sarah goode (home video) : give me a kiss. thank you. can i have another kiss? welcome to "street signs." my name is arabile gumede and these are your headlines this hour lvmh posts record sales for the second straight year, but margins disappoint some investors. retail h & m posts a much worse than expected drop in operating profit hit by rising costs and weaker consumer

confidence sainsbury grew after it confirms it will not make a takeover offer. futures point to a negative open on wall street after key inflation data as the economy grows at a better than expected rate in the final quarter of 2023 >> this is all evidence that we have a plan and it is working. it's working it really is it is a flat start with the positive move. a lot of it is based on the retail numbers that have come out today as a key element to look out for, but one element is the 2.9% figure from the united states for the fourth quarter of

2022 that number is better than the 2.8% anticipated giving a sense that things are growing in the united states, but it may be the last quarter that we're seeing positive growth or solid growth numbers until the fed's hikes begin to kick in. that is the expectation from analysts perhaps that may beginning to wane a bit markets are going higher sa sainsbury with that stock and h&m at the lower end of the spectrum let's get a look at the picture today. just above the flat line .10% across the board in terms

of good numbers. the ftse 100 moving around .10% stronger in europe, we are expecting to see fresh consumer confidence numbers to come out and household loan numbers the way of the appetite for the consumer how the consumer is doing will be the element we are looking at as well. on to the sectors, we have seen the tech sector be the big gainer this week for the most part not really on the board right now. oil and gas going up .90%. reopening of kpchina is key to that retail a lot of the retail counters coming with news in what has been a very heavy earnings week. so to with travel which is interesting. travel and leisure with lvmh reporting record revenue and profits for 2022 this is on the back of strong

demand as pandemic restrictions begin to ease. sales did manage to rise 9% in the fourth quarter that is above expectation. the ceo said he expects 2023 to be a positive trend if china continuing to reopen that stock is .75% to the good 22% higher a fairly upbeat sentiment from lvmh. chinese sales helped remy. it is a 6% drop on the year, but above estimates. the french drink maker reaffirmed outlook for the year, but warned it will see further normalization in consumer trends after the outstanding years of the pandemic that stock price down 2.5% on the back of the news

and still in retail, h & m profit fell in fourth quarter as the world's second largest fashion retailer satisfy ann -- announced it would cut jobs. this includes the russia invasion of ukraine and leaving the russian market 8.6% on the down side of the market of the stoxx 600. best way has bought a 3.5% stake in sainsb rury's sainsbury's. it intends to hold it for investment purposes. it is not considering a takeover offer. sainsbury gaining on the back of that news.

now bank sabadell announced a net profit of 149 million for the fourth quarter it sees interest growing at a double digit percentage. that is the rate expected for this year. let's take about these earnings news with leo the cfo from morgan how are you about the looming recession? spain, itself, is said to feel that a little bit across europe as well in the market. your impairment is substantially up >> the outlook we see for spain is more optimistic than others in europe.

what the consensus is saying is it will grow in 2023 after growing 4.5% last year i think there will be a different situations across different situations in spain. for the time being, the macro is strong, even in january. we have seen demand in december and a number of transactions for me which is interesting to look at for me. it could be an early indicator of something going wrong a number of transactions in payment are going up toward december and january last year i think things are still going in the right direction. >> what are you seeing in terms of the consumers are they really going deep into their savings or going into credit you know, things are weakening somewhat and that may be be beginning to be felt by them?

you see consumers draw down, too. >> that is another of the early indicators we are not seeing for example, delinquencies are stable here in the course of 2022, they improved from january be to december it is the same in january of 2023 for example, we are not seeing the retail deposits which are still growing. we are not seeing the deposits easing as i said, we expected this to come we first thought after the summer and then november and now it was going to come in january. it is still not here we will see how it goes. we are not seeing it yet >> still making provision for it, you are? >> we made in the year 170 million euro of provisions based on the changes we introduced because of the change of the

