welcome to "street science >> copper sales have a four-year peak driving sales for strong growth next year another stock presidential endorsement of the stockmarket president trump touts the tax cuts to be reasonable to expect certainties. >> a lot of companies are coming back into this country they're coming back into the country that we love, which is

what we care about and even before the nasdatax cut. i tell you that tax cut be sill something. the u.s. has agreed to keep pressure on north korea while secretary of state rex tillerson asks his counterpart to reduce the violence in ukraine. and good morning again, everyone we are still with you. let's take a look at stocks, how things are look one hour into the trading session. we did start off on a firmer footing. it seems the momentum has changed. the profit is a little weaker on the day, let's remember, it's the holiday season let's take a quick look at sectors, see european markets

quantiti quantities 51 hundred is trading in the green. the rest are a picture in the red, struggling down 2%. now we can delve into the sectors and see which ones are standing out a couple days for mining sector and commodities in the overnight session. we are overseeing it, to the down side, telecom is down .3% technology is down almost 3% as well utilities lagging, too our next guest believes looking east to asia could boost investor's portfolios in 2018. joining us is an investment officer from lloyd's bank investment group are you looking at china or

japan? >> we are looking at japan, it's one of the more profit rivers to ship in. it's hire than the previous peak in the 1980s, which is really exciting cash flow growth is very i don't think. the yen the currency is very atraff attractive if weighed out with any tool >> it was down about .5% t. bank of japan minutes came out sucking a few people on the committee are beginning to think about withdrawing some of the stimulus in the system to lessen the purchases. does the not pose a significant risk for your equity outlook next year in >> absolutely. risks are key to our vooemt investment outlook next year 2018 is for identifying 20 points in the investment cycle yes, the global economy is very strong and vibrant

we can see if we look at leading indicators, such as the copper rise, which you've commented on, purchasing indices, it's fairly strong components. global trade is growing at twice the rates we could see a year ago. yet the blue skies are fought without clouds for some countries like germany, japan and the u.s., there are warning signs that the economies might be overheating some turning away from japan for a moment to germany, for example the iphone index is at 1969 levels when unemployment was no longer 1%. >> switching to that, let's talk about the economies overheating, do you expect there to be a pickup next year in inflation in >> exactly inflation could be a storm cloud which we need to monitor the horizon for. it's generally expected inflation will remain in

hibernation fourever, both for manufacturing as well as for service cities is low-to-non-existent and we can see inflation very low it could be bad news for bonds, a dangerous mix, if there are any surprises. >> i get that. if you look at inflation expectation, fregs, in europe, the metric most people look at is something like the five year inflation, that has dumped about 30 basis points in the last few months, they have rallied ten basis points are you seeing this wedge between what the mark is telling you, expecting it to be in ten year's time. the bonds market is at the whim of purchases and consumers will continue buying next year, no? >> you make a very good point inflation is a lagging indicator of the economy right? that's very important to keep in mind, there is always a danger at the end of the economic siej

or within it comes to a peak that investors underestimate inflation and there is much talk about the amazon effect, for example. but, actually, there are some good signs that prices are rising and what's also very important for the inflation outlook is wage growth and while there is much talk in this country for some rising for some of the wrong reasons that wage growth is a problem, there are actually a number of major economies, where wage growth is looking to rise quite significantly. i mentioned germany earlier, where, you know, wage growth could be around 3% this year we still have a very low inflation rate that can mean there is more demand, which pushes up consumer prices >> i'm looking at the dollar crosses this morning we can bring them up you can see the euro and the pound. next year, 2018, what are you expecting from the u.s. dollar and what impact does the u.s.

