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tv   Street Signs  CNBC  September 30, 2019 4:00am-5:00am EDT

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♪ good morning and welcome to "street signs" i'm joumanna bercetche and these your headlines. keeping an open mind chicago fed president charles evans tells cnbc he would be persuaded to change his view on interest rates but warns head winds can complicate things. >> there are head winds we are facing we reduced the federal funds target by 50 bases points, and i think that's helped move us into an accommodative stance more than where we were for sure but that could be a moving target if head winds are increasing and we
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might need to do more. european equities search for direction as investors await a key wto ruling that could see u.s. slap europe with tariffs on 11 billion dollars worth of good. the chinese government warns of decoupling following u.s. is blocking chinese access to american markets british prime minister boris johnson once again refusing to rule out leaving the eu without a deal this, as the health secretary, matt hancock says he prefers an agreement, the threat of a no deal is looming. >> there are lots of different ways you could end up leaving without a deal, but as i say my preference is we leave with a deal and that's what we're working towards. ♪ well, good morning and welcome to "street signs." we have a very busy show coming up ahead first, to european markets because the price action is
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decidedly cautious today this after a better end to the week on friday, but of course those reports came out later in the session in the u.s the u.s. are considering some investment restrictions potentially on chinese companies and the market did not react so well to that wall street traded negative by the close on friday and heavy session for asian equities and that panning into the european session. we only have ftse and the cac trading slightly in the green the german index slightly below the flat line and the italian is slightly underperforming in terms of sectors, we are seeing as ever the trade exposed sectors are underperforming today. household goods luxury down .3 percentage point technology as well, down .3. again no, surprise there given the news that came out on friday of the potential escalatory rhetoric of china and u.s. not boding well for markets. we have the wto ruling that we'll talk about in a little while from brussels when we
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speak to willem. banks recovering somewhat up about half a percentage point as well we are seeing some of the cyclicals do well this morning but of course the trade sensitive sectors are underperforming. now, chicago fed president charles evans told cnbc market injections are a useful tool coming at a challenging time and he's open minded about the path of interest rates. you just spoke with mr. evans. what would you say are some of the highlights of that interview. >> well, actually we started off to talk about repo rates and the reasons behind them are not entirely clear as of yet i mean, loads of people are siting technical reasons, and that is what i asked him as well, what his explanation is actually for that very unusual volatility in the repo markets whand the fed is planning
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remedying potential spike again in the future. take a listen. >> the new york fed put together a very strong program to offer repos daily, offer term repos over the quarter end and i think it's effective i think this is just a challenging time the federal reserve's balance sheet is lower than it had been. we had been bringing it down we stabilized it, but it's still pressure on the level of reserves as nonreserve liabilities adjust so, the term repos i think had been extremely helpful it's been a very well designed plan >> clearly another big question is also where the u.s. is headed in terms of economic growth because the bond markets of some investors are very much concerned there's also recession on the horizon and this could warrant more rate cuts the fed itself is also divided
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very much whether there will be no rate cut or even rate increases or whether there will be another rate cut this year. charles evans himself, he just previously week, half ago was saying he doesn't think there will be another rate cut this year, but he seems to be very flexible when it comes to the assessment of that statement stake a listen again. >> i'm definitely open minded what about the right level of the federal funds rate target is to have appropriate monetary policy at the moment i think appropriate monetary policy is somewhat under the neutral rate. just at the end of last year, 2018, i thought that appropriate policy was headed towards slightly restrictive stance policy because unemployment was at a very good falling rate. inflation looked to be picking up to 2% and perhaps beyond and the economy was very solid
