i don't know. natalie morales: that's all for this edition of "dateline." i'm natalie morales. thanks for watching. [music playing] good morning and welcome to "street signs. i'm joumanna bercetche >> and i'm julianna tatelbaum. these are your headlines traders in europe prepare as christine lagarde plerepares to deliver her first ecb decision >> the federal reserve keeps the fed rates. >> in order to move rates up, i would want to see inflation that

is consistent and significant. significant move up that's also consistent that's my view >> hitting the mark. saudi aramco valuation touches the $2 trillion but pairs gains within minutes of opening trade. >> and polls open in the uk with voters across the nation heading out to vote in the election. a very warm welcome to "street signs. before we get to all the big topics today macrowise the latest oil market report they have kept their oil demand growth estimates for 2019 and 2020 unchanged at 1 million a

day and 1.2 million a day respectively saying the oecd amount of barrels is set to fall in the first annual decline since 2014. on the supply side, the number of barrels fell. for november, oil supply held steady as higher u.s., canada output was offset by saudi cuts. they make an interesting note that in september, the united states momently became a net exporter this is a major milestone on the path tet exporter which is likely late 2020 or early 2021 however, this does not mean independence has been achieved just an interesting note on that note, let's get out to joumanna on another preview in

focus today. >> it is a huge day for markets today. a lot of expectations because it is christine lagarde's first ecb meeting as chair and president the former imf is set to maintain the policy. he left rates at minus 0.5% and introduced a two tiered system draghi also restarted quantity tative easing and also launched the third round of the teleco initiative a flash november reading came in at 1%. >> thank you for that preview. of course, it is voting day in the uk you are seeing there live shots of nicholas sturgeon voting

there. you can see her there leaving the voting office. we'll keep a key eye on that var you various leaders showing up. we recap the big december decision that was met by a lot of contention ahead of today's meeting, christine lagarde, the new president set out new priorities for her return >> the first is monetary policy. it is my area of policy, which will under go a strategic review which will begin in the near future more later on that give us time to do a little bit of work. bare with me i will have my way to deal with the issues >> the euro does not belong to you, you know that

it does not belong to the ecb however well it serves it. it belongs to them, to the people of europe we are merely stewards on their behalf as we both know, we are just passing through. >> joining us now from frankfurt, the last ecb meeting of the year and the first for christine lagarde. market participants will be looking out for her communication style. i guess the question is how committed she will be with the september plans unveiled by her predecessor, many of them, including the qe side of things were quite contentious at the time >> yes highly contentious what we have seen after that decision was a severe rift inside the governing council like never before. so much outspoken critics like

never before having said that, if you look through recent speeches, i think she's more or less endorsing the policy action from september she's not going to reverse any of that as of now, one has to say. she'll also look at the data which is coming in in case, if we are really headed towards a cyclical recovery, that will be shown in growth figures and potentially inflation figures. we could see a reversal of that policy during next year. if you look at what the market is thinking, it is quite interesting. there was a big u turn already on how much the market is thinking the ecb will cut rates going forward further into negative territory if you talk to people on the ground inside the ecb. the mood has changed looking more towards the negative side effects of those negative rates.

that is also mirrored in speeches where she explicitly pointed out that the side effect of that monetary policy stance have to be taken into account. that is a new thing. draghi wouldn't have talked about negative side effects to that extent. that is one area today, so what she's going to say about potential negative side effects will give you a flavor of how much you like them or not. then we have the new projections. that is a continuous thing every quarter, you get projections and what they think about inflation and growth today is the first time you get projections for 2022 that's important that's the medium term outlook and could also give the markets

some fantasy how long that lower for longer policy will stay in place or whether there is rumor ready for fantasy that it could come to an end sooner or later the two main areas and then of course, we are going to talk about the strategic review it is the big elephant in the room right after her taking the role as president of the ecb, she was announcing a shift review of the policy framework that could entail how inflation is calculated. that seems to be not in sync with real inflation. it doesn't factor in resent price satisfaction that is important. very dear to her heart is climate change what that could do to the

