tv Street Signs CNBC February 12, 2020 4:00am-5:00am EST
that's all for this edition of dateline. i'm natalie morales. thank you for watching. good morning welcome to "street signs." i'm joumanna bercetche >> and i'm willem marxs. these are your headlines >> heineken beats full year dividends. but it is too early to assess the impact from the coronavirus as the death toll surges past 1,100. >> i'm reading and watching the press like you are
it will impact obviously people don't get out and go to restaurants. that will have an impact what we don't know is the duration kering beat sales to send shares higher. but the luxury brand says the virus outbreak uncertainty could hurt trends. softbank operation plunges taking a massive third quarter hit after bets on uber and wework go south. >> translator: we have cause for concern among investors. a drag on the stoxx 600 after fourth quarter numbers and higher numbers weight on the dutch lender
let's start with some of the market price action. a bit of a muted end we have dow finish flattish. s&p up a certain amount. worth pointing out that 77 new s&p 500 highs. a couple of highlights not real areally market moving but he did define growth as being moderate no one is expecting major shifts out of the fed worth pointing out that they had signaled the coronavirus situation closely. it is too early to assess the impact we should tell you that on the
subject of the coronavirus, we saw the coronavirus arise. hang seng up 1%. it appears we are heading into a situation where the coronavirus is actually stabilizing and investors have taken some comfort from that. you can see the hand overfrom euro -- handover from europe is strong up 0.6% today despite the turbulence we have seen back home in the uk, the ftse 100 also up about 0.3 as well. we have the cabinet reshuffle coming towards the end of the week we are focused on company
earnings it feels like the coronavirus worry for now is coming down lieutenant me talk you through some of the reactions and sectors. at the top, we have autos, cyclicals bouncing up 1.8% a lot of these names positioned and why these are doing so well. basic resources up 1.3%. getting an uplift as well. chemicals up 0.8%. on the down side, just two sectors. health care down as well you can see it is a day where cyclicals are big again. to talk the stocks and company earnings, close to the top swedish names and heineken
fourth quarter leading the charge in the feud and beverage space. we have some underperformance. tui is down getting hit from the onslaught of coronavirus even though the number of cases has subsided, we are seeing numbers low there. citing more head winds from the lower interest rate environment. chinese health officials have reported more than 2,000 new cases in mainland china. and 90 new deaths. that was the smallest percentage increase in death toll in the past couple weeks. world health has renamed the
virus and now will call it covid-19 saying that coronavirus swwas misleading jerome powell describedthe u.s economy as resilient and indicated he is happy with the current stance he did warn that full effects on american industry have yet to be seen >> the yes fquestion is what wie the effects on the u.s. economy? will they be persistent? will there be effects for china and close neighbors as well as asia we know therewill be some effects in the united states i think it is just too early to say. we have to resist the temptation
to speculate the question we'll be asking is will this be a material reassessment of the outbreak >> the globe al head of strategy and joining us at our london studio do you get the sense based on what chairman powell said and what the chinese government's response is over the coming weeks that markets will continue to rise. the virus has created a three-part narrative clearly the narcotic emarkets i growth bond markets seem to like it they think central banks are going to react to the virus. equity markets are taken long view it is going to be short lived.
i'm a little tentative because they never really went down but the long view is probably not unreasonable >> interesting you say that. do you think that the fed would be in a situation now where they would be more upbeat on the economy. he characterized growth as moderate but equally, he has lessened external fears with the trade war. any other situation, people would be pricing in the move >> yes i think the fed is caught in two lines. when you look at the u.s. economy, it is doing well. to me, the fed is focused on this long-term inflation story
and that expectations are picking up saying that bar to hiking rates would not be too high. >> it seems like a lot of the balance sheet on the expansion they said they'll continue purchasing bills into the second quarter and reduce asset purchases to the level >> toning down how important is that for markets and going back to what you were saying, how much of the performance is the function of the fed on that space? >> one of the great debates on our desk and economists.
the fed said it is not qe, they are buying short-term bills. the fed is given the market a perception that they've got the markets back when the fed starts pulling back, i would not be surprised to see that as a point of anxiety. >> something to watch out for. >> sure. this will encourage action from central bank do you think that's likely to happen >> listen. i think certainly asian central banks will start policy.
