The best year since 2010 with energy as the standout sector helped by a 50 jump in crude. Europe treads water amid thin holiday volumes. And Johnson Johnson considers breaking up actelion as part of its takeover plan which it values at 30 billion. Good morning. Welcome to street signs. The last trading day of 2016. This was the picture on wall street going into the last day. A bit of softness. Dow jones industrial average getting further away from that 20,000 mark. The s p 500 closing just barely in negative territory. The nasdaq composite lower by 0. 1 . Yes, these are modest losses. You must keep them in perspective because its been a rally, especially since the election results. Well take a closer look at that in a minute if we can hone in on the dow jones for the moment, year to date this index is up 13. 7 . The outperformer among the s p 500 and the nasdaq. Lets hone in on the nasdaq. Higher as well by neighborhood of 9 , just shy of that at 8. 5 . We continue to watch the big names in this sector, but also with the likes of nvidia making near 200 gains this year. In europe, a quiet session. A lot of traders rushing out to celebrate the new year. A fair amount of red on the board behind me. Weve been keeping an eye on the ftse 100 to see if it will hit the closing record high. Doesnt appear to be the case this morning, off by 0. 14 . Lets get a shot of how the uk market fared on the year. Its a real outperformer. Globally this index is higher 14 . A lot of that down to the postbrexit strength taking a cue from the weaker sterling. On the session, a bit of weakness, off by 0. 14 . Despite the ftse strength, you cant lose sight of the gains on the german main market. The dax is holding out on its own here, higher by 0. 65 . Yes, a bit of weakness today. Overall investors have been relatively relieved given the Political Risks weve seen towards the end of the year. Thank you. Talking about markets and performance in 2016 in a moment, in other news president obama has ordered sanctions on two russian agencies and the expulsion of 35 diplomats. The state department announced the closing of two russian compounds in new york and maryland that they say were used for intelligence activities. President elect donald trump issued a written statement saying its time for our country to move on to bigger and better things. Nevertheless in the interest of our country and its great people i will meet with leaders of the Intelligence Community next week in order to be updated on the facts of this situation. Ron allen has the latest. Just as i told russia to stop it reporter today president obama made good on that promise to retaliate. Targeting russias top intelligence agencies with sanctions, officials in Vladimir Putins inner circle but not the russian president himself, all but singled out by president obama. I told him to cut it out or there would be consequences. Reporter freezing the assets of Russian Diplomats named, banning business contacts with americans. Russia also accused of harassing u. S. Diplomats abroad and espionage operations in america. Weve seen verbal and physical harassment. Weve seen them try and revoke their credentials, try and detain them. Reporter 35 Russian Diplomats in the u. S. Expelled, just 72 hours to leave. Closing two russian government compounds, rec centers allegedly used for spying, shut down as of noon friday. In a statement, president obama saying, all americans should be alarmed by russias actions. The actions today were designed to make very clear, we will respond at a time and place of our choosing. Reporter also targeted, two alleged cyber criminals accused of stealing millions from american banks and personal data from ecommerce sites. The u. S. Also declassifying information designed to help computer experts block more hacking. The russians dismissed it all as another sign of aggressive Foreign Policy, to deal a blow to the incoming administrations Foreign Policy plans. Earlier president elect trump again rejected allegations of russian interference in the election. I think we ought to get on with our lives. Reporter while trump may have the power to reverse todays sanctions, that may prove politically difficult with republicans and democrats calling for tough steps against russia. He has a senate and house leadership that have also supported these actions. If he backs down and he does this, it will be perceived that it was done for putin and at putins request. That was ron allen in washington. Our next guest Sees Opportunities in the Real Estate Market next year but suggests the oil and mining sectors should be avoided. Joining us is roger jones, head of equities from london capital. We are taking stock of 2016, looking for areas of opportunity for 2017. Flesh out the case for us. Real estate, we are meant to be seeing Rising Interest Rates . Probably one more controversial than most in terms of total return from real estate stocks next year, its too attractive to ignore. You also have real asset backing as well. In times previously when Interest Rates have gone up, real estate has done well. We have the leadup in very different times to financial crisis, we had a rising rate environment then. Into the mid 2000 s, and real estate stocks performed. I think in terms of where expectations have moved and where we got to now in terms of Interest Rates, expectations of hikes next year, that might well disappoint in terms of inflation hawks, and rate hike builds. So i think you have a situation where total returns for real estate can be attractive. Its one of those strange conundrums around real estate. Rates seen as things you want to avo avoid, Rising Interest Rates, by then you have hot assets to the fore. How do you play that in your book . Thats a very good point. In terms of how you look at real estate, the areas we dont like are the more traditional Real Estate Markets. We dont like