tv Street Signs CNBC October 2, 2019 4:00am-5:00am EDT
eline." i'm natalie morales, thank you for watching. [music playing] welcome to "street signs." i'm joumanna bercetche these are your headlines the global sell-off spreads to europe after a decade low. the dow wipes out all of the third quarter gains on the first day of the fourth quarter. the ftse 100 on track for the worst day in six weeks as boris johnson reveals his plan tesco reveals earlier losses
that offset the departure of ceo. >> demonstrations continue after an 18-year-old is shot by police after 17 weeks of anti-government protests the risk off tone was set by wall street overnight. a heavy close after a very disappointing ism manufacturing print coming out of the united states showing it deeply in contracting territory. that set the tone for equity trading. you can see the stoxx 600 today, almost all of the heat map is trading in negative territory. we are only about an hour into the trading session or so. so very heavy losses
let's talk about the indices the ftse 100 today with boris johnson expected to deliver his keynote speech the ftse 100 is down 1.2% we'll get more about hard deal or no deal luxury hit there we'll talk about that in a second ftse, mib in italy down as well about .8 travel and leisure the only spot in green basic resources down 1.8%.
chemicals in decline down almost 4% there anything that has international expose you're or exposure to this trade war speaking of germany and the trade war, i want to bring you some flashes we are get egg out of germany this is out of the german economic institute saying there is no need for additional fiscal action now but berlin should use fiscal leeway of the debt break in case of worse than expected data so the germans have been resisting on opening up tabs now that they are saying, they shouldn't be in a rush to use additional fiscal action i also want to bring you the comments on the gdp as well. they have revised the 2013
forecast to 0.5% so slashed lower. and determined the gdp forecast from 1.1%. this year and next a lot lower as well. also saying that this isn't a time for additional fiscal action it makes you wonder when is a good time to resort to additional fiscal action those are already down 1.1%. there are more and more cries from ichbter national community to do something and be more proactive than dealing with the down turn. the german economic institute has slashed their forecast this year and next. >> elsewhere, the minister is on a panel at russian energy week we'll bring you some of the flashes when they come and some
highlights as he continues with the speech it has been a very tumultuous time in saudi arabia since the attack a few weeks ago we've seen the price of oil go full circle. brent is now just shy of $60, around $59 we'll head out to that panel and listen in. the world's energy market must be nonpolitical to prevent any unilateral and illegal interference according to iran's minister he accused the kingdom of the damage done on the attack by hootie rebels. however, he said he is willing to meet the saudi energy minister on the sidelines in moscow a lot going on and a lot to
unpack let's bring in the chief oil analyst. it is great to have you with us. i want to take you back to the price of brent we are back down to around $60 it had shot up to around $70 it seems many have a short-term memory when it comes to these attacks. >> this is the biggest attack in the history of the oil market. i think the problem is that there is so much concern about the global economic growth, u.s./china trade wars. a lot that has come out on the u.s. macrofront has been so poor the question is, which one wins out? the supply or demand side. you've got a huge amount of the
geopolitical answer with the administration currently in office you don't know if they are going to change their mind that is keeping investors away from prices. it is extremely tight. all of this is telling you that the supply side is winning there needs to be less uncertainty. >> take you back again, the market wants to put this incident behind it quickly i wonder whether the people you talk to are concerned of the sankity of the saudi oil here given the huge role in the global oil market, do you get the sense that another event like this could happen in the future >> i think the physical markets buying and selling absolutely
are. all we are seeing. production isn't fully back yet. we are not going to really feel the stock drop we need to wait until november, december before we see the market tightening up if you are in the market, there is extreme concerns about the ability of saudi arabia to defend its oil structure but what does it mean for oil supply security either because of demand or because people think shale is going to grow, which by the way, isn't growing either that is the thing between the physical and paper market. >> opec is trying to keep on the pricing. the swing pricing coming
specifically from the united states are they at the risk of becoming a bystander in terms of oil production >> we've discussed this before in terms of the opec role. the reality, arguably, we would have been significantly lower in prices we've been around $60 for most of the year. i do think the perception is that shale is driving a lot of the sentiment. if you look at the u.s. data, production at the end of july is lower than where we exited 2018. u.s. production just isn't growing whether geological factors or investors don't want the companies to grow. it hasn't dropped yet. it is really estimate it is opec that is controlling that swing
price. >> good insight ahead of the next opec meeting. thank you, chief oil analyst tesco has announced chief ceo dave lewis will step down. he said the decision to leave was a personal run the company reported a price in fourth quarter profit. boris johnson will unveil his final office to the european union today. he will reveal details of his brexit plan before submitting the proposal to brussels he will describe his deal as a, quote, fair and reasonable compromise and is expected to rule out negotiation delay if
brussels does not move on with the over adding that the only way to move on is to come out of the eu on october 31 big day for the uk also coming up, hong kong police respond to the shooting of an 18-year-old protester. more on this story after this break. your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall.