fed policy have on that? >> we are right at the moment, that financial conditions, which are very attractive. they could be more attractive as we went along, will have a positive impact, will start to have a positive impact on the u.s. economy, that could, inturn, be a positive for the u.s. dollar. >> which segments of the parks do you want to haveing posier to you are skeptical, where do you want to be, equity >> $good estimate opportunities while we upon tore the rising for refx and the class to look for opportunities. >> we have segments of the u.s., more attractive in one, the momentum is in the other >> that's true, but the valuation gap is so attractive, in favor of european equity, that european equities will be a preference coming back to japan again, it's probably one of the most attractive markets for next year. >> thank you very much for

that that was chief investment officer from lloyd's banking grou we mentioned earlier on our trading, significantly higher, boosted by the latest surge, especially amongst copper, it mentioned 15 straight positive sessions in a row. it hit 40% price gains for the year >> almost as much as the claim, but no shares in bank of bpm are rising after the italian lender exceeded the castle requirements they have set 2018 cut to a minimum threshold at 8.75% following its annual review. and big takeovers are expensive and dangerous. that's a warning from the insurance company, it will be cautious about how much it uses of share buy backs now, they are pleased to get involved in the conversation on street science, sfwo to streetsigns.com or tweet us

directly coming up on the show, scores of high ranking royals are detained in saumpblt we will look at the purge in the middle east could mean for investors next year that's coming up next. taking care of a family member can lead to plenty of questions. fortunately, there's a place to get the answers, for them and for you. find articles, tips and tools from experts and others who have been in your place. the caregiving resource center at aarp.org/caregiving.

welcome back to "street signs" they may phase out the airbus. they have only been if service ten years. it's struggled with emirates as a notable exception, given that it has been its biggest buyer. staying in the middle east, saudi arabia has released 23 of the original suspects in the anti-corruption crackdown earlier this year. cnbc spoke to the foreign minister around asked him how the kingdom push fits into the broader program of economic reforms. >> quite the contrary, i think

this will increase investor confidence in saudi arabia because it shows we have adopted a zero tolerance policy on corruption just as we have adopted a zero corruption policy on terrorism and terrorism financing. the kingdom of saudi arabia announced more than two-and-a-half years ago that he will fight corruption and fight it robustly. the royal highness has made it very clear no prince and no minister and no high ranking official is immune from corruption charges the public prosecutor started an investigation two-and-a-half years ago and unearthed a large number of cases of individuals who are involved in corruption and the decision was made to bring these people in for questioning and to confront them with the everyday and to deal with this issue in a very resolute manner a. sizable budget was being stolen.

this cannot stands where you are corruption, can you fought have justice. can you not have investment. you cannot have deficient and transparent government i believe that the international community will be very, very pleased that the kingdom of saudi arabia is not only transparent, not only firm, but has taken decisive action against individuals who rob public goods and the reason the fames have not been announced is under our legal system, we don't publicize names until after the verdicts are out and this process is still ongoing, the questioning is ongoing, the individuals will have trials in accordance with our laws just like everybody else, they will be held accountable. so this is a hugely important step for saudi arabia. now foreign investors can come in saudi arabia and compete on an equal footing with everybody else. >> conflicting reports about just what happened with prince abdullah, can you clarify what exactly happened

especially can't comment on the individual cases i leave that to the public prosecutor. >> we are talking $800 billion worth of assets either if saudi arabia or abroad, belonging to those or under investigation is this really about corruption or is this really about getting the cash because those funds you guys could really use right now, especially with decision 2030. >> i can't comment on numbers to the public prosecutor. i think in time people will know t. bottom line is money was stolen from the public treasury and that robbed the country of the ability to invest it for good of its people and so, of course, people have to return the funds that were stolen >> so when you look at what happened over the last several day, it is an unprecedented move from the go. this was a very large crackdown. what does it mean for the future of the country >> it means that the country is moving on the right track, that

the country is opening up, that the country is implementing its 2020 national transformation plan to make government more transparent, more accountable? how can we do that it means we have to empower our youth. we monitor, we adopt and push for a pod rat islam so that people can live normal lives in their country. they can realize their hopes and dreams and ambitions and in the process make our country much greater than it is, so the issue of corruption is critically important to this. when you look at the total changes that have occurred in saudi arabia over the last two years, these are vast changes and tremendous changes that will transform our nation and make us into a stronger, much more dynamic society. >> in the face of continuing turmoil in the middle east, president assissi had a call for

