that's all for this edition of "dateline." i'm natalie morales. thank you for watching. [music playing] ready. good morning welcome to "street signs." i'm julianna tatelbaum these are your headlines lower for longer dragging stocks deeply into the rate as keeping rates into the red into 2022 calling this the biggest economic shocks in history. >> we are not thinking about raising rates. what we are thinking about is providing support for this

economy. we do think this is going to take some time yields on both sides of the atlantic fall. u.s. futures suggest the dow will open 500 points lower travel and aviation crowd the stoxx 600 as lufthansa warns of deeper job cuts and unsettled return to work take away shares turn hire as snatching up grubhub. beating uber to the top seat at the table. >> a very warm welcome to "street signs. it has been a pretty remarkable morning already in the first hour of trade. we've got a substantial selloff.

the stoxx 600 down by 2.6% it is really a sea of red. just over a dozen stocks are trading in positive territory. this comes after the federal reserve meeting yesterday where they vowed to keep rates near zero through 2022. they forecast about a 6.5% contraction. when looking at a policy stance and eyeing up some fresh ip infection data and seeing a rise of new cases in the west and deep south concerns of the implications of opening up the economy and measures in terms of infection rates. renewed concerns from a health perspective and from a lockdown perspective also weighing on septemberment this morning

let's look at european markets we've got red across the board every major region in the red. leading the way lower down about 3% dax about 2.7. ftse mib down about 2.7 and in the uk down 1.5% last year, we saw more than 10% worth of gains for several of these markets. so we areretracing the rally not exactly red but a strong signal this morning. we are in risk off mode. looking at the sectors clearly telling when we look at the breakdown. clear trend with the defensive growth quality parts of the market still in negative territory. the best performing basket of stocks on the down side, we've got

banks down 4.7%. we saw a pretty big boost to banking on the back of comments on credit suisse suggesting capital markets activity are strengthening. now we are looking at lower rates and what that means for margins for the banking sector that is weighing on sentiment as well as opening up on the economy. auto is down 4.6%. another key beneficiary. cyclical rally, travel and leisure and oil and gas. in terms of the fed yesterday, let's listen to a little sound following the two-day meeting. jerome powell said the central bank is still looking for sciences the u.s. is emerging from, quote, the biggest shock in living history. >> in march, we lowered our rate

to zero where we will keep it until we are able to achieve employment and price stability goals. >> the uk 10-year trading the 2.3% italy and in germany, 10-year is negative 0.1%. in the u.s., the yield on the 10-year the ig best at 0 bot.7%. bringing in someone who knows a little about this. steve will also be with us james, what was your take on what we heard from the federal reserve yesterday? the key message seems to be a dovish stance on the fed >> i didn't think there was a lot to take.

i felt this was going to be a tricky meeting to forecast it was definitely going to be a tricky meeting to digest because so much has happened so quickly in terms of fed policy it felt like the right thing would be for the fed to stand and notintroduce any new measures and see how they are seeing the sort of material and medium-term future and then obviously around the communication around that where the past jerome powell has had a few issues i don't think he really did yesterday. it was an okay performance they are telling us the huge damage to the economy. ifs that a surprise to the economy, then i really have lost all understanding of what is going on out there in the world. market cheering was a huge surprise which was almost immediately walked back a little

bit. even if they took them at face value. what you saw was an unemployment rate higher than the worst period that tells you there is a heck of a lot of wood to chop to get back to normal the fed has confirmed that it is a bit of a cold shower after a quite remarkable risk on period >> you say that shouldn't come as a surprise. it comes after we've heard forecasts from another authorities and the oecd yesterday. do you think the fed's forecast are realistic? what is driving this reaction that shouldn't come as a surprise >> to take the latter point first in this reaction in the market, we've created the market which is addictive to the

stimulus and given a heck of a lot of that recently if you keep giving a kid candy, it doesn't take long for the kid to start crying. economic forecasting is a very tricky thing at the best of times. trying to make one, two, three year ahead in this environment is next to impossible. the key piece of information and understanding about how the economy is likely to work is that this growth improvement that we are seeing and likely to see in the near term doesn't tell us a lot about the trajectory in this economy where the market has latched on to the idea of lockdowns and adjustments in consumer and corporate behavior on the course of the virus are the main down side risks to the economy.

the more material risks to the medium term trajectory are the almost of debt and the need to service that debt and we are about to service the balance sheet where corporates and consumers are required to return to the future and that balances the activity >> good morning, my friend when do you think the economic rally realistically will start 2022 2023 is. >> if you measure month on month, quarter on quarter, then this year. >> in a meaningful way >> i think at least the end of 2022 possibly even longer than that >> okay. good that's my point. i agree with you i think we've got a tough 18 months, two years ahead.

