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tv   Street Signs  CNBC  May 22, 2019 4:00am-5:00am EDT

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. good morning welcome to "street signs." >> here are your headlines we got the pound trading at four-month lows, and the ftse rallying as market traders suspect that despite new concessions, including the prospect of a potential second brexit referendum, mrs. may's deal could potentially be dead in the water
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>> shares drop as the british retailer its third straight yearly decline. >> shares in dialogue semiconductors slide after an analyst downgrade as investors are warning about the sector between the battle between the u.s. and huawei heats up >> with less than 24 hours to go before polls open in e.u. elections, italy's deputy prime minister tells us that a divisive campaign has not damaged the relationship with his party's coalition partners >> nothing is going to change. >> all right good morning speaking of italy, we have data out on italy official stat ikss from the base camp let's go over them they have cut officially the
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italian 2019 ge dp growth forecast to 0.3% let me just remind you, everyone, we had it at 1.3% back in november. inevitably it will signal when it comes to the fiscal outlook here >> it's based on internal demand with no contribution from trade flows whatsoever, and they also see italy employment enling up by 0.1% in 2019. just to reiterate, earlier on today we heard from deputy prime minister sylvini who said all e.u. budget constraints should be removed, and e.u. policy has brought precariousness and
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despair. strong words from the deputy prime minister there. >> it's the things that seem to be mounting within the coalition. give us the latest as we head into these elections >> it really resolves around the desire on the part of the
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five-star movement, the party that got the larger share of the vote in last year's national italian elections to spend more money. this will have a bearing on the country's budget, and a significant one. i had a chance to sit down with one of his party's candidates for the u.s. parliamentary elections. she's a krd for the southern region of italy. she's a political novice, but i asked her after 1 1 months why is it that the lega party in government has failed to pass any meaningful legislation that could reduce taxes or introduce a flat tax for italians. >> translator: i think that we need more time in those 1 1 months we have implemented a series of laws that respect our commitments
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in the next few months we will implimt plemt more laws, including tax cuts we've seen how a flat tax gets companies more chances to envest and create new jobs. i believe that the next few months will be able to meet all of our commitments we've seen it when it comes to the pension or which has been dismantled. his partner in the coalition, mr. demayo, says that kind of talk is, quote, "irresponsible" was the word i finished with there. she said she doesn't believe that talking about a 3% fiscal spending limit is irresponsible.
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political analysts kagts, though, that if legia does come out on top and does end up with the larnlest share of the vote it could encourage, even force mr. salvini to rethink that government contract, the groemt between the two parties, and that's something investors will be watching closely. if the right wing does once again try to take power along side two other smaller parties and have a more stable government, thatco change the kalg husband when it comes to italy's spending and fiscal targets. >> the rise of the far right is indeed one of the big issues in this european election
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yesterday when i interviewed one of the vice presidents of the european commission, he said that he is actually more worried about the lynx between these parties to russia and to president putin. let's take a listen. >> we had -- who were simple fewing issues and offering easy solutions to complex problems. people were tired for financial prices, and they have a tendency to understand easy solutions i understood this to a certain exte extent, but now some of those parties but also newcomers have adopted more nationalistic approach, and basically it means that they want to be and fragment the deal, and some of those have also very close
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connection to russia to president putin. russia has obviously financed some of those parties they have in the -- our democratic process, for instance, the referendum or national elections in order to weaken the e.u., and in order to create division within the people inside the country. that's why the phenomenon, national phenomenon in europe is very dangerous even if nationalist is to -- they are clear minority, so we have a couple of who are representing nationalistic view. >> according to various polls, they can take up to 30 pirz in the european parliament. this is not a majority it could be a blocking minority, so they could have the power to stop certain legislation from
