tv Street Signs CNBC August 5, 2019 4:00am-5:00am EDT
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good morning welcome to "street signs." >> we're both in london. here are some headlines for you. >> the sell-off deepens with more than 90% of the stock 600 in the red as miners drill lower and luxury stocks dive on rising trade tensions between the u.s. and china. european bonds rally as yields continue to tumble with the german 30-year and uk 10-year touching record lows. hsbc has a surprise
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departure of the ceo, flint, in the role, amid a report that thousands of employees are set to lose their jobs. the yuan slides to the lowest in a decade, with the move being called normal, promising to keep the currency stable we've got some final pmi numbers for the yoeurozone it is in line with the estimate we got a few days back june number was 52.2 this is a three-month low. services pmi is 53.2 that's slightly lower than the flash of 53.3 and slightly lower than the june final number we saw of 53.6. interesting looking at the
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services new export business down at 49.2 into contraction territory, in line with the flash and very slightly lower than the month in june >> of course, this comes on the back of that very disappointing german pmi we just had a few minutes before pointing to a composite pmi number for germany of 50.9, below the 51.4 flash, and lowest in aggregate since june 2013 for germany, the lowest numbers since june 2013 for the composite. euro zone as a whole, pmi composite at a three-month low i'm happy to bring in the asset manager of vanguard. peter, good morning. >> morning. >> a few months ago, we were talking about data bottoming out. the numbers today suggest data hasn't bottomed out at all if anything, germany continues to get worse. >> i mean, there was always uncertainty about whether data was going to bottom out.
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there's been a good reason why things are getting worse, because of the increasing trade uncertainty. obviously, the news over the end of last week that those trade tensions are going to be intensified. it's going to add more fuel to the fire as far as this is concerned. >> is there anything you think policymakers here in europe can do to contract this in the short term, outside of the ecb what can the german government do to try to help its manufacturing sector in particular >> well, there's been a long debate about whether or not the germans should have a looser fiscal policy. i think those voices are going to get louder now. the fiscal policy has been on the sidelines for a long time in europe it'll probably come into play. i wouldn't expect an emergency response in that respect i think it'll have to come the ecb only has so much ammunition they can fire at this. >> just wibriefly on the ecb, wt do you expect from them the next few months to try to help the
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situation? we heard about being data dependent. the data isn't looking great what can they do >> i think they'll cut rates originally, they were talking about maybe doing it in two steps. they'll probably do the 0.2 in september. people have been talking about announcing qe. maybe they'll say, we'll start it straightaway. really, how quickly and how effective that can be and really getting an impact on what is essentially a global trade do downtu downturn it is very hard to see i think the chances of the euro going into recession are now higher than we thought for some time i mean, getting up 40%, 50%. germany, even more likely because of their huge dependence on trade and on china in particular it's not helpful at all for europe at the moment >> peter, we'll come back to that later in the show peter westway, asset management at vanguard. what are we seeing on the markets? >> there's a lot of red behind
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me today, it is not a pretty picture. remember, on friday, we had a heavy, heavy loss of session for europe, as well. the stock 600 ended the session down 2.5 percentage points weaker on friday ftse 100, 3% today, the mood is negative, as well this in continuation with the declines we had in wall street overnight, asia also reacting to the fact that china are responding somewhat to the potential extra tariffs that could be applied from the u.s. on those $300 billion, as we found out on friday. the currency has broken through seven, and that's had knock-on effects through asian indexes and fixed income markets as well the uk is down 1.75% again, the german index is down 1.4% a lot of the declines on friday were centered around basic resources, industrials, and autos. we'll get to that in a second.
