Transcripts For CNBC Worldwide Exchange 20150108

Recovery. Stealing the lime line as the new ceo unveils a cost cutting plan to turn around its fortunes. But m s is in the red after christmas sales come in below expectations. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. A man hunt is still under way following an attack on charlie hebo. Cnbc has confirmed in the last hour that at least one Police Officer has been injured after being shot in the south of paris. But it is not clear whether is the incident is linked to the event in central paris yesterday. Local reports say two officers were injured, one critically, and the shooter was arrested. The interior minister has left forever an emergency Cabinet Meeting to the site of this latest incident. Earlier, Police Released photos in two wanted people in the attacks. Police say a third man is 18 and has surrendered. Speaking ahead of the Cabinet Meeting this morning, the Prime Minister said seven people had been detained. Antiterrorist forces have been dispatched to the northeastern city of renz. Dozens of police are searching a flat where one of the suspects is thought to have lived. Lets get out to stephane pedrazzi live in paris with more. Stephane. Hi seema. Just a few minutes ago, the interior minister confirmed that none of the gunmen responsible for the shooting this morning have been arrested. Two Police Officers have been shot using automatic guns. One of them reportedly in a Critical Condition that was in the south of paris in the city called montrouge. There is no confirmation at this stage between any link between the shooting this morning and the attack that took place yesterday in the center of paris. The interior minister who was attending this morning an emergency Cabinet Meeting at the pallis decided to leave the meeting to travel to monrouge where the shooting took place. He confirmed several people have been arresteded following the attack yesterday. Seven people, ard cooing to police sources, located about 140 kilometers away from paris and one person by the belgium border about 300 kilometers away from here. Two gunmen two brothers are still on the loose. Some pictures and their names have been made public yesterday. They were two brothers 32 and 34 years old. One of them is known by french authorities. He has been convicted of being responsible of organizing Jihadist Networks in 2008 and was sentenced to 2003 in jail. Still in jail overnight, one suspect who is still in jail was not apparently the third young man who took part in the shooting yesterday. He was at school during the attack. In the meantime were on a high security alert in paris. More Police Troops have been traveling to the french capital to Public Places and media outlets. We will have one minute of silence to pay tribute to the victims of the attack yesterday. Wilfred, back to you. Stephane thank you very much for that update. Just while stephane was talking, we have had a flash relating to the french superior minister. That message says that the shooter from this morning is still on the run. That contradicts earlier reports that the shooter from this morning has been arrested. Now, the uk government meanwhile is holding an emergency kobe what meeting to discuss the implications of the attack in paris. Coming up on heightened alert, we get expert analysis on how governments as well as leaders should react. Thats coming up over the next two hours here on worldwide exchange. So lets have a look in on what asian markets are doing today. Were up 1. 3 so far in todays trade on the stoxx europe 600. The stoxx 50 up fractionally more than that. The ftse 100 up 1. 2 . You can see it has a broad based bounceback from the weakness weve seen at the start of the year and were still down for the course of 2014. But the last two trading sessions seeing a bit of green in european markets. Germany, interesting to dwell on that, up 1. 2 despite german Industrial Orders falling by 1. 2 for the month of october. Lets move on and look at bond rates because we saw a lot of bond buying in the first few trading days of the year. In the u. S. We saw a pause, a global concern. The we did tick back up above 2 yesterday, but we are still below that level at the time of close yesterday. Thats where we are at the moment. Bond buying in europe continues to be the cause. Again, bond yields in europe still very much pointing to expectations of ecb easing. When we have the next meeting on january 22nd. So perhaps at the margin theres a possibility for disappointment for investors if we dont see as much european Balance Sheet expansion as some were expecting. The euro has weakened again today. Were at 1 is. 18 . Maybe well fall a bit below it. That will put the 2005 chop in reach. But at the moment were still just above 1. 18. The u. S. Dollar gaining some ground against the yen giving people caught to think the u. S. Economy will be nice and strong as expected. Also worth pointing out that sterling has been very weak 1. 50. That follows Weak Services data. Very Important Services data for the economy. We are flirting with the 1. 5 handle, so sterling down 1. 4 . Lets get an update and have a quick look at commodities. Both oil measures bounced back a bit yesterday as they did today. Finished stronger as the u. S. Market opened. Just below 51. 3 on brent. Gold remains just above 1200. Sri jegarajah is standing by with an update on asia. A rather upbeat session for regional equities. We saw wall street snap a fiveday losing streak overnight. We are looking at gains in ek excess of 1 . If you look at the kos pea, the nikkei as the outperforms. The softer japanese currency by implication, helping the exporters and the broader market. Here is the odd man out. Shanghai composite underperforming wrapping up its first loss of the year today. The worst session in two or three weeks for the index. The shanghai composite has scaled some pretty heavy highs over the years. Weve seen fiveyear highs for the index. Some give back is warranted with some profit taking affecting the financials. Elsewhere, you were talking about the stabilization in the oil price has benefited the resources names on the s p 500. I would say tomorrow given the event risk that we have in terms of this region we have tighter Inflation Numbers tomorrow and the nonfarm payrolls stateside. It could be a choppy muted session on friday. Fed officials discussioned various potential risks to the economy at their meeting in december. The minutes showed global weakness posted some of the big Downside Risks. The fed was concerned about markets overreacting to their guidance and decided to announce they would be patient in move towards a hike. So far, it seems like the fed like what they saw. Take a look at the euro dollar trade. The euro trading at its lowest levels not seen since december 2005. It was trading below 118. Again, big moves that we are seeing in the euro. The last time the euro was trading at 1 or lower was in november 2002. Is it time to go long the dollar or is it too late . Lets bring in james foley. Lets start there. In case investors are on the sidelines wondering if the euro could weaken is there room or an opportunity to get short the euro at this level . I think there probably is but in listening to the minutes of the december fonc things have changed. Weve seen arguably moving disinflationary pressures across the globe. Also the fomc themselves would become more dovish this year. Weve seen a couple of members rotating out, a couple of hawks. So quite possible that we may get a slightly more dovish fomc in the next meeting. That could mean that we could see have choppy times ahead for the dollar and we could see pullbacks. I think by the end of year we will see a stronger dollar against the euro. I suppose the risk is to the upside for the euro. The german yields hitting report lows yesterday. It seems investors are very confident were going to see quantitative easing and the risk is the ecb Balance Sheet expansion isnt as much as expected. I would certainly agree if they dont do something, theyre on scale for a large pullback. I do think he will give us something in january. Perhaps we have to wait until the next meeting in early march to get the full details and the start of any qe from the ecb. But it is quite interesting. You know longterm Interest Rates across europe are very very low. We can argue about the benefits to the economy with the additional pull down on those Interest Rates. Qe may do a little bit on Interest Rates, but the talk of qe is helping to push that economy down. We also have to remember greece. That could be another risk factor for the direction of the euro. Talk about the benefits of a weaker euro. Its supposed to be good news for the european corporations. But at some point, do you think if the euro continues to weaken perhaps below 110, 105, will that be bad news for consumers . For many policymakers and corporates alike, sometimes its the pace rather than the level. There may be some politician some corporates that wont want that. But i think what weve had to date has been okay. I can certainly if we had a very sharp move to the levels that youve been talking about, that would be distressing. If we have choppy trading say between 119 and 120 for the duration of this year i think most europeans would be happy with that. Jane just to round up on the u. S. Side of things, you say in your notes they will not vote for a hike rate until the end of 2015. How dont think that fixes the underlying economy. So that core difference will remain and strengthen as the year goes on. Many times, they have been referencing the fact that full blown quantitative easing wasnt be enough to restructure the economy. Prachs there is room for the u. S. Dollar to continue to strengthen. Here in europe the ecb is looking at options findsing more ways to ease and help stimulate the eurozone. The euro did break below 1. 