And game, set, match for Sports Direct as it agrees to sell its tennis brand dunlap for 140 million. Good morning. Welcome to street signs. Lets get you a check on how the european equities are trading an hour into the trading day. Were hoping for a little bit more action now that the uk is joining the post christmas party. A rather mixed picture. Again, we are seeing the uk outperform, but that market is playing catch up from what we saw. Gains in the neighborhood shy of 2 yesterday. Thats in line with the ftse 100 at the moment. The xetra dax in negative territory, same story for the french cac 40, and the ftse mib lower by 0. 2 . Just shy of that mark. Lets give you a closer look at the sector breakdown. Weve been following the outperformance in basic resources. Higher by 0. 2 . Similar to asian session. Strength in the australian miners spilling over to the uk market. Crude prices have ticked up again. On the down side, watching real estate, telecoms, food and beverage, travel and leisure, utilities and insurance. Speaking of real estate, a couple stocks to watch. A profit warning from bovis homes after they downgraded their 2016 home sales estimate citing slower than expected home build. They expect volume delivery to come in lower than the previously anticipated 4,000 homes. Shares of Sports Direct have opened positively after they agreed to sell dunlop for almost 140 million. Its part of a strategy to develop relationships with third party brands. And airbus has postponed the delivery of 12 a380 planes to Emirates Airlines over the next two years. The french planemaker says it plans to increase cost cuts to minimize the impact of the delay. U. S. Consumer confidence beating expectations, surpassing a 15year high in december. The Conference Board said its Consumer Confidence index rose to 113. 7 this month, the highest reading since august of 2001, with trump in his tweet saying thank you very much, its all down to me. A couple stocks big gainers this year, including amazon. The online retailer said they shipped over 1 billion items this christmas. Amazon echo and the echo dot were the best selling items. Morningstar Research Estimates sales of the devices came in between 4 million and 5 million devices. Amazon said the 19th of december was the busiest shopping day with 72 of customers shopping via smartphones. Joining us is the equity strategist at bank of america, merrill lynch. You have this report, and you look at tech disruption. Was amazon the biggest tech disruptor for the market in 2016 . Absolutely. We do continue to think they will continue to dominate the market in 2017 as well. If we just take a step back and actually define tech disruption, the overarching idea is about the internet of things ecosystem. You have the starting point as rising sensor content, so every few years or so the costs of them are halved. On the back of that were plugging everything into the iot ecosystem, and collecting big data, thats getting stored up in the cloud where things are more easily accessible, more secure from cybersecurity hacks and more energy efficient. These sounds like a lot of big buzzwords, but its important because big data is the input for things like arrested ficial intelligence which amazon tends to dominate in. And ai is making us smarter about what to do with the big data, how to improve goods and services. If you combine that with other macro trends like Climate Change and demographics, that is take the uptake trajectory from something that used to be much more linear to something that is par b parabolic. I think most corporates know they have to do something to tackle the threat in sign oth cybersecurity. Theres been a story about chinese hackers looking into the emails of lawyers on wall street, taking information and trading upon it. In 2017, where do you think investors should be chasing portfolios around cybersecurity . I think there will be more and more focus of cybersecurity of the cloud. Every single sector, every Single Company is likely to be susceptible to an attack. In our minds theres only two types of companies, ones who already know theyve been vulnerable to an attack and those yet to find out. If you think about connectivity overall, today we have 25 billion connected devices. By the end of this decade this is likely to nearly double or roughly double to 50 billion at that time. That essentially means 50 billion potential entry points. With that said, it does tend to be more secure if we put our data up in the cloud, that a larger Services Provider such as amazon through aws, that can help you protect your data during that time. If i want to play intelligence as a utility, if im assuming that, you know, that just like weve seen other trends become household items, like the iphone or whatever. If im playing intelligence as a utility and assuming theres more of it, how do i best play it . Also, thinking about education for example, if education is something, everybody comes in contact with almost everybody. Is there an inroad there . Theres really two different ways of thinking about ai. For one, right now were still looking at the providers of ai software, primarily the googles, amazons, ibms of the world who are strong at that. But increasingly we will be focusing on the holders of data, the feed stock that goes into things like artificial intelligence. At that point, within every sector and within any company you could be looking to, you could essentially assess them on how have they been collecting the data . How are they able to quitalize utilize it. Dont they just buy the Sensor Companies then . Sensing our voice, whatever the technology is, but the actual Sensor Technology . In some ways, yes. But in due time a lot of that will be commoditized. If we look at sectors there are certain sectors migrating faster towards iot than