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cac, steep declines. ftse mib is down 1.2%. we found out the pmi composite number coming at a three-month low. for germany, the lowest number in about ten years' time really, some really big moves there. let's talk about fixed income. again, today, we're seeing major, major activity in fixed income space the ten-year note is at 1.76, ten bases points overtime in asian time bear in mind, going into the fed meeting, we were trading around 2.05 30 basis points in the last three sessions, as the markets find a flight to quality haven there in u.s. treasuries as well as just ae areacting to the nege price action ten-year bund, all-time record
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low. we have every single bond in the german yield curve trading in negative territory you thought these numbers were crazy when they were positive. now, they're even more negative than we had envisioned the beginning of the year. ten-year gilt is rallying ten basis points italian bonds are even seeing a flight to quality, quote, unquote, with the rally and fixed income that's the picture for fixed inco income there's one sector in particular that continues to get hit by these trade war discussions, and that is basic resources. the minors coming under a lot of pressure today one name that isn't shown here is down 5% today it's down 10% in the last two sessions these are some of the minors we're focused on a lot of uk names dragging down the ftse autos, let's not forget, there's some speculation as to whether or not the u.s. would start looking at european autos as the
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next target for the tariffs. yet again, we see another down day, especially for the german names, volkswagen down 2.4%. bmw down a similar amount. keep an eye on those basic resources, autos, the heaviest hit sectors in europe another sector we're looking at, as well, tech and luxury tech because of the supply chain effect remember, semiconductors, a lot are in this basket ams down 6% today. friday, it was down 10%, this stock. they make some of the semiconductors and the iphones manufactured by apple. asml down 2.3% some of the tech names really getting hit. luxury, no surprise, look at the reaction there lvmh down 3.5% swatch down 5% richemont down 4.3%. these have exposure to chinese demands. when there is speculation the chinese economy is slowing down, these are stocks that typically would get hit because of the
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knock-on effects of that anything really with exposure to china today or supply chain is getting hit in europe. it is another day of declines for european markets >> you mentioned the chinese consumer let's talk about the chinese currency weakened to below 7 to the u.s. dollar for the first time in ten years. the chinese central bank blamed u.s. protectionist measures for the move we have this report on the latest details and the implications >> reporter: the chinese yuan has weakened past the 7 mark, raising questions if policymakers here are purposely devaluing the currency as a way to offset president trump's anticipated 10% tariffs on $300 billion worth of chinese goods in a statement on its website, the people's bank of china linked the depreciation with president trump's tariff threat, saying the losses were due to protectionist and tariffs on chinese goods. a weaker yuan makes chinese exports cheaper.
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some manufacturers have been worried the tariffs could force them out of the u.s. market all together companies that buy from america anticipate paying, too like new hope, which purchasing u.s. soybeans. >> translator: of course, if they cannot reach a deal and impose additional tariffs, i believe don't sides will, it will add to u.s. farmers' costs and force chinese buyers to pay more this is something we don't want to see but have to be prepared for. >> reporter: china's central bank expressed confidence the yuan will remain stable. the danger is the weaker currency today could spark more capital outflows and potentially a backlash from the white house, which might interpret this move as beijing weaponizing its currency in the trade war. cnbc business news, pbeijing. president trump announced the tariffs on chinese goods despite objections from almost all his senior advisers
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according to the "wall street journal. it reported advisers said the tariffs could hurt the economy and damage relations with president xi trump argued it'd force china to comply with u.s. demands. obviously, it is not just the u.s. and asian markets reacting to the trade developments we just had some headlines coming out of the ecb, a bulletin being published saying global trade is likely to remain more subdued than activity in coming quarters. they say the trade recovery is expected to be mild with activity picking up only gradually due to a subdued outlook for investment in many economies. some negative narrative coming out of the european central bank we were just talking about the fact that the pmi numbers have come in disappointing and really the pressure is now on central banks and also governments to do a little bit more on the growth stimulus fund. let's get back to peter westway,
