point, the dollar overvaluation. we also think the relative value the eurozone recovery as a whole.t is why we like the pound. we worry about china. francine: the pound is interesting. we have a boe that is looking at lessons from the fed about what to do in a hike. >> they are also looking at the ecb. 2015 was a strange year. initially, we thought the boe was going to follow the fed. at the year went on, they looked more like the ecb. the brexit wrist and the referendum are things that will create uncertainty. that will make the banks job more difficult. bottom or the year. -- for the year. scottish referendum. in the general elections. the pound is selling off seems premature. right selling the pound now are running the risk of the -- any rate hike decision will depend on the eu referendum. francine: what are the chances of the u.k. leaving the eu? >> less than 20% chance. thank you so much for joining us. he will stick around as our guest for the hour. here are some of the data you should be watching for the week. wednesday, we have the fed minutes and then it is -- job stay on f

you already have the dollar 20% overvalued ver u.s. is the euro. e dollar can only go in one direction from here which is generally weaker because of interest rate expectations. further hikes in the u.s. seem unlikely. that was echoed in davos. manus: any question to you, if i looked a 10-year government bond yields, trading lower. we lost another 1/10 of 1%. there you go. is it boring? the bonds delivered a moderately good return for january. are you considering bond also in the portfolio? >> you just always have bond exposure in your portfolio. it is an insurance policy when things go horribly wrong. as we have seen in january. bonds have performed well. but they are incredibly expensive at the moment ands unclear about whether interest rates are going to go up or down. you have to keep that in the back of your mind as well. the reality is look at bond yields relative to the yield you get on cash in a bank. they often carry over cash at the moment. that is the way long-term investors are looking at bond exposure. anna: we had one of the comments a

the u.s. dollar. the dollar is incredibly overvalued. you look at ppp levels, if you look at euro-dollar, ppp levels are around 131. the euro is some 20% undervalued versus the dollar. if you look at the yen, it is a very similar situation. strengthensr significantly, you can start to $30, butve toward sub it is being driven by currency moves, not by smart supply and demand financials. from our perspective, oil will stay in the order of $30 to $35. if it goes below $30, it is fast money. if it goes above it is fast money. we're unlikely to see a significant change in policy going forward. companies,for oil but good for the broader economy, and it will go through to earnings numbers. and earning numbers drive share price appreciation. man who previously managed the money of the billionaires at goldman sachs, now the ceo of asset management. now just a quick live shot of a rather beautiful morning here in london. currently we are seeing the ftse 100 futures going down for the start of the market trading. up next, it is all about retail. ♪

the currency. if that respect they want it to decrease in value because it became overvalued as the u.s. dollar rose. and they are intent on managing this. the big lesson we'll learn is are $3.3 trillion in reserves enough to manage the currency of the world's second biggest economy? charles: they used $108 billion of that last year. they were at $4 trillion in january of 2014. we all know when we feel like we have money saved for a rainy day, maybe even $4 trillion is not enough. is there a chance we decouple and take our cue from domestic events. what we are seeing in china was a trigger and investors should be worried about that. underlying the index numbers we call the stock market, the nasdaq and the s & p which are down 10%. the real stock market, the average stock is down 24.1% through its 52-week highs. the best performing sector in the market, the average stock in the consumer staples group is down 10%. it will be filled by the indexes coming back down to meet where the average stocks are, and it will be ugly. charles: i wanted to go into a detailed nuance where the rest of the market

of depreciation continues steadily, after all, the currency is overvalued and needs to catch up with other occurrence sisz in the world against the dollar, i think that steady rate will be largely benign, but it's going to be the occasional flare-ups or hick upthat will be the real issue. >> very quickly for china, hard landing, soft landing or continued flight? >> i would say 80% chance of a soft land been with some hiccups along the way due to policy missteps. >> paul, thank you for joining us. >> thank you. >>> paul christopher with wells fargo investment institute. >>> and coming up, some towns reap the rewards of strong oil demand. now with prices in a free fall, a look at the fallout in with texas town and how it might weather the downturn. >>> here's what to watch for on tuesday. earnings season starts to shift into high gear with a pair of dow xon ntsds. more financials are out with morgan stanley and bank of america, and is the best s&p performer in 2015 netflix? that's what to watch for tomorrow. >>> another blow to the markets as we start 2016. it's a carryover from 2015, collapse been oil prices, both the domestic and global