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since then, over the last six months, you know, we had more challenges getting inflation to 2% there's been more uncertainty. trade negotiations have been challenging. the foreign european and chinese growth have been slowing somewhat, so it just seems like more accommodative stance is a good one for the u.s i think what we've done already might be sufficient. i'm open minded to suggestions he might need more at the moment i'll be looking a the data. >> which data are you looking at if you were making your mind up? >> i think the inflation data is very important we had a forecast that inflation would go up to 2% with momentum and go above 2%. my own expectation is we should overshoot our overinflation of 2% by just a bit that would be good labor markets will be a very important piece of data to be monitoring we've had good, very strong employment growth for quite some period of time
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it's eased up a little bit but still quite strong that will be important to watch. the consumer has been really the important contributor to the u.s. economy and labor market has been important for that. >> so one thing is clear that the u.s. is benefitting from its bigger exposure to the service sector compared to countries like germany and other big countries in europe because here manufacturing is so much bigger chunk of the economy than in the u.s. and the weakness, the trade war and reduced weakness clearly have started with the industrial space. but the big question also for the u.s. is whether this will -- the weakness in industrial space will eventually trickle over to also the service sector and consumer sentiment and the labor market it seems to be this has happened quicker in europe and also warrants more positive response from the ecb, but still also the u.s. doesn't seem to be
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safeguarded from that potential risk he was also referring to that he sees a lot more fragility in the u.s. economy than before so we're headed towards interesting times to say the least when it comes to the economic outlook uncertainty seems to be everywhere with that, back to you. >> absolutely. you know very well as well aneta speaking from germany talking about the manufacturing sector i want to bring the senior u.s. economist. just to pick up on the charles evans' interview it seems appropriate for him to have monetary policy just below the neutral rate, keeping an open mind about the possibility of further interest rate cuts doesn't sound like one of the seven people who may have voted for a cut later on this year where do you stand on the debate should do? >> what the fed will do, we think the fed will cut rates again. why is that because we think the global economy is likely to say
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weak and the fed right now prioritizes the weak global economy. we see another rate cut. we also see more liquidity more asset purchases we think there will be $400 billion of new asset purchases announced in october so we still think the fed will ease policy more. >> when you talk about asset purchases, do you think the fed will have to go back to qe or function of open money operations to get the repo levels and repo situation back in order again >> so unlikely to say it's not qe although it will look like qe4. but they need to ripple each bank reserves and comes at a time when the economy is slowing. part with qe will be quite strong again, they'll say it's a technical operation but in the end it will still be a buying of treasuries. >> but isn't what happened in the repo space just a technical phenomenon you want to break it down to very simplistic explanation, the
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bid for cash is a lot higher than the fed originally anticipated. that was one of the reasons why repo rates spiked up so much isn't it just a simple fix they just need to inject liquidity back into the system again and things will normalize? >> right i was at the leeman brothers in 2007 i'm a bit more sensitive to repo issues than maybe other people in the market. so, yeah, it's mostly a technical reason why we like liquidity in the system. bank reserves have been shrinking because of the quantitative tightening of the fed and regulation and so on and so forth we have to find what's going on there. and it may be that actually i think some discipline in the market is starting to erode, a bit at the margin and we need to keep an eye on that. >> there's a big difference between 2007 and 2019.
