. good morning, everybody. welcome. you're watching "street signs." i'm louisa bojesen. these are your headlines. air france flies to the top of the european market and lifts the rest of the sector after beating on earnings. the cfo tells cnbc further savings need to be made. >> when you mix everything, we also believe we have to continue quite positive policy in terms of cost reduction. and we think that for the next year we'll continue to have a cost reduction by more than

1.5%. nestle shares sink at the start of trade as the swiss firm misses earnings and forecasts and scales back its growth targets, with the ceo telling cnbc he is disappointed by the results. >> year by year in this present-day environment it's much more prudent to give forward sales growth and guidance as we did today. on the defensive. cobham shares lose a quarter of their value after the british aerospace firm issues a profit warning for 2017 after missing full-year forecasts. the white house denies a "wall street journal" report that u.s. intelligence officials have withheld sensitive information from president trump, this as his secretary of state, rex tillerson, makes his international debut at the g20 foreign ministers meeting. good morning, everybody. welcome to the show. we've got an hour together.

very glad to be in your company. i want to get you some flashes that are just hitting our wires via dow jones. it seems that the deutsche boerse ceo has been giving a growth target and also talking about how he personally has been hurt by allegations of insider trading. these allegations have been launched against him of late. the investigation is still ongoing. he said he is certain allegations will prove unfounded and he is confident to win regulatory approvals for the lsc merger. he said he listened carefully to the heads of government concerns and that the merged company will have two headquarters. so this just hitting our wires right now. deutsche boerse a little bit higher on the session over the past 30 days, relatively flat looking at a month ago or so. nevertheless two things coming out of these comments.

one, that he says the allegations of insider trade made against him, that they'll prove unfounded. and the second that he's confident they'll be winning regulatory approval for the lsc merger. european equities this morning opening flat to mixed. now flat to lower. shy of 1.5%. ftse, cac 40, xetra dax, and minute. industrials are off a similar amount, oil and gas to the down side. insurers leading the way lower by 0.8%. telecoms and media outperforming a tad. we've had quite a bit of news flow on the air front. klm air france shares taking off after beating expectations for the full year. the airline has warned of uncertainty around a unit

revenue and fuel prices. nancy asked the airfrance-klm cfo about geopolitical turmoil on the earnings. she is in paris and joins us now. nancy, what was the message given from the cfo? >> good morning. the overriding message coming from the cfo at airfrance-klm is that we're committed to cutting costs going forward when they talk about their target they're eyeing, in excess of 1.5% for cost units to bring down after a year in which investors were pleased with progress on costs, in an environment in which the company got a big boost on operating results coming from a drop in fuel prices. i did ask the cfo whether he was concerned about a stabilization in oil prices, not so much he said. they expect with hedging benefits that that impact will be neutral over the year. nevertheless it's a change in external circumstances to take into consideration.

now, looking at the industry itself, analysts have for quite some time been concerned about overcapacity, especially on transatlantic routes. i asked him what his thoughts were on the capacity situation. take a listen. >> it's true that during the last year we observed a situation where we are more overcapacity than undercapacity situation. it plays a role on revenue, as we have seen in 2016. but we have the feeling that companies around the world are a bit more cautious than before. so this time in 2017 we continue to have overcapacity, but with limited amount if you look at the european market. i mean the flights from europe to the rest of the world. the cfo of airfrance-klm saying, yes, overcapacity will be an issue in 2017, but they are taking control of the levers they can when it comes to costs.

