welcome to street signs. >> these are your headlines. >> a cautious trade in europe ahead of the surge with investors with a dovish hike and tightening in policy through 2019 >> gsk jumps to the top of the stock 600 as the pharma giant teams up with pfizer to combine their consumer health units into a joint venture with sales of nearly ten billion pounds. >> italian banks are set for the best day in three weeks after the government strikes a budget deal with the eu avoiding

sanctions on spending plan and bringing an end to months of uncertainty. >> austrian oil and gas company muscles in on a long term strategic contract with adnoc to develop ultra sour gas in the persian gulf catch our interview with rainer seele in half an hour. all right. good morning, everybody. welcome to "street signs." it's december 19th you would think is -- we're edging towards the end of the year and things would calm down. of course, it is fed day all eyes on the fed decision this isn't usually contentious today is setting up to be a contentious meeting because despite mounting opposition, the fed is expected to raise rates by a quarter point later today

it will be the fourth hike this year the central bank looks to normalize policy by winding down the multitrillion dollar balance sheets they're expected to take a more cautious outlook for 2019 as well for this year this is the fourth time they would hike if they end up hiking later today. that is the only time they've done that since 2006 really capping off the end of this hiking cycle here i just want to draw your attention very quickly to the graph on left. all eyes is on what happens to the dots n 2019, the expectation is that we will see the median dot move down from three hikes to two hikes with he know that there is a new governor member coming on. she's expected to have a two hike forecast for in e year. if it does move down, chances are it moves down because powell himself also moved down his dot. so that is pretty much what is priced into the market in terms of the hike itself it's about two-thirds priced in. it was almost 90% a couple

months ago. >> donald trump hit the fed ahead of the rate decision calling on the central bank to heed a "wall street journal" editorial laying out reasons to hold off on a december rate rise it's the latest in a string of fiery comments trump made towards the fed. the president called fomc decisions out of control and loco and labelled the bank a bigger problem than china. he also criticized fed chair jerome powell saying his policies were too aggressive now cnbc has spoke to the biggest names in finance and politics about a potential december fed rate hike and the move has divided opinion >> i think when the risks of the fed doing too much too fast, there is risk of doing too little too slow. it is easy for people that own assets fwz low it's about lower rates normalizing rates is a good thing. my guess is the fed is looking at data up to the last minute and they will do december. >> they're probably going to

slow down a little bit and there was talk about dovish positioning rather than hawkish. so that might signal less than the dot that's the dots than we've been expecting. >> there is no cost to capital and no discipline to do other things, it goes to the way side. i think rising interest rates is healthy for the u.s. economy >> the problem is the fed shouldn't have kept them so lw g for so long. we should have been doing quantitative easing. but the problem is really the deficit. the fed is kind of helpless here >> somehow they have to exert their independence from the white house. now this is a bad argument i think what the fed should do is simply do what it says it's going to do which is look at the data >> i'd like to see the fed with a lower interest rate. i think the rate is too high i think we have much more of a fed problem than a problem with

anyone else. >> now to help us try to make sense whast market of what the t expecting, we're joined by the head of rate strategy from b & b. thank you for joining us >> the market expectations of a dovish rate hike have been building into today. if it is what we see a dovish hike, meaning they raise once but they dial down expectations for next year, will the market actually find this reassuring? >> i guess it depend how much they dial down expectations. the truth is the market now has completely taken out the rate hikes it has priced earlier this year and even quite as recently as a month or two ago. so now we're discounting in the marketplace just 20, 25 cent chance of a rate hike in march and no full chance of a hike all year so the market already expects a super dovish outcome and it's not obvious really that

even the change in the sep, even the change in the language this rate hike, even that is going to fulfill the expectations >> now in terms of the risk that's the fed is assessing, what do you think is the greatest external risk that they're looking at and what is the greatest internal risk >> one thing i'm looking for is any reference to financial stability. the dovish move already happened when powell started talking at the -- remember the economic club of new york speech end of november he started to talk about the new financial stability analysis that the fed is doing. went through four different heads of what could be unstable and including stock market which obviously is very weak since then and he was pretty relaxed. well, in a cautious way. but he was -- he emphasized there aren't really that many risks to financial stability from what is going on in the u.s. economy >> and it's almost as though the markets want to test him though.

