good morning. welcome to "street signs." i'm louisa bojesen. >> i'm nancy hungerford. these are your headlines. sticking to the man. shares in asset manager man group soar after the company reports $1.3 billion in inflows as funds under management swell to just over $80 billion. altice buys an additional 5.2% stake in sfr off-market, sending shares in the french telco to the top of the european market. september car sales shifting

into top gear hitting a record level in europe with renault showing double digit growth. hard times for software ag. shares fall to the bottom of the stoxx 600 as the german company reports plunging earnings on weakness in its database gi division. good morning, everybody. welcome. it's friday. >> it is. tgif. this week has gone like that. i don't know where the week has gone. >> year has gone. >> stoxx 600 up with better than anticipated data overnight. we'll get into that later in the show. coming into the session yesterday, we had weaker than expected chinese data. inflation data better than expected. we're seeing a bit of buying

across the board. here you have it. everything in green today. all european boards trading in positive territory. up a half percent to 1%. when it comes to the sectors, banks, insurers, basic resources higher by 1%. the banks up by 1.5%. speaking of the banks and the financials out there, man group, let's talk about this company. they are to buy the real estate focused investment company called aalto as they seek to diversify revenue sources. they also announced a $100 million buyback scheme after net inflows of 1.3 billion in the third quarter. jenna acton is here to talk about this move. hello. >> hello. >> investors loving it. the stock up by 10%. so what's happening here? third quarter asset growth

stronger than anticipated, now entering into the u.s. property market. >> yes, three pieces of good news individually which you summarized on the read-in. the one that is most exciting to people is the fact that net inflows were so much stronger. it's been a tough year for performance for man group across the board. we've seen a good quarter for american, and ahl performance has narrowly tracked the man group share price, a little less so recently. people equate the two together. so, moving away from that, the fact they managed to get inflows despite the performance is a good sign. >> they had difficulties or had difficulties a couple years ago in terms of those inflows, of new inflows. the strategies that people like at the moment are what? what are the real pulls for investors? >> institutional investors are trying to move towards more longer term locked up capital

type initiatives, such as private debt, private equity. a big move towards that. that's what you're seeing here, what man is doing is making a step into the space. speaking to an analyst this morning, saying this is only a small stepping stone into the space. it's not a large acquisition. only 25 million up front. a bit more over time, an extra 200 million subject to earn-outs. it signifies luke ehlers who took over on the 1st of september is following the strategy outlined, and that's what investors like and that's where the institutional money looks like it's heading. >> should investors read this as man group hitting the pause on acquisition buttons or is there more to come? i wonder if this is it, will they focus on organic growth? >> i think it's the opposite. this is a sign they're ready to go. they looked at 300 acquisitions in recent years and rejected them. saying they've been patient,

waiting for right opportunities. they still have a lot of surface capital. doing the acquisition and the buyback will bring the surface capital from $479 million down to $300 million, but that's still a lot. >> what about the brexit effect? i know man group's chief was one hedge fund titan talking about the issues surrounding brexit. they haven't seen that so far as many industries have been able to shrug off as we await article 50 to be triggered. >> ahl, their group, bet correctly on this and did well in the week following brexit. also you got to remember, most of the revenues are made in dollars, this is quite attractive from that point of view, from the sterling side they have more costs than revenue. so it's actually working out better for them. >> all right. gemma, thank you very much.

ge mm mshg gemma acton joining us. should we talk about software? >> yes. one of other favorites. german firm software ag has seen a downtown its database business. troubles have been compounded by 5.4 million euros of provisions after ag had to set aside for legal disputes in the u.s. >> let's check shares of french telecom firm sfr, they are rallied boosted by altice which is buying more of the company's stock. they are continuing to increase their stake in sfr despite a public regulator blocking the sale of the firm in september. we were talking about this one yesterday. tesco and unilever buried the hatchet over a dispute which saw the british grocer pulling a range of products from the

