Good morning. Very warm welcome to Worldwide Exchange on cnbc. Im wilfred frost. Im susan li in for sara eisen. Lets get to the Global Market picture, coming off a day where the dow ended ets eigits day losing streak. T it was financials bouncing back and leading the charge to the upside that allowed that recovery. Today we are flat in the premarket. A bit of red for the dow and s p. The nasdaq in the green. Yields recovered from the lows, back above the 2. 4 level. Sitting at 2. 409 today. Yesterday we were up around 2. 2. 4 2. 42 . So slipped a bit over night. The tight correlation between what the tenyear yield is doing and what bank stocks are doing has been extraordinary to see. As yields moved higher yesterday, as did banks, that dragged the rest of the market with it. Lets check on asian equities this year. Asian trading off the end of the dow losing streak. Minimal gains across the board. Saw japan up 0. 1 . The hang seng advancing, shanghai lower by 0. 3 . Asia, we finished the session intact given that were expecting the article 50 letter to be delivered today. Europe early on in the wednesday session. Lets check in. As you see, positive. I feel this brexit talk and expectations have been priced in. Absolutely right. We all knew the invoking of article 50 was coming today. Brexit itself not a factor in european trade. Wall street gains not a factor either for asian or european trade because it came off of two days of gains already. Not playing catch up so month. The month to date picture for asia and europe much better than the returns state side as we near the end of march and the end of the quarter. Lets look at the broader markets. Oil prices coming off the back of a 1 or so gain. Another three quarters of a percent today. Up 0. 7 for wti. 48. 7. Dollar boards, a bounce back for the dollar up about half a percent. Up slightly today. Not doing too much. Pound had been lower. Its now flat. Essentially the dollar slightly stronger today after half a percent of gains yesterday. Still down for the month. This is a late end of month slight rebound for the dollar in what has been a surprising slipping really this quarter and this month. Pound back up to 1. 24. Lots to watch out for today. Data on the housing sector. More fed talk. February pending home sales are due out at 10 00 a. M. Eastern time. Then chicago fed president charles evans, boston fed president , eric rosen grin, and San Francisco fed president John Williams will be in front of the microphone today in an interview on cnbc yesterday, Steve Liesman asked fed vice chairman Stanley Fischer if the average fomc member forecast for two additional rate hikes this year is just about right or if the markets should prepare for something else. Heres what fischer had to say. That seems to me about right, that is to say thats my forecast as well. But, yes, you have to be certain you know for sure that you dont get everything right, particularly about the future. You need to think about what happens if the economy is growing more slowly or the economy is growing faster. So fisher says the feds current outlook has not changed much from its march meeting. He also adds that the central bank is closely watching policies coming out of the trump administration. I think fed funds futures now pricing in a 53 probability of a move in june. The interesting take away of yesterday, not just from mr. Fisher but all sorts of fed speakers, the fed members were ability to influence the yield curve again. It wasnt just politics, that belief in the reflation trade lessened a bit over the last week, and we got a we are mirems is a twoway battle, and they want to raise rates. 2. 4 in yields, better than 1. 5, 1. 6 dividend yields on the s p 500. A lot higher than a year ago. The top Global Market story, british Prime Minister theresa may triggering a brexit, signing a letter to invoke article 50. The letter will be hand delivered to donald tusk in just a few hours. Todays action marked the start of the divorce talks between the uk and eu, twoyear process ahead of us. Lets discuss what it means for markets. Joining us is jim melon. Good morning to you. How are you . Doing well, thank you. Weve known this day was coming. Its finally arrived. In terms of the start of negotiations, is there downside for the markets in the shortterm or was this already priced in . I think the down side of the market is because its overpriced, but i dont think it has anything to do with brexit. The pound has been climbing a wall of worry recently. Today on the big day its bounced. I dont think the pound will come under particular pressure. I think the main markets are probably fully valued and deserve a breather. They will correct. But nothing to do with brexit. More broadly, all factors considered, youve been positive on the pound last couple of times youve spoken to us. With the levels were at today, is that still your view . I would think the pound will go up to 130 against the u. S. Dollar and rise against the euro given the problems in the eurozone, which persist despite a dead cat bounce. Its neither significantly overvalued or undervalued. To be quite honest, the uk economy continues to be quite robust and will again be the strongest growing major european economy this year. Very interesting. I was looking at the proxy plays over in asia, since were early in the european session, talking about the banks like hsbc, standard charter, they gained in the session. Seems like everything is priced in. I wonder if equity wise theres a better play out there. I think the storm around june of last year has abated. People realize its not the end of the world. The bemoaners have piped down, and we know a sensible conclusion will be reached with the European Union in due course. Im certain in two years time some principle will be established that allows free trade of a sort without tariffs and barriers. Freedom