hello. welcome to "street signs." i'm carolin roth. these are your headlines. european markets open in the red and u.s. futures point lower as risk aversion spreads, and the euro hits highs against the dollar not seen since the u.s. election. donald trump tells james comey "i hope he can let this go" as he was urged to shut down an investigation into michael flynn. the european union mpreparig

a legal case for failing to crack down on fiat over the emissions scandal sending shares in the carmaker lower. ubisoft shares sink as the french video gamemaker trims its midterms sales guidance, despite playing down its reliance on new launches, saying it can boost profitability from older games. good morning, everyone. let's kick things off with our top story. president trump asked former fbi director james comey in february to end the agency's investigation into former national security adviser michael flynn, that's according to a report by the "new york times." nbc news has confirmed that comey wrote a two-taj mpage mem detailing the conversation immediately following the meeting. the white house denies the version of events saying the president never asked mr. comey or anyone else to end any investigation. nbc's blayne alexander has the

story from the white house. >> reporter: tonight more damage control for the white house, now denying new reports that president trump urged former fbi director james comey to drop the investigation into michael flynn who lost his job as national security adviser for lying about his ties to russia. >> he said that general flynn was a good man, and that the fbi needed to move beyond the investigation of him. this deeply concerned comey, who immediately after leaving the white house wrote an extensive detailed two-page memo that outlined his conversations with the president. >> reporter: the white house insists that the president never asked comey or anyone else to end the investigation, pointing to last week's testimony by acting fbi director, andrew mccabe. >> there's been no effort to impede our investigation to date. >> reporter: the president abruptly fired comey last week saying he wasn't doing a good job. the latest revelation catching republicans off guard. >> i doubt there's much to it, if there were i would have thought director comey would have reported this to someone earlier. >> reporter: democrats want to hear directly from comey.

>> on a day when we thought things couldn't get any worse, they have. >> reporter: a day that began with news the president sharing highly classified information with the russians now ending in a new controversy. according to that "new york times" report, the president asked comey during that meeting about the possibility of locking up reporters for reporting government leaks before turning the conversation to flynn. blayne alexander, nbc news, the white house. representative jason chaffetz released a letter requesting the fbi to turn over all memoranda, notes, summaries and recordings relating communications between former fbi director and president trump. in the letter chaffetz said if true, the comey memo raises questions as to whether the president has attempted to influence or impede the fbi's investigation. let's have a look at how this is playing out on global equity

markets. we see risk aversion sweeping across global markets. let's kick things off with u.s. futures. s&p 500 off by 12 points. the dow jones set to fall by 104 points. the nasdaq seen down by 23 points, this after the dow fell for the fifth time in six sessions yesterday. the nasdaq closed at a record once again. stocks remained in a relatively narrow range. want to see what this is doing to bond markets across the world. once again those flight to safety playing out visibly. the ten-year treasury note yelled has dropped back below the 2.3% handle, a two-week low. a two-week low for the two-year note yielding 1.27%. when it comes to the dollar index, it is trading at the lowest level since early november. as investors get to grips with the latest news flow from the white house. the euro is one of the biggest winners against the greenback.

it gained a 1.11 handle for the first time since the election results. we're seeing the ftse trending higher, close to another record high. it is above the 7,500 level for the first time ever. the xetra dax is slipping back from haven't record highs at 12,750. the cac 40 is off by a quarter of a percent or a half of a percent, given the weakness in ubisoft. when we look at the sectors, this is the picture. we're seeing there's only one sector on the stoxx 600 which is managing to eke out gains. gains of 0.9% for the basic resources sector. autos, utilities trending lower. we're joined by anna cuttiford. thank you very much for joining us. let's talk about the latest crisis coming from the white house. it casts another doubt as to whether president trump can enact some economic policies what do investors do here?

