welcome to "street signs." i'm joumanna bercetche >> i'm jewel januaulianna tatel. >> uk shares are broadly higher across the board as theresa may prepares to meet with her eu counterparts to fine tune aspects of her divorce agreement. wpp trades near the top of the stoxx 600 as the ad giant says it will slash costs as part of its 300 million pound

turnaround plan. apple's frankfurt shares are higher as it looks to overturn a qualcomm case ruling that sets an import ban on a number of iphone models in china all right. welcome to "street signs." our top story today, no surprise here, we'll talk about sterling which has dipped to a 20-month low versus the dollar. this is after theresa may called off a vote on her brexit deal at short notice yesterday sparking anger and criticism from across parliament >> the british prime minister conceded that it would be rejected by a significant margin of lawmakers as she vowed to head back to brussels to fine tune aspects of her agreement. >> we have willem standing by in westminster, silvia in brussels.

a lot to get through willem, let's start off with you and run us through the events of the last 24 hours, specifically i want to ask you about the timing essentially what we found out from the house of commons yesterday -- and they were running a live twitter commentary as the house discussion was taking place, effectively ruling out that 21st january deadline and essentially opening up the potential vote timing of the vote until as late as 29th of march, 2019, the final end date when the exit is supposed to happen so the question is really what does this mean for timing? as far as the investor community is concerned, is buying time moving the chances more into theresa may's forgaavor or more against it >> well, that would be a question for her in the sense that is this part of a strategy to focus the minds of people within her own party that there

is a possibility of no deal happening? and that possibility is increasing the longer we wait. in terms of timing, we had the eu withdrawal act passed earlier this year. that set that deadline of january 21st by which a government would have to come back with an alternative if they couldn't find agreement that would pass the house of commons. she was asked about timing yesterday, and she eluded to that date of january 21 gs implying she would try and get things sorted by then. she is going off to meet various european leaders over the course of today and in the coming weeks. parliament in theory goes into recess for the christmas break not too far from now so there is quite a tight deadline for her to try an get this legislation through before march 29th moving beyond january 21st doesn't seem to help that case >> willem, we found out this morning that labor are being granted an emergency debate to discuss the decision to defer the vote we heard from corbyn yesterday,

he said the decision in itself shows contempt in parliament >> the emergency debate is being called on the fact that no vote is being called. what the government did yesterday was informally change the schedule for the lower chamber in the parliament, they did that informally, the speaker of parliament called that discourteous, and jeremy corbyn calling this contempt of parliament what labor would like to do is once again publicly criticize the government's process, the policy, the government's approach, and by having a debate on the fact that there's not going to be a vote, that gives them the platform to do that >> prime minister theresa may will head to berlin today in a

bid to renegotiate the uk withdrawal's deal from the eu, donald tusk says brexit will be discussed at an eu counsel meeting on thursday. so far the message from the eu appears to be that they're open to talking but they're not open to renegotiation what are you hearing on the prou ground in brussels >> exactly that. the europeans are happy to meet with the prime minister. happy to listen to what she has to say but they have said loud and clear that they're not going to change the agreement this is the deal, this is the backstop we heard it from different institutions we heard it from the different cab ta capitals the irish deputy prime minister was here yesterday and he said this is the backstop and the deal on offer. >> the backstop was never and is not an offer for one side to the other. it was a negotiated solution that both sides signed up to the

eu and the uk. and it is there for good reason. it is a last resort insurance mechanism that only kicks in if we are unable to resolve the border issues throughprehensive future relationship, which everybody believes is possible it's a fallback position that protects relationships on the island of ireland, which people should not take for granted given the difficult and sometimes tragic history on the island of ireland. so the backstop is important >> european officials told me yesterday that though the europeans are happy to meet with the prime minister, the big problem is that they don't know what theresa may will actually tell them. they don't know what the uk needs at this stage from the european side. so we will monitor the discussions that will happen later today to see whether or not the prime minister will

bring some clarity >> on the one hand you can argue that the eu is trying to send a message to other european countries about what it means to leave the eu. is this just a negotiating tactic on their behalf are they trying to send a message? ultimately a no-deal brexit doesn't work for them either >> that is one of the points let's not forget as well that we have european elections in may of next year it is also in the european interest to get this story, this brexit negotiation sorted as soon as possible of course we are running short on time. we have this big deadline, the 29th of march of next year for the uk departure but at this stage we don't know if that will end up being the case the uk may decide to extend its revision period. the problem when it comes to

