welcome to "street signs." i'm joumanna ercetche. these are your headlines saudi stocks turn lower again as u.s. secretary of state mike pompeo touches down in riyadh amid reports that the kingdom will blame rogue operative force the killing of jamal khashoggi. emanuel macron reshuffles his government following a number of high-level resignations appointing head of his ruling party as interior minister italy's bond yields fall and bank stocks rise after rome

submits its budget to the eu as deputy prime minister luigi dimaio claiming the highest spread between italian and german rates is temporary. and volvo trades near the bottom of the stoxx 600 as the truck maker warns a crucial emissions control component is wearing out too quickly. good morning let's check in on markets overnight. we saw stabilization in the asian indices. the nikkei up 1.25%. chinese equities still in the red with the shanghai down almost 1% or so. the focus of the market moved beyond that of trade wars and a teg se tech selloff

the stoxx 600 is up about a third of a percentage point about an hour into trading moving into individual bourses i want to talk about each one individually the ftse 100 opening up on a weaker tone. down about a third of a percentage point around that 7,000 level. watch out for the unemployment figures that are coming out in about a half hour's time as ever the brexit discussions and irish backstop we'll get out to brussels for the latest you want to watch out for the confidence index in about an hour's time. and ftse mib surprisingly we are up on a day. up 1.2%, pulled higher by some banking stocks one name you need to watch out for there is a bank that's had a high sensitivity to the budget discussions, political

ramifications of these budgets on a day like this we're seeing that bank rebounding, helping to lift up italian equities the ftse mib is quite a heavy utilities index, it's not just banks. so, some of that positivity is showing up there autos up 1%. basic resources lagging a bit, down 7%. oil spot prices coming off a bit. the sector under performing as well our top story today, u.s. secretary of state mike pompeo has landed in riyadh to talk about the case that has strained u.s./saudi relations since khashoggi's disappearance, several high-profile executives have withdrawn from a conference

being held in riyadh this month complicating bin salman's plan to attract foreign investments saudi is preparing to admit that jamal khashoggi was accidentally killed during an interrogation gone wrong in the saudi consulate in istanbul. nbc is reporting that the kingdom will blame its operatives after president trump suggested rogue killers may be behind the disappearance >> we are going to leave nothing uncovered. with that being said the king denies any knowledge of it he didn't know sounded like these could have been rogue killers who knows. we'll try getting to the bottom of it soon his was a flat denial. >> let's get out to hadley in riyadh and has been in riyadh the last 24 hours.

what message is pompeo's visit sending to the international community and also to the saudis who are now confirming the journalist's death >> i think it's showing that the united states is taking this seriously. these relationships are frankly one of the most important to this administration. you will remember that saudi arabia was the first international trip that president trump took after going into office. certainly the support of the trump administration is really a boon over what we've seen the last 20 years for the saudi vision and crown prince mohammed bin sal lmasalman's intention te away from oil dependency mike pompeo has met with saudi arabia's foreign minister. he's probably on his way now to

meet with king salman himself. there are a lot of questions about what will come out of this meeting. we've been speaking with saudi government officials off and on asking if there will be a press conference today when can we expect to hear from the foreign minister on this saudi arabia has remained silent as the world has been in an uproar over the disappearance and potential death of saudi journalist jamal khashoggi i have to tell you, just being on the sidelines of this in riyadh, it's been fascinating to see this serious level of momentum in terms of this story and how it's progressing it seems as if saudi arabia was caught off guard here. >> just to come back to that point, as you highlighted, it's a big step for the secretary of the state of the u.s. to be flying directly to riyadh to engage in conversations, perhaps there's a hope that there may be a deescalation of tension there what does it mean for the international business

