tv Street Signs CNBC June 11, 2019 4:00am-5:00am EDT
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further levees will be imposed if xi jinping does not attend this month's summit meeting. >> and theresa may gathers pace as the final ten candidates are ahead of this week's first round vote well, good morning, everybody. our top story today, china has pledged to respond to u.s. trade pressure with, quotes, firm resolve. this is after president trump ramped up tensions with china once again and he has told cnbc that he would immediately impose tariffs on additional chinese goods the president xi did not attend a meeting in the japanese city of osaka later this month the u.s. leader insisted his approach has tightened the pressure on beijing. >> tariffs are a beautiful thing when you're the piggy bank and
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you have all the money they want all our money. china is working out because they're getting absolutely decimated by companies leaving china, going to other countries including our own because they don't want to pay the tariffs, and china will, in my opinion, based on a lot of facts and a lot of knowledge, china's going to make a deal because they're going to have to make a deal. >> so despite the pretty strong words coming out of the u.s. yesterday, we had a strong session from wall street actually it's sixth positive winning streak in a row. it's posting its best month. yes, a lot of narrative about tariffs, mexican tariffs and ultimately stocks are in a good place. there's a lot of green on the board. the heat map is mostly pointing to positive territory. you can see the broader positive
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index is up 0.6% and we're only an hour into trading strong footing today for european equities. let's talk about the individual indices. today the major gains are lead by the index, the german index up 1.2%. yesterday we were closed for a holiday, so there's a little be it of a catchup effect over here all of these indices are in the green. the italian index also up 0.6% as well. very quickly i want to point your attention to the ftse 100 7400 is the mark here. lots going on here remember yesterday we had the weak gdp for the month of april. but much of the narrative is about the leadership contest that is taking place we now have formally got ten contenders for the role of prime minister, and that should be something that we'll be watching out for in the next coming
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weeks. however, in this basket, we're seeing a big gain for minors and steel makers that's one of the reasons the uk index is up. let's talk about where the leadership is coming from. i mentioned miners and steel makers we'll talk about some of them today. cyclicals the story today, up. technology is up with the more positive effect. not to forget the digital taxations. the u.s. president trump criticizing europe and particularly the competition commissioner we'll talk about that more in the show later on. on the downside we have the defensive sectors.
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th i want to talk about minors in particular this is one of the reasons the uk has been doing quite well tofrmd a lot of the minor names in this box, basic resources having a good start to the session. again, we are seeing some positive correlation with the performance in chinese equities. switching to stealmakers as well, as you have imagined given that some of the minors are doing well, here are some of the german names. thyssenkru is up, schaeffler and
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arcelormittal as well. it's one of the reasons that the german index is doing well today. auto sectorser have much caught in the crosswinds of the narratives of tariffs. the expectations is at some point the u.s. will have to make a decision on whether to apply tariffs on them. today is a positive day for that particular basket. we've got bmw up 2%. there are a lot of names trading up fiat, chrysler, italian names up 1% also some report this morning from the french transport minister suggesting that the potential tie-up is not completely dead. so this is a story that will continue to watch. renault up 1.7% today. so, again, a lot of sectors in the green, particularly the cyclical sectors. >> joumanna, a lot of green in
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the chinese markets as well. it's still quite a long way off from its relatively recent high in mid-april, but it seems that there is a bit more confidence there in those chinese investors' minds we're joined in our london studio thank you very much for joining us it doesn't seem like it's that easy to do that. i wonder whether the inexplicable nature of the u.s. ties and your country is going to be a lot harder to resolve in the short term >> i think it's become a lot harder to resolve once president trump actually linked those two things, on the one hand