consumer goods group off its website. they clashed over raising profits in order to offset the sterling slump. brands like ben&jerry's ice cream, marmite were removed from tesco's website. both companies declare the spat is over saying they were pleased that the situation had been resolved. the uk must choose a hard brexit or no brexit says european council president, donald tusk. he warned that britain wouldn't be able to have its cake and eat it too by remaining in the single market after leaving the eu. >> the truth is that brexit will be a loss for all of us. there will be no cake from the table for everyone. there will be only salt and vinegar. if you ask me, there is an alternative to this scenario, i would like to tell you yes,

there is. i think it is useless to speculate about soft brexit because of the reasons i've mentioned. this would be purely theoretical speculations. in my opinion, the only real alternative to a hard brexit is no brexit. >> the fx markets, the euro dollar relatively stable around 1.10, slipping a bit after hitting a 2 1/2 month low after the last session or so of 109. just above that. on track for somewhere in the region of 1%, 1.5% loss over the course of the week. when it comes to the bond markets and what's going on there, we're seeing a mixed picture this morning. john taylor is with us, portfolio manager for fixed income. the whole issue about brexit, i don't understand what a soft brexit means, if we're leaving

we're leaving. i don't see how it can be soft. the net outcome would be the same, wouldn't it? >> this differential between soft brexit and hard brexit will disappear. we're in for an extended period of negotiations for two years plus. what we're hearing so far is not too much of a surprise. both sides taking a firm stance. we get to see the outcome. we won't know that for a few ye years. what we're seeing is that currency effect and sterling looks cheap. there's no near-term reason to see that starting to recover. >> european bond funds hit by the largest outflows in more than a year with the largest redemption since 2015. blackrock data at the same time showing us bond etf volumes at record high, 24% rise this year. these things that are taking place in the background, like brexit, like the uncertainties with regards to the election and

uncertainties with central banks, will we continue to see money flowing into bond markets? >> we're at an interesting point. the last couple of years we've seen institutional money flowing out of europe into the u.s. and that same flow from japan as well. now when we look at that opportunity, it's fading away a bit. the yield they get they give up on. fx hedging costs. now i think what you're seeing is european domestic investors getting more nervous. if you're invested in a corporate bond fund you've seen your yield get lower and lower. and headline risks over the next couple of months, u.s. election, italian referendum and important ecb meetings as well. doesn't surprise me people are looking at the yield and thinking about downturn risk and taking a back step. >> part of what is making

investors so nervous is this emperor has no clothes element, the fact that people are worried that quantitative easing is having a diminishing effect. if we look at that report that the ecb was going to start tapering, it didn't live long. what do you think? >> the ecb themselves, the senior members came out and dismissed that talk. i think it's a bit of a tricky position. they need to make some adjustments to the program because they're running out of bonds and markets to buy. any sort of sign they are tapering will be taken badly by markets. the ecb's job still is to keep yeels l yields low to allow growth in europe and longer-term inflation expectations to increase. at the moment they're well below their target and below where they were when they last extended qe. this doesn't seem like the right time to start tapering. i think we're a year away from that. the ecb needs to be careful about changes they make to the program over the next couple of

months. >> interesting, you made the point that investors should start protecting themselves against inflation risks. is it time to get into inflation-linked bonds? >> in certain areas, yes. in europe, no. the output there is negative. if you look at somebody like japan, much more aggressive on the monetary side and now embarking on big fiscal stimulus as well, there's more catalyst for inflation there. the expectations are low. almost a free option. in the u.s., sort of much further ahead in the cycle, we are seeing inflationary pressures building there. our expectation, inflation next year will be much higher than the break-even price. there is opportunity in japan and the u.s., but not really in europe. if i'm taking a longer-term perspective and listening to these issues you raised, when is a good time to say i'm going to short bonds now? i'm going to sit and wait for a while? these things will come back to roost, whether it's rates

heading higher or inflation heading higher, or they might come back to roost. >> i think there's definitely risk. not quite at that tipping point yet. the job of the central banks is to keep yields low and allow fiscal policy to work, and to raise inflation expectations and growth. so you're probably looking outtor another couple years. i think there's upward pressure in the near-term with the fed raising rates, but those yield moves higher are limited. you need to wait a couple years before you see the start of the huge bear market that people are forecasting. >> yellen due to speak later on today along with the boston fed president. once again investors on their toes waiting for that. is there anything that prevents the fed from hiking this year? >> probably a trump victory at the election. i think that's something that the market als will take a negae view on and something that the fed will be on the back foot for the time being.