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and that 2007 it was a credit risk phenomenon. today it's about liquidity risk, they're not the same thing. >> yeah. but there's so much credit out there and speaking about liquidity problems in new york, i mean, think about it, it's a bit crazy. i'm not saying there's anything -- there's no smoke out there. but there's no problem the economy is fine and so on and so forth i don't think it's 2007. don't get me wrong it's something we have to pay attention to that's a fragility in the system we need to keep an eye on. >> hence why you're expecting more forceful response out of the fed then. >> exactly. >> just to take it back to the actual data, though. we have a big week in terms of day taechta events. >> they'll look at the repo
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markets. on the data front, definitely the labor market report on friday will be important and especially manufacturing side because it seems the u.s. economy is weakening especially the manufacturing front and now manufacturing weakness is propagating to the services side as well. consumption in the u.s. was stronger and now it's starting to erode slowly. that's something to watch. >> something my colleague was eluding to as well in the charles evans interview. you stay with us thomas, thank you very much for the first segment. senior u.s. economist. now speaking of central banks, we have done enough and we can do more the words from outgoing ecb president mario draghi speaking to the financial times, draghi says the urgency has increased as the downside of expansive monetary policy becomes more apparent. in the nod to the current tensions on the ecb board over further stimulus, he tells the
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paper, it would be better if we had unanimity from the out set his he claims his successor will be an outstanding ecb president. also coming up on the show, the wto looks poised to allow the u.s. to stop tariffs on billions of eu goods we'll cross live to brussels that comes up next
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♪ welcome back to the show the world trade organization is poised to back u.s. trade tariffs worth billions of dollars on a wide ranging list of eu goods, according to media reports. this arbitration ruling marks the latest development in a 15-year dispute over european subsidies given to french plane maker airbus let's bring in charlotte to explain this in a little 34r detail on what has been going on here before we get out to willem to give us the brussels angle. this is obviously a european company airbus what type of impact would these tariffs have not just on airbus but obviously on europe as a whole. what are the implications here >> so those hypothetical subsidies airbus at the call of
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this dispute that you just mentioned. for the moment the ceo said they don't see an impact on the bottom line if those tariffs and punitive tariffs come into place. they're worried about the medium to long-term for two reason. one is that those tariffs would be 100% of reports so a company buying airbus for $100 million would now have to pay 200 million. it's the client in the u.s. that would have to pay for those tariffs. so the impact has many american airlines as companies, american airlines, delta, jetblue, they all have pending orders and have committed to buy some airbus planes they have been pressuring the trump administration to tell them it would impact them and impact american jobs and impact american consumers so from that side, they're worried that further down the line, those american companies would not order airbus planes because it's too expensive for
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them the other side is that those 100% tariff would impact parts of aircraft. that would impact the final assembly line that air bus has in mobile, a alabama airbus only has four final assembly lines and that one is the most recent one bid in 2015 precisely to answer the demands from those american airline orders and this assembly line would be impacted because of 40% of the elements that they use to build those planes come from american companies. and i asked the chief commercial officer of airbus about this ten days ago and this is what they have to say. >> air bus procures 40% of what we do in the united states so, the ripple effect on the u.s. supply chain of airbus would be very, very violent if there's an impediment to airbus doing business in the united states it also affects the consumer, because taxes import duties will
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invariably link to increased prices at the consumer level so we think it's a lose/lose proposition. >> that was the chief commissioner of airbus speaking to me ten days ago >> 45% of the supply chain comes through the u.s. >> 40% >> that's a huge number in a lose/lose situation. willem is live in brussels you have been following this story perhaps not for the last 15 years but it has been going on for the last 15 years can you give us more context on the background to this story and what type of tariffs we could expect in case the committee rule in favor of the u.s. here >> yeah. this obviously began back in 2004 from the u.s. perspective what they were unhappy with the european union was using
