welcome. you're watching "street signs." i'm carolin roth. these are your headlines. donald trump says a dossier of unverified claims of compromising conduct in russia is fake news as details of the intelligence memo come to light just days before the inauguration. the 2017 wef global risk report calls for collaborative action among world leaders. rapidly advancing technology can be a double edged sword for businesses. >> businesses have to look at

their reputations through a different lens now and the potential that fake news could be something they have to fight off in order to guard their reputation. bagging a beat. sta sainsbury trades higher, but the impact of the pound remains uncertain. a guilty plea and a $4.3 billion settlement. vw hopes to draw a line under it's diesel emissions scandal in the u.s. with a draft deal that it hopes can be sealed before the government transition. good morning. we have a lot going on. we have it all covered for you on "street signs." wanted to kick off with breaking news. the kremlin has just come out and said that they do not have

compromising material on trump or clinton. documents say russia has compromising information on trump. that's false, says the kremlin. the kremlin goes on to say hysteria is being whipped up to maintain a political witch hunt. the kremlin says they understand that tillerson will be quite tough in his line on russia. they say that possible new sanctions affecting u.s. investment in russian energy would damage russia and the global economy. if such sanctions were to happen, russia would compensate the energy sector. this morning we are slightly under water. the ftse 100 not far from the record high we saw in the last trading sessions. sainsbury is an outperformer after better than expected numbers. the xetra dax down by roughly 52 points. similar weakness for the cac 40

and the ftse mib. let's get back to this u.s. and russia saga. donald trump has dismissed a dossier which contains potentially explosive allegations about his alleged dealings in russia as fake. the president-elect tweeted he is the victim of a media witch hunt, this after several news organizations made reference to unsubstan unsubstantiated claims been the dossier. it was said information initially was circulated among trump opponents and passed to u.s. intelligence agents. neither official said the fbi was actively investigating the information, which has not been verified by u.s. agencies. the sources would not comment on the nature of the allegations. that continues to be one of our top stories. once we do get more commentary out of the kremlin or from

either side, we'll bring that to you. let's push on. economic inequalities, societal polarization and intensifying environmental damage ngers are top three trends that will impact global developments over the next few years according to the wef report. the report emphasized the need for collaborative action by world leaders in coming years to avoid the pit falls these dangers present. business and political leaders will meet to discuss these issues next week in davos under the theme response and responsible leadership. louisa asked about how rapid technological advance could be a double edged sword. >> one thing that played out over the last ten years is how that transparency of information and rapid spreading of information can be a positive

from a communications standpoint, but you can also be spreading fake news. that can be affecting politics but also businesses. i think businesses have to look at their reputations through a different lens now, and the potential that fake news could be something they have to fight off in order to guard their reputation. which was precisely, again, that the report highlighted, this misinformation area that we now all are a part of somehow, whether we're consuming it or trying not to consume it, but inadvertently consuming it. any trends that you think are stand-out trends apart from technology or within technology that we should be paying attention to? >> within technology, in the last couple years a big development has been around internet of things, these sort of sensor devices out there. they're there to improve workplace safety, risk management, to improve productivity, but they also create an array of devices which can now be subject to

cyberattack. cyberattacks continue to be the number one risk as cited by business executives in most advanced countries, and i think that risk is now larger because of the development of new technologies that are serving other purposes, but certainly increasing cyberexposure. >> is it your impression that we talk about risks, but that businesses are still behind in following on to get ahead of those trends or get to grips with the trend, for example, with hacking? >> yeah. innovation is where most of the money goes. there's a lot of upside from that. risk management, risk governance around technologies tends to get underfunded as a parallel development. risk governance tends to be behind the innovation. that doesn't mean businesses are doing the wrong thing, but it's a parallel investment that is important to do as well.