if we get a clinton victory, they have the green light to go. they started to talk about losing credibility if they don't move. that's enough to push them over the line. >> all right. there you have it. john, thank you for joining us. john taylor, portfolio manager for fixed income at alliance bernstein. plenty more still to come. ary rick roseric rosengreen wil to cnbc later. a lot of fed presidents say he is seen more important when he speaks than janet yellen. >> is anybody awake out there? >> it's early. >> we'd love to hear from you, it's always nice. streetsignseurope@cnbc.com. it's interesting to hear your thoughts on flows, where the money is going.

how to prevent your portfolio from potential disaster, politics, you name it we're also on twitter, tweet us directly, @nancy dominguecnbc a at @louisabojesen. car sales hit top gear on the contine continent. we'll break down the biggest winners. guess what guys, i switched to sprint. sprint? i'm hearing good things about the network. all the networks are great now. we're talking within a 1% difference in relbility of each other. and, sprint saves you 50% on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers? i wod definitely love some new cusmers. sprint will help youdd customers and t your costs. switch your business to sprint and save 50% on most current verizon, at&t and t-mobile rates. don't let a 1% difference cost you twice as much. whoooo! for people with hearing loss, visit sprintrelay.com.

. good morning. welcome back to "street signs." let's bring you up to speed on the latest news around deutsche bank. they have reportedly seen withdrawals from the bank's european and asian banks wealth management units over concerns

of the doj fine. as of the end of june, the lender managed 360 billion euros in its wealth management division. shares rising higher on the session by 2.3%. four small italian bank there's a were rescued last december say the amount of nonperforming loans has been raised to 360 billion euros. bank popolare has sold 318 million of bad loans. thailand declared a year of mourning after its king died yesterday at age of 88. martin joins us live from bangkok. martin? >> good morning. we're about 20 hours since the official news yesterday evening at 7:00 local time that the king had passed away. he was 88, the world's longest serving monarch until that point.

we're waiting for now -- what should happen any minute now is his body, he died -- passed away at a government hospital about 30 minutes drive away from her. his above will be moved to the golden palace. that's where rituals will start taking place, including the washing of his body. we can expect more people, hundreds are now out on the streets, around the hospital where he died and now surrounding the grand palace. hundreds more to line the route as his body moves from the hospital across to the grand palace. of course, this is a nation in mourning, grieving the loss of their king. unusually, in addition to that, at the same time on the street, it is remarkably calm today. partly because it's a public holiday, partly also because there's heightened security presence. troops as well as police here. in financial markets, that's a more interesting story. coming to the home stretch for

bangkok trade today, that was a surprise. the market, we weren't sure whether it would open for trade today because the news of the king's passing came after the market closed yesterday. in the event, 10:00 this morning, back to business as usual. the market was up and running. it did not sell off. it's been going higher as the clock ticked on. we are near session highs, close to 4.5% stronger on bangkok's s.a.p. the low 335.20 or so for the baht. a fairly strong bounce back there as well. this market stability is important for thailand at this strunk su juncture, this was reiterated by the prime minister last night at 9:00 p.m. in a special session

of parliament televised on national tv shortly after the official news of the king's passing was out. take a listen. >> translator: for the economy, stock market trade, investment and business sectors, please don't stop. don't make our country stark and lack reliability. don't panic to buy or dump stock. i urge everybody to maintain our country's financial security. the prime minister there. two years ago, back in 2014, he was a general, the general who led a bloodless coup which led to the political situation we're in now, which is basically military rule. back to you. >> thank you very much, martin. european new car sales have hit a record level for september. after jumping 7.2% on the month. renault has taken the number one spot with sales up 18%. italy and spain were the biggest

