Unicredit reports its highest Fourth Quarter profit in a decade and rolls out its first Cash Dividend in half a decade. Shares in swiss re spike nearly 6 at the open addres ja softbank looks to invest in the insurer. Insurance is finally a very interesting industry its in a transformation its in a radical revolution the parameters that run the industry and constrained the industry for years no longer exist. And chinese imports surge in january and contributes to the yu yuans worst day in 2 1 2 years. One of the big stories, softbank in talks with swiss re about taking a stake in the company, that sent shares close to the top of the stoxx 600. The deal could be worth around 10 billion and would give the Japanese Firm a onethird stake in the reinsurer swiss re said the talks were at an early stage and theres no certainty any transaction will be agreed. Doesnt seem like investors are seeing it that way Zurich Insurance reported fullyear net profit ahead of expectations the figure came in at 3 billion, a decline of 6 , but still above forecast from reuters. Zurich also will raise its dividend they have dealt with losses from naturalcatastrophes but it confident it will deliver targets for this year and the next geoff joins us live from zurich. How confident are they about this year and next year . Its interesting. The insurance sector used to be boring you took the insurance, you forgot about it, the company clipped the coupon, took your payment, and everybody got on with their business. I think the message from mario greco is that the industry is getting more exciting. You cited that softbank story. Well have to see whether this is anything more than a strategic stake for softbank we also had Technological Developments with amazon teaming up with jpmorgan and berkshire to look at what they can do in the Health Insurance sector. So that would bring renewed technology and renewed focus on disruptors to the sector all of that is going on in the background, even as mario greco has taken the knife to the company and 700 million swiss francs into a 1. 5 billion cost cutting program. Hes making the business leaner, more capital efficient they bested the 100 level on the combined ratio on an underlying basis and they would have demonstrated strong underlying growth in these numbers but 2017 was a difficult year for hurricanes and other natural disasters. Lets listen to what mario greco had to say about the state of transformation in the industry insurance is finally a very interesting industry its in a transformation its in a radical revolution the parameters that ran the industry or constrained the industry for years no longer exists this calls for a completely different shape of the industry. Players will adapt and change or disappear. Were leading this were being innovative well continue we welcome this. This for us is a great opportunity. We look carefully at all this action, events as further opportunities for us to innovate, push further our relationship with the customers, and to gain new space an nd new services i got the sense theyre optimistic about 2018. Of course the one thing you can never bet on is what kind of natural disasters we may see through fullyear 2018 the 2017 triplet of harvey and maria and irma gives them an opportunity at a commercial level to raise prices to customers. Theyll take advantage of that if they get the additional premium and they have a much more stable year for 2018, a lot of that will go straight to the bottom line. Back to you. Geoff, thank you very much. At this point well bring in a guest via telephone, Marcus Rivaldi joins us we heard from mario greco he sees this sector undergoing radical transformation do you see it that way absolutely. M a is a scene were focused on within the insurance industry. Bottom line, its an industry facing a huge operational challenge, and there are businesses out there that need to be driving great efficiency in operations, cost savings where they can get it, and looking to reinvest in really reinvigorating the Business Models for the technological changes that we see. Equally from a sellers perspective, people trying to sell noncore assets so they can refocus businesses on to really what they want to focus on they want to raise resources to reinvest in operations of course financing is cheap and plentiful. So m a is a big theme for the insurance sector that leads us neatly on to softbank and swiss re. It looks like they have the first mover advantage in terms of really beefing up technological innovation and digitalization is the industry doing enough to future proof itself . That is a very, very tough question to answer i think theres a lot of businesses outside of traditional insurance looking at the space, thinking about how they can get involved and disrupt the space. Its not just swiss re if you look at xl group, it was up over 12 on speculation that allianz and others are looking at it again. What is going on is a huge confluence of different drivers coming together at the same time creating a spike in m a interest we heard from geoff talking about mario grecos transformation of zurich how do you rate that effort to streamline the business . Again, he also touched on 2017 being a tough year. What was interesting today was that the board was able to look through the noise coming out of the hurricane activity, look at the underlying improvement of the business and therefore feel comfortable to ratchet up the ordinary dividend buy to 18 swiss francs a share moving that dividend up sends a signal its not going down it only goes one way from here on top of that they talked about antidilution activity, removing di dilution from past share Employee Benefits and future compensation plans sending a