community? a lot of key names have pulled out of this investment conference that was supposed to happen we heard from the likes of jpmorgan, uber, goldman, mr. are on that list is this going to hurt their ability to attract foreign investment >> that is an excellent question it will be an interesting story as we move forward it's a question about whether this international moral outrage is really going to last and how long it can last at the end of the day you have multinationals, global corporates from the u.s., whether they be energy corporations, folks coming in to seek investment or grow investments in this region they've been working in difficult spots like iraq, like syria for years now. frankly the idea that something like this would derail them long-term in terms of their investments is pretty farfetched at the end of the day they are bowing to u.s. and frankly international pressure at the

moment the conversation on the sidelines is will they go ahead with this investment forum at the moment it still seems as if it's full steam ahead, but there's questions if that's wise given the international outcry of mr. khashoggi's disappearance and death. >> absolutely. hadley, thank you for that other top stories, french president emanuel macron reshuffled his cabinet following the abrupt resignation of two ministers earlier this month the biggest new appointee is christophe castane who has been named interior minister. it's interesting to see the finance minister is still in his role and other key cabinet members, the energy minister and foreign minister also stayed in their roles. we'll talk more about that shortly. and another main story, the rise in italian bond yields is not destined to remain like

this luigi dimaio said the widening spread is temporary. dimaio said once rome's new budget is explained the spreads will not exist anymore that is the latest that we've got from dimaio. we've also had a few flashes from the prime minister as well. conte said that they are proud of this budget that they released this morning and he does hope for dialogue without prejudice when it comes to their conversations in brussels. he also says that belonging to europe is unrenouncible. sending the same message to some of the investors who have been eyeing this budget and the budget conversations have been monitored closely. willem is joining us live from rome obviously you have been following this story it's interesting that today we're seeing a big rally back in

fixed income two-year yields about 12 basis points lower 10-year yields are back to 3.50 again. six basis points firmer. italian index rebound. where is all this positivity coming from? perhaps dimaio is right? once invests saw the nuts and bolts of the budget they stopped being so worried about it. >> they won't see the nuts and bolts until they release that as part of the budget lore in italy. we saw last night the new budget plan, proposals being sent to europe under european commission law. the regulations have said they have to submit certain forecasts. it's no different to the forecasts they submitted to the italian parliament not a lot in that document wasny except the impact that the new government measures would have on the government revenues and spending none of the absolute numbers are out there.

conte talking this morning and last night once they said they sent this document off to brussels, he had a few comments about fulfilling guarantees they made during the election earlier this year. >> translator: we're keeping all the promises we made we're happy with this budget like i said, this is the outcome of a lot of work and meetings that we transparently made public we worked on the project, more so than just on a budget we worked on a project that the country needs, that the citizens needs and we're keeping accounts in order and delivering on our promises at the same time. >> he was flanked by the two deputy prime ministers, luigi dimaio and mateo salvini and giovanni tria was also in that meeting. mr. salvini also positive about the government's prospects because of this government being

passed >> translator: i'm extremely happen pichlt we're ke happ happy. we're keeping our promises we're not raising taxes of any kind for 2019. >> the measure also have an impact on the government's spending plans and revenue take from taxes any changes include freezing of the taxes, also the universal income is a sizable chunk of the differences in terms of spending plans. i had a chance to try to walk through some of these details in terms of what it may mean, it was said in terms of the economic growth forecast, those are possible but they are taking a bet on their plans to get people

spending money through the basic income, and in terms of the assessment they made of borrowing costs in the future, that's where he thinks they'll have difficulties. he used the word optical illusion to describe them. if we see the spreads staying as wide as they have been, it will be difficult for the italian government to service their debt as affordably as they claim to do >> i never heard spreads called an optical illusion. i'll have to start using that one. we look forward to your interview with claudio borghi in an hour's time he's a known euro skeptic. happy to bring in david owen from jeffries to help me get through the next 45 minutes or so we have lots to talk about let's start off by talking about italy and something that i think willem just flagged now is how the deputy prime ministers are presenting this budget

what they're saying is the hope and the bet that they're making is that with this universal b e basic income people may go out and start spending this budget may not be such a bad thing for the economy. >> i think we're so used to subpar rates, if you look at the break down of the second quarter data, investment and manry equipment wqui machinery was strong we saw strong growth in the second quarter and wage inflation picked up 2.8% year o year so, yeah, it's possible. >> that sounds positive to me. >> it's up >> the economy growing north of 1% we were speaking yesterday to

