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tv   Street Signs  CNBC  January 12, 2023 4:00am-5:00am EST

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they're just memories. craig melvin: that's all for this edition of dateline. i'm craig melvin. thank you for watching. good morning welcome to "street signs." i'm joumanna bercetche >> i'm julianna tatelbaum. these are the headlines. >> the stoxx 600 hits the highest level since last april as investors eye inflation data stateside for eye clearer picture of interest rates. chinese consumer inflation accelerates as covid eases and factory prices fall more than expected in december. merry for some, but not for all.
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strong sales for the holiday period, but revenue as asos falls. uvisoft shares slash revenue guidance for the year citing sales slashing for the year end of 2022. good morning welcome to "street signs." cpi day is here. u.s. inflation is expected to ease with the forecast lower by 0.1% versus the month before the rate is projected at 6.5%. further moderation amid the june peak and falling energy prices. >> this will impact the fed. the central bank forecast rates
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at 5.1% this year against 4.25 to 4.5%. still some way to go as jay powell would put it. susan collins supports a 25 basis points hike next meeting a 25 or 50 would be reasonable, but she is leaning to a .25 move she is not a voting fmoc member this year. all eyes on the inflation print. julianna will talk about it. >> joumanna, the equity markets are rallying ahead of the print falling the strong session on wall street yesterday. stoxx 600 up 0.5% this morning nearly every stock is trading higher this follows yesterday where we saw another strong day with the stoxx 600 gaining further ground 0.4%
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xtra dax out performed yesterday. we saw a long bond in the equity markets. it is the same picture this morning. a rally in europe this morning in sovereign bonds what is driving the rally in fixed income markets deutsche bank team said scholz was helping the eu help against green subsidy as is. they are saying that is part of the reason we saw the major rally yesterday in the european bonds and perhaps part of why we are seeing that continued rally today. alongside further gains in equity markets breaking it down by region we are seeing the dax this morning lagging a little bit that follows the out performance yesterday. cac 40 gaining 0.4%. ftse 100 up 0.5% every region in europe is higher this morning
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broad based rally. from the sector, this is the split. real estate up 1.4%. autos catching a bit at 1.2% retail and travel on the down side with chemicals and food and beverage chemicals typically more of a cyclical sector alongside food and beverage and media under performing joumanna, the take away here is the rally is on tap with the cpi. >> we have spoken about it many times on the show and last year fo focused on the inflation with the impact on central banks and now investors are looking at earnings and guidance from several companies which is have been big movers today for the earnings season. let's talk more about u.s. inflation and what we can expect today. i'm happy to bring in keith
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grimley. it feels there is a strong inflation print in the u.s does this continue and what sort of impact will that have on the fed calculation from here? >> good morning. the roughly november or october time when we were here last time, we were non consensus. now cpi would come down quicker than the markets or fed was expecting. since november, things changed fed slowed down on the rate increase and now the next meeting is probably priced somewhere between 15 and 25 basis points the assumption now is inflation is coming down we are probably below consensus in our view for today's data we think there are a couple of anomalies that will bring things down at a faster pace.