regional unity, he says he is working to encourage dialogue between the middle eastern leade leaders. >> i want to say that the stability of the region is very important and we all have to protect it and i am talking to all the parties in the region. the region has more than enough fighting and turmoil and lack of stability. we don't want to add more instability and fighting this message is for everyone we should be protective of our stability and security and the others should also be protective of their security and stability. the region cannot take any more turmoil. this is the image i want to convey we are keen on the unity, stability and peace of lebanon as a diverse and patriotic country. lebanon is a patriotic country

pe preserve its unity, we preserve its stability we preserve its independence >> so it's not the time to take on hezbollah smr the subject is not about taking on or fought taking on. it's about the status of the fragile stability in the region in light of the unrest facing the region, in countries like iraq, syria, libya yemen, somalia and others we want to increase stability, not have more instability. >> let's talk about potential partners in stabilization, russia today has the opportunity to exert enormous influence in the middle east, is president putin the best part iner to ensure regional stability? >> i see the dialogue, discussion and understanding between the united states, the biggest country in the world russia is very important for achieving stability. if there is no dialogue or understanding, it will be at the

cost of stability in the region. that is what i see and that is my opinion i always say understanding between america and russia is a very important matter. we support this understanding and communication. in the end, it will positively impact our region, which is very sensitive and turbulent now. >> so who would you say you are closer to, president trump or president putin? >> ha, ha, ha ha that's a great question. my relation with others and all leaders is always friendly and extlevenlt depth of understanding is very good i very much admire prumplt i anticipated his victory and suspect he will lead a country as big as the united states. we also have very good relations with president putin we have good relations with everyone, everyone these are the old morals of politics we in egypt look upon it as

something from a bygone era. the era of polarization is at the cost of security and peace for the whole world, understanding, dialogue and commune indication much b communication is much better >> that was a really interesting conversation. you now, a number of people have issued information about art official intelligence, steven hawkings and they called for the regulation of a.i. so it doesn't get out of handle. we spoke to the president at the summit recently and asked him how his firm was implementing the tech following >> artificial intelligence is going to really change and help humans as in health care so for example, there is data now that suggests because artificial intelligence can look at things and see changes in shifts much sooner than human eyes can, using mris, they can

detect alzheimer's onset years earlier than a doctor or human can detect by changes in the brain. we all know that alzheimers, for example the earlier you detect it and get on to medications, slow it down, so alzheimer's takes a lot of time for us to be cured. but a.i. may help us slight down to a point that it doesn't affect our lives nearly as much as it does today. >> steven hawking warned about millions of job losses from artificial intelligence or humanity being side lined. you mentioned health care, one idea is that ai could be used in triage these are not low skilled jobs, when you talk about the first interface with an emergency worker or health care professional are you concerned about job losses that a.i. could bring you have know, every time there has been a big shift in technology, go back to cars, airplane, people thought the industries were going to die,

people were going to be out of work what happened is it shifted and it actually augmented and allowed more jobs, more opportunity, more commerce and so a.i. is going to do the same thing. it's going to allow those trained people to actually focus on more treatment and less triage, for example. it doesn't mean there is less skilled workers. it means they are able to focus and treat more people in man kind with the stills we have >> if artificial intelligence is going to be so game changing, where is the regulation? in the past, we seen legislators slow to move on new technology, are you concerned this is the same situation, they may think this is so bad behind how quickly a.i. is developed? >> a.i. is only going to go into makes that we allow it to go into and so, it's really it's in its

infancy so it would be too early to do regulation today west virginia would you regulate around artificial spell jens today? it's really we need to foster ter innovation and allow it to grow we're at the beginning stages of artificial intelligence. we want it to blowsome and grow into what it is most capable of. >> we colleague weighs in on the conversation. >> i am much more focused on the benefits that we can bring with artificial intelligence the things we can do from a social perspective in terms of what we can do medically, i mentioned, for example, from a examiner service perspective, in terms of the yields of crop ki come up with tens and tens of examples of positive things that come with understanding data and information, the ability to apply a.i. to those applications we can come up with, talking

