welcome. you're watching "street signs." i'm carolin roth. these are your headlines. kering shares strut their stuff in paris after a comeback in sales at gucci helps the luxury giant beat earnings. we speak to the ceo first on cnbc later today. shiny results from steelmaker arcelormittal as the company swings to a profit in the fourth quarter thanks to strong demand in brazil and the united states. just eat delivers investors the surprise news that the ceo is stepping down, sending shares lower as the hunt begins for a new chief executive.

donald trump said he will honor the one china policy in a call with xi jinping, where the two presidents pledge closer ties and agreed to jointly address global challenges. good morning. happy friday. let's get straight to some breaking news. the oil market is in wait and see mode, that's according to the iea's latest report which said higher stockpiles and caution from the markets in assessing the level of output cuts explains why brent crude prices have stayed in the mid $50 a barrel range. opec's cuts cut a record compliance rate of 90%, making it one of the deepest cuts in the cartel's history. let's talk more about this with alec holborn.

90% compliance. is that something not sustainable over the longer time? we get the next opec report, wouldn't that go down to 70%, 80%? >> i think there's a decent chance they maintain the compliance levels between 80 and 100% is where they're at. the latest secondary source put it at 91%. that's very impressive. a lot of that is lede edby saud arabia. they cut well below what they expected back in november. they are producing less than 10 million barrels a day. that's where we need to see the key change in move. nigeria and libya are exempt, we'll see what they bring in terms of additional production. >> as oil prices go higher, there's always the incentive to ramp up production again. that's what the u.s. producers are doing. wouldn't the saudis do the same, you think? >> i think the saudis have

changed policy and will be disciplined. the u.s. production will be the key differential going forward. that's where the supply will now come from. the u.s. could increase production this year in the range of 300,000 barrels to 500,000 barrels a day. we've already seen the rig count tick up month on month by around 65% to 70% from lows in may. that's a key indicator going forward. >> when do you think rebalancing will happen in the oil markets? we thought it would happen by the end of the second quarter. at the same time we see so much production overhang, given that opec producers before the cuts were implemented actually reached record output, and now all of that is flowing to the u.s. yeah. arguably the market has already started to come to balance. if you look at the oil futures curve out to 2024, it's trading within a range of less than $5. the level in 2024 is at $60 a

barrel for brent. we started to see for the first time as of the end of december last year the oil futures curve started to move into backwardation. so, my view is that that balance is already starting to take place. >> i want to talk about demand. i'm looking at data, china imports, oil imports for january, third highest ever. that tells you a lot about demand coming from china. one of the biggest consumers of oil in the world. wouldn't that prop up prices over the longer term despite the contrary factors pushing down prices? >> it is certainly helpful. in addition, given that we've just had lunar new year as well, the fact that's the case is surprising and impressive. china and india are the key two drivers of demand growth going forward. 80% plus of deman fd for oil wi come from emerging markets,

predominantly emerging asia. so a growth rate of 6.5%, increasing gdp rate from india are key for keeping oil demand high. >> alex, what happens to oil prices down the track? brent crude at 56, we've been stuck in this 5 per barrel range for the last couple of weeks. not much has moved from the start of the year. where do we go from here? >> it's true not much shifted in terms of oil prices from the beginning of the year. a lot of companies used the opportunity of a high futures curve or a flat futures curve in order to take opportunity and hedge production going forward. volatility dropped substantially from as high as 45% in november and december of last year down to the level of 15%, 20% now. our view on the outlook is constructive on prices. there are enough reasons to be positive on the outlook. i don't expect it to remain as

low volatility as it has been over the recent weeks. >> i should mention that brent crude and wti have seen a rally on the back of the news saying opec compliance is close to 90%. seeing almost a 1% surge from brent and wti this morning. alex, thank you for coming in. also want to give you a quick look at the equity markets in europe as we're rounding out the week. and we are broadly positive. i can't see the stoxx 600 right now, but i do know it is just marginally higher, to the tune of 0.1%. we are seeing this rally being led by basic resources in construction, given a boost by the fact that in china we saw the export and import data come in stronger than expected. we had that strong handle from asia and the u.s. given trump's big tax cut announcement. no details yet. i guess that's what we're used to with donald trump. a look at european equity markets. ftse 100 up by 1.5%.

