Julius bar opens lower as the slow asset growth and full net profits fail to impress. The ceo tells us he expects the stock markets to fall this year. We will see sooner or later a correction hopefully 5 , 10 , 15 correction another large one. I think thats going to happen sometime in 2018. Another disappointing quarter for ericsson shares hit the bottom of the stoxx 600 after a bigger than expected loss in the chinese market. Build the wall, build roads, get tough on north korea President Trumps state of the union speech takes a hard line on trade and Foreign Policy but hales economic gains this, in fact, is our new american moment. There has never been a better time to start living the American Dream good morning it is wednesday, its fomc day but yesterday was quite a heavy session in u. S. Equities we saw another big drop in equity trading at one point the dow was down almost 400 points, at the end of the day 370 points lower the picture in europe is brighter this morning. We have had earnings that have come out well get into some of them in a while. The stoxx 600 is up about a quarter of a percentage point. Lets get into individual bourses. The ftse is the only one really lagging. Just below the flat line we did have some earnings weighing on the sector over there. Xetra dax is leading the charge, and were having a strong day for ftse mib all indicating a stronger session than we had in the last couple of days, also in the u. S. As well. Just one thing to note on the xetra dax, we have had a whole bunch of Inflation Numbers come through this morning well look out for that flash hicp print at 10 00. Should give clues on to what the ecb may or may not have to do in coming months. Getting back into sectors, lets lookhousehold goods which are leading the charge technology continues to struggle healthcare continues to decline in line with what we saw in price action in u. S. Trading in yesterdays session. Of course that is on back of the news of the combination of amazon, jpmorgan and Berkshire Hathaway combining forces to disrupt the healthcare sector. That pushed down the rest of the key names in that sector some names down as much as 9 . That theme is continuing into europe this morning. Shares in Banco Santander are trading higher despite the spanish lender reporting a dip in Fourth Quarter earnings spains big ef legest lender toa writedown on a u. S. Finance group. It came in at 1. 54 euros, but that was ahead of analyst estimates. They benefited in brazil where underlying net profit roads 9 during the period. Geoff cutmore is in madrid this morning. It sounds like that brazil number is something theyre happy about. Absolutely. To be honest, its no hardship coming to madrid in the winter given the weather conditions in london but thank you. The brazilian number was strong. In the conversation i hwill, thy said the brazilian economy may do 2. 5 this year, which is stronger than expected if that transpires, that would be terrific news for santander which is strong in the brazilian market there are other tick boxes here. Yes, there was the oneoff item for the american business. That is a work in progress mexico actually was not bad. The expectation was for a flat performance here so i think generally the market is pleased with that the uk, that could be one area of challenge Going Forward and they say of the ten markets the theyre active in, the uk is the one that would see the slowest growth and there is this fog around visibility that is brexit. So in my conversation with her, i asked her what the potential impact of the brexit story might be on the bank Going Forward lets listen in. In terms of the country, obviously theres a slowdown in the economy. If you ask me which of the countries we think would grow less in 2018, its probably the uk of all the ten countries in europe and the mericas the slowdown is beginning to be felt you know, in terms of our bank, we are the most resilient bank, according to the bank of england stress test. I think were well placed in a less favorable economic environment. On brexit, im an optimist i believe europe and the uk, its in both interests to have a deal ta makes sense and helps sustainable and inclusive growth i have confidence in our leaders that theyll come to a good arrangement. And spain domestically. I have to ask about catalonia. We still dont know what will happen with carles puigdemont, and hes been encouraged to come back and form a government which will infuriate madrid. What do you think the challenges are for you negotiating this story . Well, you know, we dont know what will happen we know what is not going to happen were not going to have the same scenario as before spain has strong institutions. I think spain is stronger than before the crisis. It was a big crisis. We have the tools to deal with that in our constitution the constitution must be respected. I think thats the key message for investors. You know, the market is telling you that the government has dealt with this crisis in the right way because our spreads are narrower than ever with germany. Spain is like i said a couple years ago, the phone doesnt stop ringing the phone doesnt stop ringing everybody wants to invest in spain. Well have the fourth year of growth, creating 500,000 jobs. The one challenge is that we need to increase productivity and create better jobs reforms in education and others, but were in a good place. Spain is ready to grow terrific quarter. I think the market will acknowledge that were all looking for gray swans or black swans yesterday we got a lesson that markets can go down as well as up and volatility appeared to rise. Do you think thats a tremor its a warning that there may be a bigger earthquake coming later this year that well have a more significant correction should we be worried about what