Transcripts For CNBC Street Signs 20161212

The italian banks also outperforming as italys treasury reportedly says its ready to bail out another bank if necessary. The italian Prime Minister is looking to form italys next government hoping the renzi loyalists can steal the country through to the next election. Ridiculous and insane. The trump team strikes back at a cia report saying Russian Hackers may have swung the election. Good morning, everybody. Welcome to street signs. We look like a Florida Beach party. Hard to believe, another record day on wall street. Just when you thought it was going to end. They keep going. And now we are very much led higher by the energy sector, the oil and gas sector, really pulling us higher in terms of some of the performance numbers that we have seen here over the last couple of hours. Stock share up 600, a little lower at the moment. So drifting a tad. We have seen the mixed European Markets in this mornings session, just underperforming a bit, the cac 40 and ftse may be outperforming by 1. 5 . Well get on to italy in a second. Just to show you the main moving sectors out there and where we are seeing the repositioning, you have oil and gas up by just over 2 . The underlying price of oil really rallying on the back of this deal. Well get into the details of that later in the show. Basic resources a little higher. Real estate, travel and leisure and health care pulling a little lower. The italian president asked the foreign minister gentiloni to form a new government. This after renzis government last week was rejected for constitutional reform. Gentiloni is the fifth Prime Minister in as many years. Hell be facing a vote of parliament as early as this week. The Italian Government is ready to pack out if needed of the monte dei paschi deal if needed. The italian lender said it would go ahead with a lastditch effort to raise 5 billion euros by the end of the year. They have rejected the request to raise the funds. And looking at the numbers today, rally iing today, bmps i outperforming the other italian banks, but they are higher. Penny stocks, many of them. Keep that in mind. And looking at unicredit that reached a deal to sell pioneer to amundi for 4 billion euros. They suggest the sale would involve the payment of a special dividend of 500 Million Euros to unicredit. The president is looking to boost capital levels at the largest bank. Joining us around the desk is julia chatterly. Thank you for joining us. You have been hovering every aspect of the italian referendum and what it means for the Banking Sector. Investors are seeming optimistic today on the back of bmps. You had a chance to speak to him a week before the referendum, and what did he say . He correctly predicted there wouldnt be market backlash out of this. And he said there would be continuity to the government. Listen to what he had to say. I hope that the i dont want to be repeating this too much, but i repeat that we have not to give this idea that the defeat of the referendum is so possible. I think the vote yes would prevail. And, in any case, dont fasten your seat belts, because it is not the case of a tremendous turbulence. Any case where well have a weaker and more unstable country, but not a threat for the european economy. And it seems he was right. Hes seen as a safe pair of hands. Hes seen as a smart pick for Prime Minister renzi because hes not seen as someone who will go, hey, i like a taste of power and challenge renzi for the leadership of the democratic party. And, of course, hes got a number of challenges to deal with immediately, not just the electoral law change to enable the country to have flesh elections, but what to do with the banks. Its interesting you mentioned renzi there. I think they were calling him renzaloni. How realistic that renzi makes a comeback here and when . Well, gentiloni is seen as a person to pull the party together. And theres been huge damage within the party with the referendum, you have different people on different sides. Hes got to go away and regroup and pull the party together. I think the big fear for analysts is that the only beneficiary of spillover facts and what happens with the Banking Sector, and the fact that the country wont progress any further in times of Economic Growth is the populist movement. How do you view this scenario . And in terms of the health of the italian Banking Sector and whether well face a fullblown italian banking crisis or whether were going to avert it . I think if you look at ecb on friday, we rejected the request to the payout or recapitalization. It means theres a bit more pressure with regards to the private sector. However, if we have a backstop from the treasury government to potentially step in, should private recapitalization fail, that could be massively positive. And more growth with regards to the referendum. And i think mr. Gentilonis agenda would be super important, 1 being to reform, the other is what happens to banks. The speed with which the pm proposal was accepted had to do with the urging of the banking resolution. One of the big questions, too, about public money getting involved here is what happens to the Retail Investors who pull the junior debt . Julia, you have been looking at this in terms of the ballot rules that apply. Absolutely. Talk about public money being a backstop to this bank, but to what extent if youre going to provide government money do you need to see some fort of bailin sharing with the