welcome to "street signs." i'm joumanna bercetche >> i'm willem marx these are your headlines >> third quarter revenue at burberry falls sending shares lower as investors await signs of a turnaround. >> and skanska slashes 3,000 jobs sending shares in the swedish construction firm to the bottom of the european markets. back of the class. pearson shares sink with a lore operating profits forecast as

its education business continues to struggle in north america. and asml is among the hottest stocks in europe this morning hitting a record high as fourth quarter profits beat expectations good morning we're about an hour into the european trading session wild swings in the u.s. equity session. we'll get into that. the handover from asia was mixed. the nikkei was down about 0.4% overnight. hang seng stood out there, ending up about a quarter of a percentage point the mood music in europe is grim this morning it points to a weak start for the stoxx 600. we recovered a bit, but for the day the index is trading down. let's look at european markets and see what the picture is like there the only one in the green, is ftse mib. the italian index, but ftse 100

is lagging in the uk, the focus is on the voting of the uk withdrawal bill later in the lower house of the parliament today xetra dax is also struggling, down 0.2%. we get eurozone inflation numbers in about a half hour's time we should get confirmation on whether the inflation numbers have, indeed, stuck around 1.4%, or are going to dip a bit. we also had corporate earnings announcements this morning one of the major stocks that was under focus this morning was burberry, that was a key name pushing down ftse 100. it's down about 0.5% in trading. going into deeper, technology is the out-performer, up 0.7% insurance also having a good day. it's mixed in terms of sector composition. media is lagging and telecoms is the

underperformer, down 0.7%. let's get into what happened in the u.s. equity session last night. so, we did mention many times during the show yesterday that the futures are pointing to a very strong start for the dow jones and suggested that one of the strongest starts in record and indeed that was the case at one point the dow was up almost 270 points, then quickly capitulated, fell about 300 points on the day. the largest single day drop in a couple years time. that meant overall it went from being up almost 300 points to ending the day down ten points overall for the index, it's not that alarming, because overall it ended up not down 0.1%. s&p same type of volatility, because deeper down day as far as where tended. it did touch an intraday high of 2800 that's the first time the s&p reached 2800, but ended much weaker the tech stocks, nasdaq was the

biggest underperformer here, ending the day down 0.5% no surprise with all of this volatility, we saw an uptick in the vix. you can see that at the end. there is an uptick in the vix. it was -- it hit a high of 12.4 in yesterday's session, that's the highest level ina couple weeks. you can see vix has been really underperforming. it has not been doing much because of volatility in the index indexes has been low it looks as though it closed down a bit >> let's look at some of the european stocks moving skanska is trading near the bottom of the stoxx 600 after the building firm issued a profit warning and announced sweeping plans to restructure its business skanska says it will cut 3,000 jobs

the company reshuffled its leadership team as part of its restructuring effort >> ubm shares have risen to the top of the european stocks after informa agreed to buy the event organizer. informa will pay 3.8 pounds for ubm. the deal will combine the two firms into a group worth billion pounds but has greater international reach. pearson shares have dipped sharply in early trading after the education firm forecast lower 2017 profit growth and said staff cuts and asset sales will help this year's profits. the world is bracing for yet another year of heightened risk. that's the finding of the latest global risk per sception survey ahead of the annual meeting in

davos. 93% said they expect political or economic confrontations to worsen in 2018 and the environment topped the list of concerns with extreme weather events seen as the single most prominent risk i sat down and asked what environmental risks were worrying decisionmakers here >> the risks would include extreme weather, which you saw with hurricanes, wildfires, anticipation that that type of event will increase. you have the adaptation to climate change and can we adapt fast enough to respond to that and air pollution also is featured in the survey as a key source of future potential risk. >> looking back at previous reports, what i can tell is in 2009 the biggest risk was asset price collapse in 2013, the biggest risk was

income inequality. 2016, migration around the time of brexit. isn't it often the case the big event for that year becomes the biggest risk factor for the next year, given that this year was a year that saw many natural events and climate disasters, the expectation is that this will continue into next year do you detect that theme >> there's no doubt that coverage and visibility of risk within a year affects the survey on the environmental side they've been prominent for the last few years, even before you have the big year of hurricanes in 2017. >> in terms of cybersecurity, surely that must be a threat that evolved over the last decade or so has it featured high in the global risk report >> it's jumped up, but now cys r cyber is in the top five in terms of overall global risks and has been rising. does that play into the

