good morning and welcome to "street signs. i'm joumanna bercetche >> i'm julianna tatelbaum. these are your headlines. >> european stocks opened lower as fears over the coronavirus spread as death toll reaches 80 and china stems lunar holiday. luxury and travel stocks sink as 13 countries confirm cases of the infectious illness.

>> virus fears rattle oil markets while investors pile into safe haven assets like the yen, ten-year treasuries and gold. italian bank stocks are the main bright spot this morning after salvini's right wing party fails to secure an election victo victory. a very warm welcome to "street signs. we have fresh data out of germany to staert things off. in is the germany ifo survey the business climate index in january came in at 95.9. the consensus expectation was for 97 the current condition was 97.1,

below expectations of 99.2 finally, the expectations index came in at 92.9. that was below expectations of 95 so, a weaker print when it comes to those german confidence indications, which is very interesting given the data we've seen out of germany at play. >> it's worth bringing to mind, the last two months the german climate index has been on the climb, it's been moving in the right direction. this number sets it right back again. it is, indeed, a negative number. >> let's bring in our first guest, fabio from hsbc, senior economist. let's talk about the ifo numbers. pmi was stronger, beating numbers on services and manufacturing. this looks like, perhaps, things are not as rosy as those previous data pointings would suggest. >> yeah, i mean, there's been

other market excitements in general at the beginning of this year about germany and getting out of the woods and seeing a pick up in the economy you're right, the pmis were better but the manufacturing is still well below 50 so still in c contracture area it's too early to call the german recovery. particularly on the manufacturing side, they still have weakness. when you talk about an economy where manufacturing is 30% of gdp, the risk that spills over into the service sector remains high for the time being we remain a little bit cautious. certainly not what we're going to view is a v-shaped recovery all we're seeing is tens ive sign of stabilization of the manufacturing side certainly, the regional signs of - >> some economists are thinking about, perhaps, a recovery, a

more significant yupturn in the second half of this year for germany but you think that's off the table? >> we think that's unlikely for the time being particularly because if you look at the other side of the economy, the services sector, we've seen signs of contagion from the manufacturing consumer confidence across the eurozone has been fading a little bit it's not just a german story in other countries, spain, in france, for different reasons. in general, employment is slowing a little bit we think it's unlikely we'll see a significant recovery already stabilization of the industry sector is good because it reduces the drag we've seen over the past six, seven quarters effectively particularly from a german perspective. but that in itself is unlikely to bring back growth towards potential. so, for example, our growth forecast for this year is still significantly below potential for the eurozone as a whole and for germany in particular.

>> in davos the impression was a lot of people are turning a little more positive about the prospects for the eurozone economy. not that anyone is expecting gang busters growth but that 2020 will be better than 2019. said another way, is that not actually a worse case scenario and it will take a lot of pressure away from policy makers, from politicians, from governments from doing something about this low level growth and pressing on the fiscal spending side. >> look, that has been our central case throughout. growth has been certainly not spectacular, not at the level you would worry about. coming back to germany, the unemployment rate is at all-time low and we expect it to remain at that level for the time being. you see cracks in the labor market emerging, more cyclical short, but nothing that would urge policymakers to do significantly more

we expect this muddle through to continue which is just about enough for the ecb to remain on hold and why they're undertaking this review of monetary policy. nothing we should cheer about or nothing that will bring inflation back anywhere near the ecb target, certainly not in the near term. >> fabio, thank you for your opening thoughts fabio stay with us let's get-g get to joumanna on markets. >> the world is gripped by concern over the outbreak of coronavirus. nikkei down 2% you can see very early hours of trading, stock 600 in europe, the index is down 1.5% this is having ramifications on multiple different sectors we'll get into that in a moment. a lot of sectors that have exposure to china and hong kong

are the ones getting clobbered the most this morning. commodities coming under pressure as well that's the picture for stoxx 600, down 1.5% let's get a little more color on a country basis. ftse 100 down 1.8% huge declines. down 130 points. a lot of names underperforming are those that have exposure, of china pafk resources, some of the names down 3% to 4%. at the bottom of ftse 100. clearly, there are concerns about what this is going to mean from a growth perspective in that part of the world dax in germany down 1% we had those efo numbers showing business climate has stalled for the last month not boding well for the future from an economic standpoint. cac in france, down 1.69%.

