ll with his brother and david. and we've already sold more shoes tonight than we did a whole week in our brooklyn store. now i feel like these guys are really ready to hit the ground running. dave: all right. [ cheers and applause ] dan: nice distance! good morning welcome to "street signs these are your headlines credit suisse plunges 10% after the swiss bank tells to brace for a significant loss in the first quarter due to a hedge fund halting on margin calls shares in europe of nomura with a $2 billion loss related

to a u.s. client. wall street futures see red as hedge funds forced to liquidate positions. and the "ever given" has refloated. the giant cargo ship has been partially straightened sending oil prices lower good morning welcome to "street signs." we hahave a packed show we start with banking space. shares of credit suisse are deeply in the red after the significant material loss that

will hit first quarter results due to the u.s. based hedge fund the swiss bank is exiting the positions alongside other lenders also impacted by the hedge funds default. it is not just credit suisse shares of nomura with the worst decline in a decade after the japanese bank with a $2 billion loss at the u.s. unit. the group said the negative impact was due to a transaction with a u.s. client reports suggested the loss is related to the hedge fund. the company, however, has not confirmed this. in the credit suisse statement, they noted a number of other banks were affected in lock step, we are seeing selling pressure across the european banking space ubs is down.

bnp has taken a hit. this is taking a hit jomana >> the issue is the systemic risk last week, the hedge fund was hit by margin calls after the big media names and chinese stocks forced liquidation. cnbc reached out for a comment i'm happy to say johan is here to speak with us so far, we heard of a couple of large casualties in european banking space with credit situsuisse down 10% are rewe likely to hear more issues it wiped out $30 billion of market value it seems as the two banks sustaining losses as of yet are credit suisse and nomura

will more casualties emerge? >> i think this is likely to be more exposures the way i understand it, it's five banks that got exposure and market edly more the question is to what extent the banks have hedged up the risk it seems nomura and credit situation risk management was maybe not as stringent as it might have been which i think explains the large movement in the share process. >> let's talk more about credit suisse and it is coming at an inopportune time they have been under scrutiny for the exposure to green cell does this raise questions about

cr credit suisse risk management? >> i think so. it is related to green cell. you recall last year it was seems there is a bump in the road that credit suisse is going toward while we have been highlighting the value that we have seen in credit suisse, this is thought that it is really the latest in the litany of problematic exposure credit suisse reported the clean set of results for the better part of the decade now. >> johann, it felt like at credit he swiss, thomas gotshein was brought in to be a safe pair of hands after the scandals of credit suisse. a lot of the issues crept up

under his watch although it was legacy issues. the financial crisis and the issue on york. that decision before he came on board. what does it say that the issue like this, the one we are seeing today, may have taken place under his watch. >> it is under a problematic spot i think we try to throw the kitchen sink at the legacy issues in last year's pp&l. it occurred under its watch and it speaks to a broader cultural issue with risk management that needs to be addressed at credit suisse that's not something that you are going to address with a couple of internal reorganizations.

this will mean that credit suisse will have to take a long hard look at the risk management policies and internal culture at the firm >> and johann, when it comes to the liquidation on friday, if it turns out this is just one hedge fund liquidation, do you think investors in the banking space and investors at hedge funds should feel reassured there won't be an elongated broad fallout that we can draw a line in the sand following the events of last week >> i think at this stage, to suggest it is part of the broader systemic issue it seems an isolated incident. it is too early to say at this stage, nothingto suggest it is a systemic issue >> back to the european banking sector as a whole.