do you think davos or the world economic forum is at risk of being unseated this year because of the incoming trump administration and the whoelg theme of populism as well which doesn't quite go hand in hand with high powered businessmen and women setting an agenda? >> i think you're right. another big theme at davos is multilateral cooperation between governments, business and government, and it seems now that the political sentiment is much more nationalist, much more -- or much less, let's say, multilateral cooperation oriented. so davos, which i think will still stress collective action as the solution to bigger problems, whether climate change or geopolitical tension is going to have a challenge on its hands because i think the sentiment is moving away from that theme. >> all eyes are expected to be on donald trump today as he holds his first press conference

since july what we're hoping for is more information on his policies, given there's been so much uncertainty, i guess what we will get is information on his business dealings when he's in government. let's get go out to our guest. good morning to you. i want to talk about your u.s. rating at this point. double a plus, what do you want to hear from the future president, donald trump, that would make you more conducive to raising the rating? >> interesting question. thank you very much. as you remember, we lowered the rating in 2011. it's already five years ago hard to believe, but time flies. this was in the context of the debt ceiling debacle, when for party, political, tactical reasons the united states was almost moving towards an edge of technical default. this reflects to us sort of a weakening institutional framework where policymakers are becoming less stable, less

predictable and less effectively. i think what we're seeing now is not doing very much to actually dispel those concerns that we had at the time. so the predictability of policymaking as you eluded and heard before is very uncertain. so this is, for a triple a rated sovereign, you would expect more visibility, more continuity in policies, so right now the outlook is stable. so, you know, this should indicate that holding your breath for an upgrade is probably not in the cards. >> probably not in 2017. what if we get this massive boost to gdp, what if we see a 4% print for the u.s. at some point soon and a lower debt burden. would that make the case for a triple a rating? >> certainly that would be good, if you have more growth, less deb debt, what is not to like. the policy mix that seems to be coming through doesn't suggest this is a sustainable outcome what we will likely see, if we

have important tax cuts and if we have maybe additional spending on infrastructure and other spending programs, that would mean other things being equal that you would have a larger deficit and larger debt stock, and the debt stock is quite large now compared to what it would have been before the crisis. starting from a weaker fiscal position already. now the 4% growth, you might achieve that through fiscal stimulus in a fiscal straw fire, if you like. but the u.s. economy is operating probably close to potential. there's no obvious need to stabilize the economy through fiscal politics. we're close to full employment. so sustainability of 4% growth rate what it would take really is more progress on the productivity growth front, that you don't achieve through fiscal policy but through other means on the structural side. >> i hear that point time and time again given there isn't a

lot of slack in the labor market and we are at nine-year lows for the unemployment rate at 4.7%. back to your overall report and outlook for 2017. just under 52% of sovereigns are investment grade rating. that ratio is the lowest level. why is that? >> we've seen over the last couple of years, basically since 2008, gradual weakening of sovereign ratings. nothing catastrophe, but a slow, constant grind. so the initial years after the crisis, 2010, 2011, 2012, most of the situation was in the eurozone. right now what we actually see it's at the emerging markets. the big exception last year is the uk where we lowered the rating by two notches on literally june 25th or something like that. a couple of risks, the confluence of risks, what you would see, many of them are political in terms of more uncertain policymaking.

that's not a domain that is exclusive to the u.s. or the uk. we see that in many emerging markets, but also threats to growth. we, of course, keep a keen eye on whether protectionism would really materialize this year and in the coming years. many emerging markets are open and trade dependent. they've been greatly benefiting from the globalization of late. if this trend were to be stopped or reversed, they have much more to lose than the advanced economies. >> finally, we want to talk about the uk. aa rating on june 25th or so, a few days after the referendum. and a negative outlook for that sovereign. what exactly would push you towards another downgrade? what you're seeing out there, does it make you more uncertain about your rating currently given that there's such a muddled response to where brexit is going? >> i think the response we're seeing now is fully baked into the rating.