the former imf representative and one of the designates back a few months ago, he was saying the major risk for the italian economy is that of recession as long as the economy continues to tick along at this rate, 1%,.1%, 1%, 1.5%, doesn't seem like a note able catalyst would precipitate a crisis >> there's a big rise in investment in machinery that was masked by strong import demand that masked the impact overall on gdp later this month on the 30th of october, around the same time we get rating action from rating agencies, we get the q3 initial print, that will be looked at closely. i don't think you'll find many people in the markets who believe the government's numbers. but in the grand scheme of things, these are not rounding errors but italy could still

surprise on the upside it won't grow perhaps as quickly as the government is forecasting, but it's growing. >> a few months ago we were talking about italian exits, tax incentives those seem to be brushed away. now we're talking about a matter of percentage points it is small in the grand scheme of things. >> they still have to maintain market confidence. in may and june we saw record selling of italian bonds in two months later this week, we get the data for august it will be interesting to see what's happened in september and this month, october. i should also warn this month in october the ecb is active in the markets. so italy has been supported by that going forward, there's an issue next year, there's a change in the capital key which will not be helpful for italy so they may be less supportive

moreover they alreadyov overbouh italy. so the market may see less support from the ecb and it's key they maintain the foreign investors and they come back and buy. >> i've been looking at the bond market, many people flag up the fact that 20% of the market is owned by the european central bank and they will be stepping away don't you think that's in the price now? don't you think we've been talking about it enough that people have identified the faat fact >> they overbought they couldn't find enough portuguese paper, enough slovakian irish paper to buy, so they overbought. there are fundamental changes happening with the capital key as of january. all we're suggesting is that the ecb action may be less supportive of italy than is

currently priced in. if the economy surprises on the upside, yes, things can come in from here. >> we will continue the conversation on to another topic we've been watching, brexit we heard from juncker, juncker will brief 27 leaders on readiness for no-deal scenario on a wednesday summit dinner the eu is said to now be expecting prime minister may to present her view of brexit progress before the wednesday summit dinner. we've also heard from a german government official who says the north ireland brexit backstop must be legally water tight. this withdrawal agreement has to be legally binding before they can move on to that of the topic of the political declarations. so, it looks as though prime minister may will have an opportunity to spell out her definition of what progress means ahead of that eu summit at a dinner on wednesday. we already discussed a lot

if you have anything you want to tell us, if you want to get involved in on the conversation, follow us on twitter. coming up on the show, emanuel macron reshuffles his cabinet. find out the big move after this break. place, the xfinity xfi gateway.

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french president emanuel macron has reshuffled his cabinet close ally christophe castaner has been named interior minister following a resignation two weeks ago. bruno lemaire will remain in his roles. charlotte reed joins us on the line last time we spoke we were talking about how long it's taken to get to this point there's been multiple delays some people were saying macron was struggling to find appropriate teammates to actually join him in the cabinet. we finally got an announcement what is your initial take of what's been announced this

morning? >> that's right. this reshuffle was postponed for a few days to ten days, to two weeks, now we have the news this morning. it was tough for the government to be formed you have to keep a tight, difficult balance. you have to keep a left-right balance. women to men balance, civil society to politician balance. it was tricky. there were some concerns that there was not sufficient talent pool to tap into to form a government looking at the nominations this morning. it looks like he kept the balance. there's a few socialists that are joining in and also the most notable nomination as you mentioned is kristochristophe castaner, one strong men and the head of the party, now named as interior minister, which is a key ministry for the government and for president macron given the

security situation and the terrorist risk that still belongs in france. so he has been put in this key ministry he will be surrounded by a former security intelligence boss, that will be his number two at ministry. for the other ministers, it looks like a woman has been named as well. there's a few socialists which could mark a slight slide to the le left, letting voters hearing the concerns that the government is going too much on the right and they're trying to soften that approach of course, you know, the government said it's a renewed team, maybe for macron it's an opportunity to reboot after a summer of setbacks this is the opportunity to start anew this is a new team with the same