a bounce of banking stocks in the first of the year. we were talking about the ru results that came out and they were encouraging because of the investment banking business. can we extract from the episode that occurred and the broader readout to the banking sector and that maybe they have overexposed now back into investment banking space what is the readout to the banks looking ahead given what we found out in the first quarter >> yes, i would be cautious to say that if overextended themselves most of the guys pulled back from investment banking. i think what's driven the good results out of the franchise is more volatility we have seen in the market over the past 18

months or so which has really led to great efforts from clients and great volumes. we have also seen margins and spreads as the consequence of the volatility you know, i don't think it's a systemic issue once again. i think it is more a question it has been a very good period for investment banking i think, you know, we also cautioned that you should be careful not to extrapolate the revenue we have seen from investment banking into the future >> when it comes to, i guess, revenue forecasting for the european banks moving into the future from an equity investor per s p

per perspecture, the market is exposed heavily to financials and value more generally what about the risk that is associated with europe being so far behind the u.s. and uk when it comes to the vaccination rollout and timing of reopening? is that a headwind for the banking stocks over the coming months >> it could potentially be you know, i think the broader driver for european banks from the earnings perspective is a more normalization of credit ratios rather than a top line st story. >> and we were just getting flashes coming in from the swiss financial watchdog saying they are aware of the international hedge fund case and several banks involved

they were informed by the bank and is in close contact with it. these are comments coming out from the swiss regulator and in reference to credit suisse and what we found out this morning with regards to the substantial loss for the bank. how much room do you think regulators have to act in a situation like this? what sort of clout could they impose and could they have ramifications for banks and credit suisse and will they get more muscular? >> swiss banks are the most stringent regulators globally. i don't think there is much room for them to become even more hawkish when it comes to regulations. a loss of this nature would almost automatically in the

calculation of the capital that credit suisse needs to maintain, it would automatically trigger a higher level of capital going forward. it is going to be an impact. >> you know, i don't want to draw a conclusion that's not there yet. credit suisse has not named the u.s. client involved here. judging by the language used in the line from the swiss regulator referring to the one hedge fund, certainly there is speculation of what the hedge fund may be. i want to understand from the market perspective how much weight we should be putting on this event it felt like on friday when with the details were yet to emerge, there was concern of the ripple effects and what this may trigger. it looks this is all coallessing around one fund. is this likely to prove to be a storm in a tea cup or could this actually have bigger

implications >> like i said earlier, i don't think it is going to be a u systemic issue if we assume it is this one fund, look at the underlying efforts. it doesn't seem to be straight forward equity it doesn't seem to be a problem with underlining effort. it seems to be an issue with the hedge fund and internal risk management and overleveraging itself and the risk management at the bank. at this point in time, it doesn't point to an underlining systemic issue >> johann, we'll leave it there. thank you for your views on all of the developments this morning. very big day for the banking sector johann scholtz from morning

star for more on that warning from credit suisse and including why this is not the only headwind facing the bank, head to our web site cnbc.com. tweet us as well if you have any thoughts on this or any other story that we plan to discuss on this show. just before we head to break, i'll give you a look at european banks to set the scene for european markets stoxx 600 is down 1% many other banks outside credit suisse trading down substantially. ubs down 4%. we'll be back in a few moments

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at northwestern mutual, our version of financial planning helps you live your dreams today. welcome back to "street signs. we have been monitoring what is happening with the european banking space. credit suisse down 14% let's look at european index as a whole.

mixed bag and resilient despite what we are seeing in european banking space. ftse down .40% and the country is going through and the greater paris region and dax and germany is up .10% the swiss index. traditionally the index is the one we are watching closely due to that credit suisse has the jurisdiction let's talk about credit suisse the bank warned of exposure of losses from one u.s. fund. hasn't named the fund. this is the reaction and credit suisse down 14%. this name has been in the news for the better part of the month. also due to the ongoing situation with green cell. investors are taking aim at the particular stock this morning.

