tv Street Signs CNBC February 25, 2020 4:00am-5:00am EST
and that's all for this edition of "dateline." i'm craig melvin. thank you for watching. >> welcome to "street signs. i'm julianna tatelbaum >> and i'll willem marx. >> giving up early gains to trade mix to the early selloff that fell to 1,000 points in the worst daily fall in two years. >> sparking optimism as the company sends the drug for testing pushing european drug stocks higher.
gold moves to a shine after moving to a seven-year high and oil prices bounce back the oil ministers tells cnbc he is not worried about the virus >> i'm not a concerned person. i tend to think calmly everything serious requires attendance president trump is up beat about a trade deal with indian prime minister in a press conference of day two of the u.s. leaders state visit >> i'm optimistic we can reach a deal that will be of great importance to the two countries. working together, i know we can achieve new breakthroughs and forge even brighter futures
the new coronavirus drove fears it could turn into a full pandemic the stoxx 600 now above the flat line we did see the stoxx 600 pair back stronger gains early on in assessment mode trying to determine where to go from here after selling off yesterday dropping 3.8%. in terms of the latest on the numbers around coronavirus, the number of confirmed cases now nears 80,000 globally. over 800 people have contracted
the virus in south korea while confirming 12 people have died the death toll is at 2,690 let me takes to individual regions in europe. the dax above the flat line, in the uk, the ftse 100 positive. the mitt ty mib down today yesterday, the main italian benchmark dropped nearly 6% as italy became the home of the largest outbreak outside of asian regions. 10 towns quarantined in italy. let's take a look at safe havens that caught a strong bid as investors caught a look
around the globe we are seeing fluktations. we saw the german 10-year blenderly on as investors strike the table. gold posting a seven-year high this morning pulling back and we are seeing a movement in the gold price as well the dollar green back has been the safe haven and the euro standing at about 108 versus the dollar that's the look for safe havens more broadly very interesting to note some sectors that would perform yesterday. >> let's start with travel and leisure. down 6%. it has come back slightly. you can see some of these now performing better than yesterday.
ryanair, both higher iag took a pump elling yesterday. they are still not performing. down 0.97% one of the big concerns around coronavirus is that demand in china will dip bhp, angel american. they are still well into the red after a difficult day for them yesterday. south korea saying it is going to launch mass testing the u.s. has pledged a billion to find a vaccine. you can see some of these companies in europe are performing a little better than yesterday. some of the optism there the vaccine might happen sooner than had been happening before. italy confirming at least 200
people have contracted coronavirus, seven have died and authorities continuing to quarantine 10 towns in italy accounting for roughly a third of the country's economic output austria and switzerland are tightening the border with italy. the european commission said it will not consider closures in the shenzhen zone. >> the italian minister said it may call for leeway from the eu. it has raised concerns that italy could end up with a technical recession. >> let's look at the italy 10-year spread early on in the session, we saw
that the german 10-year tighten and widen out with a new high. investors clearly trying to weigh the risk profile that spread is going to keep an eye on as the day progresses >> claudia joins us on the line. what is this doing to italian stocks this morning? >> good morning. the towns in this called red zone continued to remain quarantined. it is hoped that the outbreak will be contained. it is 50,000 people, 10 kilometer radius the other regions account for
about 15 million citizens within those areas. those measures that are put into place are requesting people to be aware schools have been canceled, universities, any public place must be closed from 6:00 in the evening to 6:00 in the morning people that need to go to work that can go to work are being pushed to avoid to go to places where they can congre gre gate a group. businesses are trying to set up a work plan to make it possible to work from home. technology is a big support for this in order to try and not suffer clearly there will be issues because businesses count on conventions and big industry fairs and events that have been
canceled if these businesses can try and keep running to the best of their ability. in just minutes, they'll be meeting the simple protection head to discuss other measures that the government will be taking in order to account for italian citizens like locking mortgages and other measures the european union might be asked to give leeway to italy and if the first quarter were to show a technical recession it is too early to tell. it is only the second workday italians have been dealing with this situation, so they are still trying to come to their new normal that will be the case for the next weeks for sure.
