forecasts but flagging that uncertainty around u.s. chip restrictions on china could certainly be a problem we're told the situation is very fluid. >> it's highly complex several countries are involved it's not just between the dutch and the americans. it involves all the european countries, it involves asian countries. it's a complex situation. it's also an 11-month high with easyjet saying they expect to beat market expectations in 2023. we're going to get son info data coming out of the german markets in a while, in a moment or two, but before that, let's get into the market picture and see how things are going particularly the european markets that have been interesting of late with the aspects of economic recessions still following the market and dogging the market quite extensively. the european markets fractionally lower this wednesday morning. this follows on from the loss from the previous session and data out of the eurozone yesterday did point to positively, particularly when it comes to the pmi numbers that came out, some better than expect, germany as well. we did see pmi numbers and business tircht in the regio image proving. the regional services and manufacturing sectors performing a little better. taking a look at the european markets in particular, of course, we'll take a look at the ftse 100 being of interest as well just above the flat line is where that is sitting. quite interesting, of course, then to note that we do have ppi numbers having come out of the uk, rising 16.5% in december that's year on year. down 0.8% month on month, however. it's down from the peak of 24.6% we saw in june we got numbers out of the obr or sentiment out of the obr this is according to the "times" reporting. the budget could actually decrease its growth expectations as well for the next quarter or so, teven the next year growth to pick up heading into 2024 and average around 2.6%, but they could decrease those numbers then as well, and they could actually decrease that between 0.2 and 0.5%. all right. let's get into the ethos number. german sentiment has been on the up of late we're seeing that number come in, and it has risen in the month of january by the scenes of things. the index revised to 83.2% expectations index is sitting at 83.2 is the point number on that one. we're seeing the economy starting the year with what seems to be a little bit cautious optimism. 94.1 versus the 94.4 in december so a slight decline. but seemingly headed in the right direction is what it does look to be doing at this point in time. the improvement, of course, does come from manufacturing data, which we saw being perhaps the only one that was better than expected in those pmi numbers as well we're joined now as we discuss the caution optimism of the german economy clarence, thank you so much for the time do these numbers perhaps suggest to you that a recession isn't necessarily a forgone conclusion here >> they are indeed the expectation was that there might be a recession in the fourth quarter of 2022 and the first quarter of '23, and now it looks like the last quarter was flat the economy may still be shrinking a little in the first quarter, but given the improvement we're seeing from businesses, it is very unlikely that we will have a technical recession, which would be two negative quarters. so, yes, indeed, it's a signal that we might avoid the recession. >> yeah, so a downturn that isn't necessarily going to be as steep is what it certainly does then look like how much of those sentiments could have improved? >> it's not just the prices. it's the expectation that we will not end up in a gas rationing situation. this was the most important risk for the german economy a scenario where gas supplies would have been sufficient for the winter and parts of manufacturing would have to be cut off from supplies because priority would be given to households, to heating, and that scenario is now off the table. gas tanks are full temperatures were mild this winter it does explain the decline in prices, but it means we would avoid the hit to the economy and gas rationing. >> we saw manufacturing on the other side being the one key laggard, perhaps, in the pmi numbers that we pointed out yesterday. in your sense, what is this trajectory pointing toward are we really out of the woods at this point in time? can we really say for certain that this optimism that was shown toward the end of last year is going to carry us through the rest of this year for the biggest economy in europe >> i would think so. so in manufacturing, we're seeing a number of factors improving. energy prices, bottleneck supplies are still there but they're easing our expectation would be that the situation will continue to improve slowly but steadily throughout the year. one issue in the german economy is the construction sector here we have steeply rising costs and rising interest rates, and that is affecting construction so this is the one sector where problems may be a hi ed, but in manufacturing, we would expect a steady improvement of course, we don't know whether, for instance, the opening of the chinese economy may lead the energy prices increasing or raw materials, commodity prices in the coming year, and that may lead to a setback for the companies. at the same time if china opens up, the supply bottlenecks will ease further, so it's a mixed bag. and, of course, we're living in uncertain times and we don't know given what we know today. yes, we expect an improvement over the year. >> current conditions currently improving as well. companies are complaining about with the bottleneck. you spoke about china. that means a whole lot more needs to go around the world at this point is there the sense that those bottlenecks could actually get worse before they get better because this reopening could still stymie the market? >> well, the reopening will ease some of those bottlenecks. at the same time there may be growing demand for other products and need for adjustment in international logistics so there's uncertainty around here, but overall we would expect supply bottlenecks to ease throughout the year so we don't expect hiccups in that area. >> the fiscal package is really coming out of the german economy. the fiscal stimulus packages you also, you know, had those lockdown-related backlogs that we're speaking about now were those possibly a big help to assure those things didn't go and were worse for wear as they could have been in this picture now? we