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oil and gas prices normalized since june of 2021 vegetable prices were higher last time. that was perhaps the consumer was finding it difficult to pay for the high levels of meat and they were substitutsubstituting energy prices are down heating oil and car sales were weaker last month in december. consumer spending is weaker. we are seeing the personal savings rate hitting rock bottom at the same time the personal savings rate is coming down, credit card and revolving credit was increasing we think the consumer is under a lot of stress right now. people are surprised by the drop in average of hourly earnings the last inflation report. that kind of reflects the low
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level of employment or lower level of employment in hospitality and leisure which is off from what it was before. we found that earnings is coming down at the same time. >> keith, thank you for that overview what people tend to do is breakdown the inflation number into goods inflation and services inflation i think we have seen a market decline in goods inflation services inflation is still a little bit sticky. yet, last week, we had a very weak ism services print. why the dichotomy? what is going on here? >> this is a reflection of the consumer household budgets tightening with the higher prices shelter is up this year. a major component of that. if anything, the fed is putting pressure on the rent prices by raising rates. the property market is in recession and to the degree
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landlords are able to put prices up because of demand over the last few months and today's data should show a turn around in rent which will bring -- which will be some relief to consumers to a degree. we are not talking about contraction or lower rates, but just about the speed of rents going up at a slower pace. i think the service sector and consumers change habits after the financial crisis they are more stay at home they bought home cinemas they have come to delivery and have expanded. they economized in their own way. it is difficult when inflation and cost off living goes up to make adjustment when wages are not keeping up with inflation. you are seeing in the service industry what we saw in
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manufacturing. more of a recessionary condition and probably prices paid will drop below 50 in the next couple months and the fed should now take more of a sanguine view on rates. they should consider the amount of recessionary voices coming out now that perhaps wasn't there a couple of months ago. >> keith, let me pick you up on the comments around the property market what is your take on the state of the u.s. housing market and how important is the housing market for the fed clearly they have tried to this point to make thelabor market front and center in driving the decision making. the housing market is hugely important to the health of the u.s. consumer and interest rate sensitive. >> that's absolutely true. now we are seeing pending home
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sales and other forward-looking housing data looking in poor shape. in our context and people we speak to in the real estate market are really suffering from the past year. they are hoping for some relief. mortgage rates have obviously risen to such a degree that the affordability is difficult sales have collapsed now we're finding the fed itself by raising rates is creating a more of a recessionary situation. what we got to do now is give the markets time and construction spending needs to come back. therefore, the growth area in the areas has to have improved at the moment, property market is definitely in resciscessionrn
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each time the fed keeps rates higher. >> keith, thank you for setting up for us. keith grandlay. china inflation taking center stage chinese cpi accelerated 8.1% in december producer prices fell the by 0.7% as the sharper decline than expected as manufacturing deal with weak demand sam filed this report. >> reporter: chinese prices fell for a third month in december as factories dealt with rising covid inflations and supply chain challenges continued sticker prices picked up on yearly basis thanks to rising food prices, but not on a monthly basis as government-imposed lockdowns moved to self-imposed cases and
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lockdowns. this is the first report from china as it dismantled the covid curbs. that brought the number to 4% which was below the target core inflation strips out food and energy stayed subdued in december at 0.7% highlighting sluggish domestic demand this is expected to give the pboc more room to ease as the central bank vows to stabilize growth, jobs and prices. for now, there is a view in the market that there could be a lag between the reopening and the pickup in demand as covid cases are on the rise. online travel data is already pointing to a surge in bookings with 70% of pre-pandemic levels expected this lunar new year holiday. because of that, the economists say inflation could gain pace in the coming quarters. although it is unlikely to be as
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hot as seen in other economies investors now eyeing monthly trade figures out of china tomorrow which economists say are also likely to confirm the slowdown in the fourth quarter in singapore, i'm sam baddas back to you. chip manufacturer tsmc reported record fourth quarter profit profit rose 78% to 296 billion tieaiwan dollar revenue increased 43% from the year earlier another stock we are watching closely today in europe is ubisoft shares are down 18% now. the company cut the revenue target after weaker sales in 2022 the french videomaker cut to 500
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million euro citing economic conditions and lower consumer spending charlotte is here at the desk. ubisoft did well in the pandemic because people were playing video games and now fleeing as we get back to normal. >> back to the office. less going on. you are looking at the profit warning by ubisoft cutting revenue guidance after disappointing sales. just down 23%. disappointing sales there. that led the company to review the full-year net bookings which is expected to be down by more than 10% this is the previous target of growth of 10%. big revision there speaking to journalists last night, the cfo said the biggest issue was larger market share and that led to less subpoenaed -- less spending.
