welcome to "street signs." i'm joumanna bercetche >> i'm willem marx these are your headlines this morning. fresh multi-year highs across u.s. treasury yields spark concerns of a slowdown by mohamed el-erian says he thinks the american economy looks good for the next couple of years >> golvernment spending which will get stronger, investor spending, that takes the u.s. through the next couple of years. the u.s. economy is building up momentum

the problem is the rest of the world is lagging. a shock change at the helm of aviva ceo mark wilson agrees to step down and the search for a successor begins immediately buying into fintech. wire card rallies to the top of the dax after the german payments company forecast a six-fold increase in core profits with marcus brown telling cnbc why he's bullish about the medium term outlook. >> in the next five to ten years probably the large financials will still remain point of sale volume and come into the full system that we provide. and richard branson offers some words of advice to tesla ceo elon musk in an interview with cnbc. >> maybe he needs to learn the art of delegation. he has to find time for himself, he has to find time for his health and for his family.

he's a wonderfully creative person welcome to "street signs." happy tuesday. let's talk about some of the moves in markets overnight we saw a stabilization in chinese equities, but the shanghai slightly positive to the tune of 0.2% perhaps some of the policy support introduced over the last 48 hours is having an impact there. some stabilization as far as risk sentiment is concerned. nikkei was back trading negative down about 1.3%. overall the picture in europe is somewhat positive. we have the stoxx 600 up about 0.1% and this, of course, after quite an ugly day in trading yesterday. let's get into the individual stories and see how it has been across the bourses starting off talking about what's happening in italy. the ftse mib was the big underperformer today we have ftse mib bouncing back about 0.4% higher

85 points, still below that 20,000 mark. this on reports that the italian side will be looking to moderate some rhetoric about that all-important budget there are some reports that the economy minister along with the prime minister would be looking to do some form of italian bond road show with investors that will help ease concerns. that's helping to lift sentiment in italian indices we have the cac 40 and dax trading slightly in the green. the uk index, ftse, trading about ten points higher. also want to point out that carney will be speaking this evening at a dinner. so watch out for headlines there. let's look at sectors to see where leadership is coming from. up at the top oil and gas. this is precipitated by a move we're seeing in the spot price there with oil trading higher overnight. we have the sector doing well, up 1.4%. basic resources in line with

stabilization in chinese equities, up 1%. real estate up 0.7% as well. underperforming this morning the defensive sectors, telecoms down 0.4% healthcare down 0.6. household goods down a bit all eyes on lvmh earnings. they are one of the key names to be releasing results over the next 24 hours or so. willem >> u.s. ten-year and 30-year treasury yields have hit multi-year highs strong u.s. data increased investor concerns about rising inflation and a potentially faster pace of rate hikes from the federal reserve. joumanna bercetche has been looking at the reasons why investors might be bullish or bearish about treasuries tell us more >> all eyes on that ten-year treasury people are pointing to that 3.25 level. this is a level we've not been since 2011 it's having an impact on stock

markets. one reason cited for weakness as of late is concerning about those yields what's been going on the number one driver for me, the main catalyst for this bearishness is the concept of extra issuance this is a year where the u.s. government has been issuing more debt, come out with big fiscal spending plans that meant extra supply would be absorbed by the market there's an extra $1 trillion worth of net issuance issued since last october this is the highest level since 2012 lots of issuance hitting that market it's coming at a time when the fed is using quantitative tightening and if you look at the positioning data, this is the data that comes out on a weekly

basis, it tells you investor positioning is turning more bearish. people don't want to be long fixed income, it is pointing to bearish positioning in the ten-year curve that's another catalyst for the weakness and if you look at the numbers, inflation numbers have been creeping higher. the last six month prints of cpi have come in above 2%. the latest core cpi was 2.2. average hourly groewth and non-farm payroll numbers pointing to healthy wage growth north of 3.5%. so, you take the fundamentals, you take the technicals, add to that the fed has been reducing its balance sheet and the dollar is strengthening which makes the dollar funding more tricky for some foreign investors, and you get this scenario of a bearish

