Transcripts For CNBC Worldwide Exchange 20150116

I find it a bit surprising he digit contact me. Crude clings on to gains afteren erratic session yesterday. The top firm is cutting 7 of its work force. Bp shares in the green after a u. S. Judge rules its liable for spilling less oil in the gulf than alleged. Its maximum mine will be 4 billion lower. Youre watching Worldwide Exchange. Bringing you Business News from around the globe. Quickly going to bring you flashes firstly out of the iea whose report on the oil market has come out and said how low the markets fall will be is anybodys guess. Macroeconomic weakness continues to strain Global Oil Demand growth. Prices do not be seeming to stimulate demand just yet. Stocks are rising to their widest surplus versus the five year average since august 2010. Well bring you a discussion on oil in the next 20 minutes or so. One other flash in the last five minutes is the greek Government Bond yields have risen 40 basis points to 9. 5. The three year has risen 137 basis points to 1. 11. 7. Two banks applied for emergency liquidity to the European Central bank needing more collateral to sending greek equities lower and greek bond yields higher. Back to the stop story. Lets get you updated on what took place yesterday and how markets are responding today. The euro is recovering after the shock by the swiss bank to remove the threeyearold cap versus the single currency. The dollar also trading higher against the franc while the euro remains at an 11 year low versus the green back. Swiss stocks trading lower at the smi had the biggest fall in a quarter of a decade yesterday. You can see the big movers continue to move to the down side. Lets take a look at the smi right here. 8,038 down about 4. 3 but as i was pointing out yesterday the worst move in this index in 26 years. Investors werent only surprised by the move but imf chief Christine Lagarde talked about the broader implications of this move from the snb. This was a bit of a surprise. I hope it was communicated with other colleagues from Central Banks. Im not sure it was. Im going to reserve judgment on the pertness of the move because we are not discussed it. Governor jordan did not contact me which doesnt mean he didnt contact somebody else in the organization. Lets get live outside the Swiss National bank. Over to you. Yeah a big ramification for the swiss market this morning as you have seen. Big consequences for a lot of people that do business outside of switzerland but has to translate their earnings back into swiss francs. The people that are the toughest hit have money coming into switzerland but sitting outside of switzerland versus who is here. It has to do with whether the ecb could be looking at quantitative easing as early as next week and the swiss were trying to get ahead of the curve with regards to that ecb move. I spoke to a fund manager wanting to remain anonymous this morning and the fundamentals are not as drastic as they may look on the outset here. There will be a calibration and youre likely to see an evening out of this massive increase that we have seen in the swiss franc immediately after this move. He said the swiss were clumsy in their communication but not stupid in their action. He goes back to talk about how theres been this overvaluation of the swiss franc. Not as high as perceived by the market but the longterm fundamentals are not as terrible as it looks. The Market Reaction yesterday was violent but in reality because the measures the Swiss National bank put in place to prevent the swiss franc from excelling but the same thing is taking place with the dollar above the euro given that there havent been any dollar caps in trade for eurodollar trade for example. I also spoke to another analyst yesterday saying with regards to the timing theres a lot of criticism that the Swiss National bank should have given a warning or indication that they were going to do Something Like this instead of pulling the rug out from under all the investors and speculators as well but he was saying in reality there had been indications that there could be some type of move like this on the way. The swiss indicated before christmas they were going to head into a negative deposit rate. We knew that already. They wouldnt have indicated this if everything was okay so that was one thing. The other thing also is it will be interesting to see whether this move turns into something more positive. Whether it becomes a bullish play on european markets. Maybe not swiss stocks but on european markets given the signal this might be giving us about the ecb move. Thank you very much for that. Lots to digest and we will continue to debate the topics. Joining us now is the cofounder and chief economist at draganomics and jonathan westbound. We had that term clumsy with their communication but not stupid in their actions. Would you agree . They looked at accumulating 24 billion euros last month and im sure similar amounts this month and i think they just said exactly ecb, qe next thursday and something thats being underplayed is the greek election. Potential concerns about a greek exist could bring flows into switzerland and they looked at the rule to give us the green light next for qe next week and they turned around and said were already 85 of gdp in terms of reserves. Enough is enough and thats the driver of it. Not that they wanted to do it. I think they felt probably their hand was being forced. Lets bring you in as well. As recently as monday the vice chairman reiterated their commitment to the currency flaw and dramatically removed it yesterday. The chairman said this was a well thought through decision. Does it destroy the credibility of the snb . Yes i think it does. But whats more important is it destroyed the credibility of the snb but also undermines the credibility of all central bankers. It emphasizes a phrase ive liked to use for quite some years that just as james bond had a license to kill central bankers are the only Public Officials that have a license to lie. Lets not beat about the bush. The snb lied extremely directly to markets about issues that are of enormous concern and have tens of billions of euros and dollars behind them. On monday they said that the peg was a corner of swiss Monetary Policy. Were now being told by mr. Jordan that at that very moment they were considering a change. Now if a politician did that went on television and said under no circumstances am i considering an increase in taxes an the following day he raised taxes he would have to resign but central bankers not just in switzerland but all over the world are able to get away with that. What the implication is in the future markets will be much more cautious about believing other central bankers. Janet yellen but particularly mario draghi. And for mario draghi that delivered such sensational impact this is a critical moment. Next week he either has to do something and do something dramatic or he has to put up or shut up. Mere words will no longer work for the ecb because we have seen from the Swiss National bank that you cannot trust the words of central bankers and i think in a since Christine Lagarde emphasized that. She was obviously shocked at what the snb had done. It sounded to me as if the snb lied to the imf as well. Definitely an element of surprise with that announcement but ahead of the ecb decision on january 22nd could we say that this move by the snb was politically motivated . Yes. And another issue that raises a question mark is this idea of Central Banks being independent of politics. I think this was clearly a reaction to swiss politics in which the idea of reserve accumulation being very unpopular. Reaction to politics. We see the ecb dominated by german politics today. Jonathan we also heard the snb saying they will remain active in the markets moving forward. It moved 30 to 40 yesterday and the currency paired back some of the gains. Do you think from the 30 to 40 move initially was that driven by the snb getting involved in the market or is that where were going to settle for free market moves. Im pretty sure that was the case. Ive been in the markets for 30 years and a move like that is unprecedented in the major markets and i think at the end of the day there were only sellers as it was quite clear and i suspect that was the snb came in to try to add some stability and i think from their point of view they would say if the kurnty went to 95105 maybe the economy could cope with it but if swiss strengthens further i would expect further measures from the snb. They cant just allow an unlimited appreciation given the impact that this current move has had. And quickly jonathan would you be a buyer of the swiss franc at these levels . As the market tries to find the equilibrium . Thats right. You look at european ecb. The qe. You know you look at the greek elections. Theres lots of pressures still on the swiss frank and i suggest that the Swiss National banks work has still got to be done. Its a story that caught global attention. Jonathan westbound head of fx strategies. Thank you for joining us on Worldwide Exchange. We want to hear from you viewers. Have Central Banks lost credibility after the Swiss National banks surprise move yesterday . Join in the conversation and get in touch with us by email. Tweet us at cnbcwx. Our personal handles can be seen at the bottom of the screen. Lets see what all this means for markets and of course yesterday having sold off initially because of the shock of the decision markets finish pretty strongly in europe and today we have just come off the gains that we saw yesterday down 0. 