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tv   Street Signs  CNBC  February 11, 2016 4:00am-5:01am EST

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hi, everybody. good morning. you're now watching "street signs". our headlines today, european stocks selling off across the board. sweden's bank riksbank surprising people. ten year bond yields sink with the treasuries hit being their lowest level in years. fear over the financials sending the bank shares plunging.
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socgen. >> when you look at the system, i think it's much morrow bust and too much nervousness. >> and rio going deeply into the red as they take proactive the measures to shore up their balance sheets. hi, everybody. good morning. and welcome to "street signs". we're an hour into trade. we didn't even need an hour. and all of our european equity markets off somewhere in the region of what, 3% to 5%?
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the ftse off. so broad-based selling across the board after a relatively stable session seen yesterday. you're just glancing here at some of the main european markets. just to reiterate that across the board we're seeing indiscriminate selling of all sectors. everything is off at least 2% from what we're seeing this morning. and it is really just these fears that are setting in to the market once again. the same story about whether or not we're heading towards a recession, whether or not the banks are healthy enough. and we'll be talking about this throughout the show. i also want to show you some other major moves happening in other asset classes and especially what's going on within the bond markets. ten-year yields dropping to a below 1.63. we are bouncing around that level now. so dropping to their lowest levels since at least may2013. and what you're seeing is a real rally of the longer term debt,
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so a flat ttening of that curve. i'll be asking my guests what that means and if that's what means is coming. if you look at the past financial crises that we've been through. i want to get back to one of the bigger issues, one of the bigger stories. less than half an hour ago, sweden surprised people take being the repo rate further into negative territory. they dropped it to minus .5%. we continue to see this move with the k arrona dropping. they're looking at additional measures to go hand in hand with this drop in the deposit rate. so we're looking at these negative rates across the board. when it comes to the banks, a hot more activity in the banks.
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some of my guests yesterday were indicating that they see value now in the european banks. i'm not sure what they're seeing today, if they're looking at it as more value with the selloff that we're seeing an hour into trade or if they're saying, maybe i was wrong and i'm going to stay away from the banking sector. ubs off. deutsch bank down by 7%. so shares heavily sold after they posted fourth quarter earnings below forecast. the french bank from $400 million to 1.7 billion euros. nancy is in paris and has been speaking to the boss. this is the massive selloff that yea we're seeing in the shares this. >> mo. >> reporter: that's right. and i think what investors are honing in here is the concern
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that the bank has not gone far enough. perhaps moved quickly enough to reduce costs. because overall, the revenue for the full year was solid. but when we talk about the net income missing here, it's the costs that people are worried about, and considering the volatility we've seen the start of the year, a lot of concerns about whether or not profitability can be maintained going forward. and we talked a lot about the profit blgt standards, because soft gen is -- it's raised concerns that additional head wind kos dent that profitability. i had a chance to ask the ceo of softgen that question. >> there is profitability in the marke markets. a lot of liquidity around. so big waves. when there is uncertainty, the
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liquidity of the banking sector is better than in 2008. >> but if that's the case, what explains this dramatic selloff? >> first of all, we've not seen that position now. and thanks to the hard work we've done, you might have again, fears on certain banks. all in all, i think globally speaking, systematically, when you look at the system, i think it's much morrow bust, and i think, there's again too much nervousness. >> there may not be systemic risk in your view, but even the fear that there is systemic risk has an effect, does not? >> not so sure. we meet with corporate clients that are pretty positive overall. if you put together the sectors, generally speaking i see companies which are pretty positive. as i've said, the outlook for the eurozone is also better. i'm not sure that particularly
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in europe, this nervousness on the market translate potentially in real effect in the compliment at this stage, we are just three weeks, four weeks, five weeks of turbulence. let's wait. we know that 2016 can be a bit bum bumpy. but fundamentally, i remain positive for 2016. >> and that was the ceo telling us that there are reasons to be positive, and he does not see repeats of a 2008 crisis scenario. but nonetheless, about eight years on from the financial crisis, there are still concerns that banks have not been quick enough to reduce costs and really to adjust this low interest rate environment. we also had a chance to speak about that, how the bank is looking to get revenue in other areas, such as private wealth. but we speaking to an analyst on the show earlier this week who said that is a competitive space. so the race is on to find
