♪ welcome to "street signs." >> these are your headlines this monday morning. >> the rally fades in europe equities fail to match the gains made stateside and across asia as trade talks between washington and beijing resume. b.t. shares move higher on a report the tell comes company brought in advisers to help ward off a potential takeover from deutsche telecom. sharesslump following a report in the french media that its rail deal with semens is unlikely to get new approval.

and president trump offers a slight compromise to end the u.s. government shutdown but threatens to declare a national emergency to secure military funding for his border wall. ♪ well, after a very strong close to the week on friday which saw global equities rally, today european stocks are flatlining the stock 600 is hovers around flat today, down about six basis points right now just to recap what we heard on friday, nonfarm payrolls report incredibly strong, 312,000 jobs added. federal reserve chair jerome powell reassured language around the fed, being patient and flexible around monetary policy as we look to 2019 on top that we had the pwoc cut.

today this drove widespread rally across, u.s., european and then overnight asian equities, but today we're seeing a little more caution focus is firmly turning to u.s./china trade talks that kick off today. i want to take you through european markets and see how the regions are fairing this morning a little bit of a mixed picture. the best performer of the bunch the italian index up about .45%. but across the board, you can see no massive moves investors, buoys by the comments of the china foreign ministry around their willing tons resolve the trade dispute with the u.s., i a sssuming it is on equal footing. i want to take you through the sectors and see how the different sectors are fairing this morning at the top of the leader board, basic resource is up more than 1%. that's the most trade sensitive

china exposed. seeing a big rally there on the back of trade talks will put some rez tlugs at the bottom of the leader board, we have health care, household goods, those more defensive sectors are underperforming, but still early days, focus firmly on those u.s./china trade talks >> just to bring you the latest sales figures for uk's cars looking now from smt that the total car sales have fallen 6.8% to 2.37 million vehicles and diesel car sales in the uk are down 29.6%, significant fall if you take a listen to some of the comments from is smt, the chief saying the drop was due to leading supply bottlenecks, diesel owners holding on to their cars for longer. their one of the business calling for to back the agreement to avoid a no deal

cable trading relatively flat. something to watch over the course of today. now asian stocks closed higher as an american delegation arrived in beijing to restart trade talks for the first time u.s. president trump said he's optimistic about reaching an agreement. >> the china talks are going very well. i spoke to president xi recently i really believe they want to make a deal. the tariffs have absolutely hurt china very badly but our country is taking in a lot of money through tariffs a lot of money, a lot of tariffs, steel dumping tariffs and others, but i think china wants to get it resolved their economy is not doing well. they're down close to 38%. that's a lot. >> china was of course the worst performing stock market of 2018. that may have been the comment the u.s. president was referring to as part of his 38%.

meanwhile they assist the u.s. and china want to work together on trade and agreed to hold constructive talks foreign ministry official says beijing will try to resolve the trade frictions in good faith. now, we're joined by head of economic research at barclays to help us understand what we can expect from this week's talks. what are you looking for this week and can we expect any major breakthroughs? >> i think they have a mutual interest to find some kind of not a solution but some useful market that would be positive. they have two days that the u.s. deputy trade representatives down there yes, some experts on emergency on manufacturing, on agriculture with them. i think that's positive. i think that points to trying to find solutions on china importing more goods, reducing some of those tariffs, soy beans would be a big issue, i'm sure the longer term issues with regard to technology, you know, all the issues about national

security, the g5 issues, et cetera, i think that will take longer and that may not be resolved at all if you want because we strategically think this is a clash of giants. it looks to continue but for the short-term for the market on specific trade issues, i think there's a good chance that we get something over the next few days. >> and on that point, what the markets could be looking for, will the markets be satisfied if we don't get any signal around resolving the long-term, bigger strategic issue of tech. >> the market probably by now realizes this is a longer term issue, similar to some people compare to the cold war. i think if the market gets reassured that the risk of those tariffs going from 10% to 25% in march when this 90 day ultimatum expires the markets are assured we get over that the market is positive. >> is this trade conflict in your view the defining economic