brexit is that there's a lot of uncertainty about what is going to happen next one thing is for sure, the europeans want to get this sorted as soon as possible >> certainly that uncertainty is reflected in the currency dropping about 1.5% in yesterday's trading. we bounced a bit this morning. let's get back out to willem in westminster who is joined by a guest who can hopefully give us more detail about what will happen from here >> thank you very much i'm joined by the deputy director of the center for european reform. i just want to ask, theresa may's heading off to the continue nenlt agaent again tod. she's been back and forth with her counterparts in europe for a year if not longer to hammer out concessions that would please members of her own party is there any point to these conversations she's having today? >> i don't think there's a great deal of point in changing the

deal which she struck. in the commons yesterday, when she announced she would pull the vote, she was down beaten on whether she could change the backstop which has upset her mps the most the eu has said clearly we won't change that. she might be able to get some minor changes to the political declaration, which is supposed to set out what the future relationship might be. but i'm doubtful there's substantiative changes that she will get and that it will bring more mps into her tent and she will get a deal through. >> i'm asking you to look into her mind, which seems like a black box when it comes to brexit, how does she move the dial, how does she move the needle, how does she get members of her own party back on her side so there's a chance this gets through the commons >> the first thing to think about when thinking about theresa may's mind is survival

is her number one priority the reason for that is not entirely cynical her view is that the referendum happened, britain should leave, but it should leave in an orderly manner she's trying to prevent the conservative party from electing someone from leader who will take britain out without any deal at all. on the other hand, she doesn't want them to be a second referendum either. she wants to survive in order to deliver her deal so she just needs more time. that's point one point two, we're getting quite close to the deadline. the closer that we get to that, the risk of no deal rises. she hopes, i think, that that will concentrate her own mps mind and bring more of them into her tent whether that will work, i don't know i'm a bit pessimistic. >> it's so a bit of a gamble you get closer to the deadline of march 29th to focus the minds of mps, but by doing so you naturally increase the probability that things will

fall apart and there will be less time to fix them afterwards >> that's the risk it's a high-risk strategy. if that's her thinking, it is high-risk. if her deal gets voted down, then there are two plausible outcomes one is that we go out with no deal the other is that we have a second referendum, and we end up with remain. her strategy, if it is to get close to the deadline, raises the risk of the two outcomes which she's seeking to prevent >> it's worth pointing out that the idea of having no deal between the uk and eu is not something european leaders want to see either. in terms of the irish backstop, if you have no deal that becomes a colossal mess as well when you look at that hoaard border havi to meermg becau to emerge because there is no agreement. how do the europeans play this given those are the restrictions >> the way the europeans have played this so far is to use

their greater negotiating power. that comes from the facts that the cost of no-deal is larger for the uk than it is for the eu knowing that they won't all sort of concessions out of britain which the prime minister said would never happen, such as the backstop so i suspect that in this game of chicken that the eu would be the last to swerve the way they might swerve is by saying, okay, we'll extend the period where we'll continue to talk past march 29th but i think they would only do that really if it was for a general election or preferably a referendum where this would be settled once and for all they don't want to extend it to allow more bickering in the conservative party >> no one likes to make predictions about brexit because they're hard to get right. in the short term, over the next week or so, what should voters, what should investors, what should business owners here in

the uk or across europe essentially be looking for in terms of public comments, do you think? >> i'm very doubtful that there will be big public comments coming out of these negotiations simply because, you know, for the uk side, there's not going to be anything huge. there's nothing to announce. the eu wants this deal to pass they're unlikely to do anything to make that more difficult. the thing to look for is about whether theresa may ends up with a leadership challenge of some kind or if there's a no-confidence motion, which is issued by the labor party, whether other parties join in, especially the dup i'm doubtful that the dup will, but it may just happen that they decide that actually the union is far more important than brexit for them, and that they would prefer really to have a realistic measured outcome given