regional winners showing double digit growth while luxury brands put in a strong performance. joining us now is arnd arndt ellinghorst. good morning to you. thank you for joining us to react to the numbers. at a time when we talk about plenty of headwinds out there, talking about increased capex for invasion, fears of global peak demand for car sales, yet this strong number what is driving it? >> good morning. the european markets are still on track. germany, southern europe are strong. consumer confidence are strong. it's cheap to own a car. cheap and available to switch to a new car. that's really driving the momentum. the uk is softening down. we've seen weakness in business sales, so i think it's far too early to call there's no brexit

impact in uk car sales. overall these numbers are very sound. >> looking at renault the clear winner, pujot not so much. we know the volkswagen namesake brand is pushing forward with a big turnaround plan. are these results they can be happy about or is there more to desire? >> vw has been losing market share for two, three carters. that's a clear effect of, "a," they've been, i think, selling above the natural level of vw market share for a number of years because competition was weak. secondly in the aftermath of diesel, clearly consumers are turning to other brands, especially, as you said before, to renault. the good thing here is vw management is not pushing to get to higher sales. not offering huge discounts in the market which would harm their residual values over time. we are really eagerly awaiting

the turnaround plan that we hope will be presented later in november this year. >> arndt, good morning, do you have indications of whether or not production costs are going higher for these automobile makers? are they having to take a larger bite of the costs that would otherwise be passed on to consumers out there? >> that's a good point. for the next ten years the industry has to live with an overlap of different powertrain technologies. the combustion engine needs a lot of work to comply with co2 emission standards. at the same time we will see more plug-in hybrids coming in, a high concentration of evs. until 2025 or so, that is driving complexity and power train costs. i would agree. the industry is facing higher costs moving forward. that's partially the reason why

auto stocks are trading at all-time low valuation. >> there were some comments surrounding daimler earlier this week that sparked concern in and a a&d and capex. what do you make of that? >> we know r&d and capex are peaking this year because of the e class and the end of a huge product renewal, so we expect that to come down for daimler a bit. i would not read it as a signal that we're at the peak now, we have to tighten the belts here now. >> a few years ago, arndt, people were switching from the gas guzzlers to the much smaller cars. we saw a trend in that direction. what's the trend now? what's the main type of vehicle that people are looking to buy? >> well, people are buying bigger cars.

the reality is that people don't care too much about fuel efficiency or emissions. there's a lot of talk about it, but when people have the cars and money available, they are buying bigger cars and diseaese. in the u.s., we've never seen a higher pick-up in suv penetrati penetration. even in china, bigger cars, more prestigious cars. that's a problem for carmakers, because they have to -- they're facing all these fleet average emission targets, but people keep buying bigger and bigger cars, it will be harder on that mix to meet these emission targets. arndt, pleasure as always. arndt ellinghorst. >> i'm offended, people are saying keeping the '80s alive.

this is how it is. i love the '80s. colors. >> you should see us when we come into work. we have to take a break. check out world markets live. our blog runs all the time. we'll see you after the break.

good morning. welcome back to "street signs," happy friday as well. i'm nancy hungerford. >> hi, i'm louisa bojesen. your headlines this morning, european markets rally boosted by basic resources as chinese producer prices rise for the first time in 4 1/2 years. signaling the end of industrial deflation in china. >> altice buys an additional 5.2% stake in sfr off market sending shares of the french telco to the top of the european markets. sticking to the man. shares in asset manager man group soar after the company reports $1.3 billion in inflows as funds under management swell to just over $80 billion.

