Divided hikes, with the swiss insurer targeting an eventual payout of 75 of its net profit. Donald trump prepares to meet his first foreign leader, japanese Prime Minister shinzo abe, as the bank of japan goes on the defensive, buying jgbs in a bid to offset rising treasury yields. Good morning again. Welcome. Glad to have you with us for this next hour. We have lots going on. A packed show for you. Just giving you an indication of where europe is trading, we were called higher by the spread bettors before we opened an hour ago, hanging on to those gains, just over a tenth of a percent. Over night, the bank of japan conducting the bond buying, stopping jgb yields from highing higher this had an effect stateside and some rejigging of yields in europe. When it comes to some bigger movers out there, also just looking at some of the stock specifics, investec has been trading higher after reporting a solid set of first half earnings, similar for zurich. Ahold trading lower after weakness in the firms u. S. Business hurting operating incom. Then royal mail on the righthand side of the screen. Also down after announcing further cost cuts to combat a drop in first half profits. So a mixed bag of announcements so far. When we look at the sectors out there, how some of that is reflected, you are looking at banks being a main sector to be trading lower, down by a half percent. Telecoms, basic resources hanging on to some gains. People questioning how long this banking or Financial Sector rally can continue. We are seeing unwinding of the trump rally thats been in place for a week or so. I was talking to an investor yesterday, its difficult for us, even if we dont have conviction in the trump trade, we have to be on it. The institutional investors, they want to see the Massive Gains that some of the Financial Investors in the u. S. Wracked up in the space of one week. Theyre torn between a lack of conviction but the pressure from investors. You were at the ubs conference, i know a lot of heavy weighted people in the industry were there. I spoke to somebody from the emerging markets yesterday, from brazil, who was talking about how the danger is that everybody piles into the same trade. Everybody goes long u. S. , its great until it isnt. He was saying its important to diversify. Timing is absolutely key. Lets see what some other huge investors are saying out there. Carl icahn has praised president elect trump as a consensus builder saying he will help to heal the divide between American Business and government. Speaking at the Global Investment outlook summit, he also said that he believes the posttrump market rally may be overdone. He confirmed that upon leaving trumps Victory Party early on november 9th he bet about 1 billion on u. S. Stocks. Only a billion . Only a billion. But has done well on that. What did bill gross say . Taking a slightly different line. He is saying theres no trump bull market adding that the president elects victory signals the American Economy is heading the wrong way. Speaking to cnbc, he warned that structural headwinds remain in the way of u. S. Growth. Proposals in terms of fiscal spending are focused on not only tax cuts, but corporate infrastructure. You know, tax incentive corporate infrastructure plans which are to the necessarily the best way to go from my standpoint in terms of injecting money into the system and putting people to work. Thats debatable. Well have to see. I dont think were looking at 3 , 4 gdp growth because of structural headwinds that i talked about with you for several years. Were now joined by justin oliver, and were seeing some reversal of the trump trade going on in the markets overnight what do you do . Do you want to build on to your position in financials, healthcare, basic resources . Is it time to take profits . You have to look at where the tailwinds are at the moment. The tailwinds behind financials, healthcare, infrastructure will be there. I think theyre overdone in the short term. Some regulation change, is that well be seeing will be supportive for u. S. Financials in particular, maybe not so much in terms of europe. But i think from an investment point of view, you have to invest with the tailwinds, not against them. The tailwinds are in those sectors. So the trend is clearly your friend. You do want to be diversified what if this trump rally comes to a screeching halt and volatility picks up again. Where do you want to be invested to buffer those effects . Cash . Gold . Depends whats causing the volatility in the first place. As we know, bonds over the past few years have been very good as a hedge against slow growth, disinflation, deflation. If the trump rally comes to a grinding halt, bonds are the place to be. If were seeing volatility as a result of inflation coming through, then cash is going to be your friend. The vast majority of people now are still advising invest in equities. I dont remember anybody saying come out of equities, heading into the election there were people saying we have a larger portion of cash now. Hedging ourselves a bit. But when looking at the equity positioning now, there are also people questioning financials and how long that support really can continue before we start to see a turn there. Are we started to look a bit overdone in financials in. We are in the shortterm, again, it comes down to the fact that you will have that tailwind there. Now, people are talking about, you know, the doddfrank act just being put to one side. Clearly that is not going to happen. At worst youll see a moratorium on new legislation in terms of the financial industry. But thats the environment in which we got at the moment. Again, if you look in terms of u. S. Financials in particular, the correlation between that and the yield curve is pronounced. Again, you would expect that the environment weve got, that yield curve will be steepening. How about basic resources . Talking about valuations, talking about some bigger