good morning welcome to "street signs." i'm joumanna bercetche with julianna tatelbaum here in london and steve is live from the shores of lake como. here are your headlines. ubs and credit suisse facing interest payments up to 10 billion swiss francs and the cost of the emergency lifeline the european house and managing

partner tells me we have not seen the potential end of banking crises >> the uncertainty within the banking industry, not much about europe the silicon valley bank failure a couple weeks ago is probably the first of a series. european equities shrug off the biggest banking meltoff in decades and wall street is on the back of the unease in the is se sector. and the biden administration is looking at regional banks leading to shares lower. and donald trump is indicted by the manhattan grand jury after the investigation into hush money paid to a porn

stas star during the 2016 campaign and election the first former president to face criminal charges. warm welcome to "street signs. gearing up for the final trading day of the week and quarter. the stoxx 600 is off to a muted start. hovering around the 455 level. closing out what has been a roller coaster ride. the stoxx 600 is up over 3% for the week a strong trading session yesterday stateside and here in europe for the quarter, the nasdaq has been the performer when you look across the u.s. and european markets. european versus u.s. and we are seeing performance in europe despite the banking sector tur turmoil. bringing back to the trading session today is the mixed

picture. no major moves in either direction. fairly muted ftse 100 and cac 40 trading on the green side investors are gearing up for inflation print. we are getting a flash reading at 10:00 a.m here is the split for the sectors. food and beverage in front on the down side, gas and china coming in lower. china's services sector activity has surged. factory growth slowing in the month of survey data in terms of data from europe, german retail sales fell 1.3% in february compared to the previous month surprising analysts expecting a 0.5% rise. they were down over 7% for the

year the dax is fairly flat on the day. the jobless rate in europe came in at 5.7% in march for germany. french prices rose in march according to preliminary data. it rose 5.6% on the year the eu reading climbed 6.6% for the year which was down from the previous month contrast to the spanish inflation yesterday. >> julianna, we are awaiting the 10:00 a.m. print we are waiting on signs of how the eurozone is playing out. and credit suisse and ubs could end up paying 10 million swiss francs in credit suisse. that is associated with the 100 billion francs as part of the

merger and separate 100 billion franc lifeline granted to credit suisse he is concerned about more failures stateside >> the worrying factor is the uncertainty within the banking industry not much about europe. ecb has done increasingly well the european commission and eurozone is very stable and sound and profitable what could happen particularly in the united states is a mystery. well, you know very well silicon valley bank failure just a couple weeks ago is probably the first of a series. >> we had crises and we got them again with policymakers in the

banking sector fighting fires right now. lawmakers and business leaders are gathering on the banks of italy's lake como banks for the 34th european house forum. that is where steve joins us steve, good morning. it was over six months ago we were in another part of italy talk about the italian election and it feels from the news making standpoint, italy has receded a bit in terms of all of the other things going on in the world. >> reporter: i think you are right. that is partly because of two things one, the italian crisis issues are there, but dormant secondly, the meloni government is facing their own issues it is the same of all of the big beasts of

europe, italy is the quiet because other crises have risen to the top that is not where i'll go with the interview. i have a guest here with me. the fellow institute of economic relations. sebastian, you wrote a brilliant book of 2022 the venture capital and the deal making of the future you think my timing is fantastic and given everything with svb. it is the tone of venture capitalism and to where we are now. if you were to add something to that book now, given what we know about svb what would it be? >> i guess i would emphasize the industry on one route, all investors in one place, and one

good around and bar on the vroad all the money flows into one bank it is one describe tribe rush t same -- tribe rushing to the same place it is very bubble prone. >> reporter: you have some of the smartest people on the planet doing something you wouldn't advice anyone to do in a heist. i heard your puool of money in one place. why would these smart, amazing pe people do that >> they have been networking it is a big network it is a whispering grape vine. you can form views about which technology can succeed and get behind the idea and push it and hype it. if it doesn't work, you move on. that is great for a startup, but it is a down side for the macro

investing with the nasdaq bubble in 2000. the same thing in 2022 with tech stocks going down. then you had silicon valley bank it is all part of the same upside and down side of the network. >> the venture capitalists, let's get to the heart of the question, one question is did the venture capitalist create the success of silicon valley bank and the boon we saw would it have happened from different financial sources otherwise. did you get to the question? >> it is a good question that is posed in the literature. did they show up or create it? i come down on the side they helped to create it. why? an entrepreneur is a determined individual, but needs to be connected to the people they will hire and first customers they will recruit. they have to have a sense of the

broader landscape of innovation. that is what the vc does they show up with money and connections. we know in life, money and connections are super important. >> yeah. it brings me to the power itself i'll butcher this and you will tell me. if you gotten investments, you will not make all ten. all ten are not going to happen. let's say one or two the profits and growth and succession will wipe all the losses from the others that is the power? >> right the therefore, the only thing that happens is 20 times the capital. it is all about shooting for that, you know, big win. therefore, that is why venture capitalists want flying cars and sound crazy. not the next generation, but the generation after the next