bondholders, because they are held in great part by retail names. And that politically has been toxic for this government and continue to be so. The belief is if you see bailin of bondholders, there will be public money to give them reckonpence for that, but timing is difficult, particularly in mind with an election. It could be an electionlosing strategy. So the government has to be careful with this. Just also think about how it ties in with the European Investment strategy at the moment and whether or not we think theres going to be contagen from this, whether it can be contained, do you buy into italian banks at the moment . Do we think theres going to be a turnaround or is it too early . I think the italian bank outlook is one of the key drivers in terms of why investors have largely stayed out of the European Market so far this year. You look at etp flow, but more recently we started to see the flows come back in to etp European Equity as well as the Banking Sector, in particular. Arguably, because a lot of the bad news is the price and just how much cheaper you can get it before the market becomes more positive. All right. Julia, thank you so much for that interview. We were just talking about the etf flows there and looking at patterns. What a surprise last quarter of the year we have had with investors pulling out 350 billion from stockpicking Portfolio Managers just this year. Moving funds into bonds and past equities according to a study coming from the financial times. That shift has prompted analyst concern for Fund Companies amid the shift away from more expensive active funds to cheaper index trackers. The study comes just days after moodys cuts the outlook to negative. I feel like this is a trend that has been in flow for quite some time. Is it only going to be exacerbated from here . What are your thoughts . A large part has to do with the market. The volatility has been low and it has been for a large part of this year, despite some of the spike, then it has been challenging for active managers to make a very good performance. And some of the transition that we see going into positive exposures has to be said. But theres always a place for active alongside passive, and its important to do proper Due Diligence to see how they all fit together. We are also looking ahead to the fed now as well to see the differential between the ecb and the fed. You anticipate two rate hikes next year in 2017 . Well, exactly to your point, a lot of the focus has been around kind of what they are going to do in this next meeting. But more should be placed on the trajectory of policy rising. And in our point of view, given where domestics recover with ease, they were meant by the u. S. , two rate hikes would appear possible. Definitely being talked about a lot with the price of oil coming back, right . Do you think its a trend here to stay . And if thats the case, then back to my earlier point, do we buy into the banks . Is that reflection in the theirtrade . It is not just to rebounding with oil. We are starting to see wage pressure coming through. We are also starting to see some of the Domestic Service part of the economy actually contributing to the inflationary trend. So they are related but not contingent on oil putting out for the rally. With regards to what are the ways to play it, u. S. Banks will be a good way to consider given the curve steepening in trade. The more grossry valued equities would be a way to play given what is quite possibly related to the inflationary outlook. We have seen inflows into both exposures. The u. S. Banks have enjoyed a very decent run over the last week. And it is raising a question over the broader u. S. Embassies. At what point do they look expensive to you . U. S. Equity evaluation looks a bit more stretched in terms of comparing the european counterparts. However, momentum is a strong effect to consider, especially within a short period of time. What we have seen so far is if you look at last week, the italian referendum outcome sweeps resignation of the pm. We had the ecb meeting, that arguably was basically tapered. Yet the market went from high to high. And i think that with regards to the fed meeting this week, not a huge amount of surprises would be delivered. You have to wonder if they up their prediction to predict more than two rate hikes last year. So much has changed since septembers meeting with the trump stimulus, inflationary trade, dont you think it is possible janet yellen recognizes this . At the beginning of this year we had four rate hikes forecasted this year and only one was realized. I think the actual travel will be important to monitor. Furthermore, with regard to the meetings, if they actually address the impact of trump election outcome on the growth forecast. All right. Milly, thank you very much, head of Investment Strategy at black rock. Now email the show. Yes, please do. Get in touch, we want to hear from you on all the subjects. The address is streetsignscnbc. You can find us all on there. Good to hear from you as always. Still to come, tillersons hand on the tiller . Well bring you the latest news on the trump transition, including the report that the exxonmobil boss has been tapped for secretary of state. We are heading into a break on a festive note. This is dtuba christmas. This is an event where tubas come together at Rockefeller Center and play christmas carols. I like this one. The tradition has caught up elsewhere with three concerts held