macro. forward looking provision. >> would you say your business has recovered from the i.t. issues as you tried to merge the communications devices and computer systems with tsb. has your division recovered from that and even the fine from the fca which must have hurt >> that was the end of that road, if you wish. i think we suffered a lot a few years ago with the migration after that, we came up with a platform which was pretty new which was important for banks. platforms for banks are not different. i think this is now showing off in tsb we are doing very well in the mortgage market which is absolutely brokerized. you need to respond to the brokers demand

you need a flexible platform which we have right now. we waited for the final fine to come along it happened in december. i think that is really behind us. >> having changed the system and seen things get better, has that increased efficiencies within the business >> it has. as a matter of fact, we are very fast to answer the brokers as i mentioned before, as opposed to faster than the rest of the market this is a very perfect market. there are two levers at play first one is prices and the second one is flexibility. we are flexible and within the range of prices. >> let's talk about the rising interest rates across europe which we are seeing which may continue to rise again if president lagarde does hike interest rates as we expect by 50 basis points next week, then

how long do you stand to benefit from the interest rate hikes do you see them at the elevated level for the year or do you see them drawing down toward the close? >> as i said many times, retail banks need positive interest rates. it is not we need high interest rates. we have been suffering in europe with six years of negative interest rates that is tough for us because you suffer on the asset side you cannot trust the deposit and liability side now we are seeing that benefit our 2022 went up 11% we still have not yet re-priced a big chunk of the book. 2023 will be the turn around we are expecting to improve in the high teens for 2023. mostly it is driven by the interest rate hikes. nevertheless, we are not expecting interest rigates to he

for forever. we are expecting it will reach its peak during the course of 2023 to make a stable down side in the coming years in 2024 and 2025. >> what is the ideal resting place for you for those rates? >> historically, we are talking about a neutral rate of 2% by the ecb to keep the economy working. we need to normalize the inflation rates. once it is normalized and it comes back to the normal in europe and then we have included the numbers of 3% this year. today is 3.4%. that is what we included in the numbers. in 2025, we will get down to 2%. >> very interesting. you reaffirmed your stance with tsb. it is not for sale for example

is that because you have not received an offer or there is more value to unlock out of that business >> the former. we believe tsb has a lot of improvement to make. tsb with minus 200 million pounds a couple of years ago to the group and today's earning 150 with that fine we believe that will increase in the coming quarters because there is productivity we will see in the coming months >> so no rush on that one. no rush on the possible sale of payments business. is that to focus and zone in on more critical parts of the business and what might those be >> actually the payment business is a very important part of the business for us. we have a market share close to 20% in spain which is basically double market share in credit and assets or deposits

it is an important tool for us to have partners we are looking for an industrial partner to keep on growing here. the bank has a stable view going forward. >> what are you looking for in the industrial partner and what you want in and around the business as well the offer on the table is within t -- one that you are willing to be part ownership of the business and not sell off all of it >> that could be a solution. we are not studying this because of capital generation. we generated a lot of capital in the last two years we will see that we will keep on generating a lot of capital going forward in 2023 and 2024 this is a strategic alliance with someone to bring something on the table we don't have which is probably a state of the art

i.t. and to be in the frontier of new development of this devices. >> leo -- >> in order to increase us view going forward. >> thank you for that. i appreciate the time. interesting set of earnings and in this time when interest rates are rising and looking at consumers. it is interesting to see how the banks are faring thank you for joining us on cnbc the cfo at bank of sabadell. here is an interesting story. russia intensifying assault on the ukraine concessions from allies and they turn from tanks to jets.

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welcome back to "street signs. the imf is reviewing a relief package for ukraine for up to $16 billion. the program would depend on a number of conditions including endorsement from the

g7 at least 11 ukrainians died in the russian assault. that is the day after the commitment from germany and u.s. and uk to send battle tanks to the country. total commitment falls short of the 300 tanks ukraine needs to make a difference in the war it poses a marked shift in western countries are willing to give over concerns of russian retaliation over military escalation the u.s. imposes sanctions on the private military company in the evident to degrade the capacity to wage war against ukraine. the group's owner was added to the u.s. black list six year ago. debate whether to return fighter jets which is a no-go according the u.s. chancellor olof scholz ruled it