policy i guess she'll leave a big mark on the ecb going forward she's not a person who is not strong enough to actually have an argument with people who don't think that should happen so back to you >> thank you for setting the stage for us look forward to your continued coverage throughout the morning. let's bring in our first guest chief european economist joining us in the studio not expecting any policy today it seems as she highlighted there, the focus is more on her communication. what are you looking for her stance on today? >> within the grand scheme of things, the markets still need to get to know about her the question is how committed is she to continue with the easing that mario draghi has delivered on the 12th of september

how high is the further easing does she have assessment of the side effects she talks about a new division of labor between monetary and fiscal policy, how could that look like? number four, i would say she talks more about a consentual approach and yes, it is about the strategic review which is something that will occupy the ecb over the next couple of quarters she will not be able to say too much today except to timing and the focus of this. >> do you think she'll be able to make an emphasis. she's so far been more vocal than mario draghi was. >> she will have to be careful if she says, yes, the side effects are higher than we previously thought she will essentially tie the

ecb's hands. she's been quite out spoken in the past she has to tameherself she has to come across as too hawkish if she steers too much in that direction. when you talk about her style. the consensus is that she seems to be more of a consensus driven president unless the approach is him driving her and convincing other people to go along with him. do you think in any case, it will make them more hawkish and dovish it will be more difficult to get away with very dovish policies >> we are all asking ourself this question. we'll have 25 members and 21 members will vote each time. when it comes to highly

contentious measures like qe, it will be difficult even in the future to find a compromise. if the more consentual approach is unanimous, this will par lies the ecb. when push comes to shove, the ecb needs to be in position to make a harsh decision. >> we have two new members joining. two new board members. isabel appears to be on the dovish end of the spectrum another member resigned from the post how do you think that will factor into the decision making? >> i think she would be a more moderate hawk. i wouldn't call her dovish

i think she'll have a more moderate, more practical approach she'll be less into theory into dogma, more hands on. she could play a very important role >> you need somebody from germany to spell out to the germans exactly what the ecb is doing and somehow remove the negative press >> indeed. she's been very vocal in warning germany, german politicians to be too negative. we don't want the propaganda war between germany and the ecb. we all need to calm down a bit i think she will contribute to that >> it is certainly important we'll pick up the conversation our chief european ee con miss

from ubs join us for decision time at 13:30 ecb. the swiss national bank is keeping interest rates on hold and sees negative rates as a key tool in the battle to curve the rise of the swiss bank they have pit out the strategy amid concerns over declining margins. bare in mind that the snb made their decision more towards. that was one development we'll hear from the snb chairman coming up later today. if you want to get involved in the conversation, it is a big day. we are happy to discuss your ecb views. join us on line. >> coming up, a potential high

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welcome back to the show let's take you to the market price. we did have a positive end this after the fed meeting where they indicated no further hikes for 2020 that came as some what of a relief for market participants that were not anticipating a hawkish surprise we are seeing them inching higher further worries about the jo ongoing trade talks between u.s. and china side before december 15 that is the big deadline coming up this sunday the chinese commerce did say the two sides are still in communication. we are seeing a mixed hand over overnight into european equities you can see the european map is mixed.

we have the stoxx 600 up about 0 d0.6 of a percentage point. starting with the ftse 100, today is the general election day. we'll get the exit polls at 10:00 p.m. markets will be waiting for that exit poll. we are seeing the ftse 100 trade up higher today. worth baring in mind, we have some house survey data this morning that showed house prices dropping for the seventh month in a row on the uk and heading into today's general election. we have a quarter of a percentage point ecb coming up later. no big decisions expected. those big decisions were all back in december it is christine lagarde's first meeting. she'll feel a lot of questions about her style and review that

will be unveiled we'll give you some clues as to how hawkish and dovish this will be we are seeing some patches on the board. let's talk about the individual sector as well we've got the cyclicals up on top. travel and leisure doing well. the banks also up 0.4 of a percentage point lack of an announcement. right at the bottom, we've got food and beverages ab inbev and the watch dog seems to have put a stumbling block ahead of the sale of the japanese u nice.