as you know, they're looking at a new unit to boost low costs, medium and long-haul carrier that they are trying to get approval from unions on that one by the end of february is what the cfo told me yesterday. you can't ignore the fact that the earnings are taking place against the back drop of election season right here in france. so i had a chance to talk to the cfo about the political environment. the companies don't want to get behind any one candidate here, but i asked what kind of policies he wants to see from the candidates when it comes to improving the economic environment and especially on the hot button issue of labor reform. because this airline has constantly come up against labor strikes. it took more than 100 million dent in profits this year. listenicies from the candidates. >> we are going to see the further costs going down, if

possible, and again, everything which is good for the people is good for us. we hope it will be in the program of the new president. >> looking for policies that would bring costs down for this airline. an obvious line but a crucial one. when we talk about the different candidates here, when you look at the conservative candidate, francois fillon he is a champion of labor reform, economic reforms that would take the stickiness out of the employment codes. a fresh development this morning around his candidacy, the french prosecutor said reports by investigators contain numerous elements which means the fillon case cannot be dropped at this time. that will be seen as a blow for his campaign. they were pressuring the financial prosecutors to drop the case. if the case worsens for him, there's big question marks as to what the party will do to find a replacement as we get ever closer to the first round at the

end of april. big question marks facing these companies, but the message from airfrance-klm is that we're moving forward and encouraged that ultimately voters will fight for the candidate that encourages globalization that is friendly to the exchange of passengers across borders, because that is crucial not only to airfrance-klm but their competitors as well. >> nancy, thank you very much. fantastic being in paris. every corner you go around, loads of history right there. >> that's right. even on a rainy day, still a beautiful city. >> nancy, thanks a lot. we'll talk soon again. moving on to other earnings. shares in airbus have been moving lower after the austrian defense minister said it was filing a lawsuit against the planemaker for willful deception and fraud related to a 2 billion euro order of the euro fighter jets in 2003. that's according to the apa news agency. the report says an investigation by the government will reveal

that airbus mislead austria with fraudulent intent about the purchase price of the fighter plane. cobham shares have been tumbling after the british engineering group issued a improvement wa profit warning and would take a charge on the boeing tanker program. the company said undoubted market moves are hindering abilities in the full year ahead. schneider managed to turn a profit of 1.75 billion euros, which means that that figure is up by 24% on the previous year. looking ahead, schneider says it sees modest growth in europe and north america this year, and that it expects a 200 million euro rise in raw material costs. and shares in nestle have been trading lower after it missed expectations with net profit falling to 8.5 billion

swiss francs. the swiss consumer giant said it is forecasting organic growth of 2% to 4% this year. carolin joins us from the nestle headquarters. they are ditching sales targets as well after this miss. >> yes, they are. and they vehaven't been able to meet those sales targets, ambitious ones, for the last four years. i guess today they're catching up with reality. in 2014 we saw an organic sales growth number of 3.2%. that's disappointing. the market this morning is reacting to it. here's the message coming from the new ceo, mark schneider. >> there are results, and we believe we have come in behind industry, but we're below our own expectations. i think what happened in the second half of 2016, there were two things coming in at the same time. one is volume growth.

disappointing across the board. i think that's reflected with other consumer goods companies as well. we also hope in the second half to see stronger pricing. pricing has come in somewhat, but not as fast or strong as we felt it was going to be. want to talk about the very high expectations put on you. a lot has been written and said about you, about your background in healthcare and about the fact that you have been very active dealmaker at your previous company. let me try to get it straight from the horse's mouth. is that something, the combination of healthcare and more dealmaking, is that something that you want to bring to nestle? >> let me point out this is not about me. it's about what the company has been pursuing as a strategy for a long period of time. so the nutrition, health and wellness strategy is something that nestle has been pursuing, where a lot of progress has been made when it comes to upgrading the nutritional profile in food and beverages and scaling up in a prudent fashion nestle health

sciences and nestle skin health. when it comes to m&a, i think nestle is no stranger to that. in fact, some of the most strident deals of the 1980s that put the company on the map where it is today as the world's largest food and beverage company, those were coming from here. i'm no stranger to that. it's basically a continuation of what we've done before, that's basically when there are deal opportunities that make strategic sense, we'll be there. >> is it a continuation or acceleration? dealmaking at nestle has been fairly quiet over the last four, five years. >> i see it as a continuation. it's about doing it when the time is right. not just because you haven't done it the last year or two. >> what do you say to analysts who say you have a high fixed cost base. who say your margins are under pressure. how do you want to address that? >> i think the company has made a lot of progress last year when it comes to some costs reduction, expanding operating

