Transcripts For CNBC Worldwide Exchange 20150107

We anticipate paying out the load this year than last year. But with all of that said i think the core of the business remains strong. Hopes are raised of finding the black box recorder as recovery teams locate the planes tail under water. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. Welcome to the show. Lots of data coming out of europe today. The latest that has just broken is italys jobless rate which for november has hit 13. 4 . That picks up from 13. 2 in october. This is the november reading that were getting. Its had highest rate since the data series began back in 1977. So the fundamental weakness in the labor market in italy is certainly still an issue. As you can see the euro is roughly at concession middle point for the day. Its at 1. 1868. Down 0. 2 on the day. Thats iraqiing more in the last five or ten minutes to some of the german data weve had. And lets recap those german jobless numbers. German december adjusted jobless rate came in at 6. 5 versus 6 of. 6 in the month of november. German seasonally adjusted jobless rate falling to a record low in december. Remember we did get earlier data from germany, europes largest economy earlier this week. Inflation falling to its lowest level in five years. Now our foef turns to that eurozone inflation number which is expected to dip into negative territory. The threat of deflation the biggest concern over here wilfred. And those unemployment numberses, a stark difference between the focus. The focus will turn to Inflation Numbers due out at 11 00 cet for december. Most forecasts suggest st number will turn negative for the first time meaning the block will have fallen into deflation. The promising price of oil saw german inflation dropped to a fiveyear low last month. Seema, lets talk about this a bit. Its going to be a krufl factor ahead of the ecb meeting on the 22nd. I think it puts more pressure on the European Central bank and for mario draghi to not just hint that sovereign bond is coming but to detail a plan. I have to say, the economic case for ease sg strong. Its the political will to allow it to happen that remains the biggest obstacle. The debate will continue to focus on whether the political powers that be will allow it to happen. Theres the expectation that full blown quantitative easing will be announced by mario draghi. You have to wonder will that be enough to pick up the economy . Absolutely. That will be a point to focus on in the week ahead. Over the last couple of hours, the brent dipped below the crucial 50 a barrel oil. It is lovering around 47. Wti down 1. 6 today and brent is down about 2 so far today. A big drop in the price of oil will oil continuing its deep decline. Prices at the pump are trending sharply lower in the u. S. My mother sent this picture in from portland, oregon. Unleaded price, currently at 2. 11. What price are you paying at the pump . In general, we are seeing lower gas prices across the board. When looking at the u. S. Here is a picture from my dear mother who sent that in. Lower oil prices are supposed to be good for the consumer but right now, wilfred, it seems like the market is focused more on how declining oil prices will impact Oil Producing nations like venezuela and russia. And lets get more discussion on that point right now. Joining us is sabine. Thanks very much for joining us. Lets touch on that point first of all. The headline point. Which countries are suffering the most right now . Yeah. Arguably, almost all producers are suffering. I would say with the exception of perhaps russia that is normally and its going to be a high cost producer. The sharp devaluation in the ruble is helping produce it there. But otherwise, i would say those in the north sea sitting around 50 a barrel on average approximately we have much higher cost producers. U. S. Starting to see Oil Producers hurt and you, you know, perhaps will clearly also see unconventional production in countries like venezuela that are going the to hurt these prices. And since late november, weve been focusing on opec. Does the focus now shift to nonopec supply as well . Absolutely. In order to stem this free fall that weve had in oil prices at least one of three things. A is the curtailment in nonopec oil supplies. C is perhaps opecs thinking and three its a much much stronger acceleration in global oil demand. While wefrz countries hurt and producers hurt theyre unlikely to cut imminently. They have financing lines in place. They may be, you know shifting rates towards more efficient places or cutting costs. But they dont cut production. It seems a lot of companies are cutting cap ex, but theyre still moving production up in the year. The supply demand equation knot favorable for the price of oil at this point, but how much do you think speculators are exacerbating the move were seeing in oil . 40 decline in oil over the past five months now. Of course theres a fair amount of involvement of paper investors at the moment. But i do think the lower prices are reflecting whats happening in the physical market. The physical market is extremely weak. We have 1 million to 1. 5 Million Barrels of oversupply a day. Speculators are suggesting we are likely to soon run out of unstored storage capacity. Once you get to flatting storage, that will lead to much sharper declines in oil prices because its very expensive, of course, to store oil on ships and its also just a finite number of ship thats we can store oil on. Its not like we just woke up one day in june and said we have an oversupply of oil and saudi arabia is not cutting production. Thats why im wondering that is exactly what has happened. Exactly the same way you put it. Unlike the last three years with saudi arabia then that producer came back libya, iran or whoever it was, iraq. They cut production again. So we kept total Global Oil Production pretty much constant. And what would happen in june is libya came back and saudi consciously didnt cut. And they made it clear at the last opec meeting that opec is effectively dissolved. A new policy effectively was produced in june and its now official policy. They dont want to be cutting production any more and theyre not going to see the balancing agent of the oil market. Opec is essentially dissolved, that suggests that theyre playing this very badly. It suggests a negative view on what theyre getting up to at the moment. But essentially the saudis are playing a bit of a blinder here. Theyre protecting themselves. Theyre trying to protect themselves in the longer term. What has happened really with a fast rise in shale production is that theyve lost market share and theyre trying to regain their market share or at least keep their market share. They need a much Higher Oil Price to break even under government budget. We talk about 140 a barrel. You have other countries like iran that need similar price levels. Most opec producers, with the exception of a few rich countries, need 100 plus. So theres a vast amount of different interests within opec and its become clear they cant agree any more within that cartel format. Sabina shell, youre going to stick with us to talk more about the oil story. Lets have a look in on european markets. We have slightly better than expected german Employment Data slightly worse than expected italian data. All of that together for a bit of a bounceback in european markets. It was a weak start to 2015. Its more a little bit of a bounceback following two or three days of declines. The broader stoxx 50 index is up 0. 5 . Lets look at the individual markets. Its a broad based bounceback from the risk off sentiment that weve had over the last three or four trading days. Germany, the uk and france up 0. 5 . Italy up a little less about 0. 25 . Lets look at bonds. There has been a lot of action in the bond market over the last couple of days. The tenyear n u. S. Dipped below 1. 9 briefly yesterday, but nonetheless, it remains below 2 . The last time it will that was during that big risk off trade we had in early october last year. It only stayed below the in october very briefly and it marked the bottom in the start of a rebound. We are staying here for the second trading session. Risk sentiment in europe is very soft. Its hit another record low. 0. 44 . Expecting some kind of bond buying in europe at the next meeting on january the 22nd. The uk has been correlated with these moves. Its not compressing today but 1. 58 and italy 1. 82 . Lets have a quick look at forex, as well. The euro continues to slide in and around the nineyear lows against the u. S. Dollar, 1. 1877. The u. S. Dollar has bounced back today against the yen, 118. 