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something they called launch aid. a number of aircraft that were being built by air bus and sold to customers around the world that they felt were being unfairly helped and therefore adversely impacting the ability of boeing to compete now, as of 2011, the wto said you're right there's been about $18 billion worth of unfair subsidies to airbus from 1968 through to 2006 and we would like you, the european union to comply with this ruling and change the way you operate. many, many years later, 2018, 2019, the wto found that the european union had not been in compliance and the u.s. said, right, given that, we would like to impose some penalties we think around $11.2 billion sounds about right the europeans said that's much too high let's talk to arbitrators, get them to decide on a final number and that's the number we're expecting to receive as soon as today. there's been a couple weeks of comments allowed for the eu and
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u.s. sides coming into this moment but once that number comes out, it will then be up to the u.s. government to decide which products it would like to target they released this list back in april that was worth around 25 billion, so they'll be able to pick and choose from that. that's going to be things like civilian helicopters, cargo planes, aviation parts from four countries in the uk, eu, i should say and then all these other products we have been talking about from any one of the eu member states things like cheese, yogurt, luxury handbag once president trump has given the go ahead and once this ruling from the arbitration tribunal has been formally adopted by the governing council, then those tariffs can be imposed but of course a few months from now we could see an opposite ruling against boeing. so there's an incentive for both sides to look at this and say maybe we can find a settlement rather than both of us inflict
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these countermeasures on each other. that's where the european commissioner said they don't want to see tit for tat. the u.s. said we would much rather the eu complied if we need to use tariffs we will, but we would much rather get this resolved beforehand but we haven't yet seen the u.s. saying any kind of genuine settlement offer from the eu. at this point, therefore tariffs does look very, very likely. >> interesting breakdown there, willem this isn't specifically targeted at airbus and it's a pan european phenomenal, four countries directly involved there in case the tariffs were to be applied. in terms of time line, quick question for you, as of what date could we expect this to go into law if it were to go into law? when are we looking at >> right so, the adoption of this ruling needs to be done by something called the dispute settlement board, a panel within the world trade organization they're actually meeting today and they'll be talking about some of the issues around airbus, but not this specific ruling this is all issues around
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compliance with previous rulings. the next scheduled meeting is october 28th, but of course there's the possibility the u.s. will call for a special meeting of that dispute settlement between now and october 28th once that governing council, dsb, adopts this ruling it becomes legally actionable that is now to october 28th and at that point the u.s. can go ahead and impose tariffs if it so chooses. >> potential another front on the trade war. thanks for the breakdown in brussels let's bring back in the senior economist. another trade war front. is that what the u.s. economy really needs right now. >> well, certainly the u.s. doesn't need more trade tension. i think the u.s. economy is already suffering from trade tensions, but this issues about airli airplane is many issues between the european union and the u.s one is also about taxes and taxing the big companies the second one is also that
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trump believes that the ecb is doing in terms of negative rates is mostly because of devaluing the euro by doing monetary policy so trump really believes that the ecb is manipulating the euro and that's a ground potentially for new tariffs later on and the third one is obviously the german car sector and the u.s. has something against the german car sector and trump. the car sector has a lot of symbolic value for trump that's something to keep an eye on as well many issues there. >> yeah, a lot of issues definitely the irony one of the reasons is because of the trade wars. if he opens up a new front with europe, that's going to make the manufacturing situation in europe even worse which will incentivize ecb to cut more. that's a different story all together when it comes to the original trade war between china and u.s., looks as though things are moving towards a new round of
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discussions mid october in washington do you have a positive baseline scenario that could play out here >> well, it's difficult to have a positive baseline given all those trade tensions and underlying frictions, but actually we could think that, you know, there's some risk of potential truce out there in october. it seems, you know, that trump is aware of the economic cost of those trade tensions we know next year we'll have elections in the u.s you don't want the economy to backfire right in time of the elections, so it could calm things down a bit. although we think there are some really deep seeded issues including with intellectual property with china, that will make a grand deal look quite unlikely. >> does a truce pose upside risk to the economy, though, just a truce? >> just a truce, unlikely. i do not think all the tariffs will be reduced. the last 5% could be removed but i don't think all the tariffs will be removed. also we know the economy -- people have already adjusted in
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terms of businesses, cap-x, investment, there's a time lag so the problem that people are cutting cap-x right now and is affecting the u.s. economy >> so it's not over then thomas, thank you very much for joining me >> thank you also coming up, ab inbev hong kong coming up next we'll be right back.