th telecom is down about a 10th a percentage point we'll see how things will shape up as we get to that ecb meeting coming up. thank you for that let's dive into a few single stocks this morning. starting with ocado who posted a slow down. a rise in weekly orders was tempered by stalling order size. the super market expects its best christmas to date the company backs plans to bring food range to the platform in september 2020 dixons carphone reports a fall says it is still on track to meet the full year forecast. >> nestle will sell its ice cream business to froneri

handing over control of haagen-dazs granting the company access to the u.s. market. a strategy of selling underperforming businesses president trump is reportedly expected to meet with top officials today to discuss the deadline to impose new tariffs on chinese goods among those set to be attending is u.s. secretary steven mnuchin and robert lighthizer. >> president trump is set to meet tonight with steven mnuchin, lighthizer and navarro will discuss whether to keep the december 15 tariffs. the final decision would be

trumps circulating a memo in favor of the tariffs. under his alias, he argues the tariffs won't have a big impact on the u.s. economy or stock market and china hasn't changed what he says are unfair trade practices. and recent buying of u.s. pork and soy is due to domestic problems stating they booked to book 500,000 tons of u.s. soybeans coming ahead of the hol guy when pork demand is strong and china is trying to drive up its pig p population reporting from beijing let's get straight to where jerm ver my corbyn is voting.

you can see him with his labor bath front and center. >> i think that is a red teletubby in the background. >> i think it is elmo. >> casting their votes on this election day >> meanwhile, we'll get back to our guest, chief european economist at ubs we just got fresh commentary this morning saying recession in the general economy is very unlikely we know germany avoided a technical recession, there has been no real es scalation do you think we are at a turning point for the economy. we still think there is a lot of sand in the gear box for the economy that has to do for the slow down. there will not be the all-clear

signal that might be the case now turning positive the worst is within the grand scheme behind. we've bottomed out and recovery would be very slow going forward. >> in the case of germany, isn't no bad news actually bad news. the worst the situation, the higher the likelihood would be on it. with the situation not getting worse and then improving, that removes the possibility of a large fiscal package or support coming out of the german and the authorities. >> at ubs, we were always a bit skeptical. remaining at 3.1%. that meant the policy would be moderately expandry. unless unemployment were to shoot up massively you have to be careful what you shoot for. if the prize is that things on

the ground have to get much worse, i'd rather not have it. this is the overall approach in germany remains quite conservative on the front. it would be a bit more >> what do you think that means overall for the policy looking at 2020, the markets are only pricing in the major cuts despite introducing this tiering mechanism. the markets don't buy it >> that is 80 to 90% maxed out i think we do need the support to get out of this weak growth inflation spot for that, we do indeed also need the government to step up to their responsibility >> if we do see the government go forward with more fiscal policy, could that enhance the effectiveness of the monetary

policy >> i think so, we need a more balanced approach. where demand policy helps. from fiscal policy that to have an impact is also growing. >> thank you for setting us up for this afternoon's ecb meeting. >> stay with us, we'll talk about cnbc's global poll counter results and who they think is the business person of the decade, not the year, after the break. memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.