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revenues elsewhere, but others wonder whether it will go far enough. >> by all means, get in touch with nancy or myself here on "street signs ". you can find us on e-mail at cnbc.com. now publicis shares are better and it is pretty extraordinary given the red that we're seeing across the board that they can hold onto 5.5%, it's no small feat. >> this is a classic case of setting expectations low and reaping the rewards later, because remember they had revised down their expectations back in november. so analysts looking at the
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fourth quarter. nevertheless, they are keeping a muted outlook going forward. i asked how they viewed business going forward in europe for the full year. here's what they had to say. >> germany's doing extremely well. u.k. from a macro standpoint is doing extremely well. less so in our own situation. we were improving our position. spain's coming back, and that is a very good news, as spain is now in the positive aspect. the same regarding italy. france has been hurt since mid november. it's starting again to take off progressively, but they don't believe that we'll have a very bright european market in 2016. i believe that we'll still have issues with the unbalance between the countries. >> so the ceo of publ sis making
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it clear that they're trying to restructure, trying to attract new accounts and maintain existing clients. and they plan to fire on all cylinders and that is a message that investors clearly like. >> we'll see you back here in london tomorrow. we've been talking about these market moves across all classes. rio tinto, they say it will take proactive action. they also cut its cap budget for this year end for next. now sticking with the basic resources story, rusal was
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lower. they are saying that sales and production saw declines in the final quarter. and i'm very pleased this morning to welcome oleg with us. talk to me about the fourth quarter and the full year 2015, what we've seen and what your expectations are. >> thank you. we are carefully optimistic. we think that the aluminum market is trying to find a balance. as you know, it was heavily supplied for several years in a row, and finally, this year, we think it might be an equilibrium found. we can see the ex-china producers quite disciplined. you know, the largest companies cut production by quite a big volumes, including rusal in 2015. and we keep, keeping to be a
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disciplined market player as you can see our results. we did not increase production last year. >> yep. >> but what is good news coming from china, you know, the overall supply is very much influenced the price. >> yeah. >> we can see it in the fourth quarter. chinese started to shut down production. in 2015, the full year, they closed about 4.4 million down. and in december last year, the oil production in china fell by nearly 9%. >> so oleg, do i look at china now and do i think china's become a lot better at balancing its supply in this teparticular area? >> that's what they're doing. before they were only telling us about it, but now we can see the proven numbers of production
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slowdowns and also slowing down of -- >> you're looking at this from a company perspective, given that you're deputy ceo. if i look at the markets and what's taking place at the market, and if i look at this massive move that we're seeing in yields, where we're seeing this flattening of the yield curve, some would say that's indication that we're head of a recession. are you looking at the economy from the potential of a recessionary phase in front of us? >> well, we should look at aluminum industry from the market perspective. and i think there is no doubt in the industry, and this is the consensus that the consumption of aluminum is still quite healthy. so last year, the oil consumption worldwide increased by nearly 6%. and this year we expect at least 5.5% increase of consumption. we can see slow down in china, but consumption of aluminum
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still going up, and we expect another 7% growth of consumption in china this year. it's actually is a result of substitution of other materials by aluminum. >> oleg, let me ask you also about currency fluctuations. lu russia having seen this massive drop in the ruble. the russian central bank indicating that they're not about to intervene. and i know your ceo was quoted as saying it amounted to the central bank as doing nothing. do you think they eventually would intervene? >> well, i would not comment on russian central bank policy, but what i should admit, obviously, the massive delineation of russian currency helped a lot to local producers, especially
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exporters like rusal. our coastal production is the lowest in the industry right now. so basically we're probably one of the best, actually the best a aluminum price worldwide. >> oleg, thank you for your time, deputy ceo of rusal. now some big deals going on and an adrenaline rush after mylan indicated it would purchase the swedish drugmaker meda. it is the third team thime they attempted to take over meda. later in the day, our colleagues in the u.s. will be
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speaking to mylan ceo. that's at 1300 cet. janet yellen faced the u.s. congress yesterday. we'll talk about what signals she's sending and we'll leave you with our european heat map. as they continue to be sold. down 4% on our stock share of 600. this is a big selloff.
