that's all for this edition of "dateline." i'm craig melvin. ♪ ♪ >> welcome to "street signs. i'm joumanna bercetche >> and i'm julianna tatelbaum. these are your headlines >> bank stocks lead higher after cuts by a quarter point. it fails to give a clearer picture about future plans >> this is a time of difficult judgements and different perspectives i really do think that is nothing but healthy. so, i see a benefit of having those diverse perspectives

>> not so negative in switzerland. relaxing deposits and bucking the easing trend the fed draws fire from trump once again >> saudi arabia say drone and missile debris calls out iran and mike pompeo calls the strike an act of war. >> a warm welcome to "street signs. plenty of central bank action. the fed and the s&b already. just in, we heard that norges bank has raised interest rates

the question is if they would hike rates for the third time this year. we are seeing a jump on the back of this decision to raise rates. this is the third time this year that they have the question is will they change but they have gone ahead >> given the fact that they have and bucking the trend, it is worth pointing out the smaller rate hikes in june they have hiked today but revised downward in their future >> very interesting. a real variety of action around the globe. we have the bank of england decision as well again, central bank taking focus. >> let's talk about the biggest central bank decision. the federal reserve has cut

interest rates by 25 basis points as expected rates could remain at the same level by the end of 2020 expectations are more hawkish as analysts predicted two more cuts by the end of the year st. louis fed opted for 50 basis point cuts kansas city and boston leaders didn't think the rate cut was warranted. fed chair called the out look favorable but added a cut may be added only if things worsen. >> we've always said the level was uncertain. that is something we've been unclear about.

we've spent a lot of time talking to large holders of the reserve. we tried to assess that and put it out so the public could react to it. there is real uncertainty. it is possible we may need to resume the organic working sheet. that has always been a possibility. >> wall street was a little underwell ammed. you can see all of the treasuries in the green. the ftse in green. watch out for that in the uk as well as the mpc meeting coming up at 12:00. keep an eye on the macroback

drop we continue to see bits of green and money flowing in to the italian index after the new government formation continues to trade well. one sector in particular we are focusing on is european banks trading much higher. i should point out, we saw the trade off about a sixth a percentage point and today up 1.2% deutsche bank up 1.4 swiss banks as well. they didn't cut but before the s&b decision, we did have a strong start performing quite well. you can say this goes with what is happening with the yields let me take you to what has been going on in the yields we had been disappointed by the

yields in the u.s. the fed chair didn't point to interest rate cuts to keep an eye out and keep their cards close to their chest we did see a bit of rally in the 10-year notes. we have the 10-year trading. japan overnight, we saw bank of japan and today, the 10-year yields trading slightly weaker the picture for europe and guilds, we have bund and guild trading heavy. the 10-year bund trading around 150. we have the teltro decision coming up. watch out for that that will give you good indicators of appetite to borrow something to watch out for very busy day. thank you. let's take a look at the

political reaction to the fed's decision yesterday no guts, no sense, no vision he called the fed chair a terrible communicator. trump later toned down his decision saying, i think it is fine but the central bank should have responded faster. here is how powell responded >> i don't i'm not going to respond to comments or address comments made by elected officials. i continue to believe the independence of the federal reserve from direct political reserve has served well over time and i will continue without regard to political considerations >> we were discussing what could happen at the ecb. there is a remarkable

similarity a lot of different views you had seven people only calling for further rate cuts. this year, you had people opting for no cuts at all you had some people express the view that the situation was going to get a lot worse and the economy warranted deeper cuts. a lot of different views it just tells you this is important for the central bank to come up with unanimous decisions with what is going on. >> difficult to come up with a policy decision and communicate that decision when we hear from jerome powell as we did yesterday. what i found interesting is that the market reaction was fairly muted. initially, we saw stocks pull back like we did there ultimately, we saw them claw back those losses and end little change on the day.