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♪ welcome to "street signs" i'm joumanna bercetche and these your headlines keeping an open mind chicago fed president charles evans tells cnbc he could be persuaded to change his view on interest rates but warns head winds could complicate things. there are head winds that we are facing we have reduced the federal funds target by 50 bases points. and i think that's helped move us into an accommodative stance more than we were sure but that could be a moving target if head winds are increasing and we might need to do more. european equities search tr
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direction as investors await a key wto ruling u.s. could slap tariffs on europe on $11 billion worth of goods. the chinese company warns of decoupling the two biggest kmis following reports the u.s. is considering blocking u.s. access to american markets. british prime minister boris johnson again refuses to rule out leaving the eu without a deal as health secretary matt hancock tells cnbc while he prefers an agreement, the threat of a no deal looms. >> there are lots of different ways that you could end up leaving without a deal, but as i say, my preference is that we leave with a deal and that's what we're working towards ♪ well, speaking of the uk, we're just getting the final second quarter gdp data. a bit outdated at this point but just to tell you that the final second quarter gdp was unchanged from its previous reading of negative .2%, quarter on
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quarter, that is a 1.3% year on year growth rate that is revised upwards slightly from 1.2%. so the annual rate is slightly higher than what it was before, but the quarterly rate is still dipping into negative .2%. business investment obviously been watching it very closely down minus .4% quarter on quarter, slightly better than the original reading of negative .5% quarter on quarter. we know that business investment has been hit by brexit but, what's interesting is that the government spending is up 4% year on year that is the strongest growth since the fourth quarter of 2008 so the strongest growth in about 11 years inventories have subtracted 1.9 percentage points from quarterly growth rates before the statistical alignments that is revised from a drag of 2.15% so slightly better, i guess, on an annual basis than the initial reading. but all eyes really on the third
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quarter gdp now and whether or not the uk will be entering into a technical recession seems unlikely given the july gdp print we had that's the reaction in sterling. we have the pound trading up around 123 firmer on the session today. not a lot of movement across the board in currencies. we have euro trading slightly heavy as well below that 110 mark 109.30 is where we're at keep an eye on the wto ruling vis-a-vis airbus let's look at the urine markets as a well. woer lacking a bit of direction here the tone from wall street was pretty negative on friday after the reports that the u.s. are considering investment restrictions on chinese companies so wall street closed in the red as for u.s. futures, we have a
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big week of data coming up today. you can see that the three indexes are pointing to rebound from the price action we had on friday s&p seen up 12 points. dow up almost 100 points big week as i mentioned, the subsidies announcement today, wto, could see tariffs imposed from the u.s. on eu we have ism numbers to watch out for. and nfp on friday. big week ahead coming up in the u.s. shares in ab inbev jumped on their hong kong debut. they raised about $5 billion in the world second biggest ipo this year after it priced the float of its asian division at the lower end of its projected range. the company initially hoped to raise more from the listing earlier this year but shelved those plans in july. emily filed this report from the hong kong exchange >> budweiser apack is hong kong's most actively traded stock today. this is hong kong's biggest ipo
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this year. it's the world's number two biggest after uber's $8.1 billion raised now budweiser managed to raise $5 billion pregreen shoe after pricing shares at the bottom of the range $27 per share. this is the biggest brewer in asia they brew, sell and distribute more than 50 brand in the asia pacific region and they are focussed on growth budweiser apac makes its second attempt at its hong kong listing. they attempted a $9.8 billion listing back in july but pulled due to valuations and market conditions we've seen now 18 consecutive weeks of political unrest and protests in the town, but ceo at budweiser apac remains confident in the hong kong market. >> we've seen very solid demand for our stock where we did the management road show we saw a lot of very enthusiastic reactions of investors. that's also the reason we decided to do the listing.
