>> detective kilcoyne has an interesting theory about the pair, "it all comes down to greed." >> if they had slowed down, not got so many policies on mcdavid in the mill-- multiple millions of dollars, they'd still be out there. good morning welcome to "street signs." i'm julianna tatelbaum these are your headlines the stoxx 600 hits a three-month low while u.s. futures accelerate losses as wall street comes off the worst week since january. european yields spike with the ten-year tops 1% for the first time. and beijing officials warn

of explosive covid outbreak and shanghai starts another round of testing. and emmanuel macron's bid is under threat as the left surges in the next round of assembly elections. >> for the first time, the newly elected president is not capable of gathering a majority of the parliamentary election happy monday warm welcome to "street signs. not so happy in the market stoxx 600 is down 1.5% in the first hour of trade. extending last week's losses the benchmark dropped 4% last week overall the main event on friday which is the cpi report for the month of may in the united states. coming in a lot higher than expected we saw instead of keeping pace with what we saw in april, we saw acceleration in the headline

cpi for may. spending markets in a tail spin. we will dive over into the next session and now filtering to europe the question is will central bankers act vfaster and more aggressive to combat inflation let's look at the split. it is red across the board steep losses italian market down 2% german market down 1.7%. cac 40 down 1.4% the uk market is taking a hit. ftse down 1.7% every sector is trading in the red. more resilience in the defensive parts of the market. food down 14 basis points. telecom and health care. travel and leisure is down more than 3%.

technology also taking a sizable hit down 3%. autos and real estate continued weakness that was the story last week on both sides of the atlantic basic resources down 2%. heavy selling this morning in europe from the individual per sppersp, the down side is down 10%. the food delivery company taking a hit. atos in the tech space is down 10% as well. on the flip side, defense names performing well. we have daso aviation. interesting movers the store y last week was the me in yields. a couple of superlatives

the treasury hit 2-year treasury moving higher last week. that was the story on friday now in europe, the 10-year german bund at 3.5 the one to watch is the spread with italian and german bonds. let's look on the screen right now. you can see spreads widening between the 10-year german bund and italian btp. the european central bank raises rates and puts the economies under pressure from the debt perspective. the euro is trading firmly on the back foot. down more than .50%. sterling is splurging do

dodown .70% we are seeing movement in the yen. that story of weakness is a big one in foreign currency markets. let's get to singapore to see how asian markets are trading. jp has more. good morning >> good morning, julianna. not a strong market for asian markets. of course, coming off the cpi report on friday and stoking concerns about whether or not the fed will raise rates at a more aggressive clip the rising covid-19 cases in beijing prompted new testing and renewed restrictions and heaven forbid lockdowns we saw this trickle into the markets. the selloff hitting the japan nikkei falling 3% at close

kospi down 10% the trucker strike is entering its seventh day. they he will have to cut output because of inventories it is not being delivered by the truckers due to the strike one of the latest south korea industrials. this is adding to more problems for the kospi. we saw this mix with the shanghai falling 3.9%. the boris closing flat in the session. chinese markets doing okay in the session. we want to see it in the currency space it goes back to how this impacts the japanese yen the yen did cross 135 to the u.s. dollar today. in the past, it was highlighted on a weaken yen. this time around, a new concern because the yen continues to

weaken and it means input costs will start to get higher and the cost of building these big exports might go up. it eats into the margins another reason why the japanese stocked were weighed on in the session. the south korea market falling and weakening because of the exports in the first ten days of june fell 13%. south korean authorities will have to monitor volatility and come in and try to stabilize let's look at the hang seng today. trading 3% the index was again falling back wherever you look from tokyo to t'aipei and hong kong, the tech shares in asia, are falling in lock-step with the nasdaq which fell last friday the rising rates continue to

