president trump and chinese president xi jinping speak by phone about north korea, secretary of state tillerson arrives in moscow. global markets take notice. saying sorry. the ceo of united airlines makes another attempt at an apology as outrage builds about a passenger being dragged off a flight. the latest information and stock information coming up. and behind the wheel. lyft raises more money pushing its valuation to 7$7.5 billion. it's wednesday, april 12, 2017. "worldwide exchange" begins right now. ♪

good mornings. warm welcome to "worldwide exchange" on cnbc. i'm wilfred frost. >> i'm seema mody. good morning to you. >> great to have you with us. let's get straight to the global market action. >> a lot of news to break down. u.s. futures are pointing to a higher open, this after stocks did close lower in yesterday's trade. geopolitical worries casting a shadow over stocks. we did see bonds rally. the cbo volatility index hitting the highest level since november, that's before the election. as you can see, dow jones up about 25 points. nasdaq indicating a higher open by. bo 8. yields picking tier yesterday, off slightly, just off 2.3%, yielding 2.29.

>> i think the big takeaway this week is twe could expected biggr declines in the market, we didn't get it, so resilience. some data out of asia. china's consumer's prices rose 0.9%, slightly below forecast. the producer price index rose 0.3%, month over month. in general, all of that data was in line. we have seen japan and shanghai decline today. japan off the moves in the yen. hong kong keeki inggaining 1 %. european trade for you as well which is positive this morning. yesterday we saw the ftse hold in positive territory. the rest of europe declined. today germany up about 0.3%. it's grown across the screen. we've had data out of the uk as well in terms of unemployment.

this sort of headline is that the unemployment rate pretty low, 4.7%. indeed, the overall employment level of 74.6% is the highest rate since 1971. but the wage growth was slightly disappointing. either way, the ftse still holding on to gains, as is the pound. looking at broader markets, checking in on the price of oil. higher at 53.66 for wti crude. ice brent crude at 56.55. geopolitical worries a big factor in play for the price of oil over the past couple of days. something in focus in today's trade as well. that g-7 foreign minister meeting, no resolution in sight when it comes to the middle east and syria. we'll watch for the latest from secretary tillerton in moscow. nat gassying so iseeing some gi.

the doll gains. the dollar in focus today. the bid for safety helping the currency move to the upside. not good for japanese stocks. that's the reason we saw a bit of pressure over asia. u.s. dollar, 109 against the yen. looking at gold, the safe haven bid, safe haven role helping the yen and gold rally. trading higher by around $2. trading at $1,276. in terms of going back to european assets, both the euro and equity markets green for those today. but a lot of focus continues on the polls that are coming out ahead of the french election, in particular mr. melenchon's gains, the far-left candidate. had a lot of focus yesterday. continues to have focus today. the thought being he might be taking some of the ground up of the center left, mr. macron, the favorite to win. the question of whether the far-left candidate who is not expected to win gaining

momentum, does that increase the chances of marine le pen winning. certainly close and hard to pin. >> and less than two weeks to go. moving on to today's agenda, march import prices released at 8:30 a.m. eastern time, followed by the monthly federal budget statement. rob kaplan speaking at 10:00 a.m. eastern, and delta reports earnings before the open. president trump and chinese president xi jinping discussed the situation in north korea on a telephone call last night washington time. china's state broadcaster reporting xi stressed a resolution of tensions on the korean peninsula should be achieved by peaceful means. this conversation comes less than a week after the two met in florida. yesterday trump tweeted i explained to the president of china that a trade deal with the u.s. will be far better if they solve the north korea problem. and he went on to say north korea is looking for trouble.

if china decides to help that would be great. if not, we'll solve the problem without them. president trump will meet with the leader of nato in washington today, followed by an expanded bilateral meeting. the two men will hold a joint news conference. trump criticized nato in the past saying it's costing the u.s. too much money. moving on, secretary of state rex tillerson is in moscow now meeting with russian foreign minister sergey lavrov. tillerson saying he's looking forward to open, candid and frank exchanges so we can better define the u.s./russia relationship. lavrov saying the usair strik.s

strikes in syria were a violation of law. both leaders appear to say we want to work together. >> i think so. there's a fundamental disagreement between the two about the last week's developments in the middle east, not just the action from the u.s., but president putin's rhetoric coming into the meeting, speaking at a press conference yesterday with the italian president, making a state visit. he was making it clear, y they acknowledge these attacks on the syrian people happened, but they say they were done by rebels that face assad in order to lure the u.s. in. and it can only be the u.n. that can go in and investigate this. they have a lot of hurdles to get over. just arriving there moments ago. the picture seems fairly relaxed, but i'm sure behind the scenes the rhetoric won't be. bill neely will join us for a live update in about 5, 10 minutes. new developments in the united airlines saga following the viral video of a passenger being dragged off a plane.