mandate. they have been clear they will stick to their lines, stick to their reforms, hopefully the reforms will bear fruit next year >> charlotte, thank you for bringing us the latest out there. this comes at a time when macron's popularity is at 30%. with me is david owens your take on the fact that he kept lemaire as finance minister, it shows they're intent on this economic reform agenda even if there's multiple costs to popular tichlt. >> popularity. the eu elections are next week do we get more completion of the single market, france has been clear it wants to put the excess savings inside the eurozone. again over 350 billion euros, mork to work with. it's all part of this bigger

picture. italy wants push back on the fiscal side. in terms of macron he's trying to push the structural reform issue. >> cac 40 is the best performing european index, something most people are overlooking coming up, the uk prime minister prepares to address her european counterparts as the eu warns of an increasing risk of no deal. that's after this break. - learn. when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers. - anncr: prevagen is now the number-one-selling brain health supplement in drug stores nationwide. - she outsmarts me every single time. - checkmate! you wanna play again?

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welcome to "street signs." i'm joumanna bercetche these are your headlines saudi stocks turn lower again as u.s. secretary of state mike pompeo touches down in riyadh amid reports that the kingdom will blame rogue operatives fo the killing of jamal khashoggi. emanuel macron reshuffles his government following a number of high-level resignations appointing head of

his ruling party as interior minister italy's bond yields fall and bank stocks rise after rome submits its budget to the eu as deputy prime minister luigi dimaio claims the highes spread between italian and german rates is temporary. and volvo trades near the bottom of the stoxx 600 as the truck maker warns a crucial emissions control component is wearing out too quickly. we've got the uk employment data coming out. let's go through the numbers average weekly earnings at 2.7% year on year the last three months this is the fastest growth since february 2018. august alone accounted for 2.% of that. 2.9% of that ex-bonuses higher, 3.1% year-on-year august alone was 3.1%

year-on-year as well strong employment data job vacancies up at 832,000 in three months versus 833,000 three months to august the main headline grabber is that of the strong employment data, employment earnings numbers as well on the average weekly earnings up at 2.7% david owen is still with me. these numbers look strong. >> yes the main focus of the bank of england is the average earnings figure, it's only a question of timing for another rate rise so an acceleration into all of this, running at 0.7 so the uk economy at the moment looks resilient. the chief economist was flagging

pace picking up last week. >> coming back to the point of how it ties into the bank of england, 3.1% ex-bonuses, and inflation is 2.7 so we're seeing positive real wage growth in the uk. >> there's also the fact that the labor market is beginning to operate again in the uk. we're seeing the same thing again in the eurozone. so the central banks have much more confidence that the labor market is returning back to normal the highlight about the bank of england. we had three keynote speeches about shrinking the balance sheet. so they're moving in the direction of the fed they have also asked market participants for feedback on this they're not shrinking the balance sheet now. they are only shrinking when they get the bank rates around 1.5% >> when do you think they get to

1.5% >> if the economy continues as it is, let's assume in a perfect world that somehow brexit sort of is an orderly process, the uk carries on with it, february would be a good stab for a rate rise we also have the budget later this month and the next inflation report is the 1st of november the bank may steer the market into thinking you're not pricing in quite enough uk rates going forward. you don't think that will be dependent on what happens with the next couple of days with the eu leader summit >> in terms of brexit, they're still dancing. they'll be dancing probably until we get the vote, this critical vote on the eu, which won't be until later november and december they're dancing at the moment. >> dancing dancing with the lights off and no one's watching. david, thank you very much for joining me on "street signs"