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obviously these are challenging times in hong kong but we are very confident that it was a strong foundation here. we're very optimistic with a bright future of hong kong as one of the most important financial centers in asia. >> budweiser apac is trading urn the ticker code 1876 and they say that's an emotional ticker symbol because that's the same year the first budweiser was brewed >> second largest ipo this year that was. the u.s. treasury department says it has no plans to block chinese company interests listing on u.s. exchanges, quote, at this time. that's after investors were rattled by report claiming the trump administration was discussing methods for the financial decoupling of the u.s. and chinese markets. including forest delisting, limit on pension fund investments and caps on the value of chinese stocks in u.s.-managed indexes china's foreign ministry
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responded by saying decouple would destabilize the international markets. two key readings have come in higher than expected in september. it showed pmi at 51.4, the highest level since february, 2018 and while official pmi data was still below the 50 mark the reading of 49.8 was better than analysts had forecasted. and security is tight in beijing ahead of commemorations to mark the 70th anniversary of the founding of public's republic of china will showcase tanks, bombers, drones and intercontinental ballistic missiles eunice joins us live from beijing. the big event is tomorrow, the military praed pa raid and president xi will also give a speech then. what can we look forward to in that speech? >> well, a lot of people are wondering what he's going to be
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saying at that speech. likely it's going to be very broad themed since that's what we've heard from him in the past, however, there are many investors who are curious about what he's going to say about china's relationship with the world. now, today, president xi jinping along with several top communist leaders did lay a wreath at tiananmen square in order to honor the nation's past heroes tomorrow, joumanna, the festivities that are more prominent are taking place on october 1st. there will be a military hardware filled parade that beijing will play host to. also a party near the forbidden city and this really is the communist party marketing itself as a great leader of this country really showing that china has been able to succeed under communist party rule now, there is this parade isn't really something that you would see in the same way as say in
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central london or maybe in paris where there would be millions of people on the street in fact, the public participation here has been extremely restricted in fact, our office oversees the parade route we are not allowed to open the windows or go out on the balcony. so i think that also shows just how sensitive and concerned the authorities are that anything could go off script or that there could be anything embarrassing can be seen for the communist party. they often like to orchestrate these types of events. jouman joumanna >> excellent, yeunice further protests are expected in hong kong today after police used water cannons, tear gas and rubber bullets to break up violent weekend demonstrations protesters smashed cars, threw bombs and lit fires in one of the city's worst periods of
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unrest tensions remain high ahead of events marking the 70th anniversary of the communist party rule in china tomorrow so we are joined from hong kong now. we were just speaking with eunice about the president's speech tomorrow on october 1st, but of course the hong kong situation is very much hanging over china right now and it looks as though things have really deteriorated yet again in the last couple days. >> reporter: >> that's right. it's one of the high profile public challenge to chinese president xi jinping, i would say. beijing authorities could ban pigeons or drones in mainland china, but when it comes to hong kong, it's a little tricky, isn't it the headline is this, joumanna, 17th straight weekend of civil unrest here in hong kong absolutely no signs of that coming down in its intensity and that's an ominous setup for chinese, of course, national day celebration tomorrow
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marking the 70th anniversary of the prc. it's certainly an occasion for beijing to celebrate but for a lot of hong kong protesters, it was actually, you know, an occasion that they say that they are going to mourn tomorrow. calling other protesters to dress is black, which is really the representative color of 2019 summer protests so far and of course, you know, that was the setup. this weekend, this urban battle between protesters and police was actually a setup for tomorrow's celebration or the occasion of the national day and you're looking at behind me a venue where normally hong kong as one of the territories of china marks that celebration, along with the handover ceremony but we are seeing absolutely a tight security around this area and we are certainly seeing the
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hong kong government as toning down, scaling down the celebration set for tomorrow for one canceling the fireworks that was originally in schedule that would normally happen around this time and also taking the flag raising ceremony. one of the symbolic ceremony elements for national day indoors. guests will have to go to the event but see the flag raising ceremony on a screen this is one of the examples where the hong kong government authorities want to avoid any kind of embarrassment as, of course, hong kong protesters are using this occasion to really escalate things. that's exactly what we saw over this weekend of course tear gas, pepper spray and you know reported bean bag usage by the police was met with some of the hard core protesters really trying to set some of the major mtr stations at the
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entrances of it on fire and vandalizing a lot of properties in hong kong and we are getting ready to see more of that potentially tomorrow as well joumanna, back to you. >> you have to wonder whether or not this week will see and spark more demonstrations in hong kong thank you for the latest from hong kong. also coming up on the show, prime minister boris johnson keeps the threat of a no deal brexit on the table as the conservative party conference kicks off. we're in manchester in just a few moments.