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welcome back the hong kong university students union has released video of an 18-year-old who was shot by police a warning, some viewers might find these disturning. the city's police commissioner defending the officer saying he acted in self-defense. the students remain in hospital as students gather for a sit in at his school. >> a few weeks ago, carrie lamb
announced the withdrawal of the bill what are protesters demanding now? >> at this point, it is not really about the extra bill anymore. there are four other demands they include an independent inquiry of the police behavior of the summer protesters this summer as well that is exactly what we are seeing and what we saw yesterday. especially marking china's national day yesterday the level of aggression both pro protesters and police are trying to quell unrest have reached a new level we haven't really seen hong kong is realing from
clashes and more fears than usual. that will really culminate the level of violence we saw yesterday. there have been warning shots but this is the very first time a person has been shot with a live round what they are saying is that the protester is now in a stable condition, while defending the police officer's actions saying he acted in self-defense and according to police guidelines we were teasing about this thehong kong police commissioner coming out saying at this moment that he's been arrested for assaulting a police officer. they are going to conduct further inquiries and decide
whether they will press charges or not at the same time, they've got a spokesperson calling them rioters calling them extreme violent acts yesterday in many different parts across hong kong we are getting conflicting reports about where this protester was shot police say it was in the shoulder some in local media say he was shot on the left side of his chest with this left round we have getting various videos going around details have not been confirmed. i'm sure this investigation will continue we've got more than 100 videos of the injury alone. of course, this is going to provide a new catalyst
we are seeing angry criticisms coming from hundreds of office workers as well as students denouncing this incident from yesterday. back to you. >> thank you for spelling that out for us luxury stocks struggle for the second straight day. shares have reacted negatively from global trade tensions as well as ongoing unrest in hong kong that is the key picture of some luchly brands there we are talking about. kering is down, so really heavy trading for some of these key luxury stocks. luca solca, it is great to have you on the line. china's middle class has really
fuelled luxury it seems as though that has changed. how much of that can be put down to the trade war and how much can be put down to the unrest in hong kong? >> it is difficult to dial secretary the two effects. clearly, it was the mark worsening in hong kong trends. as far as we understand, sales of luxury goods were down 40% and 60% in august and september. hong kong remains one of the most important cities for lucxuy sales worldwide. all of this decline is not in that loss. there is a rebound and catch up in main land china the bulk of the demand is from chinese tourists
with this decline, there is a concern that not all will be caught up. hong kong is a profitable due t the tax being low in that market >> is it possible for you to give us more clarity on which specific names will be most affected by the unrest in hong kong >> i think hard luxury is exposed. if we look at swatch group, they have a deep distribution and retail network in mainland china. they'll be in a position to catch up the other thing is looking at the net impact is the price
differential it is small. then chinese consumers may well buy at home rather than going to hong kong. it is likely those will be more exposed. berberry will be impacted. >> one analyst put out a note saying, the smaller you are in hong kong, the better. do you agree >> not necessarily i think in the grand scheme of things, if we look at long term chinese demand and chinese tourists traveling the world over it is important to receive them in the u.s. and other parts of the world.