margins. more than meets the eye. the reported margin improvement was 20 basis points. when you look at it against the currency headwinds on a constant currency, it's 30. when you look at food and beverage only, it's actually 50 basis points. that comes on top of a restructuring expense that was twice as high as the previous year. so from 150 million of restructuring to 300. by the time you factor this in, i think we are underweight to good, solid marginal improvements. i'm committed to continuing those and raising the restructuring costs this year to about 500 million. that was mark schneider, the new ceo of nestle speaking to me earlier. today is the first time that he's facing the media. the analysts and the investor community also. he also has his work cut out for him to improve margins, organic growth at nestle.

want to bring you some key quotes. he said we're not trying to impress the market with headline-grabbing deals. he said valuations in the food space are high at this point. back over to you. >> carolin, thank you. the shot looks amazing. i hope you have a chance to see it. it's like a mist fog behind you. beautiful. >> it is probably the most beautiful location outside of broadcast i've been in. >> it's crazy. looks like a fairytale. thank you very much. we will see you soon. listen, we love to hear from you. you can find us again at e-mail as always. i know a lot of you like to write long letters that we do read. streetsignseurope@cnbc.com. that's the e-mail address to reach us on. you can also participate via twitter. follow the show at streetsignseurope@cnbc and i'm @louisabojesen. just send your questions in on

the early side. sometimes there's a delay, and i get all your comments after the show. then it doesn't help. it's too late. coming up, fed defending. janet yellen is responding that the fed is hurting the economy. details from her testimony after the break. we'll have more on strategy, g20, bonds what to do with the u.s. markets. we'll be right back.

hi everyone. welcome back. you're still watching "street signs." i'm louisa bojesen. the singapore listed bank dbs posted a 9% drop in fourth quarter profit and booked higher provisions for nonperforming lawns. we're lucky to have pauline with us from singapore. a drop in profits for dbs, pauline? >> yes, a drop in profits and the real issue is the exposure

to oil services and gas services in that sector here in singapore. this is an ongoing theme for the big singaporean banks. charges for bad loans up 87% year on year. and the dbs ceo says he doesn't see things getting better for this particular sector for the next year or the next two years. he says it will continue to be a challenging environment. but here's the silver lining. he says he sees the npl rate slowing down. he also says guidance for 2017 in terms of charges for bad loans, he doesn't think it will be as bad this year as it was last year, which the charges on bad loans totaled $1.5 billion. we asked him about his view of fed rate hikes. he says don't count out the march meeting. >> my own sense is that you will probably see three rate hikes this year. the market is calling from three to four rate hikes. in our own planning we budgeted

two because of reasons of conservativism. i think there's a 50% chance of a rate hike in march. but i think in many ways the fed is behind the curve. >> he's worried that the fed is behind the curve because of the strong data we've been getting. the u.s. is near full employment we also overnight got strong cpi numbers, at a four-year high and stronger than expected retail sales. that lifted wall street to a record close. that momentum got lost in the asian region here as we saw profit taking. also a weaker dollar. the nikkei ending down a half percent where we saw electronic stoc stocks sliding. the nifty is rallying up 0.6%, led by the i.t. sector, that's because tata consulting services said their board may consider a share buyback next week when they meet. and look at china. the shanghai composite up 1.5%. the hang seng by the same

amount. the material sector on the composite led the way. they're benefiting off struck plays from china's one belt one road initiative, the initiative to build out infrastructure throughout china the middle east and into europe. back to you. >> pauline, thank you very much. janet yellen has defended her monetary policy in front of the house financial services committee. janet yellen faced robust questioning from republican lawmakers who criticized the fed for its efforts to reboot growth in the u.s. rob mccreery is with us from lipor investment services. good morning. >> good morning. >> i note in your musings you say janet yellen sounded a similar tone this time around as to last time but we have differences in where we see yields performing. >> yeah. i think now there's an assurance of that strength in the recovery that has come through now.