geopolitical context >> absolutely. one key underpinnings of the growth of cyberrisk in the survey is the likely increase in state sponsored attacks, so a clear connection between geopolitics and cyberrisk. >> i guess the bigger question is whether government is, and central banks have the right equipment in the toolbox to manage the next challenges when they arise what is your view when it comes to that? >> a couple concerns multilateral institutions and agreements have been waning, as the more nationalist politics has taken hold so more protectionism, less liberal multilateralism. that could be a problem in responding to risk the other issue is central banks are usually responding by lower interest rates, and there's really nowhere to go with interest rates now if there was an economic crisis, it would be harder to respond to >> it's interesting in the

report, economic risks feature lower down in terms of risks for the next couple of years or so is this due to the fact there's less income inequality because that is certainly something that featured in the past, or is it just that people are focused on other themes right now >> i think there's a general feeling that the economy is better and growth has been higher but it masks some underlying concerns in the economic risk environment. corporate debt to equity ratios are up global debt to gdp ratios are up defaults are rising. so there's shocks out there for companies that they have to find ways to be resilient to. >> you spelled out ten potential shocks, these are all hypotheticals, as i understand it in aggregate would you say the world is becoming a riskier place? >> i would say certainly the response of the survey, 59% say

it will get riskier, and 7% say the risk will decline and the broadening array of risks. ten years ago most of the prominent risks were in the economics sphere, now you see a wide array of risks, not only economic and technological, but geopolitical, societal and economic risks so a wide varity of shocks could come to the system. what is the main message for governments on receiving this type of report >> it's multilateral cooperation will be needed to solve some of the most complex risk problems, these problems are increasing. also that resilience, the wide array of shocks will be needed and building up system resilience to that wider array, not just a narrow array of risks is important >> interesting conversation. i have to say i noticed economic risks did not rank highly on his list >> we'll get to that but the way they rank them,

there's an interesting diagram, it's impact on one side and likelihood on the other. if you rank them by those two elements, what you see is that the likelihood of extreme we're weather events, natural disasters are high in terms of potential risks for next year. the other thing that featured, this is a new element to be introduced in the report is the threat of cyberattacks and cybersecurity becoming a major theme. it never featured in these reports. >> which is echoing what the u.s. government is saying as well >> and plays hand in handed with the geopolitical risks as well when you talk about the economic risks, it is interesting i detected a pattern, like when it comes to the number one risks for investors. if you look back at 2008 and 2009, they there are numbre ares

in 2016, the risks were large-scale migration. this year and next year the risks are extreme weather events and 2017 is a year where we saw many extreme weather events. >> so you're saying they are good at these predictions? >> i mean as far as people are concerned, there's a bias as to what has been the major event for that year and it affects your assessments of the risks going forward. when it comes to economic report and here in the report it was telling, it was not as though the economic risks have significantly subsided, yes, the world is in a much better place as far as economic growth, but income equality and those issues are still there. and it reported to an imf report that showed over the last three decades, 53% of countries have seen an increase in income inequality so what governments should be doing now is using this good economic climate to address some

of those issues. >> really interesting. we'll watch and see how right or how wrong they were. cnbc will be on the ground at the world economic forum for five days of live coverage that starts on monday. to follow us, search cnbc international across all major platforms. president trump has again used twitter to lash out against the media. this time for not focusing on the recent stock market surges and the job creation that he says accompanies that rise in equities during an unannounced visit to a woman's forum in washington, president trump said his presence in the oval office is responsible for the recent bull market >> had the other side gotten in, the market would have gone down 50% from where it was. >> right so let's look at foreign exchange pairs

the dollar is back in the focus. dxy at the lowest level in a couple of years. it's impacting those major currency pairs today is bucking the trend of moving through and setting new highs. dollar/yen is also stronger. the overall picture has been one of weakness. to get in on this discussion, i'm happy to say that the co-head of ubs is on the show. what is going on with the dollar why does it keep going from weakness to weakness despite the positive news that is the backdrop in the u.s. for now >> for us, it's surprising how quickly it has come to materialize. "a," the source of the shock is outside of the u.s the big surprise has been the strength of growth and the speed of growth in europe. the resilience of china emerging