cloud and raise uncertainty. australia is offline today in observance of a holiday. we will see if they react when they reopen tomorrow julianna. thank you. as for u.s. futures, we are looking at losses in the acceleration of the selling on friday the losses accelerated throughout the course of the morning. dow jones industrial average now looking to drop 500 points at the open if the levels hold. nasdaq looking to hold 300 the s&p 500 pointing to a weaker start. the dow fell 900 points on friday or 3% the nasdaq 3%. all sectors ended lower for the week financials was down 6.8% energy was the best performing sector for the week. all of this heavy selling is coming as the consumer price index jumped to the highest

level since 1981 food and energy prices surged 6% drivers included energy which rose 35% and food and evshelter. this is looking to have the fed raise rates. the fmoc will deliver the decision on wednesday with the likely 50 basis points hike. analysts suggest they may deliver a 75 point hike the swiss national bank and bank of england is not expected to raise on friday. in investors will watch for the increase in the yen. luke barnes is with goldman sachs. luke, it is wonderful to have you with us for equity mashrket

an hour in the session how is the fed reviewing the inflation report >> good morning, julianna. thank you for having me on this morning. the reality is the fed will try to get ahead of the inflation picture. that is worsening. we expect over the course of the year to see a number of hikes. we actually think through the june, july and september sessions we will see 50 basis points lihikes and 25 points th rest of the year that is a challenging picture for the equity markets it gives us interesting entry points into the stories whereas much as the discounting message and interest rate hurts the cash flow picture, there is a huge amount of growth that is under priced relative to what the market is viewing. >> i want to get into the opportunities you are talking about p. when it comes to making the

determination now is a good entry point, how do you determine whether we have bottom the selling this morning looks heavy and doesn't look like it will abate >> that is an impossible call to make we have seen external pressures on the inflationary side of things especially with cost of living and energy markets. where we come from, we are long-term minded we are thinking about the valuation of the businesses and looking at 5-year or 10-year cycle. for the fundamentals north of 20% and now trading in many cases half of the multiple we saw six months ago, that is an interesting point. it doesn't mean we found a flaw, but longer term investors, accruing those at this point in the cycle could be a very a

track attractive decision. >> where are these opportunities? >> one area we are focused on is the u.s. bio-tech space. we see change happening in health care driven by technologies and the shift to the precise and proactive delivery of health care solutions to individuals yet, that industry, if we take xpi which is down 40% year to date on top of the 20% decline in 2021. it is down roughly 50% since the start of the 2021. under performing versus the broader market it is not to say the markets don't have immediate challenges. those that are pre-approach, they have to burn cash a third is below cash point. that is a very attractive entry point if you buy into the long-term growth story if you think of the exit strategy, the opportunity where

large pharma can step in, it is attractive at this stage, take the 12 largest pharma companies they have $6 billion on balance sheets in cash position. that is more than the xpi in total. if you look at the below market cap. that is around $500 billion. the large pharma industry could come in and take out a lot of the technologies giving you an interesting upside if you are committed to some of the new and unique technologies. >> luke, you make a compelling case for the sector. there is a lot of volatility in the bio-tech stocks. because of the takeout potential, you see hedge funds get involved here. how do you address the volatility that comes with the names and what is the catalyst for the large pharma names

taking the bio-tech names out? >> on the first question, we have to be long-term minded. we have to be behind the solutions. we have to be critical of the management teams and successes there will be a high fail rate which leads to the volatility. if you have the right management teams to connect with the invai invi inno innovations, that is a space which drives and acceleration in appetite for it. for the large pharma companies facing the changes with the solutions coming throughtechnolo transition away from the one size fits all solution in health care they have been in under the last couple decades. if you see the weakness where

the multiple to acquire the companies could be the catalyst. it doesn't mean the volatility exits. that will drive the terms in the market the longer term opportunity is there. >> luke, a compelling case for bio-tech what about investing in china? what is the strategy with weakness and the covid story seems to be getting worse? how are you thinking about investing there? >> i think the short-term picture is challenging in all likelihood, we are seeing a speedy economic recovery until 3q at the worst. in terms of the longer term opportunity in china, this will be one of the fastest growing economies globely.