18 just about ten minutes back. It was unthinkable, maybe just a couple of weeks ago, that the euro could trade at a dollar. But now, it seems like that could be where the euro heads. If the if it does head to 1 is the last time we saw that level was back in november 2002. Certainly these levels are surprising. I think the next important levels are sort of 1. 16 which are the lows we saw saw in 2005. Great time to go for a evacuation if youre in the u. S. Looking for a dollar trade. Especially to moscow if you fancy a vacation there. Sales decline over the Christmas Period but could 2015 bring a change of fortune . Were going to discuss that next. Lets talk retail. Tesco is set to sell off noncore assets as part of a restructuring plan. Theyre fighting to recover from an accounting scandal. Likeforlike sales showed a slight improvement over the Christmas Period and that can be related by shares in tesco. One of the big movers in todays trade, up about 7 . Taking a look at the broader Retail Market stains bury up about 3. 3 . Marks expenser that was a disappointing read on sales over the Christmas Period. That is why were seeing m s shares lower by around 3 . That gives you a sense of how Retail Markets are trading. Now lets get out to Catherine Boyle who is outside a tuesdayco tore to give us more about the struggling retailers strategy. Thanks seema. Im here on this not particularly nice morning outside the city of lobbed. One of about five within a half mile radius which tells us a little bit about what tesco strategy has been in recent years. Its been all about trying to capture as many sites as possible, but that strategy likely has to change. Looks as though the new chief executive is really trying to turn that around and bring it back to just whats happening in the store experience and for committeesco customers. Im joined now by brian roberts, retail analyst. Lets talk how high do you think the Customer Experience will change at tesco and what thats going to mean for the start . Its changing already. In the run up to christmas, they put a lot of investment into manpower and hours back into the store which improved the Customer Experience. Were seeing an ongoing store restructure, as well. The Shopping Experience is Getting Better. Last night, they managed a big range of price cuts, as well. You see lots of positive where tesco is leaving the instore experience and the affordability for shoppers. Lets get back to just what theyre doing in terms of how theyre going to help liver on the online experience and capture those customers. How do you think theyre performing there . Very well. This is the number of course yesterday theyre continue to go sxan, as well. They did manage to close with some 50 or so Convenience Stores this morning. But, of course theres been a lot of focus today on marks spencer. Their performance has been abysmal. How do you think they can turn that around . The woibt has been improvement. Lots of disappointing news around womens wear as well. The stocks reacted accord landlord. Lets talk about what were seeing in the broader uk landscape. How bad a year 2015 is going to be for these retailers . Who do you think is going to emerge as the strongest players in that pack . I think tesco has the firepower and the efficiency. Are we going to see more of this strength . Is that going to continue . They will continue to grow. Given the Growth Market share, albeit at a much slower rate. And just coming back to tesco specifically the stores have closed and theyre not going to develop 49 stores that had been planned. Does this mean that were going to see tesco on the british high street is going to be the past . The end of the space rush is over and tesco needs to focus on making their existing stores better, easier and quicker to shop. Back to you, wilfred. Catherine, thank you very much for that. Were going to bring you a live shot now of the former french president sarkozy who is speaking at the moment. We dont have direct sound of that, but as you can see, hes clearly giving his condolences following the tragic shooting weve had in paris over the last 24 hours. Lets bring you back to the retail story here in the uk. We mentioned marks expenser which you heard catherine talking about there. Comparable sales came in below expectations. The uk retailer kept its guidance unchange however. Lets have a look at how its trading so far today. It is, in fact down about 3 so it is bucking the trend of the broader Retail Market. This as tesco is up 7. 4 . M s is down 3 . It is interesting to discuss this a bit further. M s results, its not just the food retailer story like the tesco, sainsbury, performing well. M asuffers, al because of diop line delivery problems. Quite a surprising bounce. Tesco has cut its dividend in full and yet still bounced 7 . It shows the levels drop. A 50 decline in shares of tesco. Last year, a big fall one of the biggest losers. I think investors who have been caught on the wrong side of this trade are looking for some type of commentary from management about what theyre trying to do to turn around their company, rebuild confidence with shareholders. Taking a look at marks spencer, just that individual story, theyre blaming unseasonal aus item w, but there clearly is more to this story than just weather. Interestingly enough International Sales were impacted by the crisis in russia. There was one emerging market that saw exceptional growth. Marks expenser has exceptional presence in india. More on m s coming up. Still to come on wek, we turn our focus on the bank of england ahead of the Central Bank Decision later today. Thats straight after this break. And we will be bringing you the latest update on the shooting incident in paris. We back in a couple of minutes. A gunman is on the loose after shooting two officers south of paris in an understand this morning, but no link has been confirmed to yesterdays attack in paris. Two suspects from that understand are on the run, also. Taking a look at markets, european markets bounce into the green as investor cheer the session on wall street as the price steadies with brent back above 50. The feds latest minutes hoping to boost sentiment and promising patience in raising rates. In Corporate News tesco is stealing the lime line as the new ceo unveils an aggressive plan after m s in the red after sales come in below expectations. And is back to our top story this morning, a manhunt is still under way following the paris attack following the attack on magazine Charlie Hedbo. In a separate story, two officers have been reportedly shot and killed in a suburb south of paris, but it is not clear in the event is linked to the eaches in paris yesterday. The shooter is on the run, contradicting earlier reports that the suspect was arrested. We are now joined by allen mendosa, founder and executive director of the Henry Jackson decided to talk more about this horrific event. The manhunt continues in paris for these suspects. Given that they were able to escape so easily, does that tell us that this was perhaps a larger well planned terrorist attack . It was certainly a well planned attack. They knew who they were coming for. They planned it meticulously. The question is what happens now, of course how the authorities respond and whether they can be found quickly. And atrocities of this kind both in france and broadly across europe is it possible or likely even that were going to see