today i put out a tweet saying that it seems as though today is more like a market test for the fed rather than a pure economic decision on their part because of the financial stability concerns now here's the question i have for you. back in october when powell made the comments saying that we are still a long way from neutral, the market panicked. we had the big selloff, recovered a little bit in november and now the tone that come out of the fed has been extremely dovish we know that they're hinting they're approaching the neutral rate and stock markets have not recovered. you're seeing credit markets come under a lot of pressure as well that tells me that market really, i mean this is beyond nervousness of the fed perhaps there is something more fund ally wro-- fundmentally wrong. >> i have seen more of these rate hike cycles than i care to admit. there is a point where rates are going up

risky assets always trade badly. but the stock market is down a couple percent for the year. credit spreads widened a lot the absolute yield on, for example, the high yield index is higher than it's been since 2009 but the economy is in great shape. unemployment is, as we know, the labor market is tight as a drum. we have something like trend inflation again, target inflation again. we have robust growth. probably growth too strong given how tight the labor market is. it's all going fine in the economy front. what you're talking about is what happens when the fed is raising rates which is financial market pricing re-adjust the question is for the fed s th -- is the re-adjustment enough? >> the expectation of one and done, hiking today and then being done for 2019 is going a little too far quick question on what this means for the flattening of the

curve. again, one of the reasons for the flattening is because the fed intends on hiking at a time when inflation has been somewhat muted. i wouldn't say it's getting out of control that's really etched in expectations we have seen the flattening. if they stop now, could we see a resteepening of the curve again? >> the flattening of the curve is extraordinary and for sure it's another reason for the fed with a low, as you say, lowish inflation path, just to take it easy. but what i think they would like to engineer is they would like to engineer if they do pause it's not obvious the next move is a cut it's not obvious they've already peaked the cycle it will be nice to have a long pause like we did at the beginning of the hiking cycle as financial conditions tighten and the fed sat there and waited for that to have the effect on the economy and then was able to proceed again. i guess that is the dream scenario for powell.

>> a dream scenario. well, thank you very much for that we'll be back for more shortly that is lawrence mutkin from bnp parabas. >> let's check in on how markets are doing. it is pretty much split. this is the volatile price action we had in the markets yesterday. the dow trofaveled 400 points intraday ended up slightly in the green i need to mention the s&p 500 did intraday make another new low for 2018 this has been the worst month for u.s. equities since the great depression so let that one sink in. the mood in europe is muted. we're seeing moderate gains across the board let's switch on and talk about individual markets though. again, you can see the mood is more positive across the four majors we have ftse 100 up.

don't forget, we're getting into a couple days of key uk data starting with the inflation data today. really not the market focus as of now given all of the political noise. again, we should be paying attention to the data. it's important it tells us what the uk fund mentalfund fundmentally is looking like >> enjoying a nice rally about one hour into the session already. up more than 200 points. again, this is on finally we may have an agreement between the italian government and the european commission when it comes to that budget, the revised budget now 2.04% they will be giving a speech later today. that is the italian prime minister he is also meeting in brussels so we should expect to get confirmation on italy later today. switching on and talking about sectors, lots of corporate news this morning as well it isn't just about all the fed

and macro and general price action but on the down side, we have tech sectors about .6% again some supplier concerns there. industrials, oil and gas, we had another huge move in the oil complex yesterday. brent was down about 7% at one point. continues to go down in that space. obviously weighing on that sector up at the top, travel and leisure up .5% one of the names coming up a lot, potential acquisition target for virgin atlantic there is speculation for supply now that they may be a subject to that acquisition. retail also bouncing back nicely remember, this has been a tough week for retail. it drags down a bunch of the other colleagues in the sector early on in the week, citing poor performance we're seeing a bounce. .9% in the sector as well again, some sensitivity when it comes to china at trade there.

we're seeing some of the sectors also bounce. that is the mood again for europe slightly more positive this morning. >> thank you very much coming up on the show, tokyo debut as the ties hit investor appetite we'll discuss both companies after the break. stay with us (client's voice) remember that degree you got in taxation?

