Have data points pointing at clients and investors being more optimists and ready to be constructive about the situation. They are really looking for concrete actions by the new administration in the u. S. Bts head of Continental Europe steps down amid via italian accounting scandal but the companys ceo says the situation is under control. Time to raise a glass as lvmh posts record fullyear profit and sales lifting the stock towards alltime highs spurring gains throughout the sector. Good morning. Welcome to street signs on the last trading day of the week. Enough earnings optimism this morning but thats not enough to lift the overall stoxx 600. We are looking at a bit of weakness across the overall heat map today. The broader index lower by 0. 3 . Yesterday the dow jones hit yet another record high stateside. The s p 500 and the nasdaq pairing off their own intraday record highs. In europe, investors are digesting a fresh round of earnings and m a activity. Lets see how that is carrying out into the individual bourses. The ftse 100 the outperformer, just barely in positive territory. Tesco is the real performer there. Elsewhere the xetra dax is lower by 0. 2 . The french cac 40 falling closely behind by 0. 3 . Italian main market lower by 0. 4 . How these moves are playing out in the sectors, lets give you a shot. A fair amount of red across sectors except retail getting a boost. That in part due to the tesco deal for booker. That lifting beverage higher by 0. 2 . Travel and leisure higher by 0. 4 . Lufthansa shares are on the rise after a broker resources. Overall that sector basically flat. Just clinging in positive territory. So lets tell you more about the deal of the day. Shares in tesco and booker are leading the pack in europe after britains biggest supermarket announced a merger with the uks largest cash and carry wholesale supplier. The merger values booker at 3. 7 billion pounds. Tesco said the deal would result in booker shareholders owning about 16 of the combined group. Dave lewis said the deal is completely on strategy. He said discussions on the booker acquisition began a year ago and that Richard Cousins was not supportive of the deal. Cousins surprised investors when he stepped down earlier this month with no explanation provided. Investors are cheering the deal this morning. Lets give you a check on shares of bt. Third quarter earnings and revenue came in line with estimates but were overshadowed by a profit warning earlier this week after the Company Revealed an accounting scandal in the italian division. Revenue rose 32 . According to people familiar with the batter, Corrado Sciolla will leave the company in the wake of the accounting scandal in italy. On tuesday bt posted its biggest oneday fall after going public in the 1980s. The italian accounting scandal rocked the firm costing 530 Million Pounds with bt under investigation in italy and facing two lawsuits from u. S. Shareholders. Separately bt has warned of slowing demand from the uk, the Public Sector and International Corporates since the brexit vote. Nonetheless it committed to raising dividends this year and next. But questions remain around gavin patersons leadership and pay package after he received 5. 4 Million Pounds in total compensation in 2016 alone. So much to go through this morning. Lets bring in guy petty. Guy, good morning to you. Thank you for joining us. What a week for bt. The negative headlines surrounding this company, spooking investors. The big question is have we seen the worst of it when we talk share price reaction . In our view we have got to the worst of it. I think theres three things that happened this yeweek. Firstly you have italy, which is a oneoff event priced in. Secondly you had the warnings in the uk Public Sector in the corporate businesses. That is slightly more fundamental. There could still be slight changes to that expectation Going Forward. But given the cuts this week, theyre probably relatively small. On the positive side, the fixed line and the eu business continue to do well. So, weve probably got a few things to continue to pull a move, but the real downside in our view is now largely baked into the share price. On italy specifically, youre calling it a oneoff incident. By the case itself is still lingering with question marks surrounding where we go next, the leadership involved. How detrimental do you think this factor alone could be . I think to accompany the pride its corporate governance, this is a big negative event. And it will take a long time to recover that. Were suggesting there seems to be country specific things going on in italy, that so far have not been seen to be anywhere else. And therefore its a little bit more compartmentalized. Yes, credibility has been broken. It will take a long time to restore that. Youve already seen or already mentioned there will be certain Management Changes and probably pressures for other things Going Forward as well to try and improve Investor Confidence and sentiment. In reality bt has to deliver and solve some other issues, namely it is still negotiating over the openreach solution, it needs more definition in its pension and needs to get through the next set of Champions League auctions. Clearing