the fact that no deal would impose a hard border between ireland and they don't want that either >> thank you for joining us this morning. with that, i'll hand it back to you guys >> awesome thank you for that we are seeing a bounce in sterling this morning, so that tells you perhaps traders are turning more positive as to what this means as for the chances of a deal and getting a deal through in the next couple months the question we're all asking, is this the real life or is this just fantasy we're not talking about brexit but bohemian rhapsody. it's become the most streamed song of the 20th century boosted by a movie of the same title the single has surpassed 1.6 billion streams globally wow, overtaking nirvana's "smells like teen spirit" and guns n roses' "sweet child of

mine." if you have any thoughts on bohemian rhapsody or real life or fantasy that is brexit, tweet us, @streetsignscnbc and you can tweet me at cnbcjou. coming up, shares in wpp surge as the company outlines a three-year turnaround plan we'll discuss the details after the break. plaque psoriasis can be relentless. tremfya® is for adults with moderate to severe plaque psoriasis. with tremfya®, you can get clearer. and stay clearer. in fact, most patients who saw 90% clearer skin at 28 weeks stayed clearer through 48 weeks. tremfya® works better than humira® at providing clearer skin, and more patients were symptom free with tremfya®. tremfya® may lower your ability to fight infections and may increase your risk of infections. before treatment, your doctor should check you for infections and tuberculosis.

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welcome back to "street signs. european markets have been open for over an hour now and it's shaping up to be a positive start to the day this follows a roller coaster session stateside yesterday which saw all three major indices there bounce off the lows to close in positive territory. in europe we're seeing gains with the stoxx 600 up about 85 basis points yesterday this is on the back of yesterday's sharp move lower where the stoxx 600 lost 1.9%.

we are seeing some of those losses pared back but not to the extent we saw yesterday. still in negative territory for the week let's get into the regions and see how these are faring yesterday the bulk of the selloff came from the dax, the cac and the ftse mib today we are seeing the strongest recovery across those three regions. the ftse mib up about 40 basis points cac up 85 basis points the dax up about the same. the ftse 100 also bouncing today. the big story across markets is brexit yesterday we saw the sterling plunge to a 20-month low that boosts exporters in the uk and part of why we're seeing gains in the uk. today we're seeing signs of stabilization in sterling. i want to get into the sectors and see how she's are shaping up today. we had positive signals around

trade. that's no doubt boosting the basic resource sector, which is the key out-performer today, up more than 2% sensitive to what goes on between china and the u.s. and the picture in china specifically at the bottom of the board, we have real estate and insurance, but only marginal losses putting it altogether it is a positive picture here today. i wanted to take you through what we've seen in the oil markets. oil is massively in focus over the last several weeks we are seeing some stabilization today. brent is just above flat on the day. this following a weak session yesterday where we saw both wti and brent sink more than 3%. early on today we saw a bit of a bounce after news that the libyan national oil company declared force majeure on exports, but not having a massive influence on markets

gjoumann joumanna >> some company news for you wpp shares are surging after it outlined a turnaround plan to return to growth over the next three years. the world's largest ad group will slash thousands of jobs as it cuts back the number of agencies it runs to focus on the u.s. this in an effort to gain back the 40% in value it has lost over the past year the company raise the its full-year organic sales outlook and says it will prioritizecquid buybacks we welcome roddy davidson. the market is cheering on these announcements. just to recap they said they will save costs of up to 275 million pounds a year by 2021, closing offices, removing some overlapping jobs this is a company that has more

than 130,000 employees mark read, the message from him s that a simpler wpp is needed why did this not happen before >> good morning. yes, that's a very good question i think perhaps these are the sort of changes that maybe do require a change of management and a new vision to come to the company. i guess mark read has been sort of unofficially in post since martin sorrell left the business, the man who built the business up back in april time i think what we're seeing is a changing of the guard and a recognition, i suppose, that though martin sorrell did a great job of building up wpp and creating some areas of strength that are still very much with the business, it probably had not adapted quickly enough to what is a dynamic and challenging media landscape. >> when investors think of this

