♪ welcome to "street signs." these are your headlines >> european markets falter on chinese growth concerns after gdp comes in at 6.6%, slowest official pace in 28 years amid the on going trade war with the u.s. economic error and a political mistake, sharp words from the french finance minister the eu will stomp the merger.

air france tops upgrade who rate the stock out the form. but at the other end of the scale, germany's henkel is the biggest loser after the consumer goods company warns 2019 eps will fall as it invests in new brands and digitalization. ♪ european markets have now been open for about one hour's time it's shaping up to be a fairly negative start to the week the stock 600 is down about 34 basis points remember, this comes after a very strong finish to last week, both here in europe and state side last week was dominated by encouragie iningals froe ining m corporates as well as u.s./china

trade. overnight, we had china's gdp print come out in line with expectations but did confirm that it's growing at the slowest pace since 1990. brexit sharply in focus here in the uk and that uncertainty is keeping investors cautious here this morning a look at the european markets and see how the different regions are shaping up in early trade. the ftse 100 is up about 16 basis points we have seen weakness in sterling this morning. last week sterling rallied sharply midweek but then gave back those gains and is now holding steady this morning. now the ftse 100 is up just a touch. looking across europe, beyond the uk, we are seeing the steepest losses in italy, the fitsy mib is down 80 basis points corporate stories in focus there. let's look at the sectors, as i mentioned, there are a couple, not just a couple, there are a number of corporate stories in focus this morning

it's not just about a sector tilt here. it is about single stocks. we look across the sectors there's no real dominant trend in terms of cyclicals versus defensive. down 1.2%. telecom italia is one of the key underperformers this morning autos, retail banks underperforms. at the top of the leaderboard, the only sector in positive territory at the moment, travel and lee sure up 22 basis points. i want to get into the basic resources sector, the most china exposed, most cyclical sector of the bunch and china's economic growth hit its weakest point in 28 years that's what we learned overnight. this fresh data shows that the world's second largest economy continues to struggle with weakening investment and consumer confidence amid u.s. trade tensions and taking a look at the basic resources sector this morning, we're seeing some pretty steep

losses down 1 .8% and otherwise it's holding up okay. those economic numbers came in line with forecast no major surprise there. more confirmation of what the market was expecting i want to also take you to oil stocks the oil price was sharply in focus last week. very strong rally last week in the oil price. now this morning take a look we are seeing a mixed picture for the oil major. despite the economic slow-down, crude has hit its highest level so far this year after data showed china's refinery processing was still strong. mixed picture for the oil majors here in europe >> thank you for that. and let's just get out to -- as live report that eunice filed in beijing to break down the numbers. >> they attempted to put a positive spin on the numbers saying that china's growth is

still stronger than europe's u.s. or japan's and that this year would see reasonable growth however, most economicists expect the economy to slide further with measures kicking in by the second quarter at the earliest and more likely the second half of the year. 2018 gdp was 6.6% and growth in the fourth quarter indicated weakening momentum coming in at 6.4% mixed data 5.9%. property is a big driver for the economy and indicated for future construction activity. december factory output numbers and retail sales held up well, 5.7% and 8.2% but down compared to earlier in the year one important data point for beijing policymakers, unemployment the jobless rate rose to 4.9% for december from 4.8% in november part of that is because of

weakness in the export sector. caused some companies to delay investments and hiring statistics bureau said beijing would continue to roll out new measures to help stabilize economy as authorities battle what the bureau described external environment that is complicated and difficult. >> well, joining us now is the chief china economists and analyst from jp morgan data bank i want to start with the numbers that came out overnight. yes the overall number came in line with expectations and we now know for certain that the drags on growth do come from the export sector. we had weak export data just a couple weeks ago, weak auto sales as well but then there were encouraging signs on retail sales held up okay what is your interpretation overall when drilling down into the details? >> drilling down into the