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security, on the other, trade. at the moment the attack on huawei and the other chinese companies was unleashed, i think any resolution became a good deal harder. mnuchin can say what he wants, but the two have tied it together very, very quickly. >> when the tariffs were announced and the resection was announced, they essentially laughed at the idea there was a public security threat from europe into the u.s. going into the fresh trades involving this, what do you think the u.s. should be thinking involving these kind of talks? >> it's actually difficult to see much reasoning or logic to it the idea that autos are a
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national security i think is a little far-fetched i dome think it's a good idea to laugh at the president he does not like to be made fun of he cares about agriculture and automobiles. he's been on about automobiles for a long time. what i find dangerous in the whole debate about about automobile tariffs is some of the discussion doesn't focus on which automobiles are made in the u.s., but rather the focus which are branded u.s. autos sold in the u.s. as you know, that brought about a terse comment from the head of the japanese automakers and the jobs they've brought to the united states and it's cheerily not welcome anymore. i think it's all open. the tack tuck of the u.s. has been to prolong the uncertainty
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longer and longer. we were hoping that trump was going to react to the report that he received from the u.s. department of commerce he didn't. he said, we're going to give it another six months so the uncertainly doesn't go away this is poison for the global economy. >> exactly so the uncertainty is here to stay and even in a situation where like, for example, u.s. and mexico, they were in the process of re-signing the agreement. all of a sudden the president walked away and we're back to square one or square zero, whatever you want to call it that adds an additional layer of uncertainty. how much of an impact is that going to have on your global growth especially in your interview yesterday with cnbc? and the presidential said, look, if they're not going to agree, they can impose more tariffs on u.s. good. >> that's exactly it they see tariffs as kind of a
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wonder care for anything that come s up now, throwing into the debate, the tariffs to be imposed because of security, that's not the reaction to react to such a crisis it's not only uncertainty about the negotiation and what kind of agreement can be made. i think the mexico episode short-lived as it was. the mexico episode showed that the counter part thinks everyone is negotiating with the u.s. what are the agreements at the moment that's what we need to think about. we have to get back to trade policies. >> we'll get back to you
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welcome back to the show some corporate news for you. dutch lender ing has pulled out of a potential merger deal with commerce bank. commerce bank has declined to comment to cnbc about their reports. in an article commerz bank and othering have put their bids on hold as well. elsewhere morgan stanley praised the company's brand. the bank's analysts says hugo
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boss still has to show that they can proceed. >> the u.s. administration has gerch cgiven conflicting statements president trump in yesterday's interview with cb tnbc said pau of it can be resolved with a trade deal with beijing. >> it could be we do something with respect to boyway as part of our negotiation with china. china very much wants to make a deal they want to make a deal much more than i do we'll see what p has look, i don't mind taking in billions of dollars. you know the 3.2 we had in the first quarter, we picked up the one point. just remember they're charging us tariffs.
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>> the u.s. president also has spoke on it. he touted the possibility that u.s. regulators could also impose fines on big american firms. >> is this something that's forming a bit of consensus in congress >> there seems to be growing pressure that these big companies need to be reigned in. growing pressure on these companies from all fronts, from lawmakers, the ftc, this doj, and now seemingly president trump. in an interview with president trump, here's what president trump said about reigning in those companies with fines. >> the person at the european union that is in charge of taxation hates the united states more than any person anywhere in the world. i really believe that's true every week you see them going after facebook and apple and all of these companies that are --
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you know, they're great companies, but there's something going on i will say the european union is sue them all the time p we're going to look at it differently. when they give european unions $7 billion and $5 billion and $2 billion and apple sues, you know, they get all this money. well, we should be doing that. they're our company. so they're actually attacking our company. they should be doing what we're doing. they think there's a monopoly. i'm not sure they think that it's easy money. >> jeff to be clear, there's not action taken every single day on this front what we have seen are some fines against these companies especially from the european commission we've seen a couple of anti-trust funds against google. that's not nothing there are several also ongoing trust investigations across europe, some from germany