those three hurdles will give investors more visible in the midterm. On the openreach case when will investors get a clear solution on this one . And are the risks to the down side already factored in . Theres a lot of uncertainty. I think bt put out comments to say they can get this voluntary agreement with offcom. That would be constructive. Sooner the better. Every day without the agreement highlights they still remain distant. But the key thing is to get a solution there so we can work out what it is and move forward. You can argue that 2016 share price reaction to b it was also quite negative. A lot of that was pricing in open reach an pension issues. Guy, on the Champions League issue, we understand its going to be another competitive bargain going on for this one to claim the rights. Is there a risk that bt loses the rights . What will they have to pay to secure them . Our assumption is theyll have to pay about 25 more to keep the rights, but also sky might be more galvanized to do something. So there is a risk that they do lose them. That would be even though in the shortterm that would enhance the profitabilities and cash flows if they lost the rights, if the longterm it would put a dent into their pay tv strategy. Its very important for the next three to fiveyear outlook that they secure those rights. Do you think the fox sky bid, does that thing that anything for this auction . Does that move them along when you talk about sky being galvanized to try to get them . It gives sky flexibility. Probably doesnt change the strategy but they dont have to be so share price aware. Bear in mind the share price is effectively under offer. So it remains a big fox issue. It is slightly less relevant for sky. But in reality, you know, the fundamentals of what sky wants to do in europe and over the Champions League shouldnt have changed very much. Guy, thank you very much for joining us. That is guy petty, head of European Telecom research at mcquarry. Lets give you a check of shares of ubs which suffered cross border outflows of 7. 4 swiss francs. The bank beat net profit forecasts and reported a near 50 rise in pretax earnings just in the Fourth Quarter. Lets get out to carolin in zurich and has been following the results closely. A more upbeat, optimistic tone from ubs this morning. Yet investors dont seem convinced. What do you think is going on here . Shares are down probably for a couple reasons. This stock, like many other banking stocks, had a good run thanks to the trump rally. But also if you think about this, ubs is trying to morph into a wealth manager. It is one of the biggest Wealth Managers in the world and lessened exposure to Investment Banking. Yet in the First Quarter its the Investment Banking that delivered the beat and not the Wealth Management so theres a sense of disappointment that margin in Wealth Management and the outflow picture is still bleak. There is one major exception. That is Wealth Management americas given the trump optimism weve seen a pick up in activity there. Lets listen to sergio motto. We continue to see good momentum in our u. S. Businesses. We had good results, so that underlines the benefits of our diversified footprint. There has been a bit of positive momentum building into the Fourth Quarter, but, you know, im happy with the solid results. How much of this is down to the trump rally . In the u. S. We saw u. S. Peers benefiting from that but you have a slightly different product in regional mix. You are geared towards asia and equities, not towards the u. S. And debt. How does this effect you . Its true on a relative weighting we are smaller in the u. S. But we have been also making Good Investments in the u. S. In the last few years. You saw, again, good momentum and not only in our Wealth Management businesses but also if you look at our equities, the results were very good. So clearly the positive momentum post the elections has translated into more activity in the u. S. In the rest of the world i would say the situation was more muted. For the last was seems like five or seven years, whenever i spoke to you you have been cautious about the outlook. For the first time now, this, to me is surprising, youre more optimistic. Again, is this about the trump effect or is this about more political visibility overall . Well, look, ill try to always take out my own emotions from this kind of assessment. I look at facts. So i would describe our past statements more realistic. Today we are realistic because we have data points pointing at clients and investors being more optimists and ready to be constructive about the situation. Still they are really looking for concrete actions by the new administration in the u. S. To go into investing in the markets, but what i think is much more important is also potentially invest in their underlying businesses, which will really boost the economy. So you done think this is quite the turning point yet when it comes to client confidence, which has been incredibly low over the past couple years, not just affecting your bank but hitting the industry. Theres positive sentiment, the catalyst was clearly the new u. S. Administration. Probably there was also a desire, human desire to think positively