details i would say that most of the growth slowdown can be attributed not to the trade war. basically we have seen the infrastructure growth rate has been very weak looking at nominal retail sales seems okay real is lowest levels in the last 14 years. >> so when you say that, it's very interesting that you say that because the perception and most people who watch this show from the outside are watching the chinese data and saying, look, these trade tariffs are clearly beginning to bite. there's clearly a slowing momentum in the economy. it's not externally driven it's internally driven. how long do you think it will take before these stimulus measures announced by the government, be it on the monetary policy side, double or triple r cuts, infrastructure spending, how long do you think it's going to take for those measures to actually start having a tangible impact on the economy. >> to show up on the data

another three to six months. so far, first month of this year china only started to move on easy measures. >> anastasia, coming into the year most people were extremely negative on chinese growth they had to come out and say we do have more tools in our tool box. we will be willing to apply more stimulus do you think that this is a year where we could actually see another reflationary impulse come out of china? >> i think so. that's actually exactly what i would want to see of a standpoint where i would to invest for us, china despite the slow down i agree may play out over the next couple months, that's a great contrarian opportunity we want to invest with the view of what's to come ahead. what's going to happen with pmi sub 50 and more economic data, the chinese government will have

the need to press on with the stimulus as you mentioned, that's going to start to work over the next call it three to six months. so that's the view that we're taking there and also when i look at china, one of the things that stands out to us from a market perspective f you look at china volatility relative to the global implied volatility that ratio is quite low. >> currencies or equities there? >> i'm looking at the equity implied volatility on china. it's relatively cheap actually to position, for example, on the options markets for future upside in china. so that's the attractive upside up there valuations are low, stimulus i think is on its way and there is a great opportunity for the market perspective makes it for us a great compelling contrarian opportunity. >> stimulus on its way the stimulus we're looking at is different from the stimulus we've seen in the past from china. >> sure. >> targeting measures, tax cuts tend to have a lower fiscal

multiplier when compared to fiscal investment. is it really justified to be this bullish about what stimulus can actually do? >> i think you have to think of it in terms of certain levels. we've seen the initial levels of stimulus rolled out, but it hasn't been by any stretch of the means large scale stimulus i think it's starting to work in the infrastructure fia numbers like we saw. so that number as of last night was up 7.7%. so some of this is already working. we have to ratchet up to the next level and probably have corporate cuts, we'll have incentives for the consumers but as the property investment continues to slow down and as our base case, that's when i think it will be a little bit of back to the old play book and relaxing some of the property restrictions and also easing monetary supply to the economy. >> let's talk about the elephant in the room and that is the trade balance between the u.s. and china. the reports have been denied obviously by treasury officials

that the u.s. were considering uninstating or removing the tariffs that were imposed on chinese goods towards the end of last year. obviously markets reacted well to that, even though the story is being refuted then there was another story that came out of the weekend suggesting that china would show an inclination to buy more u.s. products how can they afford to do that at a time when the current account deficit is very close to turning negative >> i think the current moving to deficit is almost inevitable regardless of the outcome of the trade negotiation because trade negotiation there's a deal china will buy more from u.s., if there's no deal, escalation of trade war, china will buy from non-u.s. countries. >> doesn't this change the whole economic world order the whole world is used to an environment where china guzzle goods, guzzle commodities, now it's inevitable they're turning

towards the current account deficit, what does that mean for the rest of the world and also the supply chains that are contingent on chinese demand >> one of the very important implication will be china will argue they are running fiscal deficit and compared to other fiscal stimulus easing cycles china will more likely to go forward for the devaluation to prevent slip into a large deficit. >> interesting thank you very much for joining us on "street signs. the chief china economist from t.s. lombard anastasia, you stay with us from jp morgan private bank. now, u.s. president donald trump has hinted at progress toward an agreement with china on trade but denied reports his administration was planning to remove tariffs on chinese imports. his comments come ahead of chinese visit to washington at the end of the month. >> things are going very well

with china and with trade. there was some false reports about sanctions being removed. we have taken in tremendous amounts of money in the united states because of the sanctions. and we'll see how it goes. if we make a deal, certainly we wouldn't have sanctions. if we don't make a deal, we will but i think china has been -- we really had a very extraordinary number of meetings and a deal could very well happen with china. it's going very well i would say about as well as it could possibly go. >> globalization needs to become more equitable and inclusive, according to the world economic forum president. hadley gamble sat down ahead of the annual meeting in davos. >> we really have to understand that we are all in the same boat in the globalized world. globalization is a fact.

