welcome to "street signs." >> these are your headlines. european stock markets follow a strong handover from wall street as the oil and gas sector leads gains on the stock 600. >> bp's fourth quarter net profit jumps 65% while the oil major ups its dividend ceo bob dudley telling cnbc is optimistic for the year ahead. >> feels like the markets will be firmer. couldn't predict the oil price we're planning bp between 50 and 65 apple supplier ams plunges

more than 15% becoming one of the worst performing stocks in europe after slashing its dividends and warning of a difficult quarter ahead. good morning, and welcome to "street signs. on "the final services number for the month of january have been confirmed let's just go over them. we now have confirmation the final composite pmi number for the euro zone as a whole came in at 51. this is slightly higher than the initial flash estimates of 50.7 and still lower than where we were back in december, which is

51.1 to put it into context, we've been saying this for a whoil now, these are the lowest numbers since july 2013. insofar as there is a breakdown, the number came in at 51.2, and that's in line with the december line also a little higher than the flash pmis well. from what i can tell just looking at the numbers, some of the up sides came from france when it came to the number today versus the initial flash trends. overall putting the picture altogether the composite numbers are still very, very weak, and the lowest since july 2013. you're seeing a bit of a dip in the euro currency there, getting closer to that 114 hand and about .2% weaker on the session. well, those positive numbers so far as versus flash numbers are supporting markets in large part we are seeing the stock 600

trade higher to the tune of about 65, 66 basis points so far this morning as you say, while they are weak in the context of what we've seen over the last year or so, they were better than flash numbers suggested. now, we are also being supported here by the positive tone in wall street yesterday, which saw those stocks end higher driven in large part by the tech sector, but here in europe this follows a relatively mixed six e session yesterday where the stock 600 ended just a touch higher the u.k. was the real outperformer yesterday today it looks as though we are seeing more broad-based gains. let's get into the european markets and see how the regions are fairing this morning as i said yesterday, the u.k. index was the best performing of the bunch. right now it is, again, leading the way up about 88 basis points at the moment. the dax is up by about the same. about 87 basis points. the french and the italian indexes are also trading higher. it is definitely a positive picture. don't forget, of course, last week the market-friendly fed

certainly supporting markets in a continued way this week and a big week for corporate earnings as well here in europe let's get into the sectors the corporate earnings, no doubt, contributing in large part to where the market is going. at the moment every sector except for real estate is trading in positive territory. the strongest performer of the bunch, oil and gas, there we are seeing the sector boosted by bp shares, which surge higher on the back of a strong earnings report construction banks, basic resources, telecos and household goods make up the rest of the outperformers today, and then on the down side just behind real estate we've got food and bev, travel measure and utilities slightly more defensive tilt on the down side, and more cyclical tilt on the up side. >> right at the top there you've got oil and gas as you were just talking about, and let's talk about what has been going on in that specific sector well, bp shares are on track for their best day since 2016 after the company reported a 65% jump in fourth quarter net profit

the result beat expectations as the oil major saw a strong operating performance across all of its business segments underlying replacement cost profits for the period roesz to $3.5 billion meanwhile, total revenue increased by about 10% allowing bp to raise its dividends. speaking to our colleagues on "squawk box" bob dudley addressed the recent volatility in the oil price and hailed the work of opec and its allies. >> opec plus agreements are now just starting. we'll see them in the market, which will firm up the oil prices they'll be in balance this year. you have some factors like the permanentean and later in the year venezuela is quite a sad case, for example. libyan production is off, and it looks like the group -- the opec plus group is working cohesively as we look at it, it feels like the markets will be firmer

>> couldn't predict the oil price. we're planning bp between 50 and 65 >> can i ask you then about the market that you'll be selling into in terms of divestment. mark $10 billion over the next two years, which puts you in interesting territory. the market is concerned about a recession or slightly slower economic growth picture over the next couple of years there is also potentially in that time frame at the back end, anyway, around 20, 21, the saudi aramco deal coming to the market finally which means it could suck the life out of the some of the other oil assets on the margaret does it mean you're trying to stagger the divestment as quickly as possible in the next year >> i think we've got data rooms already open on our gas position in the u.s we've got other things that we're in discussions with out there. i mean, there's clearer interest in energy assets, in natural gas assets and oil assets. we've got a really great portfolio, so there's not obvious things that we'll do i'm very encouraged by what feels line the market for divestments. >> you have a young evening position, if i may say so