the ftse 250 is at another record high. the dax is pushing higher. only the italian market is trending lower. plenty of earnings on the banking front later. m&a to tell you about. reckitt benckiser shares are trading higher after it struck a $16.6 billion deal to buy mead johnson nutrition. reckitt benckiser will pay the u.s. company $90 a share. this as the british consumer goods company reported full-year revenue of 10 billion pounds and wanted of continued headwinds in 2017. we spoke to a member of the investment committee and asked whether m&a was the right story to chase at this time. >> definitely key in that there are current conditions that are supportive to m&a. many corporations are awash of cash and look at the financing conditions becoming less favorable. so i think it's probably, yes,

for them the right time to do it. >> sticking with earnings, arcelormittal fourth quarter profit topped analyst estimates. they provided an upbeat outlook for demand in brazil and united states but warned demand in china could fall 1% in 2017. look at shares in just eat. they're down by almost 6%. shares are plunging to the bottom of the stoxx 600 after announcing the ceo of the company is stepping down. the company has said david buttress is quitting at the end of the first quarter due to urgent family matters. chairman john hughes will take over the role until a successor is found. bank monte dei paschi has posted a loss after being bailed out by the italian government to cover bad loans portfolio. the cet 1 ratio at end of december was at 8%. monte dei paschi suffered outflows of 28 billion euros in

commercial deposits. and unicredit reported a loss of 13 billion euros in the fourth quarter partly due to bad loan writedowns. the cet 1 ratio fell below the 10% level set by the ecb. claudia, we've been getting so much bad news when it comes to unicredit. has all of it been priced in and what are sharing doing this morning? >> this morning shares are still in positive territory even after those numbers. they did trade during the session yesterday in positive territory as well. they ended up closing higher. so, it looks as though it is priced in. the announcement was made that this increase in loss was going to be announced. the market was probably prepared for this. this sector overall has lost a lot in 2016. so, this week actually the

banking sector traded pretty much flat on the whole with these numbers that you just mentioned that are, of course, quite negative with core tier 1 ratios slipping in 2016 versus 2015. it looks as though 2017 may be the year of turnaround, especially according to jean-pierre muste who will bring the cet ratios up to the 2011 level. monte dei paschi's difficult year when they were not able to go through the capital hike may also be behind them if they can push through the restructuring plan. still weighing and looming on the italian banks is the economic situation, low interest rates, all of these other factors making profitability difficult in general and increasing revenues. they still have a challenging year ahead of them. they will be watched. it's interesting that the big question is in terms of how the market performance is, not heavy this week because of the fact

that really it is just more negative news after many months of this. so the market may be thinking this is the year of turnaround. back to you. >> thank you very much for that. we'll go for a quick break. e-mail the show. the address is streetsignseurope@cnbc. you can find us on twitter, and tweet me directly at @carolincnbc. still coming up, the dow, s&p and nasdaq hit record highs after donald trump said his administration has plans to announce a phenomenal tax reform. we'll have plenty more about this or not after the short break. [ alarm clock beeping ]

weather. ♪ [ laughter ] cartoons. wait for it. [ cat screech ] [ laughter ] ♪ [ screaming ] [ laughter ] make everyday awesome with the power of xfinity x1... hi grandma! and the fastest internet. [ girl screaming ] [ laughter ] welcome back. let's get to more earnings, this time out of france. a pick up in trading activity boosted profits at natixis. the fourth largest listed bank in france will pay a cash

dividend of 35 cents for 2016 in line with the previous year. and french games developer, ubisoft trading higher despite cutting full-year sales guidance by 10% after the launch of the title underwhelmed. the order book remains at a record level and maintains its objective of achieving its highest ever fuel-year margin. shares in kering are moving higher after it beat full-year expectations. the strong result was boosted by turnaround at gucci. nancy hungerford filed this report. >> reporter: gucci is the gift that keeps on giving for investors in kering with the iconic brand bringing in a 21% jump in revenue for the fourth quarter. that beat expectations and drove a revenue increase on the full-year for kering. in fact, the largest increase in revenue since 2012. kering also cited strength in its french brand st. laurent

with sales surging in that unit. on the lifestyle and sports segment kering is cheering a jump in puma and a recovery for this brand citing strength tied to big sporting events including the olympics in rio. kering's management is not sitting back idle, they are keeping alert for potential macro headwinds ahead. we'll speak to kering's ceo a bit more about that and how the company plans on driving strength in its key brans for the year ahead. let's talk about donald trump. never a dull moment. kellyanne conway has come under fire after promoting ivanka trump's products in a tv appearance on thursday morning. that could be a violation of federal ethics violations. members of congress are asking to explore the matter.