99. Just around 11 19. But over the last couple of trading sessions, the move obviously hasnt been as clear cut as it is against the euro. Lets check in on what all this means in markets in asia. Good afternoon to you, sri. Good afternoon and a good morning to you, wilfred. Its quite clear that despite the wobble that we saw on wall street overnight, nor the event risk that you mentioned with the data coming out of the eurozone ecb meeting and the greek selections, that sentiment sooed seems to be remarkably resilient out here in this region, at for today, at least. But bear in mind we had some sharp declines yesterday. The nikkei was a case in point, worst day yesterday in almost 10 months. Stabilization today and thats partly down to the softness in the japanese yen. Elsewhere, the shanghai composite, brokerages leading the gainers. I do want to talk about the Southeast Asian markets, as well. The s. E. C. The French Market the outperformer across the broader region. We had some very constructive data, the Consumer Confidence in the month of december at an 18month high. That supported for equities in thailand. Elsewhere, a day of resilience. But its going to be a shoppy month all in all for regional equities. As we get closer to the ecb and as we get closer to those greek polls. The markets have one eye on the eurozone and the machinations over there. Today, at least, they seem to be discounting some of the stress coming out of the eurozone region. In the short erp term as for this week its all down to the barrels at the end of the week. If we get a constructive number that may see some Risk Appetite for our markets. Back to you in london. Sri, thank you very much for that update. Lets look at the individual movers here in europe today. Sainsbury, which opened at the top of the stoxx 600, paired some of those greens. Still up 0. 5 after it posted better than expected sales over the christmas period. The super market warned of challenges ahead amid a price war with other uk retailers. Aggreko is up 3. 3 after it raised its 2014 Profit Guidance this on the back of a contract with argentina that settled its outstanding debt. London is one of the worst performers of the stoxx 600 amid plans to slash investment by 30 this year as the Swedish Company battles against the route of oil prices prices. Airbus is up over 2 after boeing delivered 723 jet liners in 2014. However, airbus won overall for the battle for new orders. Lets get more on that story. Stephane joins frus paris. Good morning, wilfred. Its the traditional story this time of year, who won the battle between boeing and airbus. According to reuters and ahead of the official announcement airbus booked more orders last boeing last year. But says that it was more than boeing. We know that boeing had 1,432 net orders for the last year. So airbus would be somewhere above this level. At the end of november for the first 11 months of the year the company had 1,031 net orders which means that it was a gap of more than 400 orders that need to be plugged in december. We know airbus last year faced a significant number of consolation, the main one being in june decided to drop a large order. In terms of you say boeing still is the largest planemaker 723 deliveries last year. That is a record level. It would break its own record, but according to specialist is from the industry its unlikely to beat this performance from boeing and, therefore, the u. S. Planemaker would be the largest one in terms of delivery for 2014. Seema, back to you in london. Stephane thank you so much. Coming up on worldwide exchange, how would you like your burger without fries . We tell you why fast food losters in venezuela are being forced to find an alternative side dish for their big mac. A drone on your wrist, only at the electronics show. We reveal the latest gifts to be unveiled. And freezing gas weather in the u. S. Listing nat gas off a twoyear low. We discuss where prices are headed for the rest of the year. Stay tuned. [container door opening] what makes it an suv is what you can get into it. [container door closing] what makes it an nx is what you can get out of it. Introducing the firstever lexus nx turbo and hybrid. Once you go beyond utility theres no going back. Intel wants to power the market. The ceo brian kusinich showed often a new computer the size of a button for smart clothes due out later this year. He demonstrated a wrist band drone called nixi that transforms into a sliding camera that can take selfies. The apple watch may be in stores sooner than you think. Apple expects to launch the device in late march. The company scheduled extensive training sessions to familiarize Apple Store Employees with a wash next month. Apple has been moving lover over the past one week. We saw a move we 1 in yesterdays trade. Right now, it is trading higher in frank put. Apple is noticeable by its years absent. The tech giant never attends the ces. Julia bororstin reports. The latest televisions are getting bigger and thinner. Dish unfailing a new way to watch live tv on these devices, sling tv a 20 Monthly Subscription to stream 20 cable channels. And big names are here to showcase the latest gadgets. Ryan seacrest promoting the new typo, keyboards which he developed to meet his own needs. It is sleek and its smooth and it literally is my office. This is how i work every single everything that i reply to is coming from one of our keyboards. This year more than every, ces is providing tools to make them smart. Everything to this lg smart kitchen and this qualcomm smart light bulb which consumers can control from an app on any device. Youre seeing a lot of intelligence in the home. And in homes that arent necessarily brand new. These are prices that have been around and you can install a later on top of your existing home so you dont have to buy new products and start from scratch. Scratch. Er all these innovations aim to help consumer stay connected wherever they are, whatever theyre doing. Im Julia Boorstin in las vegas. Lets talk weather because the new year got off to a cold start in the u. S. As a Winter Weather system brought snow and chilling temperatures. Forecasters are expecting a new High Pressure system from canada to send the windchill factor falling to 35 degrees farenheit. Chicago was hit very hard. The winter chill helped Natural Gas Prices rebound off twoyear lows in the u. S. Yesterday. But prices appear to be moving back down again later today. Joining us once again is sabina shell at bank of America Merrill lynch. Lets talk about the effect on Broader Energy stocks. Given that weve had this route, does that make it more likely that prices come on par across the range globally . The route in oil prices will have an impact on oil linked gas prices. Gas prices in europe are still partly linked to oil. As these prices are coming off with oil it will bring it more in line. But the poubt important thing to note is that all of these markets are trading off of their own very weak fundamentals. Theres so much supply. In the case of the energy markets, we are seeing a wall of supply starting up particularly in australia, which will likely put this into a bear market. In the case of the u. S. Were talking cold weather now. But finally. Its been such a warm winner prior to that. And, you know, the prices are clearly trading so low in order to curb all that domestic production. So we are in markets that are not just impacted by oil, but also by their own weak fundamentals. And given your focus on global commodities, this must be a hecht im time for you giving the moves were seeing in oil, given the winter, the frigid winter expected in the u. S. Are you expecting this type of move to continue into 2015 . Will commodities dominate the investor conversation . I think its been noticeable. To be honest, for years, all i would do is speak to our commodity client base. Equity investors, whether emerging market focused or global focus, barely looked at commodities, right . 