because not only as ceo of p, but you're a member of the board of roznef as well. were they dragging their heels and reduced their production by .1% last month in december as well dare i ask you to break confidence and say to us do they not want to cut one barrel >> well, russia has been really clear about this that cutting production in the winter, the deep winter, is not the time to do this. they've always said this will be backend loaded into the spring, but everything i hear is that they've got plans and you've seen the beginnings of production it's a very different kind of oil system in russia than it is in saudi arabia, and it's lots of i little things that have to be cut in russia rather thana few big ones in saudi arabia there's production that i haven't sensed anything that isn't cooperation between the two. >> so from your unique viewpoint, the likes of -- they're fully behind mr. novak and his -- as well to get these

production levels down >> you know, i don't have the special insight. >> that's my whole point >> i think it's a national decision, and like everything, there's a debate >> all right let's bring in ceo of prime partners who is going to be joining us for the next half hour good morning. >>. >> i would say we took the opportunity in january when we decided to increase our exposure in our portfolios and we decided to overweight energy >> expectation went much too low for the profit in the future, so this is the way we decided to

play it. i think that we are positive in the short-term for energy stocks >> and how much of the investment picture do you is a function for the sheer amount of sheer cash flow and the dividend yields being promised? i mean, bp have a dividend yield of 5.the%. 6% where are are you going to get yield in that environment? when you look at the opportunity set, how important is it to you as an investor is the amount of return that these companies are offering to you in the form of buy-backs or dividends >> this is the point that we can see during january when we decide to go find energy because the yield, the cash flow is very interesting, and this is the reason why in the energy sector we have the producer, and we do not go for the service provider. we can see that that is on the production side. that is very attractive to the investor >> let's not forget this is a british company, and we spent a lot of time on the show talking about the lack of love and lack of appetite for investing in any company in the ftse, and yet, here is one, huge beats when it comes to earnings.

one of the biggest oil multi-nationals in the world paying a dividend yield of 6%. do you think that this will incentivize people to start looking more broadly at u.k. assets and saying actually there really are valuation opportunities here, and there are yield opportunities irrespective of what's happening in the political side of things? >> i totally agree with you, at least on a specific basis. you can consider why do i want not to invest in such a company? it doesn't mean that you need necessarily to change your point of view about british assets at least for the next few months. >> excellent well, francois, stay with us i just want to bring you some highlights of what we just heard over the last 24 hours in terms of the fed. we heard that the fed chair jay poul dined with president trump at the white house on monday evening. it's the first time the pair have met since trump nominated powell for the post over a year ago and follows months of criticism from the president over the fed's rate path the 90 minute dinner was also attended by fed vice chairman richard claritta and steven mnuchin. now, the meeting came almost a

year to the day since powell became fed chair cnbc's steve liesman looks back at his first year in office. >> wall street greeted president trump's appointment of jerome powell to head the fed a yoer ago with almost universal praise an experienced fed governor, powell was a private equity banker who would understand markets and most of all, spoke in english, not in economic jargon a year later some of that praise has turned to criticism. not least of which has come from the man who appointed him himself. >> i think the fed is out of control. i think what they're doing is wrong. i think the fed is far too stringent, and they're making a mistake, and it's not right. others have joined in the criticism pointing to three particular powell stumbles on october 3rd, speaking about interest rates, he said "we're a long way from neutral," suggesting to markets the fed had a long way to go in raising rates, andthen twice, december 19th and january 10th, he made

comments on the balance sheet runoff that spooked markets. on december 19th he said "the runoff is on autopilot, which is a good decision. on january 10th, he said "it will be substantially smaller than it is now." stanford economics professor john taylor, who himself was a candidate for the top job at the fed, generally praised powell. but he said there's room for improvement. >> there was very little mention of the role of the markets i think maybe seems things seem -- i think that's being clarified. >> powell's defenders say he has done a good job in exceptional times. former new york fed president bill dudley said, "fundamentally powell has a harder job than janet yellin during the yellen period the economy wasn't in full employment there was room to grow interest rates were very low now you are in a more tricky environment. the economy has been surprising because inflation hasn't shown up frefring the verbal stumbles, the economic record looks pretty good the unemployment rate is down .2% to 3.9%.