the fed sounding steady as she goes saying i don't see those as way too early. >> emerging markets policy rates are high they are being hit the hardest a lot of room to cut rates and i think they will. >> we need to talk the political cycle. it is another big risk looking at charts showing that s&p and the dollar have been moving in dan dem with trump reelection saying it would be an easier beat against trump for a leftist candidate which is why recently odds are moving higher do you think there is a little
kplas kplas an si. >> you look at the polls and the issues and the states that matter we see it more 50/50 we look at sanders and trump five out of seven have sanders winning. not that we think the market is wrong but there really is a complacency about how close this race will be >> i'll ask you about the best way to health for that case when we pick it up. if you want to get involved in the conversation. we've already talked about powell, coronavirus and the elections, get involved on twitter where you can tweet us
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. welcome back to "street signs. heineken has reported a had rise and hiked its dif lend by 9% it is monitoring the impact of the coronaviruso outbreak saying the long-term consequences are not clear. >> it is way too early to say anything i'm watching and waiting it is too early to say what foreign impact the chinese government is doing everything it can to bring the outbreak of the virus under
control. at this point, there is nothing we can say about it. >> kering has posted a 13.8% rise to beat expectations. a strong performance in china help to offset a sales slow down and the company did warn about the impact of the coronavirus of the luxury goods and beyond and could hurt consumption and tourism. it remains confident about growth potential >> dutch bank has posted a net profit of $316 million euros fourth quarter thanks to low interest rates the cfo explained to cnbc the new focus on crime prevention has proven to be expensive >> you've seen our costs come
down we are putting more and more effort into detecting financial crime. we spend over 400 million euros in that area in 2019 we see costs pretty high regarding detecting financial crime over the next few years. we are making good progress and have indicated a further pipeline of cost savings and will do a great deal to mitigate the cost savings we are seeing on that side >> sales came in 3% lower than the same period last year. saying he blamed the slump on weaker industrial demand the virus outbreak will weigh on future sales numbers >> the car industry has been
impacted we expect that to go the rest of the year that exposure of the car industry the aerospace, boeing is not on the same pattern than they were before what you've seen in asia has been more of an impact, the lunar new year was in january. that is typically a year-end attempt to get to certain volume targets that is not happening this year. functional things that happened at the same time >> trump piled praise on the four u.s. tech giants that hit the trillion dollar cap. he noted the members also spell out his 2016 cam pan slogan,
maga mo microsoft, apple, google and amazon u.s. trade commission announced a slew of investigation into all four of those companies. let's talk about the tech in the u.s. with our guest. is it overvalued it is a question we ask time and time again >> trying to guess valuations in the stock market driven by pe expansion. when you look at the u.s. market, it looks pretty expensive and yet it keeps going on what will stop that from happening, you've got two options. one is fed tightening, the other
is a recession, which seems a little early >> what about regulation this ties into question about a new regulation >> it is not just an issue in terms of tech performance. you think about this view. now that big tech is coming in the kro the crosshairs >> bernie sanders has emerged victimor in new hampshire. did you think around the world, they'll be waking today and tabing a fresh look at their portfolios >> i would be doing -- the primaries are set up in a way
that some candidates will do better in the beginning. in my mind, markets are not engaged. they start getting engaged in march. if it is, let's call it a market unfriendly candidate this will be a makeup call knowing this will be a close election >> what is your best idea? what is the sapders trade? >> the market unfriendly trade, in my mind, it is probably a dollar story it has had a lot of good things happening. the strength and the confidence has been one of them when we start getting anxious about an election, it will get close. the dollar vulnerability is an all-time low that is the effect going into the election >> the push back about the
dollar is that this year could be a year where the rest of the world outperforms with the coronavirus. we have started to see a bit of momentum before the coronavirus hit. clearly now, that is a nonnegati nonnegativible threat. how can the dollar underperform in a situation where the rest of the world will be dragged down by the effects of the coronavirus? >> in currency is dollar positive the coronavirus or covid-19 will be an impact
there will be an impact. we'll have to reassess the dollar view once we see an impact we haven't seen that yet >> thank you for your time the global head of strategy. softbank has posted a rather large drop dropping 99% overall group profit came in 22 billion yen. its earnings effectively wiped out at the flagship vision fund. it lost a lot when it bet big and lost big in the likes of uber and wework. saying the poor performance had alarmed investors. >> translator: i am the biggest holderof softbank. i think we are all in the same
boat sometimes there are disagreements but any opinion is welcome from share holders wework challenges and uber challenges for example share prices went down since ipo from uber for example due to those unexpected events we have caused concern among potential investors of soft bank fund too >> we have dismissed concerns that cash is tight >> soft bank group has plenty of liquidity in varies ways as a softbank group, we can keep investing in businesses and once
partners are more comfortable, we will join us. >> myself in the direct meeting was about two weeks ago, we made an open discussion had a good discussion with them. >> interesting that they met with elliott a couple of weeks ago. the timing of all of this is interesting. the soft bank shares were up 11%, 12% yesterday nothing to do with earnings. more to do with their stake in sprint which has been an a chillies heel. they have about $44 billion of debt from sprint on the balance sheet. now that the merger with
t-mobile is going ahead, they can offload that there was reaction in prices for spript and t-mobile but also softbank too the other big question going forward is how much money can they raise for the second vision fund which reportedly srcisn't doing that well at the moment. the u.s. election is burning up we'll discuss the front runners and who is trailing behind in a few moments.