markets easing without significant pressures. all of that created a growth shock that is stronger outside of the u.s that's allowing space for financial normalization, policy normalization, financial conditions easing and central bank is needing to catch up. so, that allows a lot more space in a lot more expensive bond markets, such as the european bond market to correct and at the same time, while all of this is happening, let's not forget that the initial starting point is one where the dollar has been expensive on several metrics. if you put all these things together, you have an expensive dollar, growth coming from outside of the u.s., markets outside of the u.s. expecting very little of that all of that creating a positive shock for currencies >> let's talk about u.s. yields. a couple months back you and i spoke you said the expectation was for ten-year treasuries to end the year at 2.70

do you still have that view? do you feel more confident given that last week, we had that little shake off, selloff in bond yields, and the expectations was maybe this was the beginning of the bear market for fixed income >> this is a very good question. i think l above the forwards today this is probably within the forwards not a particularly bearish view yet, but yields will continue to go up. the easing in financial conditions is actually pushing the front end higher that has an impact on the long end what's remarkable is that as opposed to other bond markets that are expensive, the space for the long end of the u.s. curve to adjust. we see it happening. >> so you see it flattening then >> flattening and deeper

potential inversion than the previous cycle want to ask about sterling that weaker dollar makes cable look slightly more positive. i wonder whether you think after this rally the last few weeks if there are geopolitical shocks down the road when it comes to brexit is that something you will be watching closely >> absolutely. brexit is important to think about. for sterling in particular the most interesting bit is sterling is not a lot stronger than what it is today. you had significant positive surprise in economic data, the central bank adjusting monetary policy, and at the same time sterling is very geared to global growth. actually the global pick up in earnings is boosting the current account of the uk significantly. in many ways, sterling is the new aussie the way we used to look at it five, six years ago, this is the new sterling the fact that sterling is not

stronger compared to the euro given the surge in global profits is, i think, a sign that still the underlying current for sterling is weak, and it will probably rise against the pound as well. >> i was reading this morning that the iff said germany has the largest current account in the world followed by japan. what does that mean for euro currency as a pair and the second thing i picked um in your notes, you noted that the share of reserve allocation to euros is low still. do you expect that to pick up? >> the question about euro yen or euro/dollar >> euro/dollar >> i think when we look at valuation metrics that are based on the current account of europe which is driven by places like germany, we get the feeling that euro is double digit cheap you need this year, next few

years growth above trend in europe to narrow down the current account surplus and a strong euro, which will probably happen as the ecb normalizes policy so the valuation impact is definitely there when it comes to reserve managers, there's a shift in allocation i have to say some chunk of that is valuation driven as well. as the value increases, the share of euro based assets will increase most of that correction will happen by the price. >> quick target for euro/dollar? where do you see it going? >> 1.25 as a first step. fair value in the long run, 1.30 >> thank you very much for joining us >> thank you coming up, burberry sales dip as the british fashion brand looks to raise its profile on

the catwalk. a look at stocks across the luxury space after this break. for your heart...

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 to "street signs. china's luxury sales grew at the fastest pace in more than five years. this trend is set to consolidate in 2018 as sales of luxury goods in china increased around 20%, reaching $22 billion. the report shows chinese shoppers are the world's biggest sende spenders on luxury. burberry shares are plunging after the company reported declining third quarter sales and revenues last year the ceo laid out a turnaround plan to take the label fur ler ther up market the british luxury firm said the weak pound boosted its performance in the uk. joining us is beth pickens from william blair. there's two stories there. they have a bit of a link, chth

chinese are big spenders and that is helping burberry in the uk >> this week, we will see a lot of surprises as we look at holiday earnings, there's more surprises in the box. short of those lead times from china coming to the west and the more the consumer has become global, the more we have realtime reporting of what's happening. we used to predict what would happen in that fourth quarter. we can't predict it so well anymore. the link of the chinese consumer today to burberry's success, there may be affects in there. that may be the tourism shopper and the strategy of burberry as they try to pare down retail locations, where you have a tourist consumer you may have a relaxed consumer who is in a leisure moment and is willing to spend more >> i want to ask about that new strategy marco gobbetti back in november said they are revamping the