down 14% let's look at u.s. futures as well to see how u.s. markets are reacting to the possible relating in the european banking space. s&p is opening about 30 points lower. the dow is about 180 points lower. nasdaq about 100 this despite all three closing up in positive territory on friday despite the major selling we saw specifically in telco media space and chinese stocks as well lots of questions over the weekend as to whether or not there could be broader ramifications for stock markets given amount of losses we saw on those single stock names on friday and the impact it is having on the banking sector let's bring in the head of the equity research at citi. thank you nor joining us on the show we are watching european banking stocks closely i know european banking stocks

were areas people were keen to get involved in. it was an easy play for recovery in the second half of the year we are seeing a bit of rel-ratin on the back half of the news could you see the sector as a whole is at risk with the over extending? >> good morning, joumanna. when we look at the banking sector it is the key value play in the rotation and obviously while indices are showing voluatility and you have a lot of pieces with the vaccine announcement with the value from growth to value. if we take a step back and look at what drives the value rotation, it is the global economic recovery as vaccines are rolled out we have have some delays in the

vaccine. we still expect the recovery to happen our position and strategy would still believe there is muchto be played in the rotation. from that perspective, we are still looking to see more coming out of the financial sector. however, obviously, bumpy roads on this news >> you certainly have been talking about the rotation we have seen and it sounds like investors repositioned to some extent for the value trade on the back of reopening hopes. which sectors do you think still have the most to gain from a value versus growth perspective? >> thank you i think when you look at the sectors, particularly, europe here, i would say generally speaking, we tend to look at it also from an indices

perspective. europe moves more to growth. luxury goods and a number of cyclical sectors we tend to look at the uk as having more of a tilt. generally speaking a nice hedge you have a bit of growth, but exposed to that value rotation in terms of sectors where we see a lot to go for there and we would really look at energy and financials as the key component. uk is exposed to that. that is why we recommend uk as a nice hedge. >> what is the catalyst for the trade? a lot of people have talked about the need for more inflows in the market to takeoff a lot of the factors are known already. what is going to catalyze with

other markets around the world >> when you look at the growth and european growth, at the moment, obviously as we talk and you mentioned at the beginning of the show, right, we have news of further lockdowns and vaccine delays all of that news flow is muddying the water a bit the reality is the investor will look through this and look at the vaccine rollout unless, that's the caveat, unless the vaccine doesn't workout. the vaccine is there and providing the uissue. for every -- the economy hit is smaller with each wave that comes back we know the vaccine is coming. the economy has adapted. what is different this time is the new wave in europe the economy adapted. actually it is not as impactful

a wave as it used to be. you have the back drop of the vaccine coming actually, you do not have that eps collapse you could have. it will come back. i would like to make a parallel here with some investors that might be worrying to something similar to the 2000 tech bubble that could happen. the reality is the rally in cheaper stocks which offset the collapse in tech and the value succumbed which took the headline indices down sharply. we are in a different situation here essentially, you are at the beginning of the economy cycle where the economy cycle will pick up again. you don't have that with the value stocks are collapsing which is the opposite.

>> just to pick up on that, one of the major themes that is occurred this year is a rotation out of growth stocks into value stocks i know esg is something you watch closely. there has been a rise in esg funds and the best performing etfs last year were esg funds. interestingly, although the rotation is going on, you continue to see inflow going into esg although i guess you categorize them in the growth and not value category what does that tell you about the space and where should investors put it >> i think, joumanna, that is an interesting point. essentially what we have seen is inflows into esg although the performance sh shouldn't be strong. it is a growth trade since the end of 2018, we have seen a substantial inflow. the broader regions.

$84 billion in the u.s $37 billion in europe. $40 billion in eu.i like to say, it is passive funds. in europe, it actually the split and a lot of inactive funds. big message is you need an esg product and you need to basically, if you grow inflows, you need to have that offer. it is timely to debate this now. actually the eu regulation and sustainable financial disclosure has been announced, but it came into force on the 10th of march. the proposed requirements are challenging. when you are building of the funds, you need to start thinking how you will demonstrate that you are actually compliant it is no longer the days to have

a quick esg product. the inflows are in there >> to come back to the legislation that you talk about in europe. one of the criticisms that comes up is that it is very easy, supposedly, for a company to brand itself as esg friendly how onous do you expect these to be more demanding as it goes forward to prevent green washing? >> that is correct i think green washes is a key issue. with any gender hat on, i'll say pink washing as well obviously the regulator has been focused on that. i think the headline for me would be and from the citi,