more of them . Its hard to say, but its almost certainly the case that further are going to follow. Its difficult for the authorities to pick up on every single plot that is out. Remember the bomber only has to get through once or the shooter only has to get through once to do this. What is the solution to see when he dont see further attacks as well as what happens this morning . Is it more focus or spending put on defense and security or does it come on the educational level . Its a mixture of all things of course. This and we have to be careful not to overreact. This is a question of free speech in europe. To crack down on that and make it a police state is contra particulartory to the values we believe in. You have to look at education and the source where this is coming from. Everyone else electively in society has to say we are moderates, we favor european liberal values. There is no place like this in society. As you just mentioned, it seems like it was an attack on free speech which is different from some of the threats weve seen over the last say, 12 months which toned be linked to fighting back against action in the middle east particularly in iraq and syria. Is this a new wave of look radicalists make up excuses all the time to fight with us. Sometimes we have intervened and sometimes we havent. This time its about free speech. We have an ideology that hates who we are, what we are and what we stand for. This is a longterm band. Most people who abhor this have come out and said they disgrace this region. If this is, in fact radicalism is this an opportunity for modern movements to accept up to the plate and play a more vocal role in identifying this attack as the wrong way to do things . Youve seen a wave of condemnation from ordinary muslims and muslim authorities on this. This is not about muslims. It is about the strain of islam, a dangerous strain that needs to be combatted. The only way that happened is for muslims to stand up and say this is not our region. What you are doing is an adomination, we dont agree with it and we need to fight it. Thank you very much for joining us this morning. Now lets switch focus and go back to financial markets. European markets in the green today. The stoxx 600 is up 1. 2 . That makes it two days in a row of green following a strong day in the u. S. Yesterday. So a slight bounce back from the poor start weve had for the year as a whole for European Equity markets. A couple of days of green in the last two trading sessions. Maybe some of that has to do with the move that we are seeing in oil. Yesterday we did see wti crude come back above 50. In todays session, it is trading at 48. 56. Still oil is trading at a multi year low. One reason weve been seeing an underperformance in manager shares. Sticking with the oil story, a hedge fund ran by Jonathan Goldberg was among the biggest winners last year from a dramatic drop in crude prices. His value fund correctly betts on volatile changes in the Energy Market giving investors a massive 51 return. Weve been talking about those that have been caught on the wrong side of this trade perhaps that were ownering Energy Stocks and suffering givenlg the sharp decline in oil prices. Clearly there are some betters out there that were betting on energy to fall. Since november everyone was focused on excess supply causing oil price weakness. Over the last week or two, we started to see more people focusing on that demand. That has meant stronger correlation which we given have for the second half of december. As you just pointed, a bounce back yesterday was a good thing for markets where the previous couple of weeks it seemed to disconnection. I think its not just the supply issue, as we well know. Sentiment playing a role in this. Of course, the u. S. Dollar as weve been discussing hitting new highs against a basket of currencies. Stronger dollar is never good for the currency space. Well continue to keep you up to date with trade on the oil trade. The other thing impacting markets is the fed. The fed officially discussed various risks to the u. S. Economy in december. Members believe global weakness brought some of the biggest down side risks. But they think overall, its likely to boost growth. The fed decided to announce they would be patient in moving towards a hike. Speaking to cnbc yesterday, Goldman Sachs Ceo Lloyd Blankfein offered some advice for the fomc members. What i would do the if i were them is i would take a lot of risk on the inflation side. I would take that risk to avoid a low adverse consequence of this back sliding. If it back slid what would we do . What would the remedies be . Are we going to have a stimulus package . Fiscal . The only game in town has been the monetary and we fired a lot of those bullets. So i would keep firing because sustaining it is a lot more sure than losing it and trying to recapture the forward momentum. And the attention now turns to the bank of england ahead of its Rate Decision later today. Economists expect to join the fed ahead of a right hike later this year. Joining us now is jacob nell chief uk economist at Morgan Stanley and Helia Ebrahimi is on set with us. Thank you very much for joining us and a good morning to you. Good morning. In your notes, youre saying the first monetary rate shiek would be this year and youre pushing that back. What are the main reasons for that . The main reason is the lower outlook for inflation. Were at 1 now in the uk. Deflation in europe with lower oil prices. Inflation is going lower in january. It will hit 0. 7 . The jort on the mpc and what we call inflation risks, theyre more worried about deflation than inflation and the lingering consequences of a deflationary sharp in a low inflation world. So we think that group will dominate until we get increases in pay and inflation moving back towards target. If we continue to see deflationary pressures in thor row zone how much about that impact the uks growth story as well as the race decision . Well, the eurozone eu is the uks largest trading partner, so it will have a significant impact. Govern carney emphasize it that in his last press conference that he saw the sector of deflation haunting europe. And so i think that is uppermost in mpc minds at the moment. We do see a robust domestic demand growth story continuing but we think well have a pick up in austerity after the election. Thats assuming that we get a majority an established party and not the whole parliament. That will mean that we will have a slowdown in growth as a result of that fiscal drag. But on the other hand both will continue to be reasonably with us in 2009 1. 9 in 16. The quid pro quo will be slower. Helia, would you agree with that . No action from the mpc, at least until after the election . Yeah. I think weve all come to terms with that. We know the governor will be writing letters to the chancellor saying, look weve fallen below 1 . Some estimates this month, next week, it might fall to as low at 0. 6 . The question is why are we not looking through the sterm issue likes the massive fall in the oil price . You saw from the minutes and the fed that you were referring to earlier saying look were not really bothered by this disinflationary pressure. Were still going to go for that rate hike. That doesnt seem to be the case in the uk. One of the issues as jacob was referring to weve got an election coming up thats very unstable and i guess politically we dont know who is going. And on. Top of that youve got half of the Austerity Program that we had from the financial crisis. It still has to be implemented by the new government. So we are going to have good growth. Were see productivity pick up in the uk. Thats very good news for the first time, but there are still some shops along the way, not to mention the eurozone. And jacob, lets come back to you quickly now. One of the reasons you site in your notes why you think Monetary Policy will remain easy for an extended period is because you think fiscal policy will be tightened after the election. Surely that will only be the case if conservatives win. If labor policy wins were not going to see tight lipped fiscal policy are we . Well i can all the major parties within labor are committed to rules the deficit to an acceptable level. For instance labor wants to reduce the current spending deficit within the balance. The conservatives want to move the overall budget the balance, and they want to do it on different time scales using a different mix of measures. But we still have a deficit to remember over 5 of gdp and so i think for the first couple of years, all parties will want to reduce the deficit, but theyll use different instruments, of