hong kong used to be very much important. that was the only destination back then. today and in the future, it is going to be just another major chinese city i think the trimming of the retail network in hong kong will be increment al profits. the same way the richest chinese consumers travel overseas and abroad, there is an increasing amount of chinese going to hong kong in the coming years, hong kong will be the first stepping stone for these chinese to go abroad >> thank you for taking the time to chat with us. the world trade organization will deliver its decision for the right on the u.s. to
retaliate to airbus subsidies. we've been waiting for this decision let's get to willem in brussels. how much of a negative impact could these tit for tat tariffs have on the broader discussions between the eu and the u.s.? it seems like a negative framing. >> yes context is key here. this is a dispute involving aircraft subsidies going back almost 15 years. it is a coincidence this ruling will be coming out today the boeing ruling will be coming out. these processes will be suspended many, many years by agreeing on that suspension. talking to the eu trade commission, she says the plan a, she would like to see negotiations continue. she did acknowledge that given
the fact that since last summer, she's been working on a broader trade agreement between the eu and u.s., the timing could have been a little better >> strictly speaking, the u.s. is allowed to do so. it comes at an unfortunate moment in time because this has been going on at least two decades where we are trying to find a positive agenda whether it has those effects or not, i don't know. we do tandcontinue and i have wd a year for those >> clearly this dispute predates the trump administration but that meeting between
president trump and the european commission president last july was prompted by u.s. threats of tariffs on the auto sector if there are tit for tat tariffs, to they oppose them and the eu parallels that ruling, it could mean, a, those broader trade discussions are essentially poisoned and b, we could see those tariffs on things like autos become a central focus in this market >> thank you for the break down. for more of willem's coverage including how the eu is bracing itself for looming tariffs, head to cnbc.com. coming up, swiss banks often get a bad rap.
the latest scandal of credit suisse isn't helping >> yes the discreet world of central banking and swiss banking blown open by this latest scandal. we'll have details and perhaps a few suggestions as to why the share price isn't acting better this morning othn e investigation outcome. stay with us ♪upbeat music no cover-up spray here. cheaper aerosols can cover up odors in a flowery fog. but febreze air effects eliminates odors. with a 100% natural propellent. it leaves behind a pleasant scent you'll love. [deep inhale] freshen up. don't cover up. febreze.
welcome to "street signs." i'm joumanna bercetche these are your headlines the global sell-off spreads to europe after falls to a decade low and the dow wipes out third quarter gains on the first day of the fourth quarter. the ftse 100 is on track for its worse day in six weeks as boris johnson prepares to reveal his final brexit offer to the european union but rules out asking for a delay tesco shares rule out earlier losses after earn lings
offset the departure of ceo. >> with world trade decision will retaliate its right over the airbus decision with billions worth of goods under threat of tariffs. we are just gating some data out of the uk. the construction pmi number has come in at 43.3 versus 45 in august so construction continues to be a weak, weak spot. manufacturing has been in the dull drom. services have been holding up. this data is very, very weak this is a small portion of the gdp. not worthy that this number has come in.
that is sterling we are trading slightly on the back today all eyes on the political development. it will be a continued number of days for the uk and proposed deal we should get more on that when boris johnson delivers his keynote speech in a couple of hours time the ftse 100 down, worst day in about six weeks. the dax is also down the german economic institute slashed its forecast for this year and next and warned the possibility of using further fiscal space cac in france is down. focused on luxury names there. euro trading some what stable around 1.0920. a little weaker. u.s. dollar trading on the back
after that number came out yesterday but seems to be recovering some what this morning. especially versus euro and cable trading a little on the back.3% weaker you would think on a day like this, the swiss frank would see a bit. perhaps what is happening with the swiss bank back drop has an impact on the back drop as well. as for u.s. futures, a weak session for wall street. it looks as though today, we'll see a continuation all pointed to open in negative territory after a very weak ism manufacturing was weakest in a decade the bank coo responsible of spying on the former head of management khan.
the examination cleared the ceo. separately, credit suisse said a change to how it calculates adage will increase $250 million in profit for a full year. let's get out to goff in zurich. a lot of questions whether the bank can put this incident behind them. it has been embarrassing and sin sister, i should say >> the reaction of share price is a reasonable measure of sentiment towards an organization and its behavior and reputation, then i guess the lack luster performance we've seen since revelations of the investigation and its outcome, it would seem to be that there is still a very large question mark hanging over the current reputation of credit suisse.