why are you so mean to the investor when all i'm told by this channel ever day. we're investors. we are there five years, seven years, 10 years. when you've got zero interest rates. not because you believe there is some sugar rush but being told by people at aberdeen standard that they are going to be okay >> it depends which market they are looking at they are cyclical products it doesn't make a huge amount of sense. when i look at equities today, my concern is that when you have ral uations stretched as they are at this time the potential for the low concern over the five to

seven-year period. this is where you get to a more subjective period. they may still be better for equivalent returns elsewhere all assets are equivalent. that is a circle to square you have other investment styles where you say, yes, over 5 to 10 years, those things aren't great. stimulus and policy measures will dominate and there is a lot in the conversation. being a bond guy i'm sort of paid to be miserable. >> don't you give me you fixed income lot are always looking at the equity. that's how you work out your valuation. why can't the equities grow into the valuations in a five-year period >> the interesting thing about

the equity market is that it doesn't tell you a lot the core number of stocks that have driven over the core that it is even more difficult is an act of faith that you generally believe that in earnings growth over the years. i'm skeptical but don't have a quantitative way i'm skeptical of that. it is essentially an scrap laex lags or a forecast there are a number of stories out there that concern me incredibly a company with zero revenues in

2019, which is worth $25 billion. to me, there is something wrong there. this starts to look like amania at that stage. >> this is a debate and complicated question there i want to hone in on your spoeshl ty you are a bond buy suggesting the most dovish development out of yesterday's fed decision was comments around continuing to purchase on the qe program which amounts to $80 billion in treasury a month. leaving room to surprise to the upside what is your take? >> i would agree with that as an investor, the most attractive thing i could find. if i could get the best of nothing or something, i want to be positioned there. if that is large and attractive, i would put a lot of risk there.

that has provided that sort of semitry. the purchases went up quickly. there is always the danger of the market extrapolating and waning too far with the supply we've got. the fed hasn't done enough with that comment and that's why we've seen bond yields attracting why they have i would agree that is a dovish outcome. certainly relative to possibly some market participant expectations we must not forget a lot of treasury supply and the fiscal package in the u.s it is not easy to subtract to the growth sub ply argument that will be set out and the increase of purchases that is still the big unknown.

i don't think that is a green light. certainly after this move. the medium term where steve said to the investors i still look to the medium to long term and you are still being compensated and there are treasuries where the yield can go to the future on the economic and debt issues. >> thank you very much for more on the fed's latest decision including the central bank plan head to our website at cnbc.com follow us on twitter and tweet me directly if you want to weigh in on anything we are discussing on the show. spain's top football league prepares to return tonight what state is the league in after the coronavirus?

we'll find out after the break okay, give it a try. between wisdom and curiosity, there's a bridge. between ideas and inspiration, trauma and treatment. gained a couple of more pounds. that's good for the babies. between the moments that make us who we are, and keeping them safe, private and secure, there's webex. ♪ ♪ beautiful.

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welcome back to "street

signs. just eat take away is buying grubhub beating out uber which approached grubhub in january. let's go to karen with this story. what more can you tell us about this deal? >> the move will create the largest food delivery platform outside of china and will mean 2.1 euro in combined revenue for the group in 25 countries where the foot print would be with 75 million active customers it is an all-stock deal similar to uber eats which was discussing a deal initially but walked away. value for share holders to the stock of 75.15 yesterday, it closed about

$59.05 and thought to have an implied value of $67.04 that uber eats was offering it is a step up. it did trade around these levels in 2019 but has been well off those levels since then. in terms of the combination. the management team of grubhub will stay on and run the north american business. the two founders started off grubhub and the same time also very like-minded in chasing the growth and the sector has really negotiated in several months with the final approval. very aggressive that they turned around and tried to ink a deal with grubhub clearly consumption patterns have changed and you've seen a step up in the activity on both

sides. they've really benefits from that change in eating and home that you've witnessed. the double digit increase is what you've seen in terms of antitrust concerns here just eat take away has no u.s. retail presence at all it is seen to be clearing regulatory easily. in terms of what you you are seeing in terms of what you mentioned on delivery side 41% improvement in april or may with an increase of 59% from grubhub. what do share holders do with it you have seen reaction it fell initially and has traded back up. bounced a weaker market. investors try to work out the massive scale. i wonder whether there will be more deals in this space and