2 . Apart from the swiss index markets doing relatively well despite the gravity of that decision yesterday. Lets have a quick look at the main indiana state main indies. France basically flat. Italy just up in the green. The smi is down 4. 65 in the middle of europe today so it continues to suffer today even though it declines sharply yesterday. Lets look at bond rates because all the uncertainty and surprise moves by a significant central bank lead to a lot of bond buying particularly in the u. S. Look at the 1. 73 yield. Significant moves from the down side to the upside. For bond as we have seen the bond buying and equity markets in the u. S. Yesterday were off as well because of the uncertainty. A bit of buying in europe as well. 0. 44 in germany. U. K. Seen as a safe haven relative to this as well. 1. 47 on the yield. As we mentioned earlier two greek banks applied for extra cattle but from the ecb emergency situation there and its 9. 4 and as we said earlier it remains inverted in greece because of the uncertainty and the possibility of debt defaults on the short end higher than the ten year. Lets look we have the dollarswiss franc there. Just losing a little of the significant gains yesterday but its lead to other big moves in particular the eurodollar. The euro hitting fresh 11 year lows and its weaker today. 1. 16 considering the moves yesterday allowing the u. S. Dollar to strengthen against the euro and we have a little bit of growth in the u. S. Dollar against the yen today. Now there was more underwell ming data out of china today. Last years rose to to 1. 7 the 119. 5 billion. A slow down from 2013s level. Sri is standing by in singapore as ever. Over to you. Wilfred all Things Considered yes it was a fairly rough and a fairly volatile day out here in asia after the disorderly moves that we saw in the currency markets post that snb action to scrap the currency cap. But all Things Considered i think that that was a degree of resilience in the asian markets. They found a degree of composure. Came off the worst levels of the day. Case and point is the nikkei 225. You have to watch out for the second round effects in your neck of the woods. There are implications of course for financial stability. So that could create volatility still in our markets. I wanted to highlight shanghai that left its peers in the dust today. We did see a slow down in the fdi numbers last year and more weaker macro but that builds the case for further policy action but its going to be gradually. We have an example of this because the central bank said it would lend 50 billion to banks at discounted rates to relend that money to farmers and Small Businesses and those are area of the economy that have been struggling. It was the gold miners and banks that lead the charge in shanghai as we head into the weekend. It was volatile on the session but we found a degree of stability toward the close. Back to you now in london. Thank you for that update from asia and coming up on Worldwide Exchange. Yes were following the story out of switzerland but we also speak to apples former chief evangelist about his latest project to change the way the world and the art of social media. Thats coming up. Also lets get stock specific. A stellar run for bio tech in 2014. Can they out perform in 2015 . Thats the question. We have three reasons why stocks in bio tech can out perform. From flying drones to modern board games find out whats making waves at the london toy fair. Thats coming up. Welcome back. Flashes coming out of the French Foreign ministry. Hes asking for support internationally in the fight against terrorism. They also clarified French Police detained 9 men and three women in relation to the paris terrorists attacks last week. Back to the Swiss National bank and the surprise move. Stocks have been reacting. Major banks, consumer discretionaryies and theyre still trading on the back. They cut their rating on the giant but held ratings of overweight and buy respectively. Jp morgan cut its price target for nestle. But said it was overweight the stock. Lets talk more about these stocks with consumer goods analyst. Robert. A pleasure to have you in. If youre a swatch and nestle that of course can definitely impact exports and their Balance Sheets. What should we expect . Do you think theyll guide to lower earnings in the future . What are you expecting overall . It will depend on the company whether theyre major exports or not. In nestles case 2 of their earnings are generated within switzerland itself. So from that for speck tifrom that perspective its a translation impact. It will be critical what pricing decisions they make locally but they devolve that to the lower managers. A lot of people putting it down to the translation effects of foreign earnings. Can we gauge whether the share price moves are they an overreaction or is there more to come . It will matter where the swiss franc levels out. We cut our numbers overnight and over the course of two days now weve seen the share price broadly factor that in so the markets moving quickly to adjust for that. It will be in Constant Currency but earnings will have to come down. How are you factoring in the move yesterday into your consensus in how you trade or review the stocks . We priced it into our numbers overnight and about a 10 decline for nestle. In terms of thinking about the other companies, it will be critical to see where the ultimate levels settle out. Is there a more longer term fear due to the uncertainty that theyll delay Investment Decisions decisions. I think theres a lot of socalled swiss quarters headquatered in switzerland but dont do their business there. So for them it is largely a question of translating the currency translation. Not just of the revenues but the share prices. A lot of the share prices that have fallen by 10 in switzerland have been stable in u. S. Dollars or u. K. And sterling dollar adrs. So for them it doesnt matter that much but theres a significant manufacturing and production sector in switzerland in engineering, pharmaceuticals. Everybody talks about the watch industry which is Something Like 10 of swiss exports. Now for them this is very very bad news as we heard yesterday and for the swiss economy as a whole people say the swiss franc will stabilize at some point . It will but only at the point where its really hurting the swiss economy and thats the part of the argument we havent heard. The swiss franc will continue rising until it causes really serious economic pain to their Tourism Industry and export industries. Indeed. Lets move on to another topic as well. Nestles rival reports in london and expects an up tick in markets. Emerging markets are we expecting them to really temper enthusiasm in that space with the stronger u. S. Dollar and other Global Growth fears . We have been seeing markets slowing down for some time now and we expect it in the Fourth Quarter in particular. Theyre looking for 2. 6 organic growth in the quarter and were at 1. 