today. david owen chief european economist from jeffries. let's check in on how foreign exchange markets are doing i talked about the strong employment numbers out of the uk a balance in cable euro/dollar is 1.15. that is the picture. dollar is trading on the backfoot this morning. switching to european markets, much more positive picture for the european indices than in the last couple of sessions. ftse mib surprisingly strong today. the budget has been confirmed. spending plans and revenue plans are at 2.4% for next year. italian equities up this morning. xetra dax is firmer as well. the underperformer is ftse 100 i would point that back to the strength in the pound given the export sensitive nature of the

ftse let's take a look at u.s. futures as well. it looks as if we're seeing a firmer picture for u.s. main indices. dow seen opening up 25 points higher nasdaq 28 points higher after a weak session in the trading yesterday. we are very much in the midst of earnings season. all right. so we are just getting some flashes out of eu as well. i was talking about some of the ones that came out a short while ago, about 15 minutes ago we're also hearing now from eu officials saying that the economic part of may's chequers plans will not work. this is a comment from a senior eu official. we don't know who that senior eu official is. but they are envisinsisting thae economic part of chequers will not work, and a november summit is not a given prime minister theresa may said

she can't allow the disagreement over northern ireland's border to derail the prospect of a good deal on brexit speaking in the houses of commons, the prime minister repeated her belief that a deal on brexit can be achieved despite a pause in talks may warned that any backstop solution to the border issue would not become permanent >> i'm clear we're not going to be trapped permanently in a single customs territory unable to do meaningful trade deals so it must be the case first that the backstop should not need to come into force. second, that if it does, it must be temporary third, while i do not believe this will be the case, if the eu will not cooperate in our future relationship we must be able to ensure we cannot be kept in this back stop arrangement indefinitely >> the prime minister will hold a cabinet meeting later today ahead of an eu summit meeting tomorrow silvia is in brussels.

the prime minister seems to be the only person who believes a deal can be done here. what are the latest developments >> fworningood morning at the moment the eu's chief negotiator, michel barnier is at the european council, meeting with donald tusk to brief him on the latest developments about brexit he will speak to the press at 1:00 p.m. local time the message so far has been that the eu wants an agreement with the uk, however european institutions are also stepping up preparations for a no-deal brexit in the meantime, it's also been confirmed that prime minister theresa may will join the other 27 european leaders for dinner here tomorrow. after that dinner meeting the 27 will discuss among themselves what happens next. as you know, there's been a lot of noise about what happens to brexit i had the chance to speak to the

former prime minister of denmark who is confident that the eu and the uk will strike a deal. >> it looks chaotic. but i think the european union will find solutions step by step when it comes to brexit a no-deal would be a disaster for the uk as well as for the european union so i think we are approaching the moment where a deal will be reached. >> are you con ifi >> are you con ifdent that deal will be reached this week or postponed until an emergency summit next month? >> i cannot say it will be reached this week. it may be postponed. there's a lot of optics in this. everybody has an interest in showing that they have been fighting until the last moment but i think a deal will be reached. the question, of course, is

whether the house of commons will approve the deal at the end of the day and that might be the uncertain factor in all that >> so the former prime minister of denmark is confident both side also reach an agreement however that might not happen this week. it might get postponed he also warned that the big question mark is over in london and it's how the uk lawmakers will vote on the withdrawal agreement. let's wait for what happens here on wednesday back to you. >> i want to pick up on how the parliament will vote on the withdrawal agreement we know what the sticking point is here. we know it is that of the irish backstop everyone is aware of the issue it seems to be a matter of how theresa may can present it in a digestible format to allies and other members of parliament. at this point in time it doesn't look like they have enough support to get the withdrawal agreement in its current format

through parliament what does that mean in terms of the sequencing of events if the deal is shot down how would europe react to that and what will theresa may's options be at that point >> it seems the european union, the 27 want to get this done as soon as possible let met explain what can happen from the european side the withdrawal agreement will have to be ratified at the european parliament as well, then if the uk parliament also approves the withdrawal agreement, then that deal will have to go to the council again. it will have to be up to the heads of state to sign off the final deal we know as well that we need at least the support of 20 member states to get that withdrawal agreement done >> silvia, thank you for that.