others in this sector, julianna. >> i want to stick with the deal space. the eu will rooeportedly launcha investigation into fiat chrysler declining to offer concessions in the merger to address the anti-trust concerns. >> spain's stop football league will return to action later today for the first time since march 23 they will clash with the remaining110 games set to take place without fans behind closed doors. the coronavirus pandemic has accelerated the need for behavioral change in english football according to the review

of finance warning the virus outbreak will accelerate the revenue polarization between and around football leagues around europe the head of this group at deloitte based off this report, to what extend do you expect the hit to be >> caller: for 2019/2020, it is slightly complicated picture, what you are having several seasons coincide this year will not like that this year will behalf a billion revenue from 2019/2020 financial year that is lost. three games to broadcasters and three games behind closed doors. about half a billion that will

be deferred into the 2021 financial year the football sector will see a v-shaped recovery. about a billion pounds of revenue not coming in but a bounce back coming to one and a quarter seasons coming into that period we'll see a sharp v-shaped recovery for the league. >> i was thinking the same thing with the evidence you've seen. some business models such as airlines and autos look broken for a long time. i can see it only going from strength to strength on the back of this. more people are watching streaming and soccer as well on the longer term despite this one-year to two-year hit i can't see any change in the relationship between the players and employees and the management

of these clubs and indeed the fan base as well >> one of the things that has been evident is the extent that people crave the normal life enjoyable. sport is one of those things the long-term strength of football is all still there. not to understand the chronic short-term pain. the premier league will ride it out as well. more challenging in the football league to league one and two on the match day. it is really, really tough if you can get fans in that space that really struggle when it is safe to do so, we'll see that level of game recover as well. >> apologies for the football league as well business model, we've talked about this a lot is there a real business model

as well? my question is does it matter if these clubs make money or not given the fact that they have often ignored the model because they want trophy assets over the years? >> we've seen a move towards a more sustainable model new owners going in that don't want to lose money taking the heat out of the market and the revenue has been an incredible story that has grown year on year the way football has. i think their model has become sustainable. it has been relying on the owners i think long term, top division, very, very strong. things to look at. at least the football league is starting from a very strong pace in the year we were covering to

have more revenue at every level at the championship league as well as having more money than ever before. long term in a very good position short-term pain not to be under estimated. >> what about this wage you've highlighted. clubs increase to 107% it is a record level sustainable? >> on the face of it it is not you have these promotions and the owners that will bail you out. the issue now is that many of those owners, however well intentioned they are, the core business is really suffering a lot of them is in the consumer

industry the loss they've been making has been previously sustained. they are not in that position to face that gap anymore. looking at that control and the salary gap, we ran the numbers for the season if you had a salary cap for that season 70% on wages which we've always felt on that level, that would wipe out the losses pretty much overnight. roughly about a $300 million-pound savings. that is the time to be looking at those measures. >> you make the point that they are accelerating the need for behavioral changes what do you mean by that >> it has been a game too hard for the past 25 to 30 years.

tremendous growth in ways that would have been conceivable. not just in the premier league that is across football. great success around the top line great control around the top line all clubs really want to do is win football matches and have the best players it is also finding that degree of concentration the clubs that have been around long before i was here and will be around long after i'm gone. that is the thing is preserving these clubs for a long time to come i'm optimistic on the business >> thank you for bringing us this report. partner and head of the sports business group at deloitte still ahead, lufthansa says it melee off up to 26,000 people

in the wake of the pandemic. we'll have more after the break.

welcome back to "street signs. i'm julianna tatelbaum these are your headlines lower for longer bank stocks with a selloff dragging deeply into the red after the fed vows to keeps at zero to 2022 >> we are not even thinking about raising rates or thinking about thinking about raising rates. we are thinking about providing support for this economy we do think this is going to take some time yields on both sides of the atlantic fall. the u.s. futures indicate the dow opening up 500 points lower. travel and aviation stocks lower as lufthansa warns of deeper job cuts and the broader sector struggles with an uncertain return to work

>> just eat take away shares turn higher as the food group snaps up grubhub in the all-stock deal beating uber to the top seat at the table. >> european mark ets have now been open about 1.5 hours with a steep selloff and losses for every one of these indices dax down 2.4, cac 40 down 2.6% this after the fed vowed to keep rates at zero through 2022 we have concern arising around the increase in cases of coronavirus in the united states concentrated in the west and the deep south where those economies had reopened earlier than other parts of the u.s

so concern rising around the potential second wave of coronavirus infections in the united states. putting a damper on sentiment. let's look at oil market and what we can see with wti and brent. both trading lower by 3% for both of those. let's get a check on u.s. futures. wall street saw a mixed close. the nasdaq closed above 10,000 with a new record high investors are putting money back to work. the growth part of the market where we had seen a reverse part of the trade and the demand for cyclicals. that trade seems to be on pause now and looking at the weak part of the trade for all major u.s. indices now. >> looking at u.s. banks we have seen a rally on the back of encouraging comments. credit suisse weighing in