after so many years and quarters of gloomy environments. So we need to see if this is sustainable. There is a good momentum. Again, we need to see facts and consistency in delivering those structural reforms. That was Sergio Ermotti the ceo of ubs. In a recent note by Deutsche Bank analysts they remain cautious on Wealth Managers. Why . They expect the recovery and transaction margins to remain muted. They have preference for fixed income Capital Market exposure by the likes of barclays. Did you get any more indication on the litigation questions . I know there was an additional provision for litigation, but ubs is trying to put this specific question mark behind them. How are they doing in those attempts . Litigation has always been an issue for ubs. They settled some of the high profile cases like the libor case. We have got credit suisse, Deutsche Bank now settling with the department of justice in the u. S. Ubs still needs to do that. However the total tally for ubs is expected to be a lot lower. This quarter, for example, they only set aside 170 million swiss francs. The total tally for litigation provisions in the u. S. Is 3. 1 billion swiss francs, compared to ubs. We are still waiting for that issue, we are still waiting for french authorities on tax matters. I asked Sergio Ermotti about that this morning. He didnt have much more clarity on that. Ceos of banks are quiet on that type of thing because they cant talk about litigation issues. Hopefully this will be settled for ubs in 2017. Thank you, carolin. Stay warm and happy birthday. Elsewhere, if youre looking for another reason to celebrate, coming up we will be talking about the year of the rooster. Thats right. Asia is getting ready to celebrate the Chinese New Year. Were asking whats in store on the geopolitical front and investors. Get in touch with the show, streetsignseurope cnbc or find me directly nancycnbc. Did you know, 90 of the Worlds Largest supercomputers run on intel . That means you can take a universe of data in your case literally and turn it into medical discoveries, diagnostic breakthroughs. Proof that black holes collapse into one singularity. I dont know what that is. But yes. Innovation runs on supercomputers. And supercomputers run on intel. You are super smart. And super busy. Ooh ufo false alarm, eyelash . Good morning. Welcome back to street signs. Lvmh posted record fullyear earnings and revenues. The top and bottom line numbers outpaced expectations in 2016 with a diverse geographic mix of gains thanks to strong sales in europe and the u. S. Combined. This along with a pick up in mainland china. The groups ceo tempered enthusiasm warning low stocks of louis vitton and hennessey cognac could weaken growth next year and Political Uncertainty could weigh on the second half. Banco de sabadells second half earnings slumped by 51 year on year after high court costs. Net profit hit 63. 5 million euros. The spanish lender said it will give a strategic update on february 7th. Shares lower by 1. 6 . The ceo of intessa Intesa Sanpaolo is considering a joint venture with allianz. Intesa is said to feel free to look at options to grow provided they dont hurt the banks capital strength. More than 100 italian mps have questioned the deal in parliament asking the government what steps it plans to take to prevent a foreign takeover. Joining me is james andrews. James, good morning. Good morning. Thank you for joining us. We were going to the break talking about Chinese New Year kicking off this weekend. What does the Chinese New Year have in store for european equities . For european equities, in the shortterm the numbers look good. Fundamentals in europe are positive. However i am nervous about the overall political backdrop, and the italian banking situation, which is obviously a loud that looms. Youre not the only one nervous about the italian banki political back drop. Do you think if we get a reform candidate, we could see some upside . Certainly. The nervousness is around this populous movement, brexit, trump. That, i guess s wheshgguess, is nervous now stems from and were concerned about growth and in terms of the banking crisis in italy, the knockon effect that could have, italy is the Third Largest issuer of debt in the world. The retail exposure to italian banks is the real concern here. Driver of italian gdp has been domestic consumption. The italian Retail Investor holds about a third of overall italian banking debt. It holds a half of the subordinated debt out there in italian banks. Under the new rules, theyll have to take the first hit before we can see state aid come in an support banking. Therefore theres got to be a concern about their growth and therefore the contagion elsewhere across. And a bit of concern on what that means for Retail Investors who hold the debt, how that will play out into italys own elections. Is that a risk investors have yet to take in . Certainly. If we think of drivers of this populous movement it has been the impact on the middle and lower incomes not seeing a benefit to this great recovery thats allegedly happened post financial crisis and weve seen in markets. Certainly a domestic consumer hit strongly by this impairment in italian debt. You talk about