anyone who's known him says there will be a second act. and their -- the predictions of people who have known him over the years is the second act -- captions by vitac -- ♪ happy monday welcome to "street signs." i'm here with julianna tatelbaum. these are your headlines inflation and covid measures weigh on french business activity easing supply shortages help the german manufacturing to the fastest growth in five months. i'll have the latest european data shortly european equities track asia into the red into the worst week on wall street in almost two years. ahead of the fed meeting, imf

director tells cnbc the global economy depends on central bank clarity. >> that could throw cold water on for some countries a weak recovery this is why the fed is doing to clearly communicate to prevent surprises is hugely important. >> unilever surges to the top of the stoxx 600. and berlusconi drops out of the race as the secret ballot to elect the next president begins. dragi is the next to take the top italian job.

>> we have economic data on top this morning beginning with the january pmi data for the eurozone. let's bring you across the numbers. flash services pmi at 51.2 that is notable versus 53.1. still expense territory. what we are seeing worldwide is services slower to come back than manufacturing look at what manufacturing is doing. flash manufacturing coming in at 59 versus 58 in december more growth in that for the eurozone in january. looking as well as the flash composite number 52.4 in january versus 53.3 in december slight cooling for the flash composite. you see the leap up in manufacturing. services slow to catch up. we had covid restrictions across

the eu area throughout december and january with the omicron variant. no big surprise as people returning to gyms and restaurants and hospitality. manufacturing still climbing we now bring in our guest. neville hill he will talk to us about how the markets are shaping up neville, with the economic data, what are you reading from the tea leaves with eurozone greowth >> i think gdp with slow in the first quarter and the numbers are consistent with that there are a range of head winds that are pushing to the short-term with the omicron variant. we are seeing the waves bite on services activity. i think in addition to that, the big spike we had in the autumn

in energy prices, particularly natural gas, remains uncertain are likely to weigh on some household and corporate activity in the near term i think the eurozone economy is getting off to a weak start in 2022 that is what we see in the pmi survey looking beyond q1, it should allow the economy to speed up and put in another year of decent growth. >> and neville, good morning it is julianna here. chris williamson says the omicron wave has led to another steep drop in spending on many consumer facing services at the start of the year. neville, you mentioned the impact of the high energy prices on the consumer. how important do you think this

proves with the consumption picture? what are you expecting in terms of consumer spending in the year ahead? >> i think it is going to be a slow burn. i guess the important offsetting factor is household savings and high household balance sheets are strong in normal circumstances, the spike in energy we have seen would make we worry the contract in consumer spending and risk of recession. the fundamentals of the pandemic are strong that a lot of the down side can be absorbed. it is going to break the stride of consumer spending and in the near term, as you say, the impact of new restrictions and just the greater social distancing as people's behavior changes as the omicron variant breaks across european economies at the moment. that will be the key short-term factor energy will be a drag unless or

until natural gas prices come back down to levels we are seeing from a year ago. >> neville, our colleague has been speaking to a number of big bankers for the world economic forum. i want to bring christine le guard's comments in. do you think it is fair to say the ecb has a stronger handle on it than the fed? >> i think it is in a much better position to be able to look through the surge in inflation at the moment than the fed. the overall strength of inflation in the u.s. is higher than in europe i think the breadth of inflation is also greater in the u.s. than europe or euro area. as le guard continues to stress, we are not seeing any signs of

inflation in the labor market yet. the key thing for the ecb is the last ten years have been a struggle to get core inflation up high and keep it there. in some sense, the surge in inflation is up to 2.5% which is hardly the stuff of nightmares not far off where the ecb would like it. i think for the ecb staying on hold for the course of the year is a sensible strategy it may allow higher inflation to become more embedded by that, closer to 2% than 1%. that is what the ecb wants if the ecb wants to get rid of the negative interest rate policy, it has to hold fire now or resist the temptation that a

we have seen a couple of times when the ecb raised rates driven by higher energy prices. they have been easing policy more aggressively. the ecb needs to hold the line the data justified them doing so i think it is critical that the ecb path is different from the fed because of the underlying state of inflation is different. >> neville, one feature that i see here in the pmi that has come through is the manufacturing pmi has risen to a five-month high of 59. subj suggesting the supply strain has eased. you read from china that the omicron variant is causing renewed concern and more

lockdowns and port closerures ad delays in china. to what extent is the europe economy is at risk given what is happening in china and the path forward for china? >> i think that is a really important question i think in the short-term, up until january, what we have been seeing is a modern seizing of the supply chain problem things are getting better. they are not good. after a period of tightening and worsing even supply chain problems, over the last few months of 2021 and 2022, things have gotten a little better. what we have seen is that has allowed for a very rigorous rebound in industrial activity particularly in the auto sector which is why the german figures are strong we started to see semiconductors available for car producers and