course. We probably see more action on spending from the conservatives, we would likely see more action on pacs from labor administration, certainly higher income tax and higher tax for properties. So i think that in terms of the quantity of deficit reduction, the difference between tw two parties is very small. Jacob, thank you very much for that. Also thank you to Helia Ebrahimi our uk business editor. And listen up gamers coming up on the show super mario is moving on up making his debut in 3d. How about that . Find out how nintendo shareholders are reacting and how big of an opportunity thmd be. Thats coming up. Hey what are you doing . I was thinking about taking this speed test from comcast business. Oh yeah . If they cant give us faster internet or save us money, theyll give us 150 bucks. Sounds like a win win. Guys faster internet . I have never been on the internet and i am doing pretty well. Does he even work here . Dont listen to the naysayer. Take the comcast business speed test. Get faster speeds or more savings, or well give you 150. Comcast business. Built for business. Nintendo is one of the best performers in tokyo today after announcing it will release a 3d version featuring the classic super mario character. For more on that story, lets get out to makiko live in tokyo. The gamemaker called gungho entertainment is known for its puzzle and dragons game title which has become a best seller in japan and its gaining popularity overseas. It will release a super Mario Edition exclusively for 3ds users in april. Following the announcement, shares surged over 13 in the trading day while nintendo shares finished 2. 3 higher. It becomes the fourth motor traded stock. Figures show that sonys ps4 had apparently become the top selling game console last year leaving nintendos in its wake. Im so glad mario and luigi are still around given the proliferation of smag games on our smart phones you would think some of those older players would have a tough time. But mario is still around. I agree. The only games i really played were sports related. I never got into the fictional ones. The millennial generation are all about the online games. You clearly neat to get on board. I dont enter that category clear. Steking with tech samsung shares are up after results beat expectations. The company confirmed the decline in years. Samsung electronics, the Fourth Quarter Earnings Guidance is showing operating profit expected to come in higher than local consensus of 4. 8 trillion yuan. This is a 37 drop at the same time in 2013 been quarter on quarter, it is up 28 . Revenues were slightly lower, but mostly in line with Market Expectations coming in at 52 trillion yuan compared to a market consensus of 52. 2 trillion yuan. A 12 drop from the same time in 2013. The operating profit numbers are back into the 5 trillion yuan level and analysts are expecting the third quart rt of last year to have been the bottom for samsung in terms of earnings. The earnings are up more than 1 trillion yuan quarter on quarter. Analysts are saying there is some improvement with galaxy note 4 shipments and mostly it was lower marketing costs and costs cutting efforts in the im business that helped the numbers. The smartphone business was one of the contributing factors to the improvement, but much more so the memory chip business of samsung and more favorable fx rates for the Fourth Quarter compared to the surntsy forecast that remain in the Third Quarter were the biggest pushes from Third Quarters earnings. The average fx race was 1,in the Third Quarter. And the smartphone wars intensify going into the new year. Lets bring in cyrus, managing director at cm research to talk about more about how could be the winner going into this new year. The smartphone face was profitable for samsung back in 2012. Much of that having to do with the lack of innovation coming out of apple. Given that weve had the iphone 6 and sales have been much stronger than expected can samsung continue to stay competitive in the smartphone space . I think samsung has been a leader for a long time in the smartphone space. It should have adjusted its core weakness, which is a lack of software. In the next face of smartphones which is going to be attacked by apple at the luxury end and at the lower end, samsung is in a weak position. Yes, the margin in smartphones is massive, but cant it shift, cant it evolve with the times and still be a tech giant for the next decade . I think what we can open is if youre not a first mover or a second mover, youre in trouble. If you look at the operating system for samsung or tvs, samsung is way behind. Its operating system is way behind and i dont think it will be smart enough to catch up. When you view the samsung phone, you wont even know that operating system exists. And google is more and more taking away services and leaving samsung with a pure base. If samsung doesnt agree to googles terms, it wouldnt be google apps. Lets talk about the Consumers Electronics show. The higher connectivity of device moving forward. I think from an investors perspective, theres three big things coming out of it. The first is wearable tech. This year the average consumer has maybe two connected devices, a smartphone, tablet and maybe a laptop. In five years time they might have 30 to 40. Washing machines cars all connected to the internet. And the other thing, of course, coming out over the last couple of days has been s. E. C. s chairman may propose new rules to cut Internet Service provider as Public Utilities aimed to make sure everyone has free access to content online. Now, you have a different view to this. I think it will indeed move away from the likes of what president obama is calling for. Yes. As i understand it tom wheeler, the head of the s. E. C. Is going to make a decision on the 26th. But my view is that Net Neutrality will collapse at some point because economically its not a sustainable policy. Who are winners and losers then . I think if net knew translatety collapses, what it means is telecommunication operators will be able to charge much more to Google Netflix and facebook. So lets talk about some of your top calls for 2015. And kick off with the cloud because the clouse is a massively growing theme in general. I think theres clear winners and clear losers. Thats right. A lot of the Cloud Services Companies Like work day sales force, theyre overvalued at the moment. Longterm theyre winners, but theyre priced high. The yo areas you want to be in are in Data Analysis and Cyber Security. Cyber security will be a big theme in 2015. Theres going to be many threats because its so easy to do at list cost. So companies that unify in Threat Management Companies Like fire eye, theyre going to do quite well. I would think given the security alternatives the market has faced over the past couple of weeks, you would think there would be more players out there trying too tack this big problem facing consumers as well as businesses. Why arent we seeing other players trying to tap into the bigger markets or tap into the solutions . I think weld. The big problem is that the american Tech Industry is dissent grating. So ibm is splitting software from hardware. And that means that you cant have an integrated product in the way that apple has produced one and that creates higher Cyber Security risks. Weve got about 30 seconds. Whats your top pick for the year ahead . Im going to give you a couple. In the internet of things, who controls it . Apple, google. Microsoft is going to be big. In hardware, i think sony is going to go up and samsung is going to go down. Longterm longterm, lenovo is one of the hardware winners because its going to be the next ibm. And signer security i think you should buy a basket of these stocks. Thank you very much for that update. Cyrus mewawalla, thank you very much. And were going to talk about markets, more coming up. Investors welcoming the fed minutes as investors snapped a fiveday losing streak yesterday. But where do we go from here . Were going to discuss that, coming up. Welcome, everyone to worldwide exchange. Im seema mody. And im wilfred frost. Here are your headlines from around the world. A gunman is on the lose after shooting two officers south of paris in an incident this morning. But no link has been confirmed to yesterdays attack on Charlie Hedbo. At least two suspects in that incident are still on the run. U. S. Futures point higher after the best day on wall street in three weeks as investors cheer the latest updates on employment data. Dollar bull out in force. The dollar hits a fresh new year low following the greenback since december 2005. Tescos new ceo davis dave lewis