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chief economist from vanguard asset management i want to take it back to the trade war and the development the last 24 hours. we've been talking about the chinese breaking through 7 willem and i were discussing why the 7 is an important psychological level. in your view, how important is it the authorities allowed this to happen overnight? >> it is significant from an economic perspective, 7 or 7.05, i don't think that is the key issue. i think it is the signal it sends. up until now, the chinese authorities very much played along and said, we're not going to -- we don't want to be accused of using the currency as a tool to help improve our trade. i think now, now that the trade wars have gone up another notch, i think the chinese have said, all right, we can do the same thing to you. >> that's because they have nothing left in the arsenal when
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it comes to retaliatory tariffs. they have to seek other potential approaches >> there's still tariffs they can apply. >> this is a big one for them. i think this is going to change the nature of where trump can go next on this >> what does it mean for global growth you're an economist looking at all these things yes, we've been talking about trade tariffs for more than a year now there has been somewhat of an impact on global growth, perhaps not as much as economists initially anticipated. now, we see things going up a notch. we see china responding. it doesn't a i peappear there i going to be reconciliation in sight. what does it do to the outlook, especially at a time when the data was beginning to slow everywhere >> if you kind of run it through models, it is quite hard to get a big slowdown from trade alone. it is the knock-on consequences for corporate investment that's what we're starting to see. i mean, you mentioned about the growth of world trade and the ecb saying it'll be lower than
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global gdp growth. in the past, it was always stronger, and that propelled global investment. now, we're going to have a period where trade growth is probably going to be pretty much zero relative to global gdp. that's going to be very bad for corporate investment that's the big driver of gdp. >> you have corporate investment on one side and almost consumer sentiment on the other when you look at the u.s. economy, there's been -- >> bifurcated completely. >> right. >> that's been the challenge for the fed. on the one hand, they have this big black cloud, which they were talking about as a risk, insurance cuts to offset the possibility that the trade war could get much worse, even though the hard data was very strong now, that big black cloud is starting to dump some rain on us i think that insurance cut is now completely what they need to do i think we're going to see more cuts from the u.s. this year >> one of the really interesting set of exchanges over the weekend was the "wall street journal" reporting that trump sat there with all his advisers
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and said, please don't do this, with the exception of pete navarro, who is a noted china hawk, and the argument was, you're going to potentially hurt the u.s. economy navarro was on one of the u.s. talk shows over the weekend and was presented with pieces of evidence as to why these tariffs were harming american consumers. we were talking about this before the show, the idea that cpi, inflation on certain products that were impacted bittby spas tariffs were increasing since 2018 those not affected have fallen does this have impact on the fed? if more products are being affected bittar riff y tariffs s are going up, does it bleed into the data the fed is watching >> it does central banks tend not to respond as much to effects on inflation from tariffs on one-off exchange rate, but it can feed through to inflation
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expectations that can be important. the irony is that what trump is doing, he's bringing about precisely what he was urging the fed to do, which is keep rates lower. much as though powell will hate to say that, he's being forced into doing what trump wanted. >> the fed has his back ratcheting up the trade war. peter from vanguard asset management, thank you. police and protesters in hong kong clashed for the ninth weekend in a row authorities used tear gas to disperse crowds of demonstrators in several places, including the high-end shopping district causeway bay protesters changed their tactics recently today, they pushed for a city-wide strike that crippled rail and air hong kong's chief executive carrie lam warned the ongoing unrest is approaching dangerous
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territory. >> the reason protests and marches have seen escalated violence, and these worrying acts have gone beyond the fugitive offenders bill, particularly when i have already announced some time ago that the bill is dead such extensive disruptions in the name of certain demands or uncooperative movement have seriously undermined hong kong's law and order. pushing our city, the city we all love, that many of us helped to build, to the verge of a very dangerous situation. >> well, there's been a lot of developments in markets over the last 24 hours. if you have any views of what is going on, you can tweet us @streetsignscnbc. or tweet us directly
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coming up on the show, president trump jokes he will impose sanctions on european autos, then he threatens them for real we'll discuss the potential implications for the european economy after this break and before we head to that break, let's just take a quick look at european indexes a lot of red on the screen today. most of the indexes are trading down almost 2% weaker on the session. we will be more -- we will give you more price action afr e eak.teth (client's voice) remember that degree you got in taxation? (danny) of course you don't because you didn't!