could be starting from a lower base. >> yes they have probably helped, although, demand was not the problem. we have very high inflation rates, so the problems are coming from the supply side at this point, and there's little fiscal policy can do here. one thing that certainly was important is that the german government offered the gas price break, stating that gas prices will not rise, for consumers will not rise. now it looks like these sub subsidies might not even be needed, but what the policy has done is reduce uncertainty for policies and consumers and certainly improves consumer confidence and smooths the demand and willingness to buy. >> clemens, let me put you in a macroeconomics sphere and get you into the meeting then that would possibly be held by the ecb and ask you in your mind with inflation prices easing as you noticed, the balance of companies wanting to raise prices falling as well, would you hold an aggressive stance with regard to interest rates, which, of course, is trying to fight the inflation number we currently have at this time, but what would your thoughts be on this one, if i could perhaps push you on an answer there? >> i think slightly less aggressive than last year or in the second lahalf of last year, but the ecb needs to raise interest rates we have to take into consideration core inflation inclines inflation would food and energy continues to rise. we see unions in their wage demands taking into account inflation so that there clearly is a problem here beyond energy prices, and that's why i think the ecb will need to continue raising interest rates at the lower rate than in the last months, but, yes, we are not out of the woods though. >> thank you for the slightly more positive data you put out today. hopefully it does bode well for the german economy clemens fuest is the director at ifo. thank you so much for your time. let's move over to the far east where japan has slashed its outlook for the economy. the government expects exports as well as imports to weaken this year, but policy makers are optimistic that things will improve. if japan does pay full attention to the impact of china's covid infe infections. we were told at davos last week that the central bank tried to improve growth under its leadership. >> in the last nearly 10 years in which i have governor of the bank of japan, we tried to eradicate inflation, and that we have been successful and we tried to recover economic growth because during that deflationary period from 1998 through 2012, there was almost also zero growth but after 2013, economic growth has been regained, but about 1%. well, coming up on the show, berlin changes its spots with germany and the u.s. reportedly set to deliver tanks to ukraine. we'll discuss the policy u-turn after this break as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to 60% a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. welcome back to "street signs. let's take a look at how defense contractors are looking this morning. they're gaining around 2%. all-time high there, and that's particularly because of some news coming out, particularly out of germany there's going to be an announcement made around 1:00 p.m. how germany will not just authorize tank exports by its allies but be willing to send its own company of leopard tanks. this comes after a few denials then as well, seeing a whole host of those defense contractors going higher let's continue with that news story, the u.s. and germany reportedly ready to send heavy battle tanks to ukraine with announcements from washington and berlin expected as early as today. that's according to media reports. they're expecting the biden administration has agreed to provide at least 30 m-1 abram tanks while the schultz company will deliver 14 and will not block poland from sending some of its own the u-turn comes after months of conversation russia calls the move a blatant provocation. ukrainian president volodymyr zelenskyy urged the western allies to speed up the del discussions of tank deliveries. >> translator: there's a lot of talk about the tanks there's been many efforts, words, and promises, but there's reality. our need is greater. need everything we need to fill the deficit daily. i thank everyone who's helping us out with this, however, discussions should be completed with decisions, decisions on the real strengthening of our defense against terrorists our allies have the necessary amount of tanks. when the necessary amount is reached, we ooh be happy to express gratitude if every weighty decision. ukraine will also need more missile systems in order to defeat russia. >> we have found that ukrainians have been very, very fast learners got the nay sam systems in about six weeks. had the system in place, and incredibly as we look at the ability of them to detect and destroy incoming targets, they're at 100%. unfortunately one patriot system does not defend ukraine. you probably need 14 or 15 patriot systems across the country to actually prevent the destruction that you're seeing with the russian missiles targeting schools and apartment buildings and hospitals. so this is the first step to get the first cadre train happening at fort sill today we think that will be less than six months we'll see how many more we can get trained up and how many we can work with dod to work and deploy with the country. >> he told them the demand for defense systems isgrowing as the geopolitical situation evolves. >> i think it's well understood by everyone there's a heightened threat environment our allies feel the same way we come together in europe to work together to help defend it, but there's increased demand for the kinds of systems and products and platforms you need to defend your country we've got great relationships with a number of our allies. >> annette we eisbock joins us for more i wanted to add to that as headlines that have come out right this moment. the response was these tanks will burn like all the rest. annette, why the u-turn from berlin >> i wouldn't necessarily call it a complete future i think schultz was sitting on his handing s for quite a while because he need a concession they're divided on sending arms into war zones that comes from a very long peace tradition. he needed to bring more than 50% of the party in his camp before stepping up and saying they're doing that it's a -turn, but it's a decision as well because it clearly could constitute an alliance case in terms of nato it certainly