don't leave it too late for article 8 in the sustainable regulation this article will state clearly you need to essentially demonstrate very, very clearly how sustainable and environmental characteristics are met. you need to have that demonstrated a string of points that need to be demonstrated. notably, what is your framework for investing and your impact and all of that will need to be very, very heavily documented. i think from our spectperspectiw have seen that with the regulatory requirements linked to the payments. we are going through that and the funds will have to adapt and demonstrate that that is very important

not only is this eu regulation, but it is coming to the uk as well and this is going through unabated it is not just prep for the eu it is broader prep this is just increasing to green washing. >> really interesting discussion thank you so much for joining us this morning on "street signs. elise, thank you we'll squeeze in a quick break. coming up on the show, top global retailers face a boycott as china ramps up the pressure of the cotton supply chain

are good morning welcome back to "street signs. i'm juliana tatelbaum with joumanna bercetche >> the swiss financial watch dog

says several banks were in involved >> the japanese lender warns of a $2 billion loss related to a u.s. client. wall street futures see red as u.s. hedge fund is forced to liquidate position intensifying selling pressure. the "ever given" is refloated. the cargo ship has been partially straightened sending oil prices lower welcome back to the show let's get a quick check on how u.s. futures are shaping up. the picture is negative after a record close yet again on friday for the s&p and dow. the picture is more negative s&p is lower dow is 150 points lower.

nasdaq is down 5 the tech sector has been under selling pressure recently especially toward the latter half of the week last week i want to draw on more closely on the stocks that really capture the markets attention last week. that is viacom and discovery on friday, viacom down 20% discovery down 27% for the week, discovery down 45 and viacom down 50 we saw block sales go through the u.s. banks goldman sachs and morgan stanley. that wiped out $30 billion of market cap from the stocks in addition to the china tech stocks as well later on, we found that could be case traced back. this is dominating markets over the last couple days let's turn to the chinese tech

stocks this was the move overnight. baidu down 5%. and tencent down 1.3%. it is not just the selling on friday, but the regulatory moves. the s.e.c. will adopt measures to make it more difficult or open up the possibility of the names removed from u.s. exchange if they don't comply with the u.s. accounting standards. another reason for the chinese tech selloff last week that is the picture for some of the key stocks as for european banks, this morning, we found that nomura will have a loss of $2 billion based on exposure to one u.s. fund unnamed credit suisse is warning of losses down 13% it is having ramifications ubs is down 4.7%

the uk banks holding up okay down 1.1%. it is a sector that european investors have been buying into. keep a close eye on this one for more on this story, head to cnbc.com as for the broader european markets, we are seeing resilience in the french market cac. similar amount in the dax. surprisingly, the media sector in europe is actually out performing today despite the moves of viacom and discovery in the u.s. ftse is down .17%. and marginal losses for the european markets as a whole.

j juliana. thank you. a spokesperson for the xinjiang government says they should stop politicizing the behavior. nike and burberry have come under pressure over cotton and forced labor resurfaced and circulated with boycott threats. to discuss the story in more detail we have the ecommerce retail leader this story has captured investors attention because it asks big questions of western brands operating in china. it is a pretty tricky situation here you have western brands and retailers facing more and more pressure from western consumers

and shareholders to speak out on controversies of human rights and specifically in china. there are consequences at the same time of doing so. this is the story that has come to light over the last week or so how do you see this playing out for western brands like h&m and hugo boss trying to apiece the western shareholders and at the same time grow business in china? >> it is it is a tough situation for the brands to be in. these brands put out statements last year when the stories about the forced labor camps in xinjiang came out in western media. most put out statements decrying the position and pulling away from xinjiang. those statements are coming back to the chinese media to get out. one strategy is to lay low

the companies pulled its statement against xinjiang off the web site and is laying low that has led to backlash among western advocacy groups suggesting they are taking advantage of the situation the other strategy is stick toto your guns. h&m has no inclination to change their stance and will deal with the fallout from china i don't expect the companies to change their stance on xinjiang. likewise, they won't double down on it. they will try to hope this blows over and try to lay low for the most part and hope the consumers forget over the next few weeks and come back to shopping as normal as we have seen them do with past gambles. what we see is consumers have a sharp backlash in the first