perhaps it is those decenters and perhaps that we don't have more clarity today than we did yesterday. >> he's just emphasizing the data dependent si of the future. they are not stuck on a fixed forward path they have to look at the data and see how the situation resolves the topic that comes up is that of trade it is worth baring in mind that their december meeting comes a few days before the new tariff deadline if they did feel the need to act on accommodation, there is deadline in the future the chair was quite clear that, look, we make our decisions independently. we are following the data. we are not going to concede to the political pressure coming to

us from the outside. >> on that point, he elaborated in terms of the impact on the trade war on business investment looking back on july it was just about 24 hours from the fed decision when we saw president trump shock the markets from the twitter announcement it really did feel as though powell was sending the message of the uncertainty being caused by the trade war >> i also think beyond the macroof what w macro of what was announced, there has been a lot of focus on the repo rates and there seems to be a lot less liquidity than mentioned. he looked at expanding the balance sheet in the future. there were steps and measures

introduced from that perspective that will help ease the funding pressure that's one of the reasons the dollar traded so well. in addition to the rate cut, a little bit of plumbing that's our take on the fed i want to take you as well to one of the top stories we've been following that is of saudi arabia. they say, quote, undeniable evidence that iran sponsored weekend strikes on oil facilities a spokesperson made claims as they displayed drone and missile parts. iran has denied any involvement. an iranian advisor said riyadh knows, quote, nothing. we'll go to ali. it is great to have you on the

show yesterday, the president was on the show and said he would like to impose further sanctions on iran and the leader in saudi arabia called these undeniable strikes. how far are they willing to go >> it is a very good question. secretary pompeo was in saudi arabia he left without giving a press conference, which may indicate that they want to take a step back from the brink. the saudis were also very careful. all they they said the unmanned drones and missiles were all iranian. they stopped short of saying they were all lunched from iranian soil, which was significant. if there was to be some sort of

a shooting war between them, it would be devastating for all three countries involved people are taking a look at the consequences and taking a deep breath and possibly a step back. iran has made it clear, if they were attacked by saudi arabia or indirectly by the united states, that they would give a crushing response directly to america and anybody else who is involved in the region we saw what damage about 18 drones could do to the aramco oil fields could you imagine if there was an all-out assault on those fields it could be devastating, also for the uae. it would kill their tourism industry and be devastating for iran iran, you could say, shouldn't throw stones if you are in a glass house.

it would wreak havoc with their economy. oil is their most valuable economy. they can't risk that it would also wreak havoc with the u.s. economy the next step, as president trump said, is to impose sanctions on iran. that is also hard to see what it will achieve as american officials have said one of the harshest sanctions have been imposed. it hasn't made the country buckle it has made iran more defiant and made the leadership in iran dig in even further. they keep saying if sanctions are not entirely removed, then they are in no mood to talk. it is hard to see where all of this is going, tensions are rising we are taking a small step away from the drink of war. >> crude is reacting

brent was up around $74. we are back around $60 the markets are unpricing there. live for nbc with the latest >> we've talked about the middle east development if you want to get involved in the discussion, you know where to find us swiss banks will get a boost from the latest decision from re ws&b. mohen we come back

do you have concerns about mild memory loss related to aging?

prevagen is the number one pharmacist-recommended memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life. here, hello! starts with -hi!mple... how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today.

>> welcome back to "street signs. let's get right back to central banks. no change to interest rates at the bank of japan. the central bank did say it would reexamine developments and pay, quote, closer attention to

price stability. in the post decision press conference, they said the boj is more eager to act now than it was at the july meeting. >> another central bank meeting, swiss banks are rallying after easing decisions by increasing the threshold which they have to pay negative rates also keeping the policy rate on hold deciding not to lower it and not joining the ecb and trends they said they are willing to intervene in a bid to ease pressure on the swiss frank. historically, euro swiss frank, below 110 is the left they would typically make those interventions more pronounced. the managing director ahead and

managing director. great to have you with us. we are seeing quite a strong reaction in swiss banks. i wonder whether we are entering into a different paradigm now where the sentiment of european banks beg so oversold and so cheap that from a value perspective, this is where you want to put your money >> i think for the value perspective. that is an argument we've had for a long time. the banks are shifted. hence, i would say, actually historic valuations are not a great indicator. at the end of the day, we have 15% eps cuts year to date. we are still 4% below consensus. as long as we are cutting earnings, we will not see a

rerating of european banks >> a lot of them have shifted. credit suisse has been restructured in this environment, do you think investors are likely to reward that model. as opposed to traditional banking? >> i think you are right the banking is under pressure, retail banking is under pressure private banking, wealth management is an area we like. there are issues why we don't have some top picks. credit suisse, it is 70% of their fixed income credit is on fire. it's performing very well. longer term, it is quite nervous. more in the liquid part of credit you think you can make some

money by owning the stock as we reflect but not in the long term ubs is a great bank. we have an issue how the cost is managed. it is extremely poor cost management the new head of wedalth management has changed that really has disappointed us. >> thank you for those thoughts. stay right there the ecb is set to publish the details of the latest refinancing program. today, the central bank announced the thtro iii. let's get right back to our guest. you mentioned there at ubs, they've been really poor in terms of delivering on cost management if i look across the broader

european banking space, can the banks at this stage, given the cost custodying we've seen becoming an attractive class >> all of this happening, we see .1% cost growth. that is actually an achievement when you think of all the it investment the banks have to do, the wage growth they have to offset but it is not enough. until year end 2025, we need to see more cost cutting and maybe m&a, frankly we have seen no marchd&a of size that triggers the big cost cut coming through