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looking into facebook, the eu looking into apple this is related to a spotify complaint. and italy recently involved a probe into amazon. they're looking at amazon. so there certainly is action taken on the anti-trust level and that doesn't count the data protection level that went into place last year. so these companies are facing scrutiny here and it seems they want a little piece of that action but mostly the money he says that could be easy money. >> it's an interesting point on one point there needs to be further oversight of the tech companies. on the other hand, as long as they do it their way, not following the pattern of the european union, in this case the european commission has pursued, what does this mean for the future of streamlining those efforts when it comes to regulation across the atlantic >> that's great. perhaps what we do is look at some of the investigations and
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try to build on those. we look at reports that the ftc and doj look asset it. we have concrete evidence that congress says it also. the first hearing actually kicks off today in the house anti-trust subcommittee, democrats leading that effort. a rare bipartisan issue on capitol hill. >> it's amazing some of of these stocks are up year to date we spent the last month talking about it and we're up 30%. elizabeth, thank you for bragging it down for us. certainly lots more to talk abouter about in coming weeks. goldman sachs says it expects the federal reserve will hold things. it's promote to sustain the skpapgs did not represent a strong hands that the bank would cut rates soon that's not what the interstate
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market is telling us it's pricing in two cut. let's bring in klaus baader. where should we stand? the market is pushing them to do one things, others are a little bit more cautious. where do we stand? >> you see the market has moved at an interesting speed. they've moved very fast've even though at least until now the macro-economic levels looked fine so our published view,al tho these are kind of constantly up for revision our view is in the near term we expect the u.s. economy to slow down very sharply in fact, hit a recession around
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2020 we're looking at 100 base points cut over the horizon or a little bit more nchl the never term we don't see the case for a weight reduction. what's interesting is despite the sharp move so far, fed speakers have been reluctant to push back. >> because they don't know how long the slowdown is going to last for 100 basis points cut over the course of 2020 you don't see that happening em contintentally what do you see. they're saying it's not goepg to happen in june some say once or twice toward the end of the year. we'll have to see, and in particular we'd be looking at the lead indicators such as business sent meant. the other kind of traditional things you'd be looking at there's certainly a scope for it
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to be made the risk is relatively small, but, owe know, we have to see a sig canal weakening in economic growth the first were extraordinarily strong now we think there are things unlikely to be repeated. very large contribution for the inventories. that's unlikely to be repeated we haven't seen a fundamental loss in the u.s. economy. >> what do you make of the argument that in this environment central banks need to be given proximity. they dome have a lot of ammunition, certainly not in thest pa in times of the past recession, they could cut anything from 400 basis points to 500 basis points perhaps central banks should be on alet whenever they signs of
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distress. >> i think what that means is once there is a case, a fundamental case, then, indeed, that i should move very quickly. for instance, let's take the federal reserve example. hay should use with interest rates alone. they should activate the quantitative easing policy, but you need to have a case for loosening it, particularly when you're at low interest rates which in real terms is not far away from zero. >> no. that's what's interesting. klaus, thank you for taking the time to join us. klaus baader. they agree that the government needs to avoid european saepgss ore rome's high debt levels. after a meeting between the coalition partners, conte
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announced they would talk with brussels in the next few days. salvini says he wants sanctions but they'll not cut spending to please the european union. and the race to replace theresa may has officially kicked off with ten candidates confirmed for thursday's first round vote boris johnson remains the favored to win while jeremy hunt seems to be the closest challenger the u.s. say it has, quote, grave concern about hong kong's dichotomy. it would mean some hong kong residents could face trial in mainland china they have promised to take further action including potentially strikes. a spokesperson demanded the u.s.
