Welcome to worldwide exchange. Ross is away. Im kelly echs. These are your headlines from around the world. A sharp selloff in europe follows with asia falling lower. Pmi data out of france and germany shows private sector activity slowing more than expected. The Chinese Market is hit the hardest as fears of the crackon and pbocs trading funds show concerns over trading privacy. The Insurance Industry improving and Insurance Agency reed sees a 60 rise in earnings. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. Welcome to the program this morning. Before i bring you these numbers right away, eurozone flash, pmi services estimated coming in well below expectations at 47 versus 49 expected, this all for the month of february. These pmi surveys are one of the earliest reads we get for activity across the eurozone. Many hopes for activity bottoming out in the quarter potentially thrown a bit of a blow given these numbers are quite weaker. The euro dollar falling another 0. 6 . The fomc yesterday was adding to weakness. As you can see there, it was ticking below 1. 32. 1. 3199 is the level for the euro this morning. The flash composite pmi, 47. 3 versus the reuters forecast for 49. My understanding is that was services. Interestingly enough, if this reuters figure is right, that they are both the same for the services and pmi, about a appointment below expectations. So the point is, at these levels, activity is not only contracting, its contracting at a faster pace. Well dig through the numbers and find out where the weakest spots are, but it looks like france is one of them in particular. On todays show, were days away from italys pivotal elections. Well be on the ground in milan with the latest. Well get a view about how the countrys economy could be transformed as an exclusive interview. Were hours away from retail giant walmarts earnings. Well hear what investors expect head of the companys reporting results in light of a weak start to february. And shareholders vote on rothschild about replacing the board. Well also get a preview of this likely ending of this battle of the titans. And japanese Prime Minister shinzo abe is heading to walk to talk to president obama. Just what kind of reaction can abe expect from washington . Well give you a preview. Before all that, lets recap whats happening in markets. Weve seen more activity, in fact, higher volume over the last couple of sessions, really, than weve seen for much of the year. The volume is coming on a selloff. U. S. Markets fell yesterday following the release of the fed minutes. It was the worst day of the year for the s p and nasdaq. As you can see, shedding 108 points there, a rare triple digit decline this year. Energy and material stocks were the worst hit. All ten s p sectors did hit the day lower. Volatility on the rise. The vix rose nearly 20 on this session. The selloff has continued overnight. The shanghai composite, the australian markets taking it on the chin. Will i sixuan joins us from singapore. Thank you, kelly. Fears of an early access by the fed rocks sentiment here in asia today. The nikkei pulls back 1. 4 from its 52month high. Investors remain cautious ahead of the decision on the next boj chief. Construction equipmentmakers were down after caterpillar reported slowing sales for the quarter ending january. But batterymaker gsyuasa reported a fix over longterm battery problems. The shanghai composite tumbled to 3 today. Commodity place were under a lot of pressure today after the u. S. Fomc minutes raised the possibility of a qe asset. Development and cementmakers rose. Financials said their losing streak on fears of monetary easing. Shares in the hang seng fell 1. 7 . Belle international fell 15 after learning the profits would be at the lower end of its forecast. The kospi ended lower by 0. 5 . Steelmakers took the worst hit. The asx 200 lose 2. 3 . The fed minutes took a toll on aussie miners ending well in the red. Index action on the sensex now shedding 1. 5 . Back to you, kelly. There wasnt a lot of green behind her on the board there and there isnt much green on the board behind me here. Maybe about a dozen stocks across europe this morning in the green. Whats interesting is this follows a weak session yesterday, too. You can see some people as Dennis Gartman put it on squawk box this morning deciding something has changed here. Now, the cac 40 down 1. 75 today. This follows weaker than expected data on french pmi data. Ibex 35 taking a hit, down 1. 8 . The xetra dax not much better and this has been the outperformer for the last couple of sessions. Same goes for the ftse. Were seeing a magnitude of selloffs. Here is a couple of top stocks, though. Theyre trying to buck the trend here, bae systems adding 1. 4 after results came in better than expected. Swiss re also moving higher 1. 7 after a special dividend and Fourth Quarter income beat expectations. Similar gains here for capgemini. Ul almost 1. 74 . Akzonod giving up about 5 , certainly not helping performance across the markets this morning. Lets go back out and stay a look at bond rates. Auctions this morning, were waiting on spain, france and the uk in particular. The uk yield for the tenyear is 2. 15 . We are seeing it come in just a little bit. A different story for italy and shape, though, which are seeing yields move a little higher. Italy moving towards that 4. 5 . Spain, 5. 234 . Well bring you the results in about half an hours time. A worst than expected german auction yesterday where yields were off 1. 6 . Finally, a quick look at forex, as we know, there is so much in the markets as of late. Dollar yen, 93. 38 ahead of president obama and abes meeting tomorrow. Sterling, this is interesting. Now decidedly below the 1. 52 mark given up another 0. 25 today and finally the euro dollar, giving up about 0. 6 . 1. 32. In fact, we did dip below that 1. 