generation that is the logic. you have to go for the big win. >> this brings me back to where we started this is why i want to get back to the banks the venture capitalists are on the hook for the losses. you have to get profits. it seems the relationship with the banks and banks are on the hook for all of the losses although the two of their ten bets they are exposed to makes the money. the banks will lose, not necessarily make the same profits. the venture capitalists get the upside and now the banks with the down side. has the relationship made the whole thing more dangerous >> i think silicon valley bank could be better managed. it did not have to happen this way. if they had been making a huge bet on inflation coming down fast, which is what they did with bond portfolio, if they hadn't done that, we would not have this crisis it is not just the venture capitalists that messed up, but

the bankers. this is part of a broader thing that entrepreneurs and vcs in silicon valley believe in risk they apply that to everything including the banking relationships. if you take uber and trevor kalanik going off the rails, we don't need a chief financial officer. we can wing everything. >> you said travis you are talking about uber that sounds like someone else who has taken a massive punt on a former silicon valley company. mr. musk with twitter. the way he has taken away the key functions of the key regulations and the u.s. would like to see and moderation, that sounds familiar. am i drawing too many conclusions? >> the risk appetite is right. the disastrous thing in other domain musk goes in

he has the crazy cavalier attitude to buy twitter for fun. >> $44 billion whatever. >> other people have thought about content moderation carefully and a steward in a democratic society he hadn't thought about it because he is happy to take risks. >> this is the point i was trying to get to the banking point. has the risk appetite of vcs great, which we need, has that now added extra risk because of the attitudes of the bankers because of taking on board of the vcs? they have all of the risks across the banking society as much, is that creating more problems for all of snus. >> i think with the bit of truth in what you say. just in 1999 with the tech bubble and that had a macro

effect it disrupted the economic cycle for everybody. you take your swings you have the most vibrant tech sector in the world. it is envy of everybody. europe would love its own silicon valley that risk will bubble over and damage. >> i have to move on you have the risk attitude and debt and could that happen do we want that in europe in we don't have the same tech companies? could the problems and upside, both sides in the united states and svb? would we get that in europe? >> i think so. of course we would we would love that having more venture capital and entrepreneurship is a good thing. i believe it will happen i'm watching more and more

silicon valley and venture capitalists set up in europe and bring the risk spirit to europe. >> great lovely to see you. thank you very much. seba sebastian. senior fellow at the council of foreign relations. also, i should tell you in 20 minutes, i have the former italian prime minister coming up back to you. >> thank you, steve. we are reading the book. great to get his take on what is happening with svb and the vc world. the biden administration has released a set of proposals zedf silicon valley bank. in the fact sheet released on thursday, the white house wants to update the stress test of banks. the kbw index closed 2% lower on

the news and financials was the only sector to close in the red yesterday. fed officials neel kashkari and susan collins indicated the u.s. central bank could stick to the hiking path as inflation is above 2% collins and barkin said the turmoil in the banking sector is expected to lead to a tighter lending environment. it could help the fed with prices faster than expected. collins said it may be too soon to weigh the impact of the policy measures. >> the recent data shows signs of more underlining strength in the economy certainly than i anticipated and unemployment rate is at historic lows and spending indicators through september that were stronger than expected. this strength might reflect the

fact the policy did not enter restrictive territory until the second half in 2022. it may simply be too soon to see the full effects of real activity >> i'm taking you to overtight data chinese factory data growth above expectations the manufacturing significant focuses on construction hit a 12-year high coming up on "street signs," we will speak to the former prime minister live on the shores of lake como. we'll be right back.

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you just want to eat your heroes. the subway series. the greatest menu of all time. let's get back out to the shores of lake como where steve joins us with yet another special inter interview. steve. >> reporter: i have been joined by a great thinker as well he is the ex-prime minister of italy. i'm talking about mario. mario, i have learned something from you i appreciate our conversations i really do.

while others are talking about poli crises, some are talking about reinforcing. these are not all separate crises they are all connected and solving one will create problems for another. how do we break this loop of being stuck in crisis after desperate crisis >> terribly difficult. i think there is one element of relief and hope. at least intellectually. basically, all of the crises have one element in common whether they be monetary, health, climate change that is the political process which is too short sighted and

much too individual istic. not enough inter relations with the geographies. this is relieving to me from the intellectual point of view, but concentrates any discourse of solutions to an essential point of how do we make politics and decision making process more aware and more caring about the nation and about the long-term effects. >> reporter: you're a democrat you are whetted to democracies and it sounds like a authoritarian argument with the russians because we don't have the same short-term political

process in the united states and europe as well we can solve through longer term thinking that is what they would say when they hear you say that >> i would concede that they could have an advantage there which china, to some extent, is able to use actually particularly in the selection process of their top leadership through the communist party and schools of the communist party and so on. which may be a process with the political leaders and not i inferior of the system of the primaries in the u.s., by the way, so they are better equipped to think about the long term if you are autocrat, about which long term you care of the country and the world, or your

