welcome to "street signs." these are your headlines a relief rally in the u.s. and asia sets the tone for europe as stocks pose a strong open with major bourses up more than 1%. oil prices jump clawing back gains lost in the previous session. banca carige pop as the italian lender's largest investor holds talks with the ecb. investors seek safety in the

yen and gold as global growth worries persist it's broad based, it's decent, it's green that's what the rally looks like in europe. stocks across the board are joining in this global rally triggered by wall street we got 1.25 on the benchmark in europe we are in lockstep moving higher let's take you to the individual bourses. some are leading the charge more than others. the swiss market is up about 2%. of the core markets, we're trading up roughly 1.3%, 1.4%. when it comes to the ftse, we're well and truly off the highs in 2018 we're trading at 7,800 points as we look to wrap up for the year, we are around the 6,600 level. so we have come back from those

highs in what has been a turbulent year for uk stocks around brexit and gyrations in the currency when it comes to the rest of the market, trade is impacting some of these economies and problems domestically in france the yellow vests destroyed some of the confidence in macron's ability to change tact in that market that market at 4,656 today stronger on the german market which is trading around 2018 lows still a lot of room. we talk about whether this is a santa claus rally, there's a huge amount of territory for german stocks to pick up we have watched every twist and turn around the rome budget. the fiscal targets are just over the 2% mark. it's delivered a level of calm for the italian market still trading around low levels for this year. let's take tout action

stateside. what a session it was. it was the biggest comeback for the dow, the nasdaq in the decade and for the s&p since may 2010 staggering levels. the dow rallied 871 points from its lows of the session to close up 260 points. keep in mind we're still in correction territory all in context as we talk about a recovery in session and wild swings we had a steep fall still in u.s. markets elsewhere across the board, the dow and s&p are on pace for their worst month since 2009 and worst december since 1931. so a little bit of green today >> a lot of volatility there that's also translated into european equities. we've seen it across these different bourses. we've also seen it across sectors.

tech is one, autos, banks. today the picture is green across the board every sector is rebounding the more defensive ones, real estate up about a third of a percentage point travel and leisure up 0.6% we are in holiday season retailers in focus there at the top, construction and material, almost 2% firmer on the day. technology rebounding nicely as well in line with the nasdaq performance. basic resources up 1.7%. nice rebound there context is everything as karen was saying let's switch on and talk about oil. we have been spending a lot of time discussing the price action there. down about 40% from october highs. yesterday we did see wti sell

off again. a bit of a rebound overnight and in line with that we're seeing some oil majors seeing a bit of a firmer footing. particularly the uk names. bp up 2% already shell up about 1.75% and again, this is another sector that has been swinging in line with the moves with spots as oil continues to plummet, oil majors have been getting dragged along. we're seeing that beta this morning with a bit of a bounce in the wti complex >> edward parker has joined us from brooks mcdonald edward, we're seeing a bit of green. we'll cheer it on into year-end. in context it barely touches the sides. if you look at the german stock market, we've been grinding lower for months this slight blip up at the end doesn't helper form man really for fund managers who have lost money. >> absolutely not.

even with the s&p rally we saw yesterday, we have christmas eve, which was a poor day for markets. we're down around 7% year-to-date on the s&p 500. one thing we're looking at now is have we got to the point yet where markets will be saying okay, consensus is a 2020 recession. but i'm going to wait until then to go back into equity markets with a stellar year for corporate earnings in 2018, we've actually seen on a price attorn to earnings basis the price cheapen. is that enough for investors to get excited? perhaps this is a sign of that >> we've had markets that were moving lower and looked like they would be forming a base, but that's not been the case back to the german stock market, october looked like we would be around some of the lows, but then we went lower in november,

and then lower again in december if we take the u.s. markets. year-to-date we're down 6% in 2008 we were down 36% there could be more to fall. >> could be. one of the main differences here is are we about to enter recession? is growth slowing to a point where 2019 is going to be the recession point? we don't believe so. we think there's a bit of time being bought until we need to worry about very end late cycle. that changed this year we have this liquidity back drop where quantitative tightening has replaced quantitative easing are we at the point yet where u.s. growth will turn to negative territory we don't believe so. >> when you come to that point of whether or not the recession is able to determine the outlook of equities from here, we agreed that that's probably not going to happen in the next couple of months in the u.s., though recessions technically start before we're aware of them the german point is interesting.