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welcome back to the show the anonymous whistle-blower is likely to testify behind closed doors as early as this week. according to adam schiff, the chairman of the house intelligence committee schiff told "meet the press" there was a real risk is not moving forward with the probe and hoped the wisle-blower would testify very soon. kelly o'donnell filed this report from washington. >> reporter: the ukraine call whistle-blower, unseen, unidentified but soon to have a
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voice behind closed doors at the house intelligence committee. >> but you expect the whistle-blower to testify and if so when? >> yes and i hope very soon >> reporter: one hurdle the whistle-blower's lawyers need security clearance to join him or her before the committee. >> we'll keep running shotgun to make sure the acting director doesn't delay in that clearance process. >> reporter: lawyers for the whistle-blower tell nbc news that all agree that protecting the whistle-blower's identity is paramount and so far no date or time has yet been set. >> the president is the whistle-blower here. >> reporter: today the white house defended president trump's conversation with ukraine's president as an appropriate request to root out corruption while attacking the whistle-blower's motives. >> the president of the united states is the whistle-blower and this individual is a saboteur trying to undermind a democratically elected government. >> reporter: the president himself accused the
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whistle-blower's sources of unpatriotic misconduct. >> who is the person that gave the whistle-blower the information? that's close to a spy. >> reporter: trump defender lindsey graham from saturday golf partner. >> charmingly great host. >> reporter: so sunday morning advocate, questioning how the whistle-blower learned secret information used in the formal complaint secondhand. >> what i want to know, who told the whistle-blower about the transcript who told the whistle-blower about a phone call between the president of the united states and a foreign leader. >> that was nbc's kelly o'donnell reporting. meanwhile, president trump's personal lawyer, rudy giuliani, told sky news he would be willing to testify to congress and defended the president. >> the presidentdidn't do anything wrong president didn't do a darn thing wrong. you look at that conversation, there's no threat. there's no quid pro quo. there's no mention of money. if you want to interpret something, well, i can't stop you from interpreting something. that's called making it up
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it's either there or it isn't there. it isn't there i have no fear of that do i have a fear the democrats might vote for something. >> that's what i'm asking. >> it will never get through the senate they'll kill themselves if they do it. it's stupid politically. switching to the uk now. boris johnson has again refused to rule out a no-deal brexit potentially bypassing legislation aimed at preventing such a scenario. the comments come after a difficult weekend for the prime minister who rebuffed accusations he provided favorable treatment to an american businesswoman as mayor of london. downing street was also forced to deny allegations johnson touch eed a female journalist inappropriately when he was a magazine editor 20 years ago. on day one, johnson said his team is focussed on securing a brexit deal. >> we're going to work very hard to get a deal and then if we can't, we will make sure that we
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come out on october the 31st, but probably better if i focus on getting the deal rather than discussing the hypothesis of what happens if we can't >> now our colleague steve asked the director general of the cbi whether she agrees with the government's deputy for no-deal brexit preparations. businesses were well prepared for a no deal. >> where i completely agree with brandon is that the stepping up no deal preparations has been good and cbi have helped that and more businesses are prepared but there's still a harsh reality here it's impossible for business to be prepared for no deal. we have 200,000 small businesses who only ever traded with the european union they are not ready we know that the federation of small business has shown that as well in terms of bigger businesses, the thing they need to do to prepare is to take action that is very bad for the uk economy that is not ready. that is actually damaged to us so, for example, moving supply
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chains out of the uk, we know that sony, panasonic, others have already moved their headquarters so the idea that the uk could be ready for no deal is just a myth. >> but what about this idea that the cbi, federation of small businesses, they're just part of this project i spoke to burns in the last 24 hours the cbi got it wrong, got it wrong over the euro, why should they be right over brexit >> it is nonsense. this is fact coming through from the base of british business all businesses saying more or less the same thing that they are postponing investment. we had five quarters out of the last six declining business investment this message of we need a deal we are urging compromise across all political parties is universal. that's not project fear. that is trying to find solutions. >> so steve just conducted that interview and he joins us now live from the conservative party conference in manchester steve, personal controversies aside, it seems like the
