks. we've had two technical defaults, one in ukraine and argentina. those were very specific circumstances, little to do with these shocks. em economies are much, much cheaper because their currencies are lower. they're on a cyclical upswing. and the yields that you're getting paid in em today are higher than when the fed had interest rates at 5%. so not only have you seen an asset class that has had an amazing amount of resilience, is now becoming cyclicly very competitive, but they also pay you much more and you're not buying into a bubble. so there are a whole bunch of arguments that suggest that's where the value lies. >> so where in particular, which emerging markets? >> well, i think -- i was just listening into your previous conversation about argentina, venezuela, and brazil. what i care about is not so much what the fundamentals are doing but where prices are relative to fundamentals.

provided i can be confidentable that the country is not going to blow up, then i look at the prices relative to the fundamentals. when i look at that, i think most of the argentina trade is actually over. argentina has rallied from 1400 over to about 500 over in the past two years. that's a thousand basis points nearly of return. that's behind us. so i don't see so much value there. we're going to get a lot of supply, though, which has to be absorbed in the market. even if venezuela restructures and inflicts a 50% haircut on bondholders, you'll still make money. >> we've got to run. thank you very much. >> stay tuned. we'll be right back with the continental ceo after earnings. stay with us.

good morning. a stealth rally. stocks rising to their best levels in two months, but there are new tests for the market today, including lots of economic data. fiery car rash. former chesapeake energy ceo aubrey mcclendon dies just one day after being indicted by a federal grand jury. and decision 2016. republican presidential hopefuls ready to square off again tonight, but the field looks a little different this morning. it's thursday, march 3rd, 2016. "worldwide exchange" begins right now.