the data has started to come off quite aggressively we were talking about this previously on the show q3 took a hit because of whatever one-off emissions what if the german economy starts stagnating and hovering around a half percent, 1%. is that enough to give a base to equities >> germany is interesting. a lot of its manufacturing and export markets are dependent on china. china has helped hold back markets so far this year so if you got clarity on that, that could help german markets germany's a major part and major constituent of the eurozone. that said, if we did see some weakness in germany, that might mean a swing voter in terms of the ecb and in terms of fiscal policy for europe as a whole that becomes more combative. at the moment the german

government is having quite a large surplus. it's not spending that money that might change if there's weakness in germany. >> if you talk about the market derating the valuations when it comes to u.s. stock markets, i thought that was an interesting stat the s&p is down 7%, but in valuation terms it's down 25%. do you think there's more de-rating to come in european equities or when we look at that metric are we reaching a base? >> it's less dramatic in terms of re-rating in the eurozone that makes sense because earnings have not come through the same in 2018 that said, quite a lot of this play is a play on the u.s./china trade relationship, particularly with regards to germany. that's where we have more caution. most of these global indices, but the skew is towards the

manufacturing in germany >> speaking of global indices, the ftse, you mentioned that the yield in the uk, dividend yields have crept up, 4.75%, which is quite amazing. if you consider other asset classes out there, treasuries are 3% there is something can risk still buried in uk companies with brexit. would be chasing a dividend yield for that safe return in the uk given the uncertainty >> absolutely. when you look at that 4.75% if you look at the pennies or pounds of dividend from the ftse 100 index, it is clustered in a small number of companies. they will be international companies. not ones that will be affected by brexit, but what they are affected by is what happens to the currency if we saw a second referendum, which led to a remain vote or something that was softer,

sterling rallied on a translational basis, all of those earnings go down and with it the dividend. so there is risk both ways >> do you not think the trade is to buy the stocks that are paying that dividend, forgo some of that dividend yield, so you're getting 4.75, forego a half percentage of that and use that to hedge a currency exposure >> it's an option. currency hedging can be quite expensive given the binary nature of a brexit outcome it is certainly an option. when you buy the uk index, one central question is we all know the ftse 100 is a global index, we were taught this, but the global markets are avoiding the uk regardless of that. so actually if we saw a more positive outcome how much of an effect in the rally in sterling would be offset by asset

allocators coming to the uk. that's one of those impossible questions. >> plenty to think about edward, you're staying with us edward park from brooks macdonald. get involved in the conversation the federal reserve will raise rates three times in 2019, according to a forecast from goldman sachses s asset managemt the firm will keep a close eye on tightening monetary policy. we spoke to andrew wilson, the ceo and global head of fixed income at goldman sachs asset management for his predictions on the fed in 2019 >> central case is that they do move interest rates higher you know, we have a lot of market turmoil, a lot of volatility, people are getting focused on the short-term, underlying fundamentals of the u.s. economy is still strong yes, growth will slow next year, we think to 2.5% but it's been nearly 3% this year you have to look at it in the context of momentum in the

economy and most importantly a tight labor market >> you say that. there seems to be still momentum in the economy it's still growing north of 2.5% it's not growing at 4%, but it's still growing why are people getting so nervous why is there so much volatility? >> we're at the end of the cycle. they're looking at the fall in the stock market, and that will make a difference. so the fed will look at what that does, not so much from the stock market level itself but for the tightening of financial conditions that we've seen what's remarkable about the cycle is that for the first two years of tightening, financial conditions eased only in the last six months have we seen a tightening of financial conditions we still have easier financial conditions today than at the start of the tightening cycle >> one weak point has been the housing market, and there are some indicators suggesting softening there. how concerned should we be about