the initial panic that brought grocery stores to increase sales by 50% and stores to reduce business has seen a calm a bit the city is definitely subdued but a sense that they are under control. >> we have been watching video from some of the very empty italian towns. apologies there for the slightly bad line >> let's get over to matt for more from singapore. yesterday, asian markets were closed >> we did see a fair bit of resi resilience one was the south korean market. declining about 4% on the spike in cases there more cases reported on south
korea today, the market rebounding in that decline up about 4.2% china markets closing. the shanghai closing down as well the hong kong up there a quarter a percent. we are awaiting to see what kind of stimulus they'll pump into the economy. on the back of corporate earnings you mentioned japan, this was the big one today. its worse one-day performance we have seen since march last year, 2019 the nikkei closed yesterday. weaker more than 3% on the topix
and the nikkei we have been seeing stronger yen. 110.44 we are seeing a weakening now of the yen. back to you. washington has pledged a billion dollars to find a vaccine. the remainor will be focused on they a they are putins and money that was set aside for the ebola outbreak >> the virus is expected to weigh on u.s. quarterly results. according to refinitiv, q1 earnings down. following a string of warnings from companies that have cited the virus as a cause for
concern. getting to our guest, jeffery, great to have you with us this morning. on the back of the latest consensus numbers there for the u.s. s&p 500 companies clearly, companies have been trying to prepare investors for a hit from the coronavirus do you think we are brown to see more down grades >> yes it will be a weak first quarter in the least we went into the start of the year on the average up 6%. there is some down side risk to that the dollar is important and has been strong during the course of the outbreak is that going to be a concern foru.s. investors.
>> we are more likely to see the impact through the pressures we saw that guiding lower from last week. >> what have you seen in the data over the last few weeks that illuminated for you >> on the surface, it looked strong if you look beneath that, it showed an increase of delivery times from mainland china. that was a worry there is a limit to how far they will run that down that was a real indication that supply pressures are beginning to be noticed among european
corporates >> does that mean a few weeks or months, you could have a shortage of products >> yes there could be some shortages. if the virus is contained, it could be a bounce back we are looking at the epicenters where the virus was found. in italy, we are looking for the slow down since six deaths have occurred >> how concerning is it for you that an advanced economy like italy has not yet been able to locate its patient zero. the fact that they don't know where this has come from, trying to understand how this virus spreads?
>> it is concerning. we do know the gestation is long and can be passed on without symptoms showing that gives us uncertainty especially with regard to the earnings back drop we are focused on those we've reduced our expectations and overweight >> keeping on italy, how do you think this impacts italian growth are you now negative about their ability to meet the targets? >> a lot depends on the length that the virus continues without being contained. let's assume it is prolonged
you get pressure on the eu for relaxation of some of their criteria you get some pressure from the prime minister to explain why it hasn't been contained. he hasn't done that yet. ultimately, what we've viewed italy as is the area that is contained by reasonable gdp growth it is fragile because of the debt in a recession, those two problems are interlinked and you've potentially got a debt deflags. that would be negative and felt first in italian bonds and equity it is a factor that could have wider repercussions.
>> in terms of market reaction, yesterday was, it is fair to say, the strongest reaction to the outbreak that was triggered by italy the fact that it is in europe and they can't find patient zero so far where do markets go from here? >> the markets have had a very strong year. they were up 25% they started january strong. there was a need to consolidate even before the outbreak in italy. now what we need is certainty with regard to the virus so that we can firm up on earnings forecast in particular given that the markets went into the year reliant on the rerating i think the market needs to do
some work consolidation before we can have the next up lick >> stay with us. the head of investment strategies the drug maker moderna shares rose almost 20% on the back of the announcement the spread of the virus has intensified with more than 80,000 cases reported worldwide. that is 10 times more than the sars outbreak. coming up, warren buffett warns of the impact but he still says he sees a buying opportunity. find out why after this break. my gums are irritated.