107 for three years run, so what cared about oil . Right now, phones are ringing all the time everyone is interested. It has a huge implication on other markets. Equity markets, credit markets, currency markets, and we think this will be the case because although we expect prices to move lower, we have a target of wti, brent at 40 a barrel. But at some point, we will see a rebound. And at some point prices are going to respond to the fact that producers will have cut back and not just on an operating level, but were seeing real cap ex curtailments which will impact supply farther out. While things in the commodity markets, in the oil market which will continue to impact markets. Where do you see prices headed, 100 a barrel . Whats the upside . You know assuming saudi sticks to its policy, which will probably be the assumption we have to make right now, it means hundred dollar plus has constant because it encouraged too much shale. I dont think well go back to a hundred dollar bounce for a sustainability period. Sabina, thank you so much. And still to come on the show the threat of deflation looms over the eurozone. How should investors be positioning themselves . We discuss after this break. Oil continues its slide for the first time in 2009 while wti hovers around 47. European markets and you the euro steady ahead of that key inflation data that is expected to show the eurozone falling ahead of deflation. Sainsbury delivers a strong christmas performance, but the cfo tells cnbc that the uk super market wont be rewarding investors just yet. We anticipate paying out the load this year than it did last year. With all of that said i think the performance of the business remains strong. And an update on the air asia stories. Hopes are raised about finding the black box as the recovery teams locate the planes tail under water. And lets get you a check on european markets after what was a down day in yesterdays trade. Despite the move that were seeing in brent crude, currently trading below 50 a barrel the First Time Since 2009. We are looking at markets in positive territory. Right now, the xetra dax trading down around 9 points. The mib trading in negative territory. Keep your attention on greece. Political uncertainty, recent polls suggesting who may win the election coming up later this month. That is sending greece layers lower. You can see right there, down better than 3 for the greek market. So something that we would continue to watch. The greek tenyear yield is around about 9. 7 . In fact, the shorter end of the curve is inverse at the moment due to debt default fears. Lets dive in and look at the u. S. Around about 1. 9 . We dipped briefly below 1. 9 yesterday, so significant moves in the u. S. Market. On the 30year, the 30year bond yesterday moved from 2. 75 from the start of the year to 2. 5 yesterday and that has returned nearly 3 of holders highlight highlighting the level of risk and bond aversion weve got a quick look in on forex, as well, where the euro is weakening a little bit more after its been flirting with nineyear low. And were going to continue to watch the euro because a key focal point for investors will be the eurozone flash inflation for december which is due in the next 30 minutes. Most forecast adjusted number will turn negative for the First Time Since 2009 to minus 0. 1 meaning the block will have fallen into deflation. This amid the plummeting price of oil which saw german inflation earlier this week drop the a fiveyear low last month. Joining us now to talk more about what to expect and how markets could potentially respond is alberto gallo, head of European Credit Research at rbs. What are you expecting this time around from eurozone inflag . I think its going be a bad number. The question is how long are we discuss in this environment with low inflation and low growth . Is it a sixmonth problem or a fiveyear problem . No one knows the answer here and the only weapon we have to fight this is the upcoming qe from the European Central bank. We know they will announce something on the 22nd of january, maybe not with full details, and then it will give full in march. The reason is, theres Political Risk in the middle. On the 25th we have greek elections. Can qe find deflation in the eurozone . I think it will be tough. We have a smaller deficit, a waeshg Banking System. The channel of transmission are not there. So i am worried that were going to be in a japan type of environment for much longer than six months. Lets pause for a second before we come on to whether it will work or not. Even if we get really bad data today, worse deflation numbers than were expecting, surely the economic case for margo draghis numbers have been made. It all comes do down to political issues. Will germany allow this to happen when theres such Political Uncertainty around europe particularly with greece . I dont have any doubts that qe is going to happen. I think the inflation picture in the ecb already looked at last year is already better than what were going to in the next two or three months with Lower Oil Prices and germany has near zero inflation. So there is some sense of urgency to do something. We have to see how strong of a qe plan we get. Theres been some discussion around various options yesterday in the dush press the ecb could buy high quality bonds or the ecb could buy more but without sharing the risk with the natural central bank. But supposed we get a large scale plan where the ecb is able to buy a trail of sovereign bonds. That doesnt work for the real economy. In other words, is europe is a trade or is europe a good investment . I think unfortunately qe makes it a good trade. Yield buying, long data boomser or french bons but youre not putting a factor in france or italy. So if we do get sovens bond buying, will it be enough to simulate the upperan economy or do you think theres more that needs to be done . If qe becomes the only weapon to fight the crisis it could almost become a problem. The reason is investors buy financial as is he thes instead of investing in the real economy. You buy the euro stocks instead of putting money in a stock up. Corporate delay, they know there is a qe plan but they know it may not work because its not following through with forms of government investment. And, therefore corporate delayed investments. It doesnt lift growth off that much. I think we are at a Crucial Point this year where governments need to decide whether they spend together to support the eurozone or the ceb is left as the only institution left to fight the crisis. In that case we have a year left of european style inflation. Are there any lessons perhaps that could be learned from the likes of ireland or spain . Should greece and france and italy be looking at those similar measures . There are some success stories. Theres investment coming back theres growth job creation starting and low oil prices can help. The problems are in greece and portugal, in italy, italy and france are still lagging on reforms. Its been a very very slow process. Lets think about the european approach in general. In the u. S. Bond markets management to transmit the stimulus from the central bank to the u. S. Economy very quickly. 80 of u. S. Credit funding is bonds. And the banks are still weak. So i think that we just dont only neat reforms, but we also need more government stimulus. 0. 2 of european gdp is very small. Or we need lower taxes. We need more coordination from governments. Lots of elections, lots of Political Risks. And that could potentially mean further Political Uncertainty. Were going to leave it there. Thank you for your time. Thank you. Sticking with Europe Angela merkel will be in london today. The german leader is expected to meet with David Cameron and is expected to hold her ground on contested uk laws. Cameron is looking to renegotiation eu ties ahead of the general election which could lead to a uk referendum over membership in the europe. Meanwhile, the French Economy minister has called on germany to step up its assets saying per lynn has a responsibility to invest more. Lets get back out to stephane to find out more. Germany must invest more says the french economic minister. Speaking to the French Economy minister made these comments at the end of this week. The president will meet with Angela Merkel in strasburg. Theyre asking to take offensive measures to support Economic Reforms in the eurozone. He claims greece has its place in the eurozone no matter what will be its next government. Globally speaking, the french minister believes 2015 will be the year of the republican assistance for the european and the french economies. He believes the conditions are fulfilled for the companies to invest and hire people in france because of the reforms because of the tax production that will be reformed this year. Last but not least, because of the external factors like the weaker euro as the recent drop in oil prices. Over to you. Thank you very much for that, stephane. Now, president obama has threatened to veto a measure that would approve the keystone xl pipeline. The controversial bill is one of many that republicans are pushing for since taking control of congress. Tracie potts has more on the story for us live from washington. Tracy. Good morning. That Keystone Pipeline is the first agenda item for republicans who are now in control here on capitol hill. They insist they are setting the agenda and they want to get this thing approved. The senate could take longer. They were supposed to have a hearing to get the ball rolling