couple weeks and it subsides >> that's a great recap of what happened thank you. thank you for the update in terms of what the companies are saying one point of leverage the western companies could turn to is the fact that any moves that they make to reduce dependence on china in terms of the supply chain could negatively affect the workers and people they employ what does that serve as a mi mitigant for these companies it could have a hit on china >> so, i think they probably have less leverage than you think. many of the companies have been closing stores in china. if you look at h&m and indotech,

they have been closing stores in china to the tune of hundreds. to make the argument is tricky to make. what is likely is from the supply chain most large apparel retailers source production from china and to that extent, they are supporting chinese manufacturing and chinese warehouse labor. pulling out of that would be detrimental to the companies and china. >> and to pick up on the supply chain. my understanding is the supply chain is very obscure when it comes to fashion there are so many intermediaries in the processing. it can be traced back to the small factory in whine so for many of the companies, it is quite difficult for them to ascertain the source of the

cotton and where it is coming from do you think many are taking the approach let's play it safe with the lack of transparency from the source >> that is right you can have control over your chair one suppliers, which are the ones you as a retailer have direct contracts with. those supplies are subcontracted out to a tier two or three you have the farmer. the farm-to-shop is difficult to do one retailer which has done it well is primark. working directly with warmers in india and south asia and have 100% trace ability that is hard to do at scale. and h&m works with the better cotton industry to provide quality claims where they cannot do it.

i think generally so far they have depended on the ngos to give them creditedbility saying they don't source from xinjiang. it is really hard to do that at scale. >> makes sense thank you so much for taking the time to speak with us. senior analyst from the retail section of bernstein. coming up on "street signs." the "ever given" has been partially freed. but maersk has a warning we'll give you the latest after the braerk break

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welcome back to "street signs. oil prices are pairing back the gains from last week the "ever given" cargo ship is almost completely afloat again maersk warns it could take months to get the shipping back on track >> reporter: this is a significant issue yfor the team

trying to free the ship for almost a week on the banks of the suez canal they have been able to partially refloat the vessel and the stern is now more than 100 meters from the shoreline. it is a marathon effort. dredges have pumped about 27,000 cubic meter of sand and clay from under the ship. diggers have been excavating the bow and tug boats pushes the sea containers from the final resting place. they hope the high tide will assist with efforts today. it is not clear how soon the waterway will be reopened to traffic or how long it will take to get the "ever given" out with 400 ships loaded with cargo waiting to pass through the ca canal. an investigation into how the ship became stuck is under way with authorities in egypt probing high winds and speed and

pilot error and a possible systems failure as areas of inquiry. all of this is under scoring how critical the suez canal has been and continue to be for global sea trade into the future. on the banks of the canal, dan murphy, cnbc >> dan for us in egypt let's bring in the head of the u.s. securities. thank you for joining us on the show it seems like we have some form of a breakthrough as the boat is almost completely refloated. how much of a lasting impact do you think this whole incident which has gone on for a week is likely to have on global trade and global supply chains >> it is good news they have been able to partially refloat the vessel it has been almost a week. it comes at a unique time for the industry especially for containers

all ships transit through the suez canal 9% of all global cargo moves through there. the biggest is containers with half of all net tonnage being containers through the canal we have seen over the past nine months is the strength in demand it led to a lot of the location where vessels are out of position and boxes in the wrong places and port congestion with liners really trying to get schedules back on track, we have been getting close to that over the past couple weeks or so. we started to see signs that things were normalizing. freight rates have been all-time highs and coming off ever so slightly this situation looks like it will create a lot more of a disruption and dislocation we have seen ships transiting now around the cape of good hope that will add time and more disr disruption