seeing a global auto production for 20% between the beginning of last year and september of last year fall. in the final few months of 2021, it made up half that ground again. i think what we see from the pmis at the moment is the impact of supply chain easing at the end of 2021. we can see how vigorous that bounce is. we think it will peak in january to the rate of 8%. aside from the rebound from the pandemic, that is the fastest rate for over a decade there are signs of strength in the industrial sector. i guess looking forward, the points you raised are important. the honest truth is we don't really know how bad the impact of renewed lockdowns in china will be on global supply chains. they will not make it better

the risk is after a brief period of easing, things will get worse for a short period of time and the surge in the manufacturing sector may sputter out a bit before moving on big picture, we have passed the worst of the supply chain problems we will see improvements in fits and starts rather than in a straight line. >> neville, it has been great speaking to you and talk about the pmi numbers. neville hill from credit suisse. imf says a rate hike from the fed could throw cold water on other country's recoveries. she was speaking to the global economic outlook which featured the ecb and as well as the

economy minister and finance minister a heavy hitting panel on friday. the imf managing director said global leaders face complicated issues more now than the start of the pandemic. >> that makes 2022 in a way more difficult than 2020. why? in 2020, we had similar policies everywhere because we were fighting the same problem. an economy in standstill in 2022, conditions are very different. we cannot anymore have the same policy everywhere. it has to be country specific and that makes our job in 2022 so much more complicated >> absolutely, managing

director there are some central banks with a greater impact on the rest of the world than others. in that context, let me ask you. the talk is of the federal reserve regaining credibility by hiking interest rates next week. does that language sound unhelpful in the context of the pandemic recovery? >> we would have to be very humble in terms of how we determine actions at the time of high uncertainty the fed is acting responsibly because inflation in the united states is turning into an economic and social concern. we also know that actions by the fed are very significant for u.s. so this delicate balancing act between fighting inflation, but

protecting therecovery is something that i am confident the fed is mindful of. the issue here is what the fed does has implications for the u.s. and has implications for other countries. especially for those that have high level of dominating bet that could throw cold water on for some countries which is already a weak recovery. >> the spike in global inflation was a theme throughout the panel with christine le garde weighing in >> we are not experiencing anything like the great resignation. our employment participation numbers are close to the pre-pandemic level i think if only those two factors, if you look at them

carefully, are clearly indicating that we are not moving at the same speed and we are unlikely to experience the same kind of inflation increases that the u.s. market has faced. >> we will continue our low interest rate and expansion of the policies for the time being until we achieve 2%. we are not afraid of inflation because inflation is so low. >> i fear is the inflation is out of the box i think the adverse shock will fade away gradually. there's no rush to be exploited by the western side. i think the central banks are sleeping at the wheel. they should be aware and i think

inflation will be a problem. our real problem for the western world. >> that was a fascinating panel led by geoff on friday you can look at the panel on the economic outlook if you head to cnbc.com. coming up, we will talk unilever the pressure pilesup on the ce as the stakes are taken. we'll discuss next do you have a life insurance policy you no longer need? now you can sell your policy - even a term policy - for an immediate cash payment. we thought we had planned carefully for our retirement. but we quickly realized we needed a way to supplement our income. if you have $100,000 or more of life insurance, you may qualify to sell your policy. don't cancel or let your policy lapse without finding out what it's worth. visit coventrydirect.com to find

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we're back with the look at the europe markets shaping up on the monday session fair to say negatively a weak risk start to the week. stoxx 600 is down. all of last week, the u.s. dropping to lows nasdaq in particular we have to wait for the u.s. open to see if it can recover any of that. what you are seeing in europe here is following a mixed

picture in asia. it was a pretty weak across all sectors today. across this, we are seeing it is not just oim,micron, but other issues we will have to wait for the minutes on the fed meeting let's look at europe markets we want to point out the ftse mib. the italian elections kickoff today. our colleague will run us through the latest on that look at the ftse 100 it is pretty much the same story across the board here when we look at the red. this negativity persisting through the equity market. do you buy the dip is it regardless of fundamentals pile in or lack of confidence in

market we had analysis on that and what it means for fixed incomes there are a couple of corporate stories to bring you this week as well. nelson peltz hedge fund built up a stake in unilever. this is bringing pressure on the ceo which is forced to bow to shareholders demands and buy consumer health arm having failed with the 50 billion pound bid. unilever up 6% julianna, the market is reacting positively think about nelson peltz and the characters involved. he could be defined as a dog with a bone when it comes to certain things he led the aggressive activity whe when it came to p&g and cadbury.