core pce inflation which takes out food and energy, up .2% to 1.9% just below the fed's target range, and average gdp up nearly a full percentage point to 3.3%. the stock market, however, is essentially flattened since powell took office over that time, though, he has raised interest rates by a full percentage point and reduced the balance sheet by $350 billion. maybe the record on the stock market is not that bad and he has pivoted fed policy from gradual increases to patience we'll see now if critics go back to praisinga patient powell. steve liesman, cnbc, business news let's get back to our chat with francois, cio of prime partners now, we just heard there a reminder of the heavy criticism that jerome powell faced throughout 2018 from president trump and, of course, now we've seen markets react quite well to the change in tone from the fed that we've really heard since december, but if you look at the data in particular friday's jobs

report, it remains quite solid, so how long can the patient ethos of the fed last? >> i think at least for the first half of the year i don't think you that you can change course the way mr. powell did between december and january and move back to a restrictive course very shortly. i think that he is very wise in what he did in terms of really defining monetary saying, okay, we need to be data-dependent i think he was completely right in the way he acted in january. the data has been holding up relatively well. what didn't hold up were financial stock markets in december perhaps the real message that the fed are send sg less that

they're data-dependent and that they're stock market dependent what would you say >> i would tend to disagree. i this think that, first of all, financial condition is also how the economic outlook is going to materialize because if you have less credit in the system, if you have the spread increasing around the world, the equities are going to go down you will lose the sentiment. it means that the economic activity is going to slow down what was the risk at the time when the fed decides to move its language was that there was a kind of self-fulfilling recession becoming a reality i think that financial condition going down also impacts the economic activity, but you are right. the financial asset developing in december impacted the decision of the fed. >> i guess to rephrase the question, can stock markets still rise if the fed decides to hike again. >> i think so. if the act by the fed is justified by economic activity being able to slow down and find a bottom around the world, i think that the fed can hike interest rates, but it will not

come out and we will not have it for the second half of this year, to my point of view. >> i want to look at the bounceback we've seen over the course of january. i saw statistics from macrorisk advisors in fermz of monthly trading volume for january we're running about one-third lower than the post-crisis monthly average for january. yes, we have seen a about bounceback, but does anybody have conviction here >> i think that you are different. when you look at the market, you know, there is not one sector that push higherand the other did not. it was a kind of widespread sector improvement for the equity stock market, but i agree with you the volume is not necessarily there, and that's one of the reasons we decide on friday that we are going to reduce our equity exposure because we consider the bounce back in january is a bit excessive, and you have some sign that we could give up some of the move higher, that we had in january in the course of the next few weeks >> what in particular is making you nervous because the earnings so far, i think, i was reading some statistics, probably a bit

out of date now, but 70% of companies have beaten versus expectations this was data from last week what is concerning you the concerns about outlook, china exposure, macrodemand? what is triggering your cautiousness here? >> i would say that we are in the last phase of the economic cycle. the cycle began in 2009, and it's not a new cycle i don't believe that we are entering a new cycle, so that's the first reason the sec one is that we are very dependent on what is going to happen between china and the you u.s. in terms of trade developments, and the third one you mentioned then this morning, even if the pmi, some pmi's in europe stabilize, we still have a lot of uncertainty about the economic development for the coming quarters. i think that it is justified after such a run-up on the market to get some money out of the market for at least the short-term >> all right we'll talk more about that shortly. we'll talk about the trade war, and also the impact on tech. our colleagues in the u.s. will be speaking exclusively with the former fed reserve chair janet

yellen tomorrow. tune in for that interview at 20:30 cet. also, coming up on the show alphabet beats on the top and bottom lines, but its shares have gone south in after hours trading. we'll get the full breakdown of what's disappointed investors after the break. stay with us plaque psoriasis can be relentless. tremfya® is for adults with moderate to severe plaque psoriasis. with tremfya®, you can get clearer. and stay clearer. in fact, most patients who saw 90% clearer skin at 28 weeks stayed clearer through 48 weeks. tremfya® works better than humira® at providing clearer skin... ...and more patients were symptom free with tremfya®. tremfya® may lower your ability to fight infections and may increase your risk of infections. before treatment, your doctor should check you for infections and tuberculosis. tell your doctor if you have an infection or have symptoms such as: fever, sweats, chills, muscle aches or cough. before starting tremfya® tell your doctor if you plan to or have recently received a vaccine. ask your doctor about tremfya®.