that given a house is every american's largest asset >> i don't think we should be overly concerned remember what the fed has to do, it has to tighten policy we need tighter financial conditions a reflection of that is softer activetism we' activit activity we've been growing way above trend. the fed is doing their job, that is to slow the economy down. that's what we that i they'reinn the process of they want to see this slowdown in activity. >> talk about where you want to put your money then. the economy seems to be in good shape. you have written that you prefer equities to credit, equity to reit reits. it's interesting you say that especially when it's coming at a time when credit is falling out of the high yield space. people are getting nervous about

some of the default probable going up give than we're entering late cycle. i wonder why you're placing credit so high on the spectrum >> equities above credit credit above rates we think the fed has more to do. we don't expect positive returns out of bonds but very little out of government bonds. if you think about it in that context, the credit cycle is in the later stages you're now getting paid significantly more than six months ago that spread widening compensates for that risk. importantly it's whether we have a recession on the horizon those default rates will pick up when we see a recession on the horizon. we don't see that in 2019. maybe in the later stages of 2020 so the cycle has been long but not as strong as previous cycles we see that cycle extended into 2020 >> we discussed a lot of different views going into 2019.

get involved in the conversation tweet us at @streetsignscnbc or you can tweet us directly. ahead on the show, banca carige gives a boost to the italian index. find out why that's coming your way next. ♪ lean on me, when you're not strong ♪ ♪ and i'll be your friend ♪ ♪ i'll help you carry on ♪ ♪ lean on me.

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welcome back to "street signs. banca carige's top investor has met with the ecb after blocking a cash call for the italian lender the family which owns 26.6% of banca carige flew to frankfurt on thursday to explain the decision banca carige had planned a 400 million euro share sale as part of a rescue plan the stock is finally open for trading. it's bounced nicely, up 15%. still down about 80% over the last three months or so. really a heavy drop as far as that stock price is concerned. no doubt investors will be

focused on whether the rights issue will go ahead and happen that's the banca carige story. another bank we're looking at is mediobanca that is set to go on a splurge in 2019. in an interview, the ceo said he is interested in wealth management businesses. he said mediobanca may hit 4 billion euros in new inflows over 2018. rusal appointed jean-pierre thomas as its new chairman in return, the russian aluminum firm will see u.s. sanctions lifted the u.s. treasuries saw changes at the firm as it looks to reduce the influence of a russian businessman. edward park is staying with us from brooks macdonald. i want to talk about the u.s. high-yield market. it is almost as if a dead calm

descended on the space throughout december. do you see positive winds blowing for next year? >> we're reassessing our risk positions. we think equities are looking okay, but we're worried about credit we're worried about credit not only in the high-yield space, and the start of this month we cut all of our u.s. high-yield direct exposure because of the fact that yields moved down a bit. but they have not seen any of the volatility that we saw in equity markets, which itself concerns us. that is happening at the same time when corporate leverage has increased. even if you look at the investor grade market, triple b and lower grade credits are at the bottom of the spectrum. that's 50% of the investment grade index. we are looking at that and

looking to exit some positions >> wasthere was a huge cleanup the energy space several months ago after you had the oil price rout, you saw a clean out of that space now you have had a recovery in the oil price, another flop, but the credit side of energy looks better what is the next shoe to drop? >> it's mainly around this leverage with leverage you never know what catalyst will be. wie se we've seen that building the s&p 600, brother of the s&p 500, that's two and a half times of ebita, and that's gone up to almost four times recently so we're seeing leverage in the small cap space that we never saw during the financial crisis what will the trigger be we don't know that on a long-term risk adjusted basis that's not looking