we've seen more flashes from that certain eu official who is quite vocal this morning he says it is up to eu leaders to decide whether it's worth meeting in november on brexit. it will not be easy to find a deal between the eu and uk so not encouraging comments there. some company news. volvo shares hit an 18-month low after it warned of an issue that could cause engines to exceed emission limits. the swedish firm says a part that controls emissions in trucks is degrading more quickly than expected. volvo added it is informing authorities about the problem and has no plans to recall trucks or buses but it did warn of a large cost to fix the issue. shares are down more than 5% on that news. full-year revenue targets of b.a.t. has been cut. the company cited a flat market in japan alongside product recalls in the united states currency fluctuations also took

their toll with a 7% hit on adjusted earnings per share expected the rest of the year. the world of wrestling is being drawn in to the strained relations between the west and saudi arabia with the wwe asked to rethink their crown jewel event next month >> the wwe is one sporting organization, sporting entity that's being dragged into these heightened tentensions the wwe signed a multimillion dollar deal with the kingdom of saudi arabia to take shows there. the first happened earlier this year in jeddah it was successful. they did promotion they took a lot of wrestlers out there. the next one was to happen in riyadh on the 2nd of november. the wwe released a statement at

the end of last week saying they're monitoring the situation. they said their stance has not changed from these six words, we are currently monitoring the situation. however at periods of time over the weekend and up until earlier this morning details of -- or the location of where the event was going to be was taken off the website. now it's back on and it says tickets are supposed to be on sale friday. >> how valuable is it for the wwe to have the event in riyadh? is there a huge wwe fan base out there in saudi arabia? do they sell a lot of merchandise? >> the short answer is yes they have taken live shows around the globe in the past very much prominent figure on the calendar here in england they go to manchester, london as well the wwe is a huge global brand and they take big shows abroad

this one has particular significance because it's hall of famers like shaun michaels. anyone familiar with wwe knows these are huge historical names coming out of retirement as well as the undertaker, a famous wrestler >> a bit of an unfortunate name. >> depending on the current state of affairs, potentially yes. but historically prominent in the wwe. now they have a lot of pressure. >> quick one there was also some murmurs about interest in manu nighteund >> the co-chairman of manchester unite united is said to still be going out to the davos in the desert event. because of that they could be keen on purchasing manchester

united they want a piece of the action. rumors are that 3 billion pounds is the figure that they will have to start at the club valued at 4 billion pounds the club saying they're not for sale waiting to find out -- contacted manchester united to find out if glazer is still going to the davos in the desert event. >> keep us posted, adam. for more on the wwe multimillion dollar deal to take wrestling to the wing dom of sakingdom of sa, head to cnbc.com. some flashes from audi they say they have -- they're admitting to taking responsibility for some deviations from regulatory requirements this is a major theme for

emissions. we were just talking about volvo. they're saying that they accept a fine and by doing so they're admitting responsibility and that their acceptance of this responsibility will have an impact on their financial key performance indicators that are forecasted for the fiscal year of 2018. i'm waiting for more color on how big that fine is you would expect autos to get hit by this following the volvo story as well, which is along the same theme, emissions and regulatory standards. before we take a break, microsoft co-founder paul allen has died at age 65 from complications of cancer. he left the company in 1983 and went on to dedicate his life to philanthropy, supporting research in artificial intelligence and new frontier technologies and investing in projects in his home city of seattle. bill gates said that personal commuting would not have existed

without him and that he was heart broken by the passing of one of my oldest and dearest friends. "street signs" will be right back 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 can really become your lifeline. ♪ (nicki palmer) we are constantly innovating. from a dedicated lane on our network just for first responders to cell towers on wheels. we can even fly cells in drones so communications stay up.