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hi, everybody. welcome back. you're watching "street signs." it is a very volatile thursday morning. across the board, all of our european markets lower. in the region of 3% to 5%
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equities. when you look at the bond yields, we're looking at a lot of activity. it was at 1.634, something like that an hour ago. so we're really moving fast there with a real rally of longer-term debt pushing these yields lower. are' seeing a real flattening of the yield curve. and i'll come back to that what it means. julia, they're going to have to talk about this. >> you're absolutely right. portugal and greece are the agenda items, but i'm sure the volatility that we've seen, the pressure on eastern european bank stocks and the new gaming rules that came into play and to what extent they're featuring in the investor nervousness. that's something i picked up on and i asked just how concerned are european officials about the stability of the financial sector in europe. listen in. >> what we see is a stock market
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volatility, which is not limited as a banking sector. this is something which we see in number of countries and in number of sectors. so something of course which needs to be followed quite closely, and we would say there should be some particular worry on the banking sector in europe. >> he said we need to focus on completing the banking union. but some would argue that banks are still deleveraging and bailing rules have kicked in. so you have senior bondholders concerned that they're at risk here. have we been too quick to introduce these rules when actually banks haven't got the capital they need, do you think? >> well, i actually fully agree always what they have said on this, in a sense that we should be completing the banking union. most of the elements are already
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in place, like single resolution mechanism, single resolution fund. and we also came with a proposal on european deposit schemes, something which is now being discussed by legislators, and clearly one of the aims as a banking sector was to reduce the risks in the banking sector, including, as you know, there has been major recapitalization of the banking sector undertaken. there have been series of stress tests. there is a single supervision of the bank, so i will say with the banking union, risks in the banging sector are clearly going dull. >> vice president for the euro and social dialog. saying it's the pressure that we're seeing on the european banks, there's the confidence and the negative rates from sweden, oil price concerns, weakened demand. but i think when the journalists
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see the issues later today they'll be asking questions. and we keep going back to this question. >> while you've been speaking we're looking at the banks continuing to be sold off we're off 6% to 7%. thank you very much. live out of brussels. u.s. markets closing broadly flat yesterday after a volatile start to the week. we saw a huge bit of fluctuation from within the dow yesterday. but this is the federal reserve chair janet yellen saying she has not ruled out raising interest rates further in 2016. testifying in front of congress, the ehead of the u.s. fed said that conditions were set to improve. >> ongoing employment gains and faster wage growth should support the growth of real incomes and therefore consumer spending. and global economic growth should pick up over time,
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supported by highly accommodative monetary policies abroad. against this backdrop, the committee expects that with gradual adjustments from the stance of monetary policy, economic activity will expand at a moderate pace in coming years, and that labor market indicators will continue to strengthen. >> well, bill o'neill is with us. good morning. what a morning. >> indeed. quite, quite -- >> i'm looking across the board here. you've got gold up by 2%. all of our european markets are off almost 5%. some of them out there. what's going on? >> i think it's pure emotion. fear has overwhelmed and i think it's cut now, explain later. and in these instances you have to focus on the fundamentals and how events themselves are influencing the fundamentals. that was the lesson of '07/'08.
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>> but this wasn't reaction to what janet yellen said. >> you're in an environment of very limited nominal growth, okay? so our sense is that the market is still not comfortable with the idea of normalizing interest rates alongside the conviction that growth will prove to be sustainable. there is a sense in the market that you can have one, but not the other. >> let me ask you what you think the yield curve is signaling. because in the past, when you look at a flattening yield curve to this extent, it signals that a recession could be around the corner. are we supposed to be reading into the yield curve on those levels now? >> i think it's signaling acute disinflation, a long period of low interest rates. a prolonged period where essentially, there is no risk in being really long, high quality fixed income. that's markets reading at the moment. but it's a sense that it's reflecting a slow down.
