Transcripts For CNBC Street Signs 20180206

The riskoff sentiment also rattled the crypto world bitcoin falls to 6,000. But the ceo of bp tells cnbc that the rough years are over for his country, shrugging off the recent market volatility as they post betterthanexpected fourth quart earnings. We have gotten through years of difficulty. This market turmoil, we are only back to where we were on the 1st of january were very longterm good morning a bit of a bloodbath in europe the ftse down about 1. 65 . The dax almost down 2 the cac down 1. 25 and the ftse mib down 1. 25 . Lets look at the sectors across europe its not a pretty picture for any of them. We can see basic resources down 0. 25 . Financial services down 2 down. Industrials down almost 2 not a lot of good news for investors in europe. After a long stretch of complacency, volatility is finally back lets look at the vix. Note that it posted its biggest oneday jump in almost two years. It was interesting to note just the evolution of the selling on wall street overnight. It started in a fairly orderly fashion, then it just went ballistic. There was a dash into the Options Market vix hit 3. 6 million contracts, thats three times the average volume once again, large volatility is back lets look at the u. S. Futures they are implying more stress for u. S. Equities. Yesterday futures seemed to underestimate the depth of the selling on the u. S. Markets. Same could happen again today. A lot of the selling has come from the Program Trading so this is the cascade effect. This is what is making it so very volatile. Lets not also forget the politics of the u. S. Shortterm funding measures do run off on thursday. Once again the market is confronted with the entire riskoff or the shutdown that risk resurfacing. Lets not forget about the data. Retail Sales Numbers out on thursday if theres any sign of an inflation rearing its ugly head, that could really feed into the bond market that could feed into higher tenyear yields, and that negative feedback loop continues. Asian shares closed sharply lower, tracking major u. S. Losses Nancy Hungerford is in singapore. The nikkei was hammered. 21,000 looks as though it could be threatened if we see the same scope of declines tomorrow out in asia, is this seen as a duck and cover moment or a buy the dip . Well, i have to tell you, so many guests i was speaking to in singapore are saying it could be a buy on the dip moment, though they are waiting for more weakness to filter through a lot of uncertainty as it is reflected in the steep falls on this board behind me the nikkei 225, we closed about 4. 7 lower for the second straight day the nikkei almost moved in lock step with the percentage move on the Dow Jones Industrial average this did improve from the lows of the session at one point the japanese main market was off by 6 , briefly going into correction territory. So we did see a bit of an improvement in the late day buying overall still sharp waeakness. The worst percentage loss since the u. S. Election and the worst point loss for the nikkei 225 since brexit look at the shanghai it outperformed yesterday in positive territory today, off 3. 38 and look at the hang seng. This was the last market to close among the Greater China markets. Hang seng finishing lower by 5. 1 picking up a move to the down side coming out of the lunch break there. That for the hang seng is the worst performance in two years yes, we, too, have been tracking volatility i know youre paying attention to the uptick in the vix look at the nikkei higher in the session by 51. 7 i know youve been talking about the weakness in cryptocurrencies a lot of the crypto firms in asia bearing the brunt of the selloff. Look at the names, talking about losses on the session today in the neighborhood of 10 all the way to 13 back to you guys for now thank you very much, nancy. Headlines out of Germany Coalition talks extended through the sunday night ted line. They continued through monday night. Were here on tuesday, seemingly this impact on the Financial Markets being felt in the political realm. Angela merkel saying that everyone will have to make co compromises for a coalition. She says the financial volatility were seeing now indicates were living in turn lant ti Turbulent Times and we need a stable government. The biggest sticking points remain over healthcare, policy and labor. We saw yesterday a response from the white house in reaction to the markets, saying that the president is focused on the underlying economic fundamentals, hes taking credit for things when its going in the right direction, now hes saying this is more about economic fundamentals it seems like this action in the market is translating into the political realm with Angela Merkel talking about this. You cannot ignore the politics on the face of it, this looks like a fairly equities positive story. It does depend on what the potential Coalition Partners have to say. Then lets not forget italy. Theres the distinct risk off of hung