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elsewhere in the space, a chipmaker ams has supported a 34% rise in employer revenue, but dropped its cash dividend policy the aus reanl firm warned of subdued smartphone demand. en the first chipmaker indeed to warn about subdued smartphone demands saying it expects first quarter revenues to reflect a more unfavorable he wanted market environment you can see that the stock is

down a good 13% today in trading ask down about 40% of the last three months i really haven't tab a beating there. >> and perhaps the biggest tech story in the last 24 hours in terms of earnings, alphabet. shares there push lower in after hours trade despite beating forecasts for fourth quarter profit and revenue while it reported an operating margin of 21% down from 24% from the same period in 2018. now, in terms of the broader tech sector and the moves we saw yesterday, remember, this is, of course, before alphabet reported as you can see there, the tech sector up quite strongly the best performing sector in the u.s. and boosting shares more broadly across wall street. now, alphabet shares are still at correction levels, down 12.5% from a july high netflix is also currently in

correction territory amazon, facebook, and apple are trading at bear market levels. down from 20% from their 52-week highs. now, elizabeth schultze joins us around the studio, our tech specialist, to help us understand q4 beat expectations across the board on all measurements what more did investors want >> so the key thing to know here going into this report is that investors are looking forward and they're worried about the costs that alphabet is making in its business investments in data centers, in hardware, and in head count along with that original content that you mentioned, are some of the costs weighing on this business, and it hasn't been enough to overshadow some of the bright spots i do want to point out the revenue came in at 39.3 billion dollars for the fourth quarter that's a 22% increase year-on-year stronger across the different segments, including google properties, which is youtube and search that came in at growth of 22%. its cloud and hardware business grew 31%, and this other bets

business, which is a segment that google touts kind of these up and coming businesses barely a health unit and wamo, a self-driving car unit grew 18% the fourth yaurt rev fluz were strong across the board. the concerns investors are talking about this morning are the operating costs and margins going forward. >> we talk about this magical jaws in banking as well, and that is the growth of revenue versus the growth of expenses, and here's a very good example where the revenues aren't growing as fast as their expenses are 22% versus 26% another angle that i thought of as well is, you know, their business model, about 85% of the revenues come from ads they're getting increasing amount of competition from the likes of facebook from amazon last week. remember, amazon, we were talking about the 80% growth in ad sales there do you think it's not just the question of how much they're spending brk ut also questions about whether or not their business model is under attack >> some analysts point to this cost per click measure, which is how much google gets based on every time you click on a google

ad now, the number of clicks was up, but the cost was down. that is a concern that maybe there is more competition in this space it's important to remember google is by far the leader in digital ad revenue expected to spend over $100 billion in digital advertising this year. facebook comes in around $67 billion, according to e marketers. still pretty good lead there in that digital ads >> francois, what are you thinking about the tech sector here we ended the last conversation with you saying you're being a little more cautious i'm guessing that tech is within that cautiousness as well. you frame it that way. >> yes, in the sense we're taking some profit, but this is a sector, again, that we decide to increase in our -- at the end of december, early january, and we decide to increase some of our exposure in the u.s. in particular we like stocks that are in the digitization business and kind of sectors this is something that we need you are right, considering that we are getting more cautious in the short-term, this is where we

take some profit in our investment >> elizabeth pointed out cap-ex is concerned about the number going north of $7 billion. that is required if you want to grow is it just a matter of at this point in the cycle, this is not when you invest in alphabet versus the point about the business model being flawed? >> i think that you point to everything you know that the ad business is coming under pressure. you need "to really find a business model for the future," so, yeah, you need to invest the problem is we are being in an environment, don't forget, the last quarter of last year is still around us. it was full of uncertainty, lack of visibility. people see that there is investment, and now they are asking themselves, is it going to provide the company with the new leg to support the growth in the long-term. i think this is exactly what we are, and i think that to a certain extent, this was a wise move by alphabet to continue to grow investment. >> excellent well, thank you so much for your

insight. elizabeth schultze, our tech correspondent, and francois, cio prime partners for your insight on the broader market. coming up on the show, president trump is due to deliver his state of the union address later today, but will he use it to declare a national emergency over the border wall is the big question. more after the break

welcome back to "street signs. >> these are your headlines. >> european stock markets follow a strong handover from wall street as they lead gains on the stock 600. >> bp's fourth quarter net profit jumps 65% while the oil major ups its dividends with the ceo bob dudley telling cnbc he is optimistic for the year ahead. >> it feels like the markets will be firmer conpredict the oil price we're planning bp between 50 and 65 >> meanwhile, washington prepares for the state of the union address with president trump expected to call for unity