don't get out and go to restaurants. it will have an impact we don't know the duration kering beat fourth quarter sales but says the virus outbreak uncertainty could hurt. softbank takes a massive third quarter hit after bets on uber and wework go south >> translator: we have caused concerns among potential investors of softbank vision fund ii. and abn amro after impairments weigh on the dutch
lender the handover from asian markets overnight after the stoxx 600 made a record all-time close yesterday going beneath the radar. stoxx 600 also at an all-time record high. we are seeing fresh records. the dax up 0.6 percentage point. some of the fears subsiding. there has been stabilization a bit of a breather this morning. a focus again and positive numbers coming up. reports coming out of the stoxx 600 chips here heineken being one of them that stock is up more than 3%. kering as well doing quite well.
i want to take you to foreign exchange one of the big themes is yet again the strength of the u.s. dollar the dollar is back to four-month highs. that has translated to weakness. we have focused above that as well stabilizing some what. there is a concern euro is in a decline. keep an eye. dollar/yen, can you see some strength pound trading sub 1.30 around 0.1% following closely with the coronavirus. there was serious concerns for the global demand with
stabilization overnight. we are seeing a rebound. brent is up. ti back to around $150 you can see how dramatic a i decline. we are still down this morning we had some what of a moderate session with the dow ending flat it looks as though the three of them are going to open in the green. powell testimony last night, not really market moving but indicated the policy was too err will i to see the impact for the first time in
decades, boeing reported zero orders for new airplanes last month. cnbc's phil lebeau has the latest >> the company reported zero net new orders the lowest order for january since 1962 in terms of deliveries, boeing delivered 13 aircraft. the delivery number of 13 compared to 31 for airbus. last month logged orders for 274 new airplanes. it is believed orders and delivers will ramp up once the company gets approval to unground the 737 max that is expected the middle of the year this he will begin the
deliveries of the max. so those numbers will move higher boeing january numbers, zero phil lebeau, chicago the aircraft leasing company avalon has reported record full-year profit despite the grounding of the boeing. the ceo and joins us here in london before we talk aboutthe challenges ahead, i want to ask you about the past 12 months what were the factors that allowed you to hit that number >> our core leasing was strong we did suffer two significant head winds in our number despite the record profit. we incurred about $60 million in
one off costs. in broken and prepayment fees. because of the max and the delayed airbus aircraft. >> a quick question on the boeing max you say you saw a year of debt deleveraging i see your debt dropped in 2018, 2019 can investors expect you to continue on with that drive? >> that is a key metric. we'll continue to drive down the market our expectation is to get to 25%. that we hope will be the next catalyst for a credit rating upgrade to essentially triple b.
>> let's talk 737. your goal is to have these do you see appetite to lease any of them? >> no surprise there people want certainty. we are bowineings fourth largest company. our view is that this is a tier one problem to tier two or three. our feeling is that this aircraft will be back safely flying no later than the summer. we are confident in that given the oversight on this airplane, this will be the safest plane ever designed when it gets back in the air. >> a couple of weeks ago, the
coronavirus started to emerge as a threat, you've got hundreds of aircraft operating there that death toll has jumped more airlines have stopped flying into mainland china >> i think they ar affected we've seen this before play out in different events and pandemic-type isity wagssituatis very significant amount of aircraft on the ground the impact is immediate. cash flows have deteriorated what that means from an avalon
p perspective. we are ideally positioned to be a capital provider our message is we'll stand long and strong and our company becomes a strong constituent fo news has projected that bernie sanders will win the key new hampshire prime minister with pete buttigieg second. minnesota senator amy klobuchar let to a surprise third place finish putting pressure on other candidates in the crowded field for the democratic nomination
including massachusetts senator elizabeth warren and former vice press joe biden. bernie sanders thanked his supporters >> we are going to win because we have the agenda that speaks to the need of the people. health care is a human right, not a privilege. the wealthy and powerful will start paying their fair share of taxes. we will make public colleges tuition free and cancel all student debt >> getting to our colleague. a strong night for bernie
sanders. what were some of the other h h higher for you >> in 2016, sanders ran away with this state. this is kind of his territory. it is a win. amy klobuchar was a bit of a surprise she's been climbing for some time but after just friday night, we had a really strong bee bait performance here. a lot of the people that came out said that had a lot to do with their decision. she was wabl to ride that position to move to third. the race only picks up pace.