retail or office. We like the structurally advanta advantage businesses, data centers, healthcare, big logistic aal warehouses as well. Those are the areas we think are attractive. Normally you get a better yield from these assets compared to real estate which are more difficult areas. Its interesting that you say avoid oil. Because investors are saying finally i can get back into the energy sector. Youre not convinced, why . In terms of the way im looking at it at the moment and the way ive seen t we have seen a recovery to normalization in these markets. However the overarching fundamentals are still weak. A lot of supply out there. That supply base is changing. Sure its going from opec supply to more u. S. Shale. Its still out there. The markets are awash with supply. This is not just the oil markets, but copper, which is likely to be a surplus next year, iron ore. A lot of base metals. I think were looking at a situation where there was a massive overshoot in Commodity Prices. We have to normalize environment. But to go forward, we need a bigger recovery in demand to justify the amount of supply out there. So youve not been encouraged on data on the industrial front out of china and japan saying we could see an uptick in growth and therefore the miners this year . Thats happened in china especially. We had a big stimulus plan, end of q1 q2 last year. Thats starting to come through. Thats been a big restocking rally aspect. Weve seen this start to happen. This is driving prices. We also had measures out of china in tomorrows of Coal Production which were favorable in terms of the mining environment. The problem is now thats happened and the market being a discounting mechanism looking forward, i struggle to see that momentum continuing. It looks a bit mixed, the industrial message. So im remaining cautious. Talking about different sectors here. With real estate it feels much slower to move, either to the upside or down side. Commodities and energy, you look at the size of the rally in brent prices, 50 . The performance for glencore has been extra oordinarextraordinar. When you call for caution, what you are seeing as the outlook . I would say in terms of stocks like glencore, obviously a huge issue this time last year about the financial viability of this business. Different than where we stand now. Absolutely. Thats changed with Commodity Prices where they are. The problem i have with it all, when i look at those fundamentals and Commodity Prices, the move seems slightly speculative. We see a lot of stock being driven up in the lme. We saw after the election, if you look at copper price, an immediate 20 rally, postu. S. Election story, neimmediate 20 rally in the copper price. I think caution is warranted. Oil is slightly different. In terms of the expectation for oil Going Forward is not just 55, 60 a barrel oil, i think we need higher than that to get Free Cash Flow into the bigger integrated oils, to see them having Financial Flexibility again. Roger, thanks for fleshing out the case for us. Roger jones staying with us. I want to talk about the valuation discount on european markets which you have been talking about. Plenty more to come with roger. Lets talk about some deals out there. Johnson johnson mulling a deal with actelion which would divide the swiss biotech firm into separate entities it would create a newly traded public r d division and a structure that would allow j j to make a cash acquisition of about 265 per share. Actelion shares have staged a sharp rally since november on m a speculation. Bank bailout atlante has made an offer for three small italian banks. Italy rescued the banks with nearly 4 billion euros last year but has struggled to sell them as required by european regulators. Got some new years eve plans . Very sadly, a quiet one. Thats okay. I saw the uber numbers expected, thats not something i will be fighting for. One of the places to be is timing square in new york. I must say, having been in new york for new years, ive been not brave enough to take on times square. They always have rock concerts, pop stars performing. I think youre better off watching on tv. The ball descending which marks the time we tick over to the new year. Preparations are underway. What time is it in new york . 4 13 . Yeah. Do you have big plans this year . No im at home with a bottle of champagne. Thats the best way. Let us know what youre up to for your celebrations. With the xfinity tv app, anything with a screen is a tv. Stream 130 live channels. Plus 40,000 on demand tv shows and movies, all on the go. You can even download from your x1 dvr and watch it offline. Only xfinity gives you more to stream to any screen. Download the xfinity tv app today. Good morning. Welcome back to street signs. Lets give you a shot of how asian markets closed out on the last trading day of the year. Mixed picture on the map. Mainland shanghai composite closing higher. The india main market on the green. On the down side, the australian main market off 0. 6 . This despite hitting a fresh record for the year in the previous session. Weakness in indonesia and people focusing on the nikkei because we did see some weakness in the nikkei, largely down to the moves we saw in the dollar yen trade. The dollar hitting a 15day low against the yen. Lets look at this chart year to date. The nikkei 225 did manage to eke out a gain for the year. Gains of 0. 