we can't stop it, but we should improve it one topic we have is globalization 4.0. we have to make sure that globalization is more equitable, more inclusive, create more jobs we also have to make sure that it is sustainable. we only have one planet. and currently we are acting like we have one in reserve that's not a sustainable track i'm also glad this year we have the secretary journal of the u.n. antonio gutierrez with us, he will make a major speech here about the state of the world where do we stand and where do we have to move on climate, sustainable development goal remember, we have agreed to eradicate all power by 2030 and we're not on track world economic forum being the national organization for public, private corporations that we also mobilize business for the climate, for inclusivity and also for poverty eradication. we cannot meet that with also

having the business sector on board. >> how worried are you that so many governments are not on board with climate control >> we have to introduce more technologies working for this. then i think we have to put the price on carbon. without it, we will not see the market economy sufficiently working in that direction. look what you can achieve if you also use the right technologies. today, solar power, solar is one tenth of what it cost ten years ago. just imagine if you can have those breakthroughs when it comes to carbon capture and storage. just imagine how we can have breakthroughs if we can use

hydro in a different way in moving our vehicles. so, this is one of the main topics here at our annual meeting. >> final question for you in terms of your outlook for 2019, a lot of challenges on the horizon. what do you think is the most concerning is it china's growth lack thereof is it the fact that we have so many crises going on whether it be in the united states or in the uk what is it that really concerns you? >> there's many things that concerns me, but i would say that those geopolitical conflicts can also if not handled the right way can have negative impact on growth. and we already seeing a slowing of the global growth with the negative impact that will have for a lot of people around the world, also when it comes to creating jobs. and we're not out of the woods yet when it comes to jobs. for example, in europe, many countries are still facing 20%

youth unemployment. >> and despite a rise in global populist sentiment, the world favors immigration and working with other countries new wef report claims. for more head to cnbc.com. the world economic forum in davos will see notable absentees including donald trump, emmanuel macron and theresa may trump is battling to end an almost month-long u.s. government shutdown and macron faces widespread protests over his leadership elsewhere, may's government is scrambling to forge a new brexit deal before the uk leaves the european union in late march but some other key world leaders are set to attend davos, brazil's bolsonaro and angela merkel, conti.

our coverage kicks off today at 16:00 ct. >> if you want to weigh in on any of the topics that will be discussed at davos this week, whether you like new nickname for today, b. day, then you can tweet us street signs cnbc, tweet joumana. >> i wasn't expecting b day. it's a good one. brexit day. coming up on the show, the u.s. government shutdown now the longest in history, we break down the impact on markets right after this stay with us every day, visionaries are creating the future. so, every day, we put our latest technology and vast expertise to work. ( ♪ ) the united states postal service makes more e-commerce deliveries to homes than anyone else in the country.

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♪ welcome back to the program. air france has opened at the top of the stock 600 as day vi research raises the stock from neutral to outperform. >> and henkel has louered by 5% for 2019 german maker said it would

increase investments by 300 million euros annually are from this year focuses investment on its own brands, digital tans formation and innovations. now the european union anti-trust regulator will reportedly veto the proposed rail merger according to reuters. it will create the world's second largest rail company. french finance minister says the eu must approve the merger and will meet with the european competition commissioner today to express his support for the deal. away from the corporate space to one of the big stories we've been following over the last several weeks the u.s. government shutdown. it now is a month old and while both sides are speaking out about the president's latest offer, they don't yet appear to be speaking to each other. nbc's kelly o'donnell reports. >> today, vice president mike pence on a televised sales mission for the president's new shutdown offer for reluctant democrats, he