welcome to "street signs." i'm julianna tatelbaum >> and i'm joumanna bercetche. these are your headlines >> traders from europe keep their powder dry as christine lagarde prepares to deliver her first ecb decision and as the deadline on chinese tariffs approaches >> chair jerome powell says he's not in any rush to make a move >> i would want to see rates that are significant and

consistent before raising rates to address inflation concerns. that's my view hitting the mark saudi aramco's valuation touches the $2 trillion mark but pairs gains within minutes of opening trade. polls open in the oak with voters across the nation heading out to vote in the election. >> european markets have been open for about 1.5 hours we are seeing investors add to yesterday's gains. green across the board for every major region ftse 100 and the italian index leading the way. this is following a solid day on wall street largely on the back

of that fed meeting where they kept rates unchanged which provided support for equity valuations making up the gains here, a real cyclical tilt with more sensitive sectors performing well food and bev lagging a bit. looking at 4 x markets the euro trading flat versus the dollar ahead of madam lagarde's inaugural meeting. the pound a touch stronger at 1.32 let's look at u.s. futures yesterday, a solid day for the most part. overall moves fairly muted now looking at the futures, the implied opens there. we are looking at more modest

gains for the three major indices. saudi aramco hit a $2 trillion valuation on the second day of trading surging 10% in the debut session hitting a daily limit. the crowned prince sought a $2 trillion valuation when the oil giant was announced. goldman sach says it remains modestly progress among a slight pickup in global growth. u.s. and china tensions are likely to remain the market story of the new year. i want to bring in the head of asset allocation research at goldman sach taking a look back at 2019, almost every single asset class has been traded up in the green.

a stellar year, complete reverse of 2018. a year ago, we were having discussions about what would go wrong. people pointed to the trade war, the growth slow down and the hawkish fed. it seems to me the only thing that is different is that the fed is dovish. we've got slower growth. we've still got the trade war. asset classes have yet to do so well is it all because of the fed >> you make a very good point that last year was a terrible year and created a good starting point for this year. you had the ability to recover from the valuations, recession pricing. i agree monetary policy was the trigger here it was common to see equity and bonds go together. you've seen the same in 2016 you've seen the same in the

mid-90s with the midcycle adjustment from here, you are right that it will come back to growth because we have probably seen most of what monetary policy can do with the midcycle narrative from here, with ee are going ba where we are buffering money next year will be either inflation, equities up or frustration on this rotation and you'll get the bond market value a bit. we are leaning more toward the contracted scenario. to just do that, it masks the diverted we've seen recently between the cyclical sectors and the major rotation that has come together what is your view in 2020 first on investor positioning and how much of the trade has carried

out and whether that will continue to next year. >> a very good point the current year, you've had real yields be the key driver. you had that fall from 100 basis points to zero in the summer that was in quality type positioning. not just cyclicals but defenses. people really bought favored stock growths. people didn't touch the triple cs to push the market up from here. these parts which have been lagged behind need to have a bit of a performance it is consistent that growth taking over as these parts of the market are leading a bit you are not just dealing with the cycle pick up after two years of growth. you are also dealing with a lot of structural head winds

you have decarbonization from the lower growth you are facing in the world. you are not going away a lot of reluctant to buy structurally challenged products you won't get as powerful a rotation as you might have gotten in 16 for example >> it is a different game. equitys have rallied 20% it is a different starting point. volatility seems to be very low. if we look back at this year, there were certain episodes of shocks may, august and december, particularlyin 2019. how can you as an investor position for those types of coupl couple days of wild swings >> one of the toughest things in general of buying options.

it has always been a good idea to sell volatility or options because it is a negative carry otherwise. next year could be quite interesting. the macrocould be expected to get better the reason for that is that this year you had every time when the vix was spiking, you had three strikes to 20. immediately, you had a response. we know now also from more central banks was very high. you could see volatility sparking higher the next time. the way you position for that, we have an overweight of equities but decided to be more ba bearish on credit. this year, credit was a phenomenal trade completely decoupled on the macro if you now see a pickup, there

is a risk credit spread widens more in terms of direct trades, we don't recommend shorter hedges without really good catalysts. we find going into sunday where you have the tariff deadline, that is already positioning in the market we would want to have a very strong view. especially as you were saying some of these reverse quickly and don't linger you have to be very good in timing sunday would be a massive negative surprise. >> let's pick up on the negative impact the concerns and direct impact is margin pressure we've seen a little bit of that. a lot of companies have absorbed the cost so far. it seems we are far away from rolling back existing tariffs. how much of a risk is that in