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welcome back to "street signs. hsbc announced the surprise departure of the ceo after 12 months, citing the need for a change at the top in the face of a, quote, challenging global environment. the banking chief will step in as interim chief executive that's as the bank announced another share buyback of up to $1 billion and a 16% rise in first half profits meanwhile, finance director stevenson told the "wall street journal" that hsbc is planning to cut up to 2% of the bank's employees. european union nominated
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world bank ceo as its preferred candidate to head the imf after a 14-hour voting process european finance ministers held a series of votes friday after they had initially struggled to decide on a name they all liked. current rules dictate a candidate should be younger than 65 years of age. georgieva's nomination could require a change to the bylaws the imf will formally decide who succeeds in early october. and trade tensions between the u.s. and china have repeatedly flared up, including last week, but with flightilyund to get negotiations for beef sellers in markets trump said he'd impose 25% tariffs on german autos and quickly insisted he was only
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joking but when he talked to reporters outside the white house later on, the president no longer seemed to be kidding around on the subject. >> the eu has tremendous barriers to us, but we just broke the first barrier. maybe we broke it because of the fact that if i don't get what we want, i'll put auto tariffs. it is all about the automobile, and it is all about the tariffs. if i don't get what i want, i'll have no choice but maybe to do that so far, they've been very good >> as you can imagine, there's been an impact in the auto sector this morning. the sector is down about 2% yet again on the joke, or perhaps the threat, that auto tariffs could be imminent, coming from the united states. we're also seeing a big reaction in european yields, as well. i want to take you to what has been happening there the ten-year bund, minus 52 basis points, another three basis points italian yields trading sub 150
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now. really big reaction in fixed income across the board. u.s. treasuries obviously leading the declines in yields by about 10 basis points let's get back out to peter westaway, chief economist at vanguard asset management. the odds of a recession in the region are around 35%. just looking at your global outlook, would you say odds of a recession are highest in the euro zone compared to the u.s. and china. >> i'd say they're roughly equal now. the u.s., we were talking 30%, 35%. for a long time, we've always been saying europe is well below that i think the data we've opinion been seeing out of germany, the sequence of numbers, the latest news, all that will hit confidence it is a toss-up, which falls, if either. >> what's the cure we talked about the ecb and the fact that, you know, they can try to do whatever they can do within their monetary policy framework. do you think fiscal stimulus is going to come to the rescue here is there anything that can be
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done that can turn these things around >> i think fiscal stimulus could come to the rescue whether it will is a different question one of the problems at the moment is we have policymakers who are not thinking about economic policy as what is the best way we can get a good outcome for the economy. i think in america, a lot of political considerations are playing into decisions getting made you were saying the advisers that are advising trump on the basis of the evidence were saying this is not going to be good for the u.s. economy and, yet, the policy goes ahead people talk about evidence-based policy we're not getting a lot of evidence-based policy at the moment. >> one other bifurcation i wanted to ask you about was the manufacturing pmi in europe. what's beginnigoing on in the rl economy there? >> it is really important, the distinction. all the focus is on the manufacturing pmis that's because trade in the first instance is driven by the manufacturing cycle.
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the question, the danger, is whether the manufacturing sector then drags down the rest of the economy, which at the end of the day, is the best part of 80%, 85% of the overall economy so far, we've seen some weakness in the services pmis, but not enough to drag the whole house down i think that's the -- going back to the u.s., it is a similar situation. >> peter, we'll leave it there and pick it up at the break. peter westaway from vanguard we'll talk autos after we come back after this break. ♪ when you have nausea, heartburn, ♪ ♪ indigestion, upset stomach, diarrhea ♪ try new pepto liquicaps for fast relief and ultra-coating. ♪ nausea, heartburn, indigestion, upset stomach, diarrhea ♪ get powerful relief with new pepto bismol liquicaps. it's how we care for our patients- like job. his team at ctca treated his cancer and side effects. so job can stay strong for his family.