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welcome back italian banks are set for their best day in three weeks after the government reached a deal with the european commission over the expansionary 2019 budget the agreement will be finalized at a meeting of european commissioners later today. a source close to the italian government urged caution telling the news agency that rome received only verbal assurances. last week italian prime minister said the government was ready to reduce its 2019 budget deficit from 2.4% to 2% of gdp in a bid to avoid eu sanctions. meanwhile,italy's deputy prime minister said he is "greatly satisfied by the outcome of the negotiations." in a statement he said the

government spending plans will help millions of italians. however, he didn't provide details about the budget changes that the government has made to meet eu demands. and elsewhere, the uk government has ramped up preparations for a no deal brexit setting aside about two billion pounds for contingency measures downing street's plans include hiring more border officers and making space in ferries for food and medicine separately defense secretary announced that more than 3,000 military personnel are also ready to be deployed if needed wow. meanwhile, teresa may is set to urge scotland, wales, and northern ireland to back her brefrm i didn't think deal the prime minister will tell the nations to listen to business and get behind her agreement in a meeting later today, may will also say that her deal worked to the whole of the uk as it keeps close ties with the eu. and the uk could drop out of the world's top five economies

when it leaves the eu. that is according to pwc's latest economic forecast britain will fall into seventh place in 2019 with projected growth of 1.6% that is behind france and india. but 2019 will be characterized about it a concerted slowdown in gdp growth across major economies that's according to bnp which forecast that's it will decelerate by .4% in 2019. however, the uk, brazil, and india may buck this global trend. we'll have to see that lawrence mufkin from bnp is still with us to talk about the outlook. i just want to go back a little bit and talk about italy it seems like we finally got some closure on this on going battle between italian government and the european commission can we just put this to sleep for now? >> it's been a roller coaster for italy, hasn't it i think the thing about italy is that, you know, there's an is n

equilibrium on both side you have a little movement because the debt burden is so big, a little movement one way or another can cause a big move in the spread. so what we saw is this government comes in, it starts talking about aggressive fiscal stimulus well ahead of the eu's guidance and as a result, the market reprices very aggressively that's where we've been. and it has seem that government here was sticking to the idea that we were elected to do something in particular. we don't want these brussels bureaucrats telling us with he can't. how far they have to come back before markets get reassured seems to hinge on the procedure. they moved just far enough to do that >> certainly the market is accounting for that possibility and the sense that language is coming out of both sides is a lot more positive recently of do you think that around the

timing of the european elections next year is when we may see another italian episode? if you go back and they've been very vocal in that they didn't want to yield european demands if anything, they have gone and done exactly that. perhaps they were timed haefd the politic -- ahead of the political events how are you reading the situation? >> you're right. the thing is that until the risk goes away, you never know what is going to hit the tapes next so the european elections will, in our view, are much more significant than most european elections partly because this time the issue is europe just like the issue with brexit was europe and it hasn't usually they've been to do with local protest votes or whatever. but it's not just italy. it is what is going on in france and in germany i think this as we move into these elections, you're right. we're likely to see a lot more

anti-brussels establishment rhetoric i'm not sure that markets are going to just look through that. i think we have to price in something for an outcome which might be more hostile than we're used to. >> switching gears to the uk your base case scenario continues to be that we'll see resolution eventually. what does this mean for rates and sterling for 2019 given we're now looking at a situation where the uncertainty may continue well into q-2 of next year at the very earliest? >> it's true i think one helpful way of thinking about this is to think about what would you be doing if you were sitting on the mpc of the bank of england? not that i will ever be. >> there's your pitch. >> exactly what would they be thinking? the answer is assume that we get withdrawal agreement which is fairly smooth. then we're a bit behind with rate hikes the uk economy in some ways is

not as bad as the u.s. economy however, as we know, the chances of a nonsmooth outcome are still extremely high and then the bank doesn't know what it's -- the only thing the bank knows for sure it's going to do is keep enough liquidity in the system that the financial system stays fine. as for the level of rates, it doesn't know and neither do we. >> what is your top income play for 2019 >> wow, you just threw that at me it's true. it's been a bruising year for people with bearish bonds. but yields are still come up over the course of this year we have much p more supply we have the end of qe. we have firm economies we have central bank still raising rates. we do not have a recession we just have a slowdown. it points to higher bond yields. >> 25 basis points >> however often you try it. >> okay. i'm going to hold you to that. lawrence, thank you so much for coming on "street signs" today