issue of this year potentially, and secondly, looking at china and its ability to control the situation, is this the major uncertainty for officials in beijing? all the other things they can try to impact, influence s trade uncertainty the real challenge for them in terms of policy? >> i think it's a challenge they cannot control, as you say, therefore it's a new one if you compare to the situation in 15, 16, very similar situation. the economy was slowing. we had consecutive months of pmis being below 50, but they know what to do with this. they announced 125 over the weeks will cut taxes further, issue more bonds, loosen fiscal, do more cuts and reserve requirements, inject into the system, revive lending but what they cannot control is exactly what you say, it's the trade issue. that i think came unexpected to them they misjudged trump in this and this is now an additional

burden >> in terms of the balance that policymakers in beijing have to strike between economic and political requirements, would you say this is the most challenging period they faced in a long time? >> yeah. i think that's fair to say i think they now know how to revive the economy on the credit side but they're doing this as much high leverage and always say we still have to continue looking into the deleveraging issue, but dealing with trump and the u.s. and those trade issues that is a challenge they do not fully control and it's new. and as i said, it comes at a moment when the economy is slowing and that makes it very different now than 15, 16. >> i want to take you back to friday, the triple r cut from the pboc, now this was widely expected given the rhetoric we heard from them in the leadup to this decision, as we look to 2019, do you expect them to prioritize the domestic situation or will they be extremely cognizant of what's happening externally and that will be the bigger driver of

their policymaking >> what they control is domestically if you look at the pmis, it's true that a lot was related to trade, but you know a lot is also related just to employment and has a lot to do with the negative credit we're seeing the extended credit will get us the boost in '16, '17 that helped the global economy. now they have been contracting for a while and the focus, i think, has to be to a larger symptom domestic, investing, helping banks to lend again and this will be a significant focus and we'll see in the next few days. >> we focussed on the china side of this equation, but what's this protectionist policy doing to the u.s. economy? >> that's interesting part in a way there seems to be bit of asymmetry where the u.s. seems more protected, if you want you know, we saw last week there is something going on globally

manufacturing the week, employment figures are weak, people having rising incomes manufacturing is only 10, 12% or so of the economy. so, for now it looks as if the u.s. can grow domestically and is less affected by trade. save of course some isolated areas. as i mentioned soy beans >> christian, thank you so much for coming here and joining us christian keller, barclays speaking of u.s. manufacturing, tesla will break ground on its first factory outside u.s. today they announced plans for new shanghai facility to produce model 3 and y facilities the tesla ceo also confirmed that the factory will only produce cars for the chinese market, he said, quote, affordable cars must be made on the same continent as customers. one of elon musks favorite

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♪ welcome back to the program. b.t. shares are trading higher after reports that the brit iish telecom is working with british takeover advisers to sure up from a possible bid from deutsche deutsche telecom can increase its stake in b.t. only once an agreem with its british rival expires later this month neither company was available to comment about the report we are joined around the desk by karen choi or colleague to help flush out this story good morning again, karen. help us understand more about this story. >> this is the most exciting story for 2019 so far if there's

actually truth behind it so far what do we have, we have adding fuel to the fire a report in one of the newspapers on the weekend suggesting that powerful advisers were brought on by bt group and these two people in particular had previous golden sacks advisers or bankers for the big u.s. bank. bt has not confirmed whether they're on board to provide some form of defense. basically under a current deal deutsche telecom cannot increase its ownership of bt until the 29th of january beyond a 15% level. don't forget it picked up shares in bt when there was the purchase of ee at the mobile carrier by bt, so to fund that deal bt issued shares to deutsche telecom so under the standstill agreement deutsche cannot increase just because it's allowed to from the end of january l it do so the reasons to do so, the stock prices trading around a five-year low. you also have weakness that

provides a little bit of an easier pathway if you want to make a purchase right now. couple reasons why not to, there are other players in the room. there was a really big deal that was allowed to proceed back in november european commission effectively allowed the merger of deutsche telecom's dutch operations with telly 2 seen as a real signal to the market that perhaps the european commissioner was now allowing mergers in the telecom space where in the past she was standing in the way. perhaps it's game on everywhere. that doesn't just mean we're looking at bt now in 2019 and in the past you may recall the deutsche telecom ceo said bt wouldn't be first on my list of companies to buy so i think it raises questions more around what else could be in play, not just bt at this point. >> and how would it stack up a merger of these two relative to some of the other combinations that you just eluded to?