suggesting we would see an up tick of market activity providing a boost of banking stocks now on the down side today, you've got banks returning sharply and the overall risk to return sentiment let's bring in james longsdon weighing in on the banking space. james, it looked like banks were coming back into favor arguably one of the most unloved parts of the european market over the last five years now it looks like investors are getting a little bit of cold feet what is your take to start off >> caller: it does look like the european banking sector does face some significant challenges over the short to medium term and getting to the economies they are operating in to be

expecting by this year and certainly 3% below the 2019 levels at the end of 2021. that is in the year where the lockdowns gradually eased and we've seen them reimposed and the infection we can see with the contraction being worse than that so the nearer term outlook and capital perspective is pretty tough and clear that you will get the spouts of market reaction particularly where things like interest rates are an important driver of earnings are in question. but i think the primary issues at the moment will be looking at asset quality and the issue going to 3% that will pick up on the back of contraction and rising employment. that will see the earnings to the extent it hasn't already we'll see the charges arise from

around about five-year average of 20 basis points that went up. the worst point of the last 10 years to the two-year average. still below what we saw in the financial crisis of course, what we are going to see now in the second quarter is a fuller impact from the first quarter on earnings of lower interest rates and reduction on activity and fees and things like that. with the exception of investment and trading should have a better second quarter >> looking at banking, we are looking now at higher savings banks and where people have stayed home and stashed money away for those fortunate enough to hold on to their jobs here. if you combine saving rates. what does that mean for private

banking and mortgage refinancing in particular? >> that's where we have seen banks getting a notable hit on the business volume side credit card balance and activity notably lower. that will hit revenue for those active in that and mortgage and refinancing activity we've seen revenue pressure there on the retail banks, if you like those income lines as a result of that >> james, i'd love to get your view on this report on the ecb setting up a bad bank for toxic loans related to coronavirus and to shield commercial banks in europe from further bankruptcies and risk down the line from companies and households they've lent to to keep the company going in the pandemic. what do you think of this and do

you think it will go ahead >> no doubt, there is pretty big backing for this idea. thinkings that a pretty good idea the good thing about a bad bank is that the tale risk disappears leaving themselves vulnerable and taking on the balance sheet where they've done and looking at what happened past the crisis in ireland, spain, uk and germany where bad banks were set up these are all initiatives i think that is probably less of an issue than the crisis given the universal natural of this

crisis heard all the same of this issue and one that is set up of that rating taking on loans and those bad books tend to be a good thing in the end but it all comes down to price. what price will banks be expected or required to transfer those bad loans at what are the state aid implications i don't think so much of the bad bank scheme itself that are pretty pragmatic in the crisis what if banks need to raise more capital in the valuation in the transfer of loans. that can raise state aid concerns if they can't raise the capital themselves, they come with the sharing often on share holders and these are also complex issues we need to get work

through before such a thing would come to fruition >> that's a great point on pricing and when does the bank make a transfer and making a hit on valuation in terms of the assets james longsdon unilever has proposed merging dutch and british entity into one structure headquartered in the united kingdom after the goods company failed to move hq to the netherlands in 2018 amid a share holder revolt. saying the move would provide greater flexibility. saying it regrets the move while uk republican sister said it was, quote, delighted. up to 26,000 lufthansa employees are at risk of losing their jobs after the german c e carrier said the roles were sup

plus to requirements still taking a pretty substantial hit on this news what more can you tell us? >> caller: that potential call loss or jobs might have to go more than previously expected. previously saying more than 10,000 jobs have to go now after that submit yesterday with the trade union, they were vetting out and saying up to 22-full-time equivalent positions must go. of course pilots are weighing in here saying they would scrap 45% of their way to contribute to the rescue package

everybody is aware of the sector now on the coming days, they have to come up with a solution. getting the okay from share holders. to them, they have to be able to plan what will happen in terms of job cuts. lufthansa is painting a grim picture about the pick up of demand for air traffic in general. even though they are expanding capacity already by september, they are not expecting a dynamic pick up in demand unless they really need to cut their personnel costs substantially according to management. back to you. >> thank you for the detail on that story and continued coverage of all the twists and

turns. coming up, the fed pledges to keep rates near zero after the biggest economic shock in history. more after the break businesses are starting to bounce back.