ba backdrop for u.s. fixed income let's not jump to conclusions. there are some reasons to be bullish. the first one to start off with is something that resonates quite well this morning, global growth concerns. we got imf latest world economic outlook report pointing to a somewhat dip in global growth. next year they cut their outlook by 0.2% for global growth on the back of concerns of trade, emerging markets, et cetera with the world looking like it will moderate growth wise in the next 12 to 18 months what does that mean for appetite to hold assets, and what does that mean for the safe haven of u.s. treasuries and we are in the midst of the fed hiking cycle but many people are saying we're getting towards the end of it now. some analysts are saying perhaps the fed has one or two more hikes left in them then they may be done. so there are lots of questions about where interest rates can ultimately end up at 3.25 on the

ten-year seems fair with the base rate where it is now it's important to look at where u.s. treasuries are trading. ecb are still in accommodative monetary policy. bank of japan still in accommodative monetary policy. one quarter of global debt is still in negative rates in that environment what will you buy? high-yielding risk-free assets, that's u.s. treasuries and asset allocators are looking at that and saying in this environment of high interest rate yields and perhaps better funding conditioning, the best funding conditions that we've had in a while, it may be time to take some money out of equities and redeploy them back into the bond curve. we've had a big move it's been 50 basis points in the last month or so people are saying it may be time to take some chips off the table. that said, you want to keep a close eye on what happens to

those ten-year yields. nancy hungerford spoke to one of the best known bond market participants earlier today, that's mohamed el-erian, who was at the barclays asia forum in singapore. he predicted that u.s. treasury yields will actually continue to rise >> the fed continues to march up the yield curve -- to march up short-term interest rates. the fed continues to gradually reduce its balance sheet and it has not derailed the u.s. economy in any way if anything, the u.s. economy is building up momentum the problem is the rest of the world is lagging so you get divergence in economic performance you get dispersion in asset prices this morning the differential between ten-year treasuries and bund was 271 basis points. most people did not think it could go above 220 it continues to go up >> that's an interesting one i wonder if our producers can

bring up a chart of that, between the bund and the ten-year treasury yield. i wonder what this means for the ecb. >> it means a stronger dollar. i think people want to fade the dollar strength too early. people want to fade all sorts of differentials, it's too early. u.s. rates are going higher the curve will continue to steepen not flatten. and we are seeing it against steeper today. so, you know, the interest rate dynamics are completely consistent with divergence in economic policy and divergence in performance the question is does it break something somewhere else the ecb in particular will be put in a tough position because they're dealing with higher inflation. they're going to have to think seriously as to whether to accelerate the rates >> do you think they will? >> i think they'll be careful. i think they'll want to have as much optionality

we won't hear anything for a while, but it wouldn't surprise me if they start hiking in the middle of the summer as opposed to the end of the summer or the beginning of the summer, but they'll retain optionality until the last moment. if yo >> if your view is that interest rates will rise, by how much >> if you're an investor you want to be at the short end of the curve. you have to be careful because the curve will steepen and it will be a bad steepening >> that's mohamed el-erian talking to nancy hungerford there. the imf cut its forecast for global growth in 2018 and 2019 the fund says increasing trade protectionism, weaker fundamentals and higher political risk have prompted it to lower its forecast by 0.2% this year. trade volume growth turned out to be a percentage point lower than the forecast back in april. global demand growth for commodities remains robust

according to goldman sachs, despite the trade war, emerging market concern the and a stronger dollar. one people responsible for that assessment is jeff curry from goldman. he joins us now in the studio. the imf says it expects u.s. growth to slow slightly next year if that leads to a weaker dollar, as it may, after the strength we've seen this year, what do you think that could mean for commodity producers outside the u.s. who both borrow in dollars and earn in dollars >> well, obviously bullish commodities and we'd put upper pressure on revenues like what we saw during 2000 what is interesting is we've been seeing the reverse over the course of the last 12 months with this downgrade in the imf, it's similar to a pattern we've seen in our forecast change in commodities. we take up the u.s. forecast for commodity demand, but at the same time take down china in the