getting back to the corporate stories today. pharma groups glaxosmithkline and pfizer have agreed to form a joint venture that combines their consumer health unit to produce sales around 9.8 billion pounds the will take a majority equity controlling interest while pfizer will have a 32% equity interest the uk drug maker confirmed plan to pay a dividend of 80 pence per share. >> the stock is up nicely, 7% on the news today >> there is a class of 260 millionure yoez on news that french bank will cause fourth quarter revenue to drop to two billion euros. down from 2.25 billion a year ago. but they did not mention any potential impact on net profit shares are down 4% in trading. they're down 30% the last three months virgin atlantic says

takeover talks are continuing. this after the british carrier announced last month it is looking for buyers they also said it's exploring other options including reducing costs and capacity now one of the big stories that we've been following today, soft bank. softbank shares have closed almost 15% lower in the tokyo debut. the japanese mobile carrier was set to raise $23.5 billion in the country's biggest ever ipo but a recent service outage and worries over the exposure to others have dampened demand. now we have more from tokyo. what do we make of this disappointing debut? >> yeah. it was a rough day or rough start for them to say the least. as you said, closing down more than 14% there were the concerns coming to market over the last few

weeks. you pointed to some of the negative headlines that came out. let's start with the first one which is about just growth prospect here in the market. this is a marketing that is very saturated. the third largest mobile market behind the u.s. and china. we've got another carrier that is coming online next year there are concerns about how softbank can keep up with the competition and also the japanese government has been pressuring the carriers to slash costs by as much as 40%. that's one concern but let's talk about what happened over the last few weeks. there was a big service outage that left 40 million subscribers with in and out access to voice and dat yachlt tha and then theg arrest r arrested in canada. the japanese government said they would no longer be using chinese telco equipment and pressured other companies to do the same that left softbank in a tough

position they're the only ones that uses the equipment. we have executives talk about how they are now speaking to not just european players but also american suppliers as they look to swap out some of the 4g equipment. they have not been as clear in terms of how much this could all cost except to say that it will be a few hundred million yen we had a chance to speak to mark einstein who is with itr corps who gave us awe sense of what he thinks the costs or the concerns that could weigh on softbank's growth as a result of that exposure >> for the bottom line, it means that they're going to be forced to use european and american equipment which is going to be more expensive so they're either going to have less of a 5g network deployment and reshift the capex or just have to pay more from a consumer side, i think what that means is ultra low cost pricing might be a little bit more difficult to see than

we would have normally seen. >> we should point out this was an ipo targeted towards retail investors. the first time mom and pop buyers making up about 90% of t the 160 million shares athe lod. 85% dividend payout. a 5% yield now softbank executives said they are confident that they can deliver on that. but given the growth prospect, headwinds they're seeing from here and the performance of the stock on the very first day, there is going to be a lot of questions about whether they can sustain that back to you. >> thank you very much a difficult day for the retail investors for sure now coming up on the show, turmoil rocks manchester united after the football giant saxes jose mourinho. more on the search for his successor after the break. would you and teddy like some tea? teddy and i would love some tea!

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welcome back to "street signs. zblfr these a .

>> these are your headlines. a cautious trade in europe with the investors figuring in a dovish hike. >> gsk jumps to the top of the stock 600 as the pharma giant teams up with pfizer our colleague state side will speak with the ceo of gsk emma walmsley italian banks are set for their best day in three weeks after the government strikes a budget deal with eu avoiding sanctions on the spending plans and bringing an end to months of uncertainty. and austrian oil and gas company muscles in on a long term strategic contract with adnoc to develop ultra sour gas in the persian gulf. we get a first on cnbc interview that european politicians should be prepared to face u.s. sanctions. >> how can you prepare for that if you don't know what kind of

potential is coming? they should also manage the security of supply of energy in europe nobody else. >> all right so we're just getting uk inflation numbers out. we spoke about this a half hour ago. we've been very focused on the political backdrop here we have the uk cpi number. this is the lowest since february 2017. all services up at 2.5%. and just to put that into context, the month to month number was .2%, again, 2.3% year on year as in line with the reuters expectations of 2.3% again, i should tell you this is the lowest year over year rate since march 2017 we also had the rpi numbers come in at 3.2% year over year. in line with the reuters expectation as well. lowest year on year rate since