in more than 200 cities around the world. Take a listen. It is easier to play the flute, right . Yes. The u. S. Is not necessarily bound by the one china policy. Thats what president elect donald trump said when he was asked about his phone call with the taiwanese leader in an interview on fox news. The Chinese Foreign ministry reacted saying they are concerned about trumps comments and urged the u. S. To understand the significance of the taiwan issue. Shares in chinas mainland markets down sharply in todays trade. A number of factors weighing on sentiment. Pauline is joining us from singapore once again. Pauline, we have also had the chinese data showing us a spike in Producer Prices. Reporter yes, a spike in Producer Prices as well as cpi from late last week. But about those trump comments, louisa, it was the hang seng in hong kong that really felt the brunt of the comments. The hang seng down 1. 4 with industrials sliding the most. And on the mainland, Chinese Markets had their worst performance in six months. It was mainly because of the insurance sector. Chinese Insurance Companies taking it on the chin at the shanghai composite slid 2. 5 . And the blue chip csi index fell 2. 4 . This comes after the chinese insurance regulators suspended Evergreen Life from investing in the symptom market. And the idea is reduce risky investments by Securities Companies on acquisitions recently. The nikkei hit another high ending up 9 . Oil traded higher in asia to help, but the gains were capped there because of pressure on banking stocks. Now the main index in new zealand ended down a quarter of a percent as its new Prime Minister bill english was sworn in. And so thats a look at the asia packed markets on this monday after some of those very provocative comments by donald trump about taiwan and the u. S. Louisa, nancy, back to you. Pauline, thank you very much. Ridiculous and insane. Thats how the president elect donald trump and his team are describing the report that Russian Hackers tipped the election in his favor. Jennifer johnson has the full story. Reporter president elect donald trump and soon to be commander in chief attending the Army Navy Football game saturday and now dismissing a cia report that russia hacked into campaign files to tip the election his way. I think its ridiculous. I think it is just another excuse. I dont believe it. I think the democrats are putting it out because they suffered one of the greatest defeats in the history of politics in this country. Reporter trumps incoming chief of staff calls the report insane. Look, the russians didnt tell Hillary Clinton to ignore wisconsin and michigan, okay. Reporter but a Bipartisan Group in congress is calling for an investigation. The goal is to find out how extensive this is, how deep it is, which countries are doing it . It wont be limited to just russia. Reporter president obama has also ordered a full review of Campaign Season cyber attacks, which trump welcomes. President obama has been terrific. Hes been very respectful of the process and everything else. I saw that. But and im one of two, i dont want anyone hacking us. Reporter trump is considering exxonmobils Ceo Rex Tillerson for secretary of state worrying some in congress. Its a matter of concern to me that he has such a close personal relationship with Vladimir Putin, that that could color his approach to Vladimir Putin and the russian threat. Reporter trump says no final decision has been made. And other candidates including mitt romney are still in the running for secretary of state. Trump may make an announcement later this week. Jennifer johnson, nbc news, washington. The former special adviser to the Democratic National committee is with us this morning. Good morning, jake. So the notion that the democrats have been putting out the thought that russia was behind the hacking to help trump win, what do you think about what were hearing . Straight out of the nightmare scenario. Theres a document printed by the russian government about how it wanted to influence the rest of the world. It is straight out of the playbook. It is all about getting your man elected. I dont think we can go as far to say the russians hacked on a wide scale voting across the country, but surely there had to be an effect. There had to be some sort of benefit to having the kremlins Propaganda Machine transferring some of its learning, perhaps. What is this doing, i mean, these allegations . And its also important to point out that the cia have published an initial report saying they found evidence of the russians being hacked to some extent. But what is the impact on the strength of the two parties, republicans and democrats, given all the back and forth . After any election, one side loses and loses badly, the democrats lost control of the senate, or lost any chance of controlling the senate, and lost the white house. I think after any election, theres always a period where you are sort of digging in deep to figure out where you went wrong, and how people didnt listen to you, and then you have people like joe biden throwing their two cents in nominating themselves for the race in 2020. I think its all about the democrats, at this point, it is all for the democrats to play for. Theyve got to find a way to drive a wedge between the republican congressional delegation and the president elect. And the oval office. Reince priebus and congress will be on the same page for all intent and purposes. But the president elect