emerging markets this was the opposite of the pattern that we saw during the 2000s, where we take down the u.s., take up china and the em then you had higher commodity prices g revenue g, good revenu we're seeing taking up the u.s., down the emerging markets, and the trend is a stronger dollar so, what is the difference between those two environments in the 2000s we were short all the economy. we had a strong economy that was taking resources out of the world. today we have a strong new economy in the u.s., what we're short is lalabor i want to go back to two events, labor winning strikes. we have not seen that in commodities in a long time in brazil this week and cchire

w wining in copper >> what does that mean in terms of the emerging markets commodity complex then looking at metals, metals tend to be closely associated to em growth performance this year we've seen a jump in energy but not necessarily metals are you expecting that to continue given the em growth outlook here >> there is relative interest from investors, but when you look at copper it's outright short right now. it's rare you see a commodity be outright short, that's an indication that sentiment is low for metals when we look at what is driving metals, why are we less

concerned than what the headlines say, like the imf taking down demand or gdp? we've seen a significant amount of de-stocking going on in the metals complex why? when you have a strong dollar, you have higher funding costs in the emerging markets, it costs you more to hold inventory of these metals the second thing is if you know trade tariffs are being increased, there's a chance that this blows over, de-stock your inventory and hope for the best tomorrow there's a limit on how far you can de-stock we're seeing that in the physical markets i would chock up a lot of that weakness in metals to being de-stocking as opposed to underlying weakness. >> so in terms of specific commodities then, where do you see the best opportunity to play on that? >> nickel. this morning nickel is up 3% part of the reason i'll here m

london is it's lme week, and this week we're seeing nickel and zinc have substantial upside if you were to rank order longer term, copper is the one with the greatest upside potential. however it's been slow out of the gates. nickel is an ev play that's reason why we're seeing the upside there we're trading $13,000 a ton, our target is $18,000 a ton. >> we'll pick up more on some of that stuff jeff curry from goldman sachs joining us make sure you tune in to cnbc on thursday when geoff cutmore will host a panel that includes christine lagarde and mark carney that discussion will broadcast live from the imf world bank annual meeting in bali aviva announced that ceo mark wilson will step down six

years after he was hired to implement a turnaround strategy at the british insurer he will remain in the chief executive role until april of 2019 aviva says the search for a successor will begin immediately and could last four months airbus has appointed a new ceo. gaury will replace enders. airbus also announced that the chairman will leave after his kir current term finishes in 2020. this ends months of uncertainty at the company after corruption investigations prompted several ceos to leave. more personnel changes, another shake up solvay has appointed kadri as its new ceo. shale replace the outgoing boss and will start at the chemicals

group january 1st of next year. sir richard branson believes virgin galactic will be in space in weeks catch more from our exclusive interview with the virgin founder coming up next every call is different, so the only thing that we can do to make sure that we get there safely, and that we leave that scene safely and go home at night, is train. and we train all the time in the fire service. no matter how much we train, the last thing you want in a disaster is to lose communications. without communications, we have nothing-- people get hurt. when disaster strikes, that is when your communication service

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welcome back the italian deputy prime minister, mat ta weo salvini spn out saying the country's budget will create jobs and wealth. however jpmorgan has cut its price targets for several italian banks including unicredit and bmps as we're on the air here, italian economy minister, geovanni tria is presenting a budget to the commission this ties to the obligation of the italian government to release a full budget proposal to brussels by next monday currently they're about a week behind schedule in terms of delivering some numbers to the same parliamentary committee that has already expressed

irritation that some of the government's xhix foeconomic fos were as much as a week late. mr. tria is talking about the fact that the international macro situation is likely to deteriorate and saying italy's debt influences country's economic policymaking. that's no surprise to anyone watching the situation closely he says the data shows in coming months a weakening of the business environment will be tied to the orders outlook that bond price has been shifting around quite a lot as have the yields in italy we saw a five-year high on some of those spreads yesterday extraordinary him having to defend the policy that he himself has not put forward. that's tria there talking to the italian parliament to be specific, two-year bond yields hit the highest in five months the italian newspapers are reporting that the italian government is considering a road show to boost support for its bond offerings they reported that rome is