out on wednesday, but the country is open minded on the idea defense ministers are expected to discuss the issue at the summit in ramstein next month. volodymyr zelenskyy spoke to sky news about germany's deliberations before sending tanks to ukraine >> translator: germany's emotional although it has taken steps to change policy toward ukraine which means it changed policy to russia and kremlin germany started the air defense systems and we are grateful to them it was a breakthrough for us it was a lot of other military equipment. emotionally, germany has one connection or the other with the russian federation we hear that german tanks are offensive weapons. we discussed this many times, but we have a right to carry out actions on our territory >> now, annette, volodymyr

zelenskyy called russia emotional. it was days ago that the u.s. and germany gifted him with the tanks, but that birthday wish lists has grown and jets are part of the conversation, too. >> reporter: that is a fair summary. there is a clearance answer from germany now which is no. they are not looking into sens sending fighter jets it was only sending tanks. the second world war is still a trauma in the society that it is not okay to be part of the war and by sending those tanks, of course, one could say that germany is now part of the war even the foreign minister of

germany stepping up and saying we are at war with russia, but then she back pedalled because scholz doesn't want that statement out that we are at war with russia. that is a highly sensitive topic on the ground. for now, we are sending 40 tanks and two rescue tanks that doesn't sound like a lot. the german military sources are not stocked well with leopard ii tanks. there was not a lot of military spending happening in the country and not a lot of tank buying for leopard ii buying in the country. leopard ii are widely used across europe. 2,000 to 3,000 are sold to other countries in europe. i think right now what happens is every country is looking into their stock and it looks at how

much of them they could send to ukraine. the key topic is, as well, is ukrainians just use them and the answer is no they need to be trained. that is happening right now here in germany on the ground on german soil. ukrainian soldiers are trained on the leopard ii tanks so they can use them once deployed to the country. i caught up with a deputy member of the german defense parliament and i asked him to explain to us why was this so difficult for us and germany to send those tanks. >> we were ready to help and do more than we did back from april of last year we forced the decision and we

had this decision to say let's do whatever it takes to bring heavy material there, tanks, but they were very skeptic and very slow you must see the social democratic party which used to be fighting against u.s. army and all that in the '80s a lot of them started their political career and they have a deep pacifist affection within the party and it is hard for them they have the issue this costs lives. >> for now, tanks are going to ukraine. 14 plus 2.

exactly. the rescue tanks is there more to come? this is just one battalion >> first, we were informed they take care of the european partners and deliver the other half then there was a decision concerning the rescue. of course, it is a first move and we have to look carefully what we have effectively to offer. >> exactly it takes a long time to produce a tank the industry says up to three years to come up with a tank >> yes this is not really easy. it is just going somewhere and buying off the shelf it has to be produced. of course, there are still pieces of tanks in the industry and other countries.

let's see what the most important message is here. it starts now. the minister of defense with the new one after the old one over theo oversees our duty. he has announced by the end of march it will be there which is very ambitious they have to be trained, of course, and i hope they will keep it. >> fighter jets. yes or no? >> for the time being, no. in military conflict, you have to look at the situation day by day >> reporter: so as i was saying for now, it is leopard tanks plus two rescue. for now, the leopard ii

producers here in germany is saying they are still sitting on 20 to 25 tanks which can be easily deployed. they are looking to refurbishing others in the stock. producing a tank takes a lot of time up to three years to come up with new tanks. at the same time, you have to ask the question how to actually finance all of that because it is clearly not cheap to produce a lot of tanks and send to ukraine. it is also not cheap to r re-militarize the country like germany. if you listen to the industry, this is nothing that will happen in the next three years. it will have a larger time and investment volumes are huge. the ceo was saying this could mean spending of 2.5 billion

euro of the next few years this is what it could expand to in the next 25 to 30 years if we are heading into the direction to re-militarize and form a true european military force. >> annette, thank you. definitely a story we are following. out in germany following the tanks story for us. coming up on the show, lvmh posting a second straight year of record sales and profits despite the hit from whichina ci ckwns. we will have more after this