you'll see the italian index, the ftse mib is the outperformer today. only down half a percentage point compared to the rest, that is an outperformance this on back of some market-positive news over the weekend out of regional lictionz emilia-romagna we'll talk more about that the pd, one of the members in the coalition government has managed to stave off defeat from the party of the right this bodes well for the coalition over the next couple of years, which is one of the reasons why the ftse mib is outperforming. we'll talk about that more on the show in terms of sectors, a lot of sectors with exposure to china have been underperforming. baste basic resources down 4%. the miner, steel makers down 4%. travel and leisure, no surprise travel is getting completely hit

on back of some of the airlines rerouting or even shutting down some flights to that part of the world. tech stocks also getting hit, down 2% as well. every sector is trading in the red. at top we have defensives, utilitieses and real estate, the relative outperformers it is a heavy day for trading in europe this morning. >> thank you very much let's give you a little more detail on the latest when it comes to that coronavirus. the death toll has risen to 80 while further 2,700 people have been infected, according to china's health commission. the majority of infections remain concentrated in the central chinese city of wuhan where the virus is believed to have emerged late last year. wuhan and other cities in hubei pro province remain on lockdown. cases now reported across asia, europe, the u.s., canada and france

chinese president xi jinping has held a special government meeting where he warned the country is facinga, quote, grave situation and that the spread of the coronavirus is accelerating chinese premier is in wuhan to oversee efforts to contain the virus. beijing says it will extend the lunar new year holiday by three days to february 2nd hoping it will slow the spread of the disease. the world health organization's director is traveling to beijing to meet with government and health officials amid the growing ep deputyic. the w.h.o. has so far not declired the virus a global health emergency let's get out to eunice who joins us from beijing and has been covering all of this with great scrutiny and i see you have the mask on there. what is happening on the ground

in china >> reporter: well, julianna, i'm coming to you from one of the most popular entertainment districts in beijing normally this place would be full of people, shoulder to should shoulder it's a holiday so it wouldn't be as busy but it's still extremely quiet. what you see here is actually happening all over the nation. people are scared to go out of their homes. that's one of the reasons why the chinese government has been moving more aggressively to try to contain what they've described as a strengthening virus. as you mentioned over the weekend the vice premier was named the person in charge to oversee the management of this crisis. he's currently in wuhan, the hot zone of the virus and the outbreak and this comes after president xi jinping convened an emergency meeting on saturday to -- when he described the situation as grave.

this was the most prominent indication that the leadership is taking a lead now and engaging more directly in the management of this pandemic. up until then and still currently there has been a lot of public criticism, online and elsewhere about how the top leaders haven't been as engaged in the management of this problem. so, now it looks as though the situation has been spiraling you named some of those numbers. they've actually ticked up it's now over 29 -- it's about 2,900 confirmed cases with 81 people dead. and there are also indications that some of the efforts by the government haven't actually been as effective on sunday, the wuhan mayor had announced that 5 million people had left the epicenter of the outbreak over the lunar new year holiday and for the lunar new year holiday and because of their fear of the outbreak itself so, that is a double the

population of rome or double the population of madrid so, a lot of people. in fact, just a couple of minutes ago, the wuhan mayor had said that he would resign if others believe that that would help to contain the anger over the virus. now, in terms of what the government is doing, they are taking other measures and considering others such as what you had said, the measure to extend the lunar new year holiday by three days to february 2nd but what that means is that from an economic standpoint, is that the businesses offices as well as the country more broadly is going to remain closed for a longer period. and that then starts to get at what could be another emerging problem for the economy, and that is a slowdown. >> i want to pick up on that point because lunar new year

tends to be a big time for not just domestic but international businesses we're seeing luxury names in europe trading deeply in the red. this is a very important time of the year for them from a chinese consumer perspective now we know that most of those holiday celebrations have been put on hold. the new year holiday has been extended to february 2nd what type of economic ram fiction are we talking about here just so we can compare if you can give us a little context how much of a tailwind was the new year spending last year in china and how are things looking going into 2020? obviously, with the onslaught of coronavirus now. >> reporter: yeah, it's really difficult to say because at this point, we still don't know how long the outbreak is going to last if if it lasts a long time, it could have a severe impact on