>> two big developments unfolding overnight. united's ceo, oscar munoz offering another public apology after passenger was dragged off a flight sunday night. munoz said like you i continue to be disturbed by what happened on this flight and deeply apologize to the customer forcibly removed and all customers on board. munoz adding no one should everen treated this way. we take full responsibility and will work to make it right. this is his second public comment on the issue. he publicly apologized on monday for having to reaccommodate the passenger but came under fire for sending a letter to airline employees calling the passenger disruptive and belligerent. now lawmakers are demanding answers. the senate commerce committee asking united for a full account of the incident by next week. shares are down by a half

percent. since monday, shares have fallen 0. 8%. we look ahead to delta's earnings before the bell today. some more stocks to watch, shares of neurocrine bio sciences soaring. bhp is down about half a percent in london trade. akzo nobel is reporting elliott advisers and soutui sui industries for releasing information. 5:so up about 0.4%. tesco's profits beating full-year forecasts. the uk grocer trying to get investors to back its plan to

buy wholesaler booker. shares down 3.5%. procter kand g& gamble incr its dividend by 3%. shares flat on the day. activist investor john paulson is set to leave the aig board. the ft says the departure, being finalized this week, is expected to be announced in a shareholder proxy statement in the next few days. paulson was given a seat along with carl icahn about a year ago as aig tried to avoid a public fight. paulson was not successful in his call to break the life business off from property and casualty arm. coming up here on "worldwide exchange," secretary of state rex tillerson in moscow right now meeting with russian foreign minister. a live report from there next. as we head to break, a look at where european equities are

trading at this hour. it's green across the screen. you're watching "worldwide exchange" on cnbc. change" on cn.

. welcome back to "worldwide exchange." let's get you up to speed on market action. u.s. equities were a bit lower yesterday, but the real story is the volume with which equities have been trading, which has been low. this holiday-shortened week.

we haven't seen too much action in either direction. the volumes, as i said, have been low. shaping up in a similar way today. we are called higher by exactly 0.1 % 0.1% on all three main indices. there was more movement on the treasury board yesterday. a bit of a surprise that it didn't lead to a bigger selloff in equities. ten-year treasury note below 2.3 level. that's been an important level of support. we've dipped below it already a couple times the last two weeks. just something to watch in case it starts to proliferate below the 2.3% level. seema? >> happening now, secretary of state rex tillerson meeting with his russian counterpart, sergey lavrov in russia. bill neely is with the latest. hi, bill. >> reporter: good morning, seema. i'm not sure what you read into this, but that meeting started 27 minutes late.

it started with a pretty frank exchange of views between sergey lavrov and rex tillerson. lavrov at one point almost sounding as if he was giving the u.s. delegation a dressing down. he said we've heard a lot of ambiguous and contradictory ideas from washington, and we've seen troubling actions in syria, referring to the air strikes. it's fundamentally important that these actions don't happen again in the future. he also said it's important for us to understand the real interests of the u.s. some tough talk there from sergey lavrov. rex tillerson replying saying he also wanted to be frank, we need to identify, he said, areas of sharp difference and common interest, even when our tactical approaches might be different. i think that is critical. rex tillerson making a distinction between tactics and strategy. he's not going to go in and bang the table and say to the russians you've got to give up

your support for president assad. he will say tactically i understand why you're doing this, alying yourself with assad, who uses chemical weapons with hezbollah, with iran, but strategically that's not great for you and the world. do you want globally to be seen as someone who allies yourself with those guys? he's also, i think, going to try to use a wedge on the russians. the russians have said it is not unconditional that we continue to support assad. so what are the conditions under which in the years ahead you might be prepared to give up on president assad? because as i said, the russians will not come out of this meeting and say we drop assad. that's not possible. but the meeting has been going on now for roughly 40, 45 minutes. obviously it's the first one between any senior trump cabinet official and a russian here in