company, they want to think of two things, the top line and the bottom line. we know they're planning these 270 million pounds of savings per year that's a good thing. top line is still under severe amount of pressure they announced sales growth will still contract by half of a percentage point from this year. it's an improvement from a contraction of 1%, but still a contraction. there's not sales growth >> that's right. i think wpp has experienced a number of difficulties the advertising backdrop in the u.s. has been relatively challenging. it's been very much what growth has been in the markets, it's been focused on digital. so some traditional areas of advertising has increased. i think also we've seen increased competition from some of the consultancy businesses coming into the space. i think perhaps some of the sluggish performance of wpp does actually in our view reflect some of the difficulties and

perhaps a lack of dynamism that had become a part of the business as a consequence of not adapting quickly enough to the changes we're seeing in the marketplace. >> mr. davidson, when i look at the share price reaction today, the stock is up nearly 4%. this a stock down 40% in the last year. they announced a restructuring plan but there's a huge number of question marks around implementation of this plan. how much of this move are we seeing today is actually just short covering because the market was so poorly positioned, this is something we've seen in its peers, we saw it in pearson a number of times over the last couple of years. how much of this is short covering and how much of this is a fundamental belief that the company can turn it around >> that's a good observation it's important to put this into context. you mentioned that even over three months the share price is off by 30% wpp is traying inin inin ininiw

levels of valvaluation so there's an element this morning that is probably short closing. i also think there's a strong element of sort of short-term relief that the company has said it will meet numbers forever te current year and meet that dividend i think that level of yield support will be important to supporting the broader valuation going forward. you're right we've seen a complete collapse in the valuation of this company. and i think it's going to be a long road back and investors will require more detail and proof that these changes are gaining traction before they're prepared to afford the stock a much higher valuation. >> perhaps there is some light at the end of the tunnel here. again, one of the inadvertent consequences of the increased scrutiny from the regulators on these big tech companies is the

traditional advertising companies like wpp may stand to benefit. 2018 when we look back, one of the key features of this year was that increased amount of regulator tension on the likes of google and facebook >> i think that's right. i think traditional categories of media, even such as tv, et cetera, actually they do give a very important proposition in terms of delivering the message in terms of efficacy and there is huge controversy as you elude to over digital platforms. the key for a business like wpp is to make sure they're able to advise clients and hahn hond ho clients across this media, and we think that most brands need more rather than less hand holding in the environment you've been talking about and that would be a positive for a company like wpp, which does have a strong historic track

record >> sir, thank you very much for joining us today roddy daveson taidson joining u negotiators for the u.s. and china have spoke about the next steps in trade talks there was a telephone call with the chinese vice premiere raising hopes that a deal could be reached in a statement chinese commerce ministry said both sides discussed pushing forward a timetable for negotiations and huawei, a canadian court adjourned on monday without deciding the fate of meng wanzhou. meng wanzhou faces extradition to the u.s. over violating american sanctions against iran. she says she is innocent

huawei experts the u.s. and canadian courts to reach a farrakhan collusion. the hearing will continue today. >> it's interesting these stories are coming out at the same time and senior officials are saying they want to bring forward the timing of that trade truce. china takes a bite out of apple this time banning the sale of several ix phoiphones. we'll bring you the full story after the break.

welcome back to "street signs. i'm julianna tatelbaum >> i'm joumanna bercetche. these are your headlines >> european stocks rally after a rebound on wall street but trade and brexit concerns linger on. uk shares are broadly higher across the board as theresa may prepares to meet with eu counterparts to fine tune aspects of her divorce agreement. wpp trades near the top of the stoxx 600 as the ad giant says it will slash costs as part of its 300 million pound

turnaround plan. apple's appeal the devicemaker's frankfurt shares are higher as they look to overturn a qualcomm case ruling that sets an import ban on a number of iphone models in china. the last 24 hours have been dominated by brexit talks, we are still getting uk data coming out. the macro data is also important to watch we had good results out of the average weekly earnings front in the uk the numbers have pointed to 3.3% growth, that's in the three months until october higher than the consensus poll of 3%. it is one of the biggest rises in a couple of years there job vacancies are flat versus

where it was last month as well. the number that the market is focused on here is the fact that this wage growth is coming in quite strong, 3.3%, the poll was at 3.2%. so stronger data interesting setup for the penning here as they think about an economy that on one hand seems to be slowing, but on the other hand is facing higher wage growth interesting one for them grappling with we know it's a busy day for the prime minister here. she said she will be meeting with donald tusk at 5:00 p.m. today and announced she will be meeting with juncker at 6:15 today. watch out for those later in the afternoon. >> i wanted to take you through the fx moves we saw yesterday. sterling sharply in focus after