the market before was buying into this idea that rates might have to rise, now that rates are rising, the market is responding positively towards that. you can see that overnight. it means peoples assurances that rates might go up in march have risen considerably. >> you think we can continue to drum on with these record highs? a quintet of record earnings and record closes, the dow, s&p 500, nasdaq, russell 2000, the dow transport sector as well. when doesn't it make sense any longer from an valuation perspective? >> i think you're in a new paradigm at the moment. if you go back to february of 2016 when it was all doom and gloom, we pointed out at the time that that was a value market. no growth but value opportunities for those willing to find it. that was the debt. now it's a completely different environment where it's about growth. markets adjusting rapidly

towards that. you can see the mining stocks coming through. good results. these stocks are rallying to 7%, 8%. for the moment you have go with the momentum. you have this best ideas list. i would like some of your best ideas. >> the best ideas are in the growth category. we like the resources sector. boline is one name on there. arcelor we had on there until yesterday. we like the banks. so in that category we have deutsche bank and barclays. we like autos, haveand we valeo michelin in there. we like telecoms, telefonica deutch. that's the feel for it. insurances as well. aviva, we look to add to those

sectors and technology. >> so quite broad. >> we have 20-odd names in that best ideas name. not so with nestle? >> no. one of the things we are -- you'll note from previous appearances, we follow the fair value trends. it's clear in the stocks i referred to are beneficiaries of rising value trends. post. >> narratonovember of last year these value trends have changed. the laggards from last year have become relatively expensive from the lows. so news today means you don't want to be in those sectors. >> you have a green star on intesa sanpaolo. >> banks are screening well for us. they had a period of consolidation recently having rallied at the start of the year. that was enough to see the value

trends catch up. intesa, yes. italian banks are something for the specialists. we run a process, a model. and therefore it will screen well for us. for people interested in that stock, yeah, this is the time to look at it. i was discussing with someone just the other day how you best play risk. how do you manage risk these days? what's the managed risk trade or the managed risk position? >> well, i think for the moment you have to look at risk relative to its history. how are stocks now trading relative to their history? and at this moment in time, there's no doubt that we are getting into sort of slightly rarefied atmosphere. stocks have traded high. from a risk perspective, you're saying we need to be cautious. you have to look at where prices trade relative to history.

at the moment prices are trading well relative to history. from our point of view, we think there's not risk-less by any memen mens means but we feel comfortable. >> keep your questions and comments coming through, @louisabojesen or streetsignseurope@cnbc.com. if you have any questions for the show or our guests. rob, thank you. rob mccreery from libra investment services. coming up, what do we expect out of the g20 meeting? what will happen with the bond markets with the european elections? as mentioned, more record highs hitting the u.s. in yesterday's session. we'll talk about all of that. in the break, check out world markets live. it's our blog, it runs throughout the european trading day. bubuat iyou uld th aund?

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good morning. welcome back. you're still watching streetsignseurope@cnbc. i'm louisa bojesen. your headlines today. air france flies to the top of the european market and lifts the rest of the sector after beating on earnings. the cfo tells cnbc further savings need to be made. >> when you mix everything, we also believe we have to continue quite positive policy in terms of cost reduction. and we think that for the next year we'll continue to have a cost reduction by more than