as he threatens to declare a nashlg emergency to get funding for his border wall. >> and alphabet posted solid fourth quarter earnings beating on both the top and bottom line, but worries over spending and rising costs sent shares lower in after hours trade well, more european economic data coming through. right now we have u.k.pmi's. this is for the services sector. the u.k. january services pmi has come in at 50.1. this is down from 51.2 in december, and also, worse than expectations the poll suggested analysts were expecting 51.1 this also marks the lowest level since july 2016. a little bit more data would say that the services pmi employment figure came in at 49.3

that is contraction territory compared to 50.6, and that is the lowest since october 2012. the market, the ihs market who records this data says that the pmi is consistent with stagnating u.k. economy in q1. some negative data for sure on the u.k. front as you can see there, sterling reacting negatively to the news trending lower to the tune of about 10 basis points. jumana will see more color more broadly. >> that's right, juliana it's an interesting setup ahead of the bank of england let's not forget, all the political noise. there is a bank of england meeting coming up in the next couple of days the employment data as far as wage gains has been quite strong services numbers very weak as we just found out, and it looks as though the economy really has stole the first couple of months of the year. this is where cable is trading around 130 handle. crucially, though, taking -- we are still two points higher than where we were when the says first meaningful vote failed we're trading at around 128

then the market still seems to be somewhat optimistic in terms of how the negotiations are going to go. dollar-yen, a little bit of movement overnight yen slightly weaker, but 110 very close to that level there hovering around there the last couple of days euro also trading a faction weaker this morning as well. we're seeing a bit of a bounce in the dollar as manifested in its other currency pairs as well a little bit weaker on the session. still not through that 114 level. remember, at the ecb meeting, a couple of weeks ago we briefly dipped below that, but since then, the theme was one of dollar weakness. not so much in the session overnight. let's switch, though i want to talk about european equities here you can see the picture is green across the board the major gainer, as we have in the ftse 100, up more than 1%. 75 points. 7,100 is the level we've he. we've had a good day for oil and minors we're talking about bp earnings. very strong earnings there lifting the entire sector. ftse 100 really outperforming despite some of the weaker data.

dax up .9% all of the european indexes actually doing remarkably well despite, as we said, the weakest composite pmi number since 2013. really, bucking the trend with what we're seeing in the economic data there. equity markets are telling a very different story finally, let's get into u.s. futures. see how the picture is like there. we see muted activity the last couple of days even though we are right in the middle of earnings season. this is the picture for today. dow seen opening up about 40 points higher, and nasdaq 17 points lower remember, alphabet earnings are trading lower in after hours trading. down 3% or so. investors are a little bit cautious about some of the capex spending that was announced there. a bit of a mixed bag in terms of data we have the nonmanufacturing numbers to watch out for as well in u.s. markets. excellent. thank you. i want to bring it back to the u.k. theresa may will travel to belfast today hoping to find a solution to the northern irish backstop according to officials, the prime minister will pledge to find a way for the whole of the

u.k. to leave the e.u. customs union while avoiding a hard border however, the leader of the northern irish dup, arlene foster, continues to insist may's toxic backstop plans cannot be -- must be scrapped. meanwhile, euro zone business growth almost stalled during january as the latest market composite pmi data hit its lowest point since july 2013 composite pmi for italy and final figures for france contracted in the month. germany's composite figure was boosted by its services sector which came in at 53. elsewhere, the u.s. trade representatives office says negotiating new world trade organization roles in an attempt to reign in china's approach to trade is unrealistic in its annual report to congress, the u.s. tr said it was unlikely china would agree to new rules targeting its "merchantless target trade practices. meanwhile, the white house's economic advisor kevin hasset said trade negotiations with

china still have some way to go. >> the president has made it clear he is hoping to have a deal before the trade deadline kicks in and the tariffs have to double, but exactly how much progress we made last week and how much progress we'll make if secretary mnuchin, and ambassador lightheizer head off to china is still something we're waiting to see i throughout the negotiations have been hopeful. i'm pleased by the fact that negotiations continue, but, you know, i think there's still a lot of work to do. >> meanwhile, president trump will give his annual state of the union address later today, and many are asking whether he will use the occasion to declare a national emergency in order to get his border wall funding. nbc news's tracie potts joins us from washington. can you help break it down for us what can we expect out of the state of the union today >> certainly well, the president will be talking about both parties trying to work together on some things, according to the white house. the theme of his speech will be choosing greatness, and according to white house

advisors, he will be focussing on five things they include immigration and infrastructure, which is one area where they think they might be able to work together, trade, lowering health care costs, and foreign policy one of the areas where the president has been getting pushback about wanting to pull all u.s. troops from syria and from afghanistan of course, the timing of this is critical because it comes in the middle of negotiations to avoid another government shutdown. we just finished the largest and longest government shutdown that we've ever seen, and now the president is giving the speech in the middle of sort of a reprieve we could see the same thing happen again if they don't work out some sort of a deal on the border wall that the president insists on and nancy pelosi insists she will not pay for as the president lays out his vision tonight, he will do so for the first time before a divided congress dealing with this border issue and dealing with a president where they just don't always see eye to eye.