moscow. very, very important. they will discuss other things as well as syria, ukraine, possibly u.s. sanctions. the russians wanted to talk about libya, north korea, so on. that meeting is still going on. seema? >> bill, wanted to follow up on one point. you said rex tillerson will say to sergey lavrov do you really want to be associated supporting someone who uses chemical weapons that could be some of the rhetoric he uses to try to convince lavrov take a different position. but listening to president putin yesterday speaking, he maintained that it wasn't president assad who used these weapons and these bombs. is the belief on the ground in russia one that president putin's position is accurate and therefore his ongoing support for assad is justified regardless? >> you are absolutely right. it could be the two sides are talking across each other.

russia doesn't accept -- putin said in an interview to be broadcast this evening, he said where is the evidence that syrian forces used chemical weapons? there is none. but it's clear the u.s. broke international law with its missile strike. i'm sure sergey lavrov will repeat that point and the russians are irritated that the u.s. keeps saying we tracked the plane taking off. we know it contained chemical weapons, and that chemical weapons were dropped by syrian forces. the russians say there's no evidence of that. you're right, the two sides are talking at cross purposes, and they may have to agree to disagree on the chemical weapons strike in order to move forward to the future. >> one final point on this. you mentioned ukraine, sanctions that have been imposed because of the ukraine issue. is there a belief that those

sanctions relating to a different geopolitical condition in ukraine could be on the negotiation table for the russians to trade on assad? could they trade with flexibility on one and giving back no flexibility on the other? >> i think both sides, as so often in diplomacy, will want to keep a space on that. there's no quid pro quo on this, though there are compromises in all sorts of things. how interesting that u.s. sanctions on russia, ukraine, those were meant to be the things that would probably -- along with syria would dominate the talks. but sanctions and the ukraine issue have been superseded by what's happened in syria over the last ten days. just to answer your question, i don't think there's going to be any quid pro quo. you shouldn't expect too many

results as a result of this meeting. i don't think the mood music coming out will be terribly positive. >> bill, thank you very much for that. bill neely live for us in moscow. up next on the show, why investors need to pay attention to the big budget battle brewing on capitol hill. we're live in washington with the latest. goe this is the new new york. we are building new airports all across the state. new roads and bridges. new mass transit. new business friendly environment. new lower taxes. and new university partnerships to grow the businesses of tomorrow today. learn more at esd.ny.gov

capitol hill will be in the middle of a budget battle. john harwood recently sat down with mick mulvaney and asked why he proposed budget cuts that hit trump voters, such as getting rid of a development program for appalachia. >> the president is certainly conscious of the people who voted for him. but he cares about more than just the trump voters. when you say, you know, people that voted for him are hurt, that's not the issue. he wants to know are the folks in appalachia, are the coal miners in west virginia going to be better off under my presidency whether or not they voted for me? the best thing i can do for those folks, whether or not they voted for me is to get 3.5% economic growth. >> you're saying to all those people like ryan, other republicans, the freedom caucus in the house, do not think we are ever going to go after main medicare and main social

security throughout donald trump's presidency. >> i think the message to the house and senate is you do what you think is best. i voted for medicare premium support in the past, i voted forever that six times. my guess is the house will do that or something similar to that. >> because of his pledge, president-elect trump would veto it? >> that's not a conducive way to maintain a relationship. let them pass that. let's talk about it. >> it's a very unusual situation because you've got budget cuts like the one we talked about with respect to the appalachian regional commission, with ch hi deeper than republicans in congress want, but republicans think they need to reform entitlements. it's a strange dynamic, it's not normal that you get entitlement reform without presidential leadership. this is an unusual situation. we'll see whether or not republicans can manage it and get to the end point their party believes in, which is a

long-term reform of those programs. >> john, i had a question. all the focus on these international events, meetings taking place, specifically in russia. has that stalled lawmakers ability to focus on more domestic priorities like entitlements or tax reform? >> entitlements will be a much slower process, if they ever get to it at all if donald trump allows that to move forward. yes. tax reform is slowing down for multiple reasons, including the international events you mentioned, the effort to revive the healthcare bill. but also because the white house is looking to take over that process. when we started the year, it appeared that the house was going to initiate tax reform and the administration was going to sign on to some sort of bill resembling the house bill. now they're saying, no, we're doing a different approach after healthcare crashed. we'll craft our own bill and push that. that is going to slow down the