32 level just after the pmi data. Earlier on cnbc, ian hart of Strategy Research played down the market selloff. He says were seeing a normal correction and theres still reason for optimism Going Forward. Almost 10 over the last three months. Its very difficult to sustain that. So i suspect well have a little bit of pushback. But, you know, if we look further out, if we look to the next year, were still very positive that equities as a whole will do well and europe within that will be one of the best performing areas. Here on set with me now is Peter Oppenheimer from goldman sachs. Welcome. Thank you. Do you agree with ian there . I do. I think thats right. I think the prospect strategically are still very good. They look attractively valued relative to other asset classes. But its not that surprising that were seeing a bit of a setback. We move to a neutral position. As we thought, the very sharp rise weve seen in equities really moved a little bit ahead of the fundamentals. So your recommendation is to buy into the weakness, then . We would for people take a view for 12 months or beyond. What are the key factors in your view why european stocks are headed higher . Well, i think europe and all stocks are headed higher in terms of their trend and thats supported by, as i said, attractive valuations. We think that the Global Economy is recovering, albeit slowly, and that pace of acceleration is likely to increase through the year and into next year. Profits around the world are rising and companies have very, very strong Balance Sheets. All of that is in the context of accommodative policy. And the combination in terms of the trend should be very positive for equities. But two things i push back and wonder first of all, these pmi surveys dont point to a worsening than a pick up for europe. Secondly, if youre talking about monetary expansion levels, if anything, European Central bank stance is looking tighter and tighter given what everyone else is seeing. Well, i think that first of all Central Bank Policy in aggregate is likely to be very supportive. Inflation is going to be low and credit support is still very positive, even in the eurozone area. The weakness that were seeing in the european economy itself, again, shouldnt really be a surprise. Were expecting the eurozone economy to contract another 10. 2 this year. Thats not that far away from the consensus. We expect that you get continued divergence within the eurozone and germany, which had a very soft patch at the end of the last year is picking up and thats supported by the pmi data whereas other economies in europe are stag nating or weakening. Wouldnt it be easier if they were all stag nating or weak . Even if germany is weak, the central bank can come in and say we have to be more accommodating. But if theyre holding in okay, that puts more of the onus on the periphery or even france, that means the economies would like more saurt and might not get it. But this divergence in europe is part of the recovery process. Germany needs to see stronger than after growth at other countries effectively deflate in order to get these big imbalances to reverse over time. And thats really part of the recovery process. We dont think that the european economy itself needs to be strong for european equities to perform well. Lets face it, last year, economies in europe were in recession, profits declined last year. We have lots of concerns about politics and equities ended up doing very well. And thats largely because they were supported by attractive valuations and investors got too negative. Kind of a scary point. Peter, stay there. We have more thoughts coming up in peter in just a moment. But first theres another reason why stocks may be more in europe and thats the italian election owes sunday. Mario monti says german chancellor Angela Merkel doesnt want italys center left party to win the elections this weekend. The outgoing Prime Minister said merkel feared a consolidation of parties from the left, especially in an Election Year for her. The german leader has so far refrained from commenting on the election. What does all of this mean . Julia joins us now from milan. Julia, i have to confess, i dont really understand what montis point is here. Well, you know, we have to give it a bit of context, kelly. This was in response to something berlusconi said about the possibility that mario monti had already signed an agreement with the Democratic Left party, the Democracy Party mr. Bersani with the agreement with Angela Merkel. I dont think mario monti has hidden the fact that hes concerned about the influence, particularly the power of the union on the democratic party. If we look on the german side, the foreign minister said what they want ultimately is a party thats going to continue with the reforms, thats going to continue with the fiscal consolidation. Im not sure theres anything new here. Perhaps an argument, too, where Angela Merkel is concerned, the power she would least like to see in power is the in a few months time. Weve talked a lot about politics. I want to get a sense of, too, the voice of the business in terms of what they need to see after this election. And i spoke to the ceo of the largest retail bank here in san paolo and we talked about this idea of reforms and a mandate for change. Germany arguably had schroeder. I asked whether perhaps the most influential and important italian doesnt actually sit in this cup, but he sits at the head of the ecb. Listen to what was said. Mario draghi has proved fantastic leadership at the ecb. And i think we have to be very grateful for his commitment and enlightened leadership because he has perhaps gone beyond what is normally expected from the head of the ecb. And his speech in london was definitely a discontinuity point. I think he is what he impersonates the kind of leadership that we need in europe, someone that is, i would say, multicultural and that has a very clear perception of the global reality. While most of politicians in europe are purely domestic and, therefore, do not fully appreciate that we are competing in a global world. However, mario draghi sits in frankfurt and we need to implement reforms here and italians have to take charge of that, for that. And its