favorable to us. >> you also need to think about when maturities are due. if these are long-dated redemocrat shunr redempti redempti redemptions, if it's coming in five, ten years, doesn't that all come back to what the fed decided to do with interest rates and ultimately whether or not there's a recession in the u.s. if the fed pauses, and the u.s. continues to grow, what is the problem for credit >> these bonds are normally callable so the issuer has the right to call them back before the end of maturity if that doesn't happen, that's where sentiment gets messy

you don't need ma xhturity for market sentiment to turn yes, there's been a marginal pick up or a significant pick up in terms of base rates for the fed, but is there enough yet to knock over a company interest coverage is still pretty good. no, it's not but over the next two, three years if we have a scare in terms of economic growth or a few pockets of the sector struggling to pay back their debt, that is what might capitalize a wider look at the high-yield sector. >> given where yield levels are and that we have seen the credit spread widening in 2018, not just for investment grades but also high yields, does that incentivize you to think about buying credit but higher up in the capital structure, so single "a" territory, double "a," where the yield is not as juicy as in triple "b," but you're then

avoiding that cliff? >> yes we have a preference for investment grade over high yield for our main credit exposure actually we're thinking sovereigns are looking attractive investment grades have moved out a bit but not that significantly in 2018. we think again reflecting that risk in terms of makeup and structure so we prefer to sell and move into sovereigns ahead of potentially more volatile time >> sovereigns like buying two-year treasuries? >> front end cash in the u.s the curb is teacher in the uk. with that, you might as well have two-year cash, unless you want preparation for recession and if you think that is coming, you want a bit of duration to protect you. >> i want to draw the link

between the stock market and the real economy there's a fantastic story around california and the state's finances are under pressure because most of the revenue comes from capital gains this takes you back to financial crisis when there's states across the u.s. that were impacted in different ways fortunes were hit by a slowdown doesn't this remind you of 2008? shouldn't we be concerned about slowdowns by regions in 2019 >> there will always be pockets and trends happening in terms of markets or in terms of a source of revenue however when we look at the broader u.s. stage -- i think you need a broader metric to change and swing u.s. consumer confidence and data is pretty strong.

>> not yesterday >> no. but part of the boxing day rally was that rally on the basis that amazon is coming out saying this is one of the best years in terms of sales it's quite a mixed story in terms of the online retailers doing well other ones doing less well the consumer back drop is good we mentioned the oil price, that falling is supportive of consumer confidence. >> edward, we'll leave it there. thank you. coming up, european bank shares are sitting in the green, but the euro stocks banks index is down 34% this year what does that mean for the uk's top digital challenger bank? we'll speak to the ceo of tandem coming up next

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>> banca carige shares pop as th italian lender's largest investor holds talks with the ecb. investors seek safety in the yen and gold as global growth worries persist. finally seeing some green on the board. we still have the 31st to contend with, but this is the picture for the european bourses this morning xetra dax is up 160 points this morning. 1.5% firmer, yesterday ended the session 2.5% weaker. yes, we recovered ground but not enough to compensate for yesterday's selloff really cac 40 is rebounding nicely, up

1.4% ftse mib, also seeing somewhat of a recovery. i should tell you that all of these indices for the big part are either in correction mode or in bear market territory the german index has had a heavy couple of months exports driven, trade concerns, global demand growth, auto sector weighing on the german index. for the year it's down 19% that is the picture this morning. finally seeing more positivity let's talk about sectors every sector in europe is trading nicely up at the top we have some chipmaker names. construction material also up almost 2%.

chinese equities saw a bit of a bounce overnight it's a more positive mood prevailing u.s. yesterday had another volatile session the dow ended up traveling 871 points the biggest intraday move in about seven years. today the open is a bit higher dow opening up about 26 points higher nasdaq about 20 points higher. still for december this is the worst month of december for stock markets since the great depression >> we are trading around some of the lows for the year. right back around 2016 levels with some red inck around those

names. we have been virtually falling from the starting position of 2018, just not picked up the euro stocks bank index is down 30% this year amid low interest rates and political and economic uncertainty what does that mean for the top digital bank ricky knox joins us, ceo of tandem there's been really no concern for startups around interest rates, the economy and political uncertainty. i can't imagine it would be different for you, you're growing a business these factors do count, don't they >> we are more relative than market there's a ton of room for us to grow it's not really such an issue for us at this point, but it will be overtime some of that impact from banks is impacting us.