will obviously be singing off his own hymn sheet. Unless they can find a way to wedge themselves in for housing that already exists, unless they can drive it further and wider, they dont stand a chance in 2018 midterms. Or the 2020 president ial election. How do you think the timing of the cia report on the russian hacking, how does this impact the trump transition plans . Because the big story were following today, its expected trump could select exxonmobils boss rex tillerson. And he sees his experience with russia an asset. But other lawmakers are not so sure, even marco rubio expressed concern, and we just heard from john mccain. And the Foreign Relations Committee Says the selection of mr. Tillerson would be guaranteeing that russia has a willing accomplice in the president s cabinet guiding our nations foreign policy. If mr. Tillerson is a pick, well gear up for a tough fight for his confirmation hearing . I definitely think so. Some of the old cold warriors like john mccain, on the republican side, have been shouting about this for years now. And to see this actually come true, i think they are definitely going to be putting up a fight. They have potential in their states who are going to be annoyed, at the very least, if a prospect of a tillerson position in the state department actually comes true. You have to wonder where they are going to pick their battles in terms of the democratic opposition in the senate, on capitol hill, because several have made selection appointees coming up against criticism. Who are the big ones they will battle against . I think it goes back to Donald Trumps early promises of draining the swamp. And i dont think its fair to the american public, if you promise to, you know, change the entire system of government, and then only hire people from goldman sachs. So i think, you know, any number of the nominees, from the secretary of treasury, to the chief economic adviser, to the secretary of state. I think all these positions are definitely contentious issues. Jake sing, former special adviser to the Democratic National committee among other things. We need to take a break and look at the World Markets live. Its our blog that runs throughout the hour. Join us at twit ter. Well see you in a second. Good morning and welcome back to street signs. Im nancy hungerford. And im louisa bojesen. Shares of Oil Move Higher after nonopec producers sign off on the first coordinate Production Cut with opec in eight years. The nigerian minister says hes not worried about countries cheating on the deal. Both sides will have to keep to the deal, otherwise it falters. So i think the urgency of now and the criticality of the economy to protect is what is happening at this time. Italian banks are outperforming as they are looking to bail out the top bank if needed. And looking to form italys next government, hoping the renzi loyalists will steer the country to the next election. And phillips is selling the majority of stock for 1. 5 billi billion. Good morning and welcome back to street signs. Happy monday. We had a strong week, so much attention given to the day after day gains on wall street. But a strong week for european equities as well. Dont you believe we are heading into the santa rally, end of year, trumps not in office yet, well continue the buying before we know what is going to happen, that kind of thing . Yes, absolutely. Hard to believe for once were not talking about the fed in a way meant to see the first rate hikes since last year. A lot of excitement. But still everyone is watching the inflation story, hoping the trump rally goes into a santa rally. Well give you a closer look at how the markets are set to open. You are looking at a flat open at this stage of the s p 500. The implied open of 1. 7. The dow jones up seven points. The only market off 30 points is the nasdaq. We are seeing red across the street, but it doesnt tell the whole picture. When you look at oil and energy, they are moving higher after the opec and nonopec deal over the weekend. We are also seeing strength in the italian banks. Well get to that in a minute, but in the u. K. , we are lower by 0. 12 . Last week was the best for the market since 2014. The french cac off. 11 . And the ftse is higher by 1. 2 . The investors taking optimism from comments coming from the italian treasury we told you on reuters earlier, implying that the italian treasury is ready and willing to help out the vacant sector, specifically monte de pasci if needed. The dollar is moving higher against the yen as well by 0. 3 , relatively flat on the sterling trade here. And the aussie dollar is higher by. 20 . Some are wondering whether or not well get a change in guidance when it comes to the socalled hikes they expect next year. Louisa . Precisely the inflation trade is one that has been very focused on oil prices now trading more than 4 higher after opec and nonopec producers. They signed their first production deal to cut production since 2001. Nonopec countries led by russia agreed to reduce output by 550 barrels per day, just falling short of the 600 target they were hoping for. The Saudi Energy Minister said that everyone is committed to making sure the levels are enforced. In my role as the Saudi Energy Minister, i can tell you with extreme certainty, absolute certainty, that effective january 1, were going to cut and cut substantially. To be below the level that we have committed to on november 30. Russian Energy Minister said more