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moving forward, and this is, indead, one of the biggest issues that we have in the yourp even elections, but there are two other important ones that we cannot forget. they are voting now how many people can vote in these elections. this has been an issue since 1979 that's when we had the first election for the european parliament, and then the sec issue to look at is really how the outcome of these elections will influence the next appointments it's the new presence of the european central bank, the council is the parliament, and then the heads of state, when they got here next week to decide who gets which job. they also will take into account the outcome of these european elections. >> thanks for that just to reiterate, the far right are expected to peck up 30% of the seats and the european parliament said the polls are krengt huge turnout really disrunting things let's talk about another person who is useless disrupting things
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in the u.k. steve joins us with more, and, steve, rather flip abbotly yesterday i put out a tweet saying that, you know, for a party who is debt is to leave the e.u., it's quite remarkable that the brexit party is set to gain the most seats of this upcoming european election, isn't it >> i think you hit on akey question i have been pontificating over the same thought as well, but i think what has happened, of course, is this has turned into yet another mini-referendum on europe as well, and very few parties are very clear, of course, in the voters' mind of what they want from europe at the moment whereas nigel,
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whatever one may think of his politics pro and against, he has been remark wli kibt about wanting out with a very clean deal or indeed with no brexit if ip deed that be the case i think that the muddy waters that are the policies of the conservatives and indeed labor party at the moment have actually played into nigel's hands. as you say, he is polling north of 30%, which is quite extraordinary. it's not that extraordinary when you consider those are the kind of numbers in many ways that the u.k. party polled back in 2014 where they got 24 meps as well it's an extension of that process, but we saw in 2014, but very interesting, the party is polling second at the moment it's the one that has also the clearest vision of brexit, and that is the liberal democrats, and, of course, they are very much clear that they want to remain in europe, dwul, and want a second referendum. something we don't necessarily have clarity, of course, from the major other parties.
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one thing that should be said in the united kingdom, though, is don't expect large turnout numbers potentially in 2014. we saw at about 31.4% of the electorate voting as well. i just wauchld one of the parties change u.k. try to distribute leaflets as commuters flood into london off one of the major hubs on the south bank in london here at waterloo station, and find it quite difficult to engage a lot of the commuters as well of course, they're not the only ones, and that includes the conservative party as well mrs. may and her bold new vision announced the pwc which apparently she's going to be presenting to mps today as well. a lot of questions about who will be back in this, and whether to even make it to parliament voting stage because a lot of the people should hope to win around on the tory back benches and indeed amongst labour mps as well already rejecting it dp in droves. we've seen aggressive comments from hard brexiteers saying they can't possibly vote for this as well, and those who voted for
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mb3, meaningful vote three, which is mrs. may's last defeat, a lot of them saying they can't open this because of the inclusion of a potential customs union and, of course, because of the inclusion of a second referendum on many levels trouble ahead for politicians here in the united kingdom. what is very interesting, of course, is that those parties who have voted for some sort of proportional representation such as liberal democrats, they can do very well out of these europe eep parliamentary ledelections s well it i mentioned change u.k. one of the leading potential mep candidates for change u.k. is unfortunately, changing at the moment, polling somewhere between 4% and 9% as well, and they'll hope for a late surge as
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willing. it seems they haven't quite galvanized the voters as a whole, and, of course, a lot of those pro remain voters are voting for the liberal democrats. we'll ask him why in around 20 minutes here on street signs back to you. >> i'm looking forward to it, steve. certainly a lot more questions than answers here. that's being reflecked in the pound somewhat you can bring up the chart quickly. it's interesting that only just a week ago we had the pound trading up at 130 with the latest developments. we've jumped to over three points and also today you can see that the pound has really struggled on the back. the latest proposalby the prim minister which has already steam seemingly been shot down by stake holders. let's cut out the discussion more i want to bring in david hunt. it's great to have you with us let's start off by talking about the u.k. and where things go from here. the reaction of the pound tells you that perhaps a couple of weks ago there was a little too much complace ensy in the marketplace about the potential of reaching a soft brexit scenario
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do you think that with everything that has transpired in the last kwchl days, that possibility becomes a lot more distant. >> i think it does, but i would say we still have a lot of complacency in the market. i think around the world investors have brexit fatigue. the result of that is that i actually think that they system actually underprice some of the risk that's actually built into it if you look at other asset classes, we see much more significant movements. real estate, we've already seen people who are really not interested in putting money to work in the u.k. if you -- if we look in foreign exchange, you mentioned sterling, and yet, we haven't seen that in the public markets. >> here in the u.k., of course, passing this deal which seems like a real struggle at this point as you even just outline