this latest piece of news from the bank that they've adjusted upper wards of $250 million because of an adjustment in the way they are handing the risk weighted profits we understand the findings and the ceo has been cleared the coo has taken the rap. one of two senior executives who will leave the organization over this spying story, this botched surveillance of the outgoing khan, the head of wealth management going over to ubs in an attempt to prevent him from poaching stock ultimately led to the suicide of a middleman security officer who was handling this story. that is an unfinished element to
this also the ongoing police investigation going on between kahn and those private investigators that were following him. we've had the results of that and the latest announcement of the profit up and expectations of that $$250 million. it doesn't seem to be doing much to arrest some of the negative sentiment we see in the share price. we'll have to continue to watch over the next few days to see if there is any improvement in sentiment. we need to see the ceo break cover at some point and make some official comment. i can tell you clearly, we've put in bids to speak to him and to the chairman. at this point, no one is returning calls. we've merely had the frenpress
conference and the statements of fact at some point, we need to hear from some of the principals involved in this story before investors will let it lay to rest >> they've been remarkably silent breaking down the latest and a story we've been watching closely. joining me around the desk do you think credit suisse has done enough in terms of damage control? >> so far, they've come out with a clear statement saying thiem was not involved in this as long as this doesn't have anymore legs, they can ride it out. >> what do you make that thiam has not come out and said anything yet >> that is true. i would expect him to come out and make a much bolder statement
and provide assurance to clients about how the bank is handling this do you think this incident is one that could really hang over as a cloud on credit suisse and the way they go from here or would it be perceived as a blip in terms of the bigger issues they are dealing with here >> a good parallel is looking back at barclays with a similar incident where they had a whistleblower and they were trying to find out the identity there. he's still there as coo and the bank has moved on. provided that this is a single incident rather than a trend that is a culture there, then they can ride it out >> that's a big question, whether people will deem it a
single incident. going back to credit suisse as a business going back to 2015, credit suisse has underperformed ubs by 20%. why? >> one of the troubles thiam had is he arrived at credit suisse, ubs made a much clearer fist of restructuring their whole bank one clear visible strategy was immediately obvious to investors and clients. credit suisse has gone through more increment al changes. that has been less of a clear strategy and a more gradual process before they started to get themselves on track. >> we spoke to him earlier, he said the restructuring efforts have come to a close now
they'll turn the new page and look to the future >> one of the issues they have is that the investment bank won't fully work for the strategy it doesn't have a clear fit with the wealth management industry >> we just heard from ubs that they are going to make some big changes in the investment banking unit probably just a question of time before credit suisse catches up with that as well. >> absolutely. no one has found a way of generating new revenue >> one question, kahn is leaving. he was running that division how much of a loss does that create the fact that he got poached by
the end of the day by their biggest rival. he is viewed to have done a good job. still retaining and degrowing things in one area >> potential upside for ubs then >> absolutely. >> thank you for your thoughts talking me through credit swies and implications on the bank after this spy gate story we've been following closely facebook ceo zuckerberg says elizabeth warren would be bad for big tech in a leaked audio recording, he added he would take her, quote, to the mat over her proposed plans to break up the company. it seems strange for zuckerberg to be opining about a candidate.
>> elizabeth warren is looking to break up big tech companies she's made this one of the plans for her platform it sounds like mark zuckerberg has some problems with that plan this audio came from an internal meeting. the verge published that we got to hear a little more about mark zuckerberg's thinking >> elizabeth warren who thinks that the right answer is to break up the companies if she is elected president, i bet we'll have a legal challenge and i would bet we'll win the legal challenge. so basically, does that still suck for us? yeah >> so zuckerberg saying he will take the company forward with legal action if there are attempts to break them up
ultimately saying he's going to fight any action like this not surprising elizabeth warren struck back saying, there really is a problem if we allow giant companies like this. quite the freud happening. this plays into a bigger story about what regulators and politicians think needs to be done >> mark zuckerberg is almost trying to make this a partisan discussion we were discussing a bipartisan effort going on, the anti-trust looking into both alphabet and facebook but it is bipartisan, happening on both sides. he's not really helping himself here, is he? >> it is hard to know. he doubled down on the comments.
he posted the link on his own page saying here is a clear look on where i stand on this so he didn't really back away. it looks bad given that he was in washington, d.c. last week meeting with bipartisan groups who have both said measures need to be taken. where they stand can differ. some stand to break up the companies and some republicans have taken the stance, there is a general bipartisan notion more needs to be done mark zuckerberg talked about that it looks like he's saying one thing in public and in private, something else that displays how much of a line is walked here with facebook except that they have to work with regulators in the u.s. and
around the world >> all for regulation but up to a certain limit. thank you for breaking it down, i'm sure there will be more on this story >> two ukrainian officials agree to speak out amid the trump impeachment probe. more after the break the rich, hydrating cream is formulated with vitamin b3 and peptides to plump skin cells, brighten, and visibly smooth wrinkles. in fact, just 1 jar has the hydrating power of 5 jars of the prestige cream. for visible results without prestige prices, try olay regenerist with a money back guarantee. and complete your routine with the olay eye collection. brand power. helping you buy better.