4 . That would be the fifth Straight Year of gains for the japanese equity market, the longest winning streak since the late 1980s. Emerging markets into the new year shrouded in uncertainty as donald trump assumes office in january. Seema mody looks at this in 2017. Reporter 2016 was a banner year for emerging markets until the election of donald trump who cast a cloud of uncertainty over emerging markets. No matter which policies come out of trumps cabinet expect 2017 to be a challenging year for emerging markets which are already facing tough headwinds from Rising Interest Rates and a stronger dollar. Here are three predictions for the new year. If the president elect goes forward with protectionist trade policies and a tariff on foreign goods t would threaten some emerging countries Competitive Edge as a destination for cheap labor. Specifically china with analysts forecasting a nearly 4 decline in the worlds second largest economy. The other country likely to get hurt is mexico, which is a big trading partner with the United States and has already been hurt by the depreciation in its currency, the peso. One bright spot in the emerging world, russia. Rising oil prices and a friendlier relationship between trump and putin could draw more investors in. Hsbc echoing that sentiment calling russia the cleanest play in emerging markets next year. For cnbc business news, im seema mody. Is it a bird . Is it a plane . Is it an Amazon Warehouse . The ecommerce giant is turning to the skies for its latest project winning a patent to develop airships equipped with drones to deliver packages. The Airborne Fulfillment Centers would fly at around 45,000 feet and could provide a base for delivery drones. The application was logged about two years ago but only just discovered bay Tech Research firm. Back on land, the trouble may be brewing. The founder of run dmc has filed a lawsuit against amazon for the alleged sales that infringe the dmc trademark. Snap is telling investors it should be considered in the same class as apple and facebook. That is according to the wall street journal. The paper also reports that s p snapinc is trying to reassure investors it will be like tw twitter, and languish. It looks like snap is trying to dispel confusion among investors. Do they want to get a message across that theyre not a onetrick pony . The whole idea around twitter is tweeting. One product that they came to market with. Snapchat has come to the market, its easy to look at it as a company that you just post pictures that disappear or videos that disappear. Actually its bigger than that. I was speaking to an investor in the company a few weeks back saying theyve been laser focus the on monetizing this from the start. Snapchat has introduced ads 2014, early on in the companys life cycle and has been bringing brands on board and showing them you can use this product to reach a lucrative millennial audience. Lets put some color around the founder, evan spiegel. I know hes engaged to an australian supermodel, meant to be a young 26, but is he a visionary . A few voices have seen him like noon a zuckerberg or a steve jobs. The new thing is spectacles, glasses with a camera in them, but you can only get them from a dedicated vending machine. Are we going to miss the fact that we dont have access to them . Not at all. Its so close to an ipo, bringing out the hardware product, but its the whole mystery around it, the hype around snapchat and even spiegel as a visionary, he can pull these innovative and bold moves. Thats part of the appeal to snapchat for investors, is this a founder or ceo who will take this company on, make big, bold bets like facebook and Mark Zuckerberg has. Lets bring roger back into the conversation. Tech, talking about testing the market appetite for a company, do you like tech in 2017. There are mixed segments to it. In looking at some Semiconductor Stocks which are had strong runs t looks as if mobile phone data and handset data may disappoint. Pc sales, laptop sales are looking better. Its a mixed picture. It comes down to very much stock specifics in terms of various different areas, the internet side of the business as well. And the more i suppose franchises coming through. Still a lot to be proven. For many of us, we think about technology, we think about u. S. Companies and the access to investing in these stocks via the nasdaq. I know youre cautious, this is contrarian because investors are saying they want u. S. Stocks and are cautious on europe. But youre talking about a discount in the european stock market. Yeah. Absolutely. To come back to that, in terms of the u. S. , i think in terms of the discount, its a wide discount as historically has been the case. However theres very good reasons for that discount in place. Im saying the u. S. Is very expensive compared to europe, because when you risk adjust that, its more moderate. Where this risk comes from in europe is Political Risk. We have the dutch elections in march next year. Then closely followed by the french, german elections. That wont go away. The big issue with that ultimately is this Political Risk comes into question sustainability of the euro, the Monetary System in europe. Thats not something that will go away in the shortterm. However, coming back to the u. S. , where that could change is if the u. S. Expectations, currently very, very high, and most people are bullish in the u. S. Do suffer a setback. Were at the stage now where everybody has been in the u. S. If 2016 has taught us anything, we have to be very careful of central positioning, thats why we saw this big first half, second half 2016. Weve been talking so much about the european Political Risks coming up in 2017. Yet when you look at the real shocks 2016, not only did markets move higher, so why would 2017 be different . In terms of all the risks and investors ability to deal with risks has been diminishing substantially. However that doesnt mean they dont build up in the system. So we have a lot of risk out there. We are not sure what straw will break the camels back. But i would say, just one more thing, please, ultimately within that is Something Like the Monetary System, Monetary System like the euro coming under pressure being questioned and that would be a big issue. I hate the politics for investors, so uncertain, so difficult to try and trade, but somet