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lower spending on non-essential good goods. bad news for ubisoft, they delayed another game release and cost cutting of 200 million euro of the next two years. we see in the u.s., the u.s. listed stock is a seven-year low. we see that now in europe on the paris market with the shares diving a lot of analyst notes are saying from citi and 2023 is looking like a writeoff for ubisoft. the revision from jpmorgan chase and morgan stanley as well the game developer also saw that shares diving a couple of days ago. people are spending less on non-essential goods. maybe a post-lockdown effect for
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the game developerdevelopers >> extraordinary share price charlotte, thank you let's stick with tesco and spencer with strong reports. arabile, many are calling today retail super thursday. more insight into the health of the uk economy what can you tell sus >> it has a week of retail news. the fears around inflation, recession fears and high prices plagued consumers. things have turned positive for the retailers in the third quarter and leading into christmas sales. the numbers precisely for tesco with fourth quarter going up 4.3% clearly consumers wanting to go into the store and not necessarily going online for shopping which is a trend we had
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seen through covid right through the two or three years tesco with the full line grocer to maintain market share from pre-pandemic levels at 25% mark. clearly doing well when you compare to covid-19. over the last year, they lost to the lower spectrum the discount retailers with aldi speaking of aldi, they helped tesco in this regard they had the aldi price match. they linked 600 products to tell consumers they are cheaper that is resonating with consumers and tesco maintaining market share through elements like that. 2.4 billion is the operating guidance they are expecting. you can see the market may not necessarily like it now.
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the negativity is falling off. it was 1.6% weaker today now only .20%. we spoke about martin spencer with christmas food sales up 3%. clothing up 8% both have topped expectations. it tells you consumers want to make the most of the christmas period not so long ago, getting word from the retailer saying every business in clothing grew ahead of the market. entry price resonated with customers and still a lot to do in order to change the business particularly when it comes to that supply chain. very interesting the retail space still fairly strong despite inflation and recessionary fears guys. >> one fun fact about expspence. they are the leading sales in turkeys for christmas time that gave them the boost arabile, thank you one stock we have been
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watching the last couple days is lvmh after the news of the management reshuffle yesterday new boss will be replacing the outgoing boss mr. burke. he was leading louis vuitton for years. his daughter will being moving to the division. a reaction is positive in the stock. you can see this morning the con conti continuation lvmh up at an all-time high. note worthy. >> i think with lvmh, it is question of succession insight into the person leading the luxury giant and certainly a fascinating sector to watch and trade in the coming weeks. coming up on the program, harris associates cuts measures
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ahead. we'll have details just ahead.
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comcast business. powering possibilities. i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck. welcome back to "street
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signs. some banking news. harris group has seen the swiss lender see the stake cut in half it saw a cut of 10% last august and that was after the restructuring plans. the cfo said the stake was diluted when new capital was added. continuing our coverage of the goldman sachs story. the company began laying off staff as part of the drive to reduce cost. the bank will cut 6.5% of the global work force with close to one-third affected coming from the investment banking and global markets division. goldman earnings are due tomorrow and profits expected to fall 45% on the year joumanna, we were discussing this story yesterday you made the really important point to put this in perspective
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in terms of goldman's community employee base. they ramped up massively in the pandemic looking at the numbers, employees grew by 30% since the end of 2019. they are pushing through all of these layoffs, but it is coming from the elevated base >> we were talking about amazon, for example, the stock is back to pre-pandemic from 2019. the work force has almost doubled since then a lot of the companies went on a massive hiring spree through the pandemic and now they are trying to reduce again. i think as we spoke about yesterday in the case of goldman, they tend to have an annual point and round of laying off bottom per scent of workers. in this case, it sayingis a big
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number i spoke to employees and they said it is brutal. goldman tends to be the first bank to lead with the firing if it is just an indicator of what's to come, it could be a challenging couple months for jobs and banking sector. >> taking it a step further in the annual cycle of banks, the bankers will be given bonuses in the coming weeks that is another tool for management and banks to push people out. >> we talked about credit suisse yesterday. the upcoming bonuses could be cut 50%. typically you would use the blunt tool of the bonus to send the signal to employee about the relative value in this case, goldman is just going all-out and going for absolute head count reduction.