2020 when we see what has been a delayed impact come through and hit u.s. corporates? >> it is a very good question. the last round has the potential to be the most harmful for the consumer it goes through products that the u.s. corporates are selling for the margin, if you stay with the existing ariffs, we think the larger amount of impact on growth and margins might be to some extent reflected. you might have to consider if you don't get the extra round of tariff, the uncertainty and decline you get might outweigh the lagged response. to me, i think the deadline is critical to further get the market comfortable with that tariff topic and remove the escalation tale. the reason the market has been so friendly is related to

failing the left tale. i meet very few investors that think next year would be amazing in terms of growth most are saying recession risk is coming down we start to see the momentum of macrog macro get less negative. >> taking you to another asset class, oil we spent the last week analyzing the oil market closely back at the opec meeting, cuts and further announcement of saudi aramco trading how do you think about oil going into 2020? is it an asset class you want to own with levels around 60, 63. >> we are not particularly bullish. we have a target of 63 we increased after the opec meeting where they do cut more

we think commodities can still be a good investment opec is keen to keep the front end price elevated because they are the low cost producer. the back end is depressed because of shale suddenly offers you an attractive carry our commodities team expects something like 500 basis points for the whole index. maybe even higher for the energy part as a result of that, commodities can be an interesting portfolio which is a positive carry. oil has been less correlated with the s&p since the financial crisis, you had a situation where trading especially in corrections down together we haven't seen that this year the oil price decoupled in the risk there is very little carry

available in the mixed income markets. we find that commodity investment connected. >> you say 500 basis points, i'll take it we have minus 30 on the 10-year bund >> thank you, the head of asset allocation research at goldman sach very exciting, it is global cfo council time the results are in for this year's survey. let me take you through what this quarter has shown us about executives they were asked about topics ranging from 2020 outlooks, the most market moving events. let me share you some highlights most business leaders believe the u.s. will avoid a recession this coming year especially in the apac region where over 85% seem to have a positive outlook. not as positive with nearly 30%

believing a u.s. recession is likely the trade war received the highest number of votes as the most important economic story of 2019 wework's ipo demise was an interesting choice other was thomas cook's collapse, boeing, the rise of pop you'llism and the impeachment proceedings. tim cook considered the leading ceo. a ali baba leader and tesla elon musk came in second and third. compared to other tech companies known for their benefits bezos says he's happy amazon doesn't have the same type of culture as its peers

>> we pay close attention to the benefits but we have not paid close attention to the country club or whatever perks of the moment are i always had a bit of skepticism that i always worry people will stay part of your company for the wrong reasons. you want people to stay for the mission. you don't want mers farries at your company, you want missionaries >> that was a teaser of what the results looked like. a more comprehensive look, head on line to cnbc.com. coming up, staying on the sidelines, the federal reserve holds interest rates steady with a long pause on the rin.hozo more in a few moments. th for th.

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welcome back to the show, the federal reserve has held rates steady and insteads to stay on the sidelines until a

change in out lolook or a changi inflation. the u.s. called the 1.5 to 1.75 rate appropriate it will monitor developments and muted inflation pressures. projection showed 13 of the 17 policymakers do not forecast a rate change before 2021 at the earliest speaking to reporters after the decision, the fed chairman said the policy reflected the u.s. economy's favorable outlook. >> we base our decisions on judgement on how best to achieve the goals congress has given us. maximum employment and price stability. our outlook remains a favorable one. with our decisions through the course of the past year, we believe the policy is well positioned to serve the american people supporting economic growth, a strong job market and