we were under no illusions at the time that there would be a clear plan at the top drawer that any succeeding government would pull out and implement. what is slightly concerning, there doesn't seem to be -- the eu side or the european government is, and the uk don't seem to get closer to each other. i still see the two demands of the two groups are mutely exclusive. they there may not be too much to discuss really. there's no clear overlap. so, what i've been saying is that the hard brexit is certainly the best case now. that would harm the uk economy, not just because of the trade channel but the investment channel. the uk has been benefiting more than any other eu member from foreign direct investment in recent years and decades. once the charm of serving the largest economic area in the world goes away, the uk will not be the same place for investors. then i have the issue you have

the political side, both for the uk and scotland. we're not factoring that into the rating. but if it were to go that way, that would be pretty strong pressure for more rating actions. >> thank you very much for bringing that. e-mail the show, the address is streetsignseurope@cnbc.com. get in touch with us on twitter, streetsignseurope@cnbc and tweet me directly, @carolincnbc. we will go for a quick break. coming up, it was a happy christmas for sainsbury. found out how the grocer beat the retail blues during the holiday season. all that and plenty more after this.

welcome back to the show.

in europe, sainsbury's fiscal third quarter sales over christmas topped estimates rising 0.1%. argos was a bright spot for the second biggest supermarket which it acquired last year. total sales at the catalog retailer jumped 4%. sainsbury said it is well placed to navigate the external environment but warned of uncertainty of the pound's devaluation. moving on to taylor wimpey. the company said it will deliver profitability at the upper end of market consensus. the uk home builder said it would pay significant dividends after an operating margin of nearly 21%. house completions rose 12% in 2016, cancellation rates remained. shares off by 2%. 2016 earnings out, foxtons expected to be half that of 2015 as the estate agent blames

brexit and a property tax hike. it says trading conditions remain challenging and volumes are likely to fall. foxtons said it was committed to maintaining tight cost controls while it assesses the market. and tullow's oil coo's will become the new chief executive. the oil company says it expects to post 2016 revenues of $1.3 billion, and it will incure a $700 million writedown as a result of lower oil prices. volkswagen negotiated a $4.3 billion draft settlement with american regulators, pleading guilty to criminal wrong doing. the draft agreements has outlined an independent monitor.

nancy hungerford has been covering that story for us for more than one and a half years. that must be a huge relief for the company to have that doj settlement. >> it's a relief for the company and also for investors. that's why you see an uptick in the stock today of 1% which may not seem a lot to write home about, but look at the gains year to date, even higher than 9% just since kicking off for the new year. this in anticipation that the justice department deal was close. yes, that $4.3 billion fine is just a draft. we know the supervisory board is meeting with authorities to seal this deal as soon as can be. the message coming from investor analyst notes from barclays and evercore isi was all about clarity. they want to move beyond this big unknown. and they wanted to clear it before the administration turns over january 20th that would have been another question of uncertainty. and, yes, 4.3 billion is huge

compared to other criminal fines we've seen from the likes of toyota and general motors, but considering where we were back in september 2015, there were rumors in the early days of the diesel scandal this fine could be north of 40 billion, then 18 billion. just at the last motor show in paris there was speculation that officials were looking at how high it could go without pushing volkswagen into bankruptcy. so i think now that we have this figure of $4.3 billion, that's a figure that the company can deal with. also from the justice department's view showing they are still strict. >> despite all of that, vw for 2016 showing record sales. it seems to have not impacted their business too much overall. thank you very much for that. let's talk politics. in france, the immigration pol

policy will be laid out today. there is likely to be suggested a quote to on immigration. the euro may not exist in ten years time unless growth is generated and trust rebuilt between nations, that's what emmanuel macron told an audience in germany. he said the dysfunctional eurozone has benefited germany at expense of weaker nations. we are joined by a senior analyst from danske bank. we have a lot of political risk heading into 2017, the french, german, dutch elections. let's talk about what this means for the ecb. because of political risk, would the ecb steer clear of tapering bond purchases? >> we believe political risk is why ecb will continue bond

purchases into next year. i knows there been take of tapering because of a rise of headline inflation above 1% in more than three years. what would make the ecb start tapering? i guess we need to qualify what tapering means. to some, it's reducing the size. to the ecb, it's for bond purchases to go towards zero. let's go with that definition of tapering. what would be the trigger for that? inflation is already above 1%. that's the highest in three, four years. >> the ecb has clearly said they will continue the qe purchases until they see a sustainable adjustment in inflation. and brag draghi what is this? he said it has to be doable, self-sustained, and he said it cannot be a blip in inflation. that's probably what we are seeing at the moment. only headline inflation picking up, not the underlying prices.