>> reporter: from one of the president's top advisors, a high profile plug for ivanka trump's fashion line. >> go buy ivanka's stuff. you can buy it online. >> reporter: those comments this morning on fox news made here from the white house not just a pitch but a potential violation of federal ethics law that bars government employees from using public office for private gain, including the endorsement of any product. it comes less than 24 hours after president trump attacked nordstrom for announcing it would no longer carry his daughter's products. the company said it wasn't political but based on poor sales performance. both episodes raising red flags for ethics experts. >> i think the american people are fed up with the inability of the president and his staff to separate the interests of the trump family business from the interests of the united states. >> reporter: the independent office of government ethics flooded with calls and e-mails. its website crashing. the white house says senior

staffers received an ethics briefing after being sworn in but today few details about possible consequences for conway. >> kellyanne has been counselled and that's all we're going to go with. she's been counselled on that subject, and that's it. >> reporter: a source familiar with the discussion tells nbc news the white house legal team spoke to conway about where the line is, adding she knew immediately she may have crossed it. still criticism from congress, the house oversight committee headed by jason chaffetz fryiri off a scathing bipartisan letter to the white house and ethics off demanding answers. >> look, it was out of bounds. there's no ifs ands or buts about it. we're going to call it out and it needs to be dealt with. in a meeting with airline representatives, president trump said there would be a phenomenal

tax cuts coming for individuals and corporations. u.s. equities rallied on those comments with the dow, s&p and nasdaq hitting record highs. alex dryden from jpmorgan is joining me. why is it markets still rally on this announcement? >> we heard a lot about tax cuts, fiscal policy broadly since trump was elected in november. however this is painfully little detail. this is one of the first mentions we had from the new administration since they have taken office about any plans for tax cuts or fiscal stimulus. that's picked up equities a bit. the prospect that maybe finally we are getting a bit of clarity over what that fiscal policy will look like. frankly i think we'll have to wait until april or may before we get some of those hard details. >> how would you quantify the impact for you as corporates? i read one note that said for every 1% tax cut eps will rise

by 1%. on the other hand you have all these protectionism concerns. what's the final impact? >> there's a lot of crosswinds. we have trade, corporation, tax, we have things like the stronger dollar and monetary policy. corporation tax helps companies eps. however what i would say is that massive unfunded tax cuts are unlikely to be signed off by the core base of the republican party that control congress, that control the passage of this legislation. i would be nervous about it. there's been charter if they cut the headline corporation tax they'll remove the interest rate deductible which would balance things out. >> you are not the first guest to tell me you like u.s. equities and also not the first guest to tell me you think u.s. equities look choppy when it comes to valuation. where do you go from here? >> you look for companies that

can grow the earnings base. valuations are a bit topee, running about 17 to 18 times price attorneys ratio. that's a bit above the long run valuation. it's time to pass that back on to earnings growth. that's where you have to be company specific. there are areas that we quite like. we like things like the energy rebound. we continue to see oil prices moving higher over the course of the year. that's helpful for that sector. financials is another area that benefits from the normalization of monetary policy and the increased volatility that helps boost trading revenues. two areas you could look at that could find earnings growth and are not too exopinion siepensiv. fourth quarter earnings are on track to climb 8.5%, the best performance since the third quarter of 2014. let's cast our eyes towards europe. can we expect a similar performance here?

is margin expansion a story here? >> you're starting to see margin expansion. still early days of the fourth quarter of the european earnings season. only about 35% of companies have reported. but we're looking at 8% headline recovery. really being pulled through from the financial sector, and industrials as well. both two sectors that do well when a cyclical upswing is happening. i would say despite the political miss that's hovering over the european markets, if you can look past that, there's a fundamental recovery underway within the eurozone economy. the eurozone grew 2% last year. faster than the u.s. economy. that provides a good back drop. earnings growth is coming through. valuations remain attractive. >> actually quite hard to believe that eurozone growth was faster than we saw in the u.s. banks in the u.s. have rallied