>> welcome back to "street signs. two officials involved with trump dealings in the ukraine have agreed to give their positions. former representative say they will appear before a house panel. u.s. inspect of state mike pompeo has accused democrat lawmakers of bullying and intimidation as questions grow about the involvement of the president's circle >> mike pompeo ignoring questions in italy the secretary of state now caught up in the impeachment
firestorm after suggestions that he was on that call. last week, pompeo deflected when pressed about what he knew about that question. >> you just gave me a report about, none of which i've seen >> pompeo trading accusations for house democrats accusing them of trying to bully five former state officials pompeo vowing to attempt or skpuz any attempt to intimidate. others saying this could be evidence of obstruction. personal rudy giuliani now hiring his own lawyer after democrats demanded he turnover text messages and phone calls. would he testify
>> i'll weigh through it and get all my evidence together >> then there is william barr. barr requested the president ask australia's prime minister to assist in the inquiry of the origins of the mueller investigation. barr has already visited two countries including the uk and italy to seek help >> barr should be talking to australia, italy and the uk to find out if their intelligence services worked with our intelligence services improperly >> you have to appear to be neutral when you are attorney general of the united states i fear he has crossed a political line president trump took to twitter saying, quote, i am coming to the conclusion what is taking place is not an impeachment is is a coupe. uk gambling stocks turn higher after news of a merger
between flutter entertainment and the deal behind poker stars. flutter entertainment up 16% this morning on the news the u.s. has failed to escape the m&a slow down with activity slumping to the lowest level since first quarter of 2016. according to emerging data that shows that move has dropped. going to our guest so deal making is down 13% this year from last year. is that typical when stock markets are up >> it is easy why i to be pessi.
we have a bit of the u.s. market during the first half of the year in q 3, they were down 30% last year europe is also down quite significantly for the year overall, the equity market is doing very well. overall, the activity is down. >> what is the reason, that activity is down what is the catalyst for this decline? >> there are a lot of factors at play here. the main one is the global slow down you have the u.s., china trade war has had a big impact on china m&a activity downfrom 15% it was like in 2015.
that is down a lot brexit obviously, so all of that is playing a part. >> i noticed something interesting. the size of the deals on average were bigger than in the past an overall activity is lower but the size is getting bigger so why is that happening? >> that shows there still is a lot of appetite on the back of these acquisitions looking for growth and sometimes m&a is the answer. there has been a lot of activity very strong with fundraising happening on both sides of the atlantic that's some of the reasons why deal size are getting bigger on average. there are a lot of megadeals
we've had as much megadeals as we've ever had more than $10 billion in value >> can you walk me through the relationship between private equity and merger actions that happen down the pipeline it seems private equity are getting bigger and bigger. what does that mean for the pipeline of deal making in the future >> that makes it harder for corporate to sometimes do deals. in europe, private equity buy out of the year are on one of four buy outs has been done with private equity that's a lot we are seeing a little bit of an impact on the ipo market when you want to raise capital in business in a good way. it is having an impact
we see private equity becoming that share overall becoming greater in coming months >> not surprising. chasing so few access. you are seeing more deals happen in the uk because of the weaker pound save from outside investors? >> the prospect of no deal brexit has hurt m&a activities down 40% you are right, there has been some opportunities chased by private equity because of the lore pound, we saw that with the acquisition of things in the uk a lot of dollar revenues and
that turning was there there has been a little bit of a foreign interest for in the consumer specs for foreign buyers we've seen a little uptick there. >> i'll leave it there the global editorial an littics manager. before we head out, i want to take you to european market. a heavy day of losses. ftse 100 leading the decline down 1.5%. the dax and kak down as well a lot down more than 2% on exposer to hong kong and the goings on there. the catalyst was the weak ism
that was the weakest number in the last decade that really set the tone for markets overnight the u.s. markets are not much prettier all opening in the red, negative territory. nbc speaks exclusively to russian president today as he takes part in the final with ceos from global oil firms join us at 1:00 p.m. cet for boris johnson's keynote speech as for now, that is our show that is "street signs. i'm joumanna bercetche nt.ng icongxchae"s mi upex