>> core inflation is running at 0.9%. that is very much what the ecb has been focusing on. so we need to see that level go up to, what, 1.3, 1.4 before we see tapering? >> so, one of the executive board members had a comment which published at the end of last year where he said we are clearly waiting for signs that core inflation is picking up. and it is clearly exceeding 1%. we expect core inflation will stay around 0.9% this year, only briefly touching 1%. that's not enough for the ecb to started this tapering this year. >> you actually believe that the ecb will announce a third round of qe this year. what makes you believe that? is it down to the political risks we'll see? a down tick in european growth? >> one of the arguments is this political risk but it's more important that the ecb is too optimistic on core inflation.

they have been that for a long time and still are. they are also hopeful, we call it n their outlook for how wage growth will develop. then they have a forecast which is close to 2%, if they have to lower again, there will be another reason. >> what is your target for the next three, six months? do you expect parity? >> no, we think it could go lower. on a 12-month horizon we expect the euro/dollar to 1.12. there are still underlying factors which should support a stronger euro but also imply that inflation will not go up. >> thank you very much for that. appreciate it. we'll go for a quick break. check out world markets live, our blog that runs throughout

the trading day. we'll be back in two.

welcome back. you're watching "street signs." i'm carolin roth. these are your headlines. donald trump says a dossier of unverified claims of compromising conduct in russia is fake news as details of the intelligence memo come to light

just days before the inauguration. it is a long farewell from president obama. he uses his departing speech to highlight his legacy and made warnings for the future. >> rivals like russia, china cannot match our influence around the world unless we give up what we stand for and turn ourselves into just another big country that bullies smaller neighbors. bagging a beat. sainsbury's trades higher as christmas sales top forecasts, but the grocer said the impact of the pound remains uncertain. a guilty plea and a $4.3 billion settlement. vw hopes to draw a line under its diesel emission scandal in the u.s. with a draft deal it hopes can be sealed before the government transition. all right. let's get straight to the uk

industrial output numbers. they rose, despite some weakness in the oil output. november industrial output up by 2.1% verses a forecast of 0.8% on the year. we're seeing 2% print versus forecast of 4.6%. that oil component does make that number volatile. we're seeing sterling/at 121.48. quick look at u.s. fight chores, even though we're a couple hours away from the start of the u.s. trading session. here's how we're shaping up a mixed picture. the s&p 500 seen off by two points. dow jones seen up by 18 points. nasdaq set to push higher to the tune of less than one point after we saw fairly uninspiring session in the u.s. yesterday. the dow was off a fraction, briefly flirted with the 20,000 level again, still didn't get. there the s&p 500 was unchanged.

let's move over to the european picture. a split picture here. ftse 100 still close to record territory at 7,284, up by 0.1%. some grocers like sainsbury doing very well after that upbeat update. the xetra dax also in positive territory, only barely. seeing weakness with the cac 40 and the ftse mib. a look at bond markets in europe -- no, those are the currency markets. i guess a wait and see attitude for the dollar bulls ahead of donald trump's first press conference sense july. we've seen the big dollar weakness last week. that's being unwound to some extent, particularly against the japanese yen. 116.07. now we'll talk about the bond markets here in europe. once again, split picture. we are seeing the german and

ten-year paper in the uk seeing some buying and selling in the u.s. and japan. let's stay with jeffrey gundlach who says there will be trouble for u.s. stocks if the u.s. treasury yield hits 3%. he reiterated his call from late 2016 that the u.s. equity markets will give back post-election gains. the ten-year is trading at about 2.4%, but gundlach warned it may be time for investors to lower equity exposure. bill gross has said that 2.6% is the key level investors need to watch. he said a move above that yield on the ten-year u.s. would signal a bear bond market. gross said this number is critical to markets in 2017 and much more important than the dow 20,000, the price of oil or dollar strength. let's have another voice weigh in on this. jean-luka just joined me around the desk.