strong signal about the prospects of zurichs earnings Going Forward and the Capital Position of the group. Combined ratio is the industrys preferred gauge i know a lot depends on Mother Nature and the extent of claims and payouts. For zurich, give us a sense of your outlook for 2018. Will that industry metric stay or fall below 100 . Again, uncertainties aside, i think clearly zurich has been focused on reunderwriting its business, shedding premium it feels is not profitable to get that combined ratio lower. Absolutely we should expect a combined ratio towards 95, 96 level over the next couple of years. Quick one before we let you go im based in singapore, i hear a lot about how underinsured the broader region is. Taking a different view aside from the big reininsurance, when you look at life insurance, is asia the place to be and are they moving aggressively enough . In europe when you look around and see growth is a challenge for most insurance companies, one stock that a lot of european investors turn to for growth is prudential theyre big in asia and the whole dynamic around asia growth, underinsurance, filling that protection gap, all of that is very much part of the prudential story for growth, names like prudential are top of investors minds. Great conversation. Thank you very much for joining us Marcus Rivaldi there Societe Generale posted an 82 plunge in quarterly net income Fourth Quarter profits suffered from tax related charges and Retail Banking restructuring costs, but the french bank exceeded expectations from analysts who were forecasting a loss for q4. Socgen says it is starting out 2018 with confidence in a financial environment that should be more favorable. And joumanna spoke to the deputy ceo of Societe Generale about the results and asked about the volatility we have seen in the global stock markets. Its fair to say in our market activities we continue to get market share this quarter. Our fixed income performance has been solid with specifically structural products demand, which were more positive in equity we have a significant demand in terms of products. If you compare with the rate of the market, its fair to say our performance is the average of the quarter. When i look at the equities performance, you said a pronounced rebound of 39 compared to the Fourth Quarter of 2017 in an environment with low volatility because structure product picked up whachlup what structure products . Could be return investors or institutional investors. In light of the Market Action the last couple of days, fair question i think to ask whether or not Societe Generale has also structured some products that involve selling volatility in etf format if you are thinking about the reverse volatility, were not involved in that type of product. Globally speaking, its a Market Correction which was an anticipated one. But it does not change in our view the positive outlook for the insurer in terms of market activity we are still positive for the environment. Do you think and expect volatility to pick up this year . We are low in terms of volatility last year, it was historically low if i speak about the vix indicator. We had a peak last monday, but its not a structural level. Do you think Societe Generale is able to take advantage of that if volatility picks up . The demand is related to the rate of olatility. That was the deputy ceo of Societe Generale talking to Joumanna Bercetche unicredit returned to profit as the italian bank posted 2017 net earnings of 3. 7 billion euros, excluding extra ord flair it items. The bank says this shows the turnaround plan is working commerzbank suffered a sharp decline in Fourth Quarter earnings but managed to beat analyst expectations Fourth Quarter net profit fell 51 as the cost of the lenders massive restructuring effort took its toll. The banks ceo says more work is needed to improve profitability but it plans to resume Dividend Payments this year if you wish to email us on any of these topics, streetsignseurope cnbc or follow us on twitter, streetsignscnbc. You can also tweet us directly coming up, more on the chinese trade surge and what that is doing to fx markets. Welcome back lets look at the european markets. Wall street lost momentum towards the close of play and asia was trading around sixweek lows translation is a bit of sluggishness for the stoxx 600 off by 0. 3 . It looks like the Global Markets are trying to adjust to the threat of higher inflation and also higher yields the flip side, the earnings and the underlying economic picture look sound for now lets look at the sectors in focus. Its a big day for the banks socgen disappointed and commerzbank also, q4 numbers were down. Nonetheless stocks are up. It it wasnt as bad as the market was expecting banks up by 0. 3 basic resources down by 1. 4 total out with their numbers as well lets look at the individual bourses. Theyre under water. The dax is the rank underperformer today up a by 0. 7 ftse 100 off by 0. 4, and similar losses for the ftse mib and the cac, off by 0. 