work needed to be done to get more nonopec members on board. Translator it is very important to note that we have agreed today that this is not a closed agreement. We will be working together to attract more nonopec countries to join our efforts to stabilize the market for the benefit of producers and consumers. Now earlier this morning we spoke to the Nigerian Oil Minister and asked him how sensitive buyers of oil they were of the price of oil and whether the market struggles more to balance if the power is lower. Take a listen. Countries are going to continue to uphold the ability to look for how to save costs, by virtue of limiting their consumption. Thats something they will have to deal with in the longterm business. But on the whole, they look for investments to continue in this country. So a sensible number is needed otherwise investments will dry up. So to do with it indepth, we have to look at the u. S. Deal with positivities arise. I think they will develop a system to look for all the reactions. Glencore will be buying a 19. 5 stake in rosneft for 2. 2 billion euros. They called this the largest deal in russias history announced by the company in a meeting with president Vladimir Putin back on wednesday. Meanwhile, eni will be receiving over a billion dollars for 30 stake in the egyptian gas field. This is following the 10 stake by bp last month to generate profits from the recently found deposits. Its the largest ever natural gas field found over the mediterranean and production is expected to start at the end of next year. Still to come on the show, a 21st century deal. Well have the latest on the bid after this short break. Hi, everyone. Iran has signed a deal with boeing since the 1979 resolution. The near 17 billion deal between boeing and iran air includes 50 737 aircrafts and 30 747s. This will require approval in the u. S. Treasury, the state department and congress. And is likely to face political opposition. They are trying to sign as many deals as possible. The iranians are also trying to sign a deal before trump comes into power and you see sanctions made. We dont have details on the or how they will be changed, so precisely that, people are trying to move ahead. Meanwhile, 21st century foxs bid could face opposition. Some shareholders are unhappy over the terms of the current offer. With reuters reporting that one major sky shareholder will vote against it. Rupert murdoch stocks offered 75 cents in shares on friday to buy some of the company that it does not own. Now youre looking at a gain of 7. 5 . Phillips is selling an 80 stake in the lumileds unit for 1. 5 billion. They are paying cash for the lumileds business. They attempted to offload the business to asian investors for over 3 billion at the beginning of 2016, but the deal was blocked by u. S. Regulators over security concerns. The u. S. Equities closed at alltime highs on friday again as the major indexes posted their best week since the election. Well take a closer look at whether this is prompting the average investor to get back in the game. The markets keep roaring to new highs, and that is impressive, but is it enough to light a fire under the average investor to get them back in the game in 2017 . Now, everyone knows we lost a vast swath of the investing public after the 2008 financial crisis. And, for the most part, they have not come back, even as the stock market has come roaring back. How bad is it . Its bad. A recent gallop poll said 52 of americans invest in stocks. That matches a record low. The high was 65 , and that was way back in 2007. And more and more Stock Ownership is concentrated in the hands of the very wealthy. In fact, about 8 of all stocks are owned by just the wealthiest 10 of households. Thats it. This is the great tragedy, the s p 500 is over 200 since bottoming in 2009, but Stock Ownership has become concentrated in fewer and fewer hands. Every rally weve had in the last several years has been met with outright division. People just arent buying it. And many of them are now just afraid of losing money. But theres a couple of reasons that this particular rally might be a little bit different than the other ones. The most important thing is that investor enthusiasm has shot up. Cnbcs allamerican survey just out today shows more folks are willing to bet on the stock market now than before the election. So there could be cause for a little bit of hope. Wouldnt it be something if the largest source of demand for stocks in 2017 werent corporations buying back stock but individuals trying to catch up on a decade of indifference in hostility . Joining us is daniel morris, investment strategist at bnp paraba. The investors wondering if they should get in the game is how long the rally will last. When you consider the uncertainty hanging in the balance to next year, what is your view . It seems to have priced in quite a bit. But it depends on how you think the negotiations between trump and congress will go, what you end up in terms of tax cuts, how much hes funded. But as you said, thats a lot of guessing at this point. We really dont know. So ultimately theres got to be a pause in the market to assess what is information as opposed to hope. And at that point well have an idea if it can continue to the appreciate or the opposite there. Theres a big question over the details of the stimulus, whether it gets passed, but theres the other side of trumps commitment when it comes to carrying back some of the free trade