5 in the quarter so were expecting it driven by emerging markets. Is it slow down in growth or the currency head wind with a bigger impact on its profitability . It makes about 28 of its revenue in the euro zone and about 60 comes from emerging markets. Yes were seeing about 60 from emerging markets. In our view its the fundamental slow down we have been seeing in markets. In particular in china we saw 20 stock impact in q 3. Thats expected to repeat in q4 as well and the china consumer rebased their consumption patterns. What about the Indian Consumer . We havent seen growth come back just a bit and inflation coming in lower. Will that be a boom . A bright spot i guess. India will continue to be a bright spot. The question is margin pressures. They have been seeing competitors picking at their margin over the last few years. And then the u. S. Continues to be seen as a bright spot something that Christine Lagarde also pointed out. Is that then going to be a boom for them Going Forward . The domestic economy in the u. S. . Unilever will benefit from the u. S. Consumer. Nestle has a Bigger Consumer to the u. S. Consumer. Nearly 25 of the business but its going to continue to see improvements there. Well leave it there. Thank you for your time. And of course he stays with us after the break. Lets bring you a flash from greece. We reported that two banks had reported for help in capital from the European Central bank. They have been named according to dow jones. Alpha bank and euro bank. Greek bond yields ticking up off the back of that news. Still to come on the show the Swiss National Bank Surprise move was a shocker for Global Markets but what does it mean for europes emerging markets . Well discuss with our next guest. A sell off in swiss stocks weighs on the european markets. Banking and consumer stocks bearing the brunt of the fall. A tsunami. Policy makers express their surprise at the snbs policy move. Imf managing director Christine Lagarde tells cnbc she was also caught unaware. Governor jordan didnt contact me. Not to say he didnt contact me. I find it sur piezing he didnt contact me. Cruise clings on to gains meanwhile the top oil Services Firm is cutting 7 of its work force. Greek banking stocks slide after amid a report alpha bank and euro bank applied for emergency liquidity from the ecb. After european markets ended lower lets take a look at how european markets are trading today. Look at the ftse 100 down. 2 , xetra dax down about. 5. And french showing red and the swiss market showing extended losses down about 5 . The snb abandoning its capital. That is a big concern for investors. Taking a look at the bond market that surprise move did send investors into bonds and that can be reflected in todays trade. Were looking at the ten year treasury note trading at 1. 7 . So below 1. 8 . Quite a low yield for the ten year treasury. Investors are seeking safety during this time. Also trading at. 45 . Thats the yield on the 10 year german bond. Were seeing the swiss bounce back a little bit declining a little against the dollar about 1. 4 down following yesterdays sharp move to the upside. Also worth pointing to the eurodollar which did slide to an 11 year low. At 116. 3 today. The its felt all across europe. Its down over 2 and less than 1 weaker. This as franc mortgages become harder to service. Tim lets start with you and touch on the points we just mentioned. How significant is this move for the likes of hungary and romaine juan and poland. This problem of households so they have all been trying to do something about it. There havent been much more fx lending across the region. The hungarians amazingly, they announced this Conversion Program in november. Its a get out of jail. They dodged the bullet of this remarkedly. So the impact is fairly limited. The countries most impacted are poland and austria. They were drivers for this swiss frank lending across the region. Something like 30 billion euros in austria itself. They will likely be significantly impacted. The big move means likely the borrows will struggle to repay these. Banks will likely need recapitalization. But the impact is probably overdone frankly. The more interesting thing for emerging europe i guess is what the swiss move suggests for its forecast for europe. I guess it suggests that the swisses are not very comfortable with the Growth Outlook for europe. They assume the euro is going to go weaker and for emerging europe thats more important. Its a key market. This is weak growth and weak recovery. Many suggest that the ecb will unveil full blown quantitative easing on january 22nd which is coming up next thursday. Sure in a way we learned that but the underlying story which is really difficult growth and lots of political concerns obviously across europe thats a drag on emerging europe and for the whole of Europe Eastern Europe and western europe the big challenge is growth. Thats the big question mark there for the whole region. Everyone is struggling to get some growth momentum under them. Growth and lack of inflation of course. Deflation being the big concern especially looking at the euro zone but even looking at switzerland and i know you wrote about this as well. December cpi came in at negative 0. 3 and inflation there could head even lower. Sure for switzerland this is clearly very deflation naryary. People were saying this is the Swiss National bank acting against deflation. That shows how serious this was the other way around. This clearly is the odds of deflation. The swiss have lived with deflation before. Theres been several years over the last 20 where price versus fallen quite sharply in switzerland but i think for europe i would put a slightly different answer on it. We all knew that europe was weak. That theres a growth problem in europe and this does sharpen the question about next week and quantitative easing for the ecb. I think it creates a very binary situation where nearly everybody in the market really assumes that the ecb will have to do something very dramatic so either they do something dramatic and that will have a big impact or they dont and if the ecb underwell ms this time as they have done for each of their last four or five monthly meetings then there could be real market mayhem as a result of this move because the expectations are much higher than even two days ago. Earlier were we trying to decide why they timed the decision, one of the decisions is the ecj ruling. Do you think at the margin the upcoming greek election has anything to do with the timing of the snb decision . I thought lagardes comments were quite remarkable. The Swiss National bank a serious Global Monetary Institution doesnt bother telling the head of the imf. You find that staggering and you could tell that she wasnt too happy about this development and in answer to your question europe faces huge challenge across the board. Theres the economy but on the political front, the challenge from russia and ukraine. Europe is in a dire situation at the moment. The leaders arent talking together which is quite worrying i think. Thank you for joining us this morning. Much appreciated. Now another flash coming out of greece. They applied for assistance a Bank Official told reuters. Thats one of the two banks in that story of two greek banks applying for extra liquidity from the central bank. We have been asking you to get in touch with us. We have been asking how Central Banks now lost their credibility . We heard earlier that he believes they have. He tweeted to say although the snbs move was justified the fact that the central bank lied earlier this week impacts its credibility. Get in touch with us worldwide at cnbc. Com. Our personal handles are on the screen as well now. All right and germans deputy finance minister says he does not yet fear europe is slipping into a deflationary spiral speaking exclusively to cnbc, said this weeks data was a modest Price Development. Aneta is live. He is representing the minister of finance here in germany was pretty vocal about the fact that he doesnt see any deflation in the euro zone explaining that the environment were in is actually something we triggered ourselves through the reform process of the past years. So take a listen of what he had to say about also whether he thinks that buying sovereign debt right now by the ecb is something which is appropriate. Im not commenting on any actions of the ecb. I know my task and the task of a german policy maker is to look on Structural Reforms in germany and europe as a whole. So its delivering this message at the end of the month of the European Finance Ministry Meeting where were debating the growth structures and the investment schemes proposed by the new president of the commission and investment in our competitiveness enhancing our advantages will be key for the future common european policy. Let us talk about the risk of deflation deflation. Do you see such risk in the euro zone. I do see the facts and the fact is that the core inflation is rising and we have very moderate development on energy and other raw material. This is not what economists in the textbook describe as a deflation spiral. This is a modest Price Development and it has two influences. The global circumstances, especially on the raw material and on the other hand euro has done much to get it cost down. And for example if you look to spain and portugal it was the main purpose of the programs to become the cost down and the competitiveness up. So we have been successful with that and im not complaining that. But i very much appreciate that the European Central bank is aware that deflation and excessive inflation is not on their mission list and they will do the necessary things. Theres also people talking about good and bad deflation. So youre telling us that you clearly see good deflation. Is that the case . If it rises moderately it has nothing to do with the deflation area scenario but i see modest Interest Rates and stable economic circumstances as a driver to regain on a growth pattern which is going beyond the actual growth so im not complaining about these circumstances of economic development, yes. Another part of that interview he was also saying that the German Government is most likely going to revise gdp Growth Outlook for 2015 for germany and also that he thinks that 2015 could be the year of a european recovery saying that he is actually repeating something the french finance minister was saying in an interview last week. So you see i guess german and other european politicians try to get a positive message across when it comes to the state of the european economy. Back to you. A great interview. Thank you for bringing that to us on Worldwide Exchange. Lets look at the price of oil. After rising 5 and crossing above 51 yesterday crude oil reversed course but once again this morning were seeing a rebound. Light crude trading at 47. 