tried to make the border wall seem less ominous. >> it's not from sea to sea. it's 234 miles of additional steel barrier. >> reporter: for conservative critics questioned giving three years of legal status to qualified young immigrants and refugees, pence drew a line. >> this is not amnesty there's no pathway to citizenship. >> reporter: but the president sent mixed messages on twitter, at first saying no, amnesty is not part of my offer, but left the door wide open amnesty will be used on a much bigger deal, whether on immigration or something else, but many democrats are rejecting the plan democratic presidential candidate kirsten gillibrand. >> what it really shows is lack of compassion and empathy for people that are suffering. i think it's a non-starter. >> reporter: but virginia democrat senator mark warner calls the president's updated order a starting point. >> listen, going into negotiations i'm all for it, increasing border security, i'm all for it.

>> reporter: shutdown politics put the president's biggest audience of the year on ice. wednesday, speaker pelosi indefinitely postponed the january 29th address >> let's talk about it when we can do it at a time when government is open. >> reporter: today the president finally responded. nancy, i am still thinking about the state of the union speech. there are so many options. he suggested she broke their deal while a contract is a contract, i'll get back to you soon. >> that was nbc's kelly o'donnell with the latest on the government shutdown. and i want to bring anastasia am rosa global investment strategist from jp morgan private bank back into the conversation now, we've seen equities continue to tick higher despite the on going government shutdown are markets being complacent about the real risk of this shutdown >> i think at the moment the real risk is not that great because the reality is the government cannot function without some of the key departments being closed like

the treasury, homeland security. markets are pricing in one of the two stake holders giving in or finding a compromise and seems like we're maybe in a little heading that way. let's say president trump agrees to make this more of a personal innocent extension for the dreamers act, i think that would be the way to get some of the border funding done and the government to reopen back up i do think there's some positivity developing there. the one risk i would agree with you that the market may not be fully pricing in is what happens later in the year when it's not just the government funding that we're dealing with but also the debt ceiling because the debt ceiling suspension that we've had in place goes away in march. now, we can fund the government further through late summer, but then what? so then they debate maybe comingle between the jet ceiling and potential shutdown to fund the government, so i think that's where it gets trickier. i'm more concerned about it from the dollar perspective, i would say, from the broad equity market perspective. >> that's one of the reasons why

dollar has been trading weaker, you think. >> one of the reasons, yeah. >> do you think that given public perception if you look at the latest polls, it hasn't been reflected that well on the president. do you think that given the state of what's been happening with the shutdown and that it's negatively having an impact on his own polling when it comes to who is to blame for the shutdown, that it would incentivize the u.s. at least for the time being to come up with a softer tone when it comes to these china discussions we know that the vice premier will be having talks in washington at the end of this month. do you think that because the shutdown has been so costly in terms of political standing that they will look to compensate by getting a win somewhere else when it comes to their external policy >> i do think that this administration has a tendency to pivot. so for example, when the talks with china were heating up, the administration moved to

alleviate the concerns with europe and then when the talks with china were progressing better, maybe that's when we step up the auto issue there's a degree of that that while we deal with a difficult domestic issues, let's smooth things out on the foreign front. but i think beyond that i think there is a broad desire from this administration, the u.s. and also china to get something done on the trade deal so that's why the news flow has been incrementally positive and i would expect it to continue to be that. >> all right anastasia, thank you very much for joining us today that was anastasia am rosa joining us on "street signs." also coming up on the show, after an overwhelming defeat in parliament and with the march deadline fast approaching, theresa may looks to outline her plan b later today stay with us don't you get the best price booking at one of those travel sites? they tell you that, but when you book at hilton.com, you get the price match guarantee. so if you find your room at a lower rate, hilton is like...