what are your thoughts >> that is a great description, rosanna. that is why unilever has reacted wildly the response from the shareholder community to the news unilever was going after. we saw unilever had gone after with three unsolicited bids. when they came out last week and said we will not raise the offer further. unilever shares repacted positively the question is what will they push for what will invest orors want to ? one thing that was clear last week, investors want to focus on the core business before going

out to make major acquisitions unilever is disappointed on the growth front and the analysts talking about the investment of the food business as an option looking at the past, they forced their way on to the board at p&g and spurred a single vacation of the business could we see a further simpli simplification that is a possibility. one issue is the ceo taking over three years ago and has followed through on big changes at unilever already back in 2017, kraft-heinz has tried to buy unilever and failed they consolidated the headquarters to the uk it was going to pave the way for more portfolio now investors are not ready to back the big acquisition

they want more changes to the core business first. >> julianna, they ran a white paper on ge a few years ago and it ran 80 pages long julianna, thank you. let's bring more corporate stories. philips with a 10% slide in fourth quarter to 4.9 billion euro it maintaining the dividend, but impacted by the global supply crunch and warned of volatility in the near term aims to rebound in the second half of the year now, renaul. it is is looking into electric vehicles it is pumping 20 billion euro in ev development julianna it is a packed morning for news vodafone in talks to combine the

telecommunication power house with the mobile market talk was the british and french companies are ongoing with both s studying a tieup iliad is launching an announcement on tuesday. it continues to assess private equity group's $33 billion bid including the debt to take the company private. that's not all. lufthansa is buying a wave in ita airways it reh repeated an earlier statt saying it is open to a partnership. let's get to anetta. talk about the rationale about the deal and what the investment community is saying about it >> actually, for lufthansa that

could make sense there are not very big in the italian market whereas the italian market is an attractive market with business travelers so far, they are number three behind jet ryan and ryanair. that could be interesting. before the restructuring of alitalia, 11 trade unions had a say. that has changed with the restructuring. alitalia is down from 11,000 staff members to now under the new affiliation to 2,000 only. they have half the amount of aircraft they went through the restructuring already. actually, that might be interesting for lufthansa. they have done similar deals

with austria airlines and shares of those airlines after they went through restructuring it could look like reuters is reporting a high level board meeting on the 31st of january and then the italian carrier could open the data rule for those interested in taking over parts of the airline that could be lufthansa in the days ahead they first need to look at the books. >> of course thanks so much for walking us through that. still to come, we will bring you the latest from italy as a key candidate drops out in the race for president and as a complex secret ballot kicks off.

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welcome back to "street si signs. i'm julianna tatelbaum inflation and covid measures weigh on the eurozone recovery as business activity falls to

the slowest pace in almost a year manufacturing expands notching the fastest growth in five months in germany. ahead of the week's head meeting, imf director says the global economy defends on clarity. >> they could throw cold water for what countries is already a weak recovery. this is what the fed is doing to clearly communicate to prevent surprises is hugely important. unilever surges to the top of the stoxx 600 the giant ratcheting up requires after a failed bid for consumer health arm.

berlusconi drops out of the race and draghi is among the top to take the italian job. we have the flash uk pmi crossing the wires omicron wave is weighing on services activity, but manufacturing remains strong now for the uk flash composite is 53.4. down a touch from the 53.6 in december here is the breakdown. manufacturing pmi at 56.9. a bit of a step down in manufacturing. as for services, the flash number has come in at 53.3 a touch lighter than 53.6 in december we have seen a little bit of a slowdown versus the growth rate

in december. in terms of the commentary, business markets business picked up costs paid and prices charged by service companies increased in january after easing back in december from recent all-time highs. that is key, rosanna, for the bank, they will watch closely. that is a key part of the inflation picture. that is a key take from the near record levels. this adds to the bank of england hiking interest rates at the next meeting that is the line from the chief director >> julianna, areyou are right. now we want to bring viewers across flashes from nato this, of course, to do with the

tension with russia and uk allies are putting more forces on stand by and ships to deployment areas in the eastern europe nato will take measures to defend allies. we are always responding to deterioration of the security environment. including through strengthening the collective defenses. strong verbiage. we have been tracking that story for the last couple weeks. let's look at the markets. we have seeing smi that is down 1.3