45. Up about 2. 5 . Brent crude, the international gauge of oil trading just below 50 dollars but a move to the upside. Now speaking with cnbc in washington d. C. Imf managing director Christine Lagarde stuck an overall uptick on the Global Economy despite deflationary concerns. Deflation is a risk of concern and we warned that risks of very low inflation for at least a year. We have clearly seeing it exworse by the decline of the price of oil and theres currency adjustments resulting from that but its also a question of output. You know the capacities of some of the advanced economies are still, you know not used to full potential and to full effect which is why we have the stickiness of prices. But on that you still ceelo oil prices as a benefit for the Global Economy. We still say its a net positive but what were seeing is a Great Variety across the map. Whether your oil producer importer, whether its pegged to the dollar or not and whether you edged against the currency risk puts you in a different situation but were still seeing on a net basis a positive outcome from the decline of oil prices. Now theyre cutting 9,000 jobs as the worlds top oil Services Firm tried to control costs. They took 1. 8 billion related to the job cuts and venezuelas situation. Theyre down today. We have been saying this has stemmed since the opec decision in november. A lot of people are saying that opec is now broken. Was opec broken many many years ago and only theit still maintaining growth and profitability pause of the demand in oil. There was a factor maintaining monopoly price stability in the market. China was part of it but no on the supply side as well. So opec has been broken since the 1980s when all the countries apart from saudi arabia were producing as much as they could and it was up to the saudis to be the swing producers but i think the saudis taking that role of swing producers was a crucial factor between 2005 when chinese demand picked up and last year and there was a huge change in the prices of november and october of last year. Saudis decided were no longer going to be the swing producer. The u. S. Shale providers can be the swing producers. They can cut back if supply exceeds demand and thats the struggle were seeing. Its the saudis that want to return oil to a competitive market and its the american shale frackers are praying to bring the price back up to 70 80. But thats not going to happen. Were in a competitive market without someone willing to play the role of the swing producer. Its been fascinating to watch the various countries. Do you think more Oil Exporting Countries like russia will take this oil story as a lesson to diversify their assets Going Forward . Yes thats what they ought to do and thats what theyll try to do. The question is whether they can do it. Maybe russia can do it. But can venezuela do anything to diversify itself away from oil . Probably not. But as Christine Lagarde says theres some countries in serious trouble over the next few years although for the World Economy as a whole i would say this is a clear positive. Lets quickly touch on russia. You wrote putin and his advisors do not simply understand market economics. Do they get it now . Well i dont know but actually i think he was probably right to change the central bank because the efforts to stabilize the rouble failed and cost Something Like 25 of their reserves and c, they were clearly going to fail. They were just putting money into the market and encouraging more speckation against the rouble and that was the long way to go. I have no idea what the new regime is going to be like but chances are it wont be worse than the last one. Thank you for joining us this morning. Pleasure as always. Now u. S. Judge has ruled b. P. Is liable for spilling 3 Million Barrels of oil into the gulf of mexico in the deepwater horizon disaster. Thats a quarter less than prosecutors claimed. The ruling comes day before bp goes to trial to determine the amount of a civil fine. In a statement bp is reviewing the courts decision. Up 2. 3 today. And still to come on the show, we investigate the top toy trends for 2015 ahead of the london toy fair and see how the more traditional items are being reimagined. They were one of the two banks applying earlier today. They said they do not expect to use those funds in the shortterms so they have been telling reuters it was a precautionary application for extra liquidity. The greek bond market just did it off the back of that story today. Intel shares were down 2. 5 in extended trade following the Fourth Quarter results out to close. Josh has a run down of the numbers. How will the pc market fair in 2015. Thats a big question for investors putting money in intel. They reported Fourth Quarter eps of 72 cents. Wall street expected 66 cents on 14. 7 billion so a beat there on the bottom with revenue basically in line with forecast. Looking through the business divisions 8. 9 billion for its group. Revenue in that division did rise 3 over the year that just missed wall streets expectations. Thats the number to watch as the pc business still accounts for about 60 of inobstetrical sales. The Data Center Group came in at better than expected 4. 1 billion and finally theres mobile. Intel is making a big push into that category and promised analysts to trim losses in 2015 and the mobile and Communications Division did post an operating loss of 1. 1 billion about the same as the previous quarter. Looking ahead, intel projects revenue of 13. 7 billion. Inobstetrical stock did surge last year with signs of stabilization. The question is how the market performs this year and how much of the good news is priced in after such a strong run. For cnbc im in silicon valley. More breaking news related to yesterdays toir in switzerland. They entered into insolvency. The u. K. Fx broker has entered in off the back of the smart moves in the swiss currency yesterday. We want to bring you up to speed out of headlines coming out of france. Were learning that 122,000 police have been deployed all over france regarding a situation that is taking place. Well continue to bring the headlines out of that but right now 122,000 police have been deployed all over france. Keep you updated as more news amounts and now to another story were watching today on the consumer side. The london toy fair getting underway next week show casing the latest ideas for importers and retailers. The focus is on the outlook of technology and toys. Peter a pleasure to have you on. Thank you for having me. Tell us about the health of the consumer and what theyre looking to buy this year. It was up about 3 so the toy industry is looking strong. This year were looking at the coming together of app controlled toys. So a smart device controlling a physical item and we have started to see quite a few artificially Intelligent Toys coming through. My bets for this year are where Artificial Intelligence and app come together to create fantastic toys ive had the luck to see the past couple of weeks. How expensive are the entry level to get a really good product. You can get into drones were big last year. Big stories all over. Good and bad. You can get into the drone market 25 or 30 pounds. With a camera you start 150 upwards. So were not talking about low end plastic highly produced items. Were talking about things that have more longevity and higher price point means more longevity. Lets touch on a trend because its not just about the hardware itself. The software is just as important. Totally and so much work going into the back end of these toys. One of the break through toys was a Robotics Company set up by mit graduates and their first product is a toy and now they turned into a toy company. It shows how important that software is. Thank you for joining us this morning. Greatly appreciate it. Coming up on the show well continue to keep you up to date on the fall out from the Swiss National bank. What it means for swiss stocks and currencies, thats coming up next. [ male announcer ] meet jill. She thought shed feel better after seeing her doctor. And she might have if not for kari, the identity thief who stole jills Social Security number to open credit cards destroying jills credit and her dream of retirement. Every year, millions of americans just like you learn that a little personal information in the wrong hands could wreak havoc on your life. This is Identity Theft. And no one helps stop it better than lifelock. Lifelock offers the most comprehensive Identity Theft protection available. 