>> tracie, thank you so much tracie potts from nbc news with us from washington i want to bring in john reigns, head of political risk ihs market, around the desk. the big question for trump is, does he look to get support from independents ahead of his re-election? do you think that he will use the state of the union as a vehicle to try to gain support from the independents, or is he going to play straight to his base >> i think he has to i think this time -- at this moment in his presidency, everything is looking towards 2020 he starts to pivot i think most presidents begin to do that. this speech has two real primary goals here number one, shore up his base on immigration. the secondary thing is to get those independents on board. specifically in reference to looking at issues like inf infrastructure, like immigration, working with democrats to bring them on to his side so he actually gets more successful as far as that 2020 election campaign >> the question is whether or not he can bring them on to his side, and that leads me to my question, which is are we -- are you looking for him to come out

with anything that would entail bipartisan support here? remember, the topics that come up quite a lot, and we talked about the midterms as well, infrastructure plans, drug price, things like that. things that both sides can actually agree on, and actually looking at last year's state of the union, i was just -- i went back to read, he did call on congress to produce a 1.5 trillion dollar new infrastructure plan that was one year ago do you think that he will use this opportunity today to go down that route again and potentially try to get some support from democrats >> it's amazing you actually read the speech again. i think most people, we see these things, and then, you know, a week later you're basically past history i think that there are opportunities here, and i think you brought it up there. there are moves here for infrastructure, and i think that both democrats and republicans agree that some type of program needs to go forward. the question is where does the money come from? is it more from private interest or come from government? they haven't been able to agree so far same thing on health care. prescription drug prices how do we deal with the details

there? a lot of differences to make up. i think he is going to reach across the aisle just because it looks better for him as he goes forward. >> talking about the atmospherics, then, are you expecting the tone to be conciliatory more than we've seen in the past given the humble pie he has had to eat over the border wall in the last couple of weeks? >> i think there will be some gestures here and there. he does have to reach his hand out. if for so no other reason, nancy pelosi will be sitting right behind him as speak er of the house. he has to be strong. there are going to be calls for the wall, and you are going to see one side on the aisle of republicans standing up, and, of course, the democrats sitting on their hands. >> to your point about him playing to his base on immigration, what can he say now given where things have gone in terms of the shutdown, given the concession that he made at least on a temporary basis what could he say to his base that is going to have a lot of credibility at this point? >> i think what he is going to do is i don't think he is going to actually call a national emergency to get these funds pivoting over from the military

on to building a wall, but what i do think you could see is that there's going to be a threat of a national emergency if this congressional committee is not able to reach some kind of deal that he will accept. >> and then the ball is in the democrats' hands let's talk about the democrats response they chose stacy abrams to give the formal response to the state of the union perhaps, an unusual choice what does this tell you about the democrats' stance today? why did they select her? >> it tells a lot here it's interesting i think you brought it up. you choose somebody who lost right? she runs for office. she loses it, and they choose her to give this rebuttal. i think it shows a little bit of the flavor of the democrats right now, which is just move to the left as we go to 2020, whether that be medicaid for all or $15 minimum wage across the board. is this now a move that democrats are going to say this is successful for us and is this the new face of the democratic party? minority woman these are strong constituencies within the democrats >> we intend a lot of time talking about what president trump is going to say in the state of the union, but it's interesting to see what the democrats' response is going to

be because this is also their opportunity to spell out what is important to the democrats and what are the issues that are really going to resonate with voters going into 2020, right? the response of democrats is just as important. >> absolutely. we need to look at these things in time lielines. we ought to look to 2021, too. if they control all three branches the senate, house, and also the presidency, they could actually get things enacted this could be it >> fantastic well, thank you so much for the views as we head towards that state of the union address later today. john raines, head of political risk ihs market. the trump administration is set to tap u.s. treasury department official david malpass as the nominee to head up the world bank. people familiar with the situation have told cnbc the move comes as the white house eyes a firmer hold over the development lender after former head jim young-kim stepped down earlier this month malpass has been outspoken critic of the world bank and other multi-lateral institutions calling them "intrusive and

