i don't know if anybody knows -- aside from thompson -- where it went. >> do i think there's other storage units out there? if i was a betting man, i would say i think there probably is. -- captions by vitac -- warm welcome to our special coverage of the italian elections. joumanna bercetche and myself, steve sedgwick, are live in rome he with insight and analysis these are your headlines center right coalition claimed victory with 44% of the curren vote the brothers of italy topping the table paving the way for giorgia meloni to become the country's next prime minister. >> translator: the great goal we have given ourselves as a political force was to ensure

italians could be proud to be italian. be proud to wave the flag. this is our task and it is the one we will fulfill if we are called upon to govern the nation. the yield on the 10-year bond edges to the ten-year mark since 2013 all ahead of the ecb rate hikes and tighter market. and turmoil intensifies with the 10-year gilt yield at the highest level since 2008 unileve vrks eunileve rcee after five years at the helm

no great surprises pretty much as you called it from your travels to sicily. well played. the polls got it right giorgia meloni on track to be the next prime minister of italy with the center right coalition led by brothers of italy party on pace to win majority in both houses of parliament meloni would be the first female prime minister the center right coalition is on pace to win a majority in the both houses of parliament taking 44% of the seats meloni's brothers of italy got over a father of the vote by itself the five star movement and pd are the opposition parties taking 19% and 15% of the vote

your reaction? >> i want to take a look at the italian yield reaction i want to point out the progress it has been for fratelli this was a party founded in 2012 it has post facist roots 1 in 4 people have voted >> there was one party in unity government there was one party to enact policies of the last 17 months in july and last couple months as caretaker fratelli >> benefitted from the opposition party and new face as you have been saying which is common in italian politics it comes and goes. >> let me look at markets. as steve and i were saying, the

exit polls were accurate to a point as to how this would pan out. center right coalition looking to take 45% of the total national vote. the reaction so far has been pretty subdued i would say overall. you see the reaction across italian assets and banks reacting we have been saying italian banks have been resilient with the capital position the likes of the bank in focus given the state ownership in the bank up 1.3%. >> you and i have left our broker and trading days behind we had strong italian connections over the years you've been a fixed income trader and broker at goldman why would you necessarily buy or

sell anything? we expected x. it happened pretty much as expected what is the change that now allows people to buy or sell the btp or underlying equities >> you sold on what you said, but buy on what she does >> she won't have another formed government for another three weeks. >> because of the size of the majority, the process will be fast there is a clear mandate for giorgia meloni to become the premier. remember, you have to go to the president first. he gets the mandate for the government she will present to the president her appointments >> he's done it with finance ministers before >> that is a key point for investors, who she appoints as finance minister and she could go down the technocrat route. and what they decide do with the

budget, they have to write the budget law by the end of the year whether or not they want to be fiscally splurging -- >> i love it fiscally splurging i was asked by a guest this morning, his words, not ours that salvini was toxic for voters that already, to me, makes italian politics which are stunningly interesting fascinating because if she doesn't go with salvini in a key post and you pointed out, he covered going back to the interior ministry to cover security apparatus and immigration issues, then it is seen as a slight to him. if so, does that mean league is

at odds with the new government? >> they have been remarkably disciplined. >> on the center right >> the coalition has done well unlike the left. the left had an opportunity for the center left which is led by the democratic party and pd to align with the centrist with the former party that didn't succeed. that is one of the reasons why the left and center were not able to put up a united front versus the center right. and the election system. >> i have another theory when i spoke to the leaders of the center and center left parties before the election, i got the impression they knew they would lose. that is not rocket science they were already planning

strategy for the san opposition it was a quest to thwart giorgia meloni on the right. it was part of my thought process is that they didn't go down the coalition route because they thought why do we need to do this now? at a later date when fratelli is weaker, we can oust the center or center right. we need to discuss lots of issues about the relationship with europe as well. julianna, this is "street signs. if it was "squawk box," i would talk for hours this is a big day for investors after the week last week which saw heavy selling we have a picture of european equities which are finding stability this morning ftse mib is up

cac 40 in france is seeing green. we have red in the swiss market. fairly flat start to trade for the uk and german markets. this comes after massive selling last week. stoxx 600 returning to the low for the year losing 4% for the week with heavy selling on friday in particular the big story this morning i would say from the market perspective is in forex. sterling has fallen overnight against the dollar now down 1.2%. we were down nearly 5% in asian trade. 1.076 right now. all of this after the uk government announced massive tax cuts on friday to bolster the economy. what actually happened is those tax cuts driven fears around inflationary pressure. what it means for the payment