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also, the parliamentary elections and how does that factor into where she puts her energy at this point she has to preserve support for the tory party just go into a little more detail about how you think the partlimentry elections play into how he unfolds >> i think that they view that this is now become very much of an internal political issue within the tory mps. they've actually taken a step back and they've kind of said we're going to wait and see how this plays out we're not going to predict it, and that's where i think the complacencies come in. >> let's take it over to the
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continent and talk about europe. it's just what sylvia was saying 30% of the vote is expected to go to the far right. this is really a disruption when you talk about the left right and european partly imts and those two major parties are not even expected to garner 50% of the seats this time around what do you think that means for the future of europe decision making and that they will have to rely on a lot more consensus decisions and probably make the hurdle a lot harder to achieve things and get things done, and it's coming at a time when the economy is struggling. >> i think most investors would say that the early returns from -- from the polls would sew that quite honestly decisions sht going to be made in many countries related to either fiscal or monetary policy. as a result, they have become more bearish on growth in europe i would say that's the single biggest issue on the minds of
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global investors they see the u.s. as slowing, but doing fine they see china had a little rough patch, but appears to be on an outwing swing. the biggest surprise for them has actually been how quickly europe has slowed. these kinds of results should they happen, only make them a little more discouraged about the ability to governments to respond. >> as an investor, what would be more informative for your investing decisions. who the next european commission ends up, or the ecb president. which one of those are facing more value on? >> i think thequestion of both are important. if i had to pick the latter definitely i think that most investors are looking very closely at three things one is they really want to understand what the ecb policy is going to be regarding rates and their balance sheet. secondly, they want to understand poll policy and
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framework to inflation, which is falling more rapidly and, lastly, obviously, you want to understand what's going to happen with spending and whether or not there's any room to move away from what many of have viewed as an aus ear approach to dealing with the economy >> thank you very much for weighing in. coming up on the show, commerzbank's' gm gets underway amid speculation a new suitor will launch a bid for the german lender. all the details coming up after the break. ♪ ♪ at comcast, we didn't build the nation's largest gig-speed network just to make businesses run faster. we built it to help them go beyond. because beyond risk... welcome to the neighborhood, guys. thank you. there is reward. beyond the classroom... there is inspiration. ♪ ♪ beyond work and life... who else could he be? that's what i say. there is the moment. (laughing)
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call, visit or click today. >> the shanghai composite. the handover to europe was a little mixed coming from asia and the u.s. you can see that it is a bit of a mixed bag looking to claim the major sbeks.
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some in the green. some in the red. the ftse 100 is the relative outperformer today up .3% about 25 points higher here with just say you want to pay close attention to the currency, we're just talking about that more than three big figures in the last ten days or so. snoo you see the break today, and technology we had nasdaq in the u.s. and that ebbed up 1% seeing a lift there today in yourp. health care also up about half a
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percentage point right at the bottom of banks down .6%. >> what can we expect to see at the agm today? >> also, whether we got a few more surrounding because we have all the speculation and a number of europeans interested in taking over this case would eve
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be less compelling, so not so much on the horizon in terms of m&a, but more speculation than clearly actionable insight another topic is what commerzbank has to offer in terms of an enhanced strategy. clearly they were scrapping their profitability targets, their cost targets, and also their return on equity targets earlier this year, and the ceo of commerzbank in meet the press event here on the ground was saying that he is clearly seeing
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welcome back to street signs. >> these are your headlines this morning. >> the ftse outperforms, but the pound hovers around a four-month low as traders bet u.k. prime minister theresa may's new brexit deal won't get through parliament >> reject this dole any time soon will be dead in the water,
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what will we do there? >> m & s shares drop as the british retailer brings up a 10% naul in full year profit. >> his campaign hasn't -- >> there are too many things to do, like fiscal reform, the education reform, and the justice reform go on. nothing is going to change >> it's all about the uflt k. today. we are just getting some data out of the u.k., the inflation numbers.