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You have so much to protect and nothing to lose when you call lifelock right now and try 60 days of Identity Theft protection risk free. 60 days risk free. Use promo code onguard. Order now and get this document shredder to keep sensitive documents out of the wrong hands. A 29 value free. Call the number on your screen or go to lifelock. Com onguard to try 60 days of lifelock Identity Theft protection risk free and get a document shredder free. Call the number on your screen right now. Welcome to Worldwide Exchange. Heres your headlines from around the world. Is smi trading lower with banking and consumer stocks baring the brunt of the fall. U. S. Futures pointing to a low open after a one month low. The s p falling below the 200 mark. Crude clings on to gains after an erratic session yesterday. Meanwhile the worlds top oil Services Firm says its cutting 7 of its work force. Its disappoints with revenue forecasts sending shares lower and upgrading their price target on the stock this morning. Youre watching Worldwide Exchange. Bringing you Business News from around the globe. And were getting euro zone second reading of inflation which has come in at minus 0. 1 cpi. Thats the monthly number so that the second reading following the First Reading and just reconfirming that we are in a deflation nary environment here in europe as you can see the euro not really reacting too significantly off the back of it. Flat on the day 11628 which is in and around 11 year lows following the swiss decision. Well continue to watch those levels but back to our story of the day. The euro is recovering some ground after the swiss frank after yesterdays stocked decision to remove its 3yearold cap versus the single currency. The dollar also trading higher against the frank while the euro remains at around an 11 year low against the green back. Its not just currencies moving swiss stocks trading lower after the biggest fall in a quarter of a decade yesterday. Take a look the declines continue to accelerate to the down side. Were looking at the index down better than 5. 5 . Were seeing a lot of follow tillty in a swiss market. Investors werent the only one surprised by that move from the Swiss National bank. Imf chief said she wasnt kept in the loop either. This was a bit of a surprise. I hope it was communicated with other colleagues from central paings. Paing banks. Im not sure it was. We have not discussed it with governor jordan. He didnt contact me which is not to say he hasnt contacted somebody else in the organization. She is on the ground in switzerland to help us understand what the response has been from citizens to the announcement from the Swiss National bank yesterday. Confusion, disbelief, questions about what happens next. All of the above is fair to say. Thats what a lot of people are thinking this morning. Yes, as soon as that announcement was made yesterday and i have spoken to a number of analysts and Fund Managers since then. Many saying its going to take time now. You need to see a new equilibrium reached before we see what happens next and that has to do with what the ecb chooses to do next too. Somewhere somebody communicated with officials from the Swiss National bank about potential European Bank moves. It will be interesting to see if they dont embark on quantitative easing. In regards to what other people are saying this morning they still think the swiss market will see a lot of volatility and we have further to fall as well. Sorry its quite hard so its hard to speak clearly but a lot of the exporters though being hit hard. The ones looking at revenues and dollars on euros but having to transfer back into a franc that jumped Something Like 30 in yesterdays trade. Now one of the items, that Balance Sheet expansion is also talked a lot about because the Swiss National bank couldnt go on buying up Something Like 30 to 40 billion worth of fx reserves per month without having to come out of that trade and they dont want to be on the wrong side of the trade if we see quantitative easing. Thank you for that. Lots to dwel on and discuss and well do that now. Thank you very much for joining us today. I want to start by wondering where exactly were going to settle. We saw a massive 30 to 40 move initially and we obviously paired back some of the gains. Are we close to a free market level or were those gains only paired back because the snb got involved itself. I think the point made about what sort of equilibrium we will reach in the swiss franc is an important one. Its not clear that we have reached an equilibrium yet and what the ecb does do is going to be very important in reaching that equilibrium level. Do you think the massive exodus also resulted in this move into the swiss frank making it even more challenging for the snb to hold on to that cap of 120 . Its not clear. What is more clear to us is that, you know, the swiss franc is likely to see renewed weakness going ahead. In particular because were going to see a broader based outflows from switzerland. So the external accounts if you like will reflect and are consistent with a weaker swiss franc and certainly the francs status as a funding currency is not challenged in our view. The swiss franc will continue to remain a funding currency in g10 space particularly with Interest Rate where is they are at the moment. Lets talk about that factor because of course negative rates of minus 0. 75 yet people still desperate to buy the currency yesterday. Does it suggest that people want safe haven status, Currency Exposure even if theyre losing money on that cash . What does that mean about what people are thinking about the Global Growth outlook . We wouldnt judge yesterdays price action as a move. What we saw is a very unexpected announcement from the snb. Looking ahead it isnt clear how much trades will suffer. We know that they will have born the brunt of yesterdays move but the outlook is uncertain at the moment. In terms of safe haven demand we could see gold do well off of this but i dont think that the swiss frank will strengthen necessarily on the back of safe haven demand in particular. You know Christine Lagarde yesterday told cnbc we will see more volatility in capital flows and Exchange Rate currencies Going Forward. Do you agree . Such an interesting question. It isnt clear that we will see more volatility in capital flows. What portfolio flows do in particular, equity markets, demand for Government Bonds, will be of particular important. Different flows vary for different currencies. Equity markets important for sterling where as fdi of course is important for a number of other currencies. Thank you very joining us today. And after yesterdays surprise move from the snb we have been asking you have central bankers lost their credibility . And john martin said the snb decision isnt making him question the credibility of other central bankers and andy smith says he thinks that jordan had a chat with him over the qe and took the decision based on that. If you want to join the conversation here get in touch with us by email worldwide on cnbc. Com or by twitter and our personal handles are on the screen now but lets get an update on markets now. Thats right. Thank you, lets take a look at u. S. Futures after a volatile day for u. S. Equities hitting a one month low. A lot of weakness in the tech space as well as materials and today the sell off could potentially continue. We are looking at the Dow Jones Industrial down about 70 points in premarket trade. The nasdaq down about 35. The u. S. Major averages are down about 4 from their record highs. If youre trying to make sense of the moves that we have seen in u. S. Markets that gives you an indication of where u. S. Averages are trading down just about 4 . But the big story, european markets of course were in a volatile day of trade yesterday in response to the Swiss National Bank Announcement that actually came out during Worldwide Exchange. Were looking at markets trading lower across the board. The ftse 100 down about 29 points. The euro zone is in deflation. Coming up ahead of the meeting next week on january 22nd where the ecbs president mario draghi is expected to unveil full blown quantitative easing. If he overpromises doesnt deliver you could see mayhem in markets. Cac 40 trading down by 15 points but this is day two after the Swiss National bank made that announcement scrapping the National Currency cap and were looking at the swiss index down about 6 . Of course this after the swiss index had its worst level in 26 years but clearly the sell off is not over just yet wilfred. Though i would temper it because of course european markets finished the day yesterday very strong excluding the smi. So the fact that theyre down about a half a percent today isnt too significant given the size of the move but the moves continue in other asset classes. Lets look at bond yields. The u. S. Saw significant bond buying off the back of the move. Were at 1. 