>> you're still aiming for the target, the profitability target, do you need to get there quickly because conditions are tightening and the readiness for people to invest in whatever is growing? the psychology of the fear of missing out is disappearing a bit? it's more a case of raising capital at the right time. the type of investors coming into the sector now who have not traditionally been in more pati to profit. i was at an investor briefing with some competitors, we all have profit in our sights. we're not talking ages away. but it's important to bring in capital while the going is good. >> as we round off the end of 2018, one major development is

the introduction of open banking. i'm curious from your perspective how you think that rollout went. >> for us it's super exciting. we're the only digital challenger bank to incorporate open banking to what we do we allow you to see all of your other bank accounts in your tandem app alongside your tandem accounts in a broader level we have yet to see the major impact of open banking. there's two factors there. so far we only had the ability to look at your accounts and not the ability to pay money out of your accounts. because when that second piece comes in which should be september next year, things will start to change rapidly. >> do you get the sense people are still tied to traditional banking model and that's why open bank hag not taken off as much as some people had anticipated? or is it just a function of people not having the ability to process transactions and

payments yet >> i think it's about finding use cases. at tandem we talk about solving customers problems no one is interested in finance. finance is boring, apologies to you guys, apart from the professionals. therefore you have to present solutions with these things. with tandem we're presenting a solution with open banking coming back to traditional banks we believe it will take several years for that trust to shift from the old institutions to new institutions which is why we let you see your barclays account inside the tandem app. >> can you paint a picture for the audience about what the digital future looks like for fintech? >> our own belief is that as i said before, because customers and because it hasn't rocked your world, because customers

don't find it that exciting, we think there's not a "b" to "c" fintech future with thousands of these different things people don't have the time what we've been talking about for the last three years, is everything coming back together in a new set of banking providers. but not banking as we know it today. but banking where it solves the problems you got so we talk about our first service cash finder. finding cash you didn't know you had. a lot of people are tight at end of the month we help you figure out how you can make those end of months loser. >> big data? >> using big data and ai to let you know where you are and identify if you could save money on bills, identifying extra money to earn through extra jobs all those things wouldn't be seen by the banks as part of

their job. they don't see their job as making you better off. >> is that where you think you get your competitive edge? again, there's so many companies venturing into fintech many different companies call themselves challenger banks in that part of the space, specifically online mobile payments, an area you're involved in as well. how do y you differentiate a company like yours versus other online payment companies what is your competitive edge? >> with tandem, it's very important to note there are not that many banks around there's a lot of people who are passing themselves off as having a prepaid card or something along those lines, there are less actual banks. there are really three or four of note in the uk. there's one or two in the u.s. there's not that many players. that's a benefit ultimately differentiating yourself comes back to making an impact for customers

if you're not improving their lives, frankly they could and should forget you. >> what with data privacy? one issue throughout this year is companies that have had access to all sorts of information. sort of run afoul of the regulator. we're seeing new regulations in europe m when europe when it comes to fintech, one boss said to us we're in the business of information which is a different thought process for a bank and how they think. with that comes great responsibility and the ability for missteps do you think banks have a tricky path to navigate those data privacy issues >> i do. though ironically banks have not had that much of a problem with data loss. they make sure data is secure. i think that's been -- they may end up being the beneficiaries of that trust. to some extent that's been accidental rather than deliberate i definitely do think it's an issue that we all have to cope