we have seen. Some of his rhetoric with china starting to rattle a few people. Do you think investors have not been giving enough attention to this side of the equation . Theres certainly huge negative potential there. If we all agree trade is good, therefore trade is bad, and most of the things that trump is proposed is around less trade. So the potential is there, not just for the u. S. Economy, but globally. If you get more resurgence on trade, more protections, that means less growth. And some of the stuff he said would indicate that. The opposite side is thats not generally speaking with the republican party. So then we come down to the negotiations who is in power and what gets implemented. What is that the people you speak to, what is it they fear . And are they willing to make changes in terms of Investment Strategy right now . Because psychologically, anecdotely, it feels like we should remain long on the market. Like its too early to be taking profit and switching positions and thinking about risks for 2017. Well, you know, two views as always. On one hand, if trump is all about growth and all about jobs, that generally speaking is what trade does, even if it doesnt always help people in ohio. So if theres an attempt to address those parts of the economy that get hurt by trade, thats going to be a good thing. If you look at germany, they have recently been successful at rebuilding the manufacturing base. There are positive things to do while addressing the concerns of trade. Maybe that is what people are hoping for and focusing on. As opposed to, yes, you can get more jobs in the u. S. If you put up 35 trade barriers, but in the long run that doesnt work. A lot of writeups this morning focusing on the spikes in Producer Prices and the chinese data saying that could be an indication that inflation is happening on a broader base, on a more global base. So you think the inflation trade is going to be the trade for 2017 . Well, i think it is notable that you have seen inface expectations go up in europe. And to the degree you think its a global phenomenon, i think it is positive. Thats what the Central Banks all want. So this should be coming from draghi east poi draghis point of view. Its a pretty drastic change from a year ago. Speaking of Central Banks, what are your views on the divergence bank as we expect the fed rate hike this week. How does this play out in europe in. So, this idea of the divergence was the theme for 2016, so we can dust those rejections off and use it now. But it is different, because even if now we do see the fed hiking, they will certainly see one, two or three times next year. Its a question of really has the ecb tapered or not. You can look at the language, but the reality is they are buying less and over time they are going to continue to buy less. So i think they are tapering whether they want to admit it or not. Its going to be slow, we always knew that. The other thing to keep in mind is as treasury yields go up and we expect that they will, that will pull up the yields in europe. Regardless of what the ecb does, i think they will move in the influence. Do you see reason to buy european banks then . Well, if you had one thing that is attractive about the euro banks is the evaluation, and people have looked at that for a long time. You can see what happens to financials in the u. S. If you get the opportunity. We probably would need something that is a lot more accommodative out of the ecb first. Barry writes in and says theres a popup. There we go. Isnt the projected two rate hikes of 2017 now looking out of date . Surely they are justified under current Market Conditions with a fourth likely of the crude and dollar continuing to rise. What do you thinks in terms of projections . I think you could see two to three instead of one to two at this point. It comes down to what is the tax code package looking like, how big is it . How much of it is paid for . If it is just funded by treasuries, the fed wont sit back and let that go. How do you choose at the moment what to invest in . Are you broadly looking at efts or broadbased picking, how do you invest . Two parts, one is from a stock pickers market in so far is we expect changes in terms of the tax code. It will affect the companies differently. Some benefit, some maybe not. Theres an opportunity. I think by and large, whether or not you think this works out well or badly in the long run, it is still reflationary in the longterm. Daniel, thank you very much. Daniel morris, investment strategist at bnp paribas. Oil prices are trieding higher after opec and nonopec producers signed their first deal since 2001. They are falling just short of the 6,000 target opec was hoping for. Richard mallinson is joining us. Richard, good to have you with us. Do you think its going to make a dent in that massive glut that were looking at in the oil markets . I think this deal will, especially as it comes on top of the opec promise to cut over a Million Barrels a day, that came at tend of november. And i think the important thing is, we already heard from russia it was going to cut 3,000 pounds. We know that putin is personally behind such a move. What we got over the weekend was kazakhstan, which we were expecting to grow strongly because of the cash against the cut in demand, which was going to be flat year on year promising a cut, as well as a few countries which we knew were going to decline. Just formalizing those. So theres real substance