process in the house. that august end point that treasury secretary mnuchin has referred to in the past, that's not going to happen. if you have a comprehensive reform of the individual and corporate systems, there's zero chance that will happen by the august recess. the question is whether they can get it done at all. it will be a big achievement if they can do it. >> coming back to mulvaney and the budget. realistically, no immediate hurdles on the horizon to get over or are they realistic that we'll have some form of shut down at some point? >> there are big hurdles to get over. they have to extend government funding past april 28th when it currently runs out. there's a significant possibility that there will be a shutdown. you have multiple parties with different interests. democrats want to extend government funding. you have the trump administration which is insisting on cuts that are much deeper than even republicans on

the hill want to push forward. the question is whether republicans on the hill ignore the white house and make a deal with democrats or whether they ban together and we end up being in a situation where they cannot pass a bill that will extend government funding. it's significant drama that is just lurking in the back drop of these international events. >> john, thank you very much for joining us. >> you bet. still to come, the top stories and a round up of the global market picture, plus a live report from the new york auto show. also a look ahead to the official start of earnings season with three big banks reporting tomorrow. all of that much and more still to come on "worldwide exchange." mom gets breakfast in bed... you get to do the dishes.

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. good morning. gold touching five-month highs as geopolitical fears weigh on investors. the unstoppable oil rally. crude on the longest winning space since august, but there are threats on the horizon. and we're live at new york auto show, kicking the tires on the brand-new lincoln navigator. it's wednesday, april 12, 2017. you're watching "worldwide exchange" on cnbc. ♪ good morning. warm welcome to "worldwide exchange." i'm wilfred frost. >> i'm seema mody in for sara eisen today. good morning. so much happening on the foreign

policy front. let's get you the global market action right now. u.s. markets indicating a higher open. stocks did close lower yesterday. geopolitics under pinning this demand for safe haven asset. gold moving higher. bonds in mow cuss. the dow moving higher by 40 points. nasdaq and s&p in the green in premarket trade. look at asia. syria and north korea the big focal points on the foreign policy topic. north korea in some ways having an impact on asian stocks, specifically the south korean market. moving lower for the sixth day. europe in focus, despite the geopolitical worries, stocks in europe are moving higher. autos higher by 2%. did you that very well. remembering what they were. >> i have the screen right here. >> they are coming through for you those markets. >> the german dax higher by a half percent. daimler reporting better than expected results. shares up about 2%.

let's check in on some other asset classes. the ten-year yield for you, just below 2.3 -- bang on 2.3. it was below. it was at 2.29 yesterday. fractional move today. some buying of safe haven assets like the treasury market in light of some geopolitical concerns. that buying did not lead to significant selling of equities. low volumes this week, holiday-shortened week. currency boards for you, the dollar was higher yesterday. it was up 0.3%. for the most part, as you can see, slipping a bit today against the pound and the euro. a little bit higher against the yen. not much movement in the dollar board today. gold prices which are up over a percent yesterday, are up again a bit more today. but not too much. 1,275. oil prices have been a big driver. they gained on geopolitical fears last friday and held those

gains this week. 53.71. oil was up about 0.6% yesterday. let's discuss oil markets further with john kilder. i suppose the first question in the short-term is this go yo political fear. how much is that supporting the oil price? is that a justified move we've seen given raising fears in -- particularly in the middle east, but also tensions with russia? >> certainly tensions seem to be high around the world. investors take refuge in hard assets like this. certainly gold and oil. with oil, with syria not a big oil producing country, but you have all the big heavyweights against each other, the u.s. and saudis on one side, iran and russia on the other. iraq in the mix there someplace. so a lot of oil hanging in the balance.