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welcome to "street signs." >> these your headlines. >> the sell-off deepens with more than 95% of the stock 600 currently in the red, as minors drill lower and luxury stocks dive on rising trade tensions between the u.s. and china european bonds rally as yields continue their tumble with the german 30-year and uk 10-year touching fresh record lows hsbc announces the surprise
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departure of ceo john flint after 18 months in the role. it is warned thousands of jobs are set to go. the yuan slides to the lowest in decades, but there are promises to keep the currency stable we have some relatively strong uk services pmi numbers out for july 51.4 for the month of july, against june's number of 50.2. it's higher than the reuters expectation of 50.2. it's the highest, actually, according to this since october 2018 the all sector pmi is at 50.3. that's against the june number of 49.2. the market releasing the data
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saying it suggeaugussuggests th economy has stagnated at the start of the third quarter this year sterling trading weaker against the dollar no massive change. >> note of caution, data in the uk has been extremely volatile as of late on a month-to-month basis. the giveback in q2, various seasonal effects, as well. this is something the bank of england said over and over again, they're looking through the short-term volatility and the data to get a better picture of what's going on according to their estimates, at q2 data in the uk, gdp actually pointed to somewhat of a flattish print actually, we'll get the gdp data on friday. that's something to watch out for there. luckily, we have the experts with us. peter westaway, who is the chief economist from vanguard asset management surprisingly strong uk services numbers this homorning, but putting it together, as i mentioned, it is a mixed bag of what's going on here into brexit date october 31st.
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what is your read? >> i think you summarized it nicely there actually. it would be pretty surprising if the economy wasn't subdued, given all the uncertainty about brexit then you layer on top of that the global uncertainty we've been talking about in the context of europe and the u.s. and elsewhere. it is not surprising that investment, consumer spending, so on, is subdued at the moment. >> yeah. >> peter, i wond whaer what the british government might be able to do to stimulate boris johnson pledged additional funds for the buildings service. mr. johnson was regularly seen in front of a large red bus that claimed that leaving the eu would see 350 million pounds redirected into the nhs each week peter westaway still with us if the government starts spending money hand over fist,
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as mr. johnson seems to indicate he'd like to do, will that be enough to counteract some of the malays we've been talking about? >> no. >> okay. >> i don't think -- i think there is a valid debate about how much of this money is really extra money, compared to things that have already been committed. i don't think there is any doubt, the fiscal policy will be looser going forward, ir represe irrespective of the flavor of brexit we'd get. if we have a no-deal brexit, i think the size of the economic shot would be too large for fiscal policy to yoffset or monetary policy. >> we spent this show talking about fiscal spending, the need for fiscal spending in the euro zone, the need in the eu, and the uk is saying, fine, we'll start fiscal spending. surely, this should be a positive thing from a macro economics level. in addition to the fact that if you look at the numbers, there
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is fiscal head room of 27 billion pounds in order to keep that gdp ratio stable. there's space year yields are low it makes sense. >> i'm not speaking that at all. i think fiscal policy loosening is exactly what is needed. remember, the government was originally elected on the premise of bringing the debt to gdp ratio down, rather than keeping it stable. there's been a movement of the goalpost there personally, i think it is appropriate to use the fiscal head room to the extent we've got it what is different about the uk is the size of the shop coming along the tracks is potentially a large negative one, if we do get either a hard variation of brexit or even a no-deal brexit. >> does the looser fiscal policy from a new government in any way help the tricky situation mthe board members find themselves in >> at the moment, the mpc move
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amoved away from the next move being up to the next move being down. with news around trade, it's reinforced with looser fiscal policy, it'll make it less likely. the point at what the mpc raises rates, it'll be sooner we're seeing rates either on hold or lower until we get any sort of brexit resolution. >> which is pretty much what the bank have been guiding to. it is difficult for them to act now with so much uncertainty i think in a world where there was no brexit. hypothetically, they would be guiding to rate hikes. they have the limited and gradual language there off air, you were telling us you think the probability of a no-deal brexit is lower than what the market is pricing in at this point. >> yeah. there's a lot of talk about how no deal is now inevitable. you looked at sterling getting toward parody with the dollar. i've seen a calculation saying around 50% probability of no deal is priced in. we put it closer to, say, 15%,