september car sales shifting into top gear hitting a record level in europe with renault and fiat logging double digit growth. good morning. welcome back to "street signs" on this friday. a big day. we have two fed speakers, fed chair janet yellen and boston fed president, and the bank earnings. investors will be cluing in to a round of bank earnings including wells fargo. let's see if wells fargo says anything about the ceo handover, loan growth. u.s. markets are set to open mixed. the s&p 500 two points higher,

the dow jones, 13 points higher, and the nasdaq lower. let's see where we are in european trade. green arrows across the board. the ftse 100 higher by a half percent. we're seeing a rebound in basic resources which took a hit in yesterday's trade. today more optimism surrounding china after inflation data. the xetra dax, cac 40 and ftse mib higher. let's bring you a view on bond yields, particularly if you can hone in to the ten-year uk gilt there. that's rising this morning. that is touching the highest level since late june hovering around 1.76. tough comments coming from eu council president donald tusk surrounding brexit saying it will be no piece of cake. looking at treasuries again which have been ticking higher in anticipation of a fed rate

hike later this year. >> guess what? >> i don't know. >> construction volumes fell by a monthly 1.5% in august in the uk after a revised increase of a half percent in july. construction output falling for august. lots of economists predicted output would be rising by 0.2% for august. this is weaker than expected. they do say they don't see a brexit link. they say the weakness doesn't appear to be linked to the brexit vote in june. so volumes just inching up. weaker again than the median forecast that had been put out there. it's interesting. you know, they're saying it doesn't have anything to do with the brexit vote. it could be a lull. >> they seem to be saying because it's largely led by infrastructure. therefore there's no link. nevertheless, it's interesting because often we get the strong

manufacturing data. economists are quick to say don't look too much into that because of the sterling effect. construction a different story. interesting to have this data point. it is dating back to august as well. >> the government putting all of these plans in place to increase demand in new housing, which is very much lacking still in the uk. shares in sinochem trading higher on speculation that it could be teaming up with chemchina. the chinese government is pushing for a deal between the two chemical companies which would have a combined $100 billion in annual revenue, this as beijing is looking to reduce the number of state-owned companies and create more globally competitive businesses. and chinese producer surprised to the upside. cpi for september came in above

expectation. sherry, good to see you this morning, or -- what time is it for you anyway? >> happy friday. yes, happy friday in terms of china data points. it was a rare bright spot, i would say, when it comes to september inflation data out of china this morning. so, ppi edging up, 0.1% on year. this is turning positive for the first time in pore than four years. pretty meaningful there, driven by a recent construction boom in that country and china going after overcapacity issues, bringing up some prices when it comes to coal and steal pel products. this is welcomed news compared to august, off by 0.8%. if sustained, this can reduce some of the debt pressure when it comes to corporate china. cpi also higher than expected as

well. coming in at 1.9% on year. so erasing -- well, easing some previous concerns about deflation risks in china. the health check in the chinese economy will continue with third quarter gdp coming out next wednesday as well as house price index. this will be very big and interesting coming out on friday. as for the market reaction, we are seeing hong kong stocks getting a nice lift. shanghai composite just about flat and overall the asian markets, modestly in the money. but look at thai markets, thailand's market, the s.e.t. index soaring after the news of the country's long-reigning monarch king passing on thursday. after this, following steep losses earlier in the week in the lead up to this news. guys, back to you. >> sherry, thank you very much. it's 4:30 in the afternoon your

time, right? >> that's right, 4:30, so i'm almost done. it is truly happy friday for me. >> time for the weekend. thank you very much. the head of emerging market debt at blackrock is with us. welcome. >> thank you. >> make the case for emerging market debt. we have seen a lot of money piling in. why would i continue to buy more emerging market debt? >> a lot of people will make the case because there are few alternatives out there especially in a world where the fed will raise rates, so emerging markets stand out as the place where you can still expect a positive rate return and as well eventually to grab the coupon which is around 6%. if you want, i can give you the landscape for that.