entrenched." >> he will be an interesting choice, that one >> certainly coming up on the show, pope francis wraps up a landmark trip to the arabian peninsula hadley has the details live from abu dhabi next

welcome back to the program. income bebt venezuelan president nicolas moduro has come under increased international pressure after major yurp even nations recognized opposition leader juan guiado as the country's head of state. kerry sanders has filed this report from caracas. >> massive crowds supporting this man juan gu eh do has declared himself venezuela's legitimate president, accusing nicolas moduro of claiming victory in a sham election. >> who is the president here in venezuela? >> juan guiado >> that's you? >> it's me >> and who is nicolas moduro >> a dictatorship. >> tonight the military remains under moduro's control he acougs the u.s. of an

attempted coo. the u.s. and now many in europe backing guiado russia and china supporting moduro all this a new crisis for venezuelans who have been struggling for years empty shelves in pharmacies and inflation rate predicted to reach 10 million percent so high people can't afford to buy what food is in stores one bag of pasta costs a full week's salary. >> what do you think of the prices every day >> the prices, it's crazy. >> tonight juan guiado told us low levels of the military have also defected his side kerry sanders, nbc news, c caracas. moduro has alsosought assistance from the vatican as the crisis continues speaking to italian tv, he said he had asked the pope for help mediating the situation. >> translator: i sent a letter to pope francis. i hope it's on its way or has

already oarrived in rome at the vatican. i wrote that in the spirit i've asked him to help us in the process of filltation and strengthening the dialogue mexico, government of mexico, and your guy and all the members of caracom and the bolivian government have called for a dialogue for peace in venezuela on february 7th. i ask that the pope might use his best efforts and his will to help us on this path for dialogue we hope to receive a positive answer well, speaking of the pope, pope francis has departed abu dhabi after earlier this morning holding a public mass for an audience of 130,000 people his holyness reiterated calls for leaders of all faiths to work together against violence committed in god's name. this was the first ever papal visit to the arabian peninsula, and hadley joins us live on the ground witnessing all the action hadley, can you tell us a little bit more about the significance of this event and what it means

for the middle east at this very point in time? >> oh, absolutely. at the end of the day this is really about for the uae at least emphasizing this year of tolerance. for them this is about inviting religious leaders, not just christians, but people of all faiths to come and be in this country to practice their religion freely and to say, hey, we are allowing this and we're doing this of course, this comes off the back of several years now of reforms we've seen across the arabian gulf, certainly with all of the things we've seen happening as well inside saudi arabia, for example. they welcome the lebanese patriarch late last year a lot of changes to the tone of the gulf arab countries over the last couple of years the pope making the first visit ever by a pontiff to the arabian peninsula, and, of course, he has visited other countries in the middle east. of course, lebanon and syria, and turk whyey and elsewhere as well i think it was really significant that he not only came here. he also met with other people, other religious leaders in dialogue discussing what they wanted to do and really calling

out government leaders and religious leaders as well to do more for situations like what we're seeing in yemen and syria. he said that conflict is never the answer he asked folks here to embrace dialogue, and he really pushed his message not just before he arrived, but also while he was here in the uae as well. i thought that was quite interesting, and, of course, yesterday i did have the chance to meet his holyness one-on-one yesterday morning in a private mass, and i thanked him for everything that he has been doing, and he said to me please pray for me and pray for the work that i'm trying to do here. this is about dialogue, as you remember, and certainly this is about not just reaching those who are of christian believes, but it's also about reaching folks across the muslim world, and we really saw an outpouring of support for people of all faiths here in the uae today when some 50,000 people filled the stadium. you can see the cleanup crews already cleaning up this passive event just behind me his holyness leaving around 1:00 p.m. local time to head back to rome and some 100,000 plus people outside of the stadium as well really incredible crowds for abu dhabi and certainly for an event like this one