>> let's just talk about market cap for one. deutsche player has 71 billion euros its market cap versus 23 billion pounds for bt. 37 for orange. i think one other point, too whether there would be willingness in the board room. new ceo taking over in january this month from patterson. phillip janson is a deal maker he's presided over the ipo of world pay and also the merger of that business with the u.s. entity so he's open to deals and certainly capable of it. you look at the chairman at bt group, he's a man that's been able to fend off defenses. he stopped the takeover over rio at the time when he was in a tough position they want a deal to be done, they will certainly allow a deal to take place. they don't, they have the ammunition to fend off a deal.

>> thank you so much for adding color to this very important conversation, very important couple of stocks to keep an eye on now, samsung electronics is expected to announce its first drop in quarterly profit in two years when it published its fourth quarter guidance tomorrow 12% year on year falling operating profit thanks to depressed demand from china. apple issued a rare profit warning it blamed on slowing iphone sales samsung's revenue is forecast to be down 5% against the same period a year earlier driven by lower exports of memory chips. now, embattled chinese tech giant huawei launched a fresh chip in a bid to expand its cloud offering huawei director william chew told cnbc in an exclusive interview that quality products

will help the firm develop new business. >> because i believe the arm server has its unique advantages in certain scenarios, only by achieving good quality products can we win over customers. we'll obey laws and restrictions in local markets and eventually make products that are recognized and welcomed by customers. >> the 2019 consumer electronics show kicks off in las vegas this week analysts expect a series of announcements from major u.s. technology firms we'll be live from las vegas later today for a first on cnbc interview ibm ceo ginni rometty. u.s. markets rallied strongly on friday the dow, s&p and nasdaq posted first two-week win streaks in two months tech led in early trading and u.s. and chinese officials as we already mentioned restart their talks today. we take a quick look at the u.s.

futures this morning ahead of the open on that side of the atlantic the dow jones being called slightly higher up 20 points, s&p 500 looking to open very, very, very slightly higher the nasdaq looking to have a soft start to this week's trade. shifting focus to the commodities space, goldman put its average 2019 forecast at $62.5 per barrel for brent and 55 soft gen around $2 higher than goldman's. now we're joined by one class of commodities could see a big bounce are base commodities according to dutch bank ing. now, we are joined by warren patterson commodity strategist at ing to help us understand some of the forecasts going into the new year firstly, i want to start with

basic resources. we are seeing the equities in basic resources outperform today on the back of optimism around u.s./china trade talks is this move justified if we do see a resolution, what kind of upside can we expect in 2019 in the resources space? >> yeah. i mean, if we look at last week, obviously what was very positive as we ended the week was the fact that we saw the chinese central bank reducing the reserve requirement ratio by 1 percentage point that really did see base metals rallying quite significantly we've seen the market up 3.5% since settlement on thursday i think what we really need to see now from china is start seeing pickup in investment and infrastructure if we look over the last several months, the chinese government have promised that they are going to invest more in

infrastructure in order to try to help offset the impact from the trade war. however, that has not been seen as of yet. and i think once we start seeing confirmation of that, that does help to improve sentiment in the market and that should push prices somewhat higher from where we are at the moment. >> i want to pick up on that last point around china's commitment to further investment in infrastructure. we have seen china commit to significant spending when it comes to infrastructure over the last couple of days, but what's the scale of commitment that we would need to see for the market to really get excited about and comfortable about buying these commodities in a sustained manner >> well again, as we're seeing now is the government, the central banks cutting requirement ratios for banks so, freeing up liquidity, wanting to see banks lending more to the private sector

i think just that in itself has shown you how positive it has been for sentiment in the short-term we need to see that translate into actual pickup in investment i think the other side of the equation is looking at how trade talks progress in china over the next two days. while we don't really expect a deal to come out of these last -- out of these -- a deal to come out of the negotiations at the moment, what we do believe will happen is we either have to see some sort of extension. if you remember back in the 1st of december in argentina, china and the u.s. agreed to hold off from imposing further tariffs until the first of march and so we'll need to see some sort of extension beyond that to be positive for sentiment. but again if we turn away from the sentiment side of things and look at the fundamentals for

base metals, they're all fairly constructive for copper, for example, we do see a deficit environment over 2019. and we do see persistent deficits in the coming years as well so, as a result of that, what do we need? well, we believe we need to see higher prices. we're forecasting that by the end of 2019 we could see copper prices just below $7,000 a ton and that's sort of level is where you're attracting investment in mining assets from miners. >> warren, you talk about the fundamentals as a reason that should drive price, but if you look at something like copper over the course of the last 12 months a lot of analysts arguing that the u.s./china trade left them as one of the victims in terms of price is copper when we look at the impact of both the trade disputes across the world as well as some of these gio politically driven sanctions put in place on various commodities, that was a big, big story last year