they've taken money off the table when it comes to the trump trade. do we continue to look through this crisis or take more money off the table? >> good morning. i think one of the things we have to be careful of is really to extrapolate things that we don't actually know what is going to happen yet. so i absolutely agree with you. we've seen markets acting very positively to economic data. people take money off the table, but at the same time what we are looking for really to see is if there were to be any contagion in european equities. we'd probably look to put some money to work there. because we like the fundamentals. >> but we have not seen any contagion into the european equity markets. we're seeing a lot of money flow into europe. why is europe en vogue after all these years of disappointment? >> you've seen the u.s. market working quite nicely. as you mentioned already, post-election investors were

very sort of favorable towards it. in europe, what we're seeing is there's a bit of scarring, we believe, from the financial crisis still, from the eurozone crisis, and from the political noise that we've been seeing. but as you're aware, earnings have been coming through strongly in europe. and people are beginning to finally believe the fundamentals are correct. so there's a lot of investors still on the sidelines. >> earnings in europe are growing at 20% this quarter versus 10% growth in the u.s. we've seen that outperformance in european markets versus european markets. at what point does positioning become more stretched in europe? at what point does this become too much of a consensus trade? >> yeah. we've sort of seen a lot of people beginning to be favorable about europe. but the rhetoric is still when is this going to end? when can we price in the news? we can see pullbacks within the market.

at the same time, given the fact that the facts are coming through, continue to come through strongly, we would still use that as an opportunity. we don't predict it's impossible to tell what will happen in the future. so we prefer to look at asset prices. what do you think the catalyst will be for the pullback? would it be ecb tapering? the first signs of that? >> it could be. i don't have that fantastic crystal ball that we all like. there are a few things coming up. so we do have the ecb. we also have some of this political noise that is continuing on the other side of the pond. and it is things like that that perhaps might spook a few investors. but to be honest, i think one of the things we have to look at is the priss whce when it happens. >> given the ongoing crises happening at the white house, does it make sense to stay in bonds, give than we don't know whether the tax reform, the infrastructure package, et cete cetera, will be enacted?

is there still a case for bonds? we're quite bearish on bonds, on the multi asset team. we have the ability to go across asset classes. we still think the most sort of anomalous valuation is the equity risk premium, and essentially in some government bonds you're just about lucky to get positive returns. so, we still prefer to be slightly more risk on. >> even for the ten-year in the u.s., only getting 2.3%. that's not a whole lot. thank you very much for that. anna cuddeford. let's get back to the earnings picture in europe. sof fo s sophos has reported an 18% rise in billings. they reported free cash flow tripling to 1$133 million. speaking to cnbc, the ceo spoke about the wannacry attack. >> cybersecurity is already one

of the largest segments of i.t., but about a $40 billion market growing. but when you have this type of incident it serves to remind it's a worldwide and wake-up call that we have to redouble our efforts to get the basics right in security and how important it is to do that. >> ubisoft shares are under pressure in paris after the video games maker trimmed its forecast. the company did maintain the profit target for this year and raised the expected margin to 21% from 20%. the cfo told analysts on the earnings call that the firm relies much less on new game launches. and a.b. amro beat expectations with 650 million net euros in profits. it is targeting a return on equity of over 13%.

bouygues had a stronger performance in the telecom arm which helped reports. they said profits should continue to improve in 2017 driven by all business segments. do e-mail the show. we love seeing your e-mails. the address is streetsignseurope@cnbc.com. you can find us on twitter, streetsignseurope@cnbc and tweet me at @carolincnbc. amazon set its sites on a lucrative new market, which you e. bbut which is the new industry it hopes to disrupt? we'll bring you the details when we're back.

welcome back to the show. asian markets are mostly trading lower following the political turmoil surrounding president

trump. the safe haven yen continues to climb as risk-off sentiment hits the asian markets. let's look at the extent of the selloff with pauline in singapore. >> you hit all the right points here of what's driving the asian markets lower. the nifti is the only one in positive territory. it's the turmoil stateside in washington that has investors asking can the trump administration push through stimulus. can they push through tax reform and get healthcare done? that's what congress had been hoping this week. investors are in this risk-off move. currency traders selling off the u.s. dollar, buying safe haven yen as well as treasuries. that stronger yen has been weighing down on the nikkei with the nikkei 225 down a half percent. disappointing data out of japan. we got core machinery orders for march which disappointed with machinery orders up 1.4% w an

expectation of a rise of 2.1%. also machinery exports were down for the second consecutive month that underscores concerns by japan inc about global growth and future trade policies with the u.s. the china markets, shanghai composite down by a quarter percent. the hang seng down 0.2%. the shanghai bond connect received approval from authorities, we will first see northbound action from that. a start date is unclear. theminers were up as iron ore futures shot up dude. the asx 200 down by more than 1%. the southeast asia indices also in the risk-off mode. singapore has gained back some