what is the key level? 2.6? 3%? a different number? >> i think it's much closer to 3%, the level at which we could see weakness. we think will be stabilization around current levels in the first part of the year. a lot has been incorporated in pricing. when we look at the outlook for 2017 overall, we see higher yields. so we have 2.85 forecast for the end of the year. it's possible we get to 3%. >> at that point we have to say bye-bye to the bond bull market. you also forecast higher bund rates, will they be tracking u.s. yields higher or because of the inflation function in europe or more of a reaction that you think we'll see to political news? >> i think when you look at the difference between the treasury market and the bund, there's been an opening gap in that there is something that is specific to trump happening. but when you look at data around the word, there's an improvement that is broad based.

the call for higher yields in 2017 depends on the view that there is a decent chance that the ecb at the end of this year will announce a tapering to take place in 2018. without protection of the ecb it's easier to see a minimalization of bund yields. >> why do you think the ecb will make that announcement towards the end of the year, because i just had a guest on who said we will not see tapering from the ecb this year? why this disconnect? >> there's a big difference between the stated mandate of the ecb and their actions in december that seem to suggest that they are very worried about avoiding deflation, deflation is avoided. and even inflation around 1.5% doesn't seem to be too much of a concern. to what extent will political

risk feature in how bond prices are priced in in 2017? given we have germany, netherlands, france. do you think in france, for example, if marine le pen does very well in the first round, we could see the risk premium for france increase? >> absolutely. it's difficult to claim nothing bad will happen in 2017. if you get indications that marine le pen is closer than the current polls suggest, this would be reflected in a much lower yield target for bunds. >> what do you like and what should investors buy? you say you like italy in the short-term. a bit of a surprise for me. >> i think the underperformance of italy was steady last year, we got the worst possible outcome as far as the vote, but

consequences have been limited. there's been continuity. the banking sector didn't experience the crisis that some people were expecting. as much as we like interesting opportunities, i think it will be quiet on the italian front. >> you also like greece and cypr cyprus, debt markets not touched in years. why be active there? >> a lot of people refuse to look at the high yield, we believe they are structurally cheap. we think greece can benefit from the overall political situation, no one has a strong incentive to cause another crisis in greece into french and german elections. cyprus is a small country but doing their job well. so we like these high yielders. >> once again, short france versus belgium s that a political play? >> yeah. we short france.

we have been short france for a while versus germany and belgium. i think the central scenario is you're not going to get a le pen presidency, but the experience of 2016 will keep investors on their toes. >> it will be another exciting year. gianluca, thank you very much for that. donald trump dismissed a dossier which contains potentially explosive allegations about his alleged dealings in russia as fake. he tweeted he is the victim of a media witch hunt after several news organizations made reference to unsubstantiated claims to the dossier. two u.s. officials with direct knowledge told nbc news that briefing materials prepared for president-elect trump included information that circulated among trump opponents and was passed to u.s. intelligence agencies making damaging allegations about his dealings with russians. neither official said the fbi

was actively investigating the information. the sources would not comment on the nature of the allegations. just at the top of the hour, the kremlin says it does not have compromising material on president-elect trump saying that the suggestion that they do is a fabrication and an attempt to damage u.s./russia relations. the kremlin went on to say this hysteria is being whipped up to maintain a political witch hunt. so strong language from both sides. barack obama struck a message of hope reciting the mantra that elected him eight years ago in his final address as president. he highlighted the threats against democracy like inequality and race divisions but urged americans not to retreat into their own bubbles. jay gray has more from washington. >> reporter: when the applause finally faded and he began to speak, his words, as they have since the first time he grabbed the attention of the nation seemed almost effortless at

times poetic. >> the imperative to strive together as well to achieve a common good, greater good. >> reporter: still this speech was different because for the first time in his political life, president obama said good-bye. >> i can't do that. >> reporter: his family, vice president and jill biden and thousands of supporters in his hometown of chicago watched as the president touched on what he considered the highlights of his time in office. if i told you eight years ago that america would reverse a great recession, reboot our auto industry, and unleash the longest stretch of job creation in our history, you might have said our sights were set a little too high. >> reporter: but america's 44th and first african-american president acknowledged there is work left to be done. after a divisive election and ongoing racial tensions. >> race remains a potent and divisive force in our society. >> reporter: he spoke for about