in the announcement. So how long will it take for this surplus to suddenly then turn into a deficit if we are seeing most of these players coming together to cut . Well, assuming you dont get 100 compliance, we know the companies arent going to manage that, both opec and nonopec. Just based on our forecast, we think youll see global stocks soaring throughout next year to about 700 barrels a day first up for the year. And even if the deal isnt extended at the moment its a sixmonth deal, it could be extended to the second half to the year. Without the decline in lots of parts of the world because of low investment, we think that increasing the amount, we see that reduction in stock carrying on in the sector for the second half of the year. So we have a big hangover of oil to work through, but well head structurally into a market where we draw in stocks rather than adding to them. And richard, what about the nonopec members who are not party to this deal, when you think of the north american shell producers and the highcost producers here, how will that play into the equation when you look at oil prices above 55 a barrel . Well, certainly were already seeing u. S. Drillers bring more rigs back into service. Well continue to see that trend if oil prices stabilize here or head higher. So we have raised our estimates for how much u. S. Production grows by next year. There are a few other bright spots because of legacy investments, canada, the north where you are seeing the production. But overall, we think nonopec production is going to struggle to grow next year because of lower investment. And even if you see prices ticking up and companies becoming more bullish without investment, outside the u. S. , those will take several years to come to fruition. So were still looking at tightening supply over 2017 over 2018 even with a more positive price outlook. So how much have we raised the u. S. Production then . We now see it growing by about 350,000 barrels a year over the year next year. How about the outlook for the price of oil . First half, 2017, whats your best bet . I think were going to see prices, brent getting into the low 60s. I think it will take time for the market to be convinced that the Production Cuts that have been promised are being delivered. But once we see that, once we see sustained draws, even through refineries in the season, well see it push back 60. Toward the end of next year, we will be seeing the 70s once again. Richard mallinson, thank you. Shoppers make their final purchases this holiday season. I bought all my christmas presents. All mine are in the store. Thats the secret. Im nearly there, i have to say. And one looming tech giant is looking to capitalize ahead of its big 2017 announcement. Julia boorstin has more. Snapchat is pulling out the stops to draw in retail ad dollars in what is the most important quarter of the year for adbased businesses, the crucial holiday season. Its looking to boost its revenue ahead of the ipo. Nordstroms is looking to add sound to their selfies. They can play with a sponsored lens for 20 seconds before sending it along to their friends. Nordstroms is working with other retailers. Target and American Eagle have major campaigns underway. The ads play for up to ten seconds giving snapchatters the option of swiping up on the ads to see more. And it is not just lenses and video ads, snapchat has been quietly rolling to it a new ad format this fall. Snap codes embedded in tv shows that can be scanned to unlock an exclusive lens or filter to layer over a photo. They have run on 15 shows including gilmore girls, the simpsons marathon and nbcs hairspray live this is a crucial way for the company to diversify Revenue Streams ahead of the ipo in march of next year. Emarketer says snapchat will generate 370 million in revenue this year, and it is projected to nearly 1 billion next year. With 150 million daily active users worldwide, snapchat draws a third of social Network Users here in the u. S. , which just a tiny fraction of social ad dollars. As the Platform Launches more formats and works with a broader range of companies, that means plenty of room to grow. Back over to you. And lets give you a check on where the European Markets are trading before we go here. We are seeing some red arrows, but just modest losses when you look at the ftse 100 lower than. 20 . The xetra dax is lower by. 38 . No surprise that investors are taking off a bit of exposure there. The cac 40 is flat. And the ftse is outperforming largely down to confidence around the Banking Sector. If the sector moves if they sound more hawkish on how many hikes they want to do next year, then perhaps we see movement. But the surprise would be no. Err on the side of caution. They should do it with so much uncertainty regarding what happens with the new president next year. We have the implied open on the side of the screen. The nasdaq is a couple lower and the dow jones a few points higher. Im louisa bojesen. And im nancy hungerford. Worldwide exchange is coming up next. Good morning. Markets are on a tear after a new agreement to cut output. The trump transition, the ceo of exxonmobil is expected to be the secretary of state, adding more fueling concerns over russia. And the hills of the made for tv matchup between the Dallas Cowboys and the new york giants. Its monday, december 12, 2016. And Worldwide Exchange begins right now. Good morning. A very warm monday morning welcome to Worldwide Exchange on cn