today, but that has been postponed. The senate is going to be different. Its going to be several weeks of debate, probably not a vote until the end of the month. But the white house is now saying clearly if they send over the same thing that the house approved last year president obama will voto it. Republicans are saying they think they have enough votes to overright a veto 6 0 votes, which is more than their majority. Meantime, president obama, even though hes not setting the agenda here on capitol hill, is trying to get his initiatives out there. Hes headed to detroit, michigan, today to talk about ways to boost manufacturing jobs. He wants to highlight the bounce back of the industry there. Then eats headed to phoenix to talk about new initiatives he wants to put in place later this week. Also to talk about college and new xhishtives to help people go to college and pay off their college loans. So president obama out there trying to set his agenda with this campaignstyle trip before his state of the Union Address later this month. Tracie thank you for that update. Mcdonalds restaurants are facing issues in japan with customers finding items in their food. The fast food giant held a press conference this afternoon confirming a piece of blue vinyl has been found at a chicken mcnothing. The firm has suspended all sales of Chicken Nuggets produced at the same facility on the day. And the firm revuld that there had been a similar complaint from a customer in tokyo and that it was being investigated. This latest incident has been an additional blow to its reputation. The firm was looking into a case where a human tooth has been found from its french fry. Following the food scare, mcdonalds shares were down nearly 1 today falling for the sixth day in a row. Thats all for now. Back to you. Forget the fries with that big mac. Mcdonalds has run out of french fries, this time in venezuela. French fry operators are blame the labor dispute at u. S. West coast stores for the shortage. Theyre now serving turn ss. One thing ive noticed since moving here is you guys called french fries chips. We do indeed. Seeing that with the mcdonalds fries, i am unbelievable hungry. Love mcdonalds. Still to come on the show the super market wars continue as we hear there may be further casual actives on the high street this year. Who will be the main winners and losers . Well discuss that, next. Welcome back to worldwide exchange. Just want to get you updated on the price of the euro. The euro trading at a nineyear low against the u. S. Dollar. Of course, investors now awaiting that eurozone inflation number that is due at 10 00 a. M. Local time here in london. Expect expectations that the eurozone inflation number will fall into negative territory. If it does that will be the First Time Since 2008. So ahead of that number though we are looking at the euro weakening against the u. S. Dollar. And, of course, with oil continuing its sdooep steep decline, we are looking at brent crude trading at 50 a barrel. A steep decline in general. Prices at the pump are trending lower. Weve been getting your pictures in. One coming in from portland oregon, from my mother unleaded price currently at 2. 11. Consumers benefitting from that drop in oil prices. We have been asking you to send in your selfi didnt havies at the pump. How much do you pay for gas . One viewer tweeted in in texas gas prices are as low as 1. 67. If you want to join in the conversation here on worldwide exchange, worldwide cnbc. Com. cnbcwex. Our personal handles are on the bottom of the screen. Jcpenney is reported stronger than expected holiday sales. The Department Store says samestore sales rose in december and november which will boston its sales growth to the high end of its forecast. In october, jcpenney cut guidance after sales fell in september. Shares jumped about 20 in after hours trade. Right now, similar move in frankfurt, up about 19. 24 . Sainsbury shares have given up to earlier gains after it posted better than expected sales in the christmas quarter. Theyre up a little over 3 at the open. Now open up about 0. 8 . The uk retailer warned the outlook is challenging. Speaking earlier to the channel, the cfo says the retail space is a continuously tough environment for operators. The Retail Sector as a whole has been under controllable pressure not just this year but last year as well. I think if that pressure continues, yes, we will see further failures. As a business were continue we can continue to outperform in the market. Good morning to you. Thanks so much for joining us. I suppose a general story for uk supermarkets have been squeezed both at the low end by audi and at the high end, all of the spaces suffered by the threat of online. Since 10 and 11, they have regained market share. Yes, thats right. There are all sorts of figures reported, even now in round figures. So yes, they have certainly had a decline in market shares to the expense t of the competitors that you mentioned. Then went sharply in the wrong direction. I think on the basis, the market is a discounting mechanism, trying to feel its way towards just how is the sector going to look if a years time . Because the couple of obvious trends, Convenience Stores which in turn has led to something from right down in some of its free hold property which has long underpinned the sans bergry price. And that question of what will the food retail space look like in 12 months time did we get any answer from that question from todays Earnings Release from sainsbury . Well, the region is that likeforlike sales were down in negative territory for the quarter. She showed an improvement on the previous quarter. You could probably argue that so they should do bearing in mind it was the christmas period. I think in terms of the year as a whole, the company and management comments mentioned the word challenging. Thats no great surprise to anyone. But if we will more than likely see with tesco tomorrow investors need to be persuaded to be given a reason to reenter these stocks particularly when they are obviously outside of that sector other Investment Opportunities elsewhere. The tesco market consensus has been so for a while now. More recently sainsbury joined in the unfortunate camp. Given that these companies are expected to incur further price cuts to stay competitive in the super market space, i guess the question is how does that impact profitability Going Forward for sainsbury, tesco among others . Youre absolute lit right. One of the reasons investors had been sticking with sainsbury was that they were effectively being paid to wait for its recovery. The dividend yield is running at around 0. 7 . As we can see in the fourth coming quarter. That figure is likely to drop. So one of the main planks of a reason to have held saps bergry shares is being removed. When we look at whether we should be Holding Sainsbury or not, it was around 35 last year. To what extent was this affect by its stocks and to what extent is that decline fair . Yes, sure. Some of it is unquestionably a read across. He think its fair to say tesco has had a tougher audience than sainsbury for its problems. It central a concern of how the market will hold and can they prove theyre making significant inroads into that market share and indeed profitability to tempt investors back. Richard hunter, from hargreaves, thank you for joining us. According to newly released documents, they show in july of 2007 the central bank had identified liquidity as a concern, but did not choose to take any action. The minutes show at the time of the collapse mervyn king was not challenged in his view of how to deal with the troubledlander. Now to get us more on the story and what to expect Going Forward is our own reporter Catherine Boyle who joins us now on set. Seema, just the pictures that these minutes paint of extraordinary complacency, at the top of the bank of england really at the top of British Business because the court was supposed to function almost as a nonexecutive directorship for the bank to kind of check or back stop what the committee was doing. The picture from this seems to be of very much challenge to what is mervyn king was doing and trying to fight the crisis. Quite a lot of evidence that there werent enough things at the bottom of the stage. There were some nicknames, werent there, that the bank used for individual banks that didnt get out to the press. Yes, theyre quite funny. Some of them for example, calling rbs in the mix and were hoping for that to be trade. Weve got quite a large that would love to be rising in terms of valuation. Given that they very much ended up being negative its pretty ironic too. Wrath rin, thank you very much for joining us. And coming up on the show, is the eurozone falling into a japanese style deflationary trap . We may get the first sign with key data coming up in just a couple of minutes. Stay tuned. Xkc welcome to worldwide exchange. Im seema mody. We have a lot of data coming out today. 