1.5%. nestle shares sink at the beginning of trade. the swiss firm misses earnings and forecasts and scales back its growth targets, with the ceo telling cnbc he is disappointed by the results. >> year by year in this present-day environment it's much more prudent to give straightforward sales froth and earnings guidance as we did today. on the defensive. cobham shares tumble after issuing a profit warning after missing full-year forecasts. the white house denies a "wall street journal" report that u.s. intelligence officials have withheld sensitive information from president trump, this as his secretary of state, rex tillerson, makes his international debut at the g20 foreign ministers meeting. wonderful morning to you all. here in europe we opened relatively flat, we'll call it a couple points higher.

we held on to that picture for a minute before turning negative. setting ourselves up for trade in the states, we are five hours away or so, nevertheless glancing at the implied opens, on the right-hand side of the screen, called a bit higher there. keeping in mind again, based on data put together by robert humm, my colleague in the states, we've seen a quintet of record highs and closings lifting the dow, s&p 500, russell russell 2000, dow transports. utility and energy lagging behind. by in large people questioning how high we continue to go before we see a healthy bout of profit taking, give than we have seen seven sessions now for the s&p 500 and nasdaq with higher postings on the close. here in europe, trading a bit lower. the fx markets just throwing that into the mix, euro/dollar

right now, 1.063. hanging on so slight gains. the aussie dollar, briefly touching a three-month high after the surprise drop in australian unemployment. it then moved back to highs against the yen. there was a bit of profit taking after we had janet yellen speaking, driving the dollar higher on this notion that the fed could be set to hike come march already. less than a month. president trump hosted the israeli prime minister, benjamin netanyahu at the white house yesterday. in their first talks since trump took office. the president asked netanyahu to "hold back on settlements for a little bit." but he stopped short of committing to a two-state solution to the palestinian israeli conflict, saying he would support the peace agreement that both sides "like the best." the white house has denied a report by the "wall street journal" saying that u.s. intelligence officials have withheld sensitive information

from president trump. according to this report, officials have not revealed too many trump the sources and methods behind certain intelligence because of concerns that they could be leaked or compromised. a white house official told the journal there's nothing that leads us to believe that this is an accurate account of what is actually happening. after forcing out his national security adviser on tuesday, citing eroding trust over misleading statements, president trump now publicly praised michael flynn and blamed the media for his ouster. nbc's white house correspondent kristen welker reports. >> reporter: in a stunning act of defiance, president trump today blamed the media after he fired his own national security adviser, michael flynn. >> general flynn is a wonderful man. i think he's been treated very, very unfairly by the media. as i call it, the fake media, in many cases. >> reporter: it's the first time the president has weighed in on flynn's departure which came after revelations flynn misled the president, vice president

and other top officials about discussing sanctions with russia's ambassador before the inauguration. today, the president also pointed a finger at the intelligence community, whom he's sparred with in the past. >> from intelligence, papers are being leaked, things are being leaked. it's criminal action, a criminal act, and it's been going on for a long time. >> reporter: left unanswered, why it took the president nearly three weeks after the justice department warned him about flynn to ask for flynn's resignation and why the vice president was kept in the dark for a full 15 days after the president found out. a source inside the white house acknowledges the episode has been a major distraction and now there are attempts to turn the page. >> it could not only jeopardize his legislative agenda. i think it has the makings of unraveling his entire presidency. >> reporter: still tonight, growing speculation over the administration's ties to russia. law enforcement sources confirmed yesterday the fbi interviewed flynn as part of its

broader probe of russia's meddling into the u.s. election. now nbc news is learning more about that investigation. a senior u.s. official says investigators have determined some trump campaign aides and trump business associates were in contact with russians during the presidential campaign. but current and former u.s. officials say there is no indication those russians were a part of russian intelligence and so far officials say nothing has been found to indicate any collusion between trump aides and the russians to meddle in the election. one report named ousted trump campaign manager paul manafort of having connections with russian officials. today he denied that to nbc news, saying, i had no contact knowingly with russian intelligence officials. today, the president dodging questions about the matter. the trump administration makes its formal debut on the international stage this week. top-level cabinet officials touched down in europe to build relationships and forward president trump's policy agenda.