ground. shares in fiat chrysler are trading lower following reports that the eu will launch legal action against italy for failing to property handle the emissions test cheating. the eu is frustrated at the lack of cooperation by italian authorities to clamp down on defeat devices adding the government has failed to convince them of their legality. the uk government has sold its remaining stake in lloyds bank returning the lender to full private ownership nearly a decade after it was bailed out. lloyds says the government will make a 900 million pound profit from the bailout. however that figure has been disputed by a number of industry commentators who say it does not take into account the interest payments the government had to shoulder in order to fund the bank's rescue. chinese drugmaker shanghai pharmaceuticals is considering making a bid forever stada. the company's yet to make a formal takeover offer.

stada w ashga had a failed take. and staying in pharma, amazon is said to be mulling a move into the multibillion dollar pharmaceuticals market, according to multiple sources at the company who say the firm is looking to make strategic hires in the area. amazon is aware of the fierce competition it would face from established players if it were to expand into the pharmaceuticals business. the latest 13 f filings were a tale of tech names. leslie picker looks at where wall street's biggest names put their money in the first quarter. >> reporter: as the nasdaq 100 went up, so did hedge fund holdings, and apple saw a fair share of sellers.

green light and glenn view are some firms which pared back or dissolved stakes in apple according to f13 filings. for most hedge fund managers this was likely profit taking. the stock gained 24% during the first three months of the year. hedge funds needed easy trades to show returns after a few lackluster quarters. berkshire hathaway more than doubled his stake to hold 129 million shares, a position worth more than $20 billion based on current prices. yahoo! gained position from appalossa as well as jana, yahoo! had risk to its takeover due to a hack, but that was sorted out by mid-february. then snap. shares saw quite a bounce after

disclosures that appalossa third point ers and soros took positions in snapchat. it's unclear whether they still hold them. man group's pierre la grange said he expects confidence in europe po continue fto continue. gemma acton got the chance to talk to pierre. what was he like? he's a big name when it comes to the hedge fund industry. is he still bullish on european equities? >> he is bullish on european equities. we were talking about whether valuations are justified or not. he seemed to think that in the eurozone they are. it's more of a mrixed pia mixed. let's hear from the man himself and hear what he had to say. >> i think there's a lot of difference between different e geograp geographies.

in europe, if you look over the last year, we are in the fist time over the last few weeks since the french election, we have a lot of positivities. you have a central bank unlikely to taper significantly. you have gross that is ticking up. you have confidence that we haven't had for a very, very long time on mainland europe. we can't forget how close we were to an absolute disaster and the economy very destruction from the outcome of the french election. >> we already started to see some money move from the u.s. to europe. is it getting ahead of itself? is too much coming or is it about right? >> it's about right. if you look at the charts of that, you can still see that we have a lot to claw back to get back to significant exposure to europe. over the last few years, between brexit, between italian election, between the french

election now, it's been a litany of issues in europe which made for everybody why would i want to be in europe? i don't need to be in europe -- i don't need to invest in europe if i don't need to be there. all of these excuses, a lot of them are gone now. >> let's look at emerging markets, which has seen a spur of investor interest. is there momentum here that should be carried on or are investors getting ahead of themselves? >> it's a bit more complicated. you see some tightening in china. a mixed message from what is a big part of the emerging market story. in the other countries, it's specific. mexico has seen the currency move back to levels close or off pre-election levels. a lot of things have happened already. emerging market, if the u.s. continues to drain liquidity,

and you can see dollar repatriation, it's not because people are investing in europe, the emerging markets will be a second derivative, where people will go there only if they don't find opportunities. but if we get the continuation of the momentum that we rebuild with macron winning the election, really emerging markets will be secondary to global investors. >> pierre was really talking about the macro picture, which he sees in various countries. he went on to talk about specific sectors. in europe he highlighted that banks are quite interesting. the global european banks. he was saying they warrant a re-evaluation. also looking at technology. looking in general at disruptive industries, ones that are ripe for wholesale changes. >> i'm curious what he actually said about this big debate about active versus passive.