0. 8 is the core inflation number to the eurozone in the month of december. That is the data that investors have, of course, been waiting for. The expectation was negative 0. 1 . Eurozone core inflation coming out at 0. 8 . So better than expected number right there. Of course, the concern has been that the unexpected fall in oil prices down 40 over the past five months. Plus disinflationary pressures from france and belgium. Taking a look at the euro dollar, the euro trading at 1. 18. Thats a nineyear low against the u. S. Dollar. Indeed. Minus 30. 2 versus novembers plus 0. 3 slightly missed with it coming in at minus 0. 11 . Of course the difference between the month on month number and the year on year number. As seema was just saying it was at 0. 18 . We had some unEmployment Data coming out which has come in at stable from novembers rates. Weve come in november unemployment with 11. 5 . The same as october, of course that is a month later than the inflation data that was in novembers unemployment compared to the december data for inflation. Yeah. I also just want to point out that inflation on its annual rate did come in at minus 0. 2 in the eurozone in december. Yes, a gain of 0. 8 for the month of december when looking at core. Inflation is falling to an annual rate of minus 0. 2 in the eurozone in december. That of course is the flash number. Joining us now to get instant reaction is danielle antonuchi, from morgan stanley. What is your instant reaction to these numbers on inflation . Good morning. Its a slight downside probably lead to expectation, but clearly they have adjusted somewhat because we had a downside surprise in germany and in spain previously. Its a poor reading. Naturally, the ecb looks at readings and ability but theres no question that this number too, is yet another downside surprise. And i suppose at the margin does this change the prospect for whether we see significant action from the ecb in a couple of weeks time . I think its more the longer term outlook that matters. The naturally numbers like these can have implications for Inflation Expectations which is what matter in the end. There is another factor. You mentioned the core inflation held up relatively steady in the end. I think what matters for the 222nd of january is more this outlook rather than one single inflation point. Also there is the greek situation. It seems to have complicated things a little bit, especially when it comes to the design of any possible qe or sovereign program. Lets talk about that possible design of any sovereign quantitative easing. Theres a lot of unappearsed questions. There was talk yesterday about what it could involve, whether its aaa related, whether its related to the size of bond markets, the size of gdp or the size of countrys stake in the ecb. If we see quantitative easing is there a form that youre expecting . These are all options that i believe are still under the table. It still remains that controversial decision at the moment. The greek situation may complicate matters. The condition for countries under the program is that the program is on track and that doesnt seem to be the case when it comes to greece. With the private asset buying program, it is in the current bond program. The underlying assumption is that greece is under any program and complies with that. Now there is an uncertain political situation. It means that t not here and in the next Political Leadership will be, and thats why this complicates matters potentially a great deal. This inflation number coming in at negative 027 how much does this have to do with the decline on oil prices . How much do you think that is weighing on headline inflation . Its the main driver at this stage. The price of oil is down about 50 or so from its and that is affecting energy prices. But, again, because inflation is so low to begin with, one has to weigh potentially brought down Inflation Expectations which could be negative. Also this has made the ability more difficult for highly invested borrowers and on the other side, on the Positive Side surely its positive for the consumer and for the sectors. I just want to wrap up by talking about greece. Weve got that election coming up. So far, most of the debate has focused on greekspecific issues and not too significant worries of contagion. Is that what you think as well . Or do you think this could be a spot for worse political issues across the channel . The contagion may have diminished. Surely they havent disappeared. They are lower. Its already happened. Losses have already been taken. There is more back stop. Its not just the central bank. Several economies in the euro region have rebalanced. They have a better situation when it comes to the budget deficits and the current accounts. The on her contagions they are more in a sense if you just think that its from the ability of a euro exit thin that might upset the section in the other countries, as well. Incidentally, these two factors may harden negotiations between the greek government and the troika. The euro might take a harder stance at least initial initially and so would the next leadership in greece. So no i dont think contagion is no longer a factor. It is something that maybe could come back in a different form. It is still there. Thank you so much for joining us. Lets have a look at the market. Seema. Right now, lets take a look at u. S. Futures after what was a down day for markets. Right now, futures indicating a higher oh. The Dow Jones Industrial up about 64 points. We could go that rebound as some investors have been calling for. Nasdaq up 13 points in premarket trade. The s p up 8 points. But right now, the focus really on european markets, how they are responding to that negative read on inflation, does that put more pressure on the ecb to act at that next policy meeting on january 22nd . Thats what the market seems to be expecting. Because we are looking at european markets moving sharply higher. They are trading in negative territory. We got the inflation data and were seeing cheer across the board. German markets up about 60 points. The concern was earlier this week that the german inflation read came in at its lowest level since 2008, a fiveyear low. The cac 40 trading higher by around 27 points. The italian markets seeing a gain of around 45 points. Earlier this week it saw its worst trading day since april 2012. Yesterday as well as today, were seeing a rebound in the eye tall yap markets. But now lets take a look at the euro dollar. That has been in focus. It was trading at a nineyear low. Right now, trading at 118. 62 against the u. S. Dollar. A lot of this has to be predicated on that inflation read. But also Oil Prices Continue to fall. That seems to be worrying investors, wilfred. Absolutely. The euro kicked off 2015 in a similar trend that it has for all of 2014. Weaken against the u. S. Dollar. Lets have a look at a couple of the other currencies at the moment. Were going to stick with bonds, in fact. And weve had some purchasing of the bonds across the board. Risk off sentiment falling. Lets kick off with the u. S. And then well go back to europe. The u. S. Tenyear is at 1. 95. It dipped below 1. 5 yesterday at one point highlighting that risk aversion were seeing in the markets. But also, i want to touch on the 30year bond in the u. S. It ended 2014 at 2. 75 . It is already at 2. 5 . If youve been holding the u. S. Steady bond, youve gained over 3 in just a few trading days of 2015. Highlighting the amount of yield curves flattening were seeing in the u. S. Now, bond buying has been happening across all of europe both because of the weak Economic Outlook and the prospects of quantitative easing record low in germany, 0. 45 . And its been a similar story, lots of bond buying across the board for pretty much all of european bonds for the likes of spain and italy being caught up as part of the core in that sense whereas for greece its been the opposite. Were around about 11. 6 in greece. The yield is inverted in greece because of debt default ahead of that election on the 25th of january. Commodities, Oil Prices Continue to slide. They have paired some of the losses they had earlier in todays trade. Brent was below 50 earlier, but at the moment its at 50. 8. Wti is at 47. 7 down 0. 