a drop more than 1.5% to a 20-month low it was sitting below that 1.26 mark this morning we are seeing a bounce back. it's now trading at 1.26, up about 50 basis points. investors closely watching developments there, but perhaps thinking yesterday's reaction was a knee jerk reaction what does it actually mean for the trajectory of brexit negotiations the euro is up about 23 basis points it's easy for this to fall into the background given the spotlight brexit is taking we have an ecb meeting on thursday and a swiss bank meeting on thursday. plenty to focus on for the euro as well. the swiss franc is strengthening slightly versus the dollar 0.37 basis points on the day let's get back to european markets and see how they're faring a positive picture across the

board. yesterday the steepest losses were seen across these three indices. italy, france and germany. we're seeing the strongest rebounds there today. brexit sharply in focus. a few corporate stories as well. let's look at u.s. futures we are a couple hours away from the open there yesterday, roller coaster session stateside where the three major indices bounced and closed in positive territory it looks like we'll see a marginally softer open this morning, but no major moves judging by u.s. futures. >> all right other top story, apple says it started to appeal a chinese court rolling that bans the sale of several of the tech jch gians models in china. the court found that patents were violated. eunice filed this report >> qualcomm and apple are in a patent fight and the latest battle is plagying out in china. qualcomm said apple uses software updates in some older

phones that allows apple to avoid paying fees to qualcomm. the court order impacts older models starting from the iphone 6s which were originally sold with older versions of apple's ios. it's unclear what this means for the same phones with the new version of the software. apple says the decision doesn't affect those phones but qualcomm says it could since it applies to specific features like resizing photos, not the os. the newest models which debuted in september are not affected. apple says it will appeal the decision and pointed out that all the phones are still on sale in china china is a critical market for the company and these older models are important for apple overall sales of smartphones in china are slowing down this year, and one way consumers are able to stay with apple but also cut back on spending is by buying older phones. eunice yoon, cnbc business news, beijing. elizabeth joins us around the december 1/4 more on this.

before we talk about the impact on apple, one thing i want to pick up on, and i think the operative words here are older iphone models. these are the old models, not the new models which leads you to think perhaps they thought about filing this complaint before the latest models hit the ground i know many people are picking up on the coincidence of this timing the reality is they probably would have launched this complaint months ago, even before that new iphone model was launched perhaps we're reading too much into this? >> we know this patent litigation was launched before those new iphones were released. the new phones are the 10s, 10x max and the xr those phones are around 800 dollars. they're crucial for apple's revenues in the next quarter and going forward. analysts are estimating that the number of phones in circulation that this would effect in china

is about 15 million to 20 million phones that would account for 3% to 4% of apple's revenues china is apple's third biggest market it accounts for 11$11.4 billionn revenue last quarter it's a big segment and growing, but it's not the most important market there what are the first and second? >> u.s. and europe number one and two. >> we talk about the commercial impact of this on apple, assuming apple's view of the injunction is the correct read, it's not actually that detrimental to apple's business. >> that's right. you saw that in the stock move yesterday. when the report came out, apple's stock tumbled 2% ended the day just slightly positive so investors feel this appeal and the idea that apple can continue to sell newer phones and possibly older phones if this appeal moves forward, then it may not have as big an effect >> that's great. stay with us i wanted to bring in simon weber from schroeders. thank you very much for joining

us i'm anxious to get your view on the broader market for sure. >> bjust on apple, how resilient is the company at this stage, and are these concerns founded >> we think that apple is a classic stock ware the market goes through phases last year the stock could do no wrong. this year the phones are not selling as well and people are concerned about an earnings disappointment the bigger picture is whether apple's customers love their products and will they still go back and buy a new iphone. they have a fantastic growing services business, growing 30%, 35% per year we think the underlying business of apple is in good health and the stock is cheap >> the key word here is growth, growth stock and we're seeing a re-rating in