looking to several different measures to limit that spread between italian and german bonds. production at norsk hydro will resume half capacity ending a standoff between the firm an authorities. it was closed last week citing capacity issues with its waste deposit area allunorte is responsible for 10% of global production you can see the impact on the share price. oil prices moved higher as iranian crude exports continue to fall ahead of u.s. sanctions. tehran exported 1.1 million barrels per day in the first week of october as importers look elsewhere for crude oil rigs in the gulf of mexico have also been evacuated ahead of hurricane michael this resulted in an almost 20%

fall in production from the region jeff curry is still with us. i want to talk about the oil outlook. more and more people are talking about this $100 world and what the world would look like if oil breached $100. do you see it getting to $100? >> i'm not saying it cannot happen, but it would require a sustainable outage in iranian exports going down to zero, plus another disruption in a place like venezuela i think what we're seeing here is a mismatch between financial flows and the physical fundamental flows. in the sense that the market is trying to price in a very certain unknown -- or an unknown problem in the form of iran. we don't know how big the hole is >> that being said, yesterday's data shows iran exported 1.1 million barrels per day in the first week of october.

that's 1.6 million in september. down from 2.5 million. so the numbers are falling much faster than anticipated. >> but the inventories are building because opec plus production is rising much faster than what most anticipated we look at the numbers for the month of september, you had opec plus production grow 32,000 barrels per day faster than the decline in iran. so today we don't have a problem. i'm not saying we don't know if we have a problem tomorrow, but the market is trying to price that problem tomorrow. the way we're seeing it is long dated oil prices are rising. the front end is weakening and that's telling you we don't have a problem today. we potentially have a problem tomorrow >> saying there's a lack of clarity ahead of that november 4th deadline when it comes to iran, what should people be watching for in the weeks ahead to get more clarity? >> great question. there's three that we're watching number one, waivers. we saw an indication over the weekend that potentially india will get waivers

they're acting like it now because they're taking more barrels, and if india is taking those barrels for the month of november, going to zero is off the table by then. the second thing we're focused on is an increase in shipping around the world to deliver more oil and we're seeing signs of that the third is to get prices down we want to see producer hedging on the back end of that oil curve and swe're seeing a bit o that. >> one quick final question on north hydro. we saw they got this exemption from the local government in the state of brazil. that will be 50% capacity. what does that mean for aluminum prices in the near-term? >> in the near-term it eases the margins what was happening in the spread between aluminum and alumina was tight. so as alumina drops, it opens up the margins.

i think the other big event in aluminum is on november 12th we find out about the sanctions with rusal november 4th for sanctions with iran and november 12th with rusal and russia >> thank you very much for joining us today that was jeff curry. coming up, countdown to the u.s. midterms. 28 days away from the crucial vote we'll look at who is likely to win after this break (vo) gopi has built her business with her own two hands.

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welcome back to "street signs. i'm willem marx. >> i'm joumanna bercetche. these are your headlines fresh multi-year highs across u.s. treasury yields spark concerns of a slowdown but mohamed el-erian says he thinks the american economy looks good for the next couple of years >> government spending which will get stronger not weaker,

household spending and business investor spending, that takes the u.s. through the next couple of years. the u.s. economy is building up momentum the problem is the rest of the world is lagging. a shock change at the helm of aviva ceo mark wilson agrees to step down and the search for a successor begins immediately buying into fintech. wire card rallies to the top of the dax after the german payments company forecasts a six-fold increase in core profits with marcus brown telling cnbc why he's bullish about the medium-term outlook. >> in the next five to ten years probably the large financials will still remain point of sale volume and come into the full digital ecosystem that we provid provide. >> and richard branson says he will be in space sooner than previously thought >> we should be in space within weeks, not months, and we'll be in space with myself in months