crisis and what it means for the bank of england. could we be looking at more aggressive rate hikes? that is a feature of today's show and no doubt of your trading day. we are also seeing axlesc action elsewhere we are watching euro and the dollar trading lower well below parity. dollar finding strength against the swiss franc. the u.s. dollar and the china yuan that is trading lower down .20%. we will be joined by a strategist later in the program to talk about these moves. we have survey data crossing the wires. i'll get to them in a moment

the german 10-year treasury trading 2.09%. i start there because we are looking at the etho survey the gilt yield is trading down 2.5% we saw business morale fall further in september the survey crossing the wires now. we have the business climate for september coming in at 84.3. in terms of the current conditions index came in at 95 below expectation. finally the expectation index which is one of the more forward looking parts of the survey. 75.2 for september incredibly low and below 78.8 which is expected. let's bring in the president of ifo. thank you for being with us,

professor. where are the most worrying signals coming from the german economy? where is the most pain felt? >> i would say the most pain is in the service sector at the moment the service sector was divided this year and the sector is affected by the coronavirus pandemic and recovery. that kept up the economy in the first half of the year now a reversal here. these sectors are joining the rest in pessimism. that's why we say it's an across the board decline. >> professor, how does consumer confidence stack up versus business confidence in germany >> well, consumer confidence is declining and reflecting the burden of higher energy prices and heating. consumers spend more for heat and electricity. at the same time, prices

continue to rise it is a stagflationary shock companies have fell filled books. they face limits are production. they have very high costs. it's a difficult situation and there is little relief at the moment >> professor, looking at the manufacturing sector here, the survey suggests the index fell and tangible countries less satisfied and worried about the coming months. what are manufacturing business leaders seeing in the way of supply chain issues? are we seeing respite there? if i look for any bright spot. >> that was something many people expected, but we don't see it we see it slight worsening of the supply situation 2/3 of the companies say they don't get the parts they need.

we had in the last months, we had negative expectation the current business situation was keeping up more or less. this is now changing companies are telling us the current situation is getting worse. in particular in the chemical industry, in the paper industry, maybe that is not surprising these are the energy intensive sectors and they are struggling with the costs. >> exactly the chemical sector in germany, you could argue along with the auto sector, that is energy intensive. the energy situation precarious for the last surveys. looking at the market reaction, do you think financial markets are complacent about the risks facing this industry >> certainly for production in germany, the risks are tremendous now some risks may disappear

one risk being the german government introduce a levy on gas. a levy that hits other companies. everybody is facing higher gas prices if there is a higher levy, that is in terms of competitiveness the levy will probably not come, but still there is a lot of uncertainty about the outlook and the medium-term outlook. the likely scenario is one where energy costs will be permanently higher at least for a couple of years. that means the chemical industry will move production to plants in other countries, in particular in the u.s. and asia. that is bad news for germany. >> fascinating long-term implications there professor, earlier this month in the reaction in the central bank

decision to hike rates by 75 basis points, you said it is a step in the right direction. can you review that grim outlook for germany and do you stand by that correct move for the ecb to hike aggressively here >> i think it still is we have to see that this is not a crisis driven by a lack of demand it is a crisis driven by a lack of supply. prices are rising. so it is not that kind of recession where companies cannot sell their goods it may become that when consumers face problems. currently, companies have well filled books they would sell if they could get the parts. it continues to be correct for the ecb to tighten we see the euro tumbling relative to the dollar we see inflation rates rising.

i think it is the appropriate policy if you look at real rates at the moment, they are negative. if the ecb wants to have a contractary impact, it needs to continue raising rates. >> professor, thank you for joining us president of ifo coming up on the program, unilever ceo announces his retirement plans and the stock is trading higher. we'll be right back.

welcome back to the program. european equities are holding steady this morning. we are seeing red for the most part after last week's catastrophic selling, and heavy selling on friday, things are calm at the moment ftse mib is trading higher after italians went to the polls yesterday with the center right claiming a victory this morning.