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when you see beautiful design do beautiful work, you see what delta can do. (atlas) with verizon? do humans like overpaying when you see beautiful design do beautiful work, don't they know they can get the 3rd, 4th, and 5th lines free with sprint? (paul) yeah that means, sprint's unlimited plan gives you 5 lines for just $20 dollars per month, per line. (mom) really? (dad) robots don't lie. (avo) see how you can save more than for people with hearing loss, $1000 in the first year with sprint. visit sprintrelay.com welcome back to "street signs. i'm julianna tatelbaum. >> i'm joe manna ber set chi, these are your headlines.

>> gdp comes in at 6.6%. it's slowest official pace in 28 years amid the on going trade war with the u.s sterling in the red as uk prime minister theresa may proposed to unveil her brexit plan b to parliament, setting out how she intends to proceed with britain's divorce from the eu after a crushing defeat for her withdrawal agreement last week economic error and political mistake. sharp words from the french finance minister amid reports the eu will veto the rail merger. air france tops the stock 600 after an upgradewho now read the stock outperform. ♪ it is shaping up to be a

negative morning here in europe for equities we're about 1 1/2 hours into trade. as you can see there, three of the four major are trading lower, the worst performer of the bunch is the ftse mib down 65 basis points. the best performer of the lot is the ftse 100 uk stocks trading marginally higher there we are seeing some weakness in sterling so perhaps supporting some of those export names in the uk so, again, this is after a very strong finish to last week both here in europe as well as state side and of course we are also digesting that data out of asia overnight. chinese gdp numbers. get into fx forecast, as i mentioned, sterling is in focus. this has been the chief way that investors have expressed their view on brexit and theresa may, of course, addressing parliament later today and sterling compared to the dollar is trading about 23 basis points lower at about 1.284

that's one to keep an eye on this morning. >> certainly we are keeping an eye on that. it is a big day in the uk. the prime menster is due to lay out a plan b for brexit to lawmakers today to look to secure a fresh deal before britain reaches a march deadline to leave the european union. we spent a lot of time talking about the political angles, what may or may not happen from here but let's not forget the economic backdrop as well. i believe you have a guest to give us more color on how this uncertainty is affecting the economy. >> reporter: that's right, joumanna my colleague there just talking about we should point out, of course, protests continue here in westminster, hence some of these noises you're hearing here the question i have for you is when you look at events inside parliament today and over the next week leading up to the next big month scheduled for the 29th, what should investors and businesses watch for to understand what this could mean

for them >> sure. there's been two things markets have been latching on to the first week, the first is signs of cross party collaboration we may have to get an article 50 extension. so far plan b looks quite a lot like plan a. for markets it's seeing as she inches a different alternative, perhaps a customs union base headlines but the big question is we're still in this stalemate situation where she's going to find it really tricky to get it past the brexiteers. that could end quite badly. >> the big criticism both from european perspective and also from many inside parliament and across the uk is we just had so much uncertainty for such a long period of time i'm just wondering whether that has an impact onthe british economy? are you seeing any evidence of that >> yeah. certainly. from a business perspective nothing has changed.

the fact remains we're leaving the eu on march 29th with or without a deal and unless we get a deal or we get an article 50 extension, that's the premise businesses have to work on. we'll see more and more signs that businesses preparing for that there's then a risk that slips through. so it's going to be a bumpy ride for the economy over the next few months. >> i want to ask you also about the perspective of labor, the opposition party here in the united kingdom they seemingly have not wanted to endorse the idea of a second referendum. i wonder that's partly a political calculation. is there any economical collation behind that? is there a concern about for instance extending uncertainty long into the future by both delaying the article 50 period and having the possibility of brexit being reversed, do you think? >> well, certainly going to take a long time to sort out if we do have a second referendum talks about it could take up to a year, according to the government most other estimates put it closer to six months but certainly, yes, that does prolong the uncertainty.