parliament, policy paralysis, that will create reform paralysis that could be another big risk to the european markets. Bring it back to the u. S. , in the shortterm on thursday, you have the federal funding measures running off then youre back to square one arguably with the Government Shutdown story thats another risk for the markets that they will have to digest bringing it back to inflation and the treasury market and the tenyear yield the scope of the losses in asia compared to what we had out here, markedly deeper. I really think its because of this negative feedback loop in the tenyear yield you have a lot of debt, household debt, thats dollar denominated and potential funding stress there especially if youre knocking on the door of 3 on a sustained basis some are saying 4 herein lies the problem, higher rates environment and the risk the market is only just now starting to come to terms with an inflationary overshoot. And this volatility is not just in the equities market, its in the currency market. We heard about mario draghi talking about currency yesterday, perhaps impacting his thinking Going Forward lets check the oil prices this morning. Weve seen theyve fallen back slightly both brent and wti lets talk about bp, one of the main oil majors. They opened sharply lower despite reporting better than expected Fourth Quarter profit it cited strong earnings in refining and trading the ceo of bp this morning, bob dudley, spoke about the currently healthy state of the oil industry capital discipline is a mantra of the industry i dont think anyone will go off to the races now theyll spend within their budgets here the companies generate cash. Weve generated 24 billion of operating cash flow last year. We have lots of projects in growth we probably have more projects than well be able to spend on theres a lot of growth. I think the industry coming out of rough years is healthy. That cost discipline is interesting. I think the shalers want to see it, but were in a cycle where global sink kynchronized growth appears to be picking up and the Energy Prices are back as high as we havent seen in a while does that encourage you to loosen the purse stringing a bit and looking around i think we all learned the lessons here we need to stay with the lessons. There is Global Growth in energy its not just opec holding it back theres actually Significant Growth coming out of asia and china for products its a bit of both but we all got our financial frameworks bps is clear we had our own headwinds we had to deal with if we do that, well deliver good returns to Share Holders and still be able to grow. Thats important to you i was asking that question about whether it is necessary at this point to deliver that cash back to shalers through the buybacks, given the turbulent period youve come through and the market volatility were experiencing through the last 48 hours. Is there the potential here to build up the old cash bank and wait and see how things turn out . Well, weve got ourselves through years of difficulty. This market turmoil, were back to where it was on the 1st of january. Is this a giant correction i dont know its a bit of psychology were longterm. Our projects are longterm we made that promise to shareholders in the third quarter. We will offset the dilution from the script that was bob dudley talking earlier this morning were joined by nick coleman i want to ask about that concept of holding on to a cash pile versus a buyback can bp afford to hold off on fresh investment can it give that money back to shareholders do you think . Those exploration numbers, the reserve replacement ratio is a nice number to have, still theres a long way from converting a discovery into something you really want to invest in. You still have to prove theres value in that decembiscovery you heard bob dudley emphasizes stability, steadiness, caution on the spending. Thats probably appropriate at a time like this given whats happening in the stock markets we have seen some other companies starting to open the taps on spending a bit exxonmobil last week said it was going to increase its capex this year the emphases for the European Companies is still very much pretty cautious really bp is dropping, saying it will drop its capex slightly. Why are they doing it is it luck there were gas discoveries in egypt, a lowcost place to carry out exploration. Thats targeted at the domestic market in egypt. Also in the north sea we had announcements last week. Not a lot of detail on those announcements yet on the north sea. So i think we have to be cautious about saying exploration success is guaran e guaranteeing the future of the company. They want to position themselves or reposition themselves for growth. It implies reinvesting and sweating the existing assets they have. Yeah. Bp has been focused on cost cutting, getting the company to break even basically at a 50 oil price. Of course some executives are now being asked, you know, look, the oil price is higher, why dont you start spending