coronavirus scary stuff. he said stocks shoiuld not be sold off because of fears. and that the virus has not changed his actions. >> it doesn't mean stocks are going to go up or down if you liked to own american businesses, you get a chance to buy them 3% cheaper. i don't consider that that much cheaper. if you have to sell them, you are worse off. somebody could come around and offer you a quote on your house and it could be 2% better than yesterday but if you liked the house, it doesn't make a difference to you. >> does that mean berkshire will
be buying stock today? >> we won't be selling >> he says several businesses have felt the impact from the coronavirus. >> we have maybe 1,000 dairy queen franchises in china. they are treat only. a great number of them were closed certain of our companies have supply chain issues. i got one like carpets, you name it i guarantee significant percent of our business is impacted. >> just in response to what mr. buffett was saying there about it not changing his long-term
outlook. how do you go about trading? >> yesterday, the market saw hire cash market and volatility. our approach is to first stay invested and then stay diversified. we think the fundamentals will bottom once the virus is contained. the key is the manufacturing data which we started to rebound. now with the virus, it could be delayed at least six months. that is likely to be a lead indicator. i think within the market, we had been looking at areas of initially cyclical undervalued because they are under pressure on the moment on a trading basis
and then longer term looking at 2021, we'd be looking at areas of devalue which would underperform growth stocks on the last year. >> germany was watching closely at the beginning to see if th rebound did show up. because of the exposure to china, that was the concern with the trade tensions do you see that turning around do you see the german economy recovering >> i think we'll need a growing
impetus. there is a market cap of $2 trillion that equates to the market cap increase of the u.s. tk nolg faang stocks so no your forria priced in. once we get the stabilization. >> i want to pick that up in comparison to the faang. that is an interesting perspective. u.s. tech stocks had continued to attract investor flows until yesterday. there has been bliped. we did see a major pull back in those u.s. stocks. do you think these tech stocks that had been tremendous performers here. those undervalued sectors in
europe >> the tech stocks held up well until now because they hadn't gotten the significant impact in the short term by the virus. the ownership levels are high and profits are there to be held for the significant length of time you could see further rotation in the medium term once we get the flows out more broadly, the equities should benefit because of the valuations being more attractive >> quick word on one of the most unloved sectors in europe, banks. a huge amount of change at the top recently is there an opportunity here >> look to buy the banks
because values are lower on average. returns are sluggish on 6 to 8% but rising the average one level are 14% with balance sheets strong share buy backs is likely to be a feature. >> we appreciate that. the head of strategy coming up, after a grand reception yesterday, president trump gets down to business on his state visit to india ♪
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signs. i'm willem marx. european equity markets give up gains after an early selloff that saw the dow plunge to the worse daily fall in two years. >> a vaccine breakthrough pushing american drug stocks higher >> gold to a high. it is a mixed picture for oil prices the saudi minister says he's not worried about the impact >> i'm not concerned i tend to think calmly everything serious require attendance president trump is upbeat on a deal with indian
>> i'm optimistic we can reach a deal that will be of great importance to our two countries. we will continue to achieve new breakthroughs and unlock new potential and brighter futures we are now about one and a half hours into the european trading session. you may have missed the early rebound. now european markets trading below the flat line after yesterday saw the stoxx 600 drop 3.8% a global selloff yesterday on the back of those heightened concerns on the coronavirus outside of china fears it could turn into a full scale pandemic with the exception of japan
opening up after holiday that stabilization has not filtered through you can see the dacx now tradin about a quarter of a percentage point. the main benchmark in italy as it became the epicenter outside of asia with over 200 cases reported there investors in europe trying to assess where do we go from here? do we buy the dip, hold back or continue selling let's take a look at fx markets. we are seeing a strength in sterling still below the 1.30 mark. the dollar has been a key beneficiary of the risk off
trade taking money out of risk assets and putting it into safe haven assets the euro trading slightly firmer to the dollar at 1.0859. that currency trading around 110. let's look at u.s. futures yesterday, we saw a massive plunge for u.s. stocks the dow dropping to the third worse decline ever the major stocks about 1,000 points lower we are looking at the rebound for wall skreet. s&p and nasdaq looking to a stronger start today if europe is any kaekindication what is to come, we could be looking at a fragile opening