you're right this is mainly a political calculation at this stage. they know the further theresa may inches towards compromises the more and more brexiteers get enraged by that and labor will spot an opportunity and have another confidence no vote next two weeks. >> one of the consistent positions labor has taken they do want to remain part of a customs union. i wonder, there's an inherent tradeoff there some of the position of the hard brexiteers. from an economist perspective, is one of those a better option in terms of how the british economy performs quite a long way into the future? >> well, from an economic perspective, the closer we are to the single market and the customs union the better really because it makes trade friction less as possible the customs union means you're only half in, gets around the need for tariffs which is one part friction but the bigger friction is the compliance checks for eu regulations. things like food, supply chains that's the bigger issue.

labor said they want a close relationship with the single market nobody entirely sure what that means a in the stage being in a customs union doesn't go the whole way. >> in terms of the tradeoff, though, when you hear people like liam fox talking about the need for an independent trade policy and how the customs union prevents that, theresa may's perspective is control migration and if that second one is off the opportunity, what is the opportunity cost for the united kingdom or not a clear one from your perspective >> trade wise, our links are historically with the eu services with the internet and other things you don't need to be close to your trading partner, but then again services equals people a lot of the time. you need to be close to people you need to go see their clients and also your culture makes a difference too it's not clear cut that going for this global trade view is better than focussing on the eu at this stage. >> james, thank you very much.

especially given the noise around us here james smith. i'll hand it back to you in the studio now. >> thanks, will em giving us that interview with the vibrant background in westminster. i want to bring in managing director from europe thanks for joining us. i'm sure you have various permutations as everyone does on how this story is going to play out, but i think when we talk about plan b in the context of today, perhaps what's more significant is the amendments that are going to be put forward and many of these amendments are attempting to arrest control away from the government and put power back in the hands of parliament what is the significance of that >> another way is to say this is the moment for parliament to stop hiding behind that government that is somewhere caught in the middle and actually take a position what we're seeing in parliament is that we have this massive rift the problem being that they're basically scattered over both parties, right

how do you bring these two realities together the old division between labor and conservatives? i think that's really the debate that we're watching over the next couple of days. >> but again, the shadow chancellor don mcdonald said last week you look at the parliamentary arithmetic right now, the back benchers, not the government, the back benchers, seemingly there would be more appetite for a softer form of brexit than a no deal brexit there is a parliament majority against the no deal brexit so, how do we get from stage where there is gridlock on mrs. may's deal to going down the route of eventually supporting this soft brexit outcome which is what financial markets have priced for >> that's the key question, right? it's one thing to say we don't want no deal but then obviously the question is you can only prevent no deal if you come up with an alternative? >> exactly. >> i think the key thing to look at is this potential for

something like indicative votes which is obviously part of multiple amendments that we're going to talk about in the next couple days. again, forcing parliament to take more constructive position here, not just ruling out no deal but coming up with alternatives, for instance, something like a more permanent customs arrangement. >> now, when i think about what other european nations looking at britain right now are thinking, obviously this has been an incredibly challenging tricky process that's time consuming and hasn't played out how many people have expected. what do you think they're taking ai wa, these countries have seen a rise in populism, a backlash against the establishment from what's happening here in the uk? >> the reality is that you know it's true that nowhere has it become as much of a really dysfunctional story as here right now. but then the underlying driver of this party political realignment that i was just talking about, i think that is something that we see playing out across political systems in northern europe, southern europe the way it plays out per country

depends on things like the electoral system and so on, but this tension between let's say openness and closure that is something that we're seeing emerging across europe and political systems. >> again, to julianna's point, what's been incredible about all of this process is how unified europe had been for once on one particular topic obviously it's in their interest we have european parliamentary elections coming up. how do you think the landscape is going to change in the second half of this year? >> the european parliament elections, basically something like the midterms in the u.s., right? it's kind of taking track of the situation in terms of public opinion and so on. obviously we can look at probably a good result for these populist forces. the question then is on the actual european parliament level, how do you bring these very different forces together or do you go forward and i think