the impact may be on europe . Weve had ten years of growth in the u. S spain has been growing for four, five years latin america is a bit behind. Yes, theres a chance that as we get out of qe, there will be turbulence thats something difficult to predict. In our case we expect our ten markets to grow again this year. Is it possible one will not grow i think thats hard. If you look 12 months ahead, were end of january, thats more for 2019 were encouraged by what we see in the underlying economy. Our customers want more loans. Consumers have more confidence market turbulence could happen, yes. Thats a risk for this year. For us it looks like a pretty good year. I think the key word there was confidence clearly shes confident about growth coming through 2018 the bank is well on track to hit many of its 2018 targets at this point, difficult to know what may be around the corner that could prevent that from happening given that both latin america and the european markets, that san tanner operate in are showing improved momentum back to you guys geoff, thank you very much. Were joined by neil bates i want to pick up on the conversation said about risks. I said Retail Investors should keep a watchful eye on bond markets especially the u. S. Tenyear as it approaches 3 are you worried . Were beginning to become more concerned i dont think weve reached that threshold yet, whereby were having a red warning line for markets, but something for investors to keep an eye on. Were fairly relaxed for markets in the shortterm, but i feel that the risks rise as we move through the year policy and markets are on something of a collision course. I think its going to become more difficult for equity markets to make significant progress i want to pick up on some comments we heard from the santander interview. The chairman was saying shes concerned about the prospect of Slower Growth in the uk, but switching that around, looking at your portfolio, it looks like you have a significant exposure to come uk names why is that . Quite simply, i think a lot of the bad news is already discounted in the share price of uk banks you take barclays, it trades on 0. 65 times book value. Maybe a little bit higher given the appreciation over the last couple of weeks. Now, we believe that over time as a business that can move to 10 return on tappingibngible e. At the moment we believe that the value that resides in the Retail Banking operations in the uk has been obscured around the amount of capital that may or may not be put into the investment bank. One argument again on investing in banking is the rise of fintech and the disruption thats causing in the space. Do you think that doesnt impose somewhat of a threat to the more traditional retail banks i think it does we underestimate how resilient franchises are i think theres a tendency for investors in general to get the direction of travel right when it comes to new technologies, but get the timing wrong yes, i think fintech does represent an issue longer term but shorter term i think that the outlook for the uk, its reasonably stable as long as the Global Economy performs robustly the outlook for higher Interest Rates will be positive that will outweigh the longerterm concerns youre saying that the uk economy could emerge from brexit relatively unscathed as long as we see Global Growth yes what about the fact we have Janet Yellens last meeting as chair yesterday. The federal reserve, we got the final statement today. Do you think shes leaving on a high note . I think the challenges she faced were more nuanced than bernanke faced yellen had a different set of challenges, she has succeeded in that in general, were skeptical around policy americas ability to manipulate the economy to do what they want at some point in time well see a setback. Weve seen a shakeout in equity markets the last couple of days, this comes on the back of a strong start to the year on equities do you think that this market is due for a correction and that it could be quite sinister . Or is this just a healthy correction in the market that has gone up every single day for a month . I think its much more of the latter of curse we could see a correction nobody could forecast the shortterm direction of markets. And in terms of a more significant one, we dont feel conditions are in place. We have not seen a lot of speculative success. Some areas of the market are looking frothy weve not had that excess that precedes significant Market Correction want to ask about one u. S. Stock, alphabet. You want to talk about frothiness is that a company when you look at the technology sect their is overvalued do you think the tech sector in the u. S. Is overvalued i dont i think theres a lot of noise around the sector, but these are highly cash generative businesses the pe is slightly elt investigateelevated, but these businesses trade on 3. 5, 6 Free Cash Flow yields, those are growing 10 , 20 per annum. Thats a much more compelling proposition than the staples businesses today if you think about Warren Buffetts early success, a lot of that was built on high return, Consumer Staples business riding the wave of the economy. It is not far to say that Technology Companies are in the same position. You sound bullish on u. S. Tech stocks. Thank you for joining us this morning. Julius baer posted 810 million in swiss francs in profit, its slightly below forecast they attracted 22 billion francs in net new money, that exceeded the target and its hiked its dividend speaking to cnbc earlier, the ceo explained the rational behind the latest deal if you look at brazil, its in an upward trend the economy is doing much better we see a need for holistic advice Interest Rates have come down in brazil from over 14 to 8 we see a need for clients to diversify out of fixed income. If you have