others if we look at a sector like transport and mobility, talk of autonomous driving and shared fleets of selfdriving cars is coming to a peak, i would say. Within the next four, five years i do believe that from a Technology Perspective we are likely to be seeing autonomous driving cars on the roads already. From a sensor perspective, already were putting in roughly 250 to 310 worth of sensor content into the average new car that were selling in the developed markets. By the time we take it to be fully autonomous, thats roughly 2,500 worth of sensor content in todays terms that we require. Throw in additional components like lidar, position mapping, and artificial technology, thats roughly 8,000 in todays terms. Can you give us your view on biotech . A few stocks have gotten hit by rhetoric in the u. S. What is your view on the sector Going Forward . I think it will be a stock pickers market going into 2017 as well. Looking at the mega friends we cover, themes like obesity, health and wellness was some of the worst performing this year. Primary driven by underperformance of certain biotech companies. I think the broader trend is really differentiating between passive versus active management. And i do think that 2017, looking at a rising interest rate, rising eps environment is going to switch back to an active stock picker market again. Thank you very much for bringing us that perspective. And toshiba shares fell over 20 in japanese trade hitting the tokyo exchanges daily downward limit. The drop came after the firm warned it may have to book several billion dollars in writedowns related to its acquisition of an American Nuclear power Plant Construction company. Toshiba shares fell 12 on tuesday after reports of the potential charge surfaced. One of the best f. A. N. G. Stocks to start 2017 with a bang, facebook, amazon, netflix and google, find out more on web web. Were going for a quick break. More after this. Take one. Directv now. Stream all your entertainment anywhere anytime can we lose the all. Theres no cbs and we dont have a ton of sports. Anywhere, any. Lets lose the anywhere, anytime too. You cant download onthego, theres no dvr, yada yada yada. Stream some stuff somewhere sometimes you totally nailed that buddy. Simple. Dont let directv now limit your entertainment. Only xfinity gives you more to stream to any screen. A380. Welcome back. Youre still watching street signs. The president elect stateside has chosen a former Bush Administration official, thomas bos bossert to focus on domestic and cyb cybersecurity issues. Hadley gamble caught up with the president of the reja group and asked if Rex Tillerson would be good or bad for the region. The question is trump. At the end of the day, trump made a big part of his platform the fact that muslims are trying to get into the u. S. And blow up americans. And here in dubai and talking to a lot of people in the region its clear that theyre hopeful that was Just Campaign rhetoric and trump will let it go. If trumps popularity goes down or the first time we have a significant terrorist attack against americans in the u. S. Or American Assets in the region you know he will vilify those people. I do worry, like, what happens in this region when there are kids attending university in the United States and they get hassled or have a hard time getting visas. These challenges are clearly going to be coming under a Trump Administration. I do think that wish of the reasons why theyre so happy generally speaking with trump is that they feel like trump will be harder line on iran. Thats clearly true. This is not an administration that would have said lets do a deal with the iranians. Lets do a deal. Certainly people around trump dont have that orientation at all. Rex tillerson, a very capable businessman, he is certainly a guy that knows his way around these blocks. But ultimately i dont think hes going to be the one driving policy. Talk a bit about what this means for the bigger Foreign Policy questions, not just for the middle east but china at the moment as well. How worried are you about some of the rhetoric weve been hearing . You have to be worried that he is not really capable of showing a lot of nuance. As a businessman, thats fine. Youre working to get the hardest hosibpossible deal, you more money that way. But there needs to be diplomacy in your Foreign Policy. And trumps willing toness to g out on a limb himself before he had a secretary of state, lay, i will take that president s call, ill double down on that ill question the one china policy, i dont believe trump has the policy chops to know the implications of what hes doing. I know American Allies in asia are desperately concerned that trump is not a guy that can be counted on. Theyre already worried about obama. Think about the philippine president who tilted towards china. Theres more of that going on now. I dont think Rex Tillerson as secretary of state as one person is going to be able to get rid of those concerns. We talk about the markets. We had five weeks of records at this point. How long before this sort of geopolitical recession, as you described it, starts impacting the markets . The geopolitical recession is impacting the markets. The fact theres massive amounts of instability in this region in the middle east and its hitting europe. If youre the United States, its great to have canada, mexico and two great big bodies of water. This geopolitical recession is not one washing up on everyones shores. When 2008 hit, the entire g20, all those world large economies got together around a circular table and said if we dont fix this, were all in trouble. If you look at six years of war in syria, aleppo falling, war crimes occurring, the average american is saying not my problem. Theres no economic backlash to the u. S. Markets for not doing a damn