it will be interesting to see if this reshuffles. right now, bernie sanders, pete, buttigieg and amy klobuchar. and elizabeth warren and joe biden. joe biden left before the results came in and went directly to south carolina and went to a launch party there you are going to see a different picture. these first two nominating contests are not necessarily a look at the whole. so joe biden has been pinning his hopes on getting stronger support on some of those more diverse states >> all of those discussions ahead ever the caucus and the
momentum >> what we are seeing is the exac seems to me, south carolina will be a crucial test for the support the former vice president can garner at this point. >> that's true he finished enough fifth here ad fourth in iowa for the person positioning himself as the one you should vote for because he's the one in position to win. >> markets will be watching closely. thank you for the break down if you've got any views, get in touch on
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i have been speaking to some of the reporters. we've been going off to opec in march as well. opec prides themselves on this thing called the jmcc, which reports to the joint minister reporting committee which they are part of. they both want to pour over the data as we have been hearing from guest after guest and minister after minister, nobody can quantify the picturen the median term on the back of various facts including the clear and president enworry about oronavirus we've lost 10% demand, 20%
demand people are making it more difficult for longer term smimts they are working with incomplete data here. it is the same story here. gas and oil boom has been extraordinary. there is so much natural gas being found in the eastern mediterranean. we are talking billions of tons worth of gas the problem is, who are you g going to sell it to and at what price? we are seeing plummeting u.s. gas prices worries about the demand across the board even before the coronavirus is factored in you've got oversupply and concern about demand that is being solved by prices
coming on. the u.s. has been a major disruptor on shale as well and where are they going to sell it to the russians are also trying to sell their gas to europe as we've seen from president trump saying well you can't have your security from us but your gas from russia as well. they are trying to put their lng into place as well i said before the break, in charge of looking at the position between politics and energy in charge of the comments about selling u.s. product
wherever the russians will be put out. >> russia sees what is coming in terms of the u.s. exports. they are fearful of competition. similarly, eastern med development. we have not seen the cargos going to europe like we will soon competition is coming from multiple sources they are concerned about that. when companies buy gas from the u.s., it is a win win. there is no long arm of u.s. government coarsing and controlling prices at the end that benefits both buyer and seller that is something russia doesn't
like to see. that's why we promote a playing level field and welcome europe's goal >> if you buy usl&g, this is about securityish ou as well as price. we expect a lot of companies will continue to buy from russia so long as it is based on a competitive model. is there even a market one supplier is not a market what we have seen is even an optionality, it changes the negotiating position now russia has to compete.
by virtue of having an import. overnight, that drops the tariffs in those countries we want to continue to encourage countries to be open to the goals. build the infrastructure necessary to transport energy across europe. once that happens, even if they choose to purchase from russia, they'll be better for it their citizens will pay less >> to recap, the u.s. should have no problem selling to china because a debt on from the phase one trade deal $52 billion worth. that has put more em-tuesdphasi
what the u.s. is doing >> certainly coronavirus isn't helping. thank you. safe travels back. fed chair jerome powell will appear before the senate today he used testimony yesterday to the house to disclose he was confident and cautious he said while the coronavirus impact could not be fully assessed, the u.s. economy remains strong >> the u.s. expansion is well into its 11th year, the longest on record. last year, economic activity increased at a moderate pace the global head winds intensified last summer. >> let's look at how u.s. futures have reacted
we are seeing a risk on move in general. stoxx 600 making fresh record highs and looks like we are going to get fresh record highs. behaving like tesla here >> no reaction whatever so ever. a slight flattening to the death toll from coronavirus. seemingly, investors not with much need. a good start to the day i'm willem marx. "worldwide exchange" is coming up next.
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