i'm wondering, do you think it will be any different this year? >> well, if we look at the sanctions side of things, so, what you're eluding to i imagine is the aluminum markets, we have clarity there. the u.s. are moving away from implementing those sanctions, so there's a little more certainty around the aluminum market to a certain degree from a sanction point of view. but, again, over the course of 2019, i do believe that trade talks, trade wars is going to don't be a theme for much of the year so that uncertainty is going to continue to linger but i think we are getting to a stage now where both sides are talking more we see clear signs from china with manufacturing activity that the economy is hurting even if we look at the u.s. ism numbers last week were fairly negative so, i think as we progress more

and more moving more and more towards a deal i don't think it's going to be any time soon. >> finally on gold, warren, gold was pretty lackluster through much of 2018 but in the last weeks we have seen it start to perform very strong correlation between the gold price and what the fed is doing what's your outlook for gold for 2019 >> again, yeah, gold has been a star performer so far this year. volatility in equity markets have been supportive and as you say sort ofthat changing stanc from the u.s. fed. our expectations are that given the continued uncertainty in the global economy we are expecting prices to edge up towards $1,300 by the midyear. >> excellent thank you so much for joining us warren patterson, commodities strategist at ing. speaking about gold there, coming up, another one bites the dust, golden globes favorite "a

star is born" misses out as the queen pick bohemian rhapsody takes the top award.

fades in europe. exwities fail as trade talks between washington and beijing resume. bt shares move higher on a report a the telecoms have brought in advisers to ward off a potential takeover from germany's deutsche telecom. shares slump following a report in the french media that its rail deal is unlikely to win eu approval with the competition watchdog due to rule by february 18th. president trump offers a slight compromise to end the u.s. government shutdown, but threatens to declare a national emergency to secure military funding for his border wall.

♪ european markets have been open now for about one and a half hours and initial optimism and initial rally on the back of u.s./china trade talks focus has started to fade. we are seeing european stocks dip into negative territory. the footsy over in italy hanging on to some of the early gains up about 25 basis points but still pairing back some earlier gains. across the rest of europe, we are seeing marginal losses the cac and ftse 100 down 30 basis points as i said the key focal point for investors today is what's going on between beijing and washington so investors seeming to be approaching those talks with a bit of caution but don't forget, this is coming off of massive gains on friday stock 600 gained nearly 3%, all

three major indexes in the u.s. gained more than 3% so quite strong way to end the week but this morning we're seeing a little bit more hesitation from investors. let's look at 4 x markets and see how currencies are fairing today. a bit of a muted picture for sterling, just a touch higher versus the dollar. that level about 127, of course, brexit starting to come back into the fold. plenty of headlines over the weekend as we head toward that mid january parliament vote. over in the euro, we're seeing some strengthening versus the dollar euro up about 40 basis points to 1.14 versus the dollar now, one of the big stories over the weekend, the yellow vest protests, more developments there. french president emmanuel macro has condemned the latest round in a tweet, macron blasted the, quote, extreme violence of some dmen straiters adding that, quote, justice will be done. across the english channel theresa may warned that britain

could be go into uncharted territory if mps reject her brexit deal. the parliamentary vote would go ahead early next week after it was delayed in december with those debates set to resume this week, may highlighted elements of the deal that she says could help bring lawmakers on side. >> what will be setting out over the next few days is a sort of assurances, measures in three areas the first is measures that will be specific for northern ireland. the second is a greater role for parliament as we take these negotiations into the next stage for our future relationship and the third, we're still working on this, is further assurances from the european union to address the issues that have been raised. >> brazil's stock market has surged after newly elected president bolsonaro promised reforms. he has yet to provide clarity on how he intends to tackle his reform program that guest is the associate director of latin american