he comes from the active side. does he see the need for some machine to play a part in the investment analysis process? >> absolutely. that's something he's looking at closely at the moment. his conclusion was it will be a barbell structure. so at one end a passive structure, where the consumer can access, cutting out need for intense fund management. at the other end, you'll have the global behemoths that can capitalize on r & d and technology in order to get an edge, process different data points and apply a discretionary overlay to it. what is lost in this is your average active manager who doesn't have that edge and is not able to provide such low-cost products. >> that means more consolidation. >> that's right. you need money to pay for this tremendous amount of investment to get ahead. so we can expect consolidation

to continue. >> gemma, thank you very much. gemma speaking to pierre la grange. thank you very much for that. we are going to go for a quick break. do check out world markets live, our blog which runs throughout the european trading day. we'll be back with wage data after the break. we'll be back in two.

welcome back to "street signs." i'm carolin roth. these are your headlines. european markets open in the red and u.s. futures point lower as risk aversion spreads, and the euro hits highs against the dollar not seen since the u.s. election. donald trump tells james comey "i hope you can let this go" in an memo written by comey as he with you urged to shut down an investigation into michael flynn. the european union preparing a legal case for failing to crack down on fiat over the emissions scandal sending shares in the carmaker lower. ubisoft shares sink as the french video gamemaker trims its midterms sales guidance, despite playing down its reliance on new launches, saying it can boost profitability from older games.

good morning, everyone. let's have a look at the fallout when it comes to the markets from this renewed crisis in the white house and what we're seeing is that risk aversion is spreading through global markets. the s&p 500 seen off by 10 points at the open. the dow jones looking at 89 points of declines. we were look at triple digit declines an hour ago. but this looks to have moderated. the nasdaq seen off by 20 points. when it comes to the european markets, we are slightly under water today. the ftse 100 dipping into the red, even though it hit another record high. above the 7,500 level for the first time. the xetra dax also pulling back from recent record highs, off by a quarter of a percent. the cac 40 weighed down by the news of ubisoft. want to bring you data from the uk. we see for the uk the average earnings are unchanged at for the three months for

february. forecast was 2.1%. we're seeing the three months to march average are higher by 2.1%. that's more in line in expectations. we're seeing that the unemployment rate is at 4.6%. the uk jobless rate hitting a 42-year low. regular pay was weaker than forecast. this will be a concern for the boe going forward. yesterday we saw that inflation hit the highest level since 2013 of 2.7%. that goes to show that inflation is already putting a real squeeze on real earnings, on real wages given that wages are pretty much steady or even declining across the uk. back to our top story. president trump asked former fbi director james comey in february to end the agency's investigation into former national security adviser michael flynn according to a report by the "new york times."

nbc news confirmed that comey wrote a two-page memo detailing the conversation immediately following the meeting. the white house denied comey's version of the events saying the president has never asked mr. comey or anyone else to end any investigation. representative jason chaffetz, the republican chair of the oversight committee requested that the fbi turn over all memoranda, notes, summaries, and recordings referring to or relating any communications between comey and the president. let's get out to tracie potts in washington. at what point do we talk about the "i" word, impeachment. >> we're probably a long way from that. first we have to go to the "o" word, obstruction of justice,

which has been talked about on capitol hill. but the key is intent. legal experts tell us the key to whether or not president trump can be charged with obstruction of justice, trying to get the fbi direct tore baor to back of russian investigation, if that indeed happened, the key is was he expressing dissatisfaction about the investigation, or was there a quid pro quo, did the fbi director think his job was in director or did the president make it clear he wanted that investigation to end and he wanted comey to end it? that's the key as to whether obstruction of justice is talked about. but there are lawmakers here calling for impeachment. keep in mind impeachment has to happen with the congress full of republicans, many of whom are nervous about what's happening at the white house. some of them not quite sure where they're landing in terms of supporting the president but

not condemning him either. >> i guess the trump administration must be glad he has a trip at the end of the week. this could turn the page when it comes to the narrative, though we know foreign trips for any president, not just president trump, could be filled with gaffes. what's the sense amongst the white house staff? >> the idea was the whole week was filled with foreign visits leading up to the trip it was supposed to turn the page, now we're getting reports out of britain that they're nervous about the president sharing classified information with russia. out of germany, they're angry about this. of course he has to meet with some of those leaders at nato. he is going to israel where nbc has confirmed the information came from that the president shared with russia. instead of deflecting or turning the page on this controversy, he may be taking it overseas with him. >> i want to come to israel and