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>> there are some easter effects. 2.1% is the number the monthly is 0.6%. let's take a look at where core came out core tobacco 1.8%. that is slightly lower than 1.3% as well. a little lower there, and switching over to rpi, that came athe 3% year-on-year, and that is slightly higher than the consensus of 2.8%. looking at its core as well as rpix, that came in at 3% similar amount of levels the cpi number came in at slightly below expectations on the headline for both of them, and for core cpi 30.1% lower
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than expectations. bear in mind we do have some seasonal he was here that's one of the reasons these inflation numbers have jumped higher. >> down about 0.2% right now the volatility yesterday was quite interesting to observe sterling rallied initially chatter around the prospect of a second referendum, but gave up those gains. once it became clear that the second referendum would only be offered in the eththat a withdrawal agreement has passed. as we discussed all morning, it looks increase ily unlikely given the reaction across the
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u.k. in contrast with the pound, it has been a strong 24 hours for the dollar right now we are seeing a little movement in the euro versus the dollar and hofrz around that 111 mark we'll see whether investors discount those minutes given what's happened since that meeting on the trade front, which is a key development for markets. we'll see how things stand on the equity front mixed picture really across the board. we are seeing gains for german and u.k. stocks. u.k. and the weaker pound. french and italian stocks underperforming. overall this is making a fairly muted day for the stock 600 as a benchmark. let's take a look at u.s. futures. we can see a rebound on wall street yesterday now it looks like we're going to see the s&p give back some of the gains. implied open is lower for all three of those major indexes also, worth noting that
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yesterday the vix hit italy lowest level since early may volatility subsiding as the u.s. trade -- china trade development takes a back seat this week. >> let's look at u.k. politics tleesa may has unveiled a new ten-point brexit deal in a last ditch attempt to sway parliament monk the biggest consess made by the british prime minister is the transfer vote on holding a second referendum. may said one last chance to deliver brexit >> we all have to take some responsibility for the fact that we're in this impasse, and we all have a responsibility to do what we can to get out of it the biggest problem with britain today is its politics and we can fix that with the right brexit we can end this corrosive debate. >> however, opposition labor leader jeremy corbin says his
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party will not back may's new plan >> it's basically a rehash of what was discussed before, and it doesn't make any fundamental moves on market alignment or the customs union. the prime minister has already indicated she's going to leave office many of her own mps have already said they can't support the bill i can't see how it can get through parliament anyway. >> if you look at your twitter feed and if your twitter feed has mps on, it you'll see the disparaging comments that continue to flood on to it whether it actually gets to the voting stage of the weak of june 3rd, which i hasten to remind our vursz is a stunningly busy week with trump's arrival in the
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united kingdom plus, the commemorations, the memorial services for the d-day landings as well it's very difficult to see how the parliamentary tie could potentially be available i'm here at waterloo station anyway.