we're moving from monetary stimulus to fiscal stimulus. fiscal stimulus stock, put it this way. what does that mean? for fixed income investors rates will go higher either way. either you get the duration tantrum because central banks don't control the way going up, or they manage it very well and emerging markets would have positive return there. on the duration tantrum we're concerned because there is monetary policy convergence where all central banks are pointing to the exit door. communication-wise ecb is managing it better. but this means that yields are going to go higher on the long end. on the fundamental side for emerging markets, this is the interesting part. we see fiscal policy very positive for emerging market equities on that because if you're going to upgrade

infrastructure in japan, europe or the u.s., you will buy commodities, and commodity producers are in emerging markets. this is a plus. oil prices expected to go to 60. this is something that already is going to take on the green chutes we have. we advise clients to be selective. the poster child of the last rally, turkey, south africa, india, mexico, will be underperforming as they're starting to kick out the reformers and focus on growth. >> we are on track for this sovereign debt record to be set. we've been eyeing argentina, saudi arabia, mexico, qatar, they're all moving in this direction of issuing more debt now. >> yes. >> you mentioned oil. isn't there still a big risk out there? oil might not go to 60. if we see this volatility or if

it goes lower, or at the same time you have a diversified basket where you say some emerging markets are set to underperform substantially, or if they underperform, they underperform the main markets more. you have that risk along with the oil risk, a shift in risk appetite happening. then what? >> okay. oil should go lower significantly, if we go back to deflation fears. right now deflation fears are a bit out of the picture, more inflation fears out there. so we saw oil consolidate healthy during the summer. no big panic out there. we believe that commodity exporters that were the bad guys of the last crisis are the ones that will perform. duration is the risk, not deflation. which means that in our funds we're hedging totally on duration and focusing on selection. >> puts the macro elements aside

for a minute, you mentioned south africa and turkey, two countries that bring to mind the political risks facing some of these ems. how do you protect against that? is debt safer than equities because of these risks? >> you protect by being selective. avoiding countries where you believe the rally is a bit done, now idiosyncratic risk is kicking in. emerging markets are all about idiosyncratic risks, but sometimes people take it for granted that nothing will happen. so you'll go to the places where you believe at least you are -- >> where are those places? >> colombia, russia, brazil, a lot of countries in africa are delivering very nice returns without that many headlines. >> would you touch south africa in this environment? >> we would touch south africa

post the sell-off we had. over the recent days, because we believe the noise will abate going into the fiscal and december. so we believe we have enough noise. it's going to abate again. >> all right. thank you very much for bringing us that perspective. >> thank you. >> so noisy. so noisy. >> the race to the white house? >> just noise. >> mark cuban now saying that donald trump's brand is "done." the ax tv chairman and former friend of donald trump said this is just the beginning of the end for donald trump. and not just his run for the presidency, but his brand, his property, and his businesses. he's been scorched, and i think the whole thing has a real chance of going down with him. meanwhile, donald trump continued to defend himself from multiple women who accused him of sexual assault. speaking in florida, the gop

nominee claimed to have substantial evidence to refute the accusations and question the timing of the reports. >> these people are horrible people. they're horrible, horrible liars. and interestingly it happens to appear 26 days before our very important election. isn't that amazing? >> michelle obama took aim at the gop nominee saying trump's comments about groping women have shaken her to the core. at a campaign event for hillary clinton in new hampshire, the first lady called on americans to say enough is enough. >> this is not something that we can ignore. it's not something we can just sweep under the rug as just another disturbing footnote in a sad election season. because this was not just a lewd conversation. this wasn't just locker room banter. this was a powerful individual

speaking freely and openly about sexually predatory behavior and actually bragging about kissing and groping women. using language so obscene that many of us were worried about our children hearing it when we turn on the tv. >> tracie potts is standing by in washington. good morning to you. pleasure to see you today. an emotional statement from the first lady there, putting aside the sheer allegations fired at donald trump and saying the words he had spoken, difficult for our children to hear. is this resonating with the female voters? >> make no mistake, that's certainly the aim of michelle obama, the democratic party, hillary clinton, to try to get this to resonate with female voters who at one point in the campaign were slow to get behind hillary clinton, and now are -- some are starting to question whether or not they want to stay behind donald trump. clearly the women for trump movement is still out there. but they're trying to sway that