5 . Lets take a look at gold. It snapped its threeday winning streak. It is still above 1200 1215 at the moment. It is still in and around a threeweek high. Will fred lets get you a rundown of what to watch this trading day in the u. S. The employment report is hoi out at 8 15 eastern. Economists are expecting another strong month of hiring in the private sector. At 8 30 we get the november trade deficit. Traders looking for signs of whether slower Global Growth is hurting u. S. Exports. At 2 00 p. M. , the minutes from last months fed minutes meeting will be released. Charles evans speaking this evening and ask for earnings looking for result from monsanto. Well be speaking to an analyst later on in the show about what to expect. A quick look at the price of oil, that has been one of the reasons we see Global Markets move to the downside. Right now, wti crude is trading below 50 a barrel so that is a fresh fiveyear low at 47. 74. Brent crude trading just above 50. It did break that level earlier in the trading session, but right now trading at 50. 88. Still a lower session tore brent crude, down just about 0. 5 . Indeed. Seema, earlier in the show, oil prices declining, prices at the pump are trending sharply lower in the u. S. And your mother, mrs. Mody sent this picture in from portland oregon. Unleaded produces there currently at 2. 11. And if you are watching this morning, mrs. Mody a very good morning to you. Greetings from myself and your dear daughter seema here in london. Weve been asking all of you to send in your selfies at the pump. Follow the suit of mrs. Mody. How much are you having to pay for your gas at the pump . One viewer tweeted in to say gas prices in minneapolis are at 1. 86. Get in touch with us, worldwide cnbc. Com or cnbcwex. Im sure shell appreciate your shout out. She watches every day, very dedicated to this show. Thats great. My mother is also dedicated, but i feel that shes only fleetingly dedicated. About five minutes a day i think she watches. Anyway lets see what else is coming up for the rest of the show. Germany is preparing for greeces exit from the eurozone. But our next guest is more optimistic. Find out why after the short break. How could a luminous protein in jellyfish impact Life Expectancy in the u. S. , real estate in hong kong and the optics industry in germany . At t. Rowe price we understand the connections of a complex, global economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Thanks. [ male announcer ] fedex® has solutions to enable Global Commerce that can help your company grow steadily and quickly. Great job. mandarin cut it out. See you tomorrow. Welcome back. Lets get you some headlines. The eurozone falls further into deflation than expected with a mine yous 0. 2 reading for december. Brent crude dips below 50 a barrel for the First Time Since may 2009 before recovering slightly. And u. S. Futures point to a positive open after major indices have one of the worst starts to the year since 1950. And, of course the focus has been on that inflation data out of the eurozone. Eurozone december headline inflation coming in weaker than expected. A reading of negative 0. 2 compared to the expectation of negative 0. 1 . So deflation for the eurozone how are markets responding . Were looking at the euro dollar right now trading at 118. 62 a nineyear low for the euro. Now greene greek tenyear bond yields have risen above 10 for the First Time Since december 2013 amid Political Uncertainty. As we look at thingsed this td, we are below that level around about 9. 7 . Although the fiveyear is 1 1. 6 . Of course, we have got the yield curve inverted given the breadth of the debt default in greece. This as germany is reportedly preparing for a possible greek exit, according to tabloid newspaper build. Theyre making contingency plans for greece. According to the report the German Government is concerned about a possible breakdown of the Banking System in the of a greek exit. Lets talk more about that with tina fordham chief political analyst at citi. Great to have you in pseudo. If they win, greece pulls out of the eurozone. There is a worry that perhaps other countries will do the same. Do you think that is a likely concern, a realistic narrow . I think thats going way too fast. First of all, they have been ahead in the poll for the last 18 months and they are likely to be the Strongest Party in the greek election. But they may very well struggle to form a government. I think the biggest implication is its in an extended period of Political Uncertainty in greece. But as you know one of the things weve been talking about is the likelihood that exactly what were seeing in greece takes place across the wider european union, and that is that challenger parties like tsp rrtsyrriza pick up speed. Lets just walk through what could happen if syriza takes part. At the moment theyre 5dment about two things. Theyre saying they want to stay in the eurozone and theyre saying if we do get quantitative easing that there is no way greece can be excluded. But if a party comes into power and it wants to renegotiate terms, surely those two eventualities, they wont stand, they wont last and that could have very big effects on the rest of europe. There is a lot of repositioning going on. Today, they have added a message to their grand proposal and that is antiestablish against the pivot. The called oligarch families that run greece. That may actually help boost the popularity in the run up to january 5th been but youre right right, and other countries have been clear. But its not surprising that they continued on this path. Its worked well for him so far. Do you think it will change the ecbs course if the party does in fact, win the election in january. There certainly will be more market response if thats the case. You will see more moderated positions and there could be a period of wait and see. But we expect the ecb to start a Bond Buying Program even ahead of this recent greek turmoil. Weve had greek bond yields buying. Perhaps if the Political Risks spread the Financial Markets underestimating that risk for other countries, like spain, even the uk as well. Think back to last year. Syrizas lead is no surprise. We have a snap election so its happening a bit quicker. The markets are focused on the good news. But once again, i think youve seen a big change in the way syriza is positioning itself. Even so the core mainstream parties arent going to do so good in these elections. Thank you so much for joining us. Well get more time when youre back on again soon. Now, Angela Merkel will be in london today. Shes expected to hold her ground of contested eu migration laws. Cameron is looking to renegotiate eu tides ahead of the election. Still to come on this show we will show you what qualcomms ceo thinks is the next big thing for the computer chip industry. Thats coming up. Stamps. Com is the best. I dont have to leave my desk and get up and go to the post office anymore. [ male announcer ] with stamps. Com you can print real u. S. Postage for all your letters and packages. I have exactly the amount of postage i need, the instant i need it. Can you print only stamps . No. First class. Priority mail. Certified. International. And the mail man picks it up. I dont leave the shop anymore. [ male announcer ] get a 4 week trial plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. Lets take a look at some of todays other top stories. Hamm offered to write his exwife a check for the full amount of the settlement approved by the judge in november. Shes rejected the check, shown here for just under 975 million on fears accepting any payment from hamm would hurt her appeal of the settlement. Pretty exciting to see a check for that amount. Sue ann arnall is rejecting the check saying its rejecting her of her marriage. Now, audio equipmentmaker monster is suing beef electronics, cofounders jimmy levine and dr. Dre and sbc. They alleged the company conspired to cut monster out of the deal. Monster and beats codeveloped the beats line of headlines. Monster accuses beats of using a sham transaction in 2011 to change control of the company ending their partnership. Apple is not named in the suit. The apple watch may be in stores sooner than we thought. Theyre reporting apple expects to launch the device in late march. The company has scheduled expensive training sessions to familiarize employees with the watch next month. Apple thus far in todays trade, frankfurt frankfurt, up 1. 