january 2017 finally, i want to bring in the october house price that's we got as well. that came in at 2.7% year over year versus 3% in september. this is the lowest since july 2013 wow. real weakness in october house prices inflation pretty much in line with expectations here >> now we are seeing bate ofa ba rebound. this comes after yesterday marked the fourth negative session in a row the key event out as we've been highlighting all morning, the federal reservemeeting later today. obviously taking a lot of investor focus this morning. interesting to see that european markets have managed to hang on to the gains after yesterday's big plunth ge in energy prices. despite that pull back, we're seeing european stocks higher. i want to take you over to italy. the ft-se may have been outperforming on the day, up just about 1%. that is after it looks like we

are seeing a budget breakthrough come through between italy and the european commission. so real reversal in terms of what we heard over the last several weeks. that is providing a nice bounce to italian banks in particular and that is driving a lot of the gains we're seeing over in italy. let's take a look at fx markets. let's see how the currencies are faring ahead of that all important fed meeting today. the euro is up slightly versus the dollar about 35 basis points. the sterling, the pound is holding pretty steady versus the dollar it has really traded in a very tight range throughout the course of the last couple of weeks. brexit negotiations have taken center stage a huge amount of caution in and around sterling. let's take a look at u.s. futures and see how the markets are poised to open up. u.s. markets did close slightly higher on the day although it was well off the highs seen intraday so slightly positive day looks like we're going to see

the positivity continue into today ahead of the all important fed meeting. finally, let's have a quick look at oil the plunge in oil yesterday did take center stage. nothing hugely new in terms of what drove that selloff. still a case of oversupply concerns paired with global growth concerns for 2019 taking a look at the oil majors here in europe pretty muted reaction to that oil price plunge again, as i say, nothing massively new in terms of the drivers of that selloff yesterday. >> very big selloff indeed other news for you japanese exports in november came in well below expectations. japan saw a rise of just .1% in year on year exports undershooting a forecast of 1.8% and full length well short of october's 8.2% jump. the data highlights the risk facing japan's export economy as it comes to terms with a slowdown in global growth and fallout from the u.s.-china

trade war. and chinese importers have reportedly returned to the u.s. markets. this is the second round of purchases since the u.s. and china struck a trade truce and provides environmenvidence thatg is going to buy u.s. agriculture goods. the state owned companies last week ordered 1.5 million pounds of soy bean shipments. >> now moody's washrned that china's slowdown is highlighting how they struggle leverage weaker credit demand, tight ehrlitighter liquidity and the trade spat is causing the most disruption for china hampering exports and business and consumer confidence >> and get ready for a slow 2019 that is the warning from ts

lombard. they're expecting the slowdown of china and merging markets to drag on global growth. i'm happy to bring in charles dumas to talk us through the outlook. so many anl iflalysts started pg down they say 40% of the growth comes f from emerging markets. how much of the deceleration is on back of china itself decelerating and how much of it do you think is pointed back to the trade war that became, you know, symptomatic of 2018? >> well, 40% is the number it's larger than that when it comes to gdp growth. but, yeah. i mean china is central to the whole thing. the trade war is part of the story. there was a little jump in the dollar last spring but once the trade war story got hot, the dollar was up by 7% or

8% by the early autumn and the chinese was down by 7% they both traded in real terms so the result wasthat they sor of exported the problem to the rest of the world including all of the other emerging markets. you see you also got -- and you had a slowdown it's not 2019. it's the second half of 2018 is the slowdown japanese gdp fell 1.6% you just published a number talking about japanese exports being weak now as it happens october was a strong month but october, november average not so good. chances are that japan is in recession. they're sitting there. they're suppliers to china that hurts them. china its several is slow for the reasons you stated and on top of that, they're k t competitive with japan it's hard for japan, korea, taiwan to compete. >> in retrospect, i remember

when we were talking about tariffs and the first quarter, second quarter of the year before they actually got imposed. many economists say it's difficult to put a number on what the actual impact will be in retrospect, we had tariffs running for a couple months. talk of tariffs going for most of 2018, how much of an economic impact do you think it has had on global growth >> i think it's huge exactly for the reason i just stated first of all, you got this 40% which is difficulty. 15% is china 25% is all the others. and they're both in trouble for different reasons. but this sort of double whammy of rising dollar that increases import costs and cheaper occur enis i that reduces exports from revenue or makes it more competitive. all of that is bad news for everyone so you have germany down 1.2% in the third quarter. italy down .1% germany and italy are the big manufacturing economies of europe of the big four

spain up france up .4%. britain, .6% the service economy is doing quite well still there is this problem with manufacturing. >> so you think about the impact of a china slowdown on europe. it seems to be exacerbating issues that are am coming up you just flagged germany and italy in particular as being vulnerable to a slowdown in china. yesterday we saw the efo come in the lowest in more than two years. so putting this altogether, is all of the negativity really fully understood in europe are we looking at more disappointment in 2019 >> i think there is a serious problem. oddly enough, it becomes fairly difficult even if there is a settlement of the trade voice. that obviously in itself will be helpful. but the settlement of the trade war issue and the euro is going o. going nor north in style the competitive problem is acute.