for the past four or five months, the dollar, especially against is up more than the current interest rate is pricing in. and i think it is largely, substantially overvaluedgainst major currencies. i can only see the dollar going down from here, but it is going to be slow growth because the other central banks will try to push back to ensure currencies are weak. markets,ally balanced the ones that have high deficits as well, and the currency is very high, it will be a different story. manus: stay with us. of next will talk about shell. it is their shareholder vote today. ♪ it is earnings season. erickson gives us the numbers. fourth-quarter net sales, 73.6 billion. excluding the restructuring, 36.6. 37.5, they have missed on sales and dividends, expecting a 3.7 swedish krona that i just made up a currency. for 3.55.te was estimates were at 70. more to come. in the meantime, let's talk about the rest of the earnings we will get. as the micro, and less than 30 minutes, we will also get numbers from boeing, facebook. and ebay, those are all to watch today. in the meantime, the bloomberg first word. shares headed for the biggest two-day loss since last year.

the currency has become overvalued because it's tied to the u.s. dollar not rallied a lot because the u.s. fed is the only major central bank in the world that has a tightening bias. it's an impossible trinity idea were you cannot have independent monetary policy. with free movement of capital at the same time. there is a form of tightening of liquidity conditions and that is what is plaguing the market. from my perspective, the currency wants to come down and it has and the chinese already devalued last august and what we saw in november and december and january is more of a stealth the valuation. in november, policymakers said the currency needs to go lower. i don't think there is a lot of debate that the currency needs to come down. how does it come down? it a massive devaluation? i don't think that is likely because that's too disorderly. will it be a slowed evaluation with as little disorder and volatility as possible. that's what everybody is hoping for. devalue are not devalue? >> not devalue. i think the currency will go down as they try to adjust

my plan, not that i know what i am doing, my thought is the dollar will turn into a very overvalued item. it may turn into a bubble at which point i will sell my dollars and probably buy gold or the gold will be down at that point. i have made many plants in my life and the market plunge me in the face many times and says we are smarter than you are. that is the way of looking at it right now. gold commodities when i sell my dollars. that could be a year from now. dagen: gold is up about $7 an ounce. it did top the 1100-dollar mark slightly below the level right now. in terms of gold because you invest in all commodities, and you've been focusing on agricultural commodities as long as i've known you. with gold, white gold? it just doesn't have the uses and the up occasion in our lives that other commodities to whether it screens, whether it is other metals. >> well, you can buy silver. if i were buying one or two at the moment i would die silver because it is down more than gold. many people say -- i'm not the first to tell you it's a barbaric relic, et cetera, et cetera. who cares wheth

dollar up another 30%. that is why the earnings are weak. we have already had that increase. they cannot just keep grinding up our dollars. overvaluedhank you both very, very much. we are just a week away from the iowa caucuses. i am talking about the folks that give money to the candidates. a week from now. they may decide to put up or shut up. leave. ♪ . . . . neil: we have a tweet from donald trump focusing on his major opponent we're told in iowa. it is time for ted cruz to either settle his problem with the fact that he was born in canada and was a citizen of canada or get out of the race. say what you will of these questions as to whether ted cruz is natural born american citizen , donald trump has discovered they have arrested what was ted cruz's ascent in iowa. in fact in some of the latest polls, which are all over the map, they certainly show that ascent stop and donald trump moving in front. some polls a little bit. some polls a lot. noelle nikpour is says that is the idea to have voters question whether ted cruz is viable candidate going forward. noelle, when you add the state's governor questioning whether cruz is viabl