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welcome back china has seen factory inflation slow for a third straight month. september ppi rose 3.6% on year versus a 4.1% increase in august while consumer inflation came in slightly above forecast, the overall picture points to ongoing pressure from u.s. tariffs and slowing domestic demand as we look ahead to third quarter gdp, that is due on friday reuters forecasting 6.6% growth. the u.s. deficit hit its highest level in six years as the trump tax cuts eat into coffers. the shortfall rose 17% to 7$779 billion in fiscal 2018 corporate tax collections for the year ended september 30th

were down 22%. bank of america closed in the red overnight after posting lower than expected loan growth. earnings season continues with several big names reporting today. julianna will break it down. >> u.s. bank earnings in forecusforcus. let's go through what the four key themes are we have rates and an understanding of how banks have reacted to a higher rate environment. secondly loan growth u.s. loan growth has been decelerating for quite some time trading revenue. overall trading revenues seem to be muted overall

also trade tensions and the overall macro environment. in terms of what we've seen so far, we had bank of america yesterday, jpmorgan, citi and wells fargo on friday. all of these banks have reported decent earnings. a strong q3 overall. as you can see, it hasn't done much for shares. the real question is will the market give them credit for the performance they've seen or do they need further reassurance that future growth can continue? let's have a look at what we are expecting today. as i said, goldman sachs and morgan stanley due to report later this afternoon in terms of the trends, broadly in line with what we've seen so far. i would add in goldman sachs case, investors will be focused on new messaging from the new ceo, david soloman, who took over at the beginning of the month. extra things to be aware of on

that front >> of course all eyes will be on that loan growth number, bank of america disappointed on that front in the earnings announcement we'll have more on blackrock's earnings today larry fink joins our colleagues stateside for an interview at 12:30 cet. >> apple shares ended lower after goldman sachs warned slower chinese demand could hit earnings they have forecasted a 15% year-on-year decline in unit sales for the third quarter. the worst case scenario would see fourth quarter earnings per share come in 4% below current estimates. goldman sachs and raymond james cut their price targets on netflix ahead of third quarter earnings goldman maintains a buy rating on the stock but expects strong forecast and subscriber growth will be balanced raymond james says the price cut reflects higher discount rates

in a rising interest rate environment. elizabeth has been looking at third quarter expectations let's go back. i think they had a big miss back in july, and back then there were huge concerns over whether or not the trend is slowing in terms of how many subscribers they're adding to their platform in a sense does that not mean the bar for positive surprise is lower? >> last quarter netflix reported 5.5 million subscribers, more than 1 million below what was forecast the question is if the number will continue to disappoint or if last quarter was just a blip and sort of something that can be overlooked as a quarterly expectation. can you say that netflix, are they some what of a bellwether for the industry as a whole? last week tech sector had a huge re-rating as far as market

activity was concerned >> this is the first of the f.a.n.g. stocks to report. a lot of investors are looking to netflix to say is this a sign of if it disappoints, other disappointment in the sector all these stocks don't necessarily move together. netflix has a different business than apple and alphabet, but this is seen as a bellwether it's the first indicator coming out today if it surprises it could be a good sign for other companies reporting later. >> netflix, as we talk about the subscriber growth, i member this from the july report, most of it was happening on the international domain rather than domestic there was competition in the internal domestic market is that what investors will be watching out for? >> that's right. we are seeing more and more concentration in the u.s. market when it comes to streaming particularly from companies like hulu, youtube, apple, hbo. netflix has concentrated on that international segment when it

comes to growth it's run into some tough competition overseas as well >> elizabeth, thank you for spelling it out for us before we head out, let's look at u.s. futures. the three makers are all pointed to open in the green this is after a negative session yesterday. nasdaq, talking about the tech sector, was down 0.9% in yesterday's trading, today it looks like it will open up about 30 points higher that's it for today's show i'm joumanna bercetche "worldwide exchange" is coming up next. today is the day you're going to get motivated...

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it is 5:00 a.m here is your 5 at 5:00 pushing higher wall street rebounding this morning as investors await a barrage of earnings reports. the big names you'll need to watch. the business backlash. we're live in riyadh with the latest there. google says it is still eyeing a censored version of its search engine in china. and we have a $2 billion deal in the cloud to tell you about. and the business