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20%. i think the chances of it getting through parliament and past is just -- there are too many hurdles for the uk parliament to let that through for now, i'm more optimistic than i think the market is >> that doesn't mean that if we got to a point where the government was voted down, we moved to a general election, i think there'd be uncertainty in markets and volatility before we saw a resolution down the track. >> thanks for the analysis and your time this morning appreciate it. peter westaway at vanguard asset management. willem, there's a lot of activity in european markets this morning you can see every index is trading in the red the handover from wall street was weak the handover from asian equities was weaker this is the picture. notably, we weren't yet as steep in declines as we were on friday, by the end of the session on friday. we're halfway there in the dax
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still a lot of red on the board. ftse 100 down 2% now some of the names dragging the uk sector today is the basic resources names, some of the minors really dragging down the index, trading right at the bottom of the ftse 100 xetra dax, focus there has been on the tech names, industrials pulling down the basket, as well as autos yet again there were some remarks from the u.s. president, donald trump, with respect to the possibility of applying extra tariffs or applying any tariffs on german automakers those are remarks he made friday obviously, that sector is getting hit this morning, as well cac down 1.9%. italian index down 1.3%, as well a lot of red on the board for european equities. let's talk foreign exchanges and the developments there what we are seeing is a flight to quality bid for safe haven assets dollar yen about to break 1.5%
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5% stronger on the session i should tell you, on the weak last week, we saw yen appreciate about 2% versus the dollar that was its biggest weekly appreciation since february 2018 no surprise we're seeing the flight to quality safe hacvn ho through. we're still going to break through 1.21 meaningfully. euro is trading a little firmer versus the u.s. dollar 1.1140 this is exactly the level we were at going into the ecb meeting a few weeks ago. interesting there. there hasn't been any movement in the currency, though there's been a lot of movement in equities and fixed income. finally, u.s. futures. the mood today is pretty somber. we have the dow opening up 300 points lower on the session. s&p also down about 40 points. respectively, all of them down more than 1%
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declines we're looking at today. we're getting towards the end of earning season here. we're 85% of the way through for s&p 500. the main catalyst for performance are going to be what happens with these trade discussions between china and u.s. with china obviously retaliating overnight, the mood is not so pretty top executives at renault and nissan are working to forge an agreement to reshape their alliance, according to the "wall street journal." the "journal" cites emails saying nissan wants renault to lessen its stake fiat is happy to start negotiations but also fine to go at it alone. although a deal with fiat is of the table for now, it would have created strong new synergies in the auto sector. >> first element which is key to notice is when we received this offer, what does it show in it showed the allianceof renault
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and the alliance is attractive despite all the conditions we have described before, the attractiveness of the alliance is massive, and we like it i think this project was interesting because of the incredible new synergies we could have created there the talks are over, so we don't talk to fca any longer first quarter earnings at softbank have risen 4%, meeting analyst estimates. operating profit came in at 269 billion yen. the japanese tel-co reported an increase in mobile users it reiterated the forecast for 9% higher annual profit. berkshire hathaway posted an 11% drop in the second quarter operating profit, missing expectations slower economic growth and weak performance in the insurance underwriting business hit the buffet company
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a record $122 billion, as the firm struggled to idea acquisition opportunities. the surprise departure of ceo john flint after 18 months for hsbc europe's biggest bank cited a change f need for a change at the top quinn will step in as interim chief executive. that's as the bank announced another share buyback of up to $1 billion and a 16% rise in first half profits meanwhile, finance director, the cfo, stevenson told the "wall street journal" hspc is planning to cut up to 2% of the bank's employees. a lot of developments in the banking space, as well, right on the heels of the earning season. a lot of banks have reported let's bring in luke hickmore, senior director from aberdeen senior investments, joining us down the line from eddinburg thi morning. >> morning. >> what's your take on the developments in the banking