the recognition that risk premiums are far too tight. markets are overvalued. central banks to not have big bullets. there is one more dynamic which i think is important which is basically dollarhe quality -- dollar liquidity has gotten much tighter. this is a negative cocktail for asset prices. >> it is interesting. wherecally think that consensus was look something like this. the u.s. looks fine, labor market looks good. china is a bit of a worry but we know about that. we alternately think we are late cycle so the risk are not necessarily in 2016 but in 2017. on the back of that, i'm going to sit overweight equities and i thoselan to sell equities in june. that sounds like a wonderful plan but the problem with that is then there are people like me who scuttled that. that's the consensus view. they will plan to sell in june. i will sell now. i think there is that overweight in that position he is completely taken down in what has been happening over the last few days or last few weeks is that all of the risk that people thought were going to happen in 2017, all it now looks like -- francine: in the first two weeks. >> 2016 risk. that transition has exaggerated some of these.

are the greatest overvalued company and they've since lost some 20, 30, $40 billion off the valuation. i think that the company has another 10, 20% downward. that's roughly about 100 billion dollars're overvalued by and i think you're going to see it happen. i do. i think that people are going to wake up to the fact that this company is living off the past, and investors are all betting on the future and frankly, in a world of smart phones where android continues to get better every year, absolutely better, china, which is a market that's slowing down. where you have showme one of the biggest competitors is absolutely is making traction on apple. there's not the innovation that they need, which is what the foundation of good technology companies are based on for them to continue to have these type of valuations. stuart: all right, we hear you, you spoke very loudly and clearly and made your case, we appreciate that. eric schiffer, we'll remember exactly what you had to say. thank you very much, eric. >> thank you. stuart: e-mac, you were on the call. i'm not going to ask you about eric schiffer, what did they say on the call to the company? >> they said that it's basically the gl

the currency is very overvalued. the currency has been de facto pegged to the u.s. dollary over the last decade. it's sort of a catch-22 situation. in september when they devalue the currency, they did not gain anything because all of the other emerging market currencies fell even more. so the chinese currency was close to an all-time high. a good point.make you begin your comment with chinese debt. art hogan, i want to put the question to you. the contagion from the slowdown in china, i see it in the commodity market. the big concern is that it comes by the credit market at some point. npl's in china are picking up. how close are we to a credit event? >> if we are going to have a credit event, it's not decades. it's a matter of years. but it's if there's any major change in policy and china. what is happening is a generational change in how they do things. my guess is they are much closer to not calling into the abyss on the credit side of things. that is part of the conversation for sure. i'm not as concerned at their level of debt. it is certainly not japan. erik: we ar

the currency is overvalued. there is capital flight. people trying to leave the yuan. the chinese have to meet it with dollars dollars each time they do that. it is an untenable situation. the free market solution is for the yuan to be much lower. >> the solution is for it to continue to weaken until the balance of payment stabilizes. it depends on how much capital flight we get out of china. we know that corporates are hedging. remember that the chinese was a one-way bet until not so long ago. there was no point for corporates to hedge their exposure to the dollar. now, it is different. so we have corporates hedging. we think most estimates indicate that about 50% or 60% that was out there to be hedged has been hedged already. there is more room to go. there are retail investors trying to diversify their exposure, getting some of their money and savings out of china. there is still capital flight. the move would have been a lot more dramatic. >> let's bring it back to the u.s. this whole notion of decoupling, that the u.s. could stay resilie resilient economically. is the u.s. economy and the u.s. stock mark

the dollar for the second half of the year. a leg upou will get and we are looking for a reversal over the next monetary year. maybe not a big reversal. it is pretty overvaluedo historical levels. host: great having you here. have a great one. a new year means new challenges. we will try you what the biggest goal is after this. host: we have companies due to launch products and we are bringing in -- what is the game plan? >> the holy grail of virtual reality is something not present and it is a sense of being somewhere when you are not. traditional media gives you a sense of virtual reality. there has been a control of lineup of sony has a demonstrations of the specific poundingom a heart bank robbery to being part of a sports robot. we spoke to the head of the studio's about that. you can put yourself where this is going. these withoutence leaving the comfort of your home. getting this from many different industries. quickly, this is far from a perfect science. what are the challenges? >> users feeling uncomfortable or sick in the experience. the challenges are for the artist and the experience in a way that is compelling without being overwhelming. right.