the message from bp and shell is one of caught. Longer term, decarbonization as a theme is happening. Many oil and Gas Companies are getting prepared for natural gas. Is enough being done on that front . Theyre talking about this as never before there used to be talk about deny them Oil Companies being in denial they theyre having to respond to these concerns and i think theyre placing investments in a lot of different places, not big investments, they dont quite know themselves whats coming. Are electric vehicles taking off or not weve seen bp investing in a new solar project. You have tiny investments from a lot of these companies shell, theres something to turn coffee grounds into fuel for buses. I generate a lot of coffee grounds. I understand the Business Model there. What is behind the slight downturn over the last few months, is rosneft the reason for that shell sold off a lot of Canadian Oil Sands projects, not terribly economical at these oil prices bp renewed its license in abu dhabi at the end of 2016 that bumped up production by 10 . Theyve had a big jump in upstream production. Abu dhabi comes with a slightly higher tax rate. I cant let you go before asking you about i hope youll forgive me, im going a bit rogue here i have to ask about saudi aramco the problem i have with this ipo is will it find the buyers in reserves, its a big black box as you noted oil is a sunset industry i think were seeing the uncertainty coming out of saudi arabia weve seen conflicting announcements, will they float the company in london or hong kong will they get in a state investor like Chinese State investor will they just float on the Saudi Stock Exchange will that Stock Exchange have the ability to really handle such a theres a huge amount of uncertainty i think thats coming from the saudis themselves. Thank you very much for joining us head to cnbc. Com to find out more about what the bp ceo, bob dudley, thinks about the oil market as well you can email us on the show, streetsignseurope cnbc. Com you can also follow us on twitter, streetsignseurope cnbc. Coming up, what is the return of volatility mean for the banks . Joumanna bercetche has been speaking to the ceo of bnp paribas. And lets look at the currency markets. The dollar seems to be attracting something of a safe haven bid. Dollar yen, 1. 09 the euro just above 1. 24 well be back in two minutes some air fresheners are so overwhelming, they can. Send you and your family running. Introducing febreze one for fabric and air. No aerosols. No dyes. No heavy perfumes. It cleans away odors for a pure light freshness. So you can spray and stay. Febreze one, breathe happy. We know life can be hectic. Thats why, at xfinity, weve been working hard to simplify your experiences with us. Now, with instant text and email updates, youll always be up to date. You can easily add premium channels, so you dont miss your favorite show. And with just a single word, find all the answers youre looking for because getting what you need should be simple, fast, and easy. Download the xfinity my account app or go online today. Welcome back to street signs. Intesa sanpaolo reported strong earnings in the Fourth Quarter with net profits at 1. 4 billion euros. Intesa said the yearend cte ratio was 14 , a slight improvement on the figure from 2016 and swedbank reported a rise in Fourth Quarter earnings ahead of expectations. Net profit was at 4. 74 billion swedish crown of pearlss. If you look at sweden as a whole, if you look at the macro, you see a very, very strong growth you see low Interest Rates continuing, a strong europe. Im not so worried the normalization of prices that we see in certain segments is good there have been price increases that are far too exceptional over the past two years. Staying with the european banks, bnp paribas reported a 27 in ficc trading revenue. Pretax income came in at 11. P bi 11. 3 billion euros joumanna is in paris on a day like this, there is no margin for error in bnps numbers. If this twoway volatility exists in the markets, that wont be too bad for their Trading Division absolutely, not just for bnp but the whole banking spectrum theres been a lot of scrutiny about the earnings we had u. S. Bank earnings a couple weeks ago, there we saw big declines in fixed income trading. We saw that in Deutsche Bank, also saw it in q4 earnings from bnp yesterday. The numbers there, were as deep as 27 decline when it comes to fixed income trading but bnp has three major businesses they also have a big retail exposure that is the domestic bank, and the International Services exposure. Talking about the domestic bank, there it is a function of the lending environment, client activity and the persistent low Interest Rate environment that were in so i sat down with the cfo of bnp yesterday and asked if we will see a change in Net Interest Margin and whether the outlook for 2018 is looking more positive, visavis what how things transpire in 2017 lets listen lets take one step back. If you look at domestic