the fears around populism. Yet the poster child of populism in the United States, now President Donald Trump has been linked to this increase in stocks, the dow 20,000. Do you think this increase in animal spirits as they talk about it, will spill over to europe . Will we see more of that . What does that mean for investors right here . Obviously in terms of optimism, we are seeing a Consumer Price rise in europe grow at their fastest level in three years in december. So, there is inflationary pick up. There is positive sentiment. And expect germany Inflation Numbers to come out next week. That could well touch 2 . So, yes, theres a lot of positive momentum at the moment. I guess the negative is the uncertainty that surrounds banking and, indeed, politics in europe, whereas the europe theyre out the other side of the elections. Theyre out the other side of the banking crisis. Their banks are well funded. Everything is positive from a banking side. Obviously what were hearing from trump is this stimulus that hes looking to bring through. Lowering taxes, increasing spend, america first. Its interesting on the inflation debate because some voices will say dont worry about it, including ecb president mario draghi, theyre looking for a more sustained uptick in prices. How should one protect their portfolio against inflation risks . This is a key theme. It will be a key them in the uk, weve seen that massive fall in sterling which will see a cost push inflation. Therefore we certainly are bringing inflation protection with it into portfolios, looking at infrastructure assets that have that rpi linkage, looking at bonds, theres a fair bit of inflation priced into uk links, but in the u. S. The break even rate is still below the 2 target that we have in place from the fed. Certainly from a uk perspective, were looking at real assets with rpi link cash flows as well as the index bond angle. Would you avoid companies that are more exposed to input inflation in the uk . I spoke to two Business Leaders yesterday, one being the unilever ceo, and both say we will have to increase prices if sterling continues to deprecate. What do you think . We saw that last year with unilever and tesco. The marmitegate, if you will. That real impact of the inflationary environment, the cost base that unilever has that import cost increase pushing up against tesco saying theyre trying to take market share. Theyre trying to lower prices, theyre trying to protect their market share and their place within consumers. Knowing they cant pass that price rise on. I think thats the key issue here. How much are we going to, as uk consumers, be able to wear in terms of cost increases, wage expectations, looking at no more than 2 rises, yet unilever they mentioned 16 , 17 increases in uk costs. Started off at 10 . Yesterday they were on the defense saying this is a reality we face. Dont blame us for marmitegate. That was the message. James andrews, thank you for joining us. Stay with us. We have to take a quick break. You can check out our World Markets live blog. It runs throughout the european trading day. You can also get in touch with us on twitter, im nancycnbc. Good morning. Welcome back to street signs. Im nancy hungerford. These are your headlines. A tasty deal. Tesco and booker surge to the top of the stoxx 600 after the uks largest supermarket agrees to buy the food wholesale group for 3. 7 billion pounds. Ubs shares fall after it suffers significant outflows in its Wealth Management business but the banks ceo, Sergio Ermotti, tells cnbc he sees improved client confidence. We are realistic because we have data points pointing at clients and investors being more optimists and ready to be constructive about the situation. They are really looking for concrete actions by the new administration in the u. S. Bts head of Continental Europe steps down amid via italian accounting scandal but the companys ceo says the situation is under control. Time to raise a glass as lvmh posts record fullyear profit and sales lifting the stock towards alltime highs spurring gains across the sector. Good morning. Welcome back to street signs. Happy friday. A happy Chinese New Year to all of you celebrating this weekend. Lets give you a look at how u. S. Markets are set to open after another record high for the Dow Jones Industrial average on wall street yesterday. Green arrows again, implied open by 18 points. The s p higher by 2 points. The nasdaq called lower by about 4 points. Earnings in focus again after the busiest earnings day of the year. On the data front investors will hone in on that first estimate for Fourth Quarter gdp expected to come in at 2. 2 . Well look for reaction on that one, particularly in the dollar. Right here in europe a check on the markets in the last trading day of the week. Red arrows. The ftse 100 lower by 0. 1 , this despite strength in tesco. The xetra dax lower by 0. 2 . French cac 40 lower by a half percent. Italys ftse mib trailing by 0. 8 . Lets give you a closer look of the fx curve. Watching Dollar Strength again overnight. Whether or not that carries over to the session, higher against the japanese yen. The euro moving higher against the greenback. 0. 1 . Sterling taking a breather after touching that 1. 