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welcome to "street signs." my name is arabile gumede. these are your headlines lvmh with record profits for the second straight year and the return of chinese shoppers is cause for optimism. h & m looking at the largest

drop in almost a year as they post a worse than expected drop in quarterly operating profits and hit by rising costs and weaker consumer confidence. sainsbury tops the stoxx 600, but confirms a takeover offer is not in the works. and futures point to a negative open on wall street which is ahead of more key inflation data set to come out today after the u.s. economy grows at a better than expected rate in the final quarter. >> this is all evidence that the biden economic plan is actually working. it's working it really is all right. let's get into the market data and see how things are faring.

we said earlier that we are just above the flat line is where we are sitting today. a host of numbers have come out with retailers as we noted in those headlines. of course, a little push comes from the gdp numbers from the united states that we saw yesterday. 2.9% gdp fnumber for the fourth quarter of the year. that means a slowdown from the 3.2% from the third quarter. yes, there is a little weakness there with consumers beginning to feel the pinch. could that fourth quarter be the final quarter of solid growth before the interest rate hikes pinch the consumer more. as for the retailers have been saying, they have begun to see a pinch, but it hasn't been and pronounced as some expected. 25 basis point hike is now expected by the fed going into next week's fmoc meeting interestingly enough, pce data that comes out later today

perhaps to offer insight into what happens there negative 0.1% is expected for december which seems a little less than anticipated or less than it should be considering retail sales in the same month was down 1.1%. perhaps some influence coming through that the number may be worse showing the decline of the consumer on the european front, we are sitting positive as we said earlier. h & m down 7% after it had bigger than expected drop off in earnings that has been fairly interesting to note. hurting retailers as well significantly today. sainsbury up 5.6% as bestway announced it raised its stakes let's get into the sectors to give you a clearer picture

i made note of the retail which is down .30% which is the biggest lose near the market picture. that is off the back of the news coming off the retailers with lvmh coming out today. luxury as well in the mix. sainsbury, as i noted as well as h & h. 1.3% off the likes of the oil and gas numbers. managing to gain and sitting close to the top of the stoxx 600. that is on the back of them saying they expect profits to reach 10.5% to 11.5% still very good out on that side of the picture the gainers and losers of the t week sainsbury at 4.5%. and the largest maker in europe

gaining traction at 4.4% stronger on the weaker front, losing a bit today. on to the current board. this is interesting. dollar index retreating then you are seeing a sense of mixed trading. so weakness against the yen around .30%. strength against the pound where you are seeing it strengthen with the dollar weakness for the pound. 1.123 is where we are sitting there against the euro with 108 as the figure. still falling at the nine-month lows particularly against the euro very interesting in exspired byh fourth quarter numbers from the u.s. and interesting with the bank pivot with the bank of japan, i should say, and if that is in the offing the dollar sagging as i noted

amid expectations that the ecb will be a bit more hawkish than the fed. we are expecting christine lagarde to raise 50 basis p points she has put out a firm note saying she will stand the course and that is herm mantra in fighting off inflation as it currently sits too high and above the 2% number. that's not where they want to be u.s. futures here. early signal where the united states may be heading. down as you look at the economic numbers coming out as well today. stocks did rise in regular trading yesterday. all three indices are higher and positive for the week and month. the dow jones industrial average and s&p 500 gained 1.76% and

2.2% for now, the market is heading a bit lower. all right. on to the numbers from lvmh with record profits with sales jumping 9% in the final quarter and china reopening and the luxury maker expect 2023 to be a good year. we have the head of research with us. thank you for the time it looks like the retail sector is not as bad as we thought it may be in fact, there is still resilience there >> good morning. thanks for having me i think this is pretty good despite the slowdown in the fourth quarter the luxury sector is really resilient despite the economic slowdown that is because they have the pricing power and inflation is helpful for the margin looking ahead, the china reopening story is a positive one. from the earnings call, it was