about security i request come up with different issues, but our job is to apply those technologies in a way that benefit people and benefit customers, that's what we are focusing on. >> whakt block chain, the technology for bitcoin how is it for your company at this point >> we have talked about block chain. you can talk about block chain in the sets of putting valuable information that you want to integrate. block chain can become a very, very key technology enabler. so that's what you will see block chain use and it's beyond just a thin tech example as you described. can you use that sort of application in medical records, i can go through other examples. >> some of the executives i've spoken to, when they've done pilot, they think the capabilities are enormous. they don't believe the system has integrity at this point. so it can't be rolled out on a live scale. >> i think we are talking about

a question today versus tomorrow that's the objective to get to that level of integrity that allows you to share sensitive records back and forth that's why the focus on block chain is so attractive the opportunity now to bring valuable information up in a secure sway so important so i'd be less focused on just what kit do today but more the opportunity and promise it has for tomorrow >> social media has extended its region to many areas of our lives in 2017. we take look at what to expect from this space in 2018. [ music playing >> reporter: under pressure from users, regulators and advertisers, social giants will step up in 2018. expect facebook to spend big on sports and tv shows. facebook failed $600 million bid for cricket indicates demands for sports rights. it will double down on programs for its wash tab, to compete for

tv viewers and ad dollars. while snap to avoid getting crushed by instagram will continue to embrace its relationships with pedia giants, including investor and cnbc parent universe am expect bigger changes to battle bad raps, even fit means feeding into the bottom line, facebook for enabling the election and youtube for violent and extremist content. they are prioritize transparency and crack down on anything leading or false, to hold on to users and avoid regulation >> social ads will get smart. >> reporter: new ads will use voice recognition to easily order products, augustment reality and the ability to buy anything you see on a app. buying clothing on instagram, without leaving an influencer's post or shopping in a friend's snap or stories.

>> i got to admit, i have not yet bought from insta- grachl never say never. i think in the u.s. it's coming more so, especially in the u.s. president trump predicts republican and democrats will eventually come together on a new health care plavenl we wipln we will discuss the arcyphma sector coming up after the brake. for your heart...something your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain health supplement in drug stores nationwide. prevagen. the name to remember.

welcome back no "street signs. >> these are your headlines. copper sales drive expectations for strong global growth next year. another soft presidential endorsement of the stockmarket president donald trump says u.s. tax cuts have a reason to be opt mick about equities. >> 401ks are good now a. lot of companies are coming back into the country, which we love, which is what we care about. even before the tax cut and i tell that you tax cut bill is something. >> a moment of truth for airbus.

they reportedly prepare to phase out the a.-380 if it fails to win over a key order from emirates finally, the u.s. and russia agree to put pressure on north korea, while secretary of state rex tillerson asks his russian counterpart to reduce the violence in ukraine. in yesterday's trading session, the u.s. equity marks plans marginal gains you can see the picture is looking fairly similar

let's switch to foreign exchange obviously, the dollar has been a major theme as the tax reform bill did get passed. since then, we see further declines in the u.s. dollar hasn't really given the currency much of a boone and you can see your dollar trading up higher today, almost getting to that 120 mark, that's interesting the dollar yen trading weaker there, the cable again inching a little bit higher almost at 135 up .4% today it appears as another weakish day for the u.s. dollar is ahead. mining stock versus on the move, copper surged to a four-year high copper is on track to post a near 40% gain for the year, thanks in large part to strong demand from china. speaking to cnbc, goldman sachs says that china is one of the emerging market economies that

will work to address leverage issues in 2018. >> you are seeing in china this falsy sea saw, you have stockmarkets doing well and you got past big political event like the transition that took place, policy is going to tilt a bit more to urge reform to urge tightening, to urge some -- addressing some of the credit overhang that has built up in china over several years some of that is happening now. not that i think this is sinister, but there is no question this tightening ug see in the bond market is policy driven or policy sanctioned. yes, you are in a somewhat slower pace of growth in coin, easing that slow down will be mangled. u.s. president trump predicts republicans and democrats will come together on a health care plan following the tack cut bill that i are under increasing

legislation for obama's affordable care act. americans will no longer be fined for lacking health insurance. despite concerns over the state of the u.s. health care, our next plan continues to be profitable joining us is partner at nova sector thank you so much for joining us i guess the first question should be what it means for the pharmaceutical industry going into next year >> i think the u.s. tax reform partly the attempt is to reduce the tax clearly on the u.s. companies and i think the u.s. companies are going to look to europe and asia to acquire more. so mna for acquisitions should go up from the u.s. companies perspective if the tax reforms do take hold >> but one of the key beneficiaries is the pharmaceuticals, because they allow for repatriatation you think that money will come back to the u.s. and spent on further acquisition as opposed to making it out to employees