an hour. interrupted once by a screaming protester and several times by r applause before closing with a simple message. >>yes, we can. yes, we did. yes, we can. thank you. god bless you. may god continue to bless the united states of america. >> reporter: and a wave good-bye. after the speech, the president and first lady spent more than 20 minutes in the crowd shaking hands, taking selfies, sharing hug with supporters. they'll return to the white house early tomorrow morning. jay gray, nbc news, washington. a very busy day on capitol hill as senator jeff sessions spent more than eight hours tuesday fielding questions at a hearing about his nomination for attorney general. pete williams has more.

>> reporter: jeff sessions held a granddaughter in his lap and prepared to go before the very committee that he was a member of but voted against him in 1986 when he was nominated to be a federal judge, concerned then about his record on civil rights. >> the caricature was not accurate then and not now. >> reporter: in a hearing interrupted nine times by protesters, sessions said he would oppose any blanket ban on muslim immigrants, referring to things he said during the campaign. he said he would step aside if investigations of the clinton e-mails or foundation came up? >> with regard to secretary clinton and some of the comments i made, i do believe that that could place my objectivity in question. >> he was also asked about mr. trump's claim about women in the "access hollywood" video. >> is grabbing a woman by her gentles without her consent sexual assault?

>> clearly it would be. >> reporter: senator sessions said he would support revoking president obama's executive order allowing 74,000 young people to stay who came here illegally under age 16. >> i do believe if you continually go through a cycle of amnesty, that you undermine the respect for the law, and encourage more illegal immigration into america. >> italy's prime minister, paolo gentiloni's angioplasty has gone well. this after the prime minister underwent surgery earlier this morning after feeling ill. the war between farage is

over. neps in the liberal group rejected the bid citing a lack of money ground. and iceland's new government is planning on giving parliament a chance to debate whether they should hold a referendum e usu the. the government said they will work on a new currency regime that could include pegging the crown. i want to give you a quick look at what sterling is doing against the u.s. dollar. we're actually at a session low off by a half of a percent at 1.2113. this is after we got data before, at the bottom of the hour, showing that uk industry output for the month of november actually rebounded, but that may have been down to a one off in oil production. also we had data showing that

the uk trade deficit widened in november, and the goods shortfall with the eu hit a record. investors not liking all that data, but it is pushing the ftse to another record high. ftse 100 currently up by 0.2%. has been hitting a number of record highs in 2017. the countdown is on to the world economic forum in davos next week. if you want the inside track on what will be leading the topics this year, tune in saturday and sunday for the davos guide. we have steve's op-ed on why donald trump and populism are bursting the davos bubble. to give us a taste of what to expect from the weather in the swiss alps, look at the snow covering the acropolis in greece. we'll be back in two.

restaurant and retail cos gathered in florida for the icr conference to discuss current consumer trends. sara eisen was there to take the pulse. >> reporter: ceo's are optimistic following the election of donald trump as president. they're hopeful that the jump in consumer confidence will result in consumer spending after a rough patch for the industry. they're also excited about the corporation of lower corporate taxes. the current rate, 35%. president-elect talked about lowering it to 15%.

>> if you have an extra $25 in your pocket, you're more likely to go out to a restaurant. >> just being a multi country business, it's hard to just land it. simplification will help. >> we're 56% franchise, the more money you put in their pockets, the more they'll invest in new units and growth. >> reporter: while retail executives are also welcoming the prospect of lower corporate taxes, they are worried about one other tax reform plan being discussed, that is the border adjustment or border tax that would impose a tariff on imports and would affect most american retailers that get their products sourced from overseas it could end up driving prices higher for consumers and it's something that lululemon ceo says is too early to assess for his business. >> would have ramification to