not years. market-wise we saw a stabilization in chinese equities shanghai up. in europe the last half hour or so things are turning south. we started off on a more positive foot, but now with headlines from italy we're seeing the ftse mib drop a bit we were up about 0.4% on the day. we've dropped about 0.15 now there is still a lot of anxiety from investors as far as that index is concerned a bit light on the macro front today. for the uk we will watch for comments out of carney this evening on the financial side and lots of expectations building into the summit next week let's move on and look at foreign exchange what we see today is euro on the back foot in line with some risk-off sentiment we've seen in

italy over the last 24 hours trading below that 115 leve.15 . dollar/yen trading back in the market after holiday cable on the back foot today to the tune of a quarter percentage point. so some of this risk-off sentiment is being expressed in foreign exchange markets versus equity markets for the time being. for u.s. futures, dow seen opening up 100 points lower. nasdaq 40 points lower nasdaq, the tech sector, has been an underperforming sector as of late the italian economy minister, geovanni tria, he is addressing a parliamentary budget commission in rome right now. he's been talking quite a bit about the need for the structural deficit to come down. it will recover, he says, once

gdp and employment in italy returns to pre-crisis levels he's also called for constructive discussions with brussels over the budget, something that has been made harder by some comments from his own deputy prime ministers calling people enemies of europe the two-year bond yield has risen as he's been speaking to parliament up 4 basis points. once again, tria in a public appearance at the moment as they tussle with that budget before sending a draft proposal on the 15th >> we've just got some comments out of the bank of england the financial prudential committee saying that there is risk to the uk from global

vulnerablevul n neribilities, but those risks are material so they're citing concerns about tariffs and external threats from the economic standpoint and that risk appetite of creditors remains strong but borrowing is strong so credit growth started to slow down a bit they're seeing disruption risk in insurance and derivative contracts, but also said they are maintaining the counter cyclical buffer rate at 1% they also say they will publish streng stress tests on the banks on december 5th and they're also talking about the rise in italian bond yields. the comment from the bank of england is that the rise in the yields underlines vulnerabilities created by high public debt and the loop between

issuers and banks in the eurozone so really highlighting the linkages between the banking sector and italian bond yields >> back to italy briefly, goo s goo siuseppe conte saying that n international body could change estimates based on something that has not been fully published. we will continue to follow the impact that has on bond markets. let's talk about the other side of the atlantic. the u.s. midterm elections are 28 days away after a divisive confirmation battle for supreme court justice brett kavanaugh, some congressional races are starting to get increasingly tight. republican currently have a majority in the house of representatives and the senate in d.c., but based on

projections from real clear politics that could change in the house the democrats are projected to win 205 seats in the chamber. we have a guest to talk about this from where i stand, it almost seems like two separate elections going on you have the senate with quite a few senate democrats fighting to hold on to seats in states where trump carried the vote in 2016, in the house you have undecided swing voters who may not be big fans of the way the trump administration has operated in the last couple of years, and may switch them from republican to democratic seats. is that a reality, do you think? >> absolutely. i think the house certainly is the one to watch in terms of democratic chances of taking back a majority. the senate, there is always a chance for something wild to happen we're looking at a polarized

electoral environment, but the house is the one where the democrats stand a better chance, the entire house is up for re-election, we've seen polarizing issues reenergize the democratic base. >> there are polls as of late showing that the women demographic is particularly mobilized to vote this time around, more so than previous elections on the back of the kavanaugh situation. how much of an impact and what type of an impact do you think the fact that the women are mobilized to vote this time around will have >> we've actually seen a stronger kind of turnout or anticipated turnout among republican female voters as a result of the kavanaugh nomination there was a poll that came out looking at the number of republican or democrat voters who said that the midterm elections were very important. and that as a leading indicator of turnout actually female democratic

voters were already saying as of july that the midterms were important. looking at the high 80s. so that didn't change. there was a high level of awareness among female democratic voters. female republican voters were saying around the low 70s that the midterm was important. and now that is up in the 80s so we've seen a reenergizization of the female voters. brett kavanaugh became a symbol for the republican party at large, and that has changed the outlook. >> i'm confident in saying a lot of our viewer also be abstractly interested in the results of the elections. but in terms of concrete consequences what would a democrat victory in the house but not the senate mean for the administration's economic policies a lot of the measures trump has taken in terms of the economy, we've seen incredibly low