paychecks? >> i think pharma companies are looking for acquisition it's the nature of industry and finding science in the right place in the world. so i think the interesting thought on the acquisition front is people have predicted there may be megamergers the u.s. company is consolidating up. it is more likely they will be like pharma companies continuing to acquire to license, to partnering it's a highly partnering mna intensive detriment i think we will see more of that because of the tax reform. >> as the individual mandate, we've seen another kind of effort ching away at obamacare what does that mean down road for big farm pa in the u.s. if you see that to continue on state by state basis >> i think the obamacare and health care reform has still got some time to go. trump had a good go at it and the house and senate had a good go of it last year it didn't work out then. i'm not sure whether it will work out this year in anyway it will be substantial. it's a highly complex piece of legislation.

i think what we will see is playing at the edges of this health care reform i don't see that as a major driver. >> does it benefit their bottom line >> i think it will, it's neutral to be honest it's one of those things that people talk about price pressure in the u.s., the health care reform and so on, in the ends, each of these individual small pieces doesn't really affect the pharma industry in a huge way from my point of view. really, they've got to come up with the best innovation >> that will find a price that's suitable in the u.s. system. >> i want to ask you a little about the productivity of some of the research and development that we see in this space. i was reading a report from the world health organization it was incredible it extended from $1.2% every year on research and development. it brought to the market which two-to-three are genuinely few with the rest of the marginal benefits. >> that sounds like an awful

waste. >> i don't think it's a waste. you can look at all the medicines that came to the mark and the jentive markets t. pharma industry has produced enormous amountss of fantastic medicines. that's self-evident in terms of mortality rates and health and son. i think the issue on r&d productivity is a difficult one. it's much more differently and people have to spend more for the same outcomes. the statistics show that it's very difficult to get a few molecule to market i think where you will see some creativity is using existing molecules in different ways to actually solve different indications, different therapies, which will mean innovation defined in a different way. >> i will not ask you to tell us specific drugs or companies. when we look down r&d pipeline, which areas of health care could see blockbusters come out? >> i think you will continue to see biologics continue to be

very successful. the original pharma industry based on small molecules is sort of still going, still very strong, biologics came in 20 odd years ago t. next wave will be selling gone therapy i think that's more from a technological point of view than it is from a mark point of view. these things go for niche indications. they are highly advanced, harnessing the immune system is great news last year in terms of approval of those things i think long term you will get the market benefits of those two. >> why was mna action in 2017 so low? >> i this i the prices were way too high if you looked to the prices that were going around the dates in early '17 and if 2016, the multiples were astonishing j & j's acquisition was an astonishing multiple and very well rewarded for some great work but the multiples are very high, pharma are having to find

different ways that's often the reason, the price is inflated. >> thank you very much partner from nova. now, russian president vladimir putin called yesterday's explosion in a st. petersburg market a act after terrorism it didn't result in fatalities. the u.s. calls on russia to moderate the fighting in the east of the ompany secretary of state rex tillerson expressed his concern with sergei lavrov. they discussed maintaining pressure on kim jong-un's regime >> we want to hear back on your new year's resolution, in particular when it comes to world peace in north korea you can tweet us the show twitter handsel is streetsignsc bc coming up, natural disasters did

heavy damage around the world back here from wildfires to earthquakes to hurricane, after the break, we will look at how these events continue the markets for catastrophe bonds.