>> is that still a distance dream at this stage? we still don't have the banking european in europe a lot say they need to be in place and still are very far away >> pain means m&a. we are seeing pain i predict we will see european outmarket m&a. even without the solutions it will be back on the table end of next year even if there is no solution, i think bank managers realize. we need to generate re that means m&a in outmarket. >> interesting you say that. pain also means fiscal spending. you made the case that fiscal easing is not going to do as

much to these banks earnings that's a bold statement. even if we have germany flood the markets and go up on the spending spree, that will not boost the banks as a potential m&a would. banks would rally on the share price basis. we go back to earnings, every 2% additional loan growth would be under 1% we go 1.5 to 3.5, it would be growth it would actually mean only 3% earnings >> the results today won't reflect the new measures from last week. will it lead to extra credit lending at this time >> i think it leads to lower

margins. that is the problem. the reason we have tltro, it helps the banks but the consequences are that we see lower margins as we are flushin the markets. >> great to have you with us stay with us because a seven/three split shows a divided fed as they are unsure of the next step it's specially-designed with the soaking, scrubbing and rinsing built right in. cascade platinum's unique actionpacs dissolve quickly... ...to remove stuck-on food. . . for sparkling-clean dishes, the first time. choose the detergent that lets your dishwasher do the dishes! cascade platinum. the number one recommended brand in north america.

they have businesses to grow customers to care for lives to get home to they use stamps.com print discounted postage for any letter any package any time right from your computer all the amazing services of the post office only cheaper get our special tv offer a 4-week trial plus postage and a digital scale go to stamps.com/tv and never go to the post office again!

(danny)'s voice) of course you don'te because you didn't!? your job isn't doing hard work... ...it's making them do hard work... ...and getting paid for it. (vo) snap and sort your expenses to save over $4,600 at tax time. quickbooks. backing you.

welcome back to "street signs. i'm julianna tatelbaum >> and i'm joumanna bercetche. these are your headlines this morning. a divided fed cuts rates by a quarter point for the second time in a decade >> this is a time of difficult judgements and different perspectives i really do think that is nothing but healthy. i see a benefit of having those

diverse perspectives not so negative in switzerland. relasting decisions for bank deposits and defying rates from going further in the red >> hints new stimulus measures may come before the next meeting in october bucking the trend. norway's central bank goes against the green and warns further tightening is unlikely anytime soon >> we've had a flurry of central bank decisions august retail sells 2.7% versus 3.4% in july. the expectation was 2.4%

we should remind viewers one of the reasons the july numbers were so strong is because of the boost from the amazon prime day in july. numbers are pretty positive. 2.7% year on year. on a month to month basis, we are looking at a small dip of negative 0.2%. that was on the july month and deeper than the reuter's poll expectations did come weaker and continues to be one of the bright spots of the uk economy there has been a bit of a positive reaction on the pound the focus on the uk has been the political back drop. >> let's take a look at fx markets. there has been a number of

notable moves come through we have heard on the bank of japan, s&p, norges bank. a lot of different drivers the euro trading higher versus the dollar around a quarter percent. the pound is trading higher. we had that uk data come through. the bank of england meeting later today. not expected to be one of the more exciting of this round but they will be a focal point today. the euro swiss point after the s&b decided not to change. currently, the u.s. dollar is trading weaker to the swiss frank just under the one mark. looking at european equity markets. we are seeing green across the board here gains following a fairly

volatile but overall contained vision on wall street. interesting that we saw initially u.s. stocks fall but we saw investors buy into the dip, call back losses. now in europe, green across the board lead by the banks ahead of the pack let's take a look at u.s. futures. the trend we saw in wall street. it looks as though the three majors will open lower on the back of a strong day a lot on the back of that fed decision >> interesting reaction in europe today has been positive yet we still see negative for u.s. futures the fed will conduct another repo today to keep within the range of 1.75% and 2%.