72 . Thats moved sharply during the course of the week. Pointing to the general risk aversion that we get when uncertainty spikes. Germany 0. 45 and the u. K. As a safe haven, 1. 4 6 . Important to focus on the swiss Currency Pairs and we havent got any of them there today put they have seen the swiss frank come off its highs from yesterday of course. A net result over the last two days still significant appreciation to the tune of about 10 or 12 against the major Currency Pairs. The eurodollar moved sharply down as well yesterday over 1 following the decision by the snb. Reignited that trade and were at 1163 at the moment today dh which is around an 11 year low. Lets recap the dollar swiss franc. That doesnt tell the full story of the last couple of days. Commodity prices lets have a look at them and oil is up today. Were at 455 for wti and brent 49. 7. The net effects of the last two or three tading days has seen oil come back off its record lows hit at the back end of last week and early this week. We are have recovered the the last two or three trading days. The net result of that. Gold finding strength yesterday following the uncertainty. Were at 1258. Its off a little bit today. Investors cant see the swiss franc as a safe haven perhaps they can find some safety in gold. Lets get you the run down of what to watch this trading day. December cpi out in the u. S. With headline prices expected to drop amid concerns about deflation. Core cpi expected to tick up just slightly and at 9 15 december Industrial Production which is expected to be flat and before 10 00 a. M. We get the first read on january consumer sentiment. A trio of fed officials will be reporting today. Given the weak earnings season it will be interesting to see what Goldman Sachs reports today. Theres been interesting themes swhus legal costs and also with Interest Rate rises effecting fixed income revenues although the only one so far is wells fargo with traditional Retail Banking doing already thus far. Its been an outperformer over the past one year. A second reading in euro zone inflation confirmed the block is in deflation. December Consumer Prices fell 0. 1 on the month while prices fell on the year down 0. 2 . Interestingly enough speaking exclusively to cnbc germanys deputy finance minister said the euro zone wasnt entering a deflationary spiral. Core inflation is rising and we have especially energy and other raw material. This is not what economists and the textbook describe as a deflation spiral. This is a modest Price Development and it has two influences. The global circumstances especially on the raw material and on the other hand europe has done much to get costs down and for example if you look to greece, to spain, portugal and ireland it was the main purpose of the programs to become the cost down and the competitiveness up. So we have been successful with that and im not complaining. Still to come on the show as we just mentioned can Goldman Sachs buck the trend after a number of disappointing earnings reports . We look at this quarters hits and misses so far after the break. Swiss stocks sell off for a second day weighing on european markets. U. S. Futures also allow open after Major Industries close. And the top oil firm is cutting 7 of its work force. As i was trying to say the nba tipped off at the stadium in london last night and tested out 4k technology. I spoke to the executive Vice President of operations and technology for the nba and asked him what 4k can do for the viewer experience. Tonights the first example where theyre taking us early into the world of 4k. This is literally the first time an nba basketball game has ever been done in 4k. Help us understand what 4k is and what technology is needed to support this venture. Its four times the resolution of hd. So its a much much better picture with a wealth of detail. I thought h. D. Was clear. This is to another level. This is absolutely over the top. If you sit in front of a 4k monitor you feel as if youre there. Its almost as if you dont want graphics on the screen like you use your Second Screen to give you the score and updates and box score and everything you need about the players because you want to wrap that 4k image around you and lose yourself in the arena. That was courtside at the stadium although im sure youre used to that type of seating or being so close to the games. Perhaps but not a basketball game. Would you watch and support a team . I think it drags on too long. Basketball has more of a chance to work here in london. Well be watching to see what the nba does. Lets get you up to date on whats been happening. We have been keeping track of the earnings. The hits an misses so far and despite a disappointing forecast intel joins the likes of alcoa, csx and wells fargo. Topping estimates. Intels profit beat forecasts as they benefitted from improved pc sales and continued demand from servers. Revenues rose about 6 beating estimates. Lets have a look at who has been missing estimates so far and wells fargo has been the exception in an otherwise bleak quarter for the u. S. Banks. We had two more having a shot at whether they could hit earnings yesterday and both missed the target. Bank of america and city Group Reported yesterday and bank of america reported a 14 fall in quarterly profit taking a hit from lower bond yields. City group cited weakness in trading revenue. This a day after jp morgan tell shy and kb homes revenue came in better than expected. We will continue to populate our earnings wall and give us an indication of whether u. S. Firms are delivering enough to justify valuations. Absolutely. Goldman sachs reporting 4th Quarter Results at 7 30 a. M. Eastern. Theyre expected to earn down from 4. 60 a year ago. Revenue is expected to drop 13 . Analysts say the trading revenue will fall short due to declines in fixed incomes, kurn sis and commodities. Taking a look at how shares are trading up about a half a per cent in frankford and still to come on the show after a stellar run in biotech in 2014 can they outperform in 2015 . One top analyst gives us three reasons why they will. Welcome back and well bring some flashes out of belgium following the terror raids we heard about yesterday. The Belgium Police are saying theyre holding a total of 13 people after those 12 antiterror raids that took place yesterday. Two more are being held in france following similar raids. They found Police Uniforms at an apartment and saying also various weapons and explosives have been seized. And 2014 back to Financial Markets was a solid year for one specific sector. The index delivering a 34 out performing the s p 500 but can it continue to rally in 2015 . Joining us is matt roden executive director. As i was pointing out one of the best performing sectors in 2014 thanks to positive drug trials. Why do you think the sector did continue to out perform . It was one of the biggest losers in yesterdays trade. Good morning, thanks for having me on. So youre right, the bio tech sector in the u. S. Has really outperformed in a very significant way over the last three years. We looked at the underlying sector metrics valuations and other issues being looked at for investors this year and we still think it can out perform and its the earnings growth. This is still a big grower in the markets. If you look at the s p large cap growth index bio techs are at the top in terms of the ability to deliver longterm growth right up through 201718 in consensus numbers. So theres a scarcity of growth that we think is attractive for the large caps and emerging mid caps as well. A quick question on currencies. We see a mass move on the back of the Swiss National bank decision. How are you factoring in the currency move given some of the stock dos make a significant amount of sales overseas . I mentioned the increasing head winds this year. The larger cap biotechs are Multinational Companies but its mostly the euro and the yen and those youre able to hedge. We recently revised our numbers to reflect our currency trens. Those are significant emerging markets. Well leave it there. Thank you so much. More Market Analysis coming up next. 5 30 in new york. Welcome to Worldwide Exchange. Here are your headlines from around the world. Lets start with switzerland. Day two of the swiss sell off. Smi trading lower with banking and consumer stocks baring the brunt of the fall. U. S. Futures pointing to a low open off the close and a one month low. The s p falling below the 2000 mark. Kud clinging on to gains after a volatile session yesterday. Meanwhile the World Top Oil Services Firm says its cutting 7 of its work force. Sending shares lower after hours but a number of brokers upgrading their price target on the stock this morning. If youre just tuning in thanks for joining us here on Worldwide Exchange. Lets take a look at the big story and the broader implications in the currency space after we learned about the surprise announcement. The euro is recovering some ground after yesterdays shock decision to remove the 3 year old cap versus the single currency. The u. S. Dollar also trading higher against the franc while the euro remains at an 11 year low against the u. S. Dollar. A lot of speculation of whats going to happen ahead of next weeks meeting. Lets stick with the swiss story. Its day two of the swiss sell off after the smi. Thats the biggest fall in 26 years. Right now the sell off is continuing. Were looking at the smi index down about 5 but its not just in the equity space. Take a look at the bond market. The ten year bond fell below 0 in trade and were looking at some of the safe havens trading at 1. 