has been thing about the possible consequences of sending tanks into ukraine. essentially i think it's a bold move it's not only allowing others to send the tanks, but germany is sending their own tanks as well. for now it's only 14, but it could well increase over the next months to come. they're already saying they're sitting on some 20 or more tanks which can deploy as soon as march/april into ukraine now we're hearing from norway and spain that they're also willing to send tanks, so the number of tanks can add up quite substantially very, very fast. that is it for now, but schultz is looking for a global consensus in a way it depends on what you think he's reluctant on nations decisions. that's one alternative the other is he put a lot of pressure on the united states saying only if they send their tanks as well, we'll send our tanks into ukraine the key question is why do they all want those tanks because they're widely seen internationally as seen as the most modern tanks on the ground. they're fuel efficient they can run a lot longer, especially in a war zone where supply chain issues are a major concern. to sum it up, germany is going to decide -- not going to decide they're going to announce today around 1:00. they're going to send their own tanks as well and they're going to permit others to send their german-produced tanks into the ukraine as soon as necessary let's get to the earning front and how things have faired particularly here. it seems like the first busy sort of day. the u.s. has seen a number of earnings come out. particularly we're going to focus on easyjet, which it says it expects to beat current market expectations in 2023 t british airline reporting a headline loss before tax of 133 million pounds for the quarter, ending in december, which was significantly better than the first quarter of 2022. easyjet shares are set for the biggest one-day gain since march 2022 then. right now at 10.3% it's up 48 points. it's certainly a big gain on today. generally you're seeing a good gain for the airline stocks overall, which really have gained on the back of that information and that data coming out of easyjet, seeing a lot more bookings coming through in the month of january so far. things may be looking like they're heading into a slightly more positive tone all the way through into the summer is how they'll want to get this going as well. so easyjet fairing a lot better on this front. the budget airline increasing its four-year profit outlook as we noted significantly better. significant year on year as well givaudan's price also rising to 856 million, beating expectations speaking to cnbc earlier, the ceo said the company was able to successfully pass off higher costs to consumers amid supply chain disruptions. >> we see the input rising almost 10% this year in total we are to recover yes, thanks to the collaboration with our clients, we were able to do that through pricing. now, coming up on the show, asml reporting 21.2 billion euros and a 25% bump in revenue. that's amid strong demand for its products i just got my elite box and i am so excited to dive in. i never know what i'm gonna get. having a personal stylist makes me feel like a complete queen. so powerful. i feel sexy! the elite box by adore me. get styled for only $10 at adoreme.com. show i'm arabile argirrabile gumede. japan downgrades its domestic outlook for the first time in almost a year as the world's third largest economy contends with a slowdown in global demand for its high-tech exports. asml beating fourth quarter forecasts but flags uncertainty around u.s. chip restrictions on china. ceo peter wennink tells cnbc it's very fluid. >> they're i have high complex issues, several countries are involved it's not just between the dutch and americans. it involves all the european countries, it involves asian countries. it's a complex situation. the german economy looks to avoid a recession with business morale picking up in january ceo clemens fuest tells this program they're easing prices. >> it's not just the prices. it's the expectations we will not end up in a gas rationing situation. this was the most important risk for the german economy here's your look then at european markets this half hour. european markets opening fractionally lower on the day's trade, an hour and a half since the opening picture. it does follow from yesterday's loss, which we did see in the session. this is despite data coming out of the eurozone showing an uptick in activity numbers it pointed to an uptick. particularly today we did see the german ifo data coming out, the ifo data pointing to 48.4% of the companies complaining about the bottleneck in supplies on the whole, probably not a recession is what the ee foe data is pointing toward with the president then also saying that that might not be something that actually happens gdp will probably shrink only slightly in the first quarter, but not as high -- or as deep, rather, as was initially expected the german economy starting cautiously optimistic. you may begin to see a little bit of weakness in the euro as well as the pound then, but it's more the u.s. dollar still doing some positive work then the euro is still hovering near the nine-month highs with the dollar having given back some of its recent ains, having riis o the a one-week high not so long ago. onto the bond yields, those had fallen yesterday investors assessing the ecb's hiking rate, falling to its lowest since december 8. that was down around three basis points german bonds possibly factoring in a recent decline in inflation but may not have adjusted to growth products, which is exactly what we saw out of the ifo numbers. it does leave room for the bond yield to be on the up. sml points to 21.2 euros that was amid strong demand for its products despite the challenge macroeconomic environment. they recorded a backlog of 40 million euros and expects sales to rise 25% this year alongside a slide improvement in gross margins. the group also said it will wait for a, quote, reasonable solution to the u.s.-led export restrictions in china. ceo peter wennink spoke to cnbc just this morning and described the export controls as, quote, highly complex, adding that he hoped a resolution could be reached. >> yeah, i think that's a question you should really ask the government, you know we're a business people. we're not politicians. this is a geopolitical issue our dutch prime minister was in washington last week and actually made it