26 level. A big deal for uk Prime Minister theresa may meeting with u. S. President donald trump. Well watch for that action throughout the day. Elsewhere lets turn to the election season in france. Francois fillon has defended his wifes work as real. This after french authorities opened a claim that she was paid french funds while holding a fake job. Her work is real. I will prove this naturally with the prosecution. Its plain to see behind this the real question is how to fight the winner of the conservative primaries. Joining us now for reaction on the ground is claire fournier. Good morning to you. Good morning. Listening to Francois Fillon on the defense over this matter. I have to wonder in the posttruth world were all living in, even if hes successful in his defense, is the claim already out there . Is it already damaging his perception in voters eyes . It is damaging. It is a blow to his image. If you look at a poll released this morning, out of the people that were asked do you find mr. Fillon honest, 67 said no. So that is devastating for his image, because he was styling himself as the candidate tough on public spending. So this penelopegate as we call it in france is damaging for him. Even though she was doing real work, she he stated again last night sorry, the fact he was hiring his wife, and it wasnt really clear and transparent is really damaging to him and to avo avoid further revelations, he also said he hired two of his sons while in senate. Its a bad time for Francois Fillon, and last night he said i will renounce president ial candidate if im charged with wrongdoing in that matter. If it doesnt get to that level, if he remains the candidate what does it mean for his rivals . Some were saying Marine Le Pen, it could benefit here what about the socialists . We have the socialist primary, second round runoff. Do you think theyre sitting back saying this could help us. You would think it would help the National Front, wouldnt you . But Marine Le Pen is facing the same sort of accusations regarding her Parliamentary Assistant in the european parliament. So, we have not heard a lot of the National Front about this penelopegate here. As far as emanuel macron, he can present himself as a liberal, a clean candidate with integrity, and so far no affair has come out about macron. Fillon is still in the threeway race with Marine Le Pen and macron, but it could benefit his opponents. Claire, well await the results of the second round of the socialist primary. Well be back with you on monday. Thank you. Have a great weekend. The Dutch Justice minister has resigned in a rou over a compensation deal that prosecutors made with a convicted drug trafficker in 2001. The ministers departure is seen as a blow to Prime Ministers center right liberal party. They are trailing in the polls ahead of the countrys general election in march. Barclays is preparing to make dublin its eu headquarters postbrexit. Speaking to cnbc in davos, jess staley said the banks commitment to london remains. Well have to make an adjustment to the brexit move but it will be an adjustment manageable for barclays and will not threaten the center of london or london as a center of finance for europe it will not threaten the activities of barclays in london. Were a british bank, committed to the united kingdom. Well be fine. Ford europe has posted a record fillyear pretax profit of 1. 2 billion. However the group warned that 2017 earnings in europe would be lower mainly due to higher costs associated with product launches and the weaker sterling. I had the chance to speak to jim farley and asked if the automaker was concerned about a potentially weaker consumer environment due to brexit. The biggest result, biggest impact is definite lafinitely t currency. We see many brands with pricing, were seeing in technology, apple and microsoft and others have taken pricing, over time there could be a scenario where customers see higher prices. Thats not good for business, consumer demand. The biggest driver for us is that currency. When you talk about the currency impacts, are you concerned by theresa mays recent plans to take the uk out of the Single Market . Do you want to see some sort of special carve out for the Automobile Industry . Well, the industry the Auto Industry is so critical for uk and e ushg trade. Theres 12 million jobs linked to our industry. For ford, uk is the largest market. We have been Market Leader here for many years, 40 years, in commercial commercial vehicles 50 years. We have 50,000 jobs in the uk. We have a different footprint here where were exporting a lot of engines to europe. Actually all the engines to europe which get reimporteded. We are encouraged by the Prime Ministers statements around zero tariff environment, especially for auto. That would be critical and its our highest priority. If the european leaders sit around and say you cant have that, if you want more control over immigration, would you look at starting to close some of those engine factories in the uk . This will be a long process. It will take many years. You know, were optimistic. This is a critical industry for both the eu and the uk. Its critical for ford. Weve had very good discussions, encouraging