strategy they will focus on becoming a super luxe brand, similar to prada and gucci, which means closing down the department outlets. on the day of that announcement, burberry's stock was down 10%. it recovered a bit, but this morning down another 5%. is the market telling burberry that this is not what the consumer wants >> the consumer is telling burberry this is not what they want we are in a transition period of fixing a wholesale distribution to a more retail consumer environment. also when they're in a moment of exploration to spend this will take time. it particularly takes extra time for a super brand. at the same time dealing with wallet share with the consumer public, where they vote with their wallet and change how they buy and what they buy. this should be good news for brands like burberry, which was

originally selling a technology product. they were a need product with the trench coat, with the gaberdine created by burberry this is a tech business. so the consumer should be able to come back and choose this as an essential product but we need to pare down the offerings >> how are millennials affecting the markets here >> we first saw the pre-millennial movement in lifestyle. we took the brands and said this is the way i communicate, it's shorthand for who i am, who i want to be i'll use that on perfume, belts, as the wholesale opportunities change, the licensing has gone down we transcended luxury to lifesty lifestyle. so that millennium and beyond that generation, they want to vote with their wallets for change that may mean sustainable sourcing, less plastic

packaging, lack of use of real fur in the design. fashion has been a great way to xwhun kate h communicate how we feel about the world around that, that won't change, we have to make the messaging clear an succinct. >> i guess the consumer today is more socially conscious than in the past thank you very much for being with us. that was beth pickens from william blair. coming up on the show, fit to serve donald trump's physician gives the president a clean bill of health but recommends trump hit the gym more often more after the break

welcome back to "street signs. i'm willem marx. >> i'm joumanna bercetche. these are the headlines. >> third quarter revenue at burberry falls sending shares lower as investors await signs of a turnaround under its new

ceo. skanska slashes 3,00 jobs sending shares in the swedish construction firm to the bottom of the european markets. back of the class. pearson shares sink with a lower operating profits forecast as its education business continues to struggle in north america. and asml is among the hottest stocks in europe this morning hitting a record high as fourth quarter profits beat expectations good morning welcome back to the show of course we did have an extremely wild session in trading in u.s. equities yesterday. and it looks as though this morning the mood is upbeat again with dow jones pointing to open about 150 points higher after quite the volatile day in yesterday's trading. at one point the dow was up almost 270 points, swiftly declined 300 points, the largest intraday drop in about two

years. ended the day about ten points lower. it looks like things are looking rosier this morning. let's switch to europe over there, you can see across the board things are looking grim ftse 100 is down almost all of them are many of the stories we talked about here are dragging on the index. ftse 100 has been dragged lower by burberry disappointing sales numbers. burberry is one of the underperformers in the ftse 100 index today. dax as well-being dragged down by some corporate names that have come through. specifically sskanska, we talk about them leading the down trade. today is a day of dollar strength as far as the board is concerned. you can see that in euro/dollar

pairing. euro, we had interesting comments out of novotny who said the strength of euro is a cause for concern. and it is interesting that the ecb are yet again beginning to start doing some verbal interaction as far as the currency is concerned. they have a manner of jawboning the currency when levels get slightly uncomfortable so novotny saying the strength in euro is not comfortable let's look at some of the stocks moving this morning shares in asml hit a record high on the back of better than expected fourth quarter results. they reported net profit well above expectations a number of customers asked for early deliv rer eries in the la quarter. nestle is selling its u.s.

candy business to ferrero for 2$2.8 billion they are offloading brands such as crunch and butterfinger they cited weak performance in the u.s. as reasons for the sale ferrero will become the u.s.'s third largest confection ary coy republicans and democrats have hit a sticking point over u.s. immigration reforms with some republicans unwilling to extend protections for young immigrants shielded by the so-called daca program democratic leaders tied an extension on that program to any long-term budget deal. and so a potential government shutdown looms in the u.s. unless congress can agree on a stop gap spending bill by midnight friday. our colleague from nbc news,