if you look how we position ourselves, china is trading ten times less earnings. just to be clear in terms of where we see the opportunities, we think companies are aligning to the longer term economic ambitions. uplifting the areas like software and hardware and the clean tech solutions and china's bio-tech space with the capabilities could be attractive in long term we have to be thoughtful of the businesses we're investing in. if we take the risk, the longer term opportunity is significant. >> luke, how are your clients feeling about china? what is investor sentiment toward the region? a lot of debate if it was investable at all. >> for sure. a bifurcated along the base within that, recognize the

gro growing relevance along the portfolio. if you look at the benchmarks that agrees the last three years, that continuation in the next 5 to 10 years, means china is the next capital market in the world. they need to build a dedicated stand alone in china to build the asset class within the portfolio. what is happens is the complexity of china and people think are investing in the markets outside of china that is the relationship with the emerging market companies outside of china and relative to to what is happening in china over the last couple of years. if you think of where growth can come from over the next ten years. >> luke barnes, thank you. to round out the conversation in china. china warned of explosive

outbreak in beijing. 150 cases are believed to originate from a bar in the neighborhood known for night life and shopping. we got video in that the bar outbreak is still risks spreading to the community beijing reports 45 new local cases on monday as of 3:00 p.m two districts have closed entertainment venues as a result and many neighborhoods under lockdown mass testing in shanghai after a spike in cases which is linked to a hair salon. i want to look at basic resources. the stocks in youeurope that ar exposed and sensitive to the china story. i can see we are seeing a pull back in the basic resources names. down 2.7%.

glencore taking a hit as well associated with the covid outbreak in china. and we have a 4% loss for the asmi and asml. stmicro down 4% and heavy selling in china of course, this will likely be a combination of investors pricing in the impact of the lockdowns in china and the covid story there. also the risk of recession as investors price in a more aggressive interest rate hikes from central banks around the w world. as for oil markets, we are looking like this. wti down 2%. $118 brent down to $119

coming up, we will talk politicians. emmanuel macron faces a tough battle for the parliamentary majority after the strong showing for the leftist alliance we will have the latest after this break

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welcome back to "street signs. i want to take you to the united kingdom with the signs around the northern ireland trade situation. the uk today expected to layout plans to override some post brexit rules around northern ireland trade. a tense issue that risks throwing the relationship with the eu and uk into turmoil we have fresh lines here let's bring you the latest uk foreign secretary said that it was spoken to the prime minister the preference is the negotiated solution 20 minutes ago, boris johnson

said we have to fix the northern ireland protocol he said trade wars legislation would be a gross overreaction. now we're hearing from ireland this marks a low point in the brexit and not in the best interest of northern ireland that line coming through from ireland. we will keep an eye out for further development. as for uk markets, let's look at uk markets down 1.5% for the ftse. the data comes ahead of the bank of england data on thursday. credit suisse is on a watch list by the conkconduct authori. it is under tighter supervision. in the letter to the bank in may

asked senior management to explain how it plans to improve accountability in the statement to the ft, credit suisse doesn't comment on conversations with regulators. it is executing the strategy to strengthen its business. easy jet cut its schedule to 40 flights a day to avoid the repeat of disruption which left thousands of customers stranded. they said the cancellations were preemptive easy jet shares down 3.6% now. a broader pull back in the travel sector right now. klm down 5%. sls having issues there down more than 16%. accor down 3%. investors are jittery with the possibility of recession and slowdown in economic growth

becomes more real as the need for interest rate rises. coming up on the show, wto warns of a looming crisis of food and energy dominating global concerns.