critical vote, especially those in the middle, the independent to hillary clinton. michelle obama is a powerful tool on the campaign trail. that's nonpartisan. her numbers, her approval numbers show that she's one of the strongest voices that hillary clinton has out there. so when she comes out with something so raw and emotional, it does seem to touch a nerve with people. that was certainly their intent. not saying this was orchestrated, but certainly that was the intent or result of what happened. we're seeing a lot of raw emotion pour out on the campaign trail, not just michelle obama but look at donald trump, he's denying and fighting these charges. there's no middle ground in what he's saying. he's not saying, eh, you know, i don't remember. he's saying this did not happen. it's false, it's orchestrated. he made an interesting point yesterday saying that this is

orchestrated against the american people. as he put it, it's a conspiracy not just against him but the american people. he pointed fingers at the media and the clinton campaign. >> thank you. tracie potts joining us live from washington. coming up here on the show. we'll look ahead to u.s. bank earnings. you're all over this. pointing out all the u.s. bankers, big ones coming up. why do analysts have low expectations for jpmorgan, citi, wells fargo? that's coming up after the break.

hi everybody. welcome back. good morning. good morning. >> good morning. how are you? >> very well. how are you?

>> very well. >> how are you? hp is poised to slash between 3,000 and 5,000 jobs over the next three years. they forecast adjusted profits should come in between 1.55 and 1.65 per share. they also upped their share repurchase program by $3 billions. and verizon says it has reasonable basis to withdraw from its $4.89 billion deal to purchase yahoo!. verizon's general counsel said the hack could cause them to reopen the deal. samsung widened its profit warning after scrapping the note 7 smartphone. they expect another $3 billion hit on the operating profit over the next two quarters, taking losses to 5.3 billion.

shares edging up in seoul today but have fallen by 7% over this week. and shares in japan's softbank are trading higher after announcing a tie-up with saudi arabia to create a tech fund that could raise up to $100 billion in total. the japanese company will invest $25 billion, saudi's public investment fund will double that amount. it is one part of the kingdom's major economic overall to deal with the slump in oil prices. delta reporting a 4% fall in income during the third quarter. fi phil lebeau filed this report. >> reporter: delta air lines reporting a profit for the third quarter of 1.70 per share. that beat the street by a nickel. most were expecting the company to come in at 1.65 per share.

the computer outage in august hurt revenue by 100 million. the biggest thing for airlines what is happening to passenger revenue, down 6.8% in third quarter because of lower fares. airlines saying we have cheap fuel, we'll add cheaper seats, and that's driving the revenue numbers down for the airlines. delta's forecast for the fourth quarter, a decline of 3% and 5%. >> it's hard for us to call a bottom. we've been looking for the bottom for some time. when you look at what the driver's are, the capacity environment, growth, excess in demand is one challenge. we're announcing today we'll reduce our growth rate to 1% in the fourth quarter and keeping that throughout 2017. >> this chart says it all in terms of the pressure airlines are feeling when it comes to passenger revenue. airfares continue to trend lower, this gets back to lower jet fuel prices.

because of lower jet fuel prices, airlines around the country are able to lower prices on different routes, perhaps add a flight here or there. all of that is putting pressure on the airlines when it comes to generating pricing power in terms of airfares. delta beating the street in the third quarter reporting earnings of 1.70 per share. 5 cents better than expectations. just as earnings season gets in full gear, the u.s. treasury issued final inversion amendment rules in its effort to tackle earnings tripping. a common tax technique employed by multinationals. the amendments are likely to be challenged by republicans in congress as well as business groups. we'll speak to treasury secretary jack lew about those tax results at 12:00 cet. earnings season for banks begins today with jpmorgan,

citigroup, wells fargo reporting before the bell in new york. expectations for the third quarter are low. slowing loan growth and low interest rates are putting pressure on profits. analysts told reuters they expect all three lenders to report earnings share declines, and wells fargo is likely to fall under particular scrutiny following its accounts scandal. >> bob pisani has been looking at how the banking sector is set to perform this earnings season. >> banks have had a notable run-up in the second half of the year. some banks like bank of america are up double digits since july. what's going on? higher interest rates are the main factor. short-term rates in particular are higher and that means the banks can charge higher interest rates for loans. another issue is loan growth in general. consumer loan growth is still strong and will likely grow about 2% compared to the second quarter. commercial loan growth seems to have stalled out. it's not clear why. it may be due to slower capital