but the question starts to become from there, you know, to the extent oil production does not get affected, and it hasn't throughout this, syria has been a disaster for years now. refugee crisis, oil production, even with iraq, problems in libya, the oil production gets spared. that's the spoil of the war, the spoil of the battle. at this poent you point, you have to wonder whether opec, russia and others will come back together to keep their recent deal to limit oil production together and roll it over for another six months. sort of hard to see how the saudis will be enthusiastic working with iran and russia again to help them out in a way to support their countries, iran and russia that is, with the higher oil prices. >> what are your thoughts, if this situation in syria escal e escalates, and the united states

and russia and among other groups involved in the conflict are not able to see eye to eye, how does that impact the opec oil cut expectation, ahead of the may 25th meeting in vienna? >> if there is an escalation in fighting, if there's more fighting, you have to see the coalition potentially ripping apart. that's the hypothetical here. that the coalition does not hold together. that the one unifying interest that they had was higher oil prices to have better economies. that's not enough. that the fight over the middle east and the fight over the future for it trumps -- pardon the pun -- >> even though saudi arabia is desperate for higher oil prices, you think they would back away there that agreement if the escalation continues? >> i do. because they have other problems with the agreement. the russians have not fulfilled their obligation, though they're starting to. venezuela has not cooperated either. so, i think the saudis patience

is running out on top of these other irritants that could effect the deal. >> 53.7 on wti this morning. what are the key technical levels? >> right now we're pretty much back in the range we were in for several months from the end of last year. the big number to watch on the upside is 55.25. that was theo resistance point. if we break out above that, you have to bet and foresee oil prices could easily touch $60 a barrel. that's the line in the sand in terms of holding in or hemming in prices at this point. >> just discussing various geopolitical concerns and how they tend to be supportive of oil prices. you say if things escalated with income, it would be bearish for oil prices. why is that different? >> a war in a middle east is where all the oil is, where production gets affected and limited. with north korea, to the extent there's any kind of hostilities there, the idea is that it will

effect the south korean economy in particular. there's theory out there they'll get hit by the north. their economy will crater. chinese economy potentially craters, to the extent there's outreach to japan, too. now you have the major asian economies on a war footing at battle and not focusing on making refrigerators and doing the other things that they do that consumes oil. they'll be consuming less. >> thank you. >> thanks. in corporate news, linken unveu lincoln unveiling a new version of its navigator suv at the new york auto show. phil lebeau joins us now. >> because it's the new york auto show, we not only see a lot of debuts, but there's an emphases on luxury. that's why we saw the new lincoln navigator unveiled yesterday. this is a taste of what we'll see from a number of automakers.

redesigns and refreshes of luxury suvs. in addition to the new navigator, mercedes showed us the glc coupe. this is gorgeous. had a chance to talk with the ceo of mercedes-benz usa, he basically says i can't build these fast enough. that's how hot suv sales are now. for mercedes, suv sales up 10% this year. you don't want to miss some interviews we have coming up on "squawk box," we have the head of maserati, the head of porsche. this is one of those shows you get a lot of executives, a lot of luxury. we'll have it for you all day long. >> looking forward to that. great shots of the cars there. particularly suvs, i'm a fan of them because i can fit comfortably. any other new suvs coming out? >> there's a variety. primarily you're looking at redesigned and refreshes. this is not a show where you're going to see brand-new models

introduced. you'll see let's take the existing model, like when you look at the glc what mercedes is saying, where do we want to show the top of the line coupe version of this? new york is a natural market because of how well luxury does in this market. you have a variety of suvs, the redesigned top of the line models shown here. >> phil, great stuff. thank you very much. >> the other reason for an suv in new york is the poor quality of the roads. >> yeah. that can help. i don't think there's reason for a car in new york. you have public transit system, and uberment. >> let's talk about uber, uber's public relations chief is leaving the economy. rachel whetstone did not siteci reason for her decision. uber rival lyft has raised

6$600 million in a fresh round f funding which values the company at 7$7.5 billion. the cash came mostly from larger global investment funds instead of venture capital firms. lyft's last funding round was january of last year when it raised a half billion dollars. tesla investors are seeking to add two independent board members. c calsters sent a letter to tesla saying five of the six board members have ties to elon musk. teslaues shareholder feedback. lululemon getting a nice pop pre-market on an upgrade from stifel. saying lulu's comment valuation

provides good opportunity for long-term investors. to today's agenda, march import prices will be released at 8:30 a.m. eastern followed by the monthly federal budget statement at 2:00 p.m. dallas fed president, rob kaplan speaking at 10:00 a.m. eastern. delta air lines reports before the open. another big focus is earnings. a handful of banks are getting ready to report tomorrow. the expectation is so high, the question is whether these big financial companies, the banks, will be able to deliver. >> exactly right. they come into q1 earnings with easy comps to beat year-on-year, but as you said, tougher comps to beat month on month. the main focus will be loan growth which slowed since the election and particularly in the last couple of months. goldman sachs gives three reasons for that. first, economic uncertainty on policy. second, higher rates have driven less mortgage refinancing. and finally a seasonal slowdown in credit cards. it's very much the corporate