unemployment numbers, significantly high growth figures, in terms of his ability to impact the economy, how constrained would he be by having the house of representatives in democratic hands? >> we can safely say this is the most attention anyone has paid to a midterm election in the u.s. for a long time the stakes are high certainly. we've seen a lot of legislative struggling amongst the trump administration the republican party alone we saw a lot of trouble getting a workable healthcare bill that was due to deep divisions within the republican party. tax reform was one that was kind of a key sort of standard bearer for the republican party we're not so surprised that got through. i think that also used up a lot of political capital republicans at that point post-tax reform we're looking at a dwied futur divided future we were not forecasting significant legislation out of the remainder of the trump administration given the very divided nature of the republican

party. if we're assuming that the democrats take back control of the house but not the senate, that would presumably lead to a legislative kind of stalemate and either party will just block anything that's proposed by the other. having a democratic hold on the house could be enough to stimulate a little bit more consensus among republican parties. in that sense they have an external competitor. they can blame democrats for obstructionism and a number of other things and that means that may be enough to heal some of those divisions temporarily. >> do you think that emboldens the president to pursue strategies that don't need congress approval like the trade tariffs? >> absolutely. from the beginning we've been saying that the trump administration will rule by s subtraction rather than adi

addition we're looking at a deregulation in coal, financial services, energy industry even more broadly than that. and then again with the trade tariffs pushing through these measures that will have a concrete impact on the economy, certainly we expect in 2019/2020 but that don't require congressional approval >> thank you very much for coming on. very insightful about the midterm elections. sticking with the u.s., google says it will close the consumer version of its google plus social media platform the alphabet subsidiary acknowledged yesterday it left 500,000 user profiles accessible to hundreds of external developers fwoog google said it fixed the issue back in march but kept a lid on the leak to avoid comparisons being made to the cambrid cambre

analytica scandal earlier this year. microsoft is investing in ride hailing services grab microsoft will join several new investors in the singapore-based company including softbank analysts say the stake represents the latest example of microsoft's strategy to insert technology into ride hailing firms around the world the u.s. tech giant invested in uber and partnered with ola. and eu anti trust regulators are set to green light microsoft's 7$7.5 billion bid fr coding website gethub. it would be microsoft's largest acquisition since it purchased linkedin back in 2016. a microsoft spokesperson has declined to comment on the report. and virgin founder richard branson says it is a matter of

weeks not months before virgin galactic is in space and a matter of months before he goes up himself nancy hungerford spoke with him earlier this morning >> i have a room full of ten people, 8 out of 10 would love to go to space if they could afford it. of those people who could afford it, 8 out of 10 would love to go to space i think the market for people who would love to become astronauts and go to space is gigantic it's up to us to produce as many spaceships as we can to cater to that demand. we've also got virgin orbit which will be putting satellites into space that should happen december or january. the demand for putting small satellites into space is a gigantic one there's nearly 4.5 billion people not connected so we're hoping that will do well as well >> when you say if they could

afford it, how much is it today and what will it look like ten years from now will the costs come down significantly? >> so, it's taken us 14 years to get here initially the costs will go up it was 250 we're trying to work out what price to put it at that will then stay up for three or four years whilst we recoup our investment then it will start going down again. i think ultimately, you know, we could talk, you know, ten years time maybe 40,000, $50,000 to put somebody into space. that compared with the $50 million that it costs on a russian spaceship, it's more affordable for a vast majority of people but not affordable for everybody. >> perhaps that's why we see so many billionaires chasing this business pursuit we think of jeff bezos and elon musk jeff bezos is going neck to neck with you to get the first

commercial space flight. who will win >> we'll see i don't think either of us -- safety is number one priority. so neither of us will race to beat the other one i think in reality both of us will do extremely well at it because the amount of people who want to go to space is enormous. we can't build enough spaceships to satisfy demand. so, if we both went up on the same day that would be great >> some christmas ideas for you then something to do over holiday go into space >> yeah. christmas in space wirecard issued optimistic long-term forecasts including transaction volumes of more than 710 billion euros and it expects core profit to double by 2025 to more than 3.5 billion euros. coming up, lvmh will report its third quarter revenue later