president trump announced that india will be buying $3 billion in defense equipment from the united states trump was upbeat about the potential of a bilateral trade deal with india. >> another major focus is forging bilateral economic relationships that is fair and reciprocal our teams have made major progress i'm optimistic we can reach a deal that will be of great importance to both countries >> warren buffett has sounded off on this year's election. the berkshire chairman says he normally votes for one party >> i've only run for two offices, one was head of the young republicans and i was on the ballot running for the
republican national convention in 1960 but normally i vote for democrats. we'll see what happens >> that's the first time i've heard you say something like that >> i've kept it a secret all these years. >> bernie sanders and joe biden are close to tied. joe biden has edged into the lead with 27% of the vote. sanders has closed the gap other hopefuls are well behind that pair with a notable exception, mike bloomberg who has not put his name on the ballot in south carolina a report about that primary race >> bernie sanders moving into striking distance after the huge win in nevada. >> we are going to win across
the country because the american people are sick and tired of a president who lies all of the time >> our new poll shows sanders in a strong position behind joe biden in south carolina. the former vice president betting it all on his support from african-american voters here sanders' support is growing. >> are you going to win here in south carolina >> yes >> take it to the bank >> yes >> endorsement from the highest ranked african-american leader helps. >> do you think bernie sanders could beat president trump >> i'd like whoever the democratic nominee is to beat
donald trump >> sanders facing backlash for these comments >> we are very opposed to thea authoritarian nature of cuba it is not all bad. >> writing on twitter that castro murdered thousands but sure, let's talk about his literacy program >> bloomberg looking for a z disasterous rebound. they hope to make the debate all about sanders. >> and bloomberg attacking sanders for those comments even though he's not on the ballot. he's still being talked about in this race. >> i want to pick up on bloomberg here making his debut last week in
the nevada debate. he has not officially run on the ballot yet he gave a pretty unconvincing performance he's really a technocrat of sorts. seemingly not a candidate afraid to jump into criticism we saw that on twitter with a series of messages 4r50edileadin interesting to see bloomberg jumping in in the same way we've seen elizabeth warren go on about the nastiness.
he is facing a lot of competition. they see him as the front runner it will be interesting to see in that latest 23% poll to determine if he can move past biden. south carolina has been seen as the test >> he has. our guest yesterday weighing in on u.s. politics senator warren made it clear she will back whatever candidate is on the ticket. the question is can all of the democrats gather around him. if you look at the votes from nevada, he not only won, he won big and across a diverse range of voters but a huge amount of doubt whether he can capture the broader democratic vote. >> and if he's not the nominee,
how supportive will he be of the nominee? we saw that in 2016. he was not in full endorsement of hillary clinton we'll see the focus on that side for the other nominee. they are incredibly enthusiastic they've been impressive of getting out the vote for young voters >> i think the other aspect of the campaign which has been fascinating is ad spend and the amount of resource bloomberg has put into this campaign president trump also putting down a huge amount of money and reporting the mass add on youtube, which can cost an estimated $1 million a day to run. raising the question, can you buy an election? >> there is a lot going on in
the u.s., also some news from saudi arabia advising citizens to avoid traveling to italy and japan this is on the back of what is going on with coronavirus. iraqi health ministry weighing in and announcing four cases turning up in iraq, so the middle east clearly in focus now. we saw the increase in cases in iran >> interesting in iraq about the idea that protests should stop because of concerns of coronavirus and clearly the crowds that accompany those massive protests you can see the impact of the virus across the economy in europe and now in the middle east if you have any views about what is going on or about the prime minister race, get in touch with
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bahr welcome back let's get a check on oil in focus around the coronavirus. yesterday, we saw a plunge in oil price nearly 4% lower. overnight, a rebound flat versus the last session. let's get to dan murphy now with more dan, what did the saudi energy minister have to say about coronavirus? >> reporter: saudi arabia energy minister making his way into the conference not sounding too down beat with how oil prices have
fallen he reacted live as he made his way into the room. listen in. >> i'm not a concerned person. i tend to think calmly with f ty >> does this coronavirus worry you and require a response from opec plus at this stage and not being complacent in the broader market >> everything requires atte attendance in every issue in the world which requires attendance, i think we need to pull resources and abilities that everybody would tend to be medical, financial, economic.