on the back of a steeper yield curve. does that benefit european banks to the same extent? the research i'm reading is that the european banks are on a parallel shift, not a steepening. >> since the german ten-year yield hit the low of minus 20 basis points in june, eurozone banks rallied about 48% carried by that high yield curve. we have not had much of a steeper yield curve, but even a bit of steepening, which is what we have seen, has thrown a bone to the european banks and helping boost net interest margins. that's something that many european banks are sensitive to. what they don't have in the same way is the big trading revenues attached to them that benefit from the increased volatility. some banks benefit, but not as broad based. >> is it too early to increase allocation to european equities? >> the political risk within europe is a bit overdone. the political systems put

together after the second world war are designed in such a way that keeps fringe populous parties out of power. makes it difficult for them to get their political agenda on the table. once people realize those political systems will make it difficult for populist parties, people focus on fundamentals, eurozone pmis for january highest since 2011, that's when you started seeing equity markets rally over the course of 2017. let's talk about the ftse. that is subject to the brexit risk, but the major tailwind has been currency. can that story continue? >> currency is the driver of 2016. this is an index that gets 72% of revenues from overseas. the weaker pound is an immediate boost to overseas earnings. we think that weaker currency will stay low, but not much depreciation.

the strong global economic back drop, and the recovery in commodities should help lift the ftse 100. >> alex, thank you very much for that alex dryden from jpmorgan. stay tuned for this story as we head to break. we'll do some monkey business and leave you with pictures of the newest resident of the chicago zoo. an endangered monkey born this week. check out world markets live, our blog which runs throughout the european trading day. we'll be back with plenty of uk data.

welcome back. you're still watching "street signs." i'm carolin roth. these are your headlines. kering shares strut their stuff in paris after a comeback in sales at gucci helps the luxury giant beat earnings. we speak to the ceo first on cnbc later today. shiny results from steelmaker arcelormittal as the company swings to a profit in the fourth quarter thanks to strong demand in brazil and the united states. donald trump said he will honor the one china policy in a call with xi jinping where the two presidents pledge closer ties and agree to jointly address global challenges. at home the battle is not over. donald trump tweets see you in

court after the suspension of his immigration order is upheld by the appeals court. good morning. quick look at u.s. futures, we are still a couple hours away from the start of trading on this friday. the s&p 500 seen extending into record territory. seen out by roughly three points. the dow jones out by 45. the nasdaq out by 11 points. record closes for the dow, s&p 500 and the nasdaq. given the trump promise for an expansive and what he calls phenomenal tax reform plan. let's also have a look at european markets. the ftse 100 up by a half percent. the cac 40 pushing higher to 0.2%. plenty of earnings out here. i want to get to some uk data hitting the wires. uk trade deficit narrowing in december, but higher exports are driven by erratic items.

i don't know what they are. we'll get to them. manufacturing output for december up by 2.1% on the month. up by 4% on the year. the november manufacturing has been revised to a growth of 1.4% on the month, 1.7% on the year. industrial production up by 1.1% on the month in december. and up by 4.3% on the year. the ons saying that there remains little evidence that the weak pound has had an effect on the uk trade balance. that must be a disappointment to those who did believe it would have a major boost. so, we'll have to wait and see whether that actually remains true. the uk saying no change to the fourth quarter gdp growth of 0.6% quarter on quarter from today's data point. manufacturing growth in december was boosted by volatile pharmaceuticals according to the

ons. just saw the pound sterling trade there for a second. it is spiking on the back of the data today. 1.2506. up by 0.1% on the day. it did turn negative against the u.s. dollar earlier in the day at a three-day low. sterling back above 1.25 after trade data beating expectations. james bullard suggested u.s. rates could remain longer for lower as fiscal uncertainty will not be resolved in the near-term under president trump. bullard suggested that the fed should only move to raise interest rates once this year. and that move will likely not come in march at the fomc's next meeting. striking a more hawkish stone, charles evans has said it is not unreasonable to expect three rate hikes in 2017. evans added he expected president trump's fiscal

policies to help boost economic growth. here in europe, we've been speaking to banking executives to get their take on what lies ahead for ecb policy. >> we have seen a change which is not totally insignificant with the election of donald trump, there has been a change of perception and rates, the sovereign rates have increased. beyond this i think that depending on what will happen in the u.s. in 2017, whether the fed is normalizing or not, whether rates are increasing, at least it gives more maneuver to the ecb, to consider also reviewing its policy provided we have growth, provided we have inflation and we have more inflation, and of course provided that the fed has also increased the rate. >> i wish it would lessen up. we are facing a low-rate environment. that means we do need to react to that. we do need to be more vigilant. i say unfortunately because it