we are seeing under performance in the swiss market down .60%. steady trade for the uk and german markets after central banks hiked rates. markets pricing in more hikes in the future of course, the big news from the uk on friday what was called the mini budget ended up bigger than some would suggest. let's look at yields gilts moving higher. 10 year is trading at 4.15%. german market seeing a 10-year bund trade at 2.08%. we have the italian trading at 0 0.84%. turning to sterling. overnight, we saw sterling hit

the lowest level versus the dollar on record dropping below 1.04 now down 1.2% to 1.0727. the chancellor in the uk interviewing and suggests more fiscal stimulus could be on the way. tax cuts announced on friday driving concern of the inflation out outlook in the uk. warning of payment crisis at the macro level and raising prospect of more aggressive rate hikes to rein in the inflationary pressure a lot of questions on the future of the uk economy. we will analyze more later in the program. let's turn to the big movers in equities. credit suisse is looking at other goals. the bankdivestitures

it is looking to strengthen the wealth management unit ing giving a little bit of signal of october. credit suisse shares up more than 1%. and unilever's ceo will retire at the end of next year the board will search for a replacement of alan jope shares trading 1.6% higher this mor morning. charlie huggins talks to us about this charlie, major news from unilever >> it seems so change was desperately needed at unilever people warranted wanted to see changes. they were hoping to see an announcement that the board is

now starting to have influence on the company >> when it comes to alan jope's successor, do you have any suggestion of who would take the helm they look to consider internal and external candidates. >> i would think they are likely to look externally you look at unilever issues the last few years a few have been self inflicted there is a business which has extremely strong brands and emerging markets performance over a number of years prior to jope's appointing margin of pressure they made big expansive acquisitions dollar shave club in 2016 which hasn't really delivered much they see competition increase from smaller brands that have come on recently the world is a tougher place for

unilever their execution hasn't been great. the bid for gsk consumer business which they offered $50 billion and now valued at $25 billion. half of what unilever offered. i think that was probably the final nail in the coffin for jope >> on the wake of the news that shook the investment community in unilever, alan jope focused on running the business better and not consider major m&a. assuming that is the next issue for the next leader, what does it mean about the helm if this means running the business bert

and better and focused on growth >> this is a huge business unilever is a huge business. over 400 brands in over 190 countries. to be honest, i don't think it needs more acquisitions. it needs to slim down and look at brands and split out foods business and improve operational execution within the company increase autonomy. increase speed and agility these are the things unilever, as you say jope announced the organizational changes to try to do some of this. it all has come too late words are all very well. they need someone who can deliver. whoever comes in to take over from jope should have the operational background and execution. that is what unilever needs. it probably doesn't need to

acquire more businesses and become bigger. focus on the basics. >> charlie, thank you so much for jumping on really great to get your insights charlie huggins at wealth club joumanna, back to you. yes, coming up on the show we are live from rome and digesting the results of the italian election the center right has achieved 45% of the vote putting giorgia meloni in position to become the next prime minister and the first female prime minister in italian history. we'll be right back.

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a very warm welcome to the special coverage of the italian election we are live from rome with insight and analysis these are your headlines the center right could an coalition claiming victory likely paving the way for giorgia meloni to become the next prime minister. >> translator: the great goal we have given ourselves in life as a political force was to ensure

italians could once again be proud to be italian. be proud to wave the tri-color italian flag this is our task this is the one we will fulfill if we are called upon to govern the nation. the yield on the italy 10-year bund is highest since 2013 as they face up to more ecb rate hikes and tighter credit market. the 10-year gilt yield at the highest level since 2008 and unilever ceo alan jope will retire at the end of next year following five years at the helm of the consumer goods giant.

we've got fresh economic forecast comes in from the oecd. i want to bring them given the changes over the last weeks. global growth still expected at 3% it is now projected to slow to 2.2% next year that was revised from 2.8% predicted back in june in terms of the breakdown, annual gdp expected to grow sharply in the united states next year and a .25 in the euro area there is a risk of output decline in several european economies in the winter months as for inflation, the headline inflation is expected to ease to 6.5% next year in the g20 economies and to 4% in 2023. we do have the oecd

secretary-general speaking in paris. i believe we can listen to what he has to say. >> we expect gdp to grow to modest 3% in 2022 and weaker 2.2% in 2023 this is well below the price of economic growth projected prior to the war and represents around $2.5 trillion u.s. in foregone global output in 2023. this is weakness in combined manufacturing and sagging consumer confidence. we project inflation to remain high and subsiding in economies in 2023 and through 2024 in the g20 economies, it is expected to average 5.2% in 2022 and still be at 6.6% in 2023

this challenging economic situation requires bold, well designed and well coordinated policies high inflation and energy crisis are urgent we also need to remind -- >> let me jump in here and pick up on the last point from the secretary-general around the policy response. a line in the report that fiscal support is needed to cushion impact of high energy costs and households this should be concentrated on the vulnerable through incentives to reduce energy c consu consumption. on friday, the uk delivered the mini budget and did not focus on this prescription. instead of the most vulnerable, the uk opted for the trickle down approach and delivered the tax cuts -- plans to cut taxes