the maybe illegal sharing of information in just a second. i saw all these reports about president trump planning to shake up his staff within the white house, specifically also sean spicer. do you think he'll do that before the trip or after? no way to tell. a lot of that, to be frank about it, is still rumor. nothing really well sourced or confirmed about who might be involved in that. clearly we have a president frustrated with his own team. he tweeted about it a few days ago saying they can't keep up with me. that's part of the combativeness that you're seeing at the white house briefings. if it was just combative, that's one thing. his spokespeople are going out saying something that sometimes within 24 hours that the president is telling a completely different story or senior members of the staff are telling a different story.

there's a disconnect there. and, yes, we'reresult rumblings that the president wants to do something about it. >> thank you very much. israel says president trump did share information with the russian officials last week. israel did confirm the report but the ambassador to the u.s. said they have full confidence with intelligence sharing with the united states. hallie jackson has details. >> reporter: tonight the white house dodging, deflecting, but not denying the president shared classified information with russia and neither is he. >> we had actually a great meeting with the foreign minister, so we're going to have a lot of great success over the next coming years. >> reporter: now nbc news has learned the intelligence he talked about came from israel. according to three government officials familiar with the matter naming that country as the key partner which provided

the isis-related information. diplomatic dynamite, just six days before the president's set to visit jerusalem. the israeli ambassador says his country has full confidence in our intelligence sharing relationship with the united states. >> i'm obviously pleased to see ambassador dermer's comments. we appreciate the relationship that we have with israel and appreciate the exchange of information that we have with them. >> reporter: president trump acknowledges he did discuss with the russians facts pertaining to terrorism and airline flight safety. but "the washington post" says it went further with the president describing elements of a specific plot by isis, naming the city in the islamic state where the intelligence partner detected the threat. officials warning the paper revealing that would jeopardize important intelligence capabilities. the national security adviser wouldn't confirm specifics today but argues the president did nothing illegal, which is true, and, he says, nothing improper either.

>> what the president discussed with the foreign minister was wholly appropriate. that conversation was wholly appropriate. wholly appropriate. >> reporter: two u.s. intelligence sources tell nbc news they're not buying that. worried the president's conversation compromised a key source. h.r. mcmaster says the leaks are the real danger pointing out the president could not have put sources at risk because he hadn't been told about them. >> he wasn't briefed on the source or method of the information either. >> it's not unusual for a president to convey classified information to another head of state. but that's usually done in a scripted way. in this case it appears the president simply did it on his own and without a strategy or script in hand. >> reporter: the new questions over classified material striking given the president's criticisms as a candidate. >> i don't think it's safe to have hillary clinton be briefed on national security because the word will get out. we can't have someone in the oval office who doesn't understand the meaning of the word confidential or classified. >> reporter: now already in near perpetual crisis management

mode, his embattled team's scrambling to respond, rattled by rumors of a staff shake-up led by a frustrated president learning on the job. >> he had been a leader by fiat basically. now he has to lead by governing, and that means inviting people to be part of the solution including those in the executive branch of government who work for him. >> i'd say never a boring day in the white house. let's have a look at some comments coming from the c.o. of deutsche boerse. he says he is fully cooperating with the public prosecutor's office on insider trading allegations and that those allegations will be unfounded. when it comes to big deals being forwa brought forward, he says acquisitions and partnerships and investments are still possible but currently it's difficult to think about a large exchange merger after the lse failure. now the momentum in emerging

markets continues as the rebound in oil prices helped lift the em index to a fresh two-year high. gemma acton sat down with pierre la great lakange and asked if eamericans markets were getting ahead of themselves. >> it's a little bit more complicated, because you see some tightening in china. so we still see mixed message from what is actually a big part of the emerging market story in the other countries it's specific. mexico is seen, you know, the currencies move back to levels that sort of were close or above preelection level. a lot of things have happened already. emerging markets will still be a second derivative, where people will go there only if they don't find opportunities.