our global pricing separategy, to our sourcing strategy. it will likely have ramification to the currencies of the countries in which we are sourcing. we'll cross that bridge when we know more. >> reporter: beyond the policy changes, executives here are still trying to figure out ways that consumer habits are changing and how to respond to that. millennials, for instance, doing more buying online and on their phones. and executives are trying to figure out how that effects their purchasing decisions. wing stop here today announcing the first ever partnership ordering takeout through amazon's alexa. for cnbc business news, i'm sara eisen in orlando. those wings did look good, didn't they? shares in valeant pharmaceutical closed 7% higher after the drugmaker agreed to sell its cancer business and three skin care brands for $2.12 billion. this as it aims to trend its $30

billion debt pile. the company is trying to regain investor confidence after revelations that it worked with a pharmacy to boost sales of medicines. 2017 is set to be another strong year for deal making according to a report by my. steve cruscos from eu joins us around the desk again. we last talked in december. you said then that 2016 was shaping up to be a pretty good year. it is -- or it was the best year since the financial crisis. what makes you think that 2017 will be better? >> if you remember back in early december, i said 2017 could be a record year in terms of deal volume. not value, but volume. that was a bold statement given that we were coming off a soft

november. if you look at what's actually happened in the last couple weeks of december, into early january, the pipelines we're seeing now, which frankly are much stronger than they were a year ago, i actually more strongly believe '17 could be a record year not only for volume but also for value. that could be exciting. it's an interesting anecdote, but over the holidays there was so much happening in the deal world. so much coming in. the 23rd of december, last year, i was trimming my tree. this year i was with a client. that was sort of the way it went. it's continued on into january. >> not a quiet christmas for you then. the argument goes that companies engage in m&a because they're so confident about the corporate and the political environment. you could also argue that they simply can't grow the top line by themselves, they need to look elsewhere. that would be an element of weakness, wasn't it? >> well, growth is certainly top of the agenda for every ceo.

we talked about that before. where are companies trying to grow? we talked about this concept of sector blurring, digital disruption, consumer preferences changing. i tried to simplify that. the way to put it, i think, is they're future proofing their business, in light of the technological change we're seeing, you have to future proof your business. even some deals we saw in early january will demonstrate that. you see the cross-border moves continue, despite protectionism. that continues to play a big role. and something we have not talked about before, i think you'll see pe come back in a strong way in 2017. >> we're seeing pe businesses sitting on so much dry powder. we had a guest on the show who said they're sitting on $1 trillion in dry powder. that's got to be deployed at some point? >> if you look at the dry powder on the sideline and take what's attributable to buyout funds, it's between 500 billion, 600

billion, you lever that up, you have 3 trillion of purchasing power. if you think about the possibility of interest rates increasing, especially in the u.s. when you think about money raised over the last few years, there's a lot of ammunition there. a lot of attractive targets. you will see corporates continue to refine their portfolios, reshape their portfolios, pe will be a great buyer of those. i expect a strong year for pe. >> donald trump seems to be taking credit for a lot of things, can he also take credit for a very strong year when it comes to m&a. under his plans for tax cuts, a lot of money will be freed up. also the massive repatriation of overseas cash, that could free up more money. >> yeah. it's hard to deny that you saw a lot of enthusiasm post election creeping into the market in december and into january. so certainly there was a positive effect. now, in reality will you see that effect really hit the

markets in 2017? the tax cuts will take a while to get through the system. regulatory changes will take a while to get through the system. a tax holiday or repatriation holiday could impact us. it's not likely those changes will impact the year, but the sentiment will impact the thinking. >> steve, we have to leave it here. thank you very much for this appreciate it. >> thank you. before we let you go, just want to tell you that european markets are edging higher after they started the session in the red. the ftse 100 at another record high. that's it for today's show. i'm carolin roth. "worldwide exchange" is up next.

good morning. trump meets the media, the global markets in wait and see mode. a new call, jeffrey gundlach said he expects markets to reverse post election moves. and president obama good-bye. he says farewell to the nation in front of a hometown crowd of 20,000 people. it's wednesday, january 11, 2017, "worldwide exchange" begins right now. ♪