hadley joins us from the g20 meeting in bonn. hadley, many are saying this is the new u.s. secretary of state, rex tillerson's, first big test at the g20. >> well, they might end up for a disappointment because basically the u.s. has characterized this more as a listening tour than anything else. no big statements expected. not only from the new u.s. secretary of state rex tillerson but also from other officials as well. we understand mike pence, the vice president of the united states will be in brussels over the weekend and into monday. he will talk to officials. we already heard a bit of a preview for what u.s. foreign policy will look like going forward from the new u.s. secretary of defense. he was talking on the sidelines of the nato summit in brussels and made it clear that the united states is going to moderate its support for nato, depending on whether nato countries pony up with the cash what we've seen over the last several years is a major short fall in spending by nato

countries other than the united states in terms of making that full commitment to 2% of gdp. take a listen. >> it's a fair demand that all who benefit from the best defense in the world carry their proportionate share of the necessary cost to defend freedom. we should never forget ultimately it is freedom that we defend here at nato. >> the new u.s. secretary of defense, general james mattis characterized this as a new political reality in the united states. it is an expectation that other countries in europe in particular, will begin to meet those commitments to spending as much as 2% of gdp on defense. big questions, of course, going forward into the weekend. we're not only talking about what's happening here at the g20 in bonn but also a major security conference happening in munich with world leaders expected to attend. angela merkel. we understand rex tillerson is supposedly going to be having a meeting with sergey lavrov, the foreign minister of russia.

interesting meetings but not too much news to expect. >> hadley, thank you very much. hadley joining us from bonn. now, moving on and looking at what otherwise is taking place today. the irish taoiseach, basically the prime minister in ireland, the head of golf, has warned avoiding a post brexit border was a vital national interest, adding the uk's split from the eu could hurt i'd's economy. he urged the eu not to punish britain for leaving the bloc but calling for a transitional deal to curb any damage from the split. france's financial prosecutor said it won't be dropping a investigation into francois fillon's fake work case, the jobs given to fillon's family has cost him s status as

favorite in the presidential race. some consensus had been reached but stall steps remain for the greek bailout. the 20th of february, the euro group will be discussing the bailout in brussels. we are joined by james affey from aberdeen asset management. hi. we have this fantastic triangle between greece, berlin, and the imf. from what we heard there, moscovici is optimistic. do you think we'll get a deal that satisfies all parties? >> i'm glad he's optimistic. i don't think we had a humge amount of news that has given for optimism. other than comparisons in history. as greece pushes further and further to the cliff, they tend

to go in and help. i guess this is more uncertain than proevious episodes. >> greek yields heading up to 2% just the other day. the bond matures june or july, it went to 16%. are we going to see a lot more of this, do you think, before the signing the dotted lines? >> i certainly think, yeah, volatility will be high. when you have a bond that short-dated it doesn't take a huge amount in the price to move the yield. certainly -- that is the period we're concerned about, july. there's a lot of money due from greece to the ecb to some private creditors, the holdouts. something in the region of 6 billion to 8 billion that needs to be paid back. they don't have the funds to do that without some funding from the troika, as they used to be called. >> you talk about this economy taking place, what's driving bonds, whether yields should be

heading up or down. explain. >> yeah. there's a couple things going on in euro government bond space, they're fighting each other in terms of their influence on prices and yields. i think the first thing that's happened is obviously the ecb and their seemingly changing reaction function. we've obviously seen a pretty good cyclical upturn across the globe. that's for once included the eurozone. inflation rising relatively rapidly there. growth in q4 was stronger in the eurozone than in the u.s. even after the downward revisions we saw recently. that does take away some of the ecb's ammunition with respect to the dovish stance, lower forever mantra. so, the threat of, you know, in 12 months time the ecb buying less bonds again is weighing on yields from one direction. then you have politics. politics is -- you know, is causing spreads to widen. that leads to a flight for quality. and that pushes towards that