the xli. if it's just a matter of days or weeks, not so long what you're pointing out, the consumption during the lunar new year holiday is important for many companies, both chinese as well as international because this is the time when people like to go out and shop. they boy a lot of things it's similar to like christmas shopping season in the west. so not to have that is a really big deal for a lot of consumer companies. and then what's going to be the next thing that people will start to watch is the impact on the supply chain and on the other companies that would remain closed. so, right now you could see that there's an impact on restaurants and on these luxury brands and the shopping -- shops. what's going to move -- what people are worried about now is the impact on factories, is on the impact of all of these other companies that could potentially remain closed. for example, tencent just announced it's asking its

employees to work from home until february 7th there's one district in -- one city close to shanghai that made an announcement saying that none of its companies could come back to work until february 8th that's the kind of thing that we're watching here to see just how big an impact this is going to have on the economy. >> certainly you mentioned tech there. tech is one of the sectors in europe as well coming under pressure it's not just the consumer luxury brands but, of course, the supply chain and that translates to the tech sector here in europe thank you. joining us live from beijing with the latest. let's take a look at how some of the chinese specific indices are faring we've seen offshore yuan is actually about 8% weaker on the session versus the u.s. dollar back at around a three-week low. remember, the currency did come

back in again after that phase one and into the phase one signing of that trade deal so the currency did appreciate. but, of course, with the weakness that we're seeing in equity markets and commodity markets more broadly, we are seeing some selling pressure come into fruition on the currency that's the picture for the yuan. i also want to take you to what's been happening in commodities and safe havens. as you'd imagine on a day when markets are trading in such risk-off environment, we are seeing money flow into fixed income we have here a picture of -- well, this is italian fixed income more jemly we are seeing a bid for u.s. treasuries in the u.s. and they rallied by three basis points german bund by one basis point these are the italian bonds. more recently speaking, there's been a flight to italian bonds if we could bring up a chart for oils so i can show you what's happening in commodity space well, actually, this is the safehaven currency

you can see there has been a bid also into the yen. 108.90 is where we're at right now, 0.4 percentage point stronger than the dollar i did mention u.s. treasuries. gold seeing somewhat of a lift this morning, up 0.7 of a percentage point let's get to oil brent down, shy of $60 wti also down 3.1% as well a big hit for commodities. of course, that on back of the demand implications and what this may mean for global growth demands. >> just showed you a glimpse of what's happening in the italian yield space. it's a big day for italy a setback for salvini as he fails to upset a leftist stronghold in election regions we'll get the latest next.

welcome back to "street signs. matteo salvini's plan to return

to power was dealt a setback this weekend providing a moment of respite for italy's shaky government all eyes were fixed on local elections in emilia-romagna where the right-wing leader's league party fell short of a upset in the region, long considered a leftest stronghold. let's take a look at the italian banks, which are proving to be a bright spot among be a sea of red for european equities. you can see there, all trading higher this morning. there were concerns going into the election that a win for league would damage the stability of the coalition government the fact that hasn't happened seems to be providing a boost to investor sentiment let's get out to bologna we were looking for an upset from mateo v matteo salvini.

>> reporter: salvini and his party had been campaigning aggressively over several weeks. he was holding several rallies a day in this region because he saw this as a possibility to show league. that didn't happen, as you rightly pointed out. it means in theory the coalition that comprises the democratic party and the five-star movement, the anti-establishment party that won the most significant chair of the vote back in early 2018 across the country, their coalition in power remains. don't forget, last summer mr. salvini looking to try to topple the government of which he was a part and provoke fresh elections pull out of the five-star coalition. unexpectedly, the democratic party said they would work with five-star to keep salvini out of power. it's local elections like this where mr. salvini has to try to show the national electorate that league is so popular that

he deserves another shot during national elections what could have happened if the democratic party had lost, some senior party officials in rome might have thought their continued alliance with the five-star movement was proving problematic. as itted happened, five-star was turned out poorly, and looks like the ive-star is in difficulty the former leader stepping down a week or so ago they have a party congress in march, at which point they might try to chart a new direction their support here and calabria in single digits >> thank you so much for breaking it down for us. let's now get back to our guest, senior economist from hsbc, fabio. as we heard, one of the key takeaways from this election result is the collapse in support for the five-star

movement what are your views in terms of the coalition, what this means for the relationship between five star and the movement >> that's certainly been the big story. polls were suggesting it would be very hard for them, particularly in regional election which seems to polarize around two candidates. the party has been showing a lot of consistent downturn in terms of polls, several mps have left the party. that's the possible weak link in terms of the government coalition. they are trying to coalesce around some broader policy for example, just last week the government agreed on implementation of some labor taxes. the government is trying to move forward. the five star in the near term has implication to go forward. the government is trying to have an agenda, which so far they didn't have.