unveils a new plan. The stock rises off the back of it. Now, in the last few minutes, officials have confirmed that the french Police Officer shot this morning in montrouge has died. The latest information is coming from the French Prosecutors Office saying it was a police woman shot this morning in the south of paris and she how has now died in hospital. There is of course a separate incident from the one yesterday at the offices of Charlie Hedbo where 12 people were killed. And the manhunt is still under way following the attack on magazine Charlie Hedbo. In a separate understand two Police Officers have been shot in montrouge. But it is not clear if the event is linked to the incident from yesterday. Right now, youre looking at a live shot from the scene. The French Interior minister left the meeting to head to the site of the incident. He said the shooter is on the run contradicting earlier reports that the suspect was arrested. Lets get out to hadley gamble who joins us live from paris with the latest. Hadley get us up to speed. Hey, seema, youre quite right. There are still conflicting reports about exactly what is happening. There are reports that one of the Police Officers has been killed. We understand understand that one possibly two heavily armed suspects are on the loose in this ipd. As youve seen there is no evidence that this attack is linked to the brutal murders we saw yesterday at the offices of Charlie Hedbo. The manhunt for suspects in that attack is still ongoing. We know two procedures suspected in these attacks. Reuters have reported these guys have links to terrorist organizations, possibly one of them has been convicted on terror charges and has served time for the same in the past. The third suspect in this case we understand basically came and came into police and told them hey, here i am after hearing his name called out on the radio. So this is actually a diaw of mourning here in france. President hollande called for a minute of silence. We understand he has met with the former french me mere Nicolas Sarkozy moments ago. Of course vigilance is key. We understand understand that in terms of whats going on elsewhere in france wheelchair heard records there has been a bomb in the eastern part of france and that was possibly near a mosque. Were working to confirm more details on that story and well bring that to you as soon as we have them. Thank you for giving us the details, hadley gamble. U. S. President barack obama has joined leaders around the world condemning the paris shooting as an assault on freedom and western values. Listen in. The one thing im very confident about is the values we share with the french people a believe, a universal belief in freedom of expression is something that cant be silenced because of the senseless violence of a few. Lets talk more about security and the opportunity to ramp up on defense with tony fratto prosecutinging director. The recent attack on paris do you think this will result in the u. S. As well as the European Union to proor advertise security . Clearly theres a lot of room for improvement. I think there has been a lot of improvement, seema, but youre right, theres a lot more to go. I think these attacks are very difficult to prevent and know when theyre going to strike. Those are the lone wolf attacks. How can we find and identify the most likely suspects because you dont know b where theyre going to strike so you need to try and i have just who these individuals are. I suspect there is a lot of intelligence being exchange right now, not just between the United States and france but all of the major Intelligence Units of western countries right now. Tony thank you very much for that. For now, we will be getting back to tony to talk more about markets after a quick market update. Thanks wilfred. Lets take a look at u. S. Futures. Stocks did have their best day in three weeks after the stoxx 600 rebounding from a fivesession losing streak. The dow up 122 points in free market trade. The nasdaq up just about 30 points and the s p 500 indicating a higher open the. Were waiting a higher open across the board for wall street, but what about the ftse cnbc 300 index . Right now, the index is higher up about 29 points. Even when you look at europe were seeing gains across the board. The big market mover yesterday was the eurozone. That bolstered the case for ecb president mario draghi to unveil quantitative easing as well as bond buying. Thats why youve been seeing european markets stage a turn around. In todays trade, the section day of the rally holding true. The xetra dax and german markets up about 1 . Cac 40 up 62 and the ftse mib up 216 points. So right now, we are looking at gapes across the board for europe and even here on the heat. Map right now. Absolutely. Weve seen a bit of equity buying over the last couple of days with. Weve seen a little bit of bond selling. This is only at the margin. But the tenyear in the u. S. Did tick back up 2 briefly. Yesterday, its now just below that level, is 1. 99 a bit of from record lows. That comes after the if i had memberships, which reassured investors a little bit that issues abroad in the Global Economy shouldnt affect the u. S. Too severely. A limb lar kind of move over the last 24 hours in the german tenyear. Its now at 0. 49 . The yield overall in the eurozone is point to go expectations of sovereign bond bien from the ecb being announced later this month. Lets look at forex rates because the euro continues to flirt with record nineyear lows. And it has fallen comfortably below 118 over the course of todays trade. 1. 1775 is where we are, down 0. 5 . Further weakness of the euro continuing the strendz we have seen throughout 2014 as we kick off 2015. The story hasnt been quite so true for the yen paring. The u. S. Dollar is up 0. 5 . Over the last week or so the u. S. Dollar and the yen has been moving up and down which has not been the case in the euro which has been weakening continuously. Modties, the last 24 hours has been related to oil price bouncing back. Oil was down about a percent and it rallied throughout the course of the day. Brent 51. 2 up about 10 to 15 basis points. Seema. And the on the focus on the fed. Fed officials discuss various potential risks to the economy at their meeting in december. The minutes show members believe global weakness positives of the of the biggest Downside Risk. But they think overall, it is likely to boost growth. The fed was concerned about markets overreactioning to changes on future rate hikes and decided they would be patient in moving towards a hike. Lets get back out to tony fratto at hamilton pace strategies. The fed is looking at the price in oil as a good thing for the economy, but are they forgetting that declining oil prices could lower headline in flagz even below where it is right now . Yeah. Thats deaf in thely a concern. I think the fed has that on their mind and its weighing on their outlook. But i think they think on pal, seema, that it is a support for growth. Its almost a natural stabilizer and the Global Economy for growth. We have this deflation issue, but deflation issue is broader than just energy and i think were going to be able to see the effects of more qe in europe and the impact of other monetary authorities around the world to try to deal with deflation. The problem you have is a sort of asymmetry right now with the u. S. Economy. We know the outlook over the near to medium term is going to be in a slight tightening in the u. S. Economy. We see that in the strengths of the dollar. But i think on balance the fed is probably where the market is at least here in the United States in terms of where the dollar is and where deflation is and how thats going to impact the u. S. Economy at least is going to be they expect it to continue with relative strength. Exactly, tony. Lets dwell on that point a little bit. At the margin i think theres a little bit of cheer in that those issues we see facing the Global Economy, slowdowns in the likes of japan and europe the Weak Oil Price and the arbitrary dollar. But they said look the u. S. Can continue on regardless. Yeah. I think in the United States we generally feel this way. This is the fist time in the recent we feel strong organic growth in the United States and were less butressed by whats happening in the rest of the world. There was a sense that theres real traction, organ heic traction not supported by Monetary Policy. So its really home grown kind of growth. We still need to see that confirmed in things like wages and really you know sort of more additional final demand is sustained final demand. But there is optimism that we are going to see that and i think thats reflected in the fed anticipates outlook right now and its going to impact their policy going forward. Thank you very much for joining us this morning, tony fratto. Now with the strong dollar dominating 2014 and the euro hovering around 9 1 2 year lows against the greenback, weve been asking you, do you see Dollar Strength continuing into 2015 . How low do you see the euro going . Get in touch with us worldwide cnbc. Com or cnbcwex and our personal handles are coming up on the screen now. Lets get the bat going wilfred, you and i. Where do you see the euro headed by the end of 2015 . As we go into the meeting, the risk that theres not a promise of Balance Sheet expansion. The moves in the euro dollar are suggesting is being expected. Going back to what tony was just saying i think the fundamental reason why at the end of the year we have euro weaker than it is now is because the divergent part of the me. Even with quantitative easing, i dont think it will fix the problems in the eurozone. So where do you see it headed . I dont think it will be nearly the same decline. Give us a level. I think well push down towards 1. 