today's move will see the central bank inject $75 billion into the banking system. asking fed powell whether he was concerned. >> we don't see this as having any implications for the broader economy or the ability to retain rates. reflecting the forces we saw coming they had a bigger effect than most anticipated we took appropriate actions to address those measures if we experience another episode of pressures and money markets, we have the tools. we will not hesitate to use them >> double line capital explained the risk of the session before the 2020 election has increased. >> the economic data has gotten better when we put it all together and

look at our indicators, it seems there is an increasing probability of recession before the 2020 election. what happens historically is the curve inverts before a revision. i've heard many guests point out this curve people don't understand is that when the recession is getting to be close to your doorstep, the curve stephens out because the fed gets the joke finally that they are behind the curve and they need to cut interest rates more. >> there talking about the possibility of recession we have two-year notes trading at 175 today 10-year at 177 we flattened aggressively after that fed decision. the two-year note sold off about eight basis points from where it was trading prior to that decision the two-year yield surge about

eight basis points and five-year by about five basis points wear seeing the two-year under pressure let's go to our panel for the next half an hour. larry donald and the managing director at tcw. great to have you both with us larry, going back to the dot yesterday. they suggested seven members wanted to see the cut. what i thought was interesting is that five members pushed back on cutting at all. isn't that a bit of a hawkish surprise >> it is really back to, i'll say smoking in the dynamite shed this is the 11th anniversary of

the leiman's collapse. >> how can we recall >> as we recall, ahead of that, the fed was quite hawkish. we were heading toward that iceberg. right at us, a number of dissents very hawkish dissents out of the fed. same thing today, they are muss judging those ahead. behind the scenes, they are trading more regularly >> are you implying you do see an iceberg ahead and we are blind to that?

>> in the u.s. for example, triple cs are outperforming double bs. you do have classic indicators of recession at the end of the day, you don't need credit tightness at this level that can spread quickly. >> i want to bring you in to the decision just there taking a look at the moves yesterday. stocks closed flat on the day. did the fed meeting and the message do anything to change the narrative? >> i think they are more of the same they are trying to play this slow they are going to have to val date where the market is it blocks the transmission all we are doing here through

these processes is running up asset prices creating the haves and have notes. we are not fully creating economic growth with these policies they are going to try to get ahead of the curve. they are headed towards difficult challenges we are going right back to qe ahead of the message in the repo market they are aheadof the curve they are going to crowd out reserves what happened yesterday was pretty predictable >> in terms of the run up in asset prices, how concerned are you when you look at corporate credit if we see the fed engage in further easing >> we are extremely concerned.

there is a long-term narrative, which is reshuffling risk around when you get to negative rates, what do you have to do to health your liabilities you are heading to riskier assets you are heading people out and at the same time leverage is rising growth is slowing. income and equalities are increasing if you are a credit investor, now is the time to resist the call of higher yields and instead manage a portfolio that is more solid, more based on liquidity. as other panalists mentioned, i remember graveling forbids we could get back to that.

i agree the growth would be far less drakonian than we saw in '08. it will be set up for big twice swings >> this is a big topic of debate going into the meeting what i call the plumbing, the fixing of the money market rates. yesterday, i got the impression that powell didn't seem to be too fussed he said, look, these are forces with he saw coming because it is corporate tax season people are taking cash out of the market it sounds as though and talking to both of you, you think something a little bit deeper is going on here and did the fed actually have the tools to deal

with that funding? >> the clients i really respect around the street in fixed income, the conversations yesterdaywere around the calculations the new york fed made on this balanced sheet plan at one point was $2 trillion in the plan in july, with he were still doing $30 to $50 a month in balance sheets while they were expanding availability of credit they created this dollar funding plumbing problem you are eluding to that the fed is like literally an airline pilot saying, everybody, stay in your seats. we are okay but mean while, one of the engines are on fire >> do you have a few of the situation as well? everything i've read is people worried about the repo

is it just a case of tweaking of the balance sheets >> it seems like a lot of mist call forces here the fed has assets and liabilities. they badly miscalculated in this case it wasn't just the tax rate. there are other things that go into it. reserves have to grow over time if your banking balance sheets are throwing when they made this plan, when they said watching balance sheets would be like watching paint dry. by our calculations, they are about $200 billion behind. they have to do a further $150 billion a year if they want to prevent these from arising they have to move the reserves to the part of the demand curve.

we are fully on the kink of the curve now. >> we'll pick up the conversations in the next segment with our guests. >> we are going to take a quick break. coming up on the show. friends again? french leader visits with the italian leader to smooth over dierce reft t breaks.

cake in the conference room! showing 'em you're ready... to be your own boss. that's the beauty of your smile. crest's three dimensional whitening... ...removes stains,... ...whitens in-between teeth... ...and protects from future stains. crest. healthy, beautiful smiles for life.