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we've moved down our growth forecast in the last couple weeks or so. we're looking at a 1.5%, 2% growth. the level of interest rates themselves, real and nominal are not compatible with a recession. >> are we in a similar scenario to where we were before the great financial crisis? >> no. >> why? >> banks are much better capitalized. we do not have the excesses of an extended 20-year cycle. wage growth is not preeminent. we do not have excessive growth. we have predominantly supply-side shocks which are being misinterpreted in a lot of instances as threats to demand. >> but you've got all this pressure on banking shares, tighter credit conditions also in many places, negative interest rates in many places as well. couldn't you draw similarities -- >> issues for profitability. no doubt about it going forward. you can't deny that. those concerns are legitimate. but a deafening, harrowing
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scream around banks' balance sheets, no. >> my guests yesterday, were saying there might be a buying opportunity for some of the banks out there. do you agree? >> yes. in time, there will be. i can't say it's going to be in the next week or in the next month, but on a six to 12-month perspective, yes. >> and you're not afraid of non-performing loans. >> negative interest rates do damage to margins. we're recognizing that. but we're going to see a rapid and dramatic expansion in assets and credit growth. but you have a sector that last night was priced at .6 book value. and that's equivalent to where we were in '08 during the crisis. swreen t we have to, at the end of the day, we don't feel that. there are profitability
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concerns, yes. >> the german dax is on pace for its third negative month in a row. the ftse 100 on pace for its fourth negative month in a row. do i buy stocks at this point? or do i think we're going to see more of a blood bath heading into the year? >> well, an ex-colleague of mine, marked stock rising policymaker rising, and the rise on policy side is probably coming towards us. i think we're going to need confidence-building measures here. basically the market again has some confidence go sustainability and growth. >> so we'll have to ask whether quantitative easing aing works begin with. >> we're seeing the negative the side to lower interest rates. we don't want to kill the goose. and at the end of the day, they may have to look at the idea of
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fiscal versus monetary policy. >> bill, thank you very much. bill o'neill, head of the u.k. investment office for ubs. thank you for your tweets and e-mails. really interesting to read this morning. @louisa boilson. what's my e-mail address? you'll find it, you'll find it. let me move on. later on in the show, find out why tesla shares are accelerated even after the company posted a worse than expected quarter. we'll leave you with u.s. futures, how they're trading.
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what a morning. welcome to "street signs". your headlines today, european
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so stocks in the midst of a massive selloff. and the era of low inflation will last longer. ten-year bond deals across major markets sinking with u.s. treasuries hitting their lowest levels in three years. fears over the financials sending stocks plunging. >> when you look at the system, i think it's much morrow bust. and i think, again, there is too much nervousness compared with reality. >> rio takes preemptive action to shore up its balance sheets. what do you think is going on out there? curious to know. our european markets this
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morning, lower across the board. all of our european indexes being sold down. some where in the region of 3% to 5%. the italian market down by almost 5%. we're a half hour into trade when we saw this significant selling really gaining traction, taking hold. the banking sector off by some 6% as well. and you're looking here at some of the main forces out there, all lower by 3% to 4% when it comes to the ftse and the dax and the cac. we're looking at the u.s. ten-year yield around 1.61 now. when it comes to the bund, we continue to see it moving a bit lower. incide incidentally, we're seeing rallying in some of the periphery european markets as may be anticipated. but the ten-year yield to the
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lowest in three years. what is that indicating? what are we supposed to think about it? around an hour or so ago, sweden's bank took the repo rate further into negative territory. you're looking at the dollar dropping against the swedish krona. and meanwhile, the australian goldminers get a beast as gold hit an 8.5 year high. we have been looking at singapore. and as investors return from the lunar new year holiday and sell-off. >> that's right. there's an element of catchup for the hong kong markets who are back after lunar new year holiday, down quite sharply to the tune of almost 4% at the settlement. it was the financials that were really in the firing line today