discussions with all leaders in the eu as well as here in the uk. And we think that the governments position as far as euro tariff environment is the right position for the industry. You know, no one knows how this will play out. But we think that the industry is so critical for europe. I also asked whether ford had increased prices following the vote to leave the eu and whether they expected more increases to come. Ford moved last fall to increase our prices as we saw sterling deteriorate. It was a very modest increase, but we are the Market Leader. But we, since then, have seen every manufacturer also increase prices. Like weve seen on food, you know, technology. Since then, you know, weve had, you know, really modest price increases. The market has been much stronger. So far we dont i dent really see any further pressure, because theres such a competitive market here. Its great for customers. Customers are continuing to see great opportunities to buy vehicles. The market continues to be really strong. So there has been some pricing in the market but it hasnt slowed the market to date. Uk Prime Minister theresa may praised Donald Trumps victory as defying the pundits and polls. She made a speech to republican lawmakers at a retreat in philadelphia ahead of her joint press conference with President Trump due to take place today. Andrea mitchell has more on what to expect. Reporter britains new Prime Minister, theresa may, her First Official visit to the u. S. , addressing republicans today before meeting President Trump tomorrow. Both leaders elected on a populist wave. Because of that great victory you have won, america can be stronger, greater and more confident in the years ahead. Reporter may is here on a mission hoping mr. Trump can be an economic ally. After brexit, and britains divorce from europe, she needs a trade deal with the u. S. I predicted brexit. Remember i predicted. Everybody said what does trump know . Reporter but there are differences to smooth over like the president s comments on wednesday about torture and waterboarding. Do i feel it works . Absolutely, i feel it works. We do not sanction torture. Reporter then theres mr. Trumps praise for vladimir putin, leading to this pointed warning. With president putin, my advice is to engage but beware. Reporter britains Prime Minister still hoping she and President Trump can forge that special relationship like fdr and churchill, clinton and blair, and most famously reagan and thatcher. We in britain think you are a wonderful president. You are a very tough act to follow. Reporter thatcher and reagan natural allies. Their relationship so special it was parodied on british tv. So long honey bun. What a finelooking woman. Reporter now may the first woman since thatcher to hold that post, hoping donald trump can be her reagan. That Better Future is within reach. Together we can build it. White House Press Secretary sean spicer suggested a 20 tax on imports from mexico could help fund a wall on the border. This after President Trump signed an executive order to begin preparations on the project. If you tax that 50 , 50 billion at 20 of imports, which is a practice that 160 other countries do, right now our countrys policy is to tax exports, let imports flow freely in. By doing it that way, we can easily pay for the wall through that mechanism alone. If you think about what a tax a border tax on imports from countries like mexico that we have a huge trade deficit does, that will provide hours after floating the idea, spicer pulled several reporters aside to clarify his comments. He said his remarks on the 20 border tax were not intended to be the roll out of a new policy. However the peso traded lower on the suggestions. The move was compounded when Enrique Pena Nieto announced he would no longer be traveling to the u. S. To meet with President Trump. Lindsey graham tweeted any policy proposal which drives up costs of corona, tequila or m g margaritas is a bad idea. Coming up, will the year of the roster turn into a game of chicken between the worlds most powerful countries . Well look ahead to the Chinese New Year later after this short break. Shares in googles Parent Company alphabet traded lower in extended hours trade after the companys Quarterly Earnings missed analyst estimates. Revenue topped expectations led by youtube and mobile search but higher costs weighed on margins. The effective tax rate for the quarter jumped from 5 to 22 . Microsoft shares rose in after hours after Quarterly Earnings that topped expectations with the Cloud Business front and center. Josh lipton has more. 14 billion. That was one big number in microsofts latest report. And that is the companys annualized revenue now for its commercial Cloud Business, and that is a jump from the last time it reported results. Kirk matern says that number shows the commercial Cloud Business is showing strong growth and he also points to its profitability with Gross Margins for that business of 48 . That is a slight deceleration from the previous quarter when they came in at 49 and a bit below at least what some analysts had expected. Still he said that shows the company is growing and profitable. Street had been looking for 79 cents on revenue of 25 billion. A few other key metrics in the report, office 365 commercial revenue growth, 47 . And revenue for azur, microsofts answer to aws, increasing 93 . Revenue in that more personal commuting division down 5 to 11. 