we are having the itale tatalian presidential election returned way. regarding the italian election berlusconi has dropped out of the race to be the next president. the four-time former prime minister, who has now been admitted to hospital reuters reports he's in hospital for routine checks now berlusconi's decision throws a span in the works. more than 1,000 italian lawmakers begin casting votes for new president today. sylvia is in rome with more. good morning >> reporter: good morning. a lot of uncertainty today as italy prepares to choose a new president. we're standing now outside the italian senate it is the upper chamber of the italian parliament

it is an important daymakers he. they will vote for the first time of who should be the next president of italy among the lawmakers to be voting is this member thank you for joining us first, you are senator for the democratic party it is important to tell the viewers that tell us thousand things are standing at the moment how likely is it we will see agreement emerging soon? >> i think we need more time as you know, until two days ago, we were blocked by the choice of center right as you know, berlusconi is the leader of the force eitalia he has been the leader of the center right coalition for a quarter of a century it is very difficult to find a

solution with him because he's very divided person. we need to share a solution because nobody has a majority in this parliament. so we have to find together. we have to sit around the table and find a solution for a person and an outstanding person. a super person we want to find the solution as the president for the interest of our coupntry we want to verify if it is possible to ask for a new mandate. if we couldn't, we have two solutions. the first one is a personwho can unite the people and the political parties or we can ask

for a different solution we can work for a different solution the ruling president is an outstanding person and is a european well known person who can be a good president, but we have to verify if there are other conditions if all of the parties can agree for this person. >> it seems at the moment there is a huge divide with the left and the right wing parties is it feasible to actually see the main political parties coming together behind one key name the divisions are too big at the moment >> we were for that. this is why i told you that we need more time because all of the people can understandthat how long they can choose a person the parliament is very divided

nobody can get the name. we need to sit around the table as i told you to find a solution we need, i think, two days to talk and talk about the problems and everybody can say no one has won. this is very important. >> you mentioned the name of mario draghi which is to say he is the candidate at this moment with the highest likelihood of becoming the next president. >> it could be it could be the president. we need a political party. all of the political parties want to understand if we can go on with the legislature and we go on with the government.

we have high challenges. as you know, we have to go out from the covid emergency and we have to carry out the recovery plan 200 billion euro and it's a big stake and we have to work together carry out the project and to do the reform as you know, to do the reform in italy is not so easy >> that was going to be my next question these 200 billion euro is a big deal for italy regardless of what happens in the presidential election, can italy implement the 100 milestones needed to receive the european funds even if we have a parliamentary election in 2023 if not before? >> we have to do it is a big italian challenge for the system this is why we need a strong

government draghi would be the president of the italian republican weneed a strong government to go on. we need the legislature to go on we have to do the reform to have the next part of the recovery plan and financial resources and we have to do 100 reforms. it is an important challenge this is why the people who want to keep draghi as president of the council is not social to move draghi to the president of the republic we need a strong government. this is the most important question that all of the people of the political party is asking because we need a strong government

if we have some important answer from draghi, i think he can move on >> let's see what is going to happen thank you for joining us, senator. a lot of uncertainty, julianna, about how this election will unfold it is not just about the future of mario draghi. most of all, it is whether italy will reform in the coming years and receive the key european funds. >> thank you for walking us through the italian elections. i look forward to your continued coverage in italy. we will take a quick break. coming up, a bidding war over kohl's. circling the chain as activists add pressure for a sale.

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blackwell capital is pushing peloton to ask the ceo john foley for a sale the stand was first reported in the wall street journal. this is after $2.5 billion loss last week. following the cnbc reports that the company is halting production of the fitness machine. it gives foley and others a supermajority in the votes julianna let's talk about kohl's. it could value the company at $9 billion. sycamore partners is willing to pay $65 a share. topping the bid from last week it is backed by star board value. kohl's has been under pressure

with two major shareholders purcha pushing for a sale kohl's has been under a huge amount of pressure we had the kohl's ceo on in december he made it clear that my number one priority of the board is to drive shareholder value. i think it will be fascinating to see how kohl's responds to this bidding war and whether we do see them capitulate and sell some of its business some or all. kohl's has been a classic retail store trying to compete with online giants and partnering with amazon to allow returns in store. the store is struggling to drive sales. >> that, to me, is key, julianna the pandemic and shifting

shopping trends. we hear one-top shopping might be the answer here real estate and people loathe to go out of their homes and into stores, that is key. real estate is at the center of the story. potential buyer could sell that real estate to pay off the billions in debt that kohl's has or leverage that retail space. real estate assets it makes it a more attractive value proposition. real estate is the benefit and the burden to the deal, julianna interestingly, they have been under pressure for years waiting for a bus and two buyer come along at once. >> this has been a trend of pushing the retail giants to separate online businesses there is debate if this is the optimal strategy were they to go down the path of separating the