but if we get continuation of the momentum that we built with macron winning the election, really emerging market also be secondary to global investors. >> i want to continue this discussion with the co-head of emerging markets and fx research at goldman sachs. so, we're seeing massive inflows into emerging markets, a bit of outperformance when it comes to emerging market equities. how is this playing out when it comes to the fx markets? is the carry trade back on? >> i think so. you've seen a lot of currencies which are typically thought of as high carry. you take brazilian real, rand, the rupee, those outperformed against the dollar and on a trade weighted basis as well in the past year, really since the start of 2016. so you have seen even within the fx markets a clear trend where emerging market currencies have

outperformed or delivered. you had a bump on the road after the trump election when these things fell back quite si significantly. but from that they've staged a recovery and are back to the highs now. so in the equity markets, emerging markets have performed strongly. >> this only happening because of the trump trade which is fading somewhat? is it only happening because the dollar is weak or fundamental reasons for this. >> i'm of the view that there are fundamental reasons for it. there are several. if you look at emerging market macro fundamentals, those are in a much better place. you look at emerging market current account balances, significantly improved level. back to the levels you saw in the mid 2000s. as a group, much less reliant on external funding. much less sensitive to shocks coming from the dm rate markets. luke at inflati

you look at inflation. high-yield countries seeing inflation come down as the inflation goes up in the u.s. and the fed is hiking rates. on the growth side things are picking up. in general emerging market growth this will be the first year where we put up em growth year over year relative to having to cut it which has been going on for five years. the fundamental outlook. and trade, which is the other thing in the background. we talk about risks to emerging markets, oil prices, rates, the upside is the global trade is enjoying some of its strongest recovery since the slowdown in 2011. it's very much a fundamental driven story. what about the protectionist policies coming from trump? i know some have been watered down, but we know tpp is dead. >> that's really a crucial determination that investors have to make. how highly or how much you worry about the protectionist risk. so far we've seen both in terms of the rhetoric, but also in

terms of action, the rhetoric has been much more measured than it was during the campaign. the action barring the tpp withdrawal has really not been there. now, is that protectionist risk altogether eliminated or delayed until he gets his team together and they start moving on some of these things? that is -- so, our own view is that it is delayed. you could still have something that is a risk out there. at the same time as there is this protectionist risk there is a big recovery in global trade. if you look at the headlines, look at what you read, it's all about protectionism, all about the end of globalization. all about trade wars. if you look at the data, you're seeing a strong recovery which is not just a trump bump, not just commodity prices going up. it's not just china. all of these explanations have a grain of truth, that's where it causes skepticism, but a much

more broader demand and investment led recovery in trade. that's a big upside risk. >> let me clarify. yes, while you are more constructive on emerging markets, specifically asian markets, fx, you're not quite positive yet. there's one caveat there, that's china why are you still worried about china? the property market and infrastructure seems to be holding up well. >> generally we have been more negative on asia, more constructive on the high yielding, high carry emerging markets. i think part of the reason we've been more cautious on asia in general, even though we've become less cautious eventually, is, you know, china is tightening. i think you've seen a period where growth has been strong. both nominal and real. typically as you get this strong period they come in tight with policy. so you see some degree of economic weakness. you are already seeing that in the pmi data.

medium term, large credit imbalance is still there. that will need to be resolved. as they resolve it, you need a weaker currency. not very weak, not huge weakness, but some moderate weakness along the way. so we still think there is, you know, if you look 12 months out, a slightly weaker chinese renminbi is the way to go. >> you say the two rupee is the carry trade? >> the rupee in asia, outside of asia, we like south african rand, the brazilian real, and we like russian ruble as well. >> all right. thank you very much for that. do you want to stay tuned for this. record breaking diamonds. we'll discuss demand for the pressures stone after sotheby's sells a pair of earrings for over 57 million dollars. we'll be back with more diamonds

and other stuff after this short break.