that part of the sector. there's been a repricing on where tech stock markets have been trading as investors kget concerned abou growth prospects, revenue growth, where it will come from, when you look at the re-rating we've seen in the nasdaq and for the tech sector, you are looking at this and thinking now is a good opportunity for me to get involved or double down on my positions? do you think there could be a little bit more repricing to come as we get to the end of the year >> in general we do like technology we think there's a lot of fantastic companies. i wouldn't put apple in the high growth, high value category. it's a cheap stock it has lots of cash. they're growing earnings resiliently. contrast that with nix or amazon where you need to make bigger future assumptions so there are different categories here. in general we like tech. we think it's good to look for opportunities here >> yesterday we spoke about the news that uber and lift were looking at ipo'ing sooner than

the market was expecting there are concerns around valuation in the tech space and we don't know how these companies will fair in an economic downturn. what do you make of this rush they're making to the market and what this says about their view of the future? >> i think if uber wanted to list, they will be able to list. the question comes down to valuation. they have an incredibly strong business model with network effects. the market will be interested in it we've been through this period where in the u.s. market wehad this record number of unprofitable ipos this year. it will be harder for early stage companies to get those high valuations that they were getting a year or two ago it might be a great opportunity for companies like ours to invest in uber at the listing. we'll have to see where it comes. >> one point i want to bring up is how important tech has become in this trade war discussion

it's easy to look at the timing of this and with the huawei news to say is this connected, tech has really become a bargaining chip and that irkp fight is getting more heated versus just the devices and the hardware is there kind of a safe place to go in tech when there's a software that might get hurt, the hardware is hurt, is there a safe haven there >> that's a great point. china has been quite restrained, but if there is no deal, if next year they get into a raising of tariffs, access of u.s. tech companies, apple's product sales in china will be one of the first things that get hit. china is good at getting national citizens to boycott japanese cars, korean companies find it difficult to sell products in china. u.s. tech and other u.s. product companies feel the heat of national campaigns where can you go as a safe

haven? companies like apple will probably end up being quite defensive because they are cash generative, and offer good value. >> when you think about, again, coming back to this discussion about the tech sector, one of the positive features to the tech industry is sitting on huge stockpiles of cash and has been so and apple is one of the biggest companies in terms of buybacks for this year. when you think about the prospects of the future, how important is it for you that companies continue along those lines and continue with these aggressive buybacks even though in some cases it is eating at the expense of spending mr. on investment, research and development, capex spending. >> that's one of the great strengths of u.s. technology companies. you look at the increase in spending on data centers, r & d that they've been making, they're generating lots of cash

and buying back stock. we don't see it as an either/or. for a more capital business would have to make that tradeoff >> simon, stay with us we'll talk more broadly about equities in a bit. elizabeth, thank you for that story. that was simon from schroeders a plunge in apple share price could hit berkshire hathaway's earnings in the fourth quarter the warren buffett-led company might report a loss thanks to a near 25% dip in apple shares since late september apple is berkshire's largest equity holding the value of its stake has dropped by $15 billion in the quarter. and google's ceo, sundar pichai emphasized his company's patriotism in prepared remarks he said google never forgot its american roots. the tech company is facing

jutejut scrutiny of bias all right. as we go to break, i seem to be the one who does these reads we'll leave you with pictures from poland where a group of santa helpers visited a children's hospital to spread some christmas cheer the santas also helped kick off the city of loveland's annual christmas festival later in the day st. nicholas arrived leading celebrations in the streets. stay with us

french president emanuel macron pledged to cut taxes and boost wages. he announced the minimum wage will rise by 100 you'euros per t

and a hike in a social security raise has been scrapped. >> translator: this was a long time coming, but it's here now no doubt over the past year and a half we've not provided answers that were strong and quick enough i take my share of responsibility i may have given the impression i did not care about that, that i had other priorities i also know that i hurt some of you with my words. >> the spread between the french and german ten-year bond yields has hit a 19-month high. that's on the back of the estimates that some of the concessions he made yesterday will add to public finances. a french newspaper is estimating the concessions, as well as the eliminating the planned petrol prices should add 10 billion euros to the deficit this year but this is because he's ruled out effectively undoing the wealth tax cut that he had introduced at the beginning of the year it's a quid pro quo for him.