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>> from the management persp perspective, if you indirectly push people out with bonus, you don't have the severance packages calls there will be severance for those getting fired and those resignations is easier for the bank >> this will come back to numbers. expected to jump 45% year on year that is a dramatic decline tomorrow sis a big day for the earnings season. both will tsee how the capital market has been going. earlier on the show, we had keith and he said there are leading indicators th s that co credit is dropping with savings
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and credit card increasing russia has replaced the head of the campaign who is dubbed general armageddon this after the russian army faced setbacks on the battle field. the ministry of defense for ukraine described this as a clear move that russia is not achieving its desired objectives big news there on the russia and ukraine front. still ahead on "street signs," we're leave in st. moritz arjun has been talking to key players in the crypto space. >> liquidity is a big issue in the crypto market. is it over or more pain to come? stay tuned to that interview coming up next
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welcome back to "street
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signs. i'm julianna tatelbaum >> i'm joumanna bercetche. these are your headlines >> stoxx 600 hits the highest level since april as investors eye inflation stateside. chinese consumer inflation accelerates as covid curbs ease and factory prices fall more than expected in december. ubisoft shares sink to the bottom of the stoxx 600 after the french video gamemaker slashes guidance citing weaker sales at the end of 2022. disney announces mark parker as the next chairman set ting a scene for the showdown for a seat on the board. european markets off to a
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solid start for the session. this after the better handover from asia overnight and wall street yesterday and the number one focus for investors this afternoon which could really set the tone for stock markets headed in the short run which is cpi print. investors are expecting the year on year rate to fall to 6.5% that is down from 7.1% in december core inflation expected to fall to 5.7% from 6% back in december of course, this would constitute a 0.2% month on month jump it is important because it will set the tone for markets and also we get further indicators from the fed and what they will decide to do in the next meeting. in europe, we take a kcue from the markets as we get into the
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heart of earnings season a couple are driving the performance. dax is up .50% doing nicely today cac 40 up .80% ubisof it is really lagging today down almost 20% after disappointing results. ftse 100 as you see up .60%. this index is credit close to an all-time high. who would have thought as we spoke at the beginning of the year with the ftse 100 was the out performer with the commodity stocks within the index. something to keep an eye on for sure as it continues to creep higher ftse mib is up .80%. the theme for yields is one rally. it just keeps going. yesterday, we saw a massive rally across european fixed income 10-year treasury down 14 basis points btp is now at 3.98
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yesterday alone, we rallied 20 basis points the spread with italy and germany is now through 200 basis points around 190 really has come a long way at the time of the italian election, it was close to 240. we rallied 50 basis points on that spread. this as fixed income investors focus on the trends that are panning through in the market and europe and u.s. later today. the dollar weakness theme is continuing to give you an idea, the dollar is down .60% here today it is weak against the pound and yen and euro ftx has recovered more than $5 billion of cash and liquid
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assets which could be used to repay customers. this figure does not include liquid assets which could significantly drive down market value if sold. the failed cryptocurrency exchange is still working to determine the customer shortfall after bankruptly cy in november the judge will allow them to keep the names secret for another three months binance ceo says the cryptocurrency exchange will increase staff by 15% to 30% this year. the hiring spree comes as others are laying off workers in droves amid price pressures. cz says the damage is not that high we have arjun with more from st.
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moritz >> reporter: good morning, julianna one of the issues last year was around liquidity we are seeing that continue to push into the market the question is where does that go from here does the market sort itself out? will these issues be resolved or is there more pain i'm joined by the ceo here liquidity was a huge issue last year for so many companies as well how did the massive plunge in price last year and collapse of several companies affected your business >> it is not just protocol on ethereum and blockchains, but it allows you to supply assets and draw liquidity against them. we have seen some additional consumption after things that have been happening in the
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centralized part of the cryptocurrency sapace at the same time, the assets used as collateral has increased in value that has shrunk in the market. it is a tool that works in a bear and bull market >> has the protocol been put to the stress test this year? >> it is fascinating our protocol among other chip protocols has stood out well the reason is that the protocol acts as it is designed it relies on contracts and you codify the tools, the liquidation mechanisms work as codified to give you an example in crypto finance, you don't have this execution and visibility that has been a positive
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outcome. >> a lot of people are looking at a lot of crypto companies and after the collapse of ftx and celsius and wondering if any of these proper tocols of companieo under, do they have the collateral this is around defi and terra and an stablecoin design even that collapsed and didn't have the backing it said it did. everyone is looking at stablecoin and exchanges in terms of your reserves, do you have enough money to cover customer deposits? >> it terra, it was the design that was the flaw. the implementation of the tech was working, but the economic design did not work. in terms of the protocols, there is actually quite proven designs that are working
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they rely on overutilization as long as they are in the system, you have a stablecoin fully backed in case they are decreasing, it is built in cases that hold the collaterals. hold the amount of stablecoin and reduce the debt balance. the main thing is it is not just finance. you see everything that is happening so you can choose the protocols and mechanisms you subscribe. everything is governed by the communities. there is risk management entities there are some paid by the community to operate and manage the risk >> in terms of the reserves, are those strong enough for market down turn? >> basically, over coll
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collateralization. the amount of liquidity or stablecoins minted, what happens is they are decreased compared to the collateral available. it relies on the over collateralization. >> let's go macro. $1.4 trillion wiped off the market companies falling like dominos one issue is contagion which is a feature of what we have seen so far do you think we have reached a bottom in terms of crypto prices and also in terms of the washout or do you think there is more pain ahead >> it is hard to say in terms of where things will go from now.