welcome back to "street science". they warn trading fluctuations make for a volatile environment. the head of rabobank spoke to what is ahead agra- culture. >> we seen climate change, an emerging asia that wants western dietary supplements as well. we had doom for a long time. why should 2018 be the year when all these factors hit? >> you pointed it out well, i

think the mark suffered for years by some of the things you mentioned. i think if you look at the supply and demand, this is our key driver at the end of the day. we see a bit of a tightening in the balance sheets which means we are seeing here and there the demands is growing faster than the spliechl as you pointed out, we need to keep a sharp eye on the weather shots it's not the climate change but the core weather phenomenon. if we look, there is a la thenia chance out there, which has grown over the last couple of weeks to now 75%, which basically means there is a high likelihood over the course of early next year, maybe throughout a longer period next year, we will see an impact on the weather of the production of several of the commodities, regions can be impacted from north america and south america of the grain side throughout the palmetto industry, for example, in malaysia and indonesia. >> look. stefan, in my household, as an

anecdote, my wife has me on cale and with that in mind, certain commodities will see big spikes in demand. i think you were alluding to that, other commodities. we are top heavy in terms of supply versus commodity. i hear you the weather patterns, we have to look at commodities by commodities on this one otherwise we can make being mistakes >> we are clearly thinking on the upside, there are many grain, corn and wheat have a chance to see higher price, one, prices are currently fairly low, on the second side, we have a changing pattern as mentioned so especially on the wheat side if you take the global balance and let's take china out for a second, that's sometimes a bit of a distracting factor in the wheat market if we look at the world without china, we are seeing a several million tons deficit this is the deficit in almost

five years if you bring that in, that is the changing point i'm not saying we are running out of wheat, it's coming to a point where the balance sheets are finally moving in the direction of too much demand, a little less applies, so there is a slight uptick in prices ahead of us. we look at several other once, we see some soft, sugar, coffee, more in the neutral space, slight upside, down side, on the very down side, we have the vegetable oil, so palm oil and soy bean oil, why is that? palm oil is suffering now for about two years from very dry conditions we have seen at that point in time t. production has not recovered in the core regions, malaysia and indonesia for the palm oil production. we are expecting 2018 will be the year when finally the production is not only catching up to what it should be usually but actually is increasing once again significantly. if we bring that if, we will

have very good supply of vegetable oils, much stronger tan demand side. i'm not saying demand is weak. clearly, the supply can be once against the big driver here that is what maybe moves the vegetable prices down somewhat >> stefan, you are starting to sound to me like a man who believes that we should be putting money back into agricultural indices and agricultural products more broadly, but what is the stockpile situation like in many of these commodities at the moment because my sense was in corn, soy beans and wheat, actually, there isn't any underlying drought in supply. >> you know, stock versus increased over the last couple years significantly. especially the commodities, so the grains have very well supplied >> that doesn't mean the stock is very easily accessible. i'm saying, if you look at the u.s. farmer for example in the

u.s. is one of the biggest producing regions in the world and really core to a lot of what is happening to our grain prices, few look at the u.s. farmer, he has a very, very good capably recently to store the grains so when they make good margins, he invested that in storage capabilities that brings him to the point, where he want, he is going through the harvest and he has that grain, he can actually wait until he needs to sell it. watts we have seen in the last couple of years, yes, the stock levels are growing, but the demands is growing, too, so you don't look at the absolute stock numbers, you look at the stocks to use ratio, that is improving or has improved over the last couple of years. we think it will first of all this year decline slightly second of all, these are not easily accessible, meaning the farmer is often fought willing to sell for fairly low prices, which for corn is somewhere in the range of $3, $3.30 for chicago board of trade, for

example. >> they were talking about food supplies and the impact the climate has on them. plus, 2017 was a year of devastating hurricanes, earthquakes and fooild wildfires around the world they caused tens of billions in losses it's an extreme year for natural disaster it's shaping up for catastrophe bonds and sewerties t. asset class can offer diversification and yield benefits it is dell not for everyone. thank you for joining us, just for those of us who don't necessarily follow closely that often. what are catastrophe bonds who sells them who buys this snell. >> they are a way of insuring insurance risks into a financial instrument it gives people a chance to diversify their bond portfolios and it's today after the catastrophes you mentioned the two really good reasons to go for cat bonds are the yield

because they do give a yield, when you guy the yields off on other types of credit and they're also a tremendous diversifyer. you mentioned that that's one of the reasons to invest in them. well, if you are invested in cat bonds, invested in insurance securities, you are getting yields of 5, 10, 15% if there is a draw down, there is no reason at all that a hurricane hitting florida is going to happen at the same time as a correction in the stock exchange >> you oversee your entire principle, so you are writing an option as an investor, i buy and get coupons, when the catastrophe does happen, is na how it works or is there a recovery value >> there is mostly it's about loss of principle and that's why you don't want to try this at home >> the yield, is that worth it