he decided he cannot give in on the wealth tax front but at expense of public finances >> the fact that he has not reinstated the wealth tax, and what that says about his perception of being a president for the rich, but also in terms of funding these lost revenues there's no firm plan how they will do that one option that a couple investors mentioned to me is maybe they look to accelerate privatization programs president macron at the beginning of the year launched a program to privatize a portion of the near 100 billion euros worth of stakes that the french government owns in various french companies so might they look to accelerate those plans? one of the companies that is touted as the first of this pipeline of stakes they might sell is adp. these sales are expected to come in 2019, but maybe they look to pull this fiscal lever

there's mrent cpolitical tensios around selling these as well >> simon, do you think 2019 could be the year where we see privatizations on the back of what julianna said because of additional strain on the public finance here and it's a president under a lot of pressure >> yeah. absolutely fits with the plan that he has to reform and to modernize the french economy we've seen a bit of a compromise, a bit of a concession to the other politic political thoughts within france >> france has been a relative outperforming stock market in europe this year do you think that continues into 2019 not that it's been a stellar performance at all, but relative to the rest it has been somewhat cushioned vis-a-vis other indices on the trade front, on the export front, on the economy

front. >> it's quite a domestically driven economy you can give credit to the reforms macron put in place that the french economy held up much better than italy or germany through the weak spots this will be pro growth so we could see support to french companies for that >> stay with us. we have plenty more to discuss goldman sachs has lowered its forecast for fed rate hikes blaming trade tensions and tightening financial conditions. goldman chief economist is suggesting three reiches for sr 2019 before the change, geldman had the most bullish fed call on wall street, expecting four quarter point increases next year >> has been a significant amount of tightening in financial conditions there is a sense of complacency in equity markets about the

risks from higher interest rates. simon, to pick up on that point, do you think that's the major risk for 2019, dpif egiven the information about the fed getting more dovish and signaling that we're closer to that neutral interest rate >> good fogoldman are right and there's four more hikes coming, there will be higher interest rates, and there could an slowdown >> goldman are the minority here the market is telling you there's barely one hike priced in for 2019. the narrative have changed from let worry about a fed overtightening to let's worry about a growth falling off a cliff. >> it has. you're right to point that out, that's because growth slowed already from what we saw at the beginning of this year and one big reason of that is the ten-year the housing sector is sensetive

to higher rates, housing activity has slowed down materially that does show economically there'ssensitivity to rates an companies, some of the worst performing stocks this year have been highly levered companies where the end of cheap finance finally starts to show up. >> i had a look at some of your research before you came on the show i recognize that you really like industries that are being disrupted. you think there's a lot of opportunity there. i'm curious your view on the auto sector. this industry is facing disruption not only from new players like uber, but the incumbents are trying hard to also disrupt the industry themselves and adjust to a new environment, yet the european autos have had a horrible year one of the most unloved sectors in europe. what do you think about european out t autos in 2019? >> part of the reason they have

been so bad this year is the slowdown in china, which is an important enmarket fod market f. we think it will be a number of years of difficult times they have to get ready for the electric transition. there will be quite a lot of losers in that transition. one or two companies that have invested in electrifying their future products, they could be big winners. >> one other big loser std financiis the financial sector, which is surprising it has been one of the worst performing sectors in the u.s. some valuations now, banks like jpmorgan are at sub 10 price to earnings do you not think there's real cheap attractive plays here? >> we do we think u.s. banks look cheap but clearly the market is

worrying about late high scacyc. we think there will be a lowdown in the u.s. economy into 2020. we need to factor in higher credit costs for the banks they are cheap but the outlook is tougher than it has been. >> to come back to what you were saying, if interest rates continue to move higher that should be an advantage in the short-term >> it will at first, but then long-term views get impacted a quick look at u.s. equities after the volatile session we had yesterday dow seen moderately up nasdaq similar amount. that's it for today's show >> "worldwide exchange" is up next ♪ there's no place like home ♪

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it's 5:00 a.m. in boston, 10:00 a.m. in london wild swings in the market becoming more common down a few hundred then back up. we'll dig into why we're suddenly so violatile. why apple's fate means so much to the broader markets. the opec oil pump bumped crude oil erasing all the opec meeting gains. good news on a tuesday u.s. and china kicking off a new round of deal discussions. and the brexit battle royale what is next after