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stop interfering in its affairs. the next scheduled rounds will take place on wednesday. and a helicopter has crashed on the roof of a manhattan skyscraper leaving the pilot dead tim mccormack was the only a personal and authorities are investigating the cause of the krarchl mayor bill de blasio describes the helicopter as obliterated and there's no indication it was an act of terrorism. also, gaining conference, e3 kicks off. we'll look at the latest developments in the sector right after this break stay with us
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these may be signs of a rare, potentially fatal brain condition. some serious allergic reactions and lung inflammation can occur. talk to your doctor today, and learn how janssen can help you explore cost support options. remission can start with stelara®. welcome back to "street signs. i'm villa marx. >> and i'm joumanna bercetche and these are your headlines this morning. europe's biggest steel makers reach agreements and return with a positive reaction with a decision to call off
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tariffs. >> the shanghai composite posted its biggest gain in a month despite president trump keeping the tariff over beijing. he said the tariffs will be imposed to xi jinping does not attend the summit. and it's a leadership contest in the fund round of votes. stronger uk employment data right here the may count is up 23,000 month on month to 1.103 million. the jobless number is down 34,000 over a three-month peer dwrod 1.304 million. 's in the three months to april
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with ton ploim rate at 3.8%, very much in line with expectations the average weekly earnings were up 3.3%. in the mop of pri they're up 3.3% against the same period lau last year. an average of 2.3. if you take ort bonw out bonuse5 833 throu 833,000 through the three months. >> pretty positive numbers coming out of the uk we saw a spike in sterling it's a risk on day a sea of green behind me as you can see. the ftse 100 uk indices, we were talking about having a good start to the day no doubt, of course, helped by the stronger wage data
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we're seeing a good balance in some of the steel makers an minors this morning. yesterday the german index was closed, so we're playing a little bit of catchup. the german index is up a little bit. the italian index up a little. the positive session on wall street six positive days in a row for u.s. markets here. as i mentioned earlier on, the s&p is up 4.7% already in the month of june. this is the best start of the month. so very strong month for u.s. equities and equities across the board. you wouldn't think so. we were talking about sterling which has seen a bit of a bounce after the stronger wage numbers. we're through the 127 handle now. we were trading just shy of that before the numbers were released up 2% firmer on the day. a lot of the discussion is about
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the leadership the candidates that have put themselves forward and the ballots that will ensue in the next couple of weeks the dollar/yen, we're seeing it come off a little bit about 0.2% of the percentage points no surprise here then also trading a little bit firm above the 113 handle. we did have a dovish ecb, but perhaps not as much as the market has been hoelgd that's the picture for europe. the u.s. futures looks like it's going to be a risk on day. all three of the majors seen opening up in positive territory, just shy of triple digits here, up aboutet 0 points. >> well, the latest game has been released.
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that will be set in london watchdogs legion says a tyrannical government that is used to suppress it. they explain it was the developer's duty to talk about things that matter to people and sometimes that means contrivance. it sounds like a man who's had his fair share thousands of gamers and publishers will gather in los angeles for the world gaping conference the event, e3 will showcase the latest developments. they've used plans but unlikely newcomers could provide some unlikely competition to major players a lead gaming researcher joins us on a line when you look at a company like netflix, what is it that's involved in the gaming sector? >> good morning. so announcing video content
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based on games as well as announcing games themselves is very important to netflix. it is essentially because we're in the peaking intention economy and there's an ongoing engaging war going on they started to roll out services, but there are only 24 hours in a day and we believe they've maxed out, which means they can no longer pile up services on top of each other. instead they need to start prioritizing a couple of years ago companies were competing for consumers' available time i're now competing for time consumers have already allocated. so it's become a more and more valuable asset you have tech majors and netflix who want to be able to fulfill all of their entertainment
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desires. they've done it -- we've seen this kind of development with music, video, and games are largely the missing piece of the puzzle one additional thing i wanted to say is we're likely to actually see more of these sort of games, video, cross entertainment deals done by netflix in the upcoming future because netflix currently faces the pressure of it being pulled. as we see with disney and others to follow, netflix is becoming more dependent on its original content and the games make it less riff yk to relay original content around building up a brand of a new show from scratch. >> so that's turning games into