it's already failing pretty serious. germany in the third quarter in spite of the fact that gdp is down 2.2% had a positive contribution of .7% from inventories. that means there is a whole bunch of stocks waiting to supply anyone that wants to buy something in germany in principle, i doesn't demand -- it may be not too bad but, you know, output is not going up much. may even go down may be a recession in germany and maybe a recession in japan already in the sec half of 2018. in 2019, its going to a knock straight on through. >> this is quite gloomy. i also want to bring in oil. we saw a big collapse in oil price, almost 40% in the last couple months. surely that's a boom for development for markets. it's good for u.s. consumer and good for selective emerging markets economies as well. we've seen a rebound in india and indonesia, for example

so what does the world look like with oil at $50? >> you're quite right. the oil price slum subpoep is a positive aspect and represents an adjustment. the price was absurdly high. it was $80 for brent so it's come down more reasonable and that will be very helpful. japan has no oil and most of the asian tigers it's also positive for, as you say, india and other economies you have to remember that when something changes radically in terms of the distribution, in this case, a way from oil producers towards consumers, you do normally get a quicker reaction from the guys in pain than the guys with the gain. and that means that the producers are cutting back sharply. and there may be a lesser rate

of installation of shale fracking in the united states. but especially saudis, nigerians and iranians will have less and they won't have any choice >> excellent we may see positive impact of lower oil. we have to be patient. >> yep exactly. >> i'm afraid it will be second half of the year before it really shows up. >> excellent thank you so much, charles dumas, chief economist from ts lombard. you can follow us online and you can tweet us directly. coming up on the show, the rate debate. today's hike all but baked in despite political pressure, we look ahead to the 2019 pact.

welcome back to the show omv and the national oil company signed a deal giving the austrian energy firm a 5% stake in a mega off shore drilling project in the uae omv says the 40-year agreement will start producing around the middle of the next decade. and we have more on this monumental tie-up and also

coming at an interesting time for the energy complex >> oh, absolutely. i had the chance to catch up with the omv ceo and i asked him about that as well as the energy price today and also about northstream two. >> it's a conversation for an interesting corporation. and we do have all the possibilities here in the country. we have decided in april this year that we are going to produce oil together we are discussing now cooperating in the oil value chain. we have a daughter company which is a successful model here that we're producing polymers for the asia market. and now we have started a new venture that we also would like to cooperate with the gas value chain. if you look into omv, you find out that this is one of the best gas partners you can find. we have trained our self in the european markets

we have trained ourselves to produce gas. and i think we can bring value into the corporations. >> walk me through how you see the energy markets today we have seen a lot of pressure lately on oil prices how do you think that's impacting the markets? >> well, i think the industry will have more and more concerns investing into projects. we are very much driven by the available cash flow. this is one reason why we have seen underinvestment in the last two or three years and that is reducing the supply volumes. and now market has to be rebalanced the major uncertainties are not the supply side from the industry of the oil and gas. the major concerns in the market is the demand. and the uncertainties are how much of the global economic growth we are going to see next year 2018? there are already some signs, some very strong signals that we're going to see a cooldown

which translates into lower oil consumption. so we have to prepareas a company that we might see more pressure on the price if we don't see recovery of the outlook for the oil demand and economic growth next year. >> how do you plan for that? the uncertainties? >> oh, you have to run portfolio. you should not only put one cart into your portfolio. so we invest into gas value chain. we're investing into petro chemicals and we have certainly reduced our dependence on the oil price volatility you only can run that by a good portfolio. that is the reason why also targeting a corporation with adnoc on an integrated level if you see a upstream because of a low oil price, you can benefit with lower costs in the down stream and that's why the integrated corporation brings you the most ability in any kind of corporation >> and finally, i have to ask