4 . Speaking of tech, intel wants to power the market with what it shoeps will be the next of wearable devices. Brian showed off a new computer the size of a button for smart clothes due out later this year. He also demonstrated a wrist band drone called nixi that transforms into a flying camera that can take selfies. How about that . How do you feel about taking selfies . I do like selfishes, but im not sure about a flying camera. Kaum qualcomms ceo tells cnbc how the chipmaker is progressing in this field. So many people are trying to figure out how to get their device connected. And our job is to make it easy for them to do. Thats why you see announcements from us from a very very broad range of customers, from people trying to go into the medical industry which i think would be incredibly impacted by the strength of the unit of everything to people trying to connect light bulbs, to connected water heater and were going to end a big experimentation phase in the industry to see how its going to shake out and our job is to make it easy for that who happen. Still to come on worldwide exchange, our next guest says expect healthy returns in technology and health care in 2015. Get more of his kals after this break. As we head to break, take a look at u. S. Futures right now sharply higher in premarket trade. The dow jones industry indicating a higher open by around 80 points. Hi everybody. Welcome to worldwide exchange. Im so ya mody. And im wilfred frost. Prices falling more than forecasted into negative territory. The pressure now on the ecb to act at its next meeting. The Market Reaction is muted after a higher open after yesterdays selloff. The First Time Since 2009 wti hovers around 47. Sharply higher after hours. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. And were halfway through the first week of trade and its already been a volatile rise. Take a look at u. S. Futures. Falling oil prices and bond yields have been a focal point for investors. Yesterday, the s p and the nasdaq extended their losing streak to five falling 4. 5 respectively. Right now, u. S. Futures indicating a higher open. Were going to keep a close eye on the transports index, which has been leading the decline. A lot more on that over the next half an hour. Lets switch focus to the euro. The european markets, the euro has been Holding Steady at 1. 185 had. This is a nineyear low against the u. S. Dollar. The negative read on headline inflation coming in at the headline inflation since 2008 putting more pressure on the ecb to act. Of course, in response we are seeing european markets responding positively to that negative read on inflation because the consensus is that the ecb does have to act at that next meeting on january 22nd. Keep in mind the greece still a big focal point. Political uncertainty in greece is still a big focal point. Plus german jobless data a lot to expect. Lets give you a check on oil. The selloff was continuing last time i checked. But right now, were moving a little bit higher. Slight rebounds ride now, brent crude trading at 51. 30. Wilfred. Thanks. An interesting bounceback in the oil price. Lets recap those eurozone Inflation Numbers, because after 14 months of headline inflation being between 0 and 1 in the eurozone, we have dipped below minus 0. 2 for the eurozone as a whole. Thats slightly lower than expected which was minus 0. 1 . Now that latest move down is partly caused by Oil Price Declines and the core reading highlights that fact which is at 0. 8 . But still, of course far below the ecbs target of 2 . Andrew berkeley is the managing director, ahead of institutional portfolio strategy. Andrew, good morning to you. Thanks for joining us. Lets kick off and discuss a little bit about those eurozone Inflation Numbers. Should mr. Draghi be focused on the headline number or the core number . If oil price res the cause of dipping below 4 should he act still . Yeah, good morning. I definitely think oil is having an impact on the overall inflation sector here. Most central bankers will tend to try to look through that and tend to focus on the core numbers. Weve had a partnership tugz drop in oil that is dragging down overall prices, putting pressure deflationary pressures out there. I think its one more quiver or one more reason why the ceb will get one step closer to being more aggressive here. Certainly they have on clear some hurdles in terms of the decision in about a week or so from now. In the month, it is setting up for the ecb to be more aggressive. Exactly speaking the u. S. Markets look for attractive. Europe is trading at a discount to u. S. Stocks. Where would you put money, the u. S. Or europe . Yeah. Certainly the consensus that right now is to stick with the u. S. Overweight driven the strong dollar environment. The val ug az is certainly more attractive in the european side. The generate revenues overseas in europe as opposed to direct european exposure because of the currency risk at this point. It is getting harder on the u. S. Side to find value. Looking for opportunities in europe at this point. Looking at the u. S. Investors now turning their attention to the minutes of the last fed meeting which will be published later in the day. The rally in the u. S. Dollar has been a focal point for investors. Do you think it will be a focal point for the fed . You know, the fed tends not to talk about the dollar. Specifically, you know the u. S. Economy tends to be a little bit more of a closed economy. You know 70 is consumer oriented. Only some are 13 to 15 is swung by export import. They tend not to focus on the dollar as much. Certainly it continues to strengthen and the euro continues to fall. It is going to weigh on the decision. They wont specifically mention that. You know we think the fed is on target for the second half. In terms about the federation federationing rates, a lot of speak expect rates to focus through. Yeah. I mean i think thats probably going to be with us for the rest of the year. Youre going to see the yield curve continue to flatten here as the short rate creeps up. You know theyve backed up a little bit here. But short rates probably will continue to creep up where long rates will largely be anchored. Thats due to the Global Situation where youre seeing, you know sub1 yields in europe. So it makes u. S. Yields look relatively attractive, around 2 . You know kind of brings you back a decade to when started to raise rates and he talked about the conundrum. The conundrum is why are rates going up. I think that will largely be the case again and its a relative hunt for yields and the u. S. Looks relatively attractive right now for yields. Were looking at the tenyear u. S. Yield at below 2 at 1. 9 . The german tenyear bund at 0. 45 . So some big moves in the bond market. Andrew, stick with us. That is andrew burkely from opel hymer asset management. More with andrew in just a bit. On a programsing note kb kb is starting its year on a brand new home. Their special guests include billionaire investor bill ackman and Lloyd Blankfein this morning at 6 00 a. M. Eastern. And coming up 3g capital has sizable companies in its portfolio. Includes burger king. The Investment Firm may be highing some new takeover targets. Well bring you all the detakes after a short break. A stock investors have been focusing on this year apple, a tough start for the year. Apple was one of the big tech winners in 2014. Apple so far this year is underperforming the s p 500. Recent reports indicate the apple iwatch will be released in march and right now were looking at shares of apple down just about 4 over the past week. A little bit of a rebound in yesterdays trade. It will be interesting to see if they can make a bigger impact on the inphone. A lot of excitement among wearables. When it first got announced want i thought it would look great. Not so much any more. Well have to see whether it makes a difference. Moving on reports say the brazilian Investors Firm may have another deal on the horizon. For more, lets get out to landon dowdy. Good morning to you. 3g capital is reportedly setting its sights on new potential takeover targets. The wall street journal says investors have pledged about 5 billion for a new takeover fund. They havent disclosed how they would use the money, but they have reportedly discussed trying to buy a food or beverage company. The some analyst ves speculated 3g may be interesting in kellogg and kraft foods. The firm studies targets for years before making a deal. They have about 140 billion. 