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tv shoes let me ask how it impacts some of the competitors in the existing market leaders when it comes to focusing on platforms if you're an xbox user, you're focused on the console and your interface. is there a chance microsoft will try to diversify the platforms available to its potential users? >> possibly. so as i mentioned, it all goes back to belding up the entertainment systems. if a consumer is about to finish a favorite show and start a gaeming session, it's a lot better for the company to provide that rather than have them engad in the competitors. one other thing i wanted to say, netflix as a user base has gotten significant overlap with gamers
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so our vary shows 46% play on it and 33% on console there will actually be that you can't rule it out for the long term. having said that, they're competitors already. you don't just compete against your own sector, but you compete against everyone and everything that's treeing to engage. >> it's really interesting that you're talking about monetizing with tell fli with netflix i want to bring in one point that coming up time and time again in the context of tech where is regulation in all of
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this because increasingly you hear of congressmen and the u.s. wants to crack down on the gaming and curb it and the paying level how much of a headwind do you think it's going to impose >> of course, gaming has grown very fast in terms of engagement today it is roughly a third of the general public that actually plays games on a regular bay sichls not only that rngs one of the fattest growing segments within gaming is viewing games-related videos you're absolutely right to bring that up. so i think in terms of regulation, games will potentially be on the rah i door of the regulators next and it will be something that they will have to concern themselves with. >> we'll leave it there. thank you very much for taking
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the time to chat with us karol severin. president trump added the u.s. is becoming the world leader in 5g technology. >> and before i got here, we were way behind. and going to be leading very shortly. we're leading in everything. we are -- we are -- if you look at china, china as great as they are -- and they are great -- they don't have near the capability as our geniuses in silicon valley that walk around in undershirts and they're worth $2 billion apiece. i dome have nearly the genius that these people have. huawei says it's target of becoming the biggest phone maker will take longer than expected
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i'm not surprisedful the u.s. sanctioned tech firm had hoped to achieve that by the fourth quarter of the year, but this is now unlikely arjun joins us live. it seems like they're getting stopped in their tracks. >> yeah. i mean there's been a lot of pressure on the company, of course, and those comments came from one of the top consecutives of wowway's consumer business. there's obviously a lot of headwinds this company is facing the first and foremost and more difficult is being on the u.s. black list which threatens to cut them off on some key operating system as well as the key opponents. now, wowway has spoken on the
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fact that it's developing its own operating system it it's trying to look to mitt kbat that there are growing voices that the u.s. is against huawei could it be detrimental to the u.s. one of those voices is gary shah peer lowe which runs this event here i had a chance to catch up with him. let's listen in on what he has to say. >> this is escalating out of control. when elephants fight, the ground gets trampled. here we have technology that's important to the world china has it, the world has it europe has it. people are working together. we have these great american
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chip companies ready to sell to all around the world the fact is the u.s. policy may be pushing china to do everything by itself we're putting up an economic fence around the united states. >> gary shapiro suggesting they could get that chinese companies, consumer electronics companies, huawei, and many others do rely heavily on the semiconductors in the u.s. right now there has been a bit more of an impetus to build its own technology space and that's a view also held by the president of semi. it's a body for semiconductors and overall supply chain and he suggests this could be an opportunity. let's listen in to what he has to say. >> as we talk about 470 billion
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global revenue, about 40% of that is consumed in china. so china has the largest semiconductor consumption market, right, which was not surprising it's the largest for your electronic projects. out of that, around $200 billion of revenue in china, only 13% can be supplied locally, all right. which means this is a great opportunity for global companies as well as local companies to develop, you know, business in china. >> now, semiconductors is an area that has been flagged up in china. made in china's 2020 plan. china wants to be leaders. semiconductors is one of them. their ambition is to have 70% of
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of that cob assuming they've got a long way to go and many, many challenges to overcome back to you. >> sounds like an struggle arjun kharpal rng our colleague. and coming up, the warriors and raptors. more after this break. the first survivor of alzheimer's disease is out there. and the alzheimer's association is going to make it happen. but we won't get there without you. visit alz.org to join the fight.