comes with some degree of social cost. >> when we made our plan, we made our plan for 2020 and we took some assumptions, it's probably true to say wove done them in september that they are a bit prudent. on the other hand we have to see how things evolve. let's monitor it closely. about 1.7 trillion euros of french public debt could be redenominated into franks if the national front wins power in the upcoming elections. that's according to the ft speaking to party officials saying marine le pen would seek to renominate about 80% of the country's debt. the move would likely amount to the largest sovereign default on record and threaten the collapse of the euro. moody's has warned that the impasse between the imf and eurozone member states on greek bailout talks is credit negative for greece. the ratings company said the

risk of greece's debt program having to be renegotiated. greek yields have spiked ahead of a eurozone finance ministers meeting next week. the two-year yield rose above 10% as german finance minister wolfgang schauble said -- lots to talk about with barna bshby martin. just reading those stories t seems massive for the eurozone government bond markets. why would yields not spike on the back of this? >> clearly it's an extreme form of political risk to say le pen will get elected and call a referendum on eu membership.

i think there's a risk that we -- that narrative becomes too simplistic. to actually pull france out of the eu should need parliamentary support, should need support from a lot of the public. in many european countries it's tough to call a referendum on eu membership. there's plenty of hurdles to get over before we get to that extreme form of risk. you're right. it's there. it is slowly being priced into markets. in our view maybe not quick enough. >> for example, at the start of the week, we saw eurozone bond yields spiking again. that's reversed somewhat, but do we get used to higher government bond yields throughout this year as we price in that -- >> there's never going to be a straight line. we're ten weeks away from the first round we know french polling is changing a lot. we may wake up next week and see macron with a much higher polling number in that case, we feel more confident the chances of le pen winning are quite low.

but i think populism and political risk as a concept is not in the price risk assets. credit spreads are not well priced for the rise in political risk. in january, you look at some political risk indices, populism is contagious. it went up in the u.s., in france. it's going up in a number of countries. it's not reflected well in our view. >> what does that mean? are we in for a rude awakening when it comes to credit and bond markets? >> we're in a happy days where we're relying on the ecb bond buying program. they're still buying 8 billion a month of corporate bonds. we know that finishes or slows down on april onwards. that's the trigger point, when there's a realization that draghi's bite is not as powerful as it used to be. i think you see higher spreads. >> can they afford to taper give than we're in this explosive

political environment? >> no, they can't. but even central bankers can suffer populism. that's really our read across for what happened in december. we know draghi didn't want to bring the size of the program down. he believes, he's passionately tried to campaign for qe being extended as is, if not increased. he had to yield to the germans. >> he had to yield to the germans and perhaps other members of the governing council who said it's an election year in france and germany. negative interest rates won't win votes for the centrist parties. it will play straight into the hands of the populists. so we need something to raise yields. that's where this tapering down of qe came from. central bankers suffer populism as well. >> populism has very much been reflected in the rise of protectionism. you have done research on that. protectionism automatically means higher inflation and spread widening? >> the world is more connected or global than ever. that's a take away from the post-lehman period.

companies, supply chains have snaked all over the world to find the best assets, keepest co cheapest costs if protectionism means less trade, the only way to pass on that rise in raw material costs is rising prices. >> what does that mean for your outlook for credit products? >> as investors think about how do i position portfolios, there's a need to think of companies along the lines of domestics versus exporters. if you believe populism means protectionism, you're better off in domestic names rather than exporters. >> i want to come back to the central bank question when it comes to credit. that's extremely important when it comes to the ecb but also the boe. there's been talk that the ecb would ramp up buying corporate bonds at the expense of

government bonds. is that a reality? >> we don't know. there's been no message about how they would change buying. we know if you like the original sin, government debt, that creates negative yields. you could make an argument they won't do much for corporates. there's really no bank whenni l lending in europe. draghi's obsession of having credit created through the banks requires him to slow down on corporate bond buying. the boe is hitting its limit very soon. >> they're done. >> you're talking about an explosive second quarter. >> we are talking about risk premiums in sterling going back up again. mark carney's bond buying is done. it's difficult to go back to philip hammond saying i need more. >> thank you very much for that.