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i'm here to ask you to make it stop. stop the pain. stop us from being tired george called for help and he was ignored. please listen to the call i'm making to you now to the cause of our family and the calls ringing out across the streets in the world >> powerful words from the brother of george floyd who testified before congress about the need for police reform in america as lawmakers search for common ground on changes republicans have denounced growing calls to defund police departments and democrats have pronounced a ban on choke holds and to create a database on police misconduct. amazon is banning the use of

facial recognition by police for one year saying we hope this one-year more a tore yum might give congress enough time to implement appropriate rules. adding that government must put in place stronger regulations to govern the ethical use of facial recognition technology a check on the health care front. the number of confirmed coronavirus cases in the u.s. has topped 2 million after states began to gradually ease restrictions allowing people to return to work and resume leisure activities. u.s. health officials that took part in nationwide protests to get tested as they fear numbers could spike as a result of the demonstrations and emphasize the importance of wearing face masks and social distancing. u.s. jobless claims are expected to slow as the u.s.

economy continues to emerge from lockdown coming at a lower number than last year following may's record-breaking payroll report showing an increase by 2.5 million but jobless remain in the double digits vowing to keep interest rates near zero until at least 2022 to support recovery from the coronavirus pandemic at the latest meeting, they voted to keep rates steady at 0 to 0.25% and continue with bond purchases and unveiled the first economic forecast since the outbreak began saying it expects u.s. growth to expand by 6.5% this year with the fed adding that it will take years for joblessness to return to precrisis levels let's look at the dollar and

where we stand currently the euro firming up on the dollar the sterling down about 40 basis points at 1.2692 more broadly, that index fell by .3% and the negative session in the last 10 karen, i would love to discuss what we heard. powell mentioned uncertainty many times he didn't commit to too much is the bottom line but rather just asserted that the fed is there for the long haul. they are not going anywhere but going to be accommodative in the times ahead. what was your take on the message from powell yesterday? >> i thought the projections were quite interesting as to where the economy is going they looked very similar to what the ecb is forecasting

talking about the recovery and what you'd expect to see in the united states. roughly 5% next year and slightly less in europe's case an air evof credibility reaction from an economist this morning saying the wildcard in recovery is animal spirits we don't know how businesses and consumers will behave, particularly with a second or third wave of the infection. >> great point on how consumers will come out of this. we are looking at higher savings rates. yesterday, we are speaking to the general for the aviation industry that industry trade group. we are seeing pretty strong demand for travel and an indication getting back to

normal macro strategy and bny mel lolo. we've heard from the federal reserve that they'll be dovish for the foreseeable future what do you expect here for the dollar >> caller: i think we'll see a continuation of the weak dollar trend. for the duration of the crisis from the middle of march until a couple of weeks ago, the dollar was the currency of choice you had the excess dollar demand now that we've got a more constructive story for the euro, we've seen dollar weaker, euro dollar stronger. the dovishness and willingness to keep rates near zero at least out to 2022 will take more of a sting off the dollar and keep it

on the back foot >> the forecast suggests we are behaving in the right direction. it may be a low quality recovery for some what is the bridge to possibility around negative interest rates we didn't hear much about that in these forecasts and whether they'll play out do you think we could play out any move based on the projections we hear from the fed? >> in short, yes short of the chair coming out. there was no question asked this time around about negative rates which i was a bit surprised at short of saying over my dead body in a million years will we see that open. central banks don't ever rule anything entirely out. even though in the back of their minds, they know that is not going to happen. for many reasons, i don't think we'll see negative rates unless

there is a clear reason the fed would want to weaken the dollar. they don't normally take actions of trying to target a dollar level. i think we can dismiss the negative rates in the u.s. especially after the experience of japan and europe. they haven't done much to weaken the sector further >> speaking of targeting, we didn't get that messaging from the fed yesterday. there was a fear if you had too much above a positive move in terms of providing guidance, you might set another risk on rally adrift what do you think of that? do you think the fed is caution above asset levels >> caller: that was one of the last questions asked, have your actions contributed to further wedge and equality he dismissed the idea of asset

valuation and specifically said, no, our mandate is employment and inflation. we don't try to target or interpret what the correct asset prices ought to be in terms of yield control, i was surprised that he volunteered the fact that they thought about it and looked and historic experiences in the world an right now, they don't seem appropriate. probably we might see something like that in september >> john, thank you for joining us that's it for me thank you for watching "street signs. we'll look at u.s. futures stick with cnbc because "worldwide exchange" is coming up next. businesses are starting to bounce back.

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it is 5:00 in a reopening new york and your "top five at 5:00" starts with a six. market sell-off. investors spooked by growing virus numbers. fed fact, keeping their foot on the gas pedal. no increase until 2022 that could be bad for the banks. apple and amazon first two stocks with $1.5 trillio