a lot of policy discussion has been hijacked effectively by budget 2020 discussion so, i think going forward, that is the priority. if they can reunite around some reform agenda, then the government probably can buy itself a little more life in power. >> how likely, in your view, this government makes it until 2023 and to get there, is it likely we also see a government reshuffle on the back of this? >> it's very difficult to make those judgments. we know in italy, political instability is more the norm than the exception italy has had almost a government a year since world war ii it's difficult to make that judgment equally, it's fair to argue that in the current parliament, it's very hard to see how different coalition might emerge so, if the current government falls, there is probably a higher chance of early election rather than a possible different government being formed. obviously, reshuffle is

possible at the moment, i think the focus would be on trying to drive a policy agenda forward so they can find one or two common ground policy on which to rebuild the government. >> with five-star being so weak now and imploding within the latest regional elections, you've had defections, does that mean their standing within the government will be less impactful than it has been in the past if you look at the way the coalition has behaved since it came in a couple months ago, five star had been more skeptic than pd. pd euro-friendly now with their relative weakness. are you expecting to see a more european-friendly face out of the italian government because five star don't have the impact they used to >> i think this is -- it's an equally difficult question to answer obviously, in italy, euro

skepticism is popular. we see it simply because the gdp capita has hardly increased at all since the euro there's speculation that many people blame the euro for lack of growth in the italian economy. so, i think certainly in the near term the five star movement, at least that's the plan from the party, is to try to reunite around this goth coalition. ultimately they also need political disability they need something they can sell to their electorate that also makes them unpredictable. certainly, if they continue to fall in the polls, and i think we saw today's result, that could push them into a slight different direction from the other government party coalition. >> let's talk about italy's economy. it has been stagnant for several quarters the export part of their economy has been resilient, compared to what we see in germany what are you thinking for the

remainder of the year in italy >> absolutely. it's been economic stagnation for seven quarters we're looking for another stagnation in q4 we'll have the gdp this friday the export story has been the good side of it. the problem is the domestic side of the economy, which has been weakening, and i think will weaken further, partly because of some of the major policies, flagship policies by the previous government, like early retirement scheme, didn't quite help support private consumption as the government thought they would have and as we thought it would have happened actually led to a slowdown in the labor market because people are less incentivized to look for a job. clearly, the focus has to be on the growth agenda. having a pro-european government has been good enough from a market perspective given the very dovish attitude of the ecb. when we think about the next two, three years, the italian debt gd.

is going up and nomal growth is around 1%. that's not good enough that's something we'll have to worry in the future and that's why the focus on growth reducing taxation has to be the cornerstone of this government going forward. >> all right thank you so much for joining us to weigh in on italy and broader europe this morning. fabio, senior economist, hsbc. stay with us, because also coming up on the show, hong kong bans visitors from chinese province at the center of the corona virus

welcome back to "street signs. i'm julianna tatelbaum >> i'm joumanna bercetche. these are your headlines european stocks open sharply lower as fears over the coronavirus spread as the death toll reaches 80. china extends the lunar new year holiday in an effort to stem the spread of the virus. basic resources lead sector losses amid growth returns while luxury and travel stocks drop

while 13 countries confirm the infectious illness. the ifo institute warns europe's largest economy has made a subdued start to the year. italian bank stocks are the main bright spot after the right-wing league party fails to secure an election victory in the country's emilia-romagna region as you can see here beside me, european equities have end under a great deal of pressure as investors try to assess the risk of the coronavirus spreading over the weekend we learned new information from chinese officials around the way the virus is spread. that it is infectious during the incubation period. this is driven has sort of step change in terms of investors