3g may only buy parts of the company or could join fouses with ab inbev in a bid of about 20 approximately been kellogg has cut the size of payouts executives would get if the company is sold which analysts say could set the company up for a takeover. Krafts board replaced the chief executive. Hell spearhead inbevs takeover of Anheuser Busch in 2008. Lehman is a former professional tennis player competing at wimbledon in 1982. Hes the richest man in brazil. But politics his time between switzerland, brazil and the u. S. Berkshire hathway owns half of heinz, but leaves oversight of the business to 3g. The firm bought burger king in 2014. Its considered a private equity firm but doesnt raise money the sway some of his partners do. The journal said in addition to warren buffett, investors including Roger Federer and bill ackman. Thank you so much. And prt nominating a former Community Banker to the fed board responding to criticism over the makeup of the central bank. Allen landon has ties to the president s grandmother. If confirmed by the senate, landon would be the first Community Banker on the board since the duke left two years ago. Obama has been in the news for threatening to veto a measure that would approve the ketone pipeline. This is one of many priorities legislators are pushing for. Lets get out to tracie potts live from washington. Just 24r hours ago, the white house said they werent quite ready to issue that veto threat. Now its a done deal. A spokesman saying if congress and president obama, that same bill on the keystone peep line he will very toe it. But runs think they can override that veto at least of the senate side. The house passed it. Theres a thinner majority on the senate side but they think they have some democrats willing to go along. The keystone xl pipeline is the republican priority that the new leadership here is expecting to get done. The senate is going to take a little longer a few weeks of debate and theyre behind schedule because they were supposed to have a hearing on that here this morning and that hearing has been canceled. Tracie, thank you very much for that the. The eurozone falls further into deflation than expected with a minus 0. 2 reading for december. Brent crude future turn positive average slipping below 50 a barrel earlier. And u. S. Futures point to a positive open after having one of the worst starts to the year since 1950. Well be back in a couple of minutes. Welcome back. European markets have culled a bit in the last half hour. Eurozone deflation, minus 0. 2 . Core inflation, relatively stable, but pretty low at 0. 8 . That combined means european markets rally. Were speccing some action from the ecb, but part of the reason inflation is week is oil prices because more so because of the fundamental economy. The stoxx 600 is up pretty much bang on 1 . Now weve seen a little bit of a rally elsewhere and that is in the oil price. Brent has rallied, now up 1 having been down a similar amount earlier in trade. Its session high but, of course Oil Price Weakness over the course of the last couple of trading sessions still the cause of the day despite this short rally recently. Bad news seems to be good news for the markets. We got a negative read on inflation. U. S. Futures are responding positively. The Dow Jones Industrial up about 95 points. We did see a telloff in equities on wall street. Right now, the s p 500 up about 11 points in pretty market trade. Yesterday the dow did fall for the second consecutive day losing about 2. 6 in that period, the twofrt twoday drop in three months. Sticking to earnings, monsanto reports First Quarter numbers before the bell today. Earnings are expected to be better than last quarter, which came in below expectations. Lets get more with michael cox, Senior Research analyst at piper jaffrey. Thanks for joining us michael. Moven san toes biggest source of seed stores are in south america, brazil venezuela, other countries have been sxersen a slow youp. How much do you see that, weaker saeth, impacting monsantos profitability this quarter . Mop san toe is bringing new technologies to south america impacting farmers in that region. We will see maximizing grain brukz and i think monsanto will benefit from that. Are we expecting more updates on their moves into more precise area of farming that theyve been talking about over the last 12 months in todays release . I think we will. This quarter le release is an opportunity to provide the update on their farming. We will continue to hear about the software fools theyre bringing to help farmers identify opportunities within their field, brandt seed at the precise location. Very exciting technology. Lets talk about what youre expecting in terms of the bottom line in this set of certainings. In particular, you think investors like to focus on the deferred revenue line item. Yeah. Farmers are waiting to make seed purchases later than weve seen in recent years. Typically, farmers will place seed orders in the fall and were seeing that pushed out into early this year. Its something that weve wanted to call out for investors, but it has delayed investors as opposed to any shift in Technology Preference amongst farmers. But, again, i think its more of a timing issue than any fundamentals of the company. Michael, quickly before we let you go, shares have rallied in recent weeks in monsanto. Whats your reason for that and whats your call on the stock . Yes. Weve seen a modest uptick in grain prices over the last two months. I think that that has helped us. I think in an environment where Agency Prices are struggling monsanto can continue to deliver sole lit rudz. Farmers will always look for ways to offset lower grain prices. I think in a back drop of lower grain prices monsanto is one of the winners in the space. Its a stock we continue to like. Thank you very much. Monsanto is one of the big names reporting q1 earnings this week. Tomorrow, we get a look at consolation brands along with Family Dollar and after the bell thursday, bed, bath beyond reports along with the container store. Friday is relatively quiet, but india will be focusing in. Let get back to andrew burkely from oppenheimer asset management. Earnings could be a headwind or tailwind for equities this quarter. But one sector that is likely to show a jump in Earnings Growth is health care. Valuationwise, Health Care Still looks attractive. Do you agree . Yeah, absolutely. Health care, amazingly, has been a bit of a bull Market Leader here for two of the three years. We think it will continue to lead the market higher in here. It has some interesting qualities. There is growth as you mentioned in terms of earnings. The valuation is there in terms of a market that is pretty fairley valued. There is decent yield going back to the question about Interest Rates being globally lower. I think it has a lot of the characteristics that investors are embracing and thats why we think you should stick with health care. And theres a lot of risks out there, the stronger dollar weakness in europe. What do you think will be cited by companies as the big this earnings season . Companies will talk about the drop in Commodity Prices especially oil. Its very hard for them to quantify that. I think probably the bigger topic, essentially, is going to be the trajectory of the economic differentials between the u. S. And the rest of the world. That is what i would be keying on is what are companies talking about in terms of the impact of the slowdown weve seen outside the u. S. And how is that being balanced out with the strength that were seeing domestically. Andrew thank you very much for joining us today. Its much appreciated, Andrew Berkeley managing director and head of institutional portfolio strategy. Flower squawk box is starting its 20th year on cnbc from a brand new home. Joe, becky and andrew are making a move to new york city starting today in just a couple minutes time. Their special guests include steve ackman and Lloyd Blankfein. Theyre moving to new york youre saying in london. A much better city. Im here for now, yes. London is a beautiful city. Ive been enjoying it. Your recommendations have been helping. Very good. Very good, indeed. That is all the time weve got for worldwide exchange. Squawk box is coming up next from new york city. Thanks very much for watching. Take care. Have a good day. Squawk box starts its 20th year from a brand new home in the city where business never sleeps. Bill ackman joining us here in new york. Lloyd blankfein and mohamed elerian. Its the same squawk box additives. Exciting. Gaining off the chart as second now on the biggest state on the work. Announcer folks, youre watching squawk box live on cnbc from new york city live with joe kernen becky quick and andrew ross sorkin. Now youre in new york good morning, everybody. Welcome to new york. We are live from midtown manhattan. Were directly across the street from radio city music hall. You can see it right over the corner here. We are excited to be here this morning. And thank you, everybody, for joining us. You asked and we made a phone call. We got some lights on this morning. Did you fire jeeves . Did you walk here . No. Jeeves still has a he just has to did you just roll in here . Here i am. Thank you. This is exciting. We cant really say live from new york its wednesday morning. We cant really say that. Well you can. Thats pretty good. Lets get started