president trump's national security adviser, michael flynn, reportedly discussed russian sanctions and areas of cooperation with the country's ambassador weeks before trump's inauguration. flynn reportedly hinted that sanctions relief could be possible under the new administration. the account contradicts statements made by trump's team saying flynn spoke with the russian ambassador after christmas to arrange a phone call with president putten. if proved accurate, flynn could be in violation of a law preventing private citizens from engaging in diplomacy. donald trump told china's president that his administration would honor the one china policy. xi jinping urged closer ties between the countries. the timing of this call is curious given that the two leaders have not spoken in weeks since that taiwan snafu. it comes days before prime

minister abe of japan is actually meeting mr. trump. >> the timing is interesting. as you said, this call marks a reversal in trump's approach to china. now the white house described this conversation as extremely cordial and lengthy and in the phone conversation which happened on thursday evening, trump told the chinese president, xi jinping, that the u.s. government would honor the one china policy, which, as you know, is a policy that indicates that beijing is the seat of government instead of taiwan. the chinese have been elated about this decision. just about an hour ago the foreign ministry said the one china policy is the political foundation and is crucial for the healthy and sustained development of the china u.s. relationship. china is willing to work with

the u.s. to promote a broader development of birat lal relations at a new starting point. in previous reports trump has called into question the u.s. acceptance of the one china policy and implied that the one china policy could be used in larger negotiations on other issues, such as trade. china repeatedly said that the one china policy is nonnegotiable, that's one reason why when i was calling around to didn't analysts today, they were saying this issue was so difficult to overcome, and that now that it has been overcome, the relationship can move forward. >> mr. trump, president trump has always said, okay, i'm going to do deals if the deal works in my favor. if it works for america. now he's okay with the decades long relationship with beijing what kind of deal do you think

he got? >> that's a big question mark. some guys i was talking to were saying that this just increases the uncertainty that we still don't quite know what trump's policy towards china is. and his approach. as you suggested, just in the run up during the campaign, he was very anti-china. threatening tariffs. and now he seems much more conciliatory in tone. so it raises a lot of questions, still unclear what his approach will be. but taiwan for one also wants to make sure it's not left behind. it issued a statement this afternoon saying it hopes to maintain strong relations with the united states and china and that it wants to ensure that there are zero accidents in a major setback for president trump, three judges in the u.s. appeals court ruled to reject his immigration executive order temporarily banning

citizens of seven predominantly muslim countries from entering the united states. shortly after the announcement president trump tweeted see you in court. the security of our nation is at stake. pete williams has the latest. the legal challenges have been rushing to the federal courts at remarkable speed launched in the hours after the executive order was signed january 27th. despite today's order from the ninth circuit court of appeals the courtroom wrangling just beginning. today's ruling comes with a lawsuit brought by washington and minnesota who claim the executive order harms their residents, stranding foreign college students and faculty that need to travel. a dozen lawsuits have been filed in eight states. many ask judges to keep the travel restrictions on hold. tomorrow a federal judge hears arguments in one of those cases filed by the state of virginia asking to have the executive order permanently blocked. the state says the trump order amounts to a ban on muslims' constitutional freedom.

>> i'm the governor of a state that is built on freedom, and this is a principle that we all can never forget and we need to fight for. >> after the ruling, president trump said the ruling was political. we have a situation where the security of our country is at stake. it's a very, very serious situation. so we look forward, as i just said, to seeing them in court. >> still coming up on the show, no trump bump for twitter. we'll drill down on the disappointing earnings that sent shares diving. ♪(music plays) ♪ heigh ho! ♪ heigh ho! ♪ heigh ho! heigh ho! ♪

♪ heigh ho! heigh ho! it's off to work we go ♪ ♪ heigh ho! heigh ho! ♪ heigh ho! ♪ heigh ho! ♪ heigh ho! heigh ho! it's off to work we go ♪ ♪ heigh ho! heigh ho! hey, what's up man? here's to all 180 million of you early risers, go-getters, and should-be sleepers. from 80 thousand of us at delta... because the ones who truly change the world are the ones who can't wait to get out in it. ♪

the latest episode of cnbc's pop up start up airs tonight at 23:00 cet. each week two entrepreneurs pitch their ideas before jetting off to china to source products. they will battle it out for a $20,000 cash prize in time for valentine's day, this week's contestants are both in the lingerie business. here's what you can expect. >> two young entrepreneurs compete to win 20,000 pounds. >> with a good brand name you need to make something of those two things. >> what is it you're offering who to at what price? >> with experts on hand they'll accelerate their business plans, aiming to launch in eight weeks. >> get rid of that, choose your favorite image. >> it will help our potential customers identify with the brand. >> you'll have to get fabric