concerned around the impact of the virus. ftse 100 down 2.10%. driven by this red of the coronavirus. the french index down about 1.90% with luxury coming under particular pressure there. we'll take a look at fx. what we're seeing in terms of currency moves the euro trading slightly weaker versus the dollar but no major change around the 1.10 level sterling up 12 basis points to 1.3093 this week a very big week for the bank of england. january 30th is the central bank meeting to watch this week not just that meeting. we have the fed as well. bank of england the key for uk investors. let's take a look at u.s. futures. friday proved to be a difficult day as virus concerns took hold of sentiment with major indices retreating the dow posting its first four-day losing streak since 2019

we're in for a weaker start to trade this week as well for wall street >> very heavy close, looks like, for the open for the dow at 350 points lower now, states and officials around the world are scrambling to contain the outbreak of the deadly coronavirus hong kong has banned the entry of visitors from china's hubei province where the virus remains concentrated the u.s., france, and several other countries have announced plans to evacuate their citizens out of wuhan president trump has praised chooip's handling of the outbreak tweeting beijing had been working very hard to contain the spreads and that he greatly appreciates, quote, their effort and transparency, ending the message with his personal message to president xi jinping. let's take a look at some sectors in europe that have exposure to china and are trading very, very heavy this morning on back of growth concerns you can see here is a mixture of -- we've got some luxury

stocks, airline stocks and miner stocks down from 5% to 5.5%. some of the luckry names you can see carrying down almost 4%. obviously the travel industry getting hit, too air france, klm down 4.7%. ieg also down around 5.5 percentage points as well. niece are some of the names getting hit. no surprise there that they are the ones that have exposure either to travel or to china and hong kong as a region. let's switch on because i want to take you to the china etf this is the etf basket that one was down around 5% in the last seven days. actually on pace for its first negative week since november 15th and worst week since august 2nd when it lost 6.5 percentage points you can see china exposed stocks are also getting hit this is the etf that we now know

markets are closed for lunar new year the trajectory has been pretty negative since this outbreak first started. that is the picture for the chinese equity markets and also broader equity market as well. let's get out to martina, the managing director and head of research at frontier strategy group. and i think at the beginning of this year, i don't think anyone factored in a full health care risk obviously, now, coronavirus is front and center it feels like we moved from the stage of a few limited cases to global spreads and a global outspreads the two questions people are asking is, one, how severe is this two, how quickly can it spread on both of those accounts, so far the information is pretty worrying >> absolutely. and i think it would take time for us to understand the full scale of the virus i think there's a lot of learning happening about its nature, how quickly it spreads

and the fact there have been so many travelers out of wuhan into other parts of the world, how quickly those individuals might have spread it into other locations as well. without a doubt, we don't have enough information right now to fully understand the scope and that will only develop over the next several weeks and months probably. >> there was a flash from the chinese state broadcaster, cctv earlier, saying that the mayor of wuhan said the city's governance during the outbreak was, quote, not good enough. are you, not just you, but the broader community, are you confident that chooip is actually equipped to control this crisis? >> this kind of crisis would put pressure on any government around the world i think what china has done differently this time than sars is quickly realized it needs to be more transparent, in order to contain panic. they have established the highest level where you can have more centralized decision-making to move quickly through the

system to implement measures you've seen examples of that with some of the measures that have been taken outside of wuhan in terms of shanghai and hong kong and other places in extending the lunar new year holiday and making sure that children don't go back to school until this is contained. there have swift action but, of course, the virus seems to be moving quickly as well i think this would put pressure on any government around the world. >> there are so many concerns between the coronavirus and sars and previous epidemics that took place years before one of the differences between the current environment and the past is social media and how readily available the information is and precautionary measures getting the word out there around the virus to what extent could that help contain the spread of the virus? >> that can certainly help to contain it it could also spread panic and, in effect, behavior by consumers and individuals as well who are trying to stay out of the way.

it can be a bit of a double-edged sword in terms of the impact that it has >> in terms of economic impact, as we went through the european sectors reacting most negatively here, when we think about the economic impact within china, how long -- i mean, once this -- let's play out the different scenarios here if we do see the virus contained, how long of an impact is this going to actually have on the economy when would the bounceback actually take place? >> that's the million dollar question nobody knows the answer until we understand the virus better. you'll see volatility with numbers out of china you're seeing a big hit on transportation, entertainment, hospitality. that will extend to other consumer goods, durables, luxury goods as you've seen already have been affected some of that sped spending will come back. some of that was tied to the holiday.