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welcome back to "street signs. i'm julianna tatelbaum and these are your headlines the stoxx 600 hits a three-month low as wall street comes off the worst week since january. european yields spike with the 10 year hits a high and the 2 year tops 1% for the first time since 2011. beijing warns of the explosive covid outbreak saying the city is at a critical juncture and shanghai starts another round of testing. and emmanuel macron's bid for majority is under threat as the left surging in the assembly elections. and u.s. futures let's see how they are trading

we will take a look at u.s. futures in a moment. we are seeing red across the board. further losses and after last week's step selloff. the massive surprise on friday in the form of the cpi report coming in stronger than expected people were expecting the cpi regard to show inflation running at the same pace as april, but instead an acceleration. far from peaking let's look at forex markets. the euro down to 1.0480. sterling is down .72%. european markets let's look at equities we have red across the board for european equities. much like in terms of the weakness in the u.s. futures we have red across the board

dak down it 2% cac 40 down 2.4% when we talked about the china lockdown story, we saw luxury names under performing that is the reason for the cac 40 u.s. futures it is important to look at where we stand dow jones industrial average indicating a 600 point drop at the open nasdaq looking to lose 360 points for tcontext, the dow jones industrial average dropped 2.7% lower. steep selling on friday. french president emmanuel macron is facing a battle for majority after the first round of the election. macron's coalition came neck and

neck with melenchon's alliance he is projected to win 260 and 295 seats in the assembly according to projections with 289 seats needed for outright majority melenchon claimed that macron was unable to gain majority in his second term as president >> the truth is the presidential party was defeated in the first time in the republic and the newly elected president is not capable of gathering majority. >> charlotte joins us now with more charlotte has been covering the whole election cycle charlotte, the election was just seven weeks ago and it feels as macron is in a significantly different situation here with the majority potentially challenged what's changed with the presidential election and first round of voting?

how would you characterize the chances of macron losing the majority >> it was harder for him to win this presidency than last time it is harder for him to get majority in parliament this time around the majority is where things are tougher. he had the majority to push his agenda are forward this time it is difficult and the challenge did not come from the far right like the presidential election like he faced marine le pen, but it will be smaller the main challenge is from the left the union behind jean-luc melenchon. the third candidate in the race. they gathered with him to try to be the main opposition in the election he won in his bid where they came neck and neck with the votes. what does it mean for seats for the next week or so before the

second round next week it looks like emmanuel macron's coualition will beat the majority whether they have the majority fully? we don't know. if he has minimum of votes, he won't have it. it will be difficult for him campaigning this week is crucial. and the prime minister was campaigning in the election and saying give us majority otherwise there will be great instability in the country >> we have one week mobilization ahead of us. one week to convince one week to obtain a strong and clear majority only this strong and clear majority will allow us to respond to the urgent needs that weigh on the daily lives of the french and meet the challenges of the future. in the face of the situation in the world and the war at the gates of europe, we cannot take the risk of instability. in the face of extremes, we alone are carrying out could

hear answer and clarity. >> a record beabstension with me than 50% in the war in ukraine in the background. that is a key issue. some of the ministers are at risk themselves. if the ministers fail to get elected, they he ave to leave te government emmanuel macron could lose in the second round of the election all of this to watch out for it is hard to govern france and harder in the next five years in macron fails to get outright majority. >> charlotte, thank you for bringing us up to speed. i look forward to the coverage of the second round. i want to take you back to china. we have a few more lines coming through on the situation in

beijing which is one i certainly would keep a close eye on with this bar outbreak. beijing reported 228 covid cases now in the bar cluster which beijing government spokesperson said still risks spreading to the community. as for total cases, since april 22nd, beijing officially reported 2,059 cases as of 3:00 p.m. on monday, beijing reported 35 new local covid cases. this is the one line that really stands out the health official from beijing said this is now at a critical juncture one to continue watching closely. on the geopolitical front, china complained about the

american arms package for taiwan criticizing the efforts to destabilize the region u.s. secretary lloyd austin urged beijing against provocative actions. beijing is standing firm >> translator: in case anyone dares to split china, we will not hesitate to go to war and fight to all costs to the end. this is the only choice for china. here, i warn the taiwan and forces behind them that seeking to split taiwan from china is a dead end which is a delusion to be dependent on foreigners will never work and should stop the day dreaming >> the commission president says the response to the membership bid should be reviewed this