markets, if you look at european domestic markets, you can see a pick up in volume. Theres the positive economic environment you see, a demand going up that growth is compensated by the still low Interest Rate environment. So its true the top bin is roughly stable. The low Interest Rates also lead to lower cost of risk. When you look at the bottom line, its up 5 due to that thats where the total dynamic is overall the total of domestic markets on the bottom line is positive there hes saying that the low Interest Rate environment has hit the Net Interest Margin, but at the same time the flip side is that it reduced the cost of risk. That is a positive thing when thinking about the cost of risk and provisioning on their books. All of that may change but broadly speaking it says the momentum is there and loan activity is picking up then i asked about whether or not he sees the macro picture in europe continues with this momentum and growth to continue at the pace as we saw towards the end of last year if you look at europe, you can see a positive economic environment. That economic environment is fine if you look at the outlook for rates, that also looks better. You can look at all of those elements if you take those outlooks, and if they would crystalize, because they could change, we feel confident and we expect that our return on equity target of 10 will be beaten in 2010. Thats how we would read the environment. So there hes saying that the momentum is still there. The my is still looking strong and theyre still positive on the outlook and expect to meet that return on equity target of 10 by 2020. Rising Interest Rates will be a good thing for banks one last comment on volatility we heard from the ceo of bnp a short while back, some flashes hit. That was referencing specifically the market activity weve seen in the last 24 hours or so. There he said that, in fact, what weve seen, the drop down in stocks is less of a beginning of a huge decline and more of a correction due in the markets. Most people think about this return of volatility as a good thing when it comes to trading portfolios back to you guys thank you very much ocado reported fullyear earnings well under expectations ebita at 84 Million Pounds, below forecasts of 90 Million Pounds the grocery seller says nearterm earnings will suffer as it invests in Customer Fulfillment Centers but it expects improvement starting later this year. Shares in austria microsys Fourth Quarter profits soared thanks to demand from smartphone producers including apple. The chipmaker reported a ten fold increase in Fourth Quarter adjusted net income at 141 million euros. The company saw its Fourth Quarter revenues increase 252 a quick look at the european markets. Stoxx 600 is down more than 1. 5 on the day thats a bit of a bloodbath across the screen. Quick break. Please stay with us on street signs. Welcome back to street signs. Im willem marx. Im Sri Jegarajah lets give you some headlines. Global stock selloff. A sea of red over the globe after the dow posts its biggest point loss ever. And Credit Suisse falls to the bottom of the smi amid concerns about the swiss banks exposure to a security the wall street fear gauge, the vix, spikes to the highest level in two years the riskoff sentiment also rattled the crypto world bitcoin falls below 6,000 wiping 200 billion off its market cap in two months and the ceo of bt tells this program that the rough years are over for his company, shrugging of the recent market volatility as they post betterthanexpected fourth quart earnings. We have gotten through years of difficulty. This market turmoil, we are only back to where we were on the 1st of january were very longterm welcome. Lets look at the markets, global stock market kout routs continue all Things Considered at this point in the market, its still relatively early days in the trading day in europe, the markets are off by 2 . The worst extent of losses on the dax. Bnp paribas came out with numbers, and theres little margin for error here considering a market rout date like this. Lets look at the forex markets. Dollar against the swiss getting traction sterling just below the 1. 40 handle dollar yen, 109. 60 euro against the dollar, 1. 240 u. S. Futures are implying more stress to come for u. S. Equities though they did underestimate the degree of selling yesterday. They are suggesting about a 300 point decline for the dow and lets not forget as well that on thursday its going to be an important day. We have retail sales we have the trade deficit numbers as well and we have the riskoff possibly another Government Shutdown. Shortterm funding measures run off february 8th, thursday keep your eyes on the politics and data bank of america and Merrill Lynch predicted a 10 correction in u. S. Equities and that bank expected it to come between the u. S. Thanksgiving holiday and valentines day. At that time i spoke with Jason Ambrose who backed the call for a large pullback jason is with us now for singapore. Were also joined