reflation-type trade. the coinfluence of those two themes is creating some volatility. it is creating more stress than relief, i'd say. >> so, what is the -- what's the risk trade? i was saying to an earlier guest, speaking to somebody earlier this week, how you position yourself for risk or how do you manage risk? how do i trade this political risk or invest this political risk in the fixed income markets? >> most team would say being short spreads is probably the best way. it does feel the risks are asymmetric. i think the level of spreads we've seen across the european government bond complex over the past couple of years was contingent on the ecb buying in that quantity. and the expectation that that would go on for a long time. the fair value for a lot of these spreads, regardless of politics is wider now than six, 12 months ago. that gives me some comfort that with political risks suggesting that, you know, the netherlands could have a dominant right-wing

party, france possibly won't end up with le pen, but it could shift the political debate to the right. merkel has been slipping in the polls, shultz has been ahead in some polls, that might be a concern for markets as well. it feels like political risk is all in favor of wider spreads. >> how about the spread u.s./europe or treasury bund? >> that's a tough one. over the last four, five years that's a good trade to be in. there was a period for two, three years where that went wider, whether bond yields were rising or falling. since donald trump, that spread has been difficult to call. there's so much going on in terms of not just what's driving treasury yields, but this -- these conflicting influences in european government bond yields that actually i feel more comfortable makinge ing ing a d call than on that spread. i would rather be short treasuries. >> you're factoring into two hikes? three hikes? four hikes? >> we think three. if janet yellen's telling you she has three dots, which pretty

much she's doing. that tells you that something has changed this year from last. if you actually look at the reasons that the fed wasn't hiking at times last year, most of them have either gone away or are certainly lessening this their influence. the cpi data we saw in the u.s. yesterday is very difficult to argue that the fed is not achieving both sides of its mandate. janet yellen said in front of the house yesterday that they were close to achieving the job side of the headline. i know they look at pce, but i would still argue it's difficult to justify that they're not either very close to or achieving their mandate at this present time. >> difficult and also very different from where we were a year ago. >> absolutely. >> despite the fact that yields -- different economically, different when looking at yields, but as a previous guest on the show today was arguing, janet yellen's tone is still relatively similar. cautious, leaving the door open. not a lot has happened in terms of fed tone over the course of the past year. >> i think that's fair.

she personally has a bias to want to try to get some of that supply side going. she wants the -- i think she did want the economy to be a little hot to see if they can bring people back into the work force. she's flip-flopped on that issue and said they wouldn't try to run the economy hotter as an experiment. i think if it was just down to her she would like to give more time for that to occur. it's interesting to note in the nfib, small business optimism survey, the chief economist there made note that normalization of interest rates would be productive for the economy at this stage. i 100% agree with him. >> briefly, a question says asks your guest what happens if greece paying nothing? >> if greece paying nothing back in july? wolfga wolfgang schauber said there is can be no default in the eurozone, so that would mean greece would have to leave the eurozone. if they were not to pay those

bills, that would be difficult to gloss over as the same way they did when greece was late paying the imf. james, good to see you. >> good to see you. coming up here on "street signs," a blow to the president as trump loses his first cabinet pick. more on the withdrawal of the labor secretary nominee after the break. you can find us on twitter, @louisabojesen, and on e-mail, streetsignseurope@cnbc.com.