country at risk at ihs market. thanks so much for being with us this morning. >> good morning. >> are there indications that bolsonaro can fulfill his campaign promises when it comes to economic reforms, especially given the constitution of brazil and the makeup of the congress there? >> well, i think the figure we need to look very closely is the super economy minister quite significant. bolsonaro has spoken ten minutes. the next day on the inauguration the minister he spoke 50 minutes. and he gave more detail, more specifics about how they are attempting to do this. one of the knows is how much negotiation they're willing to do with different political parties in congress because on the 1st of february, they have to elect the head of the senate, the head of the lower house. on the lower house, it appears that he is now getting together

a good number of political parties. if they manage to select and close ahead of the lower house, i think the market will react quite positively to that then the senate will be more critical situation for bolsonaro. >> for those that aren't perhaps watching this as closely as you, the government only holds around 10% of those seats in the brazilian congress, so this is a huge uphill challenge to build those kinds of alliances whereby they can communicate and work together with that congress presumably >> indeed. but then you know how political is done in brazil. 10% is the members of the bolsonaro party. there's another 20% of the more conservative, church, the agra business, so we say he can count basically on 30% and the other 25, 60%, 25%

additional there the negotiations need to happen. to that is the current person of the lower house who has all the knowledge and apparently there is a good rapport between maya if that's true, then he has this code to build this coalition will we know that on the 1st of january when the congress gets together on both and select the head of the lower house. >> now, one of the initiatives that the brazilian government is focussing on is privatizations but this is a program that could take years how committed is bolsonaro to this initiative relative to some of the other ones he's pushing to implement and is this the right move for brazil >> well, i think privatization is the right move because many of these companies are basically costing money to the state i think there is some question on the so-called private

concession, highways, airport, that is going to happen this year i think that will be useful for the primary fiscal deficit this year they're talking about possibly $5 billion coming in, that's quite visible. the question for the market is the pension reform which will be actually more mid to long-term solution and is there where the key things, the markets are going to look up. >> thank you very much for help fleshing that out. certainly a country to watch as we move through 2019 now, freddy mercury bohemian rhapsody was the surprise winner at this year's golden globes the movie was awarded best film drama and his its star won the trophy for best drama actor. green book also scooped three prizes but golden globes favorite "a star is born" took home just one

award. we are joined by nbc's jennifer boricland live from los angeles. thank you so much for joining us very exciting night where you are. talk us through some of the highlights from the awards ceremony >> it was a big night of surprises, you're exactly right about that the only time lady gaga was on stage for "a star is born" was the best original song on which she collaborated so she came on stage and a lot of other people were talking because she was so excited to win. and i think the assumption was that she would be back on stage later picking up an acting trophy that did not happen. instead the big surprise and possibly the biggest surprise of the night is that glen close won for best actor for "the wife." that was -- she was floored when she got up to accept the award she had tears. that was very unexpected

also as you mentioned bohemian rhapsody won for the best drama, best movie and also best actor for rami malek so those were the two final awards of the evening, but for "a star is born" a night that started with five nominations to end with one single one, best director going to roma as well as best picture. so, yeah, very different kind of night for the golden globes. and there is no break because tomorrow oscar balloting begins. and they have about eight days, 8,000 or so members of the academy to make their picks for who will take home an academy award. so awards season just getting going. if they didn't get any joy at the golden globes, there's still another shot for an oscar. back to you two. >> thank you so much, jennifer certainly no slowing down for you over there that is jennifer bjorkland, nbc

news. back to a story we've been covering all morning alstom shares trading lower that the european union is likely to reject its deal with siemens they warned it would be a mistake for brussels to block the proposed merger. it will rule on the deal next month. if you have any points you want to raise with us about the golden globes, about european competition or indeed about brazilian politics get involved with on twitter. coming up on the show, it was a rough night for wayne rooney find out why the mls star is in hot water after this break hey, darryl. would you choose the network rated #1 in the nation by the experts, or the one awarded by the people? uh... correct! you don't have to choose, 'cause, uh... oh! (vo) switch to the network awarded by rootmetrics and j.d. power. buy the latest galaxy phones, get galaxy s9 free.