it looks like things will be elevated for freight rate and complexity >> especially with the backlog of more than 300 vessels still waiting to transit the channel we have been watching shipping rates. they spiked throughout the course of the pandemic this will add to that. who bears the cost of that is it the shipping container or the actual shipper itself? is it the actual company that is doing the shipping or the source of the shipment? >> the demand is strong. at the end of the day, the consumer spending is paying for the higher freight rate. in the near term with the added fuel cost, maersk talked about going around the cape of good hope that company will work to adjust

scheduling there will be higher fuel burn and emissions as a result of that that is something that over time will normalizing and eventually gets reflected in the freight rate that gets passed on to the consumer >> omar, about a month ago, we were covering the story from china that china exporters were hit hard by global shortage of shipping containers. where did that stand running into the suez canal blockage story? what is the outlook for container supply in the coming months >> sure. that's been one of the biggest stories and why freight rates have been so high. just as an example from freight from china to europe had hovered between $1,000 and $2,000 per box. now it is up to $8,000 it stayed there for some time. really for the past three or four months.

it has been firm at that level it is really as a result of that lack of boxes being in the wrong places it is because you have demand so strong within asia and north america and europe there has been a box shortage. there were signs things were starting to normalize as ships got into the right patterns there was an expectation as we moved through the summer months that maybe mid-july or august, you could see things normalize with this suez canal situation, that gets pushed back a bit. >> interesting that's really interesting. thank you. i guess one of the other debates that is brought to light over the last week or so as we all have been poring over the suez canal story and the memes. the size of the vessels. a lot of people suggesting the

size of the vessel has kind of outgrown the infrastructure. what do you think of that debate have we gone too far in terms of how big these equipment are getting relative to the size of the infrastructure >> yeah. that's a good point. obviously the "ever given" is one of the largest container ship in the world. 400 meters long. in this environment with the strong appetite for goods, that ship has been filled to the heights. so, when you get into the tight situations like transit into a canal through a strait, the margin for error is minimal. obviously, a lot of ports worldwide have been ramping up capacity in order to be able to unload and load these ships. it has caused delays the overall situation, this

vessel is constructed and well built. it is a good ship. the infrastructure just has been trying to catch up with it as you indicate and clearly in this situation, the margin for error is minimal it has to be watched closely >> omar, thank you very much for your thoughts. obviously a story we have been watching closely it looks like we willcontinue to have ramifications on many industries going forward omar, head of u.s. securities from clarksons let's look at european banks and on how they are looking this morning. the story is credit suisse announcing they will take a significant loss based on exposure to one u.s. fund. credit suisse stock down 13% down was down 14% at one point. that is having an effect on the sector ubs is another swiss bank down 4.4% deutsche bank and germany down

1% others trading in the red. none of these banks, per se, announced any potential individual exposure to the u.s. funds. investors are pricing in the possibility of systemic selling going on here. that is the picture for european banks this morning for more on this particular story, head to cnbc.com. we fill you in on everything that has happened over the last 48 hours and how it is nomura, another bank down 15% in the overnight session, is saying they will have to take losses of up to $2 billion again, due to exposure to one u.s. fund. juliana. over in the u.s., i think it is fair to say, joumanna, investors are watching the fallout from the fire sale on friday closely we are seeing u.s. futures point to a negative start. 85 point drop on the nasdaq.

if these levels hold, s&p is looking at a 20 point drop and dow looking at 170 point drop. contained, but all signals point to a weaker start as investors are cautious with the fallout potentially from the hedge fund. joumanna >> we will find out if there is more systemic risk or brokers will have losses or bigger exposure to the one specific fund archego is a private investment fund that could help. that is it for "street signs." i'm joumanna bercetche along with juliana tatelbaum thanks for watching. "worldwide exchange" is coming up next.

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it is 5:00 a.m. at cnbc. 11:00 a.m. in the sue z canal. here is the top five stuck no more. finally breaking free hours ago. many problems still remain with more than 350 ships waiting to get through. massive shorts gone wrong. how relatively little known hedge fund calling a once in a decade margin call rocked the markets could bleed through you today. and in