of movement will be preserved for high skilled workers. Everything will more on less remain the same. When i go to europe, i have to show my passport and change money. I dont think that will change. You mentioned you felt the euros recent bounce was a dead cat bounce. Lets talk about the future of europe and that side of the bargain. A lot of focus has been on the Political Developments and on countries in the north like france or holland who have had or are having elections in the shortterm. Economically, which countries do you focus on and where do you stand now about the future of europe . Its a good question on the euro, which i think is undervalued in the round and may go to 110 or 112 against the u. S. Dollar ain the relatively shortterm. That doesnt reflect the reality of europe. Though there has been a paneuropean recovery of sorts, gdp growth this year will be under 2 , theres tattered edges to europe. Greece remains a major problem. Portugal still remains a large problem. Italy doesnt have much traction. The italian also have an election as well. I dont know what will happen in france. I suspect le pen will not win. I hope she doesnt win. In germany, i think merkel will win once again. But the issue of italy is much more serious. I think theres a chance that italy will exit the euro, along with greece and portugal. Weve been talking about this since 2010. There was one euro crisis after another, and seven years on its still intact except for the uk sending that letter over to brussels. Every time greece has to be bailed out theres more and more reluctance for that to happen. The greeks have had nothing but grinding poverty. At some point theyll throw their hands in the air and say were not paying these debts, not paying the target 2 balances, we are a tourism driven economy. As soon as we devalue the dr currency, we can grow. Its lunacy that they can stay in the European Union, but its lunacy to stick with this currency which is the main reason why i wanted britain to leave the European Union. Its the one size fits all common currency that is at the root of the problems of europe and will remain so until they have a common fiscal policy. Lets talk about the u. S. The big rally after the election, were seeing a bit of a plateau. Where do you see the valuations of the u. S. Market . I just did a 7,000 mile drive around the u. S. Which was refeeling and fantastic. The middle of the crisis is not in crisis, but still lots of problems there in the united states. Now, we know u. S. Earnings are not really growing. Theyre overstated because of the inadequate depreciation. In reality u. S. Earnings are buoyed by corporate buybacks. The caseshiller ratio is at an alltime high with no earnings growth. So i think the u. S. Markets are overpriced, though there are bargains in such a fast var kva. Half the stocks since 1997 have gone off the market, been taken over or privatized. So much money is in etfs now, if something goes wrong with them, you could have a panic selloff. Arent you discounting the recovery though in the u. S. Economy . We will Consumer Confidence, the best since 2000. Housing has been pretty strong despite the Interest Rate increases. Arent you missing a part of the consumer picture . The u. S. Is a machine. Its a center of worldwide innovation and will continue to be the robust economy in the world. But growth is only around 2 . Productivity growth is nonexistent, 0. 3 , and Capital Formation is low. As long as companies are not investing in new equipment, theyre not, i dont see the trumplike 4 , 4. 5 growth projections coming true. The Infrastructure Spending will take a long time to get going. Its not that big, 1 trillion out of a 20 trillion economy. Im not that optimistic. I think prices are very, very high. So, just buyer beware is my view on the u. S. Market. Jim, thank you very much for joining us. Jim mellon. Still to come, the top corporate stories including news of another hit to wells fargo. Well tell you what test the nations largest lender failed when we come back. Stay tuned youre watching Worldwide Exchange. Welcome back to Worldwide Exchange. Lets get you up to speed on the Market Action. Yesterday the dow ending an eight day losing streak. About 0. 7 gains for the dow. The nasdaq up by a half percent. Today, pretty much flat in the premarket. The dow in the black, a bit of green for the other two markets. Yesterday, what was the big reason why we rebounded . Banks led that rebound. Why . Because yields did pick up. Looking at the tenyear treasury, sitting at 2. 41 this morning. We got up to about 2. 42, 2. 43 yesterday. It was fed speak high lyinging t highlighting the fact, rather than the trump agenda the correlation between the yield curve, the tenyear note and what the banks are doing is strong. That was the main factor for yesterdays rebound. Talking of banks, wells fargo has failed a u. S. Regulatory test. Share price 0. 3 for community lending. Getting a needs to improve rating. The findings related to the companys fake account standal it had previously had an outstanding score. The new ranking means regulators will have a greater say over daytoday matters, such as branch openings. Wells said they will pay 1 110 million fee to settle a Class Action Lawsuit related to unauthorized accounts. A bit of a bounce this morning. Of course has had quite a bit fall over the last couple of days alongside lots of banking stocks over the last three months. Up a couple percent. The way i would frame this is to say they settled this one outstanding lawsuit as they get nearer to this in a couple weeks time. There are still issues and hurdles relating to this sales practice scandal. Theres a shake up taking place in the Asset Management business. Blackrock announcing plans to overall its actively managed equities business. They will cut jobs, drop fees and rely more on computers to pick stocks. This