some of the spending people may have done with traveling, going on holiday, they may not have the option to do that once the virus is contained because they might not have the holiday to do that that's one element you'll see bounce back and volatility in the numbers. the other big question we should monitor is the impact on manufacturing. one of the things that is starting to happen is the holiday has been extended. you'll see implications on manufacturing. i would suggest watching that very closely because if there's a significant spread, you might see impact on industrial and manufacturing sector, which has already been under strain. this could impact overall the economy. on the other side of that, you're already seeing the chinese government stepping in and trying to contain the economic impact. they'll probably infuse liqu liquidity into the system. they'll do what they need to do to boost growth once the environment is contained but you'll have that playing out

throughout the course of the year and volatility unusual relative to what you would normally expect out of china. >> it's obviously the last thing they need right now after 2019 being gripped by the trade war and a slowdown of the economy. just putting it all together, then, would you say coronavirus will lead to downward prospect >> yes measuring that effect is very challenging. our forecast for gdp forecast was 5.7. meaningfully lower and i think we will feel very confident in that number, especially given these impacts we would be watching southeast asia where there's a lot of tourism coming out of china. we'll watch japan and korea who has been impacted by the slowdown of consumer goods and you'll have effects into europe and commodities as well. >> thank you for joining us and sharing your insight martina, managing director and head of research at frontier strategy group for more on how the

coronavirus is beginning to hit the chinese economy, you can check out cnbc.com well, fans around the world are still in disbelief after basketball legend kobe bryant was killed in a helicopter crash. hundreds of people gathered in los angeles to pay tribute to the basketball star. kobe died yesterday alongside his 13-year-old daughter and seven others the ntsb is investigating the crash. as we head to the break, here's a look at kobe's legacy that extended beyond his time on the basketball court nbc's mark barger reports. >> reporter: few athletic careers could compare with kobe bryant's >> when you think of one of the best ever to do it for this spo rt for this generation or others, the one word kobe will come up for sure. >> reporter: the son of former nba player joe bryant, kobe was drafted straight out of high school in 1996 as a 17-year-old.

>> so kobe will dunk. >> reporter: he won the nba's slam dunk contest in his rook year with the l.a. lakers, just the start of his impact on the game and 18-time all-star, bryant was always a prolific scorer and almost unimaginable 81 points in one game in 2006 >> scores on the slam. >> reporter: bryant had been the league's third all-time leading scorer before being passed saturday night by lebron james a milestone bryant saluted on it's twitter. >> he had a passion for the game and a drive for excellence, a relentless pursuit of such that was uncommon, not just in the nba but across many sports >> reporter: bryant's play helped lead the lakers to five nba titles, including three straight alongside shaquille o'neal in the early 2000s. two more came in 2009 and 2010 there was also olympic gold twice as part of team usa. >> it's not america's game anymore. it's a global game >> reporter: bryant faced personal challenges in 2003,

charged with attacking a 19-year-old employee at a colorado resort. the charge was eventually dropped but the alleged victim filed a civil suit against bryant which was settled out of court. bryant's playing days ended in 2016 but he continued as a global ambassador for the sport. his passion for it shared in an oscar-winning animated film "dear basketball." passion also showcased in the final game of bryant's career, a 60-point performance. >> thishas been absolutely beautiful, guys. i can't believe it's come to an end. you guys will always be in my heart. >> reporter: and for many basketball fans, kobe bryant will be in theirs. mark barger, nbc news. robinhood believes now is the time to do money.

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welcome back to the program. the uk is reportedly set to approve a limited role for china's huawei in the rollout of britain's 5g network, according to "the financial times. they are to make a final decision on tuesday. boris johnson has been under pressure from president trump to ban the tech giant's access to the british market

u.s. secretary of state mike pompeo added to these efforts, writing on twitter that the uk has a, quote, momentous decision ahead of 5g. we'll continue to keep an eye on that story france's stock market regulator has confirmed that i.t. services firm cap gemini has successfully put forward an offer to be rival. the deal comes after capgemini raised its bid in an effort to fend off activist investor elliott management meanwhile, europe's main banking regulator is working to clear the path for lenders, according to "the wall street journal. sources told the paper regulators have a softer stance and cited the willingness to work with two mid-sized spanish lenders during merger talks. the global m&a cycle is the longest in history, taking over