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all right. a bit of a basketball update for you. the golden state warriors fought back 106-105 win in game five of the finals late points from steph cary and klay thompson helped seal the victory. it shifts back to california where the warriors need to win the game to take the series to the final game.
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meanwhile raytheon fell. that's after president trump's consider over the tie-up it would become the second in the u.s. after boeing with combined annual sales around $74 billion. president trump told cnbc the deal could hurt competition and make it more difficult for the u.s. government to negotiate come pet tv defense contracts. >> i hear united technologies. it's a great company i know it well because i bought otis elevator over the years i bot a lot of carrier, too, by the way. and when i hear of raytheon -- their missile systems are incredible does it become more of a competition? it becomes one big fat beautiful company, but i have to
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negotiate, meaning the u.s. has to buy things. does it make it less competitive? because it's already noncompetitive. >> in response to trump's comments, gregory hayes says the merger will not lead to competition. >> in terms of what it's go ing to doto cause that, what it's going to do for jobs in the country, i think, is going to be supportive as it has been over the administration. >> meanwhile the raytheon chairman was keen to high light the research opportunities that would be created in the tie-up. >> in this case here, we're going to take about $8 billion of research spent and our 60,000 engineers to develop the next level of technologies to create the franchises so we can go to the international global marketplace and win those markets and bring that stuff back to the u.s. and create more jobs. >> well, from defense to autos,
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let's focus on tesla for a little bit there sheriffs there continue to rally ahead of that. they hit their lowest level since 2016 at the start of june. however, investor concerns around consumer demand as well as worries over job cuts continue to linger let's bring in felipe. it's a very interesting setup. we have a chart of this that just depicts how tesla has done in terms of others year to date. tesla's stock is down 35% for 2019 are there more traditional makers like ford up almost 30% so the setup isn't that positive going into the agm what are you going to be looking out for?
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we have to wait. >> felipe, the peak coming from the meamerican buyers. they're tooling up in china. they're getting ready to finish their operations for manufacturing there. but presumably that's not going to happen soon enough to help them. >> dwryes, absolutely. that's the biggest challenge they have. the trade deficit is threatening the position of china. tesla is the brand with the highest exposure with imports to the u.s. all of the cars sold in china are coming from the u.s. plants. so if these tensions continue, this is not going to be a good thing. that's because the mega
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manufacturing deal is not working. instead of that, it might become an exporter for the future expansion of the brand. >> what about component parts because, of course, one of the potential flash points between the u.s. and china is that of rare erkt minerals we heard china talk about the restrictions an that's important to the e.d. sector do you think tesla could struggle to source the necessary components if that kind of restriction is put in place? >> yes, yes. it's going to be more difficult to find the confidence everything i mean as hong as they don't have it, they will be always dependent on what happens between china a nd the u.s. >> i want to take it back to the
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actual financial situation of the company. tesla lost $700 million in the first quarter of the year an it's seeing a drop in vehicle deliveries there are many concerns about real demands for the cars that are being rolled out by tesla. in addition to their ability to meet production targets as well. what would you be looking at to help apply some of those concerns that they can bring those books back in order? >> it will depend on how the model tree goes in europe and china. when you look at it, it became the starting and more than 7,000 units sold in march. the thing is right after that in
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april, we saw a big drop and in may, our latest figures indicate in the european countries, i'm talking of europe and china, that's where growth is likely to come from when you look at the variation between april and may, including norway -- >> sir. >> yes >> thank you very much for that. we're going to have to leave it there. as you mentioned, it's all about the delivery and sale of that car. felipe munoz from jato dynamics. later datoy our u.s. colleagues will be talking with wilbur ross. larry kudlow will be on. stay tuned for that. our show is over for now skippin. they said i had afib.
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it's your number seven the dow issing looking for your seveninget straight day of gains. that, my friends, would be the longest streak a major hearing on capitol hill today as lawmakers take a look at the books no deal? new reports this morning that a federal judge could try to knicksnix cbs's deal with aetna. and we continue our special
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