hallie jackson has more on the story. >> reporter: between her three auto shops, her three kids, and the college degree she's trying to finish, maracruz abaca doesn't get much sleep but she's getting even less of it these days. >> it's really painful as a mother to go to sleep every single night without thinking, you know, that what's going to happen tomorrow. >> reporter: she was brought to the u.s. illegally when she was 15, allowed to stay along with about 700,000 other so-called d.r.e.a.m.ers under an immigration program that expires in march that's because president trump ended the program and asked congress to come up with a different fix. >> if the democrats really wanted to, they could but they really sometimes don't want to. >> reporter: democrats say they do want to and see their best shot, their best leverage, as friday's budget battle because republicans need them to agree to a spending deal or else the government shuts down. d.r.e.a.m.ers demonstrating in washington today >> we are honest people that want a better solution

not having that fear of being deported to a country that we do not know. >> reporter: but negotiations are breaking down after a single word, s-hole, turned the debate into something else in the eyes of senator lindsey graham. >> this has turned into an "s" show. >> reporter: homeland security secretary kirstjen nielsen says she doesn't recall exactly what was said. >> what was that strong language >> apologies, i don't remember specific words. >> your silence and amnesia is complicity. >> reporter: if no one backs down, this could mean president trump could spend the anniversary of his inauguration in a shutdown. not just the government in the dark but people like maricruz, too. >> we are accomplishing this dream but without daca probably we won't be able to see what other future it's going to bring to us. the white house doctor says donald trump is fit for duty

after a series of medical tests. the check comes as the president looks to lay rest over questions about his mental fitness dr. jackson said trump passed physical and mental exams but added a healthier diet and more exercise are needed. i could say the same for myself. he said the president might live to a ripe old age. >> can you explain to me how a guy who ekes mcdonald's, all those diet cokes, never exercises is in as good of shape as you say he's in >> it's called genetics. i told the president if he had a healthier diet over the past 20 years, he could live to be 200 years old. he has incredible genes. >> former white house strategist steve bannon now facing two subpoenas related to investigations into russian interference in the 2016 presidential election. when the former trump adviser refused to answer questions from a congressional panel, its

republican chair issued a subpoena robert mueller also subpoenaed bannon i have to ask about bannon he's appearing in front of that house intelligence committee adam schiff implies that bannon invoked executive privilege, something that is a bit legally tenuous, given that he's referring to the transition period, and did so under advice from the white house this drip, drip, drip cannot be useful flgts cle >> clearly it's not useful the drip, drip, drip of the russian investigations are not helping trump and the administration move forward policy it's not clear they're hindering it either. i was looking at the news earlier, we have been talking about the government shutdown. we've been talking about daca,

about children's insurance, all of these things are not at the moment moving forward. that has nothing to do with the russia shutdown, that's the inability of this administration and congress, despite the republicans holding the house and the senate and the presidency to move the agenda forward. as you say, we have the drip, drip, drip of bannon >> this would be horrifically embarrassing for republicans given their control of both houses if they have a shutdown >> it's embarrassing it's hard to put blame on the democrats when you're holding off of the -- all of the cards trump is trying. you've seen some of the tweets over the last 24 hours where he's putting blame on the democrats. that will be awfully hard for the republicans to do. yes, it is embarrassing not to move forward it's a symptom of our age. there's are so many interests coming together with the spending, the budget, daca and

others >> so you talk about those issues coming together what the democrats have tried to do repeatedly is tie things they care about to other bills that republicans care about because of the byrd rule, this is not anything to do with reconciliation this 50-vote majority 52-vote with pence is so slim republicans can't afford to lose one senator at a time. this will be an ongoing problem until the midterms >> it is it's a symptom of politics at the moment so many big issues have not been resolved and they're all coming to a head. you have the budget coming to a head on friday daca, democrats really wanting to move forward. you have the childrens healthcare program as well democrats and republicans wanting to move that forward everyone is sitting there ready and holding their chits, says unless you do x, i will do y what does it mean for friday

that's a complex set of issues coming together. it's unclear whether they will be able to resolve enough of them to punt it forward for another month. >> if both sides are being so intransigent, surely it will have an impact as far as the democrats are concerned as well. they won't come out looking good on this either >> on that that's something they repeatedly criticized republicans for under obama. >> absolutely everybody gets the blame if you look at the approval rating of congress, it varied over the last couple of years, but congress is one of the least approved institutions in the united states. the numbers have gone down to the teens at one point, back up to the 30s, but in that ballpark this is why. congress finds it so hard to move anything forward. right at the moment, when we think of america, we think of two parties, democrats and republicans, at the moment we have four parties.