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welcome back to "street signs. geovanni tria has finished talking in rome. he finished about ten minutes ago. in his address he said the country's structural deficit will recover once employment and gdp returns to pre-crisis levels he says the government's economic forecast are cautious, which is striking give than they are significantly higher there could be challenges there. he says italy cannot have financial stability without social stability and the government plans to liberalize some sectors connected by monopolies the ten-year yield has increased more than 4basis points. seemingly on the back of that speech seems like any time that mr. tria or any of the senior government members in italy speak we have a bit of a

reaction on the bond market. >> which means we're always seeing reaction in bond markets. lvmh reports third quarter revenue later today. investors will keep an eye out for fashion and leather goods sales and concerns over a possible economic slowdown in the key chinese market charlotte has been following this story the performance of the luxury sector is contingent on that chinese demand are tonight's results a function of whether or not that has materialized >> lvmh are the bellwether of the sector they have many brands. so everybody will be watching comments coming from them on how are the chinese demands doing. a third of all luxury sales in the world is buy a chinese customer so any change of mood will have an impact on the

sector two-thirds of those luxury goods are from abroad. so any move from the yuan can affect these purchases that's one of the key weapons from china the escalation of a trade war scenario ubs had a note in july to say luxury stocks could be hit by 30% dive in case of a worst case scenario trade war concept so those are exposed to the trade war. lvmh is one of them. so far the cfo in the first half said we cannot extrapolate the results in the first half because they were good for the moment they don't see any changes in demand. hermes three weeks ago said we don't see a change in china but we're keeping an eye

one associates lvmh with leather goods, but they have branched away into different products, more of a focus on cosmetics, perfumes, menswear is this a reflection of changing consumer tastes? >> two big trends are important. one is the chinese demand, the other is millennials the huge appetite for luxury brands that's one of the avenues that all these luxury groups is explo exploring. they are trying to double up on smaller brands they are developing a menswear brand. they are hiring new designers to develop this one was at louis vuitton before, and he did really well with that brand. reshaping it making it more young and appealing to millennials he's on instagram. so they're appealing to this sort of customer now >> the results are tonight

let's keep an eye out for whether or not they tick those boxes that you mention charlotte reed joining us there. arsenal will as of next season have adidas as i kit manufacturer the club announced a 300 million pound deal with the sports brand. who lost out here >> well, arsenal were previously made by adidas but not for 25 years. they had two decades of nike including when they went a whole season unbeaten. there's been a lot of change at arsenal. they have a new manager after 22 years, unai emery, nine on the bounce arsenal have won in all competitions since the majority shareholder stan kroenke increased his stake

in the business. this deal will give them 60 million pounds, 78million per year in revenue which takes them up to about third on the list of all-time kit deals at the moment barcelona leading the way with a huge amount of money they're looking to have a billion euro turnover by 2021. manchester united are second also made by adidas. and arsenal in line with chelsea about third or fourth place where they tend to finish up in the premier league >> seems like a lot of mron fonr shirts, shorts, socks. these firms think they're worth it >> there's discussion about how much clubs and manufacturers should be selling kits to fans sometimes a family of four will have to buy multiple kits just to try and appease the whole family that's only for a season i've been looking into this

whole debate for the first time premier league kits are costing on average 100 pounds manchester united is leading the way on that. that's just for the replica kit. if you want to pay the full you a ten thi you price. that is it for today's show. i'm willem marx. >> i'm cnbcjou tha joumanna bercetche. thanks for watching. can be relentless.

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it is 5:00 a.m here are your top five at 5:00 oil prices edging up again hurricane michael taking aim at the gulf. interest rates continue to spike. now at new seven-year highs. we'll lay out four reasons why you need to care. the imf slashing its global growth forecast but it's not all bad news papa john's popping on new takeover talk. and sir richard branson making big headlines this morning telling cnbc he expects to be in space in weeks not months. get ready to take off on this tuesday october 9th as "worldwide exchange" begin