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messaging from boris johnson and from the conservative party conference as of now is still that of october 31 do or die brexit it is going to happen, isn't it? >> reporter: yeah. i think that's extraordinary when you consider the moves that have been put forward in the last couple weeks in the unprorogued parliament now, of course, which has moved to create an act which will prevent the power of the prime minister from having a no deal brexit on october 31st there may be others who could lead to an october 31st no deal brexit including our european partners who would have to agree on the a extension it could be parliament itself which is one of the caveats in the ben act, which could say, yes, we could leave on october 31st without a deal. but the prime minister ostensibly has had his power taken away but according to the ministers i've been speaking to, the minister in charge minister of security, brandon lewis, i spoke
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to conner burns of international trade a whole host of ministers who still believe, yes, we could still leave on october 31st without a deal which is quite extraordinary. on the other side of the ledger, i just had a conversation with one remain leading mp who i saw in consultation just now with one of the 21 who does no longer have the parliamentary whip and remain voting conservative cabinet minister i just saw them talking and just asked, what were you talking snabt the mp said to me, we were just trying to work out what the magic formula is the magic formula that allows us to leave with a deal and solves the backstop how extraordinary is that conversation that the fact that a cabinet minister and two back bench mps still don't know what the government plan is you think there would be some rumor around manchester about how they're going to negotiate their way through. again a lot of the ministers i've been speaking to think, yes, the mood music from
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brussels the mood music from london is coming toward some form of pragmatism what is the deal what could the pragmatism be and how would this get done by october 31st extraordinary what you hear officially and what you hear in the rumor mill here in manchester. >> steve, just to pick up on that, willem last week was at the labor party conference that was a lot of infighting within the party, you also expect some difficult for the conservative party at this juncture to come out with a homogenous message given the infighting that's going on within that party and indeed 21 mps lost the whip, only recently how is that setting the tone for the overall conference as well >> yeah. look, i spoken to a lot of people about this, including the former minister in government. he's the mp for northeast bedfordshire he no longer has the whip. i felt sorry off camera i said what are you going to do? speak to my wife and look for another job. this is an mp who thought he had a job until 2022 but would
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welcome having the whip again. they didn't walk away from the whip these 21 mps, including is grandson of churchill, incruding excellent kark, justin greening, my former mp so they didn't walk away from it they had it withdrawn from them for voting against the government once. one mp put it to me, how many times did jacob reese mark vote against the government but never lose the whip when mrs. may was in power i think to your original point they would take the whip back gladly from the conservatives. they don't want to be in some form of rebel alliance they would much prefer to be in the tory ranks but they want the government to make its best efforts to find some form of deal i think just looking on the outside, all of this and tieg it together, the government would love to get a deal they would love to get a deal because then they can concentrate on all the other issues they're putting forward the education, then they could
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go to the country. this government is looking at its position in the polls. yes, if we had a deal as well as our position in the polls, my goodness me that might be very interesting electoral maths despite the fragmentation is interparty and across the british political establishment. >> all right steve, thank you very much for breaking it down for us. brexit is very much unavoidable. but what we'll be watching out for some of the domestic policies that will be potentially announced as well. now, meanwhile, french president is just arriving in paris for a tribute to the late president ahead of his funeral that's president macron as the funeral events will take place today in honor of former president who passed away last week that emmanuel macron. before we head out, let me take you quickly to the markets for a picture of what things are looking like cable is trading stronger,
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123.24 3 percentage points higher euro is trading slightly weaker, still below the 110 mark at around 109.40. it is a big week for the u.s. in terms of data. this is a picture for u.s. markets. we had that heavy close on friday but looks as though all three indexes are going to be starting off the week on a better foot. s&p, dow, nasdaq seen opening up in the green big week ahead nfp on friday. that is it for our show today. i'm joumanna bercetche, "worldwide exchange" is coming up next.
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it is 5:00 a.m. in new york. your top five at 5 a treasury official says the united states does not right now have plans to block chinese listings that moved the market lower orn friday in the meantime, major protests again breaking out in hong kong over the weekend but this time it's all ahead of china's big national day tomorrow on the corporate front, budweiser listing its asia business on the hong kong exchange and shares popped in their debut. in saudi arabia, a fire engulfing a new multibillion dollar rail station in jeda we'll show you pictures. plus, more trouble in american retail as


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