that's likely, center right, center left, greens, liberals, clearly fragmentation is on the right. >> clearly fragmentation is on the rise, it seems easy to anticipate that we are going to see a rise in populist support into those european elections. i want to look at france in particular where president macron has faced a huge amount of backlash from the elect rat and now in response he is initiating this three-month period of national debate to inevitably try to quell those concerns and get ahead of further backlash is this a sustainable solution that we might see adopted by other european leaders >> well, i wouldn't go that far. it's definitely a smart thing to do it allows you to win some time, definitely i think it's also a bet on the result of the european parliament elections in france it's a proportionate electorate system he wins around 25%, he will have won that election in france. that's the vote share he had in the first round of the

presidential elections i think what's really behind this is this greater openness to what's the idea that something is going on on the grass roots and politicians need to be seen as listening to that whether that really solves the problem, i think that's way too early to say. >> now, just going back to the eu and the uk and the on going discussions, we know that there's no appetite for the europeans. they've been very specific on this point there's no appetite whatsoever to make modifications to the withdrawal deal. they said this is the deal that we agreed on you've got to sort it out domestically at what point do you envision the europeans will be willing to start making concessions and open up discussions again with the uk is there any part of the process unless it's obviously pushing for a second referendum or the parliamentary arithmetic moving towards the softer >> second referendum, general election, that would certainly be something but obviously then would be willing to talk again

but i think the ultimate bottom line here is that the logic, the functioning logic of the backstop will not be touched i think that is not going to change even in a scenario where we were to see that the eu would be willing to reopen the withdrawal agreement, the functioning logic of the backstop, that's something that's not going to go away we're talking about the way the single market works and 27 have no interest in altering that. >> final question for you, lots of people are talking about the possibility of a second referendum what questions do you ask? >> well, that's the $100 million question i would look the other way around because it is entirely unclear what question you ask, that i think in my view makes it less likely than even a snap poll we're ultimately going to new referendum i don't see majority for that in parliament. >> thank you very much thanks for joining us on "street signs" this morning. that was carson nickel, managin director from europe. back to the corporate stories in focus this morning, first french telecom orange has

rolled out a merger. it was reported that orange had hired credit swiss as an adviser to look at its spanish competitor, a move it has denied elsewhere in the corporate space, nissan ceo says it's not time for renault and nissan to discuss future capital ties. he made the comment in response to a report in the nikkei that the french government was seeking a further integration of the two auto makers likely under a single holding company he said he had not heard directly about the proposal. elsewhere, bruno lemar played down the rumor saying deeper renault ties are not on the table. the french auto maker has not responded to a request for comment from cnbc. health care space, jug maker gsk announced that the chairman hampton will step down following more than 3 1/2 years in the post gsk says it has launched a search for his successor. u.s. markets will be closed for martin luther king day

today. the first trading holiday of 2019 after a difficult december, they took a look back at the year so far. >> the markets are resetting higher we've gone from fear of zero or negative earnings growth end of december to now earnings will grow in the low single digits for 2019 we've gone from fears that recession was developing in the latter part of 2019 to feeling that this is very unlikely now the danger now is that the rally may get ahead of itself. the good news is this, trade talk rumors are giving another leg up to already healthy rally. the bad news is the markets are now pricing in a favorable trade deal and the markets are increasingly vulnerable to disappointment or sell the news situation. s&p 500 move 50 points the dow industrial 500 points since mid afternoon thursday when "the wall street journal" first reported some progress on china trade talks. other reports friday indicated that china may be making trade concessions, including offer of six-year increase in u.s. imports. another report says the deal would aim to reduce the trade

deficit with the u.s. to zero by 2024 maybe because we've already had significant move up already, the market is vulnerable to couple risks. first, there's no trade deal second, even if we get a trade deal the market will sell on the news and would be very little if any reaction in the markets. there's one other problem, a major trade deal could have ripple effects on the u.s. economy. hopefully more trade will be beneficial, but there may be one other less desirable side effect if you get a major trade deal, bond yields could start to rise and the fed may start to get a little more aggressive raising rates. that's a separate problem. >> well, it's all kicking off at the australian open, just checking on the serena williams score. it's going to be third set there. we'll have more on that. and more on changing of the guard as roger federer bows out of tennis grand slam australian open more on siz surprising defeat after the break. we'll also be kicking off