by Tom Stephenson, investment director at fidelity international. Jason, you keep a laser focus on the positioning and on the tenyear yield is this a blow off top or does this correction worsen i think its twofold. I think the story last week is different from the story this week this week is much more about systematic flows, so youre seeing i think the right way to look at this is reverse back to last week and what happened last week. Last week was a problem because you had negative bond equity correlation. So yields going up on the inflation story, the same time equities did not enjoy that. You have this environment that created vol. What youre seeing since then, since you created some vol, now you have vol targeting guys selling equity markets because they have to thats the structure of their business at the same time when you have both active and retail money at a 95th percentile long so there is no natural cushion to handle these systematic flows. Thats what youre seeing today. This does not mean that the bond equity correlation story is going away any time soon it certainly doesnt mean that the u. S. Bond market can stop selling off. I think thats a temporary respite. I think u. S. Treasuries can take a severe hammering over the next two, three months. Youre quite worried about the demand for u. S. Treasuries, are you . Yeah. When you look at the demand. The demand has come from foreign buyers thats well and fine when the foreign buyers bought treasuries for negative Interest Rate policies and also for cny flows, for oil related flows. You have 5 508 billion of issuance coming from a rolloff or new issuance of treasuries due to the fiscal plan trump put into place i dont see where those buyers come from. To say youre going to get atrey market, you have to assume cny will go down to 6 or oil prices to 75. All youre seeing is a recycle of flows where these two guys have been buying treasuries. The domestic demand has been quite subpar so i just dont see, give than we got so much issuance coming over the course of this year, i cant find a natural buyer the same for me applies to equities hence this bond equity correlation story will come back i think you will have some respite, maybe thats today or tomorrow i still think theres an awful lot more flows to be enacted risk parity and cta have not done the dlef releveraging they to do. The biggest story is the risk aversion flows coming back into treasury has wont last long. I think youll get a quite severe steepening of the curve and i think therefore equities will not enjoy that. You can see what could be quite an immense draw over the next couple of months lets bring in Tom Stephenson how soon do you expect that negative correlation that weve been talking about between equity and bonds to return what will be driving that . The important thing to remember about what weve seen over the last 48 hours is this perfectly normal thing what weve had in the last 18 months has not been normal you go back to 1920s, on average we had three 5 corrections in year, a 20 correction every three years. We have not had a 5 correction in the equity market for the last 18 months we point the finger, look at the bond market. Look at the nonfarm payrolls, we say inflation is coming back. These are all post rationalizations of what is the fact that the market was going up far too fast for too long and it was overdue i think so. If you look at the evaluation of the market, yes, its high, but not excessively high it had been going on for too long what is needed then to restore confidence and restore stability . The constant refrain is that earnings are robust. The underlying economic fundamentals globally are equally, if not even more robust, is all that now offset this higher yields environment you have to remember why are yields rising . Yields are rising because the Global Economy is recovering you know, growth is pretty robust as you say earnings are not bad. We have bps earnings this morning, really pretty strong earnings i think earnings is the key. If earnings can deliver, if the tax cuts can drive the 8 hike in earnings that we expect, taking it to 15 , 6 for the year as a whole that will probably be enough to support the market stay with us. It seems bitcoin has not been immune to the market selloff falling below 6,000 in earlier trading. It recovered slightly, but it hit a peak of almost 20,000 in december jason, i want to ask you about this we saw the exposure that a lot of asian cryptocurrency equities faced this morning, cryptocurrency related equities, i should say were you expecting this to last, that ridiculous series of numbers we saw, or was this very, very expected . In honesty, i dont know. I think the problem you have when you enter the cryptocurrency space, its a function of lots of different Retail Investors, a lot of Different Things the ultimate from cryptocurrency is kyc it was obvious at some stage there had to be money laundering, kyc process to signaling where you cant do that it was always