stated that the stores are full and we are starting to see pick up in the chinese numbers. it is encouraging. i think the earliy estimate is p for 2023. >> is there macao and just in china which happens to be pretty much the impact zone where the buying will come from, particularly for the luxury sector, is this temporary or is this going back to levels we have seen in the past? >> first of all, we think that china reopening story will be a lot of pent-up demand. first of all, they have dealt with a lot over the last three years. the tourists travel across the world and they tend to buy luxury goods that is a driving factor we think that is a long growth

story. not just the china reopening story. it is a boost, but we think the luxury brands have a high entry and executing the sales strategy well we have recession planned now and we think it is very long run for growth with the luxury brands company with the high pricing power and these are unique assets for investors. >> will sales amid the chinese lunar new year be the bellwether to determine how things are going and how good, perhaps, the luxury sector is looking will you look to see china's exact position >> i think we will see tentative si sides. at the moment, the covid wave is still ongoing and there are

expectations with people are traveling around and spread the virus through china. the health situation is a concern. we don't think the rebound will be strong in the first quarter i think, you know, the expectation is from the second quarter on, we should see more rebound in spending. we won't price too much emphasis >> volumes can be a key factor in all of this, janet. the chinese customers like to keep volumes low to ensure excl exclusiveness. do you think that demand is enough to curb that as well which plays in the market factors? >> i think luxury sector is people aspiring to get in volume which is a factor as you mentioned. we think there would be a loss of pent-up demand to drive the

volume and also the margins which is there because of inflation. as i mentioned, the savings from the chinese consumer is better for example, 2022, the chinese consumer saved in excess of 7 trillion i'm not saying all of that is spent on luxury goods, but people will meet face-to-face and there is a lot of demand >> luxury spending buy for chinese households dipped from 33% global luxury to 17% from 2022 could we get back to the numbers of 33% by the end of the year or is this a long-term play >> i think this year is difficult to say we think it will happen gradually. we don't think this may get back to the 33% level by the end of

the year as we mentioned, this quarter is a bit difficult. we think 2024 will be a bit more realistic to talk about that full mobilization. >> still a recession looming with china opening up, it may face a few of the bottlenecks the rest of the world may face you still have a few supply chain issues that are still in play how much does all of that still effect things? particularly the recession is that factored into the analysis of being perhaps slightly bullish with the chinese market and luxury market overall? >> yeah, i think that is the thing. the china reopening story is a great boost when there is a global recession coming. actually, i think the concern is

the u.s. consumers with the numbers slowing down there is a bit of concern there, but lvmh is a diversified business if you look across the other areas aside from the luxury sector and beauty businesslike sephora, they had bun one of the best quarters in 2022. there is still momentum going on you know, for some of the products and even in the recession environment, people are willing to spend the business is well diversified. >> janet, thank you for the time i appreciate it. interesting sector and one that when facing headwinds can stand the test of time janet the head of rbc brewin dolphin. joining us this morning. janet yellen has been out, u.s. treasury secretary has been

on an africa tour of late post the world economic forum visiting zambia and closing things off in south africa and really having met with some of the energy leaders speaking about the energy transition and saying they are committed to helping south africa and support communities affected by the transition away from coal which has been a contentious issue in the country for a while. really, other factors she has been putting out and this is what we are getting from that discussion is that she is emphasizing that the united states is committed to ensuring employment for workers as well as young people. saying the united states is in discussions with the eu when it comes to the russian price cap that being an important and contentious issue which has sparked debate across europe with european ministers meeting

consistently on trying to find a resolution to that and finally getting to some agreement. janet yellen saying she is encouraged the u.s. and eu will reach agreement by 5th of february that is effectively about in a weeks time next week sunday hoping that will be reached by then u.s. is in the middle of discussions with the eu with the russian crude price cap. the u.s. and china have resolved some of the usual yous very interesting there that is coming out from u.s. treasury secretary janet yellen who, indeed, did end her african tour and now speaking on the european zone as well as the price caps all right. coming up on the show, we had the gdp print coming out of the united states. we have inflation data due in a matter of hours. next week, the central banks