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♪ well, serena williams is currently on court at the australian open, aiming to reach the quarterfinals in melbourne and is up against the number one seed simona halep. adam joins us. what is the latest i can tell you the score they seem to be tying one set each. >> yeah. >> and 3-3 in the third set. it looks very close to call. >> on serve in the third set in this one, but it didn't look like it was going to be like the way the match started. serena williams quick out of the blocks people thought this would be tight from the start, but serena williams was on fire in the opening set. she rattled through it by just

six games to one halep didn't manage to hold her own serve. a little action from the first set. serena williams coming out of the blocks she is the underdog in this one. she is seeded much lower than halep, the world number one. the number one ranked woman in the world, but she's come up short almost every time they played each other. just one victory so far for halep. looked like that serena williams was going to rattle through this again. you can see there roaring back came simona halep in the second set. we're on serve in the third set, much tighter, 3-3. >> this is her second grand slam since coming back, right >> it's not her second grand slam she played wimbledon last year and played the u.s. open and the french open last year. it's her first time back at the australian open since she won there back in 2017, had 2018 off because she took time off to have a baby. but now she's back and she's

looking to accumulate more grand slams in the 23 that she already has. >> it's not just serena who is in focus in the tennis space federer in focus yesterday did we see a changing of the guard take place >> that is the phrase that has been coined at the moment. john mcenroe has a lot to answer for announcing that to the tennis world after roger federer. he lost to the greek up and coming 20-year-old it was a great game on rod laver arena. and tsitsipas, he was so rapid all over the course. federer didn't actually manage to convert any of the 12 break points he had against him, winning in four sets in just under four hours as well the changing of the guard was the phrase that was coined by john mcenroe he interviewed

tsitsipas. >> he's in front of the mike a lot. he's always going to say stuff i love john. i heard of that story last ten years. so from that standpoint, nothing new there but about stefanos, he's definitely done a really nice job the last year and a half before that, too, obviously, but beating novak in toronto and likes of anderson and now me here, that's what you need to do to get to the next level and he's doing that. so, really nice for him. and i see him definitely being high up in the game for a long time. >> roger federer and he's reacted further to those comments by saying that for the first time since 2016 he's going to be taking part in the clay court season he's given that a miss the past couple of years because he wants to save his body, let's say, and concentrate on the grass court season where he had so much success in the past. but now he's saying he'll play the clay court season because at

this stage of his career, it's all about having fun. >> it's been an eventful couple of weeks for tennis fans out there. andy murray as well bowing out and he was obviously given a standing ovation the impression was that this was going to be his last tournament, but of course he hasn't officially retired yet so, can we also expect to see andy murray show up at future grand slams this year? >> well, the idea from andy murray if he had it his way, he would retire at wimbledon because he doesn't think he can go after that. he is going to have another operation on his hip that is just as much to have quality of life he said for after tennis, that's amazing he's only 31 years old that just shows what he's put his body through to get to two olympic gold medals and not forgetting the davis cup he almost won single handedly even though it's a team event he's going to have the operation. don't expect an announcement any time soon from andy murray we have to wait and see how he reacts to that operation

let's find out what happens there. longevity in tennis is very, very difficult i can just tell you now, serena williams and simona halep are still fighting out deuce 3-3 in the third set. >> all right adam, thank you for bringing us the latest on all of the australian open stories there. now you can read more about the future of men's tennis and how it's governing body is coming up with new multimillion dollar tournaments over at cnbc.com we are just couple minutes away from the next program. thank you for watching don't forget that our davos coverage will be kicking off later this afternoon at 16:00. "worldwide exchange" is coming up next would you want the one the experts at rootmetrics say is number one in the nation? sure, they probably know what they're talking about. or the one that j.d. power says is highest in network quality by people who use it every day? this is a tough one. well, not really,

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