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on the hang seng. but broadly, let's not forget that trade volumes across the region, the mainland china markets are closed for the chinese lunar new year. taiwan is closed as well. so some of these moves may be exaggerated because these low trading volume conditions. that being said, this was very much, still, risk averse environment. we saw the classic dash into the relative safety of the japanese yen. we saw dollar yen continue to get smoked. we saw fresh 15-month highs for the japanese yen. so we didn't have the japanese market on line. otherwise we would have seen another very deeply negative reaction for japanese equities. all eyes, then, on day two after janet yellin's congressional
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testimony. >> thank you for joining us out of asia. again, what's going on with our european banks this morning. a lot of selling. so softgen and the list continues. so some real indiscriminate selling taking place across pretty much, well, all sectors this morning. the commodity markets, here a little bit of respite as you see gold jumping. copper up by .5% while the oil contracts moving lower once again. speaking of oil. following broader markets down, despite -- the oil and gas company outlined further cost-cutting measures and asset sales of up to $4 billion to
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bolster the balance sheet. they see a $45 per barrel price as the price they need to break even. now rusal's aluminum production was flat, sending shares lower. they said that both sales and production saw month on month declines during the final quarter of the year. and rio tinto has been trading sharply lower after scrapping its lower dividend policy. it will take preemptive action to shore up its balance sheet after it posed deepening losses in the fourth quarter. they also cut its cap budget for this year and for next. henry dixon is a fund manager from glg. how are you? you said pretty awful. what are fund managers doing in this. you're not fine. you're shaking in your pants
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over what's going on. >> no, no. you've got to keep it, there's a lot of emotion, and we've goat to be pretty honest, in the u.k. market, there's no such thing as bad assets. a lot of companies felt debt is for free, what is largely for free at an interest level, needs to be paid back. there's been a desperate determination to rerate shares. we have to rebel against both things to find the opportunities, because when you get highly correlated selloffs such as the one we've had it does figure that certain things have been oversold, and we will always gravitate toward the companies that have cash, not debt. and we try and weed out the companies that have fallen, if you like, further than the market, which given their carbamines those companies have really had a tough time from the valuation. i think within the ftse 100, the
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reach is it has its lowest debt level in the history of the company. it has nine-year visibility on its debt, and this is very clearly a company that's going to be here today, here tomorrow and so on. and you buy at a discount to assets. as we move into the mid cac era, we try to find multiples and very much stronger balance sheet. if i could highlight two companies, a broker, it should be thriving on volatility, a very hefty amount of cash on its balance sheet. and you have a situation whereby the recent use company is very good. i'm not saying past performance is a guide to the future. but all i am saying, this is this a company that has ho momentum. it's trading less on ten times
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with cash. you always come back to these companies. when times are tough, these are companies that can do deals. >> you hold both of them. >> and also plato, yes. >> what's your last one? >> plato. software for the gambling sector. very strong balance sheet. submarket multiple and the trends within gaming. it's very, very strong. we see consolidation and new product. that's very definitely playing to that company's strengths. >> i was joking with you. we love fund managers and when people are making money, and as soon as there's volatility people lose their cool and call you every three seconds and say help. there will always be market fluctuations. that's just how markets are. i do have people writing in, and one says technically, what are hedge fund managers doing with securities, going more into cash? tangibles like gold?