7 and the ten year now trading at. 45 including this flight to safety by investors. U. S. Futures are pointing to a negative open today despite stocks falling for the fifth day in a row in the u. S. Yesterday closing at one month lows. We expect the dow down about 43 points and the nasdaq down about 28 points. Meanwhile december cpi out at 8 30 a. M. Eastern time with headline prices expected to drop amid concerns about deflation. But imf managing director Christine Lagarde told cnbc exclusively she is optimistic on the outlook of the u. S. Economy. The u. S. Economy is clearly doing well and you know whether you look at growth whether you look at employment indicators, whether you look at the housing sector or the banking restructuring that has taken place, a lot of very very positive signals and we believe that 2015 will be a goodyear for the u. S. Economy. This debate continues doesnt it . The fed minutes last week suggesting that the u. S. Is Strong Enough to continue on regardless. Other people suggesting its not and its still got the worst to come. I wonder if emerging markets continue to slow down if the u. S. Economy will continue to accelerate. Absolutely. Lets get more on this. Jim, thank you for joining us this morning. Lets touch on some of the recent employment data. In particular that wage decline we saw in the report last week. How significant is the decline . Well it was an aberration. Theres some debate at the extent wages are accelerating. But there was a decline in december. The year over year change went down to 1. 7 so the slowing is the wrong signal. Theres some debate over acceleration and over the next couple of weeks the key number will be the cost index on january 30th. What do you expect from there. It wont show as much weakness as early earnings. I havent made a specific point forecast for that yet but it will show a pick up over the past year. I want to bring us back to the swiss story. The Swiss National bank abandoning the National Currency capital. Its day two were seeing in swiss stocks as well as the european equities. What do you think the larger implications are of this move by the snb. Well have to judge it when the fed is ultimately ready to start the normalization process. But say hypothetically we go five months forward at the june f1c meeting people will look at this as a bit of noise. But is this the era of Central Bank Interventions . Were starting to see more surprise moves from Central Banks. Wasnt just the Swiss National bank that surprised the markets and Global Leaders but india as well. The swiss of course the aberration there was they were artificially drawing the line on the currency. They werent letting markets do what markets do. This is going back to more free markets for awhile but the broader context is theres a lot happening on the central bank front. Theres divergance. At what point will the feds start going the other way . Thats the world we live in and thats going to bring with it a certain amount of volatility. Another move that stemmed from yesterday. It wasnt the swiss frank pairs moving sharply but we saw it reignite the move to the down side. I wonder whether the fed has to raise rates. They always take the dollar into account. And what banks are doing. And the more the dollar goes up the less need there is for fed tightening for sure. The expectation is when the fed is tightening there will be dollar appreciation. Thats for Monetary Policy and the dollar is up about 10 year over year. Its a bit of a drag but overall financial conditions are still highly accommodating. We are seeing massive dislocation in the markets. Not just in the currency space but the oil space and commodity space. Treasuries right now trading with very low yields. What does this tell us about Market Sentiment and where we are in the market cycle . When you look at markets at 1. 7 its imlying either a the fed is never going to get back to 2 over the next ten years and b, its probably a combination but theres a sense that real Interest Rates are much lower than in the past and i suspect the markets are wrong on both those fronts. People are underestimating how accommodating this level of real Interest Rates is and i think theyre underestimating the likelihood that inflation will start drifting up again. Thats not going to happen the next couple of months. Well get a negative cpi today. Ultimately the markets have too low a level for real yields and too low a level for inflation eck expectations. That ecb is the next big market mover. Youll stick with us. Jim sullivan. I want to bring you you want to date on the story out of france. Theyre saying that the eu council will discuss reaction to terrorism in the month of february. He also says that france is acting closely with neighbors, especially belgium as they deal with their own terror attack. Lets take a look at the other stop stories at this hour. A u. S. Judge ruled bp is liable for spilling over 3 Million Barrels of oil into the gulf of mexico in the 2010 deepwater horizon disaster. Thats a quarter less than prosecutors claimed. Bp will face a maximum civil fine of 13. 7 billion under the u. S. Clean water act. 4 billion less than whats being sought by the justice department. The ruling comes days before bp goes to trial to determine the amount of a civil fine. Bp is reviewing the courts decision. Take a hook at how shares are performing up about 3 . Now still to come here on Worldwide Exchange. Tech stocks are unpressure. Well connect with the social media sector after a short break. Welcome back. U. S. Stocks closing at a one month low down for the 5th consecutive session and Online Travel stocks got hit particularly hard weighing on nasdaq shares of price line below 1,000 a share for the First Time Since october 2013. Down about 27 from its record high that it hit last year. Trip advisor also feeling the brunt of the pain hit a 52 week low closing at its lowest level since july of 2013 but expedia losing 3 . A tough day for Online Travel. Absolutely. Another stock in the focus from the nasdaq today would be intel which koul put pressure on the wider tech sector. Lets get out to landon standing by at cnbc hq. Wilfred good morning to you. Inobstetrical Fourth Quarter profit rose 4. 9 . The company says sales rose 3 while Data Center Sales which include servers rose 25 . However intel is forecasting First Quarter revenue and Gross Margins slightly lower than analysts expected. The company also expects 2015 sales growth in the mid single digits. More than half of intel shares still come from the pc market. That wasnt as bad as expected which is raising hopes the market is stabilizing. However, intel only expects flat pc sales this year. Theyre promising to cut losses from smartphones and tablets this year as it continues to try to take shares from arm holding. They sold a record 46 million tablet chips last year but still posted a loss in the Fourth Quarter. Investors have grown more confident that they can compete in mobile. Inobstetrical fell more than 2 . Down about 3 in europe. Brian krzanich will be on squawk box so tune in for that. We will. Thank you for the update. Thank you. Sticking with the tech space social media stocks also sold off yesterday. Take a look at your screen. Some of the names like facebook and twitter all moving to the down side. The question is should bargain hunters view this as a buying opportunity. The author of the art of social media joins us to discuss the cutting education space and i want to know where you see opportunity. You did of course write this book on social media