week leaders of france, germany and italy are planning to meet with the ukrainian president in kyiv this week as russia pushes on with the offensive in severodonetsk. the head of the trade organization warns global trade is facing a poly crisis as she opened the 12th minister conference the summit in geneva marks the first meeting since 2017 along with global supply chain set to dominate discussions speaking at the launch of the summit, the secretary-general said had this is to help through a series of crises >> the world has changed since the last one i wish i could say for better, but it certainly has become more

complicated. we are still trying to cope with the pandemic which cost the world millions of lives. we have international security chris was the war in ukraine we have a major food crisis and energy crisis and an ongoing climate change crisis. this polycrisis is really unprecedented. what is very, very central to all of this is that no one member, no one country can solve this crisis on its own >> the wto has urged countries not to impose further bans on food and fertilizer amid the supply chains caused by the invasion of ukraine by russia. the group is seeking a deck la ration to keep the food prices from rising.

peter alexander joins me now thank you for taking the time to help us understand how bad the situation is and what the wto could be doing to alleviate pressure in the food system. from the historical perspective, how severe is the food security crisis compared to other crises in the past like this? >> i think it has the opportunity to be extremely severe you were mentioning fertilizers. that is the biggest risk we have at the moment. the energy price shock we're experiencing and feeding through to fertilizer prices and that feeding through to food prices exacerbating that is the loss of supply from ukraine and potentially from russia of wheat and other commodities that they are producing. all of this together is really feeding into the large increases

in food prices i suspect we will still see further increases over the coming months. that, obviously, has really damaging consequences for people who are on the lowest incomes. >> so, fertilizer. you highlighted as the specific area in food chains we should be targeting when it comes to trying to address the issues what can be done to alleviate the pressure that fertilizer producers that goes into the price of fertilizer? what can actually be done? >> obviously, related to the wto, we need to keep global trade and foods and fertilizer operating as normally as possible and not see imposition of trade bans as we already are seeing from india in terms of wheat and malaysia with chicken. we need to keep food markets and fertilizer markets operating

freely i suppose to some extend your question suggests with we need to put in place market and other measures to return us to the status quo before. maybe that is not necessarily the right thing to do. the food system was creating lots of negative consequences in terms of epidemic and greenhouse gasses maybe we need to think about putting if place in a place fro before bigger welfare payments to afford more food which is more expensive and avoid the damaging congr concerns by helping people to afford the food rather than s subsidize. >> i know this was talked about through the pandemic and now like the one on the back of the

war in ukraine to present an opportunity to reset the systems. you mentioned india and india has caught flack for banning the export of wheat. in india, of course, defends the decision saying they need to secure food for their own population is that not a rationale view how do you counter that for those countries that need to secure their own food supply >> government has an obligation to their population first and foremost i think it is probably self defeating. india is trying to control the price of wheat in this case and food commodities by imposing the export restrictions. all of that fuels the global price of commodities of wheat which then flows back to themselves as well

we witdo need to have a more coordinated response to the crises to avoid that behavior and have the outcome that is beneficial to everybody. >> peter, when you look back at periods of social unrest, a lot of time they were preceded by cost of living crises and food security issues. when you look around the world, where do you see social unrest and protests and this pote potentially getting out of hand? >> to be honest, i'm one of the few people who don't see that sect portrayed as strongly. that link is less strong than some saying. in terms of where the consequences will be felt is

obviously in the progress of society globally that doesn't mean there are poor people in every country. there are inequalities in every country. poor people in the u.s. and uk which are still being harmed by higher food prices and the consumption that goes with that is in there. if they are eating less fresh fruit and veg, they have more damaging consequences. >> to wrap it up and bring it back to the wto meeting this week, what would a successful outcome look like in your view >> coordination so we don't see these copycat bans like we see

in india as we mentioned already. we want to see this free market operating as it should that's one thing in terms of what i was saying before with ensuring food is affordable and that is outside of the wto it is something that the u.n. and the world food program and organizations like that could help governments put policies in place to achieve that. that will require some element of cooperation with countries. >> peter, thank you for taking the time to understand the picture around the wto conversations. peter alexander at the university of edinborough. coming up, regulators eyeing new rules for the volatile sector we'll be right back.