is the latest sign its become difficult for humans to beat machines when it comes to outperforming the market. Blackrock will rebrand or adjust Investment Strategies on 11 of its 2 275 billion in active stok funds. Planned fee cuts will cause a 0 30 million hit to blackrocks revenue. The firm will take a 25 million charge this quarter to reflect severance and other compensation expen expenses. It goes back to the race to the bottom, race to zero when it comes to the debate over passive or active. If we look at the longterm historical record, seems like the passive investors and investments have really outperformed. Indeed. Blackrock a big name to be making such a big change. More stocks to watch. Shares of Vertex Pharmaceuticals are soaring. I shares up 16 . Sanofi and regeneron scoring a win as the fda approved their new drug to treat eczema. The therapy could eventually bring in more than 3 billion in annual sales. The shares basically flat today in french trade for sanofi. The fda also approving roches multiple sclerosis drug putting the drug back on track after a threemonth delay by regulators over manufacturing issues. More stocks to watch. Toshibas Nuclear Unit Westinghouse filing for chapter 11 bankruptcy after westinghouse faced billions of dollars in cost overruns and yearslong delays at u. S. Power projects. Also a risk that toshiba may be delisted from the tokyo stock exchange. Shares of dave and busters falling today. The restaurant and arcade shares earnings fell short. They project weaker growth for 2017. This stock has been trading at record highs, so a lot of upside built into the stock. Shares of sonic under pressure. The drivein restaurant chains revenues falling short of estimates. The company blaming a sluggish consumer environment and weather headwinds. If you look at it. Consumer confidence back up to the highest since 2000. A few more stocks to watch. Depomed reaching a deal with starboard for a new ceo. Also warning First Quarter sales would be lower than expected. Stock off 3. 7 . Rh earns and revenues topping estimates. The Parent Company of restration hardware offering an upbeat fullyear outlook. And shares of verin tsht up as. One more piece of corporate news. Spacex will try to make history this week when it attempts to reuse a rocket booster to delivery satellite into orbit. Tomorrows launch will be the biggest test of the companys planned to dead. The falcon 9 rocket was launched last april. Spacex has worked to reufurbish and test the rocket at its testing ground in texas. Space dpshgs x is trying to low to open up a new range of missions i inclu missions, including flights to mars. Ill be on that. First flight . Maybe let them test it out. Coming up, why the president is prom mi is promising his next attempt at a healthcare deal will be an easy victory. First here is todays National Forecast from reynolds wolf. Good morning. Looking at your forecast today, we have that big area where we have the Severe Weather potential for the central plains. Could have damaging wind, heavy rain, large hail and tornadoes. For the east coast, relatively dry conditions. Beautiful day in new york. Partly cloudy skies. Chicago, clouds are moving in rain will follow. Denver, what a mix youll have. Could have snow mixed in with the rain showers. 53 degrees later on in the afternoon. Dry conditions for much of the west coast, when you get to the pacific northwest, different stories. Scattered showers. Possibly some snow for portions of the Sierra Nevada and the cascades. Keep it here. Going to commercial. See you on the other side of the break. What we do every night is like something out of a strange dream except that the next morning it all makes sense. To power global ecommerce Fedex Networks are massive farreaching and, yes a little magical. Welcome back to Worldwide Exchange. Corporate news hitting the tape. The eu is blocking the 28 billion tie up between Deutsche Borse and the new york stock exchange. The announcement was expected. Share prices are both higher today by 3 and 1 respectively. We knew this was highly, highly, highly likely to fall through after the lse failed to agree to divest its italian bond trading operation to reach this deal. Lets look at some other political news. President trump says he expects congress to be able to reach a healthcare deal despite the failure of the House Republicans bill last week. The president addressed a Bipartisan Group of senators at a white house dinner last night. I know well make a deal on healthcare. Thats such an easy one. I have no doubt that will happen quickly. I think it will happen because weve all been promising, democrat, republican, weve all been promising that to the american people. I think a lot of good things will happen there. President trump did not offer any specifics on how lawmakers would keep a deal or whats changed since last week. As you heard in that sound bite, it will be easy. Exactly. Nor did he give a time frame as well, which is the other key question. Whether other issue also have to come first, which is, of course, the best case now. President trumps pick to lead the fda plans to recuse himself for a year in decisions involving more than 20 companies. The wall street journal reports Financial Disclosure forms show Scott Gottlieb held positions or received money as an adviser or speaker in small start start ups and Drug Companies like glaxosmithkline. He was a deputy fda commissioner under president george w. Bush. We will take a break. Well have more on the top Global Market story. Just a couple hours until the uk eu divorce begins. Er. So now the whole family can binge,. Surf, shop, navigate, listen, game, stream and more. All without the hassle of worrying about overages. Or running out of data. Its less than 40 per line per month with 4 lines. And remember, its at ts best, unlimited data deal ever. So get at t, get u