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things are looking good in the sense of how much technology is developed in the space obviously it is not just finance which was built for the past few years. it shows resilience in moments of what with we have seen in downturn markets there are multiple things with scale ability. we see layers built on top of ethereum with more scaleability. we are seeing more and more financial applications built as well on top of the blockchain ecosystem. our team is also building a protocol into social media it is an example where you can use blockchain beyond the initial application. there is probably more developers and more people solving these problems and that is a good indicator. >> as you look at the current state of the market, do you see any more stress points
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>> i think little things have happened the good things about finance or crypto in general is there is risk which is realized quickly the market moves fast because it is small and narrow. the information flows quickly. i think definitely most of the biggest things that didn't work out and they got wiped and those things are resilient and technology and products that are built carefully and we designed are still here i hope that the most things are in the past now. >> thank you so much for insight and intro. interesting to hear a little bit about the state of the market right now and where we are with the liquidity issues and washing out in 2023 and see if there are more stress points
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i'll talk about stablecoins as an issue, but the market is focused on ftx and how that plays out and further contagion ahead. guys, back to you. >> arjun, thank you for the interview. coming up on the program, disney slams the door shut on nelson peltz's attempt to join the board. we'll discuss that story after the break.
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welcome back to "street signs. transportation news for you. the faa outage is still felt today with flight delays and cancellations topping 10,000 according to flight aware. the faa said the initial work shows a damaged data bbase was blame. tom costello has the latest. >> reporter: it started before the sun came up. a critical faa computer system was down the notam system notice to air system with
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critical information to pilots with closures of runways and military and space activities. without that information, pilots can't takeoff. soon the faa ordered all departures to remain on the ground as it worked to dissect the problem. with delays and cancellations bui building through the day >> happy birthday. you can't leave. >> we tried calling the airline and we were not able to get through. >> reporter: by 9:00 a.m., the faa said the system was operational and allowed departures to resume delays cascaded through the day. in a strange, apparently unrelated coincidence, canada's notam system temporarily went down today the faa and senior law enforcement sources say there is no evidence that the faa system was hacked >> i would say there is no direct indication of any external or nefarious activity
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>> reporter: government sources tell nbc news, the faa system issues surfaced yesterday at 3:30 in the afternoon. then switched to the back-up system and returned to the main system at midnight at 4:45 a.m., the faa rebooted the system it took time to reload the data of thdata the problems were caused by a corrupted file >> i have never heard of the notam system being down. it is a first. >> reporter: it was last week that air traffic in florida ground to a halt after a different faa computer glitch. over the holidays, southwest airlines suffered a meltdown affecting 1 million passengers much of o mpassengers >> the air travel system in the united states is running less optimal. things will get more complicated
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going forward. >> what a time for the airline industry it was so heartbreaking looking at people sleeping on the airport floors after the massive issues with southwest at christmas time now this is not a private airline, but a government system that caused this chaos that comment there puts the spotlight on more infrastructure also, i think, listening to experts and pilots in the industry, specifically investment in back-up systems so if issues arise again, it doesn't cause the nationwide shutdown >> i don't think i was alone and as soon as i saw the planes were grounded, my initial reaction was one of fear. the last time this nationwide ban was introduced was around 9/11 later, it emerged it was a data issue with the system called the
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notice-to-air system which our reporter went through. i hadn't appreciated how important that was and how outdated that technology is for that system. you have to think given how crucial that information p system is to keeping the planes in the air and system running, it is remarkable it hasn't received an upgrade and there is no back-up system. it tells you a lot about ongoing issues we talked about the state of u.s. infrastructure and transportation issues and pete buttigieg saying they will do what they have to do one good thing is they have ruled out the possibility of a cyber attack >> right it is an issue where there is bipartisan support which is rare in the u.s. let's leave the faa issue for now. we will bring you updates if there are any. let's go to bed bath & beyond. shares are up 24% in pre-market