>> you fisk i risk control it is so this isn't something you want to buy off the shelf >> who is buying these i can see the benefits for the insurance giants they get some risk off their balance sheet who is buying there? >> investors >> investors who want the yield. but they're not buying them on their own. they're using professional managers to know how to manage that risk. diversify it and to have access to the right contracts. you don't just buy anything. so you want the contracts where you get enough yield that it's actually going to compensate for that one in a hundred, one in a thousand risk of loss. and you want a manager who will build your portfolio so that your risk of sloss fought total. your risk of loss is 1%, 2%, for that, you get a yield of 6, 7,

10%. >> we saw 2017 has unfortunately been a year of many natural disaster e disaster, we seen earthquakes, flooding, et cetera how does that affect your price something if i were an investor and i had a catastrophe bond paying me say a 4%-year-old and all of these incidents happen in 2017, even if i didn't have directly exposeer, surely the new ones will fight for a higher yield, even if they haven't been hit by a catastrophe they are under water anyways from a yield basis. >> the decision, you shouldn't be looking at this as a short-term investment for capital gain you want to cap cure that yield. your bonds are yielding 4% the very high quality ones, we talk from a probably of loss. that's going to be yielding 5% so in toll, you are going to get a better opportunity from investing this year, staying the course bond investors are not cash

machines you should be a three-to-five-year target. >> i know this isn't about economic rationale rather than reality. when you are an insurance company, you take payments for catastrophe that completely collapse their homes to embers or you are an insurance company insuring in turn, i understand the you tim of your existence. when are you betting essentially on catastrophes not happening, isn't that a bit unseemly? >> that's not huh the marks should work and aninvestor in sureties >> you are betting on natural disasters. >> you are not not if you invest wisely with a good manager the managers have access to the contracts, which are getting if you have yield to compensate the

manage worries have the experien -- managers who have the experience for the multiple risks the cyber the things that you don't really want to get tripped up by. the insurance market, yes, is there to pay insurance claims. the investment manager is on the side of the investor it's capital the customer in the insurance market is the underlying insurance company. but they need, i mean the basic moral of this is that insurance companies must be able pay claims i mean, that's really the important thing and the reinsurance securities market helps them to do that. it's the second, third layer of security >> within it comes to moral investing, ethical investing you talked about it in the brake just now, some companies moving away from agra- sector, is this an ethical investment in do you

see it as that >> most definitely people don't like insurance. they don't like paying for insurance, but people feed insurance. the insurance industry needs to know that in the one in a hundred, one in a thousand years, that you get a really big catastrophe that they've got enough capital >> thank you so much for joining us, head of fixed research at cambridge associates and a suicide attack in kabul has killed more than 35 people and wounded dozens more. a bomber struck a shiite muslim center in the afghan capital it occurred during commemorations marking 38 years of the soviet invasion of afghanistan t. taliban denied responsibility the afghan facility of the united states claimed responsibility for several such attacks in recent months before we head out for today's show, we will take a quick look at u.s. markets. as can you see the spigot a little rosier today.

dow jones looking to open up 30 points higher. s&p one point higher it is a very thin stratrading session as we head into the holiday season and new year's. we've seen a lot of profit taking coming out of equity funds. and the picture if europe again is a little bit mixed as well, footsie was the outperformer today. overall, it looks like equities are set for another boring but positive day that's it for today's show "world wide exchange" is coming up next. these birds once affected by oil

are heading back home. thanks to dawn, rescue workers only trust dawn, because it's tough on grease yet gentle. i am home, i am home, i am home

the countdown is on. just two trading days left in the year what you need to watch as we close out 2017 ahead. page dr. copper the red metal on a win streak. it's 16 straight sessions. we will tell you what is drive tag run. disneyland park, stranded on rides. >> that story. it's thursday, december 28, 2017 "world exwiwide exchange" start right now.