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gdp projected growth. coal ratios and he has a lot of questions. but in general people just want to know, what do you do to get through this? and do you add to positions? you mentioned a couple of kind of smaller stocks out there, but in general. >> industrywide, this is clear an event where people want to derisk. they want to sell. what we're finding is we're selling into a system which is less well supported by a bank. so the door is thinner, therefore the price is more volatile and steeper. so we have a perfect cocktail from that perspective with regards to the volatility that we're seeing. your viewer who writes in, i think he's right to point to volatility, but we see many, many sentiment indicators that as depressed as they were in march '09 and '94, someone who's ignorant as the challenges i
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don't want to sit here. but evaluation in certain areas, and too much debt, it is relatively easy to ens late yourself against those. i don't say that lightly. >> how? how? >> i think with regards to the amount of debt, i acknowledge as more debt in the system now than there was in '07, but i think it's much more visible there. what i mean by that, it largely sits with the bond market rather than banks. bonds are in the main. they're one times their capital investor rather than 50 times which is what banks do. so i do rebel quite hard against the notion we don't know where the bodies are. and i think as i say, we do know where too much debt has been extended. i think we know where it's going to go bad, but crucially it's being marked in the system. that should give us some sort of comfort that we do know where the damage has been done. >> have a good rest of your day. maybe we can turn things around a little bit. henry dixon, fund manager from
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glg. i've been asking what the flattening yield curve indicates, whether it indicating recession. you've been writing in. tim says, of course recession. we're doomed to debt. buy gold and silver. keep your tweets coming. bernie sanders has already raised $5.2 million since his new hampshire win. a quarter of what the vermont senator raised in the entire month of january, and that's what, over a day and a half that he's raised that money? the whole comes after sanders asked for donations to take the fight to nevada and south carolina. he met with al sharpton in harl harlem. he has yet to endorse a candidate in this year's election. new jersey governor chris christie has suspended his bid to the white house, telling
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facebook supporters he's leaving without a regret. the republican candidate carly fiorina has also given up her presidential campaign. the decision came after the former ceo of hewlett-packard finished in seventh place in new hampshire. so two contenders out of the race, tracy. >> that's right. that leaves seven to compete, and a lot of the focus now is on south carolina. nevada is next for the democrats. they have a caucus system similar to iowa. and we really don't have a lot of polling on what the situation is in nevada. so that's a bit of a wildcard in this campaign, but there is a lot of focus and a lot of the candidates are in south carolina. now let's talk about the democrats, because tonight hillary clinton and bernie sanders will face-off yet again. and this is really her first chance since that stunning loss in new hampshire to take on bernie sanders, to try to gain
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some ground before going back to south carolina where she has a big lead, but he's coming in strong, trying to go after, particularly, those african-american voters. on the other side, you had the republicans, seven of them now, if you include little-known jim gilmore who is still in this race, but they are all competing in south carolina. donald trump has had the lead there in the polls for the last six months. ted cruz is hoping to make a big come back in south carolina, because there are a lot of evangelical voters, and that's what helped propel him to victory in high whiowa. this could be make or break for other candidates like marco rubio, john kasich who did very well in new hampshire but is polli polling, barely hitting the scale in south carolina. so that is the focus right now for both the democrats and the republicans. >> tracy good to have you with us again. tracy ponce from nbc news.
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our european equity markets continuing to see severe selling. we're down currently by 3.5% on a stock share of 600. a lot of red on your screens this morning. you're seeing yields lower across the board. a couple of stock gains out there, but not a lot. really not a lot. and a couple of, well, a couple of outperformers, also, as we were seeing with the likes of publicis for example. when looking at the stock gainers, as i'm saying, across the board we're seeing a lot of red out there, but there are some outperformers. the best performing stocks out there. you've got meda. you've got fresnillo. publicis and natixis and informa. and then all the stocks being sold off. these stocks off by 12% to 20%.
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the banks really being sold off. alpha bank, it would be banca and the list continues. we love hearing from you. eva says central bankers never have a nice day. not sure about that. david writes in for mr. o'neill. you have to get here earlier e coming up, tesla accelerates even after the company posts a worst than expected loss. you're watching "street signs". find us on twitter.
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good morning.
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the federal reserve chair janet yellen has not ruled out raising interest rates further in 2016. testifying before congress, she acknowledged that market turmoil was stifling the market but that conditions are set to improve. we are just being creamed. there's no other way of putting it this morning. >> i know, louisa. you should be doing a hit for me. what a difference 20 hours makes. all the focus yesterday on what janet yellin was saying. and initially the response was pretty good. she managed to strike that tone between dovishness and a little bit of reassuring comments about the stretch of the economy. and the immediate reaction was positive from stocks. so she was quite optimistic about the economy as a whole, highlighting that difference between the economy and markets. that's largely to be expected. she also highlighted once again that despite that liftoff we saw in december, the policy remains
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fairly accommodative and saying that the central bank's balance sheet, retstive to the size of gdp still pretty big. in terms of outside risks, chinas what the biggest one she spent talking about. that's quite interesting, given that the first two weeks of the year was when china focussed and we've moved on to the likes of oil prices and european banss, and she didn't give as much mention to those sorts of issues as she did to china. initially we saw positive reaction. we saw quite a lot of yield compression. reacting to the idea that we're probably not going to see that market like in march. we did see a bit of a selloff closing down the lows by the end of the session. the reaction today, not really looking at janet yellin and u.s. futures have slid in line with european markets.