with >> i'm niche versus scale there's been fresh challenges over time. when it comes to fintech, it feels like small companies have been able to be nimble std f is the future still aboutscale how thick and fast is the competition from large players at this point? >> there's an interesting feature which i call reverse economy to scale developing. it's harder to build software with a larger team rather than a small team often we can develop software much faster than a large bank. that's an exciting development which has led to some nimble players appearing out of nowhere. but let's be honest, when it comes to balance sheets and large businesses, i think this

will converge on a new set of global leaders however it's my personal view we have a five-year window where some of those players will emer emerge i think that will involve big tech and some new emerging banking players. the draw bridge is already coming up behind some of the smaller players there. it has been a generation of new retail banking players that hasn't been added to significantly in the last couple of years looking at the styling that came through, there really hasn't been a lot more since. >> finally, quick question on your customer base is the adoption of digital banking and using your fintech services mostly targeted at millennials, the younger generation who are more open to using different types of models versus the more traditional customer >> the curious thing has been the -- first, we're more millennial than gen-z.

money is even more boring when you're 22 years old. when you're 30, you get more serious about this stuff and you want to understand how it works. the services we offer that assist you with that in your life are more relevant for people average age, 34 for our customers. the interesting thing we've seen more recently is when we take some traditional banking products and when our sale -- we're selling services, which combine the app in a product when we talk about the product, we are attracting -- our credit cards have half percent cash back, we are getting the 45 to 55-year-old audience coming in heavily for those products slightly varies according to product. average being early 30s rather than early 20s >> thank you very much for stopping by. >> appreciate it thank you very much. >> ricky knox with us, ceo from tandem plenty of feedback around crazy equity markets, but you

can still get involved in the conversation, @streetsignscnbc and you can tweet us directly. as we head to break, here's a look at giuseppe conte holdin his end of the year news conference we'll have plenty more after this

welcome back uncertainty over the global economic outlook is heightening, that's according to one member of the bank of japan board minutes from the december meeting show concern about a potential chinese slowdown and continued fallout from the trade war. the minutes also revealed disagreement amongst members over how much they should allow yields to fall british defense secretary gavin williamson expressed concern over huawei's role in

the uk's 5g network. his comments come amid reports that president trump is considering an executive order to ban u.s. firms from using equipment made by huawei and zte due to national security concerns in an e-mail huawei said it welcomed dialogue with the uk as long as it is based on facts and on demonstrable evidence. 2018 has been the year of the trade war with tensions between china and the u.s. being ratcheted up by tweet and tariff alike. ylan mui looks in the crystal ball to see what 2019 could bring. trade turmoil rocked the markets in 2018, and you can bebe it will continue in the new year first china deadline drama

robert lighthizer leading the negotiations with beijing and the two sides are facing a march 1st deadline to reach a deal at stake, u.s. tariffs on 2$250 billion on chinese goods and retaliation from china deal or no deal, expect plenty of posturing and lots of testy tweets along the way second, expect a rocky road for the new u.s. mexico and canada trade deal the usmca will need approval by congress next year but so far democrats have been skeptical looking for stronger labor and environmental protections. finally, bilateral trade deals look for the trump administration moving forward on bilateral deals with other countries. trade talks with japan and european union may ramp up if they go well that could put the brake on the threat of new auto tariffs. the administration could lift duties on foreign steel and aluminum one thing is clear trump sees tariffs as a way to gain the upper hand in negotiations

sears could have less than 24 hours to survive. the company which filed for bankruptcy in october has set the 28th of december as the deadline for buyers to bid for its assets sears told a bankruptcy court it has interests there many different parties. sources tell cnbc it's the only party offering to buy the retailer as a whole. if lampert submits a bid, the board has until march 24th to accept the bid. the u.s. consumer confidence index fell from 126.4 in november to 128.1 in december, reporting the largest monthly decline in three years. democrats and republicans are far apart in u.s. government funding talks according to a spokesperson it comes as the senate adjourn