i think we just have to be tranquilized in attending to any of this. >> are you aware of the fact that demand is dropping? and opec should be attendant to the slow down in demand? >> we did communicate with each other and use every opportunity to talk with each other. just yesterday, i had my friend fromthe cohost, the uae because he's visiting. and the secretary-general from opec was here. we had a good chat way did not run out of ideas we did not loose our phones. there is always ways of
communicating through conference calls. you will see through that statement, he was positively engaged. i'm only quoting what he is saying that we are communicating and we have not yet made our confident in our partnership of opec plus. i'm confident that everybody in the opec plus is responsive producer >> no fractures in this relationship >> wall street likes to write these stories. >> reporter: saudi arabia energy minister a couple of take aways he doesn't sound too down beat on the 4% decline on oil this is an interesting perspective to take to the opec
plus meeting this is the first opportunity producers will have to react to the potential cut to production. if the coronavirus they feel will continue to spread and impact the overall oil market. more importantly, senior sources will say any suggestion there is a pressure between the opec and non-opec alliance is appropriate. what we've heard is while there is some concern about russia's position, the suggestion that the group is fractured in any way is not true. on the other hand, it will be important to see what they'll do on the leading as had been
suggested or will they move to not necessarily go that deep, instead choosing to assess the coronavirus into the future. >> that is something to look out for. we also asked this question to the bahrain oil minister not a member but sometimes acting as an observer. an important voice in terms of what the opec group would do he told me he would endorse a cut at this stage in order to stabilize the market amid the outbreak i asked him about the situation in bahrain this morning that confirmed the sixth case stemming from iran which would amplify concerns listen in. >> they've been ready for it now it is a means of
containment. we have a committee looking out for this they have the right means and centers to make sure it does not spread it does have an impact on travel we'll have a careful watch of people coming from the countries. certainly, the ones that came from particular countries and have demonstrated that it is prone to that. this could be contained faster than we fear >> tell me how this has impacted oil prices we saw oil prices fall 4%. >> it had a huge demand on chinese markets. aviation today is a victim of this hopefully short lived. worth health organization is not yesterday concerned this would be a worldwide epidemic.
hopefully those fears will not be realized. if they can contain it fast enough, sure enough the demand will come back >> it is important to look at the overall price, if you look at the bahrainian example with oil prices hovering around $50 usd. we've spoken to the head of southern rating at s&p who suggested bahrain could be vulnerable to a rating downgrade. that underscores how important this is. it helps you to understand a little more for the cuts to
stem >> now nearly two hours into the trading session. a rebound early on and investors back in the green and the rest in the red >> looking at the u.s. futures we are going to see a bit of recovery at the open that is it for today's show. i'm julianna tatelbaum >> and i'm willem marx "worldwide exchange" is up next. when you move homes, you move more than just yourself.
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global markets in turmoil. coming off the worst day in two years as the dow plunged more than 1,000 points. the question today, can stocks stage a tuesday turn around. february 25, 2020. "worldwide exchange" begins right now. good morning welcome to the show. i'm dominic chu in today for brian sullivan wall street is waking up wit
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