you about the north stream pipeline there are a lot of questions about whether or not companies are involved, could face sanctions from the united states are you prepared for that? >> well, how can you prepare for that if you don't know what kind of things are going to happen? we're going to build the pipelines. 300 kilometers are already laid down on the baltic sea ground. and we will continue to build the pipeline. the major threat i see is financi financing the project. the original financing structure is not possible from my point of view anymore so that given the potential sanctions you have mentioned is causing more and more uncertainty in the financial markets that project financing might not kick in on the level we have anticipated in the beginning. >> and so the message then to eu leaders who are pushing back on this and even to the united

states is we're going to do this >> of course of course. europe and european politicians should manage every investment in our continent and european politicians should also manage the security of supply of energy in europe. nobody else. >> that was the ceo there of omv. of course, the bigger question about what it's going to happen next in terms of potential sanctions as a result of this north stream 2, he was firm there, guys. he was saying eu leaders need to get onboard here and really need to manage expectations for companies with regards to the security of energy of course, also talking about this investment with the uae and adnoc and really all of this part of the gas strategy going forward. so a lot to look forward to in terms of new investments down the pike >> thank you very much super interesting interview you had there. back to the main event of the day. despite mounting opposition,

federal reserve is broadly expected to raise rates by a quarter point later today. it will be the fourth hike this year as the central bank looks to normalize policy and wind down the multitrillion dollar balance sheet. the central bank is also expected to take a more cautious outlook for 2019 >> predigs for the tightening cycle span a wide range. one rate hike. banks like ubs and morgan stanley and citi and goldman sachs see as many as two or three increases on the hawkish end. barclay's and j.p. morgan are forecasting still as many as four rate rises in 2019. i want to bring in bret ewing, chief market strategist who joins us on the line good morning you to, sir let's just talking a little bit about today. what is interesting is actually if you look at the data, everything is proceeding in line with the fed's own expectations of where growth should be. so if they don't hike today or if they sound extremely dovish,

are they not sending the signal that in reality what they're concerned about is financial instability and price in stock markets? >> yes the way we look at it, really we don't feel there is any reason to hike today. i think the fed has put themselves in a box and guided the market into this hike. but when you look at the inflation numbers here in the united states, they've actually been moderating here for the last four, five months we feel that price stability should refer to more inflation than financial markets but, look, we're in a deflationary arena around the globe. and a rate hike, there is no sense to any purpose of a rate hike here except that they put themselves in a box. >> funny you say that, brett on one hand you have unemployment sitting at a 50-year, multiyear low

at the same time, you have average hourly earnings north of 3% you have pce numbers which is what the fed looks at around that 2% mark as well so everything according to their playbook is actually preceding in line where it should be it was in the last come months we saw financial conditions tighten. in reality, if if the market was panicking from before, if there were no real signs of inflation, we wouldn't see the wage average -- wage earnings creep up as well >> i think that's true you are seeing wage rowth. but that's good. we need wage growth here in the united states. especially after the last nine years of zero wage growth. so we embrace wage growth. but what we're seeing on a overall number with inflation is actually the numbers are coming down they're not gaining momentum the united states cannot go it alone. i think paying attention to the global environment is very important. especially when you're -- when the dollar is up over 5% this

year emerging markets are destroyed look at what is going on in japan, deceleration. look at what is going on in europe look at what is going on in china. >> should we hit a recession, they don't have far enough to cut? >> well, i heard that argument quite a bit. i think that is ridiculous to get the rates up so can you drop them down next year. i think what will be a good way to look at it right here is take a pause. let the other three rate hikes this year digest through the markets and let's see where we are. >> excellent, thank you very much, brett ewing, chief market strategist from first franklin now pharma groups

glaxosmithkline and pfizer agreed to a joint venture. the agreement will see gsk take a majority controlling equity stake of 68% in and pfizer will have a 32% he can wilt interest. they have also confirm a plan to pay 80 pennsylvance per share of course, sat very big day. we do have that fed meeting. all eyes on the decision making. that is it for today's show.

it is 5:00 a.m. at the federal reserve in d.c here's your top five at 5:00 to hike or not to hike that is the trillion dollar question for the markets and your money we're counting you down to today's big fed decision facebook under fire again. an explosive new report says the social media giant gave dozens more companies extensive access to your personal data than previously believed. japan's biggest ipo ever flopping we're going to take you live to tokyo. major deal in pharma that will change the way you buy drugs including names like advil and more on the recent crude collapse why the oil story