unprecedented, as i say, in the history of just the uae as well as the arabian gulf. guys >> absolutely. beautiful. thank you for summing it up for us as you mentioned, it is the year of tolerance for the uae as well as coming at a good time let's round it out with some corporate news for you, though ocado was hit by investment and new accounting standards the company also expects profits to be -- and pandora shares have surged after it announced better than expected net profit for the fourth quarter the jeweller also announce reasonable doubt plans to save 1.2 billion danish crowns as part of a commercial reset program as it battles a weak retail environment of course, can't forget it was a big day for the tech sector softbank corp. has reported a 24% rise in the operating profit and its first earnings report since going public the results come after a turbulent quarter for the japanese mobile phone network

provider due to a network outage and scrutiny over its links with china's huawei alphabet shares push lower in after hours trade despite beating forecasts on fourth quarter profit and revenue the tech giant saw a steep decline in operating margins amid higher capital expenditure. josh lipton filed this report. >> alphabet reporting earnings per share of $12.77 on revenue of $39.3 billion analysts had modelled eps of $10.82 on revenue of $38.9 billion. i checked in with aaron kessler of raymond janlz one big number that stood out to him $27 billion. it refers to revenue from google properties that's the company's bread and butter the core properties it owns and operates, like search and youtube, kessler says that grew faster than he expected. here's what also grew faster google's capital expenditures. they surged in q4 to nearly $7 billion. that was more than the street was looking for, but cfo ruth

telling cnbc her company remains focused on the long-term the company continues to invest in tech infrastructure to support growth, and the company has also made sizable investments in real estate in the quarter. josh lipton, cnbc business news, san francisco. you know, it's interesting to see that not only did shares pull back last night by 3%, but they're still off massively. if we take a longer term view down 12.5% from a july high, and it's not just alphabet it's the broader fang space. netflix also currently in correction territory amazon, facebook, apple all in bear market territory, and as we were discussing earlier on the show with our cio guest, even at these levels, investors are not pouncing in to buy the weakness. >> despite the earnings being very, very strong, and i think this is what's interesting this is also something that our guests brought up as well. it's less so about the earnings and more so about the guidance that these companies are giving, and look at the case of alphabet, google yesterday look at amazon earlier in the

week markets went down the second they said the words capex, capex spending, they're going to be spending more. it's going to eat in the revenues because they have to n invest more. whether it's on facebook having to invest for for data privacy concerns, hiring new data scientists, alga rhythms, whether it's on the back of investing more and e-marketing efforts, digital efforts as elizabeth just said to us, alphabet have earmarked $100 billion for their e-marketing efforts. there is capex expenditure coming left, right, and center, and at the end of the day these earnings still are pretty strong, and which is one of the reasons why year-to-date we have seen a bit of a rebound in the tech sector. perhaps not back to where we were as some of the highs of last year, but the earnings numbers are still there. i would just say from a conte contextual standpoint, like further regulation, like increased competition space, like anti-trust issues, none of those are going to go away when you are buying into this

story, you are not just looking at the earnings, unfortunately you are also taking into consideration the considerable amount of macroand structural headwinds these companies are facing >> which are much harder to quantify when you look at reputational risk and the impact of public perception as well as all that uncertainty around regulati regulation incredibly hard to price that risk into the stocks perhaps that is part of what is keeping investors back as well >> i thought another thing that was interesting as well is that they continue to focus very much on the share buybacks as well, and dividend payments, and this is something that has come out of these earnings too. a lot of these companies are still earmarking a significant sum to go back towards investors in the shape of further buybacks and to act as sweeteners to get people back involved again it's not just about capex spending, and it's also as some of the cash that's being put on the sideline is being earmarked towards directly investor returns. perhaps that is also one of the take-aways from last year.

if you wanted people to buy into the stock, they've also got to get something in the near term while these companies invest in the future it has been a very interesting week for tech earnings more earnings coming up this week as well across the board. a quick look at u.s. futures just before we head out. a little bit of a mixed picture. dow leading the charge in opening up about 50 points higher nasdaq just slightly below the flat line. a lot of talk and a lot of the reaction is going to happen today when those alphabet earnings are properly digested >> then, of course, state of the union as well later today. >> and state of the union. >> that's it for today's show. >> world wythe exchange coming up next.

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>> it is 5:00 a.m. here on cnbc. you can call it a high stakes steak dinner fed chair jay powell sitting down with president trump last night at the white house we'll find out what the two talked about straight ahead. the countdown is on. speaking of washington, we are just hours away from trump's state of the union address we're going to break down the key things that investors need to watch google shares under pressure today despite some strong results. there is one thing really bothering investors about the quarter. what is it we're going to tell you. we have to stick around. bp shares shooting higher after the oil giant reported a big beat we're going to bring you new comments from