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>> what we want to do is stop brexit, but the real issue here is to get as many votes for the clearly anti-bris e brexit parties of which change u.k. is the one that's most determined in this. these are people who actually gave up their careers, their comfortable careers in the two parties they belong to building the -- it's critical tomorrow it's quite clear in what you are reporting. brexit is in dire straights. >> yeah. there is a very clear other party, as you know, that is program as well, and it is polling at the moment around that 8, 9 percentage points. why not throw your lot in with the liberal democrats who aren't
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the same party at the moment the change u.k. apart from the fact that people are concerned about their stuttering start is that nobody knows what they stand for apart from they don't want brexit. >> well, first of all, that's what you said is not true in london london actually the best way to get three meps, which is what we can hope for for clear remain parties, maybe for, is actually to vote obviously for change u.k., for the greens, and for the liberal democrats. that is the way that the remain calculated, which is actually very seriously done and seriously researched calculated to see how you should vote in various parts. >> splitting your vote among three parties rather than one is a way of getting more meps the formula is very kplilktd, but actually -- >> i don't mind -- >> the point is why not -- >> exactly because if the -- they have 17,
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there are about two points below having two or three points below having the second mep. if two of their percentage points come over to us -- the point remains. why as someone who was a committee for yourself and your credentials are there, why not throw your lot in with the party that has established policies on a whole host of issues including taxation where we don't know where they stand on many, many issues as well throw years in with an established party that has established credentials rather than the stuttering start which can be fair. you have two brand new parties in the united kingdom. why does polling at 33% rough by, which is the brexit party, and that's your party. >> whether without sue on sunday, but the reason is that what we wanted to do, and it's in the name, is change u. k. the reason we want to change u.k. is that we've drawn
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conclusions from this catastrophe. i think it isn't yet because brexit hopefully won't happen, and i think probably won't happen, but from this catastrophe, which is already the result of the referendum leaf vote, what did that come from that came from politics which were confrontational, excludeing people, and not based on evidence away we want is to change those politics to a cooperative and inclusive politics and that kind of politics -- no, no, just a sec. that kind of politics actually requires us to go out and listen to people before we formulate the policy >> there are a lot of voters in united kingdom a lot of voters in the united kingdom, and that's demeaning to them they knew what they voted for. they wanted out of the european union as well, and your stance is no more of a collaborative pragmatic approach, and those are the likes of jacob reece,
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mark francois or something actually, what we need is a form of brexit along what people voted for. otherwise, what with are we going for? best of three in terms of referendum >> the attempt together self-brexit is just in the process of coming out to its fourth hurdle and crashing down.
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>> although with all due respect, mr. farage is polling at 33%. >> it's two or three percentage points >> you and i need to chat next
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week, then >> it shows one of the complete misunderstandings of europe. tusk is not a eurocrat he is a politician choseern by 27 prime ministers, elected by 27 prime ministers, and he has every right to intervene in european elections it wouldn't be right if he were to interfere in british elections. >> there are some brexiteers you think there's a special place in hell for him we'll leave it there a former finance minister opponent and, of course, change u.k. mep i'll hand it back to you in the studio >> thank you for that very interesting interview. steve. switching to another topic banking. commerzbank ceo martin zilca has taken the agm. i just want to bring you some of the flashes we're getting from that agm
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of course, this comes on the heels of the merger talks with deutsche bank breaking down a couple of weeks ago, but he is saying the ceo is saying that the talk breakdown did reveal some areas where commerzbank could tweak strategy they said that they plan to reveal more on their strategy in autumn and that the results did not yet fully meet their expectations, but they are going to be working very hard on increasing profitability at the bank of course, as he wn, there are many other banks circling around commerzbank as a potential takeover target. the next couple of months will be crucial for the direction of commerzbank. we will be hearing updated strategy project eks and offer this year. >> starting with corporate news, marks and spencer shares are lower as the company separates third straight yearly decline after full year adjusted pretax profit fell 10%. ceo steve rose says the british retailer is making good progress as it continues its major turnaround plan.
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the company says sales fell due to substantial process and operations changes now, m & s also revealed a rights issue to finance its joint venture with ocado >> shares in royal mail are trading higher after the british mail operator unveiled its latest turnaround plan the company announced its phil full year earnings, it will cut def every dividend by 40% to lift investments 1.8 billion pounds are set to go on-line parcel deliveries. the former state-owned service has struggled since it went private in 2013. dialogue semiconductor shares are trading lower after analysts at bank house lamp downgraded the stock this comes amid investor concern for the semiconductor sector as the battle between the u.s. and huawei heats up. also coming up in the show, we'll have more on the tech battle between the u.s. and china as huawei claims it's a victim of bullying the fight continues in
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another frontier we'll be live from one of the start-ups leading chooirn in its space race ♪ ♪ ♪ ♪ ♪ ♪ ♪ applebee's new loaded fajitas. now that's eatin' good in the neighborhood.