hi everybody. welcome back. you're still watching "street signs." president trump's nominee for labor secretary has taken his hat out of the cabinet ring. on the eve of his confirmation hearing, andy puzder withdrew

his name over fears he wouldn't get enough support in the senate. peter alexander has more. >> reporter: president trump's pick for labor secretary andy puzder no longer up for the job. in a statement announcing his withdrawal writing he had hoped to put u.s. workers on a path to sustainable prosperity. puzder's abrupt move coming on the eve of the long-delayed confirmation hearing. the fast food mogul and trump donor dropping out amid growing resistance, including evaporating support from republicans. >> i believe the hearing tomorrow would have been extremely difficult for him. >> reporter: democrats tonight claiming victory. >> there is some good news today for workers and women and families in america. >> reporter: for puzder, the last draw may have been footage provided to senators by oprah winfrey's company of a 1990 episode obtained by politico where puzder's ex-wife appeared in disguise describing allegations of domestic abuse. >> he vowed revenge. he said, "i will see you in the gutter. this will never be over. you will pay for this." >> reporter: puzder always denied the allegations that came

from a heated divorce and his ex-wife has since recanted. his controversial nomination had already spawned protests from california to florida, with the multimillionaire facing scrutiny for his minimum wage laws, past employment of an undocumented immigrant as a housekeeper and racy commercials for his restaurant chain that critics blasted as sexist. tonight puzder's allies are expressing disappointment, confident the political novice would have created jobs, even if he couldn't secure his own. kevin kelly is with us, chief investment officer at reckon capital partners live from new york. nice to have you with us today. we've got political changes once again. translating through to market gains. regardless of what happens in politics these days by the looks of things what do you make of the market levels at the moment and these new record highs that were hit across many indices in the states yesterday?

>> the market seems to be resilient in the face of political turmoil that's happened here in the united states. one of the political turmoils that has happened is, you know, the republicans didn't come out and try to fix taxes first. they went after the healthcare space, with the affordable care act in trying to repeal and replace that. it's really telling how strong the market is over here. especially because the anticipation of fiscal policies that should help this economy get stronger gains in gdp numbers, you know, above the 2% level, that's a second half story. the market is excited about that. what you're starting to see is multiples expand and a lot of names and sectors where they were depressed before. the financial sector. you can start to see that's now trading at a 14 pe. starting to see names like apple, going from 11 times

earnings to 15 times earnings. you're starting to see a lot of value names that were trading at below average multiples start to catch up to the rest of the marke market. >> i speak to a number of people who question how long or for how long president trump will be good for markets and the economy. how do you view it? >> yeah. i don't think it's a question of how long, it's a question of if we can get robust growth from his policies and if he can get his policies through. that's the biggest overhang we have now. you're starting to see the tax situation was supposed to be very simple. come out. they have the house, they got the senate. they should be able to come out with plans and policies, it shouldn't be a problem. now we're focusing on border tax

adjustment. trump himself says it sounds too complicated. you have a codry of lawyers and analysts from ge, pfizer, boeing on one side, then the retail ceos together on the other side. that's showing complication. so that could hamper a lot of expectations on the growth side that people are really wanting to see. we know the consumer needs tax cuts. we know the corporate tax rate needs to go down, but it's how they can enact that and what will that lead through to. if they don't get something done within the next two months, you'll start to see the market get a little discomforted with how washington's playing. >> i want to get your top picks out. paypal and facebook. why? >> paypal is one of the best growing companies that actually is in a space where it doesn't need to take market share away from the other mobile payments

players. it doesn't need to worry about apple pay. 70% to 80% of transaction in the world are done with cash. and their platforms are agnostic to the iphone or to an android system. they are on every platform as well as their brain tree operation is growing significantly. it's the backbone for airbnb, uber, all those big tech names. it processes those payments. facebook thwarted, you know, snapchat and user growth. they have more rich data on users compared to the hundreds of million of snapchat. >> we have to go. i've taken it to the wire. thank you very much, kevin. kevin kelly from recon capital partners. but whatf yocoultu thin around? what if you could love your nus?

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good morning. a remarkable rally. u.s. futures in the green after all three major averages do something they haven't done in a quarter of a century -- that particular statistic straight ahead. puzder withdraws. the latest out of washington straight ahead. and snap decision. new details about the messaging app's highly anticipated wall street ipo. it's thursday, february 16, 2017. "worldwide exchange" begins