very interesting because youre referring to Margaret Thatcher in the uk and schroeder in germany. In continental europe, perhaps it is easier for center Left Coalitions to push forward with Structural Reforms because they can get the buyin of a larger segment of the population. Do you think by doing what mario draghi has done hes actually given italy the stability no matter what happens at the election in order to pass through these reforms . He controls the market, in a sense . Well, that is a very important form of insurance. The results are another one that is purely domestic. A balanced budget is not Wishful Thinking or is not just the commitment of the current government. It is now part of a load that has been prom muulgated that is very strict constraint to any future government, as well. So i think that we have a multi publicity of insurance forms that will prevent italy from derailing from a path, a trajectory of sound policies. So would you say that the btv bund spread right now is an accurate reflection of the domestic risk here . I think that the spread can fluctuate around a certain value, but i dont think it was going to get out of control any longer. I am pretty confident in this respect. So you dont think italy poses a risk to the eurozone Going Forward . Well, italy in itself, because of its size and integration with the european economy, is in itself a potential risk. But, frankly, i think that the risk is currently under control and my assessment is that it will continue to be under control under the new government. We also discussed some possible scenarios after this weeks election which is really interesting. And ill bring you that later on in the show. Stick around for that. Back to you, kelly. Julia, thanks very much. I also understand theres going to be a little bit of football that we hearut our next pit, so well stay tuned for the market implications of that, as well. Telecom italia is reportedly delaying a launch for hybrid bonds over investor concerns uncertainty. Investors especially from germany and france are worried about the outcome of sundays elections. And coming up on the program, Prime Minister shinzo abe has set off on his trip to the u. S. Will they have a bumpy landing in washington . Well discuss when we come back. To grow, we have to boost our social media visibility. More likes. More tweets. So, beginning today, my son brock and his whole team will be our new senior social media strategists. Any questions . Since we make radiator valves wouldnt it be better if we just let fedex help us to expand to new markets . Hmm gotta admit thats better than a few likes. I dont have the door code. Whos that . He won a contest online to be ceo for the day. How am i supposed to run a business here without an office . [ male announcer ] fast, reliable deliveries worldwide. Fedex. To deposit checks from anywhere. [ wind howling ] easier than actually going to the bank. Mobile check deposit. Easier banking. Standard at citibank. Makes it easy for anne to manage her finances when shes on the go. Even when shes not going anywhere. Citibank for ipad. Easier banking. Standard at citibank. Europes largest employer allainz has reported better than expected q4 forecasts. Axa shares, meanwhile, taking a hit this morning after the french insurer reported a unexpected drop in earnings. Stephane pedrazzi following this story for us out of paris. Stephane, what can you tell us . First of all, the numbers for the last year, they were below expectations and significantly because if you look at the revenue for the last year, 90. 1 billion euros. Its about 4 billion euros below expectations despite the full increase in the year. The unit had a 3 decline last year, which was offset by the 3 rise in savings as well as a rise in property and casualty. If you look at the net profit for the last year, it was almost flat from 2011. However, 2011 was boosted by some exceptional items by a one off capital gain. And if you remove this one of capital gains, actually, the numbers were sharply increased last year at axa. Especially the profit from operations. But still, a gain, it was below expectations. So what do you do when you report numbers which are below the consensus . First of all, axa is going to increase its Cost Savings Program to reach 1. 7 billion euros for the period 2011 2015. And it has decided to increase its dividend from a year ago. Stephane, as you say, nevertheless, shares are down 2 . Not even enough to boost investor sentiment. Thanks very much for that. Peter oppenheimer still around the table here. Earnings, does anything matter other than what we were saying earlier about monetary stimulus . I think earnings do matter and this year we expect earnings to be rising even in europe. They fell moderately last year and the year before. And that recovery in europe we think is largely driven by a pick up in floebl growth. We were discussing before about how European Economic activity itself matters less. What are your favorite sectors here . We like insurance. We think its a relatively safe way to play exposure to financials. Less regulatory risks, more positive drivers to earnings. Theyre a positive beneficiary, rising bond yields and but if we take, for example, german bunds to keep rising . Were starting to see even as they inch back towards that 1. 7 level, they retreat, whether its a selloff here. Well, theres huge demand still for bonds and that will limit the extent to which bond yields rise. On the other hand, we expect growth, particularly in germany, to pick up and ultimately german activity to grow above trend over the course of the next 12 or 18 months. And that will push yields up a little bit, i think. But not very significantly and the rise, i think, will probably be fairly moderate. And will coexist with moderately rising equity prices. This is a good rise in bond yields because germany, like the u. S. , like the uk, tends to see bond yields increase when theres the inflationary view that everything is working. Today, maybe not one of those days, though. R