thing to help the Syrian People or taking the fight to isis across the region. Thats the reality that the markets are dealing with right now. The Federal Reserve surprised markets earlier this month with a forecast showing it could hike rates three times next year instead of two. We spoke to andrew balls, chief Investment Officer of Global Fixed Income at pimco and asked about his prediction of how the feds moves will shake the bond market in 2017. When we look at 2017, we see upside risk but also see down side risk and we see an awful lot of uncertainty in the outlook, including on the u. S. Administration. So from our point of view, as an active manager, theres been an auchl lot of go awful lot of good news priced in were expecting i will see periods of volatility next year, as weve seen this year. As an active manager you want to take advantage of that. On curve, we overall favor global curve steepeners. We see that as a good way to make money in the current environment looking forward to next year. But on credit, and more broadly on risk assets, we think reduce risk now, have room to add on future volatility. Have you figured what it is that is troubling you here . That call, i think, indicates some concerns that the market has got too far ahead of itself what do you think the anchors are for further momentum on these trades . We have just done our cyclical outlook. We talk about three big transitions as we look out to next year. One is from Monetary Policy or the central bank, easing and unusual policies to fiscal expansion. So hand off monetary fiscal led by the u. S. Could go very well. It could go poorly. Second one would be the trade and nationalism we see in the u. S. And around the world. One sort of risk is u. S. Trade war with china, mexico and others in this time zone, populous politics, ton of elections coming up in europe. And china. China this week, the official News Agencies were warning of chinese concerns following the fed move. The start of this year we had the china move on currency, which dominated risk assets the first two months of the year in china as we move from a peg to a basket to a floating currency over time. A lot of potential for volatility coming from china as well. Its not all bad news. Plenty of upside risk as well. Our markets have priced in the upside. We think you need to have a more balanced overall view at an uncertain time. Having donald trump as u. S. President will inject political uncertainty. Its not a oneway bet. What about the chaos ensue or will chaos ensue if we get a more hawkish ecb. Im not so sure i was right about the tapering we could see or didnt see in recent weeks, maybe you can expand upon this as well. We have another 540 billion euros to the end of 2017 as far as i can see, maximum. Anything more hawkish from draghi and what does that mean . Its unclear what they did. Theres a lot of uncertainty about what they did they announced on a forward basis they will taper. We think they should stop talking about it close to 2 inflation target. Clearly theyre okay with 1 . The bank of japan, by the way, moved away from its inflation target as well. So two of the big three Central Banks basically saying they cant do it either because of the costs and benefits around germany, and a germany view dominating the frankfurt based ecb, and they will do less because of the overall youeuro politics. We conclude from this, be very careful about eurozone assets, about anything which relies in particular on ecb support. Funding italy for less than 2 for the next ten years doesnt offer a lot of value in a world where you have an uncertain and unfortunately looks like a political ecb. Andrew balls there. Lets get more investment calls from the equity strategist at bank of America Merrill lynch. Lets go to facebook, one that investors have been talking about after gains of 200 in five years, double digit gains for 2016. Its had a huge year launching Virtual Reality software and hardware. Big push into ai, also concerns around the number of news items that have gone up and been fake and not removed. Where do you see it tracking in 2017 . What is the Headline News around facebook . How do you view it . I want to see them doing more with regards to tying together social media along with newer technologies like Virtual Reality. From the mega trend perspective, theres not much tied in with the millennials population. Looking at millenniums, roughly 90 have at least one social Network Account under their name. 71 have two or more. I really think that Virtual Reality and augmented reality could be the most social platform in the future. I mean, they made their first inroads with regards to oculus rift. If they continue to press ahead, fully morph that into their overall offers, that would be positive. Youre not giving a top score in stocks to hold for next year. Not yet. Not at the moment. What are the stocks to hold . I think stocks like infineon is extremely interesting from connectivity perspective. Going back to the idea of autonomous driving, roughly 40 of sales are going into selfdriving cars, active safety features. Going back to the idea of roughly how 250 of sensor content could be rising to 2,500 of sensor content in a car. Theyre positively exposed. If you look at stocks like nvidia, they have schematic boxes. The most dramatic play is games for millennium population. 50 of millenniums have played 10,000 hours of video games before the age of 221. My gosh. Its the number one hobby for male and females and their bread and butter. They have moved into Super Computers for autonomous driving. The 10,000, anything do you for 10,000 hours you become good at. Moza mozart, bill gates, now you will be a good gamer. When you look at nvidia, up 250 year to date, some may say thats as good as it gets. You think it has more room to run .