ecommerce business given the operations i mentioned the creative memes that kohl's tried in the past. amazon to boost traffic in store. they leased out space in the stores to the likes of planet fitness. they are clearly open to options at this point. will they be open to something more dramatic? i have come back to the interview we had in december with the ceo over in the u.s. where she made clear my number one priority is to drive shareholder value. if there is value on the table, will they have to respond? let's take a look at u.s. futures and the picture for wall street this morning as we head toward a fresh day of trade. what do we have in store dow futures indicate a modestly strong start to the open this, of course, comes in a big week for u.s. markets.

we have the federal reserve coming sharply into focus with the policy decision of the year on wednesday expect lots of questions on inflation and the hiking path and the financial conditions and kwaun that taketive tightening ibm is kicking off tech this week heavy hitters with microsoft on tuesday and tesla and intel on wednesday. i want to bring in christian intraday volatility is interesting over last couple weeks. in particular, the pattern where we see u.s. markets hold steady and bounce in the early part of the trading day and sell off, nose dive into the close what do you think is going on here is it retail coming in and steadying markets in the mornin

and demand with institutions selling in the afternoon what is your take? >> you are right it has been a volatile year. you are right. we are seeing consistent themes are a daily basis. this comes down to the types of flows we are seeing with the investments. retail say bigger part of liquidity than a few years ago i think we will continue to see intraday volatility, but across the board. equity and interest rates and currency should see more >> what do you make of the tech selloff? what would you advise investors to do with u.s. tech at the moment >> certainly in a rising interest rate environment and as you mentioned earlier, we are seeing the fed with a huge meeting on wednesday

the higher interest rates and idea of the start of the tightening cycle, of course, that is going to weigh on the highly leveraged tech sector we see the selloff in crypto which tends to trade in highly tech space we would expect this in this environment. we look at the down turn with equity it is growth falling over 13% this year. value following 4% it is those row indtations we e heading into the typing. >> i'm hearing from you there is a little bit of predictability in all that unknown, christian what did you make of the moves in the fixed income market last week it is interesting which way people would fly to in terms of safety >> forecasting markets is not easy at the moment despite the things we could have predicted ahead of time. when it comes to the longer

interest rate. it is where things get interesting. the front will be primarily driven by the expected rate path in the fed market pricing in four rate hikes so far the big question mark with the week is what happens with the russia and ukraine situation the hotter that gets, the more safe haven flows and leading to the flattening of the curve and pushing the ten-year lower we may well continue to see over the coming days. it will the tug-of-war with the fed and the russia and ukraine headlines that we see is the big story for the week i would say the one hike in call is the huge inflows in the market this year i don't think that will stop >> i'm glad you took the conversation, christian. we had flashes from nato the tension is not going away

from russia and eu and ukraine and the west in terms of energy, you mentioned the commodities. what way could the tensions play into the energy market rising prices >> in general, i think the best way to be positioned is, as i say, positioned for a lower move in the long interest rate kcurv. when it comes to commodities, on a broad basis, whether it is aeg or energy prices or metals, they are heading higher interesting thing there is commodities trade in line with other risk assets. to see this breakaway, i think, provides a nice hedge. c they have been creating the self fulfilling feedback loop as a hedge against inflation on the upside that means the etf needs the

underlying commodity with the rising pressure in ukraine and russia, that is the high cause for concern >> christian, as we head to the first policy decision of the year for the fed how is position in currency markets and what is your expectation around the dollar? >> the dollar had a great year last year after the soggy second half of 2020 the market is heavily positioned dollars. we will be susceptible to the pull backs sometimes positioning is way that is the case for the u.s. dollar which ever environment we move in the comes weeks it is a dollar positive environment with the u.s. growth out performing the developed world. rising tension in russia and ukraine. for me, stronger dollar is

another high constriction call across the board >> christian, thank you so much for your insights. let's look at europe markets before we close out the show we have seen a lot of pressure to the down side stoxx 600 falling. the cac 100 is low ftse 100 down as well. that is it for the show. i'm here along with julianna tatelbaum. "worldwide exchange" is up next. stay with us

it is 5:00 a.m. in new york. here is the top five at 5:00 stocks trying for a monday melt up after wall street's worst week after the pandemic began. new warnings from the state department on russian activity on the ukraine border. call it a triple play. three investors call for big changes at unilever and kohl's and one