8 billion. Wind ows oem revenue increased 5 . Intel shares are flat in extended trade despite delivering a slight earnings beat. Revenue for the quarter came in at 16. 4 billion. Above the 15. 8 billion analysts had been expecting. The chipmakers results were given a boost by strong performances by its client computing and internet of things. Chinas premiere has urged Angela Merkel to play a leading role alongside his country in stabilizing international markets. In a phone call with the chancellor, li warned that international, political and economic scenes are facing several uncertain factors. Li added that germany and china should continue to defend free trade and market liberalization amid increased protectionist rhetoric from the United States. And as we said earlier in the show, we are about to enter the year of the roster. The first since 2005. With the dow just breaching the 20,000 mark, what could the rooster mean for market returns . The dow has had a largely positive correlation with the roster, averaging a return of over 5 over the last three. 1981 was the last negative rooster year for the dow with 1993 coming in as the best with an 18 gain. Some of the roosters best characteristics include being trustworthy and punctual. Some of the less attractive are vanity and selfishness. Its not just the year of the rooster, its the fire rooster. Look out for those specific traits, which i believe also include a strong sense of timekeeping. Lets bring in the chairman of China Services at ts lombard, jonathan, good morning. Good morning. Pleasure to have you here as we kick off the Chinese New Year. Many have been watching the chicken game going on between the United States and china. In this new year, who wins out ultimately . I think china does. It may be ultimately, but china is setting itself up as, if you like, the reassuring power. You just mentioned lis call with merkel. Certainly with xi jinping at davos. China is saying well stand for free trade, globalization on our terms. As lee put it yesterday, were a stable force in an unstable world. How does this play out in terms of the rhetoric were hearing from donald trump . Some are wondering whether or not the United States will declare china a currency manipulator. Yes, were told theyre manipulating but to prop up the currency. Certainly the white house does not want to see a weaker currency. Yeah. Trump is about four years out of date on this. Its an easy thing to say. I dont take the currency manipulation side that seriously. Even if trump told the treasury to find china a currency manipulator, it doesnt qualify for most of the criteria which the u. S. Treasury laid down. More serious probably is not the economic side, but the possibility of some kind of strategic action by the u. S. Air and naval power in the South China Sea or to the north. This would force china to react. How likely do you think that is . Theres probably a 50 50, 40 60 chance of it . Theres been reports from washington that the Transition Team before the inauguration was considering sending a second Aircraft Carrier group to the north of the asian sea, off of japan, stepping up missile deployment in south korea, sending more troops there. The trouble is over the last six months to a year, the u. S. Has been losing ground in east asia. A lot of Southeast Asian countries which were under the u. S. Umbrella in the past are siding up with china, south korea is in the middle of a political crisis and north korea unpredictable. Certainly so many uncertainties hanging over the region this year. Lets talk about another area of economic consequence. We heard from wilbur ross talking about steel dumping. Will this occur once again . Will we talk about trade retaliation on this front . Steel is interesting, there are high u. S. Duties on steel. Only a small slice of steel exports go to the u. S. So you could have a headline war about steel without it having that much effect. More serious is if you have an across the board tariff raised on chinese goods going into the u. S. China could react in quite a number of ways. First of all by making life much more difficult for u. S. Companies operating within china this would also disrupt the whole supply chain for Companies Like apple. And china can its got quite a few weapons there. I dont think the currency is likely to be a really a real playing ground. It will more be on reciprocal tariffs. Jonathan, thank you very much for joining us. Sad to say we have to take this break. Thats it for todays show. Im nancy hungerford. Worldwide exchange is coming up next. Good morning. Riding the rally. The bulls battle to the finish the week strong after the dow sets new alltime highs. The tale of tech. Shares of google parent alphabet tumbling. And President Trump and british Prime Minister theresa may will be meeting at the white house today. Its january 27, 2017, and Worldwide Exchange begins right now. Good morning. Happy friday. Welcome to Worldwide Exchange on cnbc. Im sara eisen along