our inflation of 2% goal >> saying it would take significant rise of inflation for the fed to hike rates in the near term. >> we think our rate is appropriate and will remain as long as our data broadly keeping with our outlook in order to move rates up, i would want to see inflation that's persistent and significant. significant move up in inflation that is persistent before raising rates to inflation concerns that's my view >> the treasury is set to jump over 2%. speaking to cnbc, saying the fed's push will drive bond yields higher. >> the fed is cheer leading inflationhigher. our model shows the cpi will be 2.5 in two months. our model has been incredibly accurate

the path of least resist tense for the 10-year is higher. until such time as the fed manipulates it lower 10-year now is about 1.83 or so. it looks to me there is pretty good yield resist tense at 2.05. that should contain this move up from 1.40. >> bringing in fiscal strategist who joins us on the phone. thank you for waking up early for us let's kick off with the decision, the fact that it was unanimous. this was the first unanimous decision since may what is the key take away from this the fact that they stand united on this in terms of what is best? >> i think it reflects the u.s. economy is in decent shape not fantastic but decent risks are low. the other side, the risks run inflation over the next few

quarters is low as well. a steady fed policy is the most obvious and correct answer at this point one of the more hawkish elements yesterday was the removal remain they've taken them away from this statement do you think this is an unjust tied view. do you think they've anticipated enough to remain unresolved. >> you know it is going to be uncertainty. whether or not you keep one phrase in there or not reflects the overall view of the next move may be which doesn't appear to be over the next few meetings i think that's what it is about. the risk too of escalated trade war remains out there. let's keep in mind, the u.s.

economy is growing around 2% an external shock could push us closer to a recession than if we were growing 3.5 to 4% to say risks aren't there at all is misinterpreting what the fed has said >> to pick up on my colleagues points not one of the fed members is forecasting a rate cut the next move by all of them or have signaled the move in 2020 or 2021 is for a rate hike we speak to people like yourself everyone seems to think the next move would be a cut. there is a big wedge between yet again, the signaling coming out of the fed versus what people believe is the real risk to the economy right now. >> can we do away with that plot please it doesn't seem like it is serving its purpose.

you are right. the market has been rightly discounting what they are saying i think what a dot of the dot plots go back to are models that have this base case of inflation rising because we are at a low unemployment rate. that hasn't happened at this point this cycle because u.s. participation rate is so low even though the unemployment rate is so low, there are a lot of people on the sidelines still ready to come in and they are starting to come in and that's keeping inflation low. so the dot plot is something we've been discounting for a while in this latest dot plot from yesterday's meeting is something we are not going to pay as much attention to as the economic data and the individual statements they made >> certainly, they got it very wrong if you rewind it 12

months taking you to another announcement by the fed. that is the ongoing liquidity that is $200 trillion bigger now north of $4 trillion what are these meaning overall for broad asset markets, not just money markets >> i think it is positive because liquidity is going to get through the system they are not calling it qe, the effect is some what similar. you'll get asset inflation lower bond yields, asset prices. i don't think it is a coincidence as the fed started to expand the balance sheet, you've seen the s&p 500 and the dow and nasdaq reach record highs. >> what does this mean for the u.s. equity markets coming off a

strong year in 2019 and can the market vall market rally further in 2020 >> i think we can. but i don't think we will because of modest levels from a year ago modest growth and inflation means modest earnings growth with the multiple being fairly rich here, we are looking for about 7% growth in the s&p 500 for next year. i think when you look for risk to the outlook, as you get to the second half of the year. if the fed is in fact done at three, we could get a less friendly fed >> thank you for your thoughts chief u.s. strategist. stay with us, we'll be back in a few moments.

5:00 at cnbc global headquarters holding steady, what fed chairman jay powell said to do to the markets on the two-day losing streak. voters head to the polls in the uk pressure from down under feeling the heat from global regulators calling for correction we have an exclusive interview the top business person of the decade the name revealed as "worldwide exchange" begins right now ♪