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>> welcome back to street signs. while japan's trade surplus contracted 90% in april as exports to none other than china continue to fall we are joined with more from the -- tell us what's going on there. >> yes according to government figures released today overall japanese exports fell 2.4% on the year to around $60 billion shipments to china dropped 6.3% marking the second straight month of on-year decline the hardest hit were semiconductor components and equipment followed by auto parts and food imports from iran -- iranian oil by the u.s. from may
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as a result, japan's trade surplus franc 90% although it did manage in the black for the third straight month exports through the u.s. was up 9.6%, and all eyes are on the ongoing trade talks between the u.s. and japan ahead of the four-day state visit by u.s. president trump starting saturday the focus is on cars and ag cultural products, but so far those sides have remained at odds and there are still some way to go to reach a conclusion. >> that's after china's ambassador to the u.s. told fox news that -- the administration chaining its mind so often beijing is ready for further negotiations >> meanwhile, huawei is a victim of u.s. bullying and votes that
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the free market should be worried. that is according to the company's top european economictive that's after the chinese chose london for the global launch of its latest smartphone the honor 20 >> business as usual that was the message from huawei as it released its latest smartphone, the honor 20, in an ethat london yesterday it's a mid-tier device that helped huawei -- very quickly contained technology and contains huawei own -- of course, huawei has made a big deal out of its own chip technology as there are threats that huawei could be blocked from getting critical components from the u.s huawei is trying to signal confidence to the market, despite google, and, of course, google said just a few days ago that it would suspend business with huawei, but it's now in
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temporary reprieve, and google will help with huawei over the next 90 days what happens after that 90 days, and will that put off consumers for buying huawei and considering the future devices may not be able to support google's services. now, the company has comout very strong the ceo and founder speebing of chinese state media. huawei has -- now -- there's a whole battle between huawei and the u.s., and there's a twitter like service _#that says huawei says the chi doesn't need to row lie on the u.s. supply chain has got over 50 million views and this is a lot of support from the chinese consumers for huawei some of the consumers are -- they even said -- it's cluner hoo how widespread that sentiment is, but they could be
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some worried given how crucial the chinese is for the u.s. tech giant. cnbc, hong kong. 5 dsz gr isn't the only battleground in the tech war between the u.s. and china, but two sides are also racing for space supremacy. beijing has unveiled policies that have sparked a wave of start-ups hoping to become chooirn's answer to elan musk's space-ex eunice joins us, and it's hard to predict how the u.s.-china rivalry will unfold on earth do we know how it will unfold on space? >> why limit tech wars to just on earth when you have the final frontier before you? china wants to dominate space as well.
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>> help to boost communications especially for the internet of things here. the company has also benefitted because the government here has been able to introduce a whole lot of other measures that are helpful to companies like this one. in fact, there are more than 100 start-ups in space activity. this is what the ceo said. >> they encourage military and private cooperations we are optimistic that there would be policy that is will encourage private companies to participate in the region. for example, some state-owned facilities in aerospace such as launch pads are now open to private firms. they will also be for us to exchange ideas and cooperate on techniques >> despite the supportive policies from the government, this start-up says that they do not receive any direct government funding, and that largely their funding comes from
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private vc's, but, of course, one of the points is that, as you know, vc funding tends to follow government policy and they also say that they do receive some government contracts. >> eunice, break away from the war talking about the space rivalry there. thanks for breaking it down for us a quick look at u.s. futures before we head out for the session. yesterday obviously we did see a bet of a bounce across the three majors nasdaq up more than 1 periods. the picture is gloomier for today's open all three of the majors are seen pointing in the red. that is it for today's show. >> i'm juliana worldwide exchange is up next.
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a retail wreck topping your top five at 5:00 big moment, feeling serious pain as they brace for higher tariffs, or is weather actually the real problem ready to talk. china's ambassador to the united statess says beijing is ready to kick start trade negotiations. that's in the market and your money to new highs countdown to the federal reserve, and that guy, the minutes from last fed meeting are out today as a rate cut or maybe a rate hike on the horizon. it is the end of the line for one of america's most iconic brands

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