>> welcome back to the show, the uk may have to leave the eu without a deal saying brusle's refusal to remove the eye rash backstop is blocking both sides from reaching an agreement. he said whatever side the uk reaches. the court is holding the last day of hearings on the issue today. the uk has been handed a two-week deadline to supply alternative decisions with the

irish backstop french leader macron suggested a move saying if no proposals are received by the end of september, thens it own. >> leaders of france and italy have called for new pan european measures on immigration. macron is the first foreign leader to visit italy since the new government was sworn in. conte also stressed the need to cool rhetoric on immigration in europe >> translator: it is essential for europe to turn a page in the management and no longer emergency management for the flows. it is always for the utmost consistency. we must remove propaganda that

is also anti-european and offer a rigorous response. italy doesn't want to lower its guard against illegal trafficking, against trafficking of human lives >> it is fascinating to see what looks like a friendly encounter between conte and macron it was not so long ago that tensions were running high between those. >> probably the key part of the equation here, it has been months, normally france and italy are quite close. in the past months, they have been quite tense france being very critical of the ministers policy of blocking ships with migrants. salvini saying france are

hypocrites another moment when the deputy prime minister met with some protestors that was really the final tension here and france recorded ambassador from rome a the meeting and president macron saying, we always make up in the end. a bit of a love story. >> you know who was missing. italy's foreign defense minister >> sometimes a little bit of a strategy here. france and italy do make up in the name of the european union

s definitely more on themacron side of the rhetoric >> charlotte, thank you very much our correspondent from france. the bank of england is expected to hold rates despite the latest data showing inflation had dropped to the lowest level in three years. let me take you to the reaction in european yields this morning so we can get a picture of the type of reaction we are seeing post the f1 c meeting. all are trading a little heavy we still got the bund trading at minus 49 a couple of basis points higher. coming off a little bit. larry mcdonald on the back of the report group managing director. i want to start with us.

isn't it difficult for u.s. treasuries to sell off the environment where everything is being sucked towards the negative >> i think the ecb policies are bolstering the rates if we see the ecb go back. i expect we'll see a lot of inflows and assets and probably a rally within the u.s. market because of that. >> it is important to take note. at the peek, $17 trillion were carrying the yield we have seen a massive reversal. the pull back has been as violent as the march lower has been in terms of yields.

was the august rally a bit of a blip, do you think as the policy rates come down, we'll reverse back to seeing lower rates and steeper curves throughout the developed countries. not the reaction that they are getting. >> we are not sure that is a occur but that seems to be what is in place. >> larry, we discussed this. the injection of cash has led to all types of income. i know you've been doing some work what have you found out looking at that particular area of the

market >> it is fascinating, when equities are at all-time highs, they should be performing better the spread between triple cs and double bs are widening out new issuents are widening. although central banks are getting more aggressive, we are at the point of credit saturation it is a little bit of a step back that is pretty disturbing. you expect triple cs and lower quality to be performing better. >> is that the part of the market we should be looking at the can arie in the coal mine? >> it makes sense.

the more you expand credit to expand growth. look at china, they've grown dramatically each new unit of credit they put in now is much more effective. on margins, you've got to be creating some mall investment out there when you are pushing this much money into the system. the one thing, you can create it out of thin air, there is not as much real assets and goods in the resources as you want. that is the thing for the central banks. >> the other main story is what happened in saudi. oil and gas markets making up a huge part of the high yield world. is there an opportunity there? >> we certainly don't think the oil and gas -- a lot of what you see in the oil and gas sector in the u.s. high-yield market are

in the fraking plays and there on their heels now i think most investors are stepping back from that. i don't the disruption in oil prices is anything but temporary at this time oil prices will go with the global demand. i think you have to be cautious towards the oil patch. >> we'll leave it there. thank you for joining us thank you for joining us also join us a oecd chief economist protected income for life.rovie learn more at retire your risk dot org.

my dbut now, i take used tometamucil every day.sh it traps and removes the waste that weighs me down, so i feel lighter. try metamucil, and begin to feel what lighter feels like.

>> it is 5:00 a.m. at cnbc the fed divided. it is not just the fed the world awaiting another key rate call in the biggest financial markets. why new worries could spell trouble for the market and your money. t at&t making a dramatic move with direct tv and strong words for boeing as it prepares for first-hand look at the grounde