extensively to help businesses and help arguably the upper end of society rather than focus on the most vulnerable. we all know what happened since then the pound has dropped to an all-time low versus the dollar this morning on that note, let me hand it back to joumanna who is in rome. joumanna, you raised a fascinating point on twitter this morning tweeting how giorgia meloni is looking at the uk and taking it as a cautionary tale >> perhaps that is one of the questions we have been talking about all morning, steve and i, discussing the outlook for the government going forward. this is a coalition of three parties. giorgia meloni, the leader of the brothers of italy party, is on track to become the next prime minister the center right coalition the silvio berlusconi party and

lega party taking around 44% of the seats in the chamber of deputies and senate. and in the speech following the release of the first exit polls, meloni said she would lead the government with the aim of uniting the country. >> translator: if we will be called to govern this country, we will do it for all eitalians with the goal of uniting its people and stressing what unites rather than divides. the great goal that we have always given ourselves in life as a political force was to ensure that italians could once again be proud to be italian and proud to wave the tri-colored italian flag this is the task it is one we will fulfill if we are called upon to govern the nation. in the meantime, the senior member of the democratic party expressed disappointment, but vowed to be a strongparliament >> in light of the information

we have seen to now, we attribute the victory to the right taken over by giorgia meloni this is a sad night for the country. this is not a positive outcome we are the first opposition in parcliament and second oppositio in force we will have a great responsibility >> so this right wing coalition promised stable governance divisions with the three parties. berlusconi's forza party and the sentiment in the past is deepest division coalition party salvini has caution over the measured impact berlusconi faced outcry on

friday when he said putin invaded ukraine to install a government of quote decent people >> a lot to discuss here i'm happy to say the executive vice president is joining us we have been talking about loads of the likely implications of the center right coalition government and one of the most important ones is the relationship with europe i wonder to what degree the euro skepticism that previo previously espoused by berlusconi and the rest, there is a strong support the last i checked from the italians to be part of the euro more than 70% why does this skepticism resonate

>> i think meloni was able to get past the rhetoric. for years, she campaigned on the platform of critical and arguing from time to time in favor of the italyexit from the euro. now she changed her position reflecting in a sense this strong support for the eu. the problem she may have is she will find a way of establishing working effective relationship with the eu on many difficult fields including economic policy. her coalition and her party has always been in favor of different rules. particularly critical of budget rules of the european union.

this may cause friction, especially if the economic situation worsened and the new government finds it difficult to cope with the energy crisis. >> yeah. there's been talking potentially of them putting in a foreign affairs minister he is a senior figure and berlusconi's right-hand man. is that reassuring from the policy perspective or do you think the comments from mr. berlusconi on friday suggest that russia were trying to replace mr. volodymyr zelenskyy with decent people unnecessary intervention given that forza is closer >> i think this would be reassuring because he was the president of the european

parl parliament and has always taken positions from berlusconi on matters of foreign policy. i think he could be one of the figures accepted by the president of the republic. of course, there could be other options, including, for instance, the experienced diplomats. what is clear is the president or public heed several times try to have a pro figure to be seen as reassuring to brussels. >> regardless of the longevity, they promise to come in and be in for five years. do you think the ingredients are there for this government to dissolve in a very short timeframe? i know certain members of the

election were all preparing for that >> the biggest hurdle would be, no doubt, the evolution of the economic situation if the economic situation worsens, this government, i expect, will come up against many obstacles and create a, of course, discontent in the electorate and eventually prompt the government to, let's say, for instance, try to make the scapegoat. not only the center right, but possible other governments this could be a major factor then, of course, the parties belonging to the coalition which applies to many and including foreign policy and problem the

sanctions against russia if it appears the situation is deepening energy crisis and the electorate feels strongly the impact of the sanctions. this may induce meloni to make concession to the more accommodating position to russia favored by the lege. >> and there are forms going ahead under draghi as well do you think we will see a standoff akin to hungary and poland if indeed as you said in the previous answer the economy becomes the issue and the government tries to use the eu as a scapegoat do you believe $200 billion is at contention? >> the situation is different compared to hungary and poland because nobody expect the new