until the 31st of december with no sign of a break through before the new year. hallie jackson has more. >> reporter: not a creature has been stirring since saturday in the empty hallways of washington but in virginia -- >> there you go. >> reporter: -- free knitting lessons for furloughed government workers. >> it's out of your hands. until back in my hands, i'll put something else in my hands and go from there. >> reporter: in kentucky, a plate of barbecue on the house. >> we're feeding government employees until they go back to work however long it lasts, it lasts. >> reporter: in california, frustration for nicole lower whose husband is in the coast guard and won't get his regularly scheduled paycheck monday. >> what do we do after that if the pay doesn't come through i think that's what most families feel is the uncertainty of what do we do >> reporter: the white house today railed against democrats and reiterated the president wants money to beef up border security. >> it shouldn't be hard to get to where the president wants to be.

>> reporter: senators on both sides making their cases for a shutdown solution. >> it's going to hurt our economy. it makes no sense whatsoever. >> reporter: but making them from their holiday vacation locations, which says a lot about what is happening in washington, nothing. >> how long do you think the shutdown will last, mr. president? >> whatever it takes i mean, we're going to have a wall >> reporter: what's the way out of this stalemate? democrats could offer some money for a border wall, a political win for the president. the president could accept no money for a wall, a political win for democrats. or both sides could compromise on border security and each declare victory. >> a quick look at u.s. futures and how we're shaping up for the session after the comeback day yesterday. something worthy of a hollywood film the pullback rally, 871 points from the lows of the day we're seeing a bit more glean

mo green move on to the boards. so confidence is staying intact. intraday sessions have been extraordinary. we looked at futures before the start of yesterday, and what happened intraday was nothing that looked like things would happen during the start of the session. >> it's interesting. looking back a year ago no one saw this one coming. no one thought we would end the year with the s&p and dow down 7% nobody was talking about a trade war. >> i was talking about the trade war a year ago we had the good trump, the bad trump in the campaign. the first day in office we had a wild day for the stock market. investors were saying what would come first the bad trump stuff or the good

trump stuff? going into next year, it's hard to see how this gets solved. if you have trump still picking off companies, that will not allow the volatility to go away. that's the concerning part about 2019 >> as ever, when you think about markets, you have to think about what is priced in and how much negativity is priced in i thought what edward was saying is interesting yes, stocks dropped 7%, but in valuation terms we have dropped more there are bargains to be had >> are you talking about a short squeeze or longer term >> longer term people have been looking for -- >> so you could get the bounce back because you have beaten down levels on the stock markets, what have you got you still have more uncertainty around the growth story, the earnings will not be the 20%

handle this year, so is the valuation justified at a new normal level >> i thought another interesting stat that came out of this bear correction or almost bear market territory for s&p 5is on averag stocks go to drop another 8% looking at it from a technical perspective, the risk reward favors getting some long exposure given the re-rating and re-ev re-evaluati re-evaluation. >> the italian market, the ftse mib was interesting. we were around the lows in october. the market tried to move higher. this was a market battling rome and brussels we get past that and now you have fresh lows on the italian market that's not benefited from its own domestic good news

>> also very banking heavy, the italian index. banking stocks down 30% for the year >> the question is whether that picks up also the shenzhen market, volatile in that basket. that basket is down roughly about 35%. so still a bit to play for >> those are questions that inl ve investors will be grappling with in 2019. >> i'm karen tso "worldwide exchange" is coming up next.

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it's 5:00 a.m. on cnbc. break out the dramamine it could be another roller coaster ride on wall street we'll tell you how to best navigate these wild swings. oil on pace for its worst quarter in four years. you can make money on it in the new year no end in sight to the government shutdown, now in its seventh day. is it the sad end of the line for sears the major deadline that th retailer is facing today that could mean the end of the store. and a major marijuana deal to talk about, it's all happening on this friday, december 28th.