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trade. this stock has been on a tear. suf surging yesterday as more r retailers come back into the stock. jumping 70% during session and more after the bell. 24% in pre-market trade. we also saw a rally in the other meme stocks. amc and gamestop catching a bid yesterday. sticking with u.s. stocks. disney has stand mark parker as the next board chairman. the company says it is opposing nelson peltz's bid to join the board. peltz's company took an $800 million stake in disney. the entertainment group has lost its way. peltz has led successful campaigns at p&g in the past. >> it has told you the impact
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that peltz has had they were involved in p&g and unilever it is really telling this time how disney is pushing back they will be encouraging shareholders to vote against nelson peltz getting a seat on the boboard. it tells you the pressure on disney since bob iger's return with operating expenses. one thing he has been talking about is executive compensation. >> you talk about the company pushing back this koflcosts a lot of money a lot of money to wage a war against an activist and put up resistance it takes focus from management this comes at a time when disney is already under huge amount of scrutiny for the high spending on the streaming business. now you have the activist who is
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complicating things and potentially demanding more time, effort and money you have to think if the goal is improve returns, this could be the impediment of what they hope to do. >> the whole thing by chapek leaving and iger coming back is similar to what we talked about earlier. you have a huge company and it is important for the investment community to know. bob iger has signed on for two more years we still don't know who the pick is for who will succeed him. that will be the focus on the board going forward. there will be a committee going forward to plan for the eventual successor. they like to hear more details >> they want to hear more detail from that and more from peltz about his solutions. he has made clear what he thinks
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the problems are, but there is not a lot of clarity or insight what he thinks is the right strategy moving forward. one criticism is he doesn't have experience in the media industry specifically you mentioned experience with p&g and successful campaign there to get the shares moving he is at unilever. when it comes to the media industry, he doesn't have the track record you can see that is not necessarily important in making a positive change, but it is a yellow flag at least that he doesn't have a track record. >> the tstock we will watch. the main event is the u.s. inflation print. let's look at u.s. futures trading into that event. the picture is positive across the board. european markets trading positive u.s. dipping somewhat. basically around the flat line this is after a positive session yesterday. also worth pointing out the
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nasdaq yesterday was up 1.7% the first four-day winning streak since september a bit of rotation has come through. julianna, whether it has legs or not with tech with the beleaguered sector last year >> i wonder given the rally in tech nasdaq up 1.t88% yesterday. the first time it had a four-day win streak since september is that priced in? is the expectation for a downside surprise and cpi priced in does it set up the tech sector for downside risk heading into today's cpi print? >> i would go as far as saying i think the bigger market mover in this case would be an upside surprise to inflation.
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investors have gotten used to it the estimates are below. analysts are saying below consensus. we expect core inflation 2.2% month to month over 3% expectation. if there is a surprise there, i think that will have more adverse reaction to the market than consensus print or continuation >> it does feel like the whisper numbers are to the down side clearly that is part of what has driven the tech sector higher in the growth stocks rebound with those benefitting from the less aggressive fed move forward. our coverage will continue that is it from us i'm julianna tatelbaum >> i'm joumanna bercetche. "worldwide exchange" is coming up next.
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it is 5:00 a.m. on wall street here is the top "five@5. g goldilocks or bust what a reading too hot or cold for stocks disney on defense. the biggest proxy fight in nearly a decade. one day later and one airline playing catch up after yesterday's grounding. what we know and what we don't. and apple weighing a design feature to the macbook lapto


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