side that led the loan growth slowdown which is partly explained in high yield issuance being up 80% which brings us to the investment banking predictions, where debt capital issuance is the stand out, ipos will be stronger but perhaps less so than the excitement around the snap inc ipo. m&a could disappoint. fixed income currency and commodities appears to be strong. huge focus on yield curve has ensured that. equity trading will be soft. volatility there has been lower than q4 and q1 last year. net interest margins should improve following the march rate hike which is a timely reminder of the improving environment banks face on a medium or long-term horizon. even if stocks did fall in march due to correlation with yields falling, on that note, how valuations look at the moment, the average price is 1.3 times

which is now consistent with the ten-year average having traded below that level for most of last year. the first number we'll get tomorrow is from jpmorgan due at 6:45 a.m., followed by wells fargo and citi set to report at 8:00 a.m. >> it will be interesting to see. they've been under so much pressure of late, will earnings provide that upward momentum they haven't had of late. >> important earnings season for the banks. still to come, the must reads. as we head to break, a look at how european equities are trading. that green is helping the u.s. futures as well. europe holding on to a third to a-p half percent of gains.

welcome back to "worldwide exchange." to to our must-read stories, my story is in the "washington post," penned by julian assange. wikileaks that the same mission as the post and the times. assange writing our motive is identical to that claimed by the "new york times" and the post to publish news worthy content. then he goes on and says something different from them. saying that the u.s. constitution says that we can publish -- let's scroll back up because people have moved ahead. consistent with the u.s. constitution, we publish material that we can confirm to be true irrespective of whether

sources came by that truth legally or have the right to release it to the media. there is the sort of contrast in what he's saying. his first claim is commendable and akin to the likes of the post and the times. his following sentence adverse to it. that's the kind of critical dilemma and debate in what wikileaks is doing. >> my pick is in the "washington post," trum got syria and china got china right last week. that's a start. the trump administration foreign policy has been dizzying speck cal of mixed messages and policy reversals during its first three months. as we know, america first was his promise, his campaign

promise, will that steer him away from some of his base. that's one question. >> absolutely right. massive question on the lips of many people. approaching the top of the hour. the team is getting ready for "squawk box." michelle caruso-cabrera joins us from new york. >> you will join us, too, right? >> as quick as i can. >> excellent. rush down here. former ambassador to nato will join us. a couple of them to talk about all the geopolitics that seemed to maybe yesterday set off the vix. we have joe terranova to my left, we'll talk about the wait and see attitude that is going on. also we'll discuss what on earth should unite td do now? it's not getting better. it's getting worse. we want to tell you big coming up tomorrow.

bill belichick. susie welsh sat down with him and will bring us that interview tomorrow. it's football. >> we will see you soon. "squawk box" coming up in about 12 minutes. up next on "worldwide exchange," we're setting you up for the trading day ahead. james lu from clear nomics is with us. stay tuned.

i like russo. his on/off splits are the best here. yeah, but his offensive win shares didn't even break 4. come on, check out that stop-and-pop! what do you think? my trade-off analytics indicate no one creates more space on offense. this allows him to nail a jumper from a densely populated urban area. what you're trying to say is from way downtown?

i am still learning. i can see that. welcome back. let's check in on the yield on the ten-year, bang on 2.3%. dipped below that yesterday. 2.29 we hit. let's bring in james lu from clearnomics. thank you very much for joining us. we had some risk-off sentiment this week, but it's manifesting itself much more in bond markets and gold prices than equities. is that fair to say? >> i think investors across asset classes and around the

world are realizing there's geopolitical risk, and investors expecting the rosiest possible scenarios with coordinated growth, bond yields rising, and we're seeing that that's not necessarily the case. we think for u.s. markets it can't overcome some of the risk. so syria and the populist elections happening in europe. but the problem at this point is u.s. markets are at cycle highs in terms of evaluations. in fact the vix is finally back up to 15. you have intense complacency. we think the u.s. market can overcome this, but there's more attractive opportunities elsewhere, especially in international stocks and emerging markets. we think there are tailwinds there that will help support those areas. >> you would go international even if we see this elevation in geopolitical concerns, not just in syria but in north korea as well? >> we would underweight europe for the time being.