expenditures by corporations which reduces the need for loans. another big issue is bank regulation. this is a big wild card. the whole wells fargo debacle brought this back on the front burner. bank investors have been jittery about the small chance that the house could go democratic which would greatly increase regulatory scrutiny of banks. what's the bottom line? there's a lot to like about banks? they have more cash, better cost control, the loan quality is better, but it's hard to make money with rates so low. prudence seems to be the order of the day. i'm bob pisani, cnbc business news new york. joining us for more analysis ahead of those bank earnings is the head of north american financial institutions at fitch ratings. good morning. thank you for joining us. give us a better idea from a credit perspective the big factors you're watching for in these reports this morning. >> good morning. thank you for having me. sure. i think what we're looking at is

probably maybe some improvement in trading on the debt and currency side of the business. and then, you know, we do expect to see investment banking activity to be lighter. and like your previous segment noted, yes, we do expect to see sort of lighter loan growth, the asset quality picture is quite good for banks. the capital story is quite good. liquidity is quite good. >> those are the macro factors affecting the entire sector. let's get into specifics, especially when it comes down to wells fargo. fitch did downgrade the outlook in the wake of the cross-selling situation. what is your view of where we stand on that, especially given the latest developments of the new ceo taking over at wells fargo? >> i think it's early days to see any sort of effect on wells' earnings for now. i think that the scandal just happened at the end of the last quarter. so any kind of impact from the cross-selling or constraint from

there, i think it will take a bit of time, which is reflected in our outlook before we see any real profitability impact. we certainly expect to see more regulatory scrutiny over the matter. and that will probably bleed over to many other institutions. >> have you been encouraged by the announcement of a new ceo? >> from our perspective, we think that tim sloan has been long signaled as being groomed for that role. so we don't see any succession issues as a result. >> good morning. i'm wondering how healthy you see u.s. banks compared to european banks. here we have had the deutsche bank saga that's been rolling on for quite some time about whether or not they'll need government bail-out essentially or bail-in. how do you compare u.s. financials at the moment to ours over here? >> so sh, i think u.s. financia are healthy. they're solid from a capital

earnings. i think the one area that's lagged behind, if you l bu lshy ahead of other regions is earnings. so despite a relatively light quarter for earnings, profitability is still good relative to the rest of the world. and you certainly have strong liquidity and very strong asset quality compared to other regions. >> yeah. then at the same time, we look at the yield curves out there at the moment. how much of a risk are these -- oh, i'm right here. here. there. how much of risk are these super flat yield curves to these u.s. financial institutions? >> we've been talking about a lower for longer for quite some time. i think our view is that that will persist. we might have one more rate rise, but that probably will be at the latter part of the year, maybe one or two more next year. clearly a challenge for banks, so they'll continue to focus on

cost cutting which has been a theme we've seen among u.s. banks. >> thank you very much for being with us today. now, you're mentioning the fed speak. >> i did. big day with the bank earnings, fed speakers. >> yeah. >> the boston fed president, eric rosengren will speak to cnbc later. tune in for that. that's at 1:30 p.m. cet. u.s. futures, we're indicating higher on the open. the implied open on the right-hand side of the screen. >> that's it for today's show. i'm nancy hungerford. >> i'm louisa bojesen. "worldwide exchange" is up next. have a fantastic weekend. guess what guys, i switched to rint. spri? i'm hearing good things about the network. all the networks are great now. we'rtaing within a 1% difference in reliality of each oth. and, sprint saves you 50% on most current national carrier rates. save meyn your phone bill, invest it in your all busiss.

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good morning. jpmorgan, wells fargo and citigroup ready to roll out quarterly results. and the treasury department takes another big step towards keeping corporate taxes in the u.s. and scores send the dodgers packing. it's friday, october 14, 2016. "worldwide exchange" begins right now.