10 by the end of the year. But its not going to be from 117 to 110. So 110 for you. I say 1. By the way, the last time the euro traded at 1 would have been november of 2002. Now, given the dramatic fall we have been seeing in the euro, trading at a nine 1 2 year low against the u. S. Dollar perhaps that is where the euro is headed. As wilfred has been telling us weve been seeing this trade in place. The u. S. Economy continues to sell raise rate. Inflation is still an issue for the u. S. And europe. Where do you see the euro headed by the end of 2015 as well as the u. S. Dollar . Now a rundown on what to watch this trading day. Weekly jobless claims are out at 8 30 ooerp a. M. Eastern. Although claims tend to be volatile around the Holiday Season, to just keep that in mind. This afternoon, we get the latest lead on americans borrowing habits with American Consumer credit. By the way, boston fed president rosengren and the minneapolis speech kocherlakota speak today. Look for earnings from Constellation Brands Family Dollar and bed, bath beyond. And coming up we check into tescos plans. Can it liver in the long run . Well discuss after the break. The evolution of luxury continues. The next generation 2015 escalade. Welcome back. A Police Officer has been shot and killed south of paris but no link has been made to the paris attack owes Charlie Hedbo yesterday. U. S. Futures point higher after the best three weeks on wall street. The dollar pulls are out as the euro hits a fresh nineyear high against the greeneback. And weve been seeing some big moves in the retail space. Tesco is set to sell off noncore assets as part of a broad restructuring plan. The retail giant is finding to recovery from an accounting scandal. Likeforlike sales shoet a slide improvement over the Christmas Period. Tess doe, up better than 9 . Sainsbury up 5. 6 . M a underperforming its retail peers given the sales it reported for the krirms period down about 4. 3 . Lets discuss more with catherine boil. Also we say is senior montan. Lets start with you. Given what davis lewis had to say today, do you think its enough to rebuild confidence among shareholders . Its a chart. The headline number doesnt show how good t. Inflation is down 3 year on year. On volume materials, its 5 better year on year. Thats a real substantial improvement. The Balance Sheet, p a, trust, all the right thing in the right direction and more to come. That is why people are reacting positively. But dont think this is the end of success. Theres a lot more to come. You need consistent execution. It is the first time weve had a pretty release. The investigation over the accounting scandal is still under way, right . So were still looking for more details around what exactly happened. Correct. But obviously, in the bigger scheme of things its something quite reents. That is notice part of the way committeesco runs its business. Hes doubled quickly and hes now start to go rebuild the business. Thats the bigger story. And its not all good news today. The final payment being cut. I suppose to some types of investors, its a sprite theyre ul 9 the. 3 . Its not performing as well. Its on about a 7 yield. And theres more activity in the fist couple of hours in trading here in london in tesco than youve seen for the past 30 days. This seem to be a resore confident. It does seem to be much more of a new brim approach but the proof of that has not yet been made. I would by interesting to hear what you think in items of what is likely to happen in terms of assest disposals. Theyre going to have to sell off in the fame surely. Correct. And now seeing its clearly hinting at being up for sale. There is enough catch to make sure its not anywhere near. Look, we are doing all the right things. There is clearly more to come today. Bruno, which do you prefer . The main uk retailers, they all fell shortly yesterday, not just tescos. Which is your pick out of all of them . Theyre very different. Some almost on the limited up site. Sainsbury is much different. An execution caller. But much more than that right now. Thank you very much for joining us this morning. Thank you to catherine, as well. Still to come on the show we bring you the latest developments on the shooting in and around paris. Well be joined by Security Experts taking a closer look at the french governments response to the atrocities, straight after the break. Xkc and back to our top story this morning, paris prosecutors confirmed one police woman was shot and killed in montrouge. One other officer was reportedly injured and the interior minister says the gunman is on the run. But it is not clear whether the incident is linked to the events in central paris yesterday. This is a live shot from the scene. Meanwhile, a manhunt is still under way following the paris attack on the french mall zeeb charlie heb dp o. Were going to get some reaction on what to expect going forward. Thank you for joining us. I want to get your thoughts on this situation because were still confirming whether this attack was carries out by islamic militants. But if it was, it would be the worst islamist terrorist attack since july 2005 in london. Yes, indeed. There is still a lot unalternative about the attack yesterday. Some eyewitness accounts have suggested the attackers claimed to be al qaeda and more specifically based in yemen. If that is proven to be the case if they have direct links to akap then that may reinforce fears that this kind of rivalry that were seeing at the moment between al qaeda and the islamic states are the prominent of the jihady movement that that could spark large scale attacks intended to garner support and attention and that they may come forward and there might be more for that time. And what about the rationale for this particular atrocity. It seems so far that it was an attack on freedom of speech which is a slightly different reason for what eve seen for attacks over the last 12 months or so. Absolutely. This was a clearly defined attack. The threats against people involved in this has been going on for about ten years now. Weve seen attacks and foiled attacks in france in sweden and in denmark. So there this is not something new. Its worth mentioning Charlie Hedbo and the editor himself was mentioned in 2003 in one of the magazines published on a list of potential starths. So that is worth bearing in mind. And if there are further attacks, of course thats not what we want but if there are, do you think we could see a stronger force coming in from some of its allies like the u. S. As well as germany and the uk . I think it is a possibility. Clearly at the moment the situation in syria and iraq is a great concern. It greatly complicates the task facing Intelligence Services in western countries. You have thousands of individuals with european citizenship. Around 80 or so have been arrested and its simply too many people for the services to keep track of. So there is the possibility that other groups will join great freedom. Thank you for your time. Still to come on the show well take a look at which bonds could be a good investment for 2015. And a quick look at u. S. Futures after a snap back rally on wall street. The dow jones is up about 1 hup points in trade. Nasdaq up 28. Into its 10 30 a. M. Here in london. Welcome to worldwide exchange. Im seema mody. And im wilfred frost. Here are your headlines from around the world. A police woman is shot and killed from a suburb south of paris. But no link has been confirmed between yesterdays attack on Charlie Hedbo. At least two suspects in that incident are still on the run. U. S. Futures are higher and investors cheer the latest fed minutes in an upbeat u. S. Employment report. The dollar bulls run out of source. The euro hits a fresh nineyear low versus the greenback. Now trading below 118 for the First Time Since december 2005. Shirrs of tesco significantly higher after the new boss unveil a cost cutting plan to turn around its fortune. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. And if youre just tuning in, thank you for joining us here on worldwide exchange. Lets get a check on u. S. Futures. We did see a rally, napping a fiveday losing streak with all three major averages ending the day higher by wul over 1 . The dow foring up by 212 points. Take a look at european markets and how they are responding today. Second day of gains, in fact, for european stocks. Yesterdays read inn flagz put more pressure on the ecb to act sooner rather than later. Bad news around the economy, good news so far for european markets. We are seeing gains extended in yesterdays trade. A triple digit gays for the xetra dax, up 1 . The ftse mib up 212 points. We did get some Economic Data out today, as well. That dip in oil prices and gas prices here in the eurozone perhaps pushing the consumer to spend more. You have to take a look at the currency space. The euro continues to weaken against the u. S. Dollar. Its currently trading at 117. Thats a 9 1 2 year low, a fresh 9 1 2 year low against the u. S. Dollar. Keep in mind the last time the euro traded at 1 was november of 2002. Wilfred. Thanks very much seed ya. Weve going to bring you more flashes coming out of the situation in france. The french media is reporting the two suspects in the Charlie Hedbo incident have been located in in the east of france. Lets go back to markets. Lets have a look at some bond prices. Of course, the story of 2015 has been yield compression, more bond buying. Not, in fact over the last 24 hours, but as you can see, the tenyear in the u. S. Below 2 . Germany remains below 4. 5 briefly over the last couple of days. And the situation pointing to the expectation of bond buying from the ecb when we have the next ecb meeting in january. To discuss this is george head of u. S. Rate strategies. Good morning to you and thank you very much for joining us. The expectations by markets, by investors is that in the ecb meeting in the next couple of weeks, we will hear clear announcement about sovereign bond buying from the ecb. Does that mean that the risk is on the downside that people are expecting mario draghi might disappoint . So this year is obviously a year where investors are focusing on rates decoupleble and, in fact aus mentioned, we start out where all rates have been compressing lower. A lot of it is on the back of hopes that we can qe. But theres a scarcity of paper. There is a believe there is not enough high quality out there. The fed is innering closer and closer to eventually hiking. And then you have rights converging. I think a lot of it does hinge upon the ecb news. George thank you. You call it the year of policy title. Were not seeing that priced into the bond market. Right now, the u. S. Tenyear trading below 2 . The expectation is for Interest Rates to rise this year. Why isnt the bond Market Pricing that in . Well, again theres huge capital flows out there looking for a home. When you look at u. S. Yields although theyre low relative to whats going on in japan and europe there is a natural bias ahead to our shores. You mentioned the dollar early in in your segment. Youre really getting the fixed income released staying decoupled from the fundamentals. Lets talk about the shape of the u. S. Curve and the fact that it has been flattening. What does that really mean for the markets in the u. S. . Does it mean that the bond buying is a clear indication of risk off sentiment or is there Something Else to learn from the flattening . People usually look at the bond market and usually think of a nefarious undertone going on here. Of the last ten or so episodes going back into the late 80s, early 90s where bonds outperformed stocks last year whenever that happens, its only been three out of ten times where you get a recession that folz follows. People are always worried and wondering if the bond market is being so much of a skeptic. I think this is not really forecast on weakening fundamentals down the road. However, there is some of that embedded, too. This is why everyone is super sensitive to the longterm Interest Rates. Investors are seeking safety at a time when the u. S. Is expected to see better than 3 growth in 2015 an acceleration in job growth. Why do you think that is . Why are investors into bonds . Look there is a view out there that theres not enough fixed income paper. What people have a hard time grasping is just because you have the fundamentals looking good doesnt mean you have to have a big bond market selloff. And by and large, the second you have the low rates makes the Asset Classes look that much more compelling. It is for now decoupling from the fundamentals. However, with a lot of this usually burns out. Theres only so much capacity out there to keep pushing rates away from where they should be. I think over the course and at the end of this year as long as were still growing somewhere in the 2. 5 range, we will see rates move beyond 2 on the ten year. But before we get there, weve been of the view and constructive of the bond market as you guys have been falling on work, that we are probably in the bonding fades inging phase and who knows where the low is and will they actually deliver . Until that is all clarified, we could easily retest the october lows that we saw last year. And a quick question on the german tenyear b will this be the same scenario at the end of 2015 . Look, at the end of the day, we are of the view our guys in europe that if we get ecb, qe, a short lived higher rates. Back in the medieval times, i think the ecb is making that into gold. Thank you so much for joining us, georgia of Nomura Securities international. The bond trade, if traders get it wrong again in 2015 that will be once again another big story. We are expecting a 3 years on the u. S. Treasury but that did not happen for 2014. No, absolutely not. Thatting has been further recompression. If rates go up that will be the short pick up, as well. Do you see the Dollar Strengthening in 2015 . How low do you see the euro going, at well . One viewer tweeted in the that the focus is not on the strong dollar, but rather the weak euro and the yen. Get in touch with us by email worldwide cnbc. Com or tweet us, cnbcwex cnbcwex. Two suspects in Charlie Hedbos attack have been located in the east of france. And well continue to keep you updated on that story as we get more details. Clearly, a lot of moving parts. Indeed. Still to come here on worldwide exchange, investors seem to turn their back on gopro. Find out why the kre o is shrugging off the growth fears. Thats after this growth. The dow gaining over 200 points. There were some losers and gopro was one of them. Investor appetite has cooled over the past three months sending shares lower by 30 in that time. The companys ceo making comments about the potential for Slower Growth in 2015. He did reference International Sales as an opportunity. Here is that exclusive interview. I think you might see smaller percentage of sales relative to overall business. But growth overall should be very healthy internationally in 2015. I dont think we have any concern about that. And well stick with some tech momentum stocks. Twitter is another name sitting out in yesterdays broad rally, falling just under 4 . According to an s. E. C. Filing the companys ceo is selling more than 140,000 shares of the stock this month. The sale is set to deliver over 5 million. Just before we head to break, lets remind you of our headlines. A police woman has been shot and killed south of paris, but no links have been made with the attacks on Charlie Hedbo yesterday. And dollar bulls are out in force as the euro hits a fresh nineyear low against the greenback. Well be back in a couple of minutes. Lets get straight to news. Two suspects in yesterdays attack on Charlie Hedbo have been located in the east of france. France will observe a moment of silence in observation of yesterdays attack at 11 00 cet later today. And in a separate incident this morning, one police woman was shot and killed in montrouge. It is not clear whether the incident is linked to the events in central paris yesterday. This is a live shot from the scene. Were now going to go live to hadley gamble who joins us from paris. Hadley, help us get up to speed with whats been happening. Thats right, seema. Essentially what youve stated is correct. We do understand that there are reports that two suspects, possibly have been located in elsewhere in france. But at the same point, there are so many reports speculating and percolating this story. At the moment were trying to get everything quite clear before we bring anything to you. What we do know is police overnight released a photograph of two of the suspects. There are reports that these guys had linked to terrorist groups one of them possibly even convicted and had even served time for his links with terrorist groups. We also know that a third suspect has turned himself into the police overnight after hearing his name on the radio. Of course, in this incident that we have as of yet no link to the incident at Charlie Hedbo. We understand that of course as youve mentioned, one Police Officer has died one is wounded and police are now searching for one possibly two heavily armed suspects in that incident. So a lot of moving parts to this story. Hadley thank you very much for that update coming from paris. Lets go back and focus on markets. European markets in the green today marking the second day of gains thus far and were up over 1 . About 1. 