democrats are split and republicans are split. so you have different parties coming together trying to tie things up. >> with those internal tensions, we see this stop gap measure on friday passing, punting it down the road for another month this ongoing use of these funding stop gaps, it can't be useful for agencies trying to figure out their long-term planning >> it's not useful they can only spend according to what they're doing at the moment, according to last year's budget so they're spending according to that also it's not good for the economy. you know, there's an awful lot of companies out there who don't know what to do because the spending is so uncertain this is having a profound effect not just on american politics, but approval of american politics, and filters into the

economy. >> president trump is making quite a high profile visit to davos next week. he has a knack for going on these foreign excursions when things at home become heated what is the purpose of this trip in your view >> it's a good question. no american president has been to davos in quite a number of years. i don't recall the last time that happened. >> or 18 years >> why is he going you're right it's far easier for the president to move the agenda forward on foreign policy than on domestic policy congress restricts him much less on foreign policy than domestic policy so there have often been occasions when presidents looked outside in order to move an agenda to take attention away from what's going on internally. why is the president going to davos? he will have an opportunity to meet with all sorts of people from government to the private sector, to ngos at a senior

level globally is this a positive thing absolutely the fact he might hear more voices, more inputs from different types of people in all sectors is a positive thing. whether he will use it or not that has to be seen. >> looking at the midterms does this situation we see in congress now with this partisan bickering, that's nothing new, but how closely fought it is in the senate, how does that wleed to reactions of ordinary voters in november? >> it's a really good question generally speaking people vote less in the midterms than in the presidential elections but we've seen over the last few votes, the last few months is particularly the democrats coming out in force as the anti-trumpist vote so we don't know - >> in areas that saw trump carry them by significant margins. >> in some areas that carried trump by little margins. so we may see a strong democratic vote or republicans

come out in support of that. we have not called it terribly well the last few years. >> thank you very much for joining us >> thank you ♪ >> italians are preparing to head to the polls on march 4th, but it's unclear how any single political party could form a government immigration has been thrown into the center of the debate after a candidate for the northern league party caused a controversy by warning that the white race was in danger of extincti extinction other party leaders quickly condemned his comments, but some politics from the league of north did offer some support matteo renzi met with the leader of the spanish party. during the meeting they talked about creating a pan-european

electioni electionist. it's an interesting time for a meeting with president rajoy still the leader of spain. >> two young politics who maybe think they can feed off of each other in terms of image. what's interesting about that meeting is politically they're not that closely aligned what was also interesting is the idea that they might try and work together with a pan-european outlook in terms of elections. during that election for emanuel macron for president, he was equivocal about how he would ally with other groups he saw himself as a unique in the european spectrum. there is a spanish party that sees itself as being relatively similar in terms of flaun-afill yag toward

non-affiliations he is seen as a figurehead >> part of that is renzi perhaps positioning himself as the pro-european candidate and against the five star movement >> how does that poll in the elections is the question. we have heard a lot from league of north, they have done well in their regions when it comes to polls. will that work for mr. renzi in italy? that remains to be seen. >> you can head to cnbc.com for more on these risks as the italian election story unfolds coming up, digital currencies plunge. more on the krcrypto carnage ne. (barry murrey) when you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results.

we call that the golden hour. evaluating patients remotely is where i think we have a potential to make a difference. (barry murrey) we would save a lot of lives if we could bring the doctor to the patient. verizon is racing to build the first and most powerful 5g network that will enable things like precision robotic surgery from thousands of miles away. as we get faster wireless connections, it'll be possible to be able to operate on a patient in a way that was just not possible before. when i move my hand, the robot on the other side will mimic the movement, with almost no delay. who knew a scalpel could work thousands of miles away? ♪ jimmy's gotten used to his whole yup, he's gone noseblind. odors. he thinks it smells fine, but his mom smells this... luckily for all your hard-to-wash fabrics...