metals and miners, like glencore. So many thought glencore was going bust a couple years back. Now its recovered massively compared to where it was a few months back. Same with valley and their evaluation. Will we see money pumped into these bigger basic resources stocks . Slightly different. We were expecting the dollar to remain on the firm side, that hasnt been good for commodity prices. If you talk about commodities, you have to factor in whats going on in terms of china. You know, its always been china is doing fine, no . Possibly. If you believe the data. Clearly, again, theres a lot of expectation out there that theres that housing situation in china is very, very overblown. I think you will start to see a bit of a slowdown. Not expecting the hard landing that maybe some are. But china has historically been the marginal consumer of a lot of these commodities. We think the economy is slower than the 6. 5 that the government statistics are showing us. For many investors, the missing piece of the puzzle is Earnings Growth. The u. S. Weve seen a comeback of that after five quarters of earnings recession. In europe tepid Earnings Growth. Can a trump trade spur more Earnings Growth and a margin pick up . Thats more difficult. Depends where his policies go. The rhetoric at the moment has been very antitrade. Antitrade is not good for equities typically outside the u. S. You think about europe, germany, its all about exports, particularly in terms of cars. You expect in that sort of environment Earnings Growth will be more difficult to achieve for european companies. Offset against that, probably going to get dollar strength, euro will be weakened that will help the exporting position. We have more conviction in the u. S. , u. S. Earnings profile than elsewhere. Justin, we have to leave it here, thank you very much for your time. Justin says go with the trend, go with the trump trade. Trend is your friend until the end in the bend. Email the show, get involved. Streetsignseurope cn streetsignseurope cnbc. Com. We have plenty coming up. The French Elections, talking about that. Follow us on twitter with comments streetsigns address cnbc. louisabojesen. And carolincnbc. Can the former economy minister make his mark on the italian election or will france make a hard shift to the right . Well discuss coming up. Welcome back to street signs. Sodexo offset weakness in france with solid sales in north america and the uk. The company suffered from strikes, security fears, floods in the home market. Sales were in line with expect takes coming in at 22 billion euros. The ceo told cnbc he believes the recovery is underway in the company oops home market. France had an effect on the growth because france has been effective by the terrorist attacks, by the strikes. By the flooding in spring in paris. Hopefully the situation will get better this year and will recover in terms of tourism which is not the case so far. Its an Election Year as well it will probably wait on the overall activity. Hopefully well have establishization in france. Aholddelhaize reported a 25 increase in net income for the first period. But the operating number fell short of expectations amid weakness in the u. S. Firms grocery business. Aholddelhaize warned deflation is likely to continue in the u. S. Food market through the fourth quarter. Premiere oil cut its expenditure forecast for this year but they expect to beat the budget by 10 thanks to the selloff in sterling and cost cuts. Tony durant said he is continuing to deliver operationally despite a challenging commodity markets. Julius baer reporting a 9 increase in assets for the first ten months of this year. Switzerlands third biggest bank said net new money rose by 4 . And Zurich Insurance doing well today. Lets look at the stock. Up by 2. 5 . Zurich has upped its dividend target. They are aiming for a payout ratio of 7 5 of its net profit. The Swiss Insurance firm announced it is aiming to realize 1. 5 billion of net savings by 2019. Analysts called this optimistic and ambitious, but hopefully realistic, too. Shares in investec have been valleying aft rallying after the firm raised its dividend prospect. And Specialty Chemicals and sustainable technologies firm Johnson Matthey is upping its dividend. The ceo said currency moves boosted the latest set of earnings. Brexit in the shortterm from a currency point of view works for us. Like many exporters and foreign lots of trade overseas, its translational benefit. Still longterm questions about what brexit means into the longterm, well wait and see. European car sales fell by 0. 3 in october. Volkswagen, renault were the leading underperformers. Sales now up by 6. 9 year to date. Most of these auto makers just trading slightly in the green. The auto sector was another section of stocks to enjoy a trump traction. Phil lebeau has more. Reporter in a city of stars, no expenses spared rolling out dream cars. Take the 323,000 mercedes cabreloet. Mercedes expects strong sales of a rich vehicle only the very rich can affordment. We are only building 300 worldwide and bringing 75 to the u. S. We will have a situation that we already see where we have more demand than we actually have cars available. But i think thats the right strategy. Reporter l. A. Remains the center of americas luxury vehicle market. But its become the largest market in the country for pickup trucks, which is why gm chose l. A. To roll out the new chevy colorado zr2. We know that theres a lot of people who want to go off road. They want a capable vehicle. I can tell you this is seriously capable. Reporter amid the new models, automakers face questions about doing business in the Trump Administration. Will fuel economy standards drop and will cars built in mexico but sold in the u. S. Face a 35 tax . Its a move that could cripple auto sales. What the automotive business is is an International Business of parts, manufacturing, logistics, trade. Its an