3 for the broader euro stoxx 600. This marks a little bit of a turn around from the start of the year. Were still down 2015 in the euro stoxx 600. But a little risk on sentiment allowing a decent set of gains today, over 1 across the board in the major indices. A quick look at the euro euro dollar, were down 0. 6 at 1. 177 at the moment. The euro continuing to following last falls last year. And what does this mean for u. S. Markets . Were up for the first time in 2015, cutting losses by nearly a half. Falling a good 80. Rights now, were looking at gains across the board in premarket trade. The Dow Jones Industrial indicating a higher move by 120 points. Lets give you a rutdown on what to watch this trading day. Weekly jobless claims are out at 8 30 a. M. Eastern. Theyre expected to drop which could signal a firming labor market. Although claims tend to be volatile around the Holiday Season to just keep that in mind. This afternoon, we get the latest read on americans borrowing habits. Boston fed president Eric Rosengren and the minneapolis fed chief kocherlakota speak today. Look for earnings from Constellation Brands Family Dollar and bed, bath beyond. Fed officials believe global weakness poses some of the biggest Downside Risk especially if the royals the financial markets, according to the latest fomc minutes which we got yesterday. The central bank expects the big drop in oil is likely to boost Growth Investors welcoming the view as strong flight expect payrolls lifted sentiment. That is one of the reasons you did see u. S. Markets recover after lows of the trading day. The dow up around 212 points in yesterdays trade. Indeed seema. Lets get out and discuss this a little bit more with greg the u. S. Economic editor at the economist. Good morning to you. Thank you very much for joining pus. Morning. On the whole, bullish or dovish . I would say theyre bullish on the economy, hawkish on the markets. What struck me was notwithstanding their concerns about the Global Economy, which we all know about, japan, europe and the risk of deflation, theyre so bullish on the u. S. Economy that they think theyre roughly offsetting. Theres an interesting discussion where you think given the strong oil price, you could have unexpected momentum in the u. S. Economy this year. And so that leads us to say even though inflation is dropping sharply, it could be as low as zero this year. That will not stop them to raise rates this year. Goldman sachs out with a note that raised eyebrows on wall street, saying the first Interest Rate hike may not come this year that it could be pushed to 2016. What do you think is the likelihood of that happening, greg . I think its positive, but i also think its low. Goldman is among the more dovish forecasters on the street. They put a lot of weight on the fact that inflation is still even core inflation is still somewhat below the 2 target the fed has had for a number of years. Charlie evans, the chicago fed president was out yesterday saying he thinks it may not be back to 2 until 2018. So if you put a lot of weight on the fact that inflation continues to undershoot their target, yes, it could easily see them wait until next year. But that is not the broad signal that we get from janet yellen the chair, or the broad committee. They basically believe as long as the economy is Getting Better and that their fundamental forecast moves back to 2 the economy is ready for liftoff. Greg there were some implications in what they said yesterday, there were prepared to increase rates as long as they think inflation is headed above 2 and that the rate rise could come before that eventuality is reached. Right, right. So this absolutely critical. Its not the level of inflation today that matters for what they do. Its where they expect it to be in a few years from now. This has basically been their mantra. Yes, inflation is below 2 right now, but we believe that with the economy getting stronger the Unemployment Rate dropping and, therefore, some wage growth likely to appear in the next few years, and peoples expectations of inflation stable inflation will steadily move back to that target. Now, id say the caveat here is that it hasnt done that yet. Theyve been saying that for a couple of years and it hasnt done that yet. Thats why i agree with goldman, if there are risks to that outlook, it is that they will move later and more slowly than theyre currently saying. We are looking at the euro trade at a multi year low, a 9 1 2 low against the u. S. Dollar below 118. Do you think americans are going to take advantage of the weaker euro and spend more on tourism and travel going into the new year . Well, it has to be somewhat weaker than it already has, seema. It hasnt dropped that much. I would say the drop if fuel prices is much more significant. An american planning a vacation is more inclined to take advantage of the low petro price and take advantage of a u. S. Vacation and not a european vacation. The stronger dollar is another reason why youre likely to see inflation dropping very low this year and another reason the fed might be with rate liftoff. Were seen a turn around in todays oil prices slightly lower. Thank you for joining us this early morning. Thank you. Lets have a quick recap of european markets before we reach the end of the show. Theyre strong today, up over 1 across the board in the major indices. Following the strong day we saw in the u. S. Yesterday, that sentiment was carried through to asia overnight and its continued today in europe. As you can see, over 1 of the major indices. And u. S. Futures point to go a similar strong td start to todays trading session, as you can see. Perhaps taking queues from europe. We did have a better than expected adp report yet but, of course better than expected market here in europe providing some fuel to the u. S. As well. Absolutely. Now, before we go to break, here is a recap of the developing situation in france. Two suspects in yesterdays attack on Charlie Hedbo have been located in northeastern france according to the various french news outlets. In a separate incident one police woman was shot and killed in montrouge, a suburb south of paris. But it is not clear whether the incident is linked to the events in central paris yesterday. And france will observe a moment of silence in observation of yesterdays atrocities in just a few minutes at 1200 cet. Indeed. That minute of silence will be coming in a few minutes time. But that is all we have time for today on worldwide exchange. Im wilfred frost. And im seema mody. Thank you for joining us. Well see you tomorrow. How can power consumption in china impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . 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. Good morning. Breaking news the swo suspects in the french massacre have just been found . In global news stocks bouncing back. In large part i know it makes no sense on rising oil prices. Todays squawk newsmakers ready to join the conversation in new york city. Mark lazry, ivanka trump, and mel carmasan. Its thursday january 8th 2015, and squawk box begins right now. Welcome to squawk box here on cnbc. We are proemping 6 00 a. M. In new york. Noon in paris. Thats when the bells of notre dame are set to ring marking the start to a minute of silence to owner the victims of yesterdays attacks on Charlie Hedbo that left 12 people dead. [ bells chiming ]