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sector over the last week or so? we're getting some extreme reactions both ways. the morning of the announcement, we saw the stock up 5% rbs on friday was down 5%. the market seems to be really picking on and favoring certain names versus others. what's your takeaway here? >> well, the first thing they look at is whether it is a uk name or not. at the moment, uk names are very much out of favor across the board. bmp had a good result, coming through a tough time for banks a lot of this is around how much money they can earn from lending out to the general economy, and how much they have to pay for the net interest income, which has been under pressure for the banks this quarter in particular it surprised analysts on the downside a lot if you've managed to succeed with a small increase there, you've done very, very well from the equity market. or, as i say, if you're not uk >> luke, quickly, i want to ask you about the impact of global
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trade on a global bank like hsbc how much more significant is that for a global player potentially than it might be for the local uk banks we're talking about? >> it will make a big difference let's be clear, the international factoring they get involved with, or export/import financing, as well, it is a big part of their business you know, if you're under pressure, not getting enough income, you're trying to get it from fees on the export/import financing. if you're seeing slower global trade, it'll impact them didn't see it a lot in in quarter, but it is something to look out for in the year or so ahe ahead. >> you are a fixed income investor i'm interested to hear your view on what's happening in the credit space we have seen -- started to see a shakeout in credit european high yield and investment is moving higher over the last week, in line with the risk off we have seen in ek with
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equities it is also an environment we're seeing low default rates none of the banks have been talking about higher provisioning or a worsening of credit quality when it comes to lending standards. what do you point this shakeout and credit spreads to, and would you use this as a buying opportunity, or do you think it has legs >> i think it's been an interesting week partly, it is around brexit, where the whole market is believing brexit will happen you're starting to see uk names again, uk financials, european credit or dollar credit, underperforming over the last week i think that's triggered off in a relatively low volume environment we get in the summer in terms of trading. it's triggered off a little profit taking, which is causing wider spreads. in reality, we all know when we get to later this year, probably september or october, ecb are likely to step in and restart the quantitative easing program. we may get it from the bank of england and the fed's easing
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fundamentally, credit may be at the best we'll see for a long time technically, there's going to be a lot of support coming down the line if i wasn't already long, i'd go a lot longer here. >> luke, one final question, whether you're looking at this from an equity or credit perspective, do you think the major banks in europe need to rethink their economic predictions and models over the next 6 to 12 months? >> very much they seem to be lagging a little bit of what the market is telling us economies are hitting the buffers. we may end up with negative growth well, a recession in europe to some degree. problems in the uk, as well. that doesn't seem to be getting factored into their provisioning activities right in the second quarter. i'd like to see them doing more to be able to get involved on the equity side. we're under way. banking stocks across europe in equity space, overweight from credit, where they remain solid institutions. >> we'll leave it there. thank you for your time. luke hickmore, senior director at aberdeen standard investments
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there in edinburg. we've been talking a lot about the reaction overnight in the uk i want to highlight to viewers that the yuan, it's finished domestic trading at 7.0352 to dollar, around the 7 psy psychological level, the weakest since 2008 you can see the movement we've had over the last couple of sessions definitely something worth keeping an eye on. the england cricket team has a battle on it hands against australia during today's fifth and final day. the aussie player steve smith again starred with the bat as he helped them to a commanding lead with his second century in two innings. my colleague, adam reid, is here
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in the studio. he's presumably not the most popular with england fans tat moment. >> certainly not begrudging respect beginning to come back for steve smith, considering what he's done against them just in this one single test. they're probably sick of the sight of him that's his tenth ashes century, his second in this match, as you rightly point out. we can have a little look at the state of play in the match going into day five. australia declaring their second innings on 487 for 7 that was a lead of 397 england needs a 385 to win the test match on day five they're not really thinking about that it at the moment. it is about survival they've got tenwickets in hand they've got nathan lion to contend with on a pitch which could very much be cutting up. could be all sorts of cracks and dangers in it for them steve smith was the star again, as you can see here, just some of the shots he played this is him getting out.