views on frothiness, email the show. The address is streetsignseurope cnbc. Com you can also follow us on twitter streetsignseurope cnbc. Coming up, electrolux shares charge to the top of the stoxx 600 after a Fourth Quarter beat. Well be speaking to the ceo after the break. Welcome back to street signs. Weve had a lot of earnings come out of sweden. Weak demand in siemens power and gas division saw First Quarter industrial profits hit 14 the ceo said the declining market for fossil power was not temporary, adding that strategic measures were needed the group revealed their were in talks to implement job cuts. Ericsson reported a larger than Fourth Quarter loss as writedowns and rising costs took their toll the company, which is in the midst of restructuring, said it expects to see tangible results later this year. Ericsson maintained its dividend despite the result h m delivered a smaller than expected fall in quarterly profit the fashion retailer also said it would continue to accelerate its online push as sales at physical stores waned. Last quarter the Company Announced it would expand a partnership with alibaba as it aims to Court Chinese consumers. And capita plans to raise 700 Million Pounds in a rights issue, this after it suspended its dividend following a cut in the 2018 profit forecast the firm says underlying pretax profit will be well below analyst estimates. They brought in a new ceo in december tasked with rebuilding following multiple profit warnings in the past year. Electrolux opened sharply higher after posting a stronger than expected rise in Fourth Quarter operating profit the swedish Home Appliance maker said they expected a bigger negative impact from increasing raw material prices. Jonas samuelson, the ceo, joins us on the line youre spending around a billion dollars on modernizing factories, including in the u. S. Youre trying to cut costs is this about better efficiency . About reducing headcount its an overall effort to first modernize our product range with really appealing projepr produc products, appealing to our consumers, but doing that in an efficient way. Modernizing our manufacturing footprint as well as increasing the levels of automation its covering all of that. When you reduce headcount in the United States, do you have concerns about reaction from the administration i think we announced yesterday were investing 5 500 million in our u. S. Manufacturing base i think overall that hoo should positive message samsung is building washing machines in South CarolinaLg Electronics is racing to do the same thing in tennessee. You mentioned that investment in the u. S. When you look at the tariffs the Trump Administration has posed on washing machines, do you see that as a way of favoring u. S. Dema brands even if it damages the u. S. Job prospect . This is about making sure our u. S. Manufacturing base and the products we offer are as competitive as they can be so, i think the u. S. Is a very can be a competitive place to manufacture in. Were close to the Consumer Base were investing in our u. S. Frigidaire brand, which is a trusted and appreciated brand to u. S. Consumers for us, this is unrelated to policy and more related to the faith in the u. S. Consumer i want to ask you about your investment plans the focus is on north america and latin america, but how do you pair that up with the fact that youre also looking to achieve significant cost savings . Willem referred to some of the human reductions when it comes to hiring. As we become more efficient and more automated, our need for direct labor in some of these cases reduces on a per unit basis. At the same time were investing in increasing the appeal and competitiveness of our product and increasing sales we have a strategy for positive growth, which is a positivefor employment i also see you have a restructuring charge of 75 million. Can you talk us through that right so we are consolidating our refrigeration manufacturing that is currently taking place in two facilities in the u. S. Were consolidating that into one large facility in anderson, South Carolina in total that entails a onetime charge of about 75 million. Some of your largest and oldest shareholders, they essentially seem to think that europe is falling behind both the u. S. And asia when it comes to technology development. Theyre throwing a ton of money at research to counter that. Your major rivals are in the u. S. And asia. Do you agree that europe is falling behind when it comes to Technological Development . In our case, i would say thats not the situation most of the Core Technology development is taking place in europe at the same time, as you indicate, we are investing heavily in north and latin america as well as in asia, in refreshing our products there. I wouldnt say were hampered by our european base. Quite the contrary all right, sir. Thank you very much for that and for bringing us your views on this earnings. Jonas samuelson, the ceo of electrolux. Nintendo raised its fullyear guidance thanks to the switch there was better than expected operating profit, up nearly four fold from a year ago samsung shares have risen in seoul on the same day that the Company Announced a 50 1 stock split and a fullyear Cash Dividend the firm posted a record profit in the Third Quarter as earnings saw a boost from memory chips. Samsung also announced a clip designed for cryptocurrency mining investors are eyeing a corporate restructure at samsung and the nasdaq is still on pace for its best january since 2012, despite a sharp fall in tuesdays session. Microsoft, alphabet, intel and apple have had the biggest negative impact on the index apple is down over 2 this month. Coming up, President Trump holds hits first state of the union speech hailing economic gains and setting Ambitious Goals for infrastr