government to embark on same policy violating the euro which hurt hungary and poland. in particular, meloni and salvini have been against the program of mobilization. they are in favor of assets. they are very much against the liberalization of sectors. this is one key element in the draghi government or lege. preventing draghi from implementing them. there is the big problem in italy. all of those nations measures we to be implemented and the new

government will have to cope with them. >> back in 2018, i actually had the chance to interview the then p leader of the five star momentment who had a stunning defeat in the election yesterday. will not feature in the next parliament that aside back then, they were part of the anti-establishment drive in italy. they came in saying we want to renegotiate terms of the eu. now you have several lawmakers who want to renegotiate the several milestones for the recovery funds disbursements none of the parties have been successful in negotiating with the eu do you think meloni will suffer if they are unable to extract conc

concessions? >> i expect. i don't know when they will start pressuring italy to cope with the reduction this could be a serious problem for us and the new government will have to show the capacity of keeping public finance under control. it is always a challenge it will be more a challenge for those parties than in the past and recently shown different attitude so, i think this could become a source of friction with the eu >> all right we will leave it there thank you so much for giving us your perspective a lot to digest there going forward.

thank you so much. we will take a quick break just ahead, the pound closer to parity against the dollar with the strict budgets sending shivers through the forex market

welcome back to the program. markets have been open less than two hours and what a session it has been you can see we crossed into positive territory for the cac 40 and dax gains up more than 1%. 20 minutes ago in the red. some positive mostmentum brewing ftse 100 down 11 points. swiss market seeing further selling pressure as the spanish market overall, sentiment has turned positive will that stick in we will see turning to the european bond market, yields are turning higher

italian 10-year trading 4.7% higher we are very closely watching gilt yields to the highest level since 2008 4.15% there. the 10-year german bund at 2.1%. now to the forex markets sterling down .90% we were down 4% against the greenback overnight as sterling hit the lowest level against the dollar on record euro at 96.85. let's bring in the currency expert head of the strategy at citi so pleased you could join us this morning let's kickoff the action in sterling are we in a currency crisis in the uk >> i think we are. look, when we talk about

currency crisis, we talk erosion of confidence to the sovereign country. i think what we are getting right now and markets are moving in a reasonable direction. the uk announced massive fiscal stimulus which has been followed by tax cuts. and firmly tax cuts will have a massive increase in gilt issues. this is happening at the time when the bank of england is going down the route of quantitative tightening. you put that together with the fact that we're already in a very high inflationary environment, the boe has tightened monetary policy and likely to tighten even more. i think you get all of this

confluence that leads to the lower confidence and you get the tax and currency crisis. >> do you think the government miscalculated or misjudged the reaction or was this the reaction they were expecting >> i frankly don't know. my best guess would be they have probably misjudged that. i don't think they were expecting that kind of reaction. i think the hunch of the argument is we are expanding fiscal policy to produce growth. that being said, one needs to be very careful doing that with the imperial evidence in doing that. there is a certain level of growth one also needs to be careful how this fiscal stimulus is being

financed >> there is talk this morning about a potential intermediate over the rate hike will we get that >> the likelihood of us getting that is increasing that being said, for it to apply a meaningful temporary relief, it would have to be big. my guess is at least 100 basis points or higher potentially, we will see a recovery in various sectors. make most mistake. 100 basis points will send the economy in a tailspin. eventually it will be negative for the exchange rates we are in the situation right now where we will see.

>> 100 basis points emergency rate hike from the bank of england sound extraordinary. it is hard to imagine doing anything but sending the economy into a tailspin. what can restore the currency here and if the answer iss nothing, where is currency heading? >> i would venture a guess that the government could potential ly think the chancellor's comments on sunday suggest that he would like to double down on the fiscal so, i don't think this is very likely yes, they will keep hiking rates and that effective intervention

is not really the possible option the treasury is running low. i think really the only way out of it is selling keeps depreciating i think the dollar will trade above and for sterling, the forecasts are subject to down side risk. >> thank you for your analysis with us. i appreciate it. that is it for "street signs" this morning that's it for me in the studio julianna tatelbaum >> that wraps up our special coverage from rome i'm steve sedgwick i>>'m joumanna bercetche. thank you for joining us on this special morning in rome.

5:00 a.m. at cnbc. here is the top "five@5. investors bracing for the trading week to kickoff the back of the selloff markets testing thresholds futures are pointing to a muted open the fed also very much in focus for traders, but the atlanta fed president weighing in on the balancing act of tamping down inflation and preserving the economy his comments ahead. and a major election overseas in italy as the country prepares for the first far right government since world war ii. we are liv