ecosystem. Its an ecosystem that works quite well in america. We make a lot of cars here. We make a lot of cars across the globe. I think the ecosystem works. The consumer is not looking at uncertainty when it comes to automakers. Theyre focused on what is being offered today. Whats out there on their showroom floors. Reporter one thing is certain, demand for luxury vehicles is not slowing down, especially highend suvs. When you walk the floor and talk with Auto Executives at the show, it is clear they plan to feed americas appetite for bigger vehicles, which is why well see more suvs debut at upcoming auto shows. Phil lebeau, cnbc business news, los angeles. The bank of japan has unexpectedly announced its maiden fixed rate buying operation under its newly revamped Monetary Policy framework in a bid to offset rising treasury yields, the bank said they will guide the yield to 0 , with the aim of combating low inflation and sparking growth. Look how much it is yielding. Just fractionally in positive territory what a yield. The bundesbank warned that german banks may not be prepared for higher rates. Germanys Central Bank Says the countrys lenders are robust but may be underestimating risks. Banks hurt by the lowrate environment have been rallying on the prospect of higher rates, but how could a rate rise pose a threat . The low Interest Rates are good for the banks in the sense that the funding costs have declined. This is also part of the balance that we have to look at. But what is happening right now is, of course, that the loans that the bank issue to the real economy and to households borrowing, these loans have low Interest Rates what we see in germany is these loans have an everincreasing maturity. We now have a much higher share of mortgage loans, for instance which have a tenyear or longer maturity. These loans have a very low Interest Rate. Of course the question is what happens to the banks if funding costs start increasing. That might be an issue for the bank. This is an Interest Rate risk bidding up on banks Balance Sheets. How concerned are you about the recent increase in yields after trump was elected as the president , we see bond markets catching up with the idea that he is starting to spend, inflation will increase is that something youre worried about . The election is a week ago. Im careful to really talk about forecasts. Markets have to reprice this. I wouldnt talk about the effects of the election on the macro environment. Its way too early. What we can say is future invest in Interest Rates will have some of the implications that i talked about. For instance, that the funding costs for banks will increase and that might be an issue for the banking system. In particular, many institutions, many banks are hit by the same risk at the same time. What individual institution can deal with may not be the same for the system as a whole. Now, barack obama has arrived in berlin german magazine, the u. S. President appealed for stronger cooperation in the future between the United States and europe. Obama will be dining with the german chancellor who he described as his closest international partner. Theyll be dining later tonight. Italian Prime Minister matteo renzi said if he loses the december 4th referendum on constitutional reform he Wont Take Part in any attempts to form a temporary or technocratic government. Having already promised to resign if he loses the referendum and later retracted that renzi said he was sure the electoral system would change whatever the outcome. As it stands, renzis yes camp is behind in 32 polls published by 11 different pollsters. But should we still believe those polls . After brexit . After trump . Should we be believing the polls in france . We have a French Election coming up. Emanuel macrone has thrown his name into the hat. The former economy minister who quit under president hollande to run as an independent joins a congested list of names vying for the countrys top job. Alan jupre remains the favorite. Maureen le pen is expected to also run. Lets talk about more from france. Emily mansfield is here. Good morning. Good morning. Just assuming that not everybody is up to speed on French Elections. This is the first time theyre holding what is the equivalent of a primary in the u. S. For the center right quequivalent to th republican party, right . This is the first time theyre holding open primaries on the center right and center left. So theres more uncertainty than usual. We dont know yet who the main candidates will be for those two big mainstream parties. We have the republican primary later this month, and then the next in january. And what are people going to be voting on . What are the main topics that are getting to people . The big issues at the moment in france, theyve had three major high profile terrorist attacks in the last 18 months. So terrorism and how to improve security is top, and addressing immigration and what Marine Le Pen discusses, the idea of secularism is important. There is also the economy, but thats taking a backseat compared to the identity politics at the fore. Is there a consensus in france that le pen can pull uf what trum r trup did in the u. S . It was said they are not organized the same way as the republicans are in the u. S. So you cant draw the same similarities. What do you think . I think we have to be careful not to have a knee jerk reaction after seeing trump win and assume le pen will also win in france. Its a different system. The polls have their own horrible moment of realization after the 2002 election when they didnt predict that martin le pen would reach the second round. Recent elections have been quite close. Given the high turnout in france, its more like 80 compared to 60 in the states, the likelihood of a sudden surge of voters not expected is not quite so strong. More importantly france has a tworound election. Which means in the second round, the winning candidate has to get over 50 of