that is no more than 650 euros. >> they visit china to meet suppliers. >> wow. that's so beautiful. >> before racing home to show off their wares to the great british public. >> everybody is trying them on. picking their favorite color. >> who will win pop up start up? ♪ twitter shares sank over 12% yesterday after the company posted its slowest revenue growth since going public four years ago and also cut its profit guidance for the next quarter by half. >> reporter: not only did twitter's revenue in the fourth quarter fall short of expectations, the company's earnings forecast for the first quarter of this year was about half of what analysts projected. and twitter added 2 million monthly active users in the quarter. half the monthly usered a digs of the prior quarter.

>> the real negative to point out and what they were very upfront about they're seeing much more competitive pressure for video ad dollars. they lers listed the other media networks. that problem is probably going to intensify. >> reporter: but all the changes to twitter's products are working with the third consecutive quarter of double digit percentage growth in daily users and engagement. he's confident the company will be able to keep up that user growth. dorsey says this year the company will focus on turning around its revenue and while president trump makes headlines for his use of twitter that's not having an impact on usage or revenue yet. but dorsey says he's more confident than ever that twitter is growing in its influence. >> the whole world is watching twitter. we may not be meeting everyone's growth expectations there's one thing that continues to grow and outpace our peers, twitter's influence and impact. >> but dorsey's dual ceo roles at twitter and square drew criticism from former microsoft steve balmer. >> he started two amazing

companies. who can do that? that's very tough, both twitter and square and i give him credit for that. now's the time for him to focus down, at least from my perspective, on the stock i own. >> when asked on the earnings call if he can continue running twitter and square he said he has the management team in place to continue running both companies. julia boorstin in los angeles. coca-cola delivered mixed earnings posting profit in line with estimates and revenue that beat expectations but disappointing with its 2017 guidance. sara sara eisen breaks down the numbers. >> reporter: results today looked at better growth in america but weakness around the world. there's a complicated re-franchising where coke is spinning off most of its bottlers to become a leaner company, and a new ceo who takes

over in may. >> we focussed the portfolio on more categories, we upped the marketing investment, we improved the execution. we transformed the bottling system. refranchising it, and the whole team pulled that together, and now there's two really strong years capped off with a great fourth quarter. the north american business is humming. a lot to do in 2017 with the biggest year of refranchising, and we're confident that the team is confident. >> reporter: soda consumption is slowing as people opt for healthier choices like bottled water, juices and teas. this will be quincy's main challenge along with adjusting to a new administration. already coke opposed president trump's recent administration order. >> coca-cola stood for inclusivity. we always stood for that. always will stand for that. that's part of our core values. doesn't affect a lot of employees, but we wanted to be

clear what our brand and company stands for. >> another big question will be global trade. coke's international exposure means if we see more protectionist policies like border taxes or tariffs, it could be a headwind for balance. coke is now selling smaller cans of coke which are doing better to keep up with changing consumer tastes. sara eisen, cnbc business news. want to show you what's going on with sterling/dollar. cable jumping above the 1.25 handle not long ago. that was on the back of better than expected uk data. we saw uk industrial output rising more than expected in december. the trade deficit was narrower than forecast. that allayed fears of a slowdown as the brexit process keeps on going. sterling/dollar falling back below the crucial 1.25 handle and unchanged on the day. good news for the uk economy.

let's have a look at european equity markets. the ftse 100 is in positive territory. the xetra dax is pushing up to the tune of 47.7 points. we had m&a stories to tell you about. reckitt benckiser buying mead for almost $17 billion. the cac 0 also being supported by some earnings news. kering not doing too badly. the ftse mib is weighed down by some bank earnings. want to show you what u.s. futures are up to. we had a record day for the three major indices in yesterday's trading session. that was on the back of trump's promise for a major tax overhaul. the s&p 500, the dow jones, and the nasdaq all seen extending those gains in today's trading session. >> that's it for today's show. i'm carolin roth. "worldwide exchange" is up next.

good morning. the trump trade. u.s. markets rally to new highs as the president promises a phenomenal tax announcement. expectations and potential impact coming up. >> president trump will meet with japanese prime minister shinzo abe at the white house today. we'll tell you what's at stake straight ahead. and reckitt benckiser is buying mead johnson for $17 billion in cash. it's friday, february 10, 2017. "worldwide exchange" begins right now. ♪ >> good