take center stage. we discuss what's to come when "street signs" returns

welcome back intel shares fell over 9% in pre-market trading after the company reported weaker than expected fourth quarter results. the chip maker posted a $664 million net loss for the quarter. revenue declined 32% intel did warn it expects to lose more money as pc makers curtailed chip buying with ceo pat gelsinger saying they stumbled and lost mostmentum it lost growth in the data center division. the company did decide not to cut dividends, but investors are not liking the news. intel ceo will speak to the colleagues in the united states later today. tune in for that interview at 17:00 cet. this has been the big data

point. the u.s. economy growing at 2.9% in the final quarter of the year that is better than expected, but weaker than the third quarter. half of the boost from the sharp rise of business inconvveinvent. some likely unwanted consumer spending increased to 2.1% that is down slightly from the previous period. headlines suffered from residential fixed investment which plans to buy more than a quarter from the overall figure. this is what the u.s. markets look like as we head toward the open down is how we are looking today. it is an early read on these we are expecting to still see numbers come out a little later. american express set to come out with numbers chevron is interesting as well as some interesting data on the economy front. speaking of which, the fed's preferred gauge of inflation,

the expenses prices index or pce jumped 3.2% in the fourth quarter. that is in line with expectation. the call rose 3.9% potentially giving the fed more ammunition to slow or pause the rate hike. the december core pce readings are due out today. expected to gain on the month, but slow on the year john is the chief economist and joins us now to get into the data john, did yesterday's numbers 2.9% for the gdp number for the fourth quarter as well as early pce readings allay fears of recession? >> it allayed fears of recession in 2022. we can put those rumors to bed at this point. looking under the hood, we saw concerning signs with consumer

spending i think a lot of that 2.9% growth is driven by spending we see trends starting to contract we will see that this morning from pce i think there are some real headwinds going forward for gdp. >> have we turned the corner you know, the other risks perhaps to continued uptick in gdp elevation? do you think the rate hikes continue to take effect from here on? >> that is one of the great questions. it has been surprising to a lot of folks that the lag with the fed raising rates and starting to impact hiring and business investment has been slow we have seen, of course, the residential fixed investment starting to slow, but on the hiring front, we haven't seen the impact of higher interest rates affecting hiring you expect to see that in construction and manufacturing which has been slow thus far

the u.s. jobs market is resilient. we will continue to see that play out and drive gdp growth in the first quarter. >> we also, of course, have big questions around the retail data which did point to a fairly downbeat sense of spending from the consumer the retail numbers in december at 1.1% weaker pce expected negative 0.1% as well does that offer the evidence toward, you know, the fact that the recession for the year is something that we're looking too closely at and there's a little bit more the resilient consumer has stood the test, but i guess that kind of fades >> yeah. we are starting to see the pressure of inflation starting to affect the consumer not only in terms of spending, but how they are making the purchases. so increasing consumers going out and draw on debt and draw

down on savings. as we think of the resilience of the consumer, it is important to note they are not as resilient as in 2022 as we have additional shocks in the year ahead, particularly on the employment front if folks lose their source of income, that is a major risk to consumer spending that wasn't the risk in 2022 with the savings buffers >> john, job markets still tight, but we see a host of job cuts happening in the banking or tech sector. when does that take hold of the economy? >> i think it is likely the second half of the year. we are seeing a lot of reall reallocation workers are leaving companies in sectors that over-hired and over-invested in the long term we still have elevated levels of job openings the question is what extent can

we reallocate workers and that is a function of dynamism of the u.s. economy and ability to retrain folks in a fairly fast time period. >> john leer, thank you for the time i appreciate it. chief economist at morning consult. the u.s. futures, as i noted, pointed to negativity in the market down as investors look ahead to the earnings numbers as well as economic reports due today and the fed with the interest rates next week. that brings things to a close today for "street signs. my name is arabile gumede. have a good weekend. "worldwide exchange" is up next.

it is 5:00 a.m. in new york. here is the top "five@5. pressure to end the week as the dow does something for the first time since october. p and pressure for intel with the ugly quarter and weaker outlook. intel not alone as the list of cautious companies continue to put a cloud over tech and consumer one bright spot is chevron the company prepares to report in just over an hour and