3 or 15 points. Lets take it to asia. The yuan is on track for its worst day since the Chinese Central Bank devalued the currency back in the summer of 2015 it started sinking early in the session amid talk that policymakers will step in to soften gains the loss accelerated on the back of the latest chinese trade data chinese trade data smashed expectations with imports surging 37 in january compared to a reuters forecast of just under 10 . The spike in the figures has been attributed to stockpiling ahead of the new year. Coal imports rose to the highest level since january 2014 amid Colder Weather across the country. Chinese exports rose more than expected lets get analysis on these numbers and talk about china macro more broadly with Michael Metcalf from state street Global Markets. Good to see you. Theres always a lot of seasonal volatility with the numbers. When you styou strip these out, does it tell you the lunar year timing, Energy Imports boosted numbers. The underlying trend is very telling. You saw it in the german data as well global trade volumes are healthy. So the chinese export numbers were also stronger than expected all of this despite the protectionist back drop. Protectionism is probably a bigger risk than last year we were worried about it in 2017, but the data changed our minds. Thats where we got the strong Global Growth, rising tide, but the trade data is still putting that negotiation across. The surplus narrowed somewhat i guess the Trump Administration will be happy to see that development to a certain degree. Still its at a sizibility level when you consider the overall aggregate surpluses. Is this going to be a bug in terms of protectionist dynamics . The protection rhetoric is not going away its not due until the middle of the year, but well focus on the treasury currency manipulation report again they dont have a leg to stand on given that the yuan is closer to 6 than it is 7 completely. The reality today is no country meets that criteria. As this data shows, the trade surplus is narrowing but i do think, particularly your point at the start is how much oyuan strength will be tolerated. If the dollar is generally weakening, there is a question about how firmly Asian Countries will lean against dollar weakness because of this fear of protectionism. Thats the theme can we talk about sterling and the bank of england today. What do you expect from sterling and walk me through that expectation an why you got that. I worry a bit that the Interest Rate market and currency markets are priced in quite a lot today. So the bar is quite high in terms of where market rate expectations currently are the bank of england needs to justify that to keep sterling where it is. I think one thing were concerned about in sterling right now, is that the valuation premium is gone. You might say the renminbi is overvalued before, certainly this time last rear you could argue that sterling was more than 10 undervalued that is now completely disappearing so the concerns about brexit uncertainty are no longer impacting and weighing on sterling in terms of valuation, precisely. Before it was easy to make the case that there was a discount priced into sterling because of brexit today its harder to do that the reason why that valuation gap is closed because we expect at least two or three hikes from the bank of england. Thats what the market is discounting. The bank of england said that this is the beginning of a tightening cycle they also said its gradual. Theres a back and forth between the market one more question about currencies and central banks. Given powells likely continuation of Janet Yellens policies at the fed, do you expect policy changes elsewhere that will weigh more heavily on currencies usually currency markets are driven by the yale differential. Today that correlation is at a threeyear low and instead currencies are driven by the curve slope. Its about changes in policy coming we sort of know the fed will go three, four times this year, thats baked in but the market price has done nothing with the ecb for almost three years its about the promise of policy elsewhere, not what fed is doing now. Volatility is back in Global Markets. To me this is the initial throes of Global Markets adjusting to an inflation overshoot and higher yields, de facto tightening theres more pain to come surely well, theres a correction in volatility volatility was too low we have overshot the other side now in equities. Interestingly not in fx. Fx markets have been calm in comparison inflation, im not quite sure where that is. January Inflation Numbers will probably show a fall in the annual inflation rate. We look at inflation closely through online data. It shows that inflation is robust, but not runaway yet. But the pulse is quickening not only do you have within the u. S. Context the tax cuts, oil moving to a higher priced bracket. Coiled spring of tighter labor market near full employment in the u. S. And on top of that the weaker dollar. Surely at some point in cycle this year absolutely. I think just as volatility was too low, we had a correction, Inflation Expectations at the start of the year were too low, and now we need to see the data justify the rise in expectations michael, thank you very much for that we were just talking about inflation. Heres one potentially big driver thats the price of oil. Were seeing a bit of giveback for brent crude. 65. 48 is where were standing. U. S. Futures, wti, 61. 69 total is boosting its dividend and planning a Share Buyback net adjusted profit rose 68 last year. Totals ceo says the strong results were helped by a 5 increase in production growth. The firm plans a Dividend Increase of 10 over the next three years. Publicis will revise its 2018 profit target its underlying sales grew 0. 8 in 2017 to 9. 69 billion euros. Very separately, Pernod Ricard beat forecasts for first half organic profits. Group sales reached 5. 1 billion euros, ahead of analysts forecast stronger demand from china and india helped drive the Spirits Company as did the travel retail at 11 00, well be joined by Gilles Bogaert stay with us for that interview. Coming up, could another rate hike be on the way from bank of england . Well look ahead to the key issues facing the mpc after this break. Some air fresheners are so overwhelming, they can. Send you and your family running. Introducing febreze one for fabric and air. No aerosols. No dyes. No heav