going to be a case that there was some regulatory response whether that be from the officials or from banks like youre seeing with the credit card transactions. I think it doesnt matter. At some stage you cant have untraceable assets floating around the globe so i think thats what youre seeing Tom Stephenson, in december and even early january we had Fund Managers coming on every day saying clients peppered them with questions about cryptocurrency do you think that interest is now being stated among Retail Investors or ordinary investors . Im sure it has nothing like a correction from 20,000 to 6,000 to concentrate the mind you know, what is a cryptocurrency worth what is bitcoin worth . Theres no doubt that we think that the technology is interesting, blockchain is interesting, but who knows how to value this. Is it worth 6,000 or 3,000 who knows. Jason, we have to let you go in a couple minutes. Let me ask you to commit to an outlook on the tenyear yield. Were knocking on the door of 3 the sense out in asia, you and i talked about this, is that if we do cross 3 on a sustainable basis, then we could see more stress, especially in emerging markets. I think thats right. Look, emerging markets dont enjoy volatilitiment you liy ma in a world where volatility has been suppressed. Rather than trying to make fluffy rational about earnings, things like that, i think we need to focus on whats actually just happened and how flows are transpiring. When you have retail at 95th percentile long, or almost 50 of nonfinancial household assets in the u. S. , the last time you got to that level was dotcom we were waiting for an accident to happen within equities. So what i think youre seeing is a very temporary respite, where youre getting risk aversion flows coming into the tenyear but the big story of inflation, inflation is coming back inflation is back. You also got oversupply with no natural buyer. In that environment, what i see is a higher beater move lower in prices, a high beater move for yields i wouldnt be surprised to see a 3. 20 handle over the next three, four months. I think the beater will be magnificent at some stage. Jason, always good to talk t you. Well leave it there Tom Stephenson will be staying with us. To learn how the market selloff is crushing the value of bitcoin, head online to cnbc. Com if you have any views on the crushing of bitcoin, dont be afraid to email the show. The address is streetsignseurope cnbc. Com. You can also, of course, follow us on twitter. streetsignscnbc ahead as u. S. Markets lead the way on the global selloff, Jerome Powell is ready to be sworn in as the chair of the Federal Reserve. Well look at what challenges lie ahead for the 16th chair of the Federal Reserve. We were just talking about this a quick look at what the u. S. Yields are doing on the benchmark tenyear they have given back a bit of ground 2. 7301 is where we are standing. For your heart. Your joints. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. A bit of a news flash from carillion, with the benefit of hindsight it was said perhaps the board should have asked more probing about the companys finances Jerome Powell has been sworn in as the Federal Reserve 16th chairman taking over from Janet Yellen Powell faces a baptism of fire with his swearing in overshadowed by the market selloff. He said he was honored by the appointment and promised to remain vigilant and responsive to risks in europe, speaking at the european parliament, draghi said while strengthening Economic Growth boosted the prospects of nearing that key 2 inflation target, victory cannot be declared measures of underlying inflation which exclude the most volatile components remained subdued. They have yet to show convincing signs of a sustained upward trend. Also new headwinds have risen from the recent volatility in the exchange rate. Whose implications for the medium term outlook for price stability require close monitoring were joined by Tom Stephenson im sure youre shocked by what mr. Draghi said there. Yeah. The ecb is going to be pretty cautious, i think, given whats happened in the markets, its unlikely to become less cautious thats true in the uk as well. The bank of england will be cautious no one is going to push this sti tightening except mr. Powell thats the important question at the moment were in a transition from janet yellen to powell its no coincidence ma the markets had a wobble during this transition when grown greealan greenspan ah 87 crash happened soon after. Ben bernanke, quite soon after there was a financial crisis can i throw the boj into that the p where im based in singapore, people are saying they could be the sleeper risk data is looking constructive theyre slowly nudging closer towards 2 they have to be careful how they communicate, but how close is the boj to qt . That would be the unexpected development. That probably makes it the most likely development youre right that the japanese economy is picking up pace we are edging back to a sustainable inflation