the run in the 1990s it says a robust backlog should keep activity healthy in 2020. however, last year's expansion was driven by the americas while merger volumes, including europe and cross-border deal-making actually contracted. let's bring in the head of m&a at ubs great to have you with us. i want to start off talking about europe it seems like they haven't really kept up with the wave of m&a that has been ticking over the last couple of years particularly last year was a weak year for european m&a activity is that just the function of overregulation, the space bringing it back to "the wall street journal" article about loosening regulation on the financial side of things >> thank you for having me in your program actually, the main reason for the lower activity in europe has been a decline in cross-border

the big decline has been in cross-border roughly 50% decline year-on-year in 2018 we had 400 billion transactions coming into europe out of 1.1 trillion. and last year we had 185 billion. that's mainly a dry up from china and japan. i think consolidation is playing into regulation, some activity on the big consumption but on the smaller ones you can see some activity. >> weeg seeing a pick up of activity from activist shareholder. you would expect cross-border activity coming from japan and china, but now the shift is more to financial sponsors, to activist shareholders. do you think that theme is going to continue in 2020 in europe? >> absolutely. that's why beare bullish on 2020 activism is a major theme in europe the last 12, 18 months. they have been basically very active when i talk to clients, one of

the key questions is how vulnerable is the activism and that is leading to potential carve out, potential spin out. going to your second part of the question, where financial sponsors will have a play. we'll see increase in the size of funds as well there's much more dry powder it has doubled pretty much in the last eight years to 2 trillion and has been concentration in the dry powder in fewer funds that can do larger and be active in sections where there's carveouts. >> it seems those two forces are fairly linked. there's a rise in activist activity and global dry powder sits at record levels so emboldening activists to take action knowing it's sitting there with record levels of cash if i look to 2020, we're looking at the past year where we've seen a significant uptick in public to private deals in

europe, what sectors do you think private equity is going to be looking at in terms of public to private >> last year 40% of activity has been around tnt health care. payment has been very interesting sector for financial sponsors given the nature of the cash profile of that we think that's going to continue on the sponsor side. >> let's talk uk because brexit, obviously, had a major impact on deal-making and in the wake of the general election result, people were talking about this revival in deal-making in 2020 and looking ahead. what are your -- what's your take talking to your corporate clients? are we going to see that revival come through >> we absolutely think uk will come back. last year first half of last year, the activity in europe went down by 20% if you look at the second half,

we had recovery and basically ended up with 13%. part of the reason is uk having more clarity on brexit and, therefore, more interest in dook transactionses in uk we'll have a momentum and drive the activity in 2020. >> just one final quick question we spend a lot of time talking about valuations and stock markets. i would assume that the acquisition value these days is a lot higher than it was a couple of years ago. doesn't that mean that the bar for performance is a lot higher now as well, too >> it is it is fully valued and what strategies are doing, paying with a way to hedge the number of deals has increased to roughly 20% from 11% back in 2011 that's a way to really hedge also the type of deals we're seeing are more consolidation where you can rely on the synergies in order to value such justifications. >> interesting perspective

maybe this will be the year we see a rerun. thank you for joining today on "street signs. the head of emea at ubs. we spent a good chunk of the morning talking about how it is risk ho risk-off for global equity markets. let's take a quick look at how u.s. futures are faring into the open of the session. s&p, nasdaq, down. dow lower after a heavy session on friday and a very heavy session for european equities as well that's it for "street signs. i'm joumanna bercetche. >> i'm julianna tatelbaum. "worldwide exchange" is coming up next.

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now is it is 5:00 a.m. at cnbc global headquarters. here's your five at 5. futures pointing to steep losses amid growing fears over the coronavirus. that outbreak is expanding as another case here in the u.s. is confirmed and the death toll in china climbs we're live in beijing with the latest. remembering a legend people all around the world are paying tribute to kobe bryant after he was killed in a helicopter crash the state of housing, the ceo of one of the top mortgage companies breaks down the trend he's seeing in the market. a decade of dominance. apple celebrating ten years since the ipad's debut as "worldwide exchange" begins right now.