dollars and that's hurting u.s. exporters. are we on the counties of a -- the cusp of a recession or in a time-out on the stairs? we have had an overvaluedegression to the mean. markets go up and go down and they'll eventually find they're equilibrium again. those two camps right now, recession versus this is normal for the market, they're battling and you're seeing that battle take place in the pricing. >> the volume is really high. is there -- is that because everybody is in and making plays? 8y÷ prone for that? >> the volume being high, some market strategists say that's a signal that maybe your getting a purging of the market. everybody is getting worried and selling into the market and that's the kind of catharsis you need before the market finds its bottom and begins to go up, or it might just be people selling wju level. but we have to kind of look at what has happened since march 2009. the market then was at 6600. we have to remember that. it's at 16,000 now. so there's been a very big runup,u("íq and there has been overvaluation in some prices and that's been discussed extensively. now maybe what you're seeing is some of that wo

whether it was overvaluation of tech stocks with clinton and crazy accounting of some of those companies that you well-documented over time. what we're having here, the good news the dollar stablized and gotten stronger. so we're having influx of capital in this country. the problem is what is holding back some of the entrepreneur, and fact real wages in this country are actually still down from 2008 is small businesses which are really, many of those entrepreneurs and family businesses have gotten hammered by huge taxes and regulation. we need that the to get rolled back for a real recovery. neil: did you see that rolled back, dave, in a 8th year of a presidential year tends to be problematic? >> tends to be problematic. this president likes to regulate and power of central planning which the china thing shows it doesn't work, doesn't work on economy or scale of u.s. or china. you have got some bad mojo going on even over of american innovation and entrepreneurialism. neil: bad mojo? suzie, he is your philosopher king. you have got the wrong philosopher king. happy new year to all of them. we told what you is going on with saudi arabia and iran. they're not talking with

overvalued markets. but this is not about the payments and settlement system. the contamination to the real economy takes longer and not as hard as it would have been otherwise. the dollar, remember, the dollar price isn't also interest rate expectations. and i think the market is right to question the fed as to whether we'll get four hikes this year. i think we get two, not four. what you see happening, the interest rate market is repricing the probability of interest rate hikes and with that the dollar strengthens against the euro. >> one catalyst in all of this has been energy prices, oil, kelly and i have this friendly disagreement about its impact on the economy. one of us thinks that the decline is not that great for the economy in the ago agree grd other thinks it may be. should we be celebrating this decline in oil or worrying more about it? >> so a couple of things. first, in the old days it was easy, we were mainly consumers, we would celebrate lower prices, today we're both consumers and producers and big producer, it's harder to celebrate. it depends which side of the equation you're on. but bill, you've heard me say, there are three unhinged markets, being

the market was overvalued. all i'm saying is, look, here -- you're running china. not bad, becky, you're running china. okay. currency's falling. what do you do? prop it up by selling dollarsyou go in heavy deflation. >> yeah. >> if you sell treasuries, you take money from the system, that's deflation. on the other hand, if you come in and let the markets settle, let the markets settle it, you have stimulus of the it's slightly inflationary. people don't have this story right. the thing to do is nothing. stop the circuit breakers. stop trying to control the currency. by the way, make an announcement that you're going to stop financing these state owned enterprises which are a deadweight around the chinese economy, and they are pour iing billions and billions, and that's why people are getting out because they see how stupid. i thought we were past that. they are still doing it, those guys, they are like the governors in new york, illinois, and connecticut. you're still doing it. you talk the game, but you're doing it. that's what china is. why is that? historical revolution. >> joe, he wants china to let things fall where they may, but you want us to control interest rates