situation. So, yes, thats a possibility of course its a risk that if they go a little bit too far in terms of messaging, given all the etfs underlying the nikkei and topix, and that that could cause an overshoot in the yen, that he have to be careful how they communicate. Of course they do the japanese stock market has risen extremely strongly over the last year. I think that was reflected in the fact that overnight we had this 6 correction in the topix and the nikkei i think the risks are quite intense in japan tom, stay with us buy now or stay clear . Some market watchers are viewing the pullback as a buying opportunity as others are being more cautious. Logon to cnbc. Com for a range of views on how to react. Volatility has spiked to its highest level since 2015 amid mondays selloff in equity meanwhile two Popular Exchange traded products that investors use to bet on car markets collapsed in afterhours trading. Pro shares short vix fell nearly 18 . The Velocity Shares daily inverse vix, etn, slumped 84 . The drop sparked fears about whether security managed by Credit Suisse would need to liquidate. Credit suisse said the move was reflective of the market volatility and theres no Material Impact to Credit Suisse Credit Suisse shares are lower in european trading. Lets show you what they are doing. It will come believe me have faith right. Tom, european banks, Deutsche Bank was quite a surprise. There was a moment of groundhog day for john cryan he said the restructuring would be material, but the third annual loss and investors do not like the pace of restrict suuctg at the bank. The outlook for european banks ought to be fairly good. An environment of slowly but steadily rising Interest Rates, you know, should be good for widening margins at the banks. The economy is picking up. But theres been baggage there that needs sorting out maybe youre right the pace is slower than people would hope for how would you approach the Banking Sector i think that if you look at the value or the growth trade, which is going to do well in an environment of an improving economy and rising Interest Rates, then you have to think that some of the value stocks which would include financials, would be the place to be i think with so much uncertainty, you know, investors will be loathe to give up completely on this quality growth trade an swing back to the value trade, which has underperformed significantly picking up on that term and switch tact and talk about the Customs Union and brexit thats weighing on a lot of british businesses, this transition period. How it will work whether the government will get a deal on that are you concerned that brexit is not going in the direction that people had hoped it would go i think whats concerning is the lack of direction and leadership the clock is ticking towards next march we have a year to go, yet the government as yet seems unwilling to put its cards on the table. For good reasons we understand why the Prime Minister is in a difficult position, stuck between two competing sides on this. But unless we start to get a bit more clarity, then i think we are going to see businesses voting with their feet an saying we cant have this uncertainty we are going to make contingency plans and put them into place. Do you think investors and businesses in the uk and europe are concerned about a corbyn government one day yes, i think they are and i think investors are taking prospect more seriously than even just a few months ago super thursday, bank of england, where does this put the boe . S will chang on thursday. Tom stevenson there lets look once more at the asian markets. And what a picture at one point the nikkei was down 7 intraday. It will claw back but still deeply negative at the close other markets deeply in the red. And this is where the acts of a higher tenyear yield falls, i think, on emerging asia. Forgive e given that not so positive lead off from asia, lets look at europe as well. The ftse 100 down almost 2 . The dax down almost 2 the cac in france, bnp paribas down 1. 6 . The ftse mib very much in the red, down almost 1. 5 . Lets look at u. S. Futures ahead of the open. Not quite as bad as it was, but the implied open for dow jones down more than 370 points. That is after yesterdays fall of 1,175 points. S p 500 also with an implied open down more than 27 points. The nasdaq did not fair quite as disastrously yesterday, but still looking to open slightly soft so, well be watching those markets closely. Seeing how the u. S. Fairs over the course of the trading day. Thats it for todaysshow. Im willem marx. Im Sri Jegarajah Worldwide Exchange is coming up next. Global markets in meltdown mode the dow posting its single biggest loss in history. Right now we are pointing to another big plunge on the market its tuesday, february 6, 2018, Worldwide Exchange begins right now. This is cnbc breaking news, market selloff good morning a warm welcome to Worldwide Exchange on cnbc. Im wilfred frost, straight to the markets. We were down