and you are a tech advisor. Tell us where you see tun. Over the long run social media will equal marketing for many many brands and many many companies. So i dont think people should think of social media as a fad, as an experiment, it is core marketing and so in the long run, you have to be bullish about the industry because marketing is necessary. Who is doing a better job at that now . Facebook or twitter . Book probably. Why is that. Facebook has a much larger installed base. Facebook made it so that fewer people organically see their posts so people and brands have this entire to be seen and heard so theyre willing to pay for that and thats a very easy thing to understand. Do you not think that these social Media Companies will possibly move to a subscription model . Are there not examples of people getting tired of having ads come up on the twitter feed or pages. Theres so many possible models. You discussed the premium model. Theres also the model of you pay to get extra features and theres so many different models. I cant tell you that everyone has figured out how to monatize it. Step one is to grab the eye balls. I want to ask another question, David Cameron recently said that whats app, imessage could be banned in the u. K. To stop bad people from communicating to each other. Do you think that type of move is warranted given there are concerns around safety. Do you want me to tell you how i really feel . Thats a joke. That horse has left the barn. Are we going to shutdown cell towers too. Social media is a tool. But the concept that well shut it down to stem violence or crime. Thats unbelievable to me. Im going to move on the discussion. When you get some of your clients advice on the best way to market their products you say look for agnostics, youre saying its hard to convert someone to a totally new religion if they are loyal to a particular product. Does that apply to the debate between apples and pc computers . Do you think there will always be demand. Youre taking me into my past. I was chief evangelist of apple and i know theres some people that truly believe in windows. Android, ios or apple and its difficult to get someone to convert. Its easier to get someone thats never used a phone or someone thats never used a computer to use a computer than to get someone to switch from one platform to another. I can tell you there are a couple of people still like that. My mother has still switched on a computer in her life. If you love her, get her a macintosh. And my father never worked a phone or computer. Guy, thank you very much for joining us. Now before we head to the break a quick reminder of the headlines. Swiss stocks sell off for a second day weighing on european markets. Major indices close at a one month low and the worlds top oil Services Firm is cutting 7 of its work force. Well be back in a couple of minutes. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Swiss stocks continuing to sell off after the Central Banks shock policy move yesterday. The broader smi index is down 4. 4 . Lets get out to all the reaction. Well the reaction is as anticipated. More volatility seen this morning across many asset classes. We have seen the yield dipping below zero. You have seen a number of new stories also making the rounds with regards to the brokers that have been hit. They may be in breach of capitol requirements. You have swiss quote. They activated a division because clients lost money on the trade. They lost their operating capital and the story also goes on with regard to the selling taking place in some of the big swiss export names as you have been seeing throughout the morning many of them still lower. We have people questioning what the longer term implications would be especially if they decide to embark on quantitative easing whether it will be a positive that they got out of the trade given that their Foreign Exchange reserves are at a record of 500 billion swiss francs. They had to get out at some point. They cant keep building the foreign reserves and not do anything. Especially if the ecb ends up going against quantitative easing. Now i have spoken to a number of people. Many saying its drama across the board. Somebody saying its not as bad as what it looks. Give it a month or so and you should see some equilibrium recalibrating and taking place on the swiss e trade just as we have seen over the last couple of months as well. Back to you. Thank you. Well continue to keep our eye on the developing story out of switzerland but also the run down. Lets look at the Economic Data coming out in the u. S. Headline prices expected the drop. 9 15 december Industrial Production and just before 10 00 a. M. We get the first read on january consumer sentiment. Joining us now the ceo at tgm investments. Still with us is jim osullivan. Jim given the lackluster data we got out on retail sales earlier this week which Economic Indicator do you think is most important today . Well theyre all important. I would say for the cpi the core is the most important part. The headlines is going to be down. The core consensus up. 10. Well see what that does. Industrial production you can throw that aside. Its going to be pretty weak. Weaker than consensus but its mainly going to be a weather story. Utility is going to be down. For the Michigan Confidence number it will be up but from a fed watching perspective it will be the longterm expectations number in that report. So far that held up quite well in contrast to the Inflation Numbers priced in the markets and the fed is more focused on the you are have a measure of expectations. The core cpi. Scott i want to bring you in as well. We had the fifth day of declines in a row of u. S. Equities yesterday and were pointing to a negative open at the moment. How much of that is based on the snb decision yesterday. Well i think a lot of it is because for the first time in a long time weve seen the Central Banks disengage themselves from each other. They have been in lock step up until now and i think thats what has got consumers spooked. Were all looking for the u. S. Economy to be the savior like china saved us in 2008 but ill tell you having spent 3 trillion it will be interesting to see the Inflation Numbers. We spent the money to try to buy inflation. We havent bought it and deflation also has investors spooked. We have maybe an economy that could be faltering and were supposed to be the night in white shining armor. If youre betting on further monetary ease chg will push currencies lower do you want to buy gold here . Is that a trade . If i truly believe in what i say and were heading into an inflationary cycle im weary of buying gold because it starts to look a little bit expensive. Im going to hang off on gold. What i still want to buy and the two words for 2016 or 2015 will be relative view. 2015 is only going to be of relative value. I dont think with 12 countries and negative Interest Rates the fed will be able to do what they want o to do and well talk about new qe in the states because i dont think the economy is doing well. Thanks for that and thank you for joining us today. 30 seconds left. Time for a quick comment from you. Can the u. S. Economy continue on regardless . Yes, the company is doing pretty well. Foreign demand has weakened a little bit but export orders are still growing and you look at the trends in the labor market 2 per year growth in employment. Labor force is growing less than 1 . Unemployment continues to come down here and that generates inflation pressures. Not in the next six months but ultimately. Thank you. Great to see you here in london jim osullivan. Thats all weve got time for here on Worldwide Exchange today. Thank you so much for joining us. Squawk box is next. Good morning the currency call heard around the world. The decision to scrap the euro cap. Some are definitely going to have trouble staying afloat which is the same story with some oil related companies because crudes plunge is taking another bigger toll off the services giant is cutting 9,000 jobs and we have been warning since you saw what he did to the jeopardy contestants, the robots are coming. Elon musk wants to protect you from them. The tech visionary donating 10 murder in the Second Degree to a Research Project questioning the risk and rewards of Artificial Intelligence on friday january 16th 2015 and squawk box begins right now. Live from new york where business never sleeps this is squawk box. Good morning everyone. Im becky quick along with joe and andrew. European regulators throwing up a red tag this morning saying amazons deals may violate eu law. But first heres other major stories. The iea is seeing signs that the oil decline tide will turn but it does caution that prices may have further to fall and a rebound is not yet imminent. China unveiling new support measures as the economy continues to show weakness. The central bank would lend