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the french government has pressed renault to provide detail of executive compensation that was paid out through a dutch holding company jointly held with japan's nissan the french state is renault's biggest holder the car maker has come under

intense scrutiny since the arrest of carlos ghosn carlos ghosn is expected to make his first appearance in several courts at a court in japan he and three other defendants face fraud-related charge tas stem from a 2008 deal with investors worth 12 billion pounds that helped barclays weather the financial crisis it marks the first time a major bank faced trial for actions taken during that period ♪ a spokesman for wayne rooney, the former captain of the englishmen's soccer team has blamed his december arrest at a washington, d.c. airport on a combination of alcohol and prescription sleeping medication adam reed joins us around the desk with more adam, it seems like there are a lot of stories around big names falling from grace recently. what's the deal?

what's going on? >> wayne rooney has never been far away from the media in this country over in the uk, but he's been able to keep a lower profile in the u.s but on this occasion something that happened a couple of weeks ago in the states has now emerged to the press over here and it was wayne rooney being arrested as he arrived back in washington after being on what was being called a one-day promotional business trip to saudi arabia he was over to see the first race of the formula e season over there controversial in itself given the tensions between the u.s. and saudi arabia after the khashoggi incident and certain other rising tensions within the region wayne rooney arrested and accused of a minor charge, but it was public intoxication, which he was arrested for. reports did say he tried to trigger a door alarm but didn't

make it past airport security and was seen to be disoriented in public. he paid a $25 fine, $91 in cost and released the same day but his people have come out and made the claims that it was because he mixed sleeping tablets because it's a long way from saudi arabia to the east coast along with two or three cocktails as well. >> the cocktails certainly weren't consumed in saudi arabia so they must have been on the plane. how does this stack up as the worst behavior of rooney over the years? this is a man who, as you eluded to, never been far from the the headlines in british tabloids, is this the latest of things he's done allegedly wrong. >> lots of things that wayne rooney have done wrong, he was always the scapegoat because he was seen as the working class guy, had everything. he of course manchester united record goal scorer, england's

record goal scorer, incidents in nightclubs, often caught smoking when he shouldn't have been for a professional athlete, maybe that's not necessarily the behavior that he should be as fitting of a professional athlete at the top of his game he's -- he was banned for two years for driving offenses just last year and extramarital allegations have never been far from wayne rooney as well. whether or not he deserves all of the criticism that comes his way as a role model, ask ever to be a role model, no, but flaunting those sorts of things in public and having it both ways, bearing on a $12 million contract with d.c. united he's a very valuable commodity, maybe he should take his responsibilities a little already seriously even though the mls season isn't on at the moment >> historically when you look at this from a business perspective, these clubs spend huge amounts of money on individuals like this, what does it take for these contracts to get breached by this kind of

behavior >> quite a lot, it seems in terms of a footballer being terminated is not a lot of precedent outside of huge maybe doping offenses of which are rare at the top level. there are rare occasions as well where maybe gambling offenses have come into it as well. in terms of football has a habit of treating these as misdemeanors and slap on the wrist and fines as well. so, fines are normally what happens. d.c. united said this will happen internally. as it stands at the moment, wayne rooney is too valuable to d.c. united bearing in mind the contract they have him on to be a serious breach and any further toox be taken. >> adam, thank you. the u.s. added 312,000 workers in december but beat expectations and was the highest number since february. the unemployment rate rose from 3.7 to 3.9%.

while average hourly earnings increased 0.4% fed chairman jerome powell sparked a market rally when he pledged the u.s. central bank would, quote, be patient in seeing how the economy performs before making any further rate decisions this year. he was speaking on a panel on friday alongside janet yellen and ben bernanke >> as always, there is no preset path for policy. and particularly with the muted inflation readings that we have seen coming in, we will be patient as we watch to see how the economy evolves. but we're always prepared to shift the stance of policy and shift it significantly if necessary in order to promote our statutory goals of maximum employment and stable prices. >> meanwhile the president of the cleveland federal reserve told cnbc that the fomc would put the brakes on further rate

hikes if inflation doesn't rise this year. >> we're always looking forward, right? so when we put down our forecast, we have to predict where is the economy going and what's the appropriate policy to achieve those outcomes so you don't set policy and then say, okay, what's the economy doing? it's all sort of part of the mix. you're right, right, if we don't have inflation -- you're exactly right. if we didn't foresee inflation was moving up, we could be stopping here. white house officials have been meeting with congressional staffers in a bid to end the u.s. government shutdown as it enters its third week. meanwhile, president donald trump has made a new offer to senate democrats that have refused to fund his proposal for a wall on the border with mexico nbc's jennifer johnson has the latest from washington >> reporter: president trump now trying a new negotiation tactic to get his border wall built a steel fence, not a concrete wall, built by american workers, more pressure on democrats