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incredible achievement for someone who has not played test cricket in over a year he's back now. considering he's now got 25 tests and centuries to his name, what did he make of the whole thingsome. >> i've never doubted my ability. but, yeah, to -- it is a dream comeback in a way, to be able to score two 100s in a match, in the first ashes test match, it's something i've never done in any form of cricket before in my life it's incredibly special, special to be able to, i guess, put us in the position we're in now going into day five. >> we could be witnessing someone who could go on to be called the greatest of all time. when you're talking about australian test batsmen, that's the likes of ricky ponting, matthew haden, and the like of all of them. this is a snapshot of what steve
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smith has done in one ashes test match. not played test cricket in over a year they finally found a way to get him out. england have it all to do on day five if they're going to save the first ashes test >> adam, imagine how much better record would look if he hadn't been caught ball tampering thank you for bringing us that you can get in touch on twitter @streetsignscnbc. i received a mysterious gnome on my desk saying, it's coming gnome, and the reference to the ashes i don't know if you have any ideas who may have put that on my desk. >> i'm going to guess adam. >> or steve sedgwick. >> we'll be back after this break. with sofi, get your credit cards right- by consolidating your credit card debt into one monthly payment. and get your interest rate right. so you can save big. get a no-fee personal loan up to $100k.
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welcome back to "street signs. well, there is a lot of red on the board today. european indexes all trading in the red. weak handover from the asian session with the nikkei down 2%. shanghai also trading deeply in the red today. ftse 100 down 2.1% already we're a little over an hour and a half into the trading session. here, we're being dragged down
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by some of the minors, as well financial services companies, dax down 1.6%. remember on friday, the german index was down 3%. autos, basic resources, minors, very much in focus cac down 2%. some luxury names dragging down the french index the italian index down 1.3%. quick look at fixed income we're seeing a bounce in yields today. we've got the 10-year bund trading at minus 52. this is a new record low also some more flows going into 10-year gilts, trading below the 50 handle, down 49 the italian index down at 1.52. live pictures from hong kong, where we've had the ongoing protests the last couple months the police there talking about the fact they have now arrested more than 400 people over the last couple months they have arrested 82 people
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today in connection with the protests in a sign of how serious it's got, over the last eight weeks, we've seen 1,000 rounds of tear gas fired. police acknowledging 160 result bullets. today, the hong kong police force being forced to acknowledge they will have no chance of deploying the people's liberation army there on the streets of hong kong clearly, this is getting very complicated for the authorities there in hong kong now, several people were killed in two mass shootings in the u.s. states of texas and ohio in less than 24 hours over the course of this weekend the violence there has reignited a political debate over gun control and immigration. nbc news's tracie potts joins us live from washington how did president trump respond to these horrific events what was the public response from system of his would-be opponents in the democratic primary field? >> reporter: quite the opposite, willem good morning, everyone president trump clearly said that there's no place for hate in this country, but what some
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of his opponents argue is that he is not specifically addre addressing the white supremacist individuals and groups who tend to follow him. they argue that his rhetoric at rat r rallies and in public encourage their cause, and many of these shootings, including the one that happened in texas, are perpetrated by people who are part of that in fact, we saw the very long writing, someone described it as a manifesto, that was left with race and hate-filled language by the shooter in that situation. now, the white house is defending president trump, saying that there's no way you can point fingers and blame him for this type of tragedy, no matter what is said at a rally many of his opponents, political opponents, opponents here in washington, are very concerned about the type of language and the tone of the language he uses, and whether or not it is encouraging this violence. the other issue is gun control,
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something congress has tried over and over and over to deal with almost after every mass tragedy we see like this the push now is for our u.s. senate to come back early from their summer break and pass what the other house of our legislature passed, which is a bill for universal background checks there's no indication, willem, that's actually going to happen. >> thank you so much tracie potts live from the nbc news washington bureau there quick look at u.s. futures before we head out all of the three majors are seeing opening up in the red you want to watch out for the price action data on nasdaq, seeing about 1.8% lower. keep an eye on the developments between the u.s. and china that is it for our show. >> "worldwide exchange" up next. it's show time.
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you have to get people used to the . it is 5:00 a.m top five at 5:00 has the trade war turn sboed in dangerous currency war sinking to the lowest level in ten years. global stocks slammed on the news futures down more than 300 right now as markets everywhere fall as stocks fall, investors, they're hiding in gold and bitcoin. gold rallying to a six-year high bitcoin up more than $700 right now. it is not just trade hong kong rocked by more protests and a general strike. the city's leader says she fears it is on the verge of a, quote, very dangerous situation in corporate news,
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