welcome back to "street signs. let's turn to cryptocurrency we have seen volatility. bitcoin down 12% in the latest trading session to over $24,000. we are seeing a pull back in the other cryptos. dogecoin and litecoin trading lighter this morning the focus on crypto regulation is picking up amid the collapse. >> we have talked about crypto regulation for some time they are starting to get serious in 2019 with the libra launch and facebook's failed crypto project. ironically enough, a stablecoin project. over the past month with the collapse of luna or terra, there has been more urgency around it. that is why you see the uk come

out and talk about a how should we handle a failed stablecoin project or we see the comprehensive bill out of the u.s. >> very pleased to say arjun joins us now you have been busy writing this morning about the company called celsius. tell us what celsius is and what has happened and why it is driving bitcoin down this morning. >> celsius is the crypto lending company and effectively it uses to deposit crypto and the company lends it out the resulted revenue results in yields for users this is promising yields of 18%. that is a red flag for many. we have seen yields have been this high and there has been concern of the stability of companies offering yields. celsius is moving to withdrawal and swap on the platform citing extreme market

conditions we have seen a huge drop in the price of many coins across the board over the past few months the company says it is taking action to be in a better position to honor the withdrawal obligations from users if we look at the cel token which is the cryptocurrency, it is down 50%. down 90% over the last year. at this point, we are trying to work out what the issue is at celsius. it is unclear so far there are a couple of thoughts as we spoke back to the people over the last two months the stablecoin that collapsed and brought down the sister token luna as well there are suggestions that perhaps celsius was exposed to some of the fallout from that and is now facing potential inso insolvency there is a question if this is a cash flow issue for sells sels

sells celsius. we have seen celsius sell down the assets to raise money to honor the withdrawals or a case where they don't have enough reserves to deal with the market volatility as well those are the two questions that we are trying to figure out at the moment and whether contagion spreads. julianna, we are in a moment where is this another luna or is this contained quickly >> arjun, why are we seeing this selloff with cryptocurrency? we have the board up showing the cryptocurrencies tradingsharpl lower this morning >> first through, the celsius issue with the concern of how much contagion does this bring will they be forced to sell the cryptocurrency and dump bitcoin

into the market? that is something that was a concern with the terra usd and luna they had to sell off the bitcoin and the concern was the dumping millions off billions of bitcoin to market and how much pressure is that putting on the bitcoin price as well. the second issue is inflation. a fed rate hike and the risk asset selloff in particular with the nasdaq one of the things we have seen is bitcoin and the crypto market related to the movement of the nasdaq that is continuing with the nasdaq down shoarply. you see that filter through to the crypto he mmarket >> arjun, i appreciate it. thank you. let's turn to equity markets. two hours into the session the losses are sticking.

the cac 40 in france is down 2.4% we are seeing heavy tech name selling. and the worsening covid situation in china and linked to the interest rate outlook and the impact on the economic growth the dak down 2%. ftse in italy down 2.4%. looking at fixed income market 10-year treasury bund is down this morning 1.5%. turning to treasury markets. i want to give you a look at treasury yields. we did see a brief inversion with the 10-year and 2-year this morning. that is something that investors are watching this morning. on friday, we saw a sharp move higher in the yields curve

u.s. treasuries are moving higher a flattening of the yield curve, but the whole curve moving higher we saw this morning the 2-year and 10-year invert for the first time since april that is something to watch throughout the day as for wall street u.s. futures looking like this dow bounced off the lows this morning and looking to open sharply lower by 600 points. nasdaq looking to pull back 300 at the open. s&p down 90 points the fmoc meeting on wednesday this week. that's it for the show i'm julianna tatelbaum "worldwide exchange" is coming your way next.

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it is 5:00 a.m. at cnbc global headquarters. here is your top five at 5:00. stocks set to sell after the friday market meltdown futures down sharply right now. investors still digesting the inflation report showing prices climbing at the highest level in 40 years. attention turning to powell and the fed meeting starting tomorrow. as stocks fall, bond yields are surging with one hitting the highest level in 15 ye