>> it will be less on strusive, stronger and we're able to use our great companies to make it. >> reporter: democrats say they'll take a look. >> it is an offer he made and it will be discussed. >> reporter: the president again promised he'll get his wall with or without congress's approval. >> i may declare a national emergency dependent on what's going to happen over the next few days. >> reporter: many doubt that will work. >> the president would be wide open to a court challenge saying, where's the emergency? you have to establish that in order to do this but beyond that, this would be a terrible use of department of defense dollars. >> reporter: again this weekend, a white house team led by vice president mike pence met with senior congressional staffers to try to settle the partial government shutdown. fingers still pointing. >> the first line that chief negotiator said we're not here to agree to anything, which is a stunning way to start a negotiation. >> this is the first president in history who shut down his own government unfortunately there will be people who suffer. >> reporter: already suffering 800,000 federal workers and now

a new worry for americans, whether their irs tax refunds will be delayed. house speaker nancy pelosi says this week lawmakers will start passing funding measures beginning with the irs to try to keep those tax refunds on schedule jennifer johnson, nbc news, washington we're joined by christopher smart head of barings joins us on the line from boston. thanks for getting up so early this morning, mr. smart. >> good morning. >> the fed chair faced oval office criticism over the last few months do you think that jerome powell has been given a fair shake by market participants when it comes to his communication strategy >> well, there's fair and there's fair in some sense we do expect a lot of fed chair to solve all of the problems that are confronting the market if you look at the macro economic data coming out of the u.s. particularly retail sales at christmas the jobs number last week, it's very hard to argue that there are economic

textbooks that would lead you to believe that the central banks should be supportive of the economy at this stage. i also think that, you know, he and his colleagues really only have a couple blunt instruments at their disposal. and the jitters in the market are related, in my mind to a lot of other things rather than to one or two press conferences from chairman powell >> do you think that the market volatility is a function in large part of investors forgetting what it's like to be in a market where central banks don't intervene the way they have in the years post the financial crisis >> well, i say this with great respect as an investor myself but investors have very short memories i think you're exactly right i think we tend to get caught up in the momentum of the market or the recent past and expect it to continue the way it did.

i think there are a lot of things going on in the economy right now. we are approaching an ends to the cycle. there are a lot of different political cross currents we're unwinding an unprecedented amount of monetary support in the economy. so i think it is investors are trying to get their barings. they're trying to reassess how risk and return match up in this changing environment that's hard and that leads to a lot of volatility that you've had right now. you can be a genius on one day and look pretty foolish the next given the ups and downs we've seen >> and on the fed's balance sheet, their comments federal reserve chair jerome powell comments around being an auto pilot mode was really jumped on by investors do you think they should be slowing the pace of runoff on their balance sheet? >> well again, the data is

coming through pretty strong in the u.s. for the most part, particularly on the consumer side so, and very little of that has changed from two months ago when the markets were reaching all time records i think what -- i think it's always prudent for the fed and fed officials to talk about how they will respond if the data changes, they will change their approach having said that, i think running off the balance sheet, as i say, they have very few instruments and they're very blunt instruments. the balance sheet is an even more blunt instrument than the setting interest rates in the open market interventions. and i think the market may not necessarily welcome a fed that is -- has -- where there is more unpredictability in how quickly

they will be selling off their balance sheet, what maturities, i think that could lead to disruptions that investors, you know, that sound good right now and may not actually play out as what they had expected. >> really appreciate you sharing your thoughts with us. christopher smart, head of macro economic and geopolitical research at barings. let's look at u.s. future. we're looking at a fairly muted start in the week in the u.s s&p and dow and nasdaq fairly little change coming off of very strong gains on friday that's it for today's show >> we're here in london but world exchange is coming up right now on the other side of the atlantic - in a crossfit gym, we're really engaged with

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♪ it's 5:00 a.m. at cnbc, here is your top five at 5 happening right now. high level trade talks getting urn way between america and china. will the markets react wall street closely watching these talks. investors gearing up for a very busy week ahead this coming off friday's monster rally still no signs of progress out of d.c the government shutdown now in its third week wow. tesla breaking ground on a new factory in shanghai. we're going to take you there live and it was a golden night for netflix and amazon at the golden globes. will it help their investors we have all the big highlights coming your way on this monday, january 7th, as "worldwide