...there's febreze fabric refresher. febreze doesn't just mask, it eliminates odors you've... ...gone noseblind to. and try febreze unstopables for fabric. with up to twice the fresh scent power, you'll want to try it... ...again and again and maybe just one more time. indulge in irresistible freshness. febreze unstopables. breathe happy.

welcome back to the show bitcoin continues its plunge it dropped below the $10,000 mark on the coin base exchange other major digital currencies also sold off following reports that south korea and china could

ban crypto trading ethereum fell below $1,000 and ripple fell below $1 citi group posted an $18 billion quarterly loss in fourth quarter earnings the firm said this is in large part related to charges from the u.s. tax overhaul. the bank indicates it may raise its performance targets. today bank of america and goldman sachs will release fourth quarter results possible drivers will include the u.s. tax overhaul and the bank's positioning around expected fed rate hikes. >> from one central bank to another, german two-year bond yields touched the highest level in six months as investors positioned for a possible change in the ultra easy monetary policy expectations for the ecb raising rates in the middle of next year are roughly in line with the central bank's own guidance.

the group credit officer for moody's joins us on set to discuss all things ecb and corporate bond markets so let me take a step back do you think there's any possibility whatsoever that we get a change in forward guidance at the upcoming ecb meeting next week would they look to delay that until later in the year? >> what you're seeing is more of a medium term outlook. that's consistent with what we published. we have shied away from shorter term interest rate rises so we expect interest rates to be higher across the ecb, bank of england by 2021 >> so he thinks it's appropriate for the bond buying program to stop this year how does that impact the market? >> if you look at where the bond buying program has been targeted, we expect investment grade companies, and those are

more vulnerable to interest costs. we said at the outset that by targeting those programs, principally investment grade companies -- >> they don't have to worry about it any way >> they targeted the companies who didn't really need that support. in terms of the direct companies that have been there they bought the debt of nestle, snel shell, bsf >> it shouldn't affect them too much >> though companies didn't need that support to access the market what was the point of targeting those companies in the first place? if they were going to be fined irrespective of ecb buying their bonds, what was the sense of buying them? >> was it a confidence thing >> yeah. you also get a trickle down effect to other segments of the market >> here in the uk, if the bank of england was to end its own

corporate bond purchase scheme, would expect a small impact on the companies it bought debt for? if you look at the companies involved, they have in aggregate an amazingly small amount of debt they have 10 billion pounds of debt spread across nine different sectors. at moody's we rate about $4 trillion of debt for the corporate portfolio across 800 companies. 10 billion of support from the bank of england is a small amount >> you have done sensitiitivity analysis on interest rates front end interest rates will determine if the ecb starts hiking, but you could also see longer dated interest rates move higher as the ecb stops their asset purchase program i'm curious to see if there's a level in the 30-year german bond yield where it gets particularly good or particularly bad when it

comes to corporate borrowing costs. >> most companies are raising debt and looking over a shorter horizon. yes, they're affected by interest rate impacts, but more driven by the impact of profitability and revenue over a one to two to three-year horizon. if you look at four seasons healthcare, yesterday they missed a payment on their debt they raised there 2012, the most expensive debt was 12.25%. they have been carrying that for five years that means whatever do you with your operational problems, you are carrying an expensive level of debt. >> william, thank you very much. >> one big story this morning is burberry shares falling further. they reported declining third quarter sales and revenues >> and zala flshgs ndo shares sy would prioritize investment in

gaining market share over improving profitability in 2018. >> let's look at u.s. futures. we look at some of those numbers for u.s. futures, we can see looks like a positive open across the board in the u.s. s&p 500, dow jones and nasdaq looking to open up the dow jones looking to open up more than 160 points that's it for today's show i'm willem marks >> i'm joumanna bercetche. "worldwide exchange" is coming up next.

dow futures surging in the premarket. will wall street hold on to those gains today? bitcoin battered the cryptocurrency tumbling in early trade. we'll find out what's driving that lower. shutdown showdown. the clock is ticking for congress to pass a spending bill the latest on where things stand. it's wednesday, january 17, 2018 "worldwide exchange" begins right now. ♪ good morning a warm welcome to "worldwide exchange" on cnbc. i'm wilfred frost. >> i'm