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and in particular, that ri riksbank. and janet yellin with room to cut if she needs, but some of these banks with very, very negative rates. >> i'll update the viewers on what's going on in europe. thank you very much. >> thank you. >> thanks a lot. they're just giving us a roundup of what happened yesterday and what janet yellin's message was. cisco shares rising. the tech company announced it's adding $15 billion to its share buy-back program. now twitter shares fell over 3% in afterhours trade as they failed to deliver user growth. it comes despite the fact jack
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dorsey putting in place new features to encourage. now shares in twitter have fallen around 60% since then and are currently trading at record lows. and an optimistic outlook for tesla, sending shares soaring. phil la bow has the details. >> despite earnings worst than expected. analystis were expecting a sligt profit of 10 cents per share. so why did shares move higher after hours? considerably higher? it's all about the guidance for 2016. this year, tesla expects to be cash flow positive on a non-gap basis. gross margins for the model s
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and model x between 25% and 30%, depending on the model. and in the first quarter, the company expects to deliver about 16,000 vehicles. 2 that's important, because when you look at the full year deliveries, its guidance is that it will deliver between 80,000 and 90,000 vehicles this year. so they're really going to have to pick it up in the second, third, and fourth quarters. here's elon musk. >> we're really looking forward to the unveiling of model three at the beginning of next month. i think it's going to be really well received and getting into construction and delivery at the end of next year. >> the model three will be unveiled on march 31st. tesla says it will begin production of the model three next year and deliveries are scheduled at this point to take place late in 2017. that's the story with tesla.
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back to you. george galiu is with us. what do you make of some of the points that were just made there with phil? >> i think he hit the nail on the head, really. the outlook from tesla was much better than was expected. the range of 80,000 to 90,000 is good. 75,000 would have been okay. they view cash as king. they're really focussed on this and see themselves ending this year in a better cash position than they started. i think people were hoping they would be able to say they finished the year cash neutral. >> are people really willing to look at buying electric cars in an environment now where suddenly oil prices are sum a e tumbling? >> it's a good question, and one we get all the time.
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but it would appear the case because tesla's an appealing product. look at its performance versus comparing cars it pretty much blows the competition away. and that's evidence when we look at this high-end luxury sedan sales. it's been seeing year on year deterioration in growth, tesla in contrast is growing around 50% per annum. and it's the market leader in that segment. >> and they say they're going to start taking orders for the $35,000 model s. >> that will be for march 31st. >> model three. the challenge for electric cars is encouraging the public to try them, experience them, realize the benefits and with that
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misconception around range anxiety. people think there's nowhere to charge them. the reality is, if you have off-street marking you can charge them at home every night. >> thank you, george. he is from isi group. we want to leave you with a look at the markets. a reminder, this is what we're seeing here in europe. a lot of selling. the ftse on the right-hand side of your screen. the italian market by 5%. the banks are being hardest hit. global yields, lower across the board. the 10-year gilt yield. and the pedal to the metal with a new 15-month high hit in the last hour or so.
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here are the sosome of the big . we're down 5% to 15%. one off 15%. and we've been out talking to the ceo there and will be keeping you abreast with what's happening here in europe. now our u.s. futures. we are hours away from the open in the states, but we're being called significantly lower. look at the dow call, 281 points to the down side. i will see you again soon. that's it for "street signs". we'll see you tomorrow, same time, same place. have a good day.
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good morning, and watch out below. stocks selling off around world. >> trouble is trending. twitter user with questions. >> and a hedge fund down nearly 18% for the year. ouch. "worldwide exchange" starts now. >> good morning. welcome to "worldwide exchange". >> it's thursday, and we're playing our favorite hits from the

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