there's lots of different calls for what will happen in the french elections. we think emerging markets in general have some tailwinds. so if the u.s. dollar has weakened so far this year, that helps them. commodity prices stabilized as well. they're not surging, but that helps emerging markets at the expense of other asset classes. >> coming into earnings season stateside the banks kicking things off tomorrow. what are you expecting for earnings growth? we had such a valuation expansion for the banks. do they need to deliver earnings growth? how strong does it need to be to beat this sort of elevated expectations? >>ings growth is that the market is too optimistic. the market now is still looking at roughly 10% earnings growth for full 2017. we think that's too high it will come down a bit. this specific earnings season in particular, you mentioned the banks. the story around financials is probably still too optimistic as well. that sector surge in the fourth

quarter of last year, interest rates were rising, also on the backs of potential regulatory reforms. you can't keep surging on those facts. interest rates have come down. the ten-year is at 2.3. so we think that there are head winds to that sector. we would focus on other sectors where there are strong fundamentals like the con sumter sek consumer sector. evaluations are much more attractive in those areas. >> what about big tech? could the weaker dollar prove to be a tailwind for some companies like apple? >> we like tech, not assumer se still like tech. for example the fact that the dollar has weakened so far this year helps the profit margins still. especially because they source a lot of labor and capital and quip the from overseas. so we still like technology. we just think the consumer sectors are much more attractive

given the macro economic friends. >> the dollar has been the great debate of 2017. we expected a stronger dollar with trump in the white house. it's been the opposite. where do you see the dollar headed? >> a lot of the dollar view hinged on tax reform. we were given an august deadline. now we're not sure that will happen. the question of the border adjustment tax, whether or not that helps or hurts the dollar, and also whether or not we get overall increases in real gdp growth, the administration has been prom missing 3%, 4%. so at this point we think the dollar should weaken. we think a lot was priced in coming into 2017, a lot of that is not materializing. so a weaker dollar helps earnings over the next several years, and it helps emerging markets. >> oil prices, a view on them? they've been an important driver for sector performance on the s&p. >> our best guess on oil prices, the best you can do for oil

prices the last few years is to guess, they'll stay within this range, $50 and $60 for wti and brent for the foreseeable future. the reason is that it's fantastic that they agreed to production cuts in the opec region, but we think that's probably also overenthusiastic. we think we'll have to see some real progress made there before we see this big bump in oil prices that many expect. >> james, thank you very much for joining us. >> thank you. >> james liu of clearnomics. about 40 seconds left. what are you watching? >> united airlines. the stock under pressure once again in premarket trade. will it continue given the controversy around that passenger debacle. >> it's extraordinary we're still focusing on that after the event hatppened on sunday. united still down 0.6% there that issue on sunday. and on the airlines note, we get delta before the bell. we'll break that news on "squawk

box" and keep an eye on all news out of washington where rex tillerson is meeting sergey lavrov at the moment. thanks for joining us. "squawk box" coming up next. you get used to food odors in your car. you think it... ...smells fine, but your passengers smell this bell dinging new febreze car with odorclear technology cleans away odors... ...for up to 30 days smells nice...

. good morning. breaking overnight, president trump and chinese president xi speak by phone about north korea. details on that straight ahead. also happening now, secretary of state rex tillerson meeting with his counterpart in russia. and the ceo of airlines makes another attempt at an apology as outrage continues to grow about that passenger being dragged off a flight. it's wednesday, april 12, 2017, "squawk box" begins right now. ♪ live from new york where business never sleeps, this is

"squawk box." >> this song is appropriate? number one this week. >> very appropriate given the united news. yes. about being sorry. >> oh. >> are you sorry? >> i thought you were talking about the other line, i love your body, which i didn't understand at all. good morning. welcome to "squawk box." >> yes. yes. >> live from the nasdaq market site in sometimes squarements. >> too late to say you're sorry. >> i'm michelle caruso-cabrera with andrew ross sorkin. joe and becky is off today. >> that is one of the other lines. >> yes. >> joining us for this hour, joe terranova. >> never to late to say you're sorry. >> never too late? >> we'll talk about that. >> let me tell you something, yes. >> unless you're united. >> i bet women and men have different answers to that question. chief alternative strategist from virtue investment partners, joe is also a