welcome back. with all eyes on the white house, are market participants fa taking their eye off the federal reserve meeting next month? >> the federal reserve is about to boldly go where no central bank has gone before. in order to bring monetary policy back to normal it will unload trillions of dollars of assets it bought during the financial crisis. this is totally an unknown process. the process of expanding the balance sheet throughout the crisis was an experiment in monetary policy, one that had not been done on the scale that it was performed at during the crisis. and also not one that had been done in an economy and a financial system as large as the

u.s. the wind down process is also going to be an experiment, a learning experience as well. >> reporter: in the financial panic, the fed lowered rates to zero and bought u.s. treasuries and mortgage bonds, trillions of dollars worth and those drove down interest rates. with the crisis over, the fed is sitting on a pile of securities that it needs to unload if it wants to get back to normal. no one knows what impact this will have on the economy if the fed gets it wrong. >> the impact is you could see a more abrupt adjustment in interest rates which could harm the housing market, harm auto sales. >> reporter: fed officials are currently debating when to start getting rid of these assets, how quickly to get rid of them and how much to unload. that is to answer the question in the post-crisis world what's the new normal? >> not only in the u.s. but around the world large balance see t sheets and a different set of tools for controlling interest

rates being employed. so normal i think for central banks in the u.s. and around the world is going to look different going forward than it did before 2007. >> reporter: in 2007, the balance sheet was around $800 billion. now it's $4.5 trillion. fed officials have indicated somewhere around 2.5 to $3 trillion is the right number. is it the right number? no one knows. it's never been done before. steve liesman, cnbc business new. let's turn from the fed to diamonds. sotheby's sold the world's most expensive pair of earring force almost $58 million. i guess one blue, one pink? the two are perfectly similar except the color. the other one is blue. the chief auction near declined to identify the buyer. let's talk more about the diamond business with tobia tobias corman. what was the significance of yesterday's sale? why would anyone buy diamond there's a are two colors? >> the significance of the sale is that they're the most expensive pair of diamond

earrings ever to be sold which is fantastic. sets a new record. the stones themselves extremely unique. so colored diamonds are incredibly rare. and when you have a vivid blue which is internally flawless, had is one of the two stones, talking about the third most blo blue ever sold at auction, and pink the most expensive on the stone list so we're seeing an influx of wealthy buyers looking for alternative asset classes, going for extremely rare stones. >> why is it that colored stones, especially pink ones, are doing so much better than simple white ones? they're not simple, but rose -- you know, sort of the pink that captures everyone's attention. the ftse 100 returned 10% over the last ten years. a pink diamond has returned 388% over the last ten years. why this attraction?

>> comes down rarity. with fancy colored diamonds, red is the most rare. then you have green and orange, and blue and pink. there's so few found in the ground. if you look at white diamonds, of the white diamonds found, you need to move a ton of earth to find one carat of white diamond. 0.1% of white diamonds -- of diamonds are fancy colored diamonds. of those, only 4% fit the rare category. these diamonds are incredibly rare. the combination of what you need in the earth to form these are so incredibly unique. to find them, it just -- they're compared to some of the great masters and paintings. we're seeing now diamonds are achieving records which are near the top end of the rare paintings. >> in this low-yielding

environment, everybody is flocking for the alternatives, infrastructure and real estate. you say diamonds are an asset class in their own right? >> i believe they are. first they have unique attributes, but there's not more of them being made. the last time we had diamonds brought to the earth's surface is about 16 million years ago. it's an incredibly difficult thing to find and discover these. the argon mine which is where most of the high quality pinks come from, is yielding less and less every year, and is set to close in four years time. we have a lot of wealthy individuals coming through, 2,5 0 billionaires today, so more people are fighting for these few assets. >> you have one a successful online business. can diamonds be sold online or do you want to see them in person? you want to see how they sparkle and feel like? >> that's why we have a showroom

in mayfair as well. for things like colored diamonds, it's all about the color. the vividness of the color. >> very quickly, we have 20 seconds left what did you bring here today? >> we brought the range of diamonds. we have a 10 carat round, about $450,000 pounds. then we have some pinks and blues, some yellows. and the blue we've got, this is 1 carat blue, fancy blue, worth about 700,000 pounds. >> tobia corman from 77diamonds.com, thank you very much. that's it for today's show. i'm carolin roth. "worldwide exchange" is up next. [vo] when it comes to investing, looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward.

at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock.

good morning. market alert. the dollar drops, and u.s. equity futures point to a triple digit decline at opening bell. trump versus comey. a memo by the fired fbi director claims the president urged him to drop the investigation into former national security adviser michael flynn. we take you to washington live straight ahead. plus jumping jack. the parent company of cordoba surging amid reports of a spinoff. ♪