own personal long term so what we need is, i think, a combination of long-term proj projection, global projection and, yet, at least basis of democracy. >> reporter: i'll ask you the hardest question yet how? i agree with you i think all of the viewers agree intellectually we need longer-term thinking on the issues i don't know how we do that and remain liberal democracies >> education huge effort on the part of the media and education institutions, et cetera, et cetera at least we should make it less obvious that the electorate buys

with closed eyes short-term solution promised by often irresponsible politicians. then reflecting on each particular situation for example, in a country like italy, which is sometimes unhappy about its longer -- not long term view, but processes to make decisions many people would say that's the presidential republican like france or the u.s. i warn very much against this because at this point in time in history, both countries are behaving rather poorly and president macron took six years. five in the first mandate and one year in the second and he has not yet concluded to introduce a modest pension reform under different conditions of extreme financial

urgency with a not perfect parliamentary republic like italy two years ago, but instead in two weeks >> reporter: the example of macron and the pension reform is the example of not bringing about change the forces that have not brought into the idea which is quietness. >> he tried to explain why the reform is needed that is okay what i'm saying is that people may believe that if you have a strong center power like a president in the republic, that is achieved more easily. not so because this substantial reforms need, in my view, that the unavoidable political and

social costs that in the medium term, the reforms imply are shared, burden shared, on different shoulders politely you may need government unity or a coalition for a while. that was done a few times in germany and italy. both parliamentary republics it cannot be done, physically cannot be done in a presidential republic like the u.s. or france >> reporter: i have 30 seconds left draghi had amazing reforms and government brought down by the fact he wasn't prepared to compromise as a politician rather than -- he wanted to do what he thought was best, but wasn't prepared to compromise on the conditions that's a great shame someone with longer-term thinking was brought down by the political establishment. >> absolutely. the only thing one could say is

he was not really forced to resign in the first instance he might have decided to take more pain in term, but go on to the end of the term which would be better for the country. >> reporter: fascinating point we will carry on debating. ma mario, thank you for joining us. you brought amazing concepts mario monti. the former italian prime minister liberal democracies have to work on the short-term. i think the clear point is education is at the root of it back to you, both. >> fascinating to hear what mr. monti has to say. also coming up on "street

signs," steve speak was the former general manager of finance. we'll be right back. stay tuned

welcome back to "street signs. i'm julianna tatelbaum along with joumanna bercetche and steve is on the shores of lake como here are the headlines. >> ubs and credit suisse facing interest payments of 10 billion francs we've not seen the end yet of banking crises >> the worrying factor is the uncertainty within the banking industry not much about europe. the silicon valley bank failure a couple of weeks ago is probably the first of the series european equities shrug off the biggest banking meltdown in

decades with the quarter set to close on a high and wall street is lagging on the back of the unease of the sector. the biden administration looks to tighten rules on mid sized banks without going to congress leaving shares and regional shares lower. and donald trump is indicted by a manhattan grand jury after the hush money payment to a porn star the first time the former president has faced criminal charges. welcome back to the show today is inn -- inflation data we are going to get a clear signal from the fed and what the next move is going to be we get the nfp print numbers two data points coming up in the

u.s. as investors park to one side the banking risk. yesterday, we did see a pull back in regional banks by and large, you could say over the course of the week, the attention has now shifted away from some of the issues we talked about one week ago. now again, going back to data watching over here in europe, we are focused on the inflation data. we had german flfginflation comg in lower yesterday the aggregate eurozone print is coming out at 10:00 a.m. in a half hour time. you want to keep an eye out for not just the headline inflation number, but the core inflation print. that is proving to be sticky that is something to watch out for. generally speaking, markets trading broadly positive with the exception of the italian index. we are seeing the strength in the dollar today you see it is transpiring

against the majors which has been in focus as a swiss haven currency with the ubs and credit suisse, people are watching to see how the swiss bank would do against the u.s. dollar. in the uk, we have the pound softer to the tune of .20% the ons revised upward for growth in the last quarter the uk has managed to avoid technical recession. it is just numbers at this point. it tells you the uk data has come in better than what people had anticipated. the euro is trading weaker to the tune of .25% as well in terms of u.s. futures, this is the u.s. fwith the dow and

nasdaq we have the nasdaq up more than 14 points for the first three months of the year the best quarter since 2020. switching back to the uk, gdp grew 1% in the last quarter. this was revised up. despite high inflation and the turmoil in the banking sector, spanish prime minister tells cnbc the outlook for spain is positive >> businesses are having high profits. they never had so high profits as they are than right now we are attracting investment i was meeting with top investors in london yesterday. the message i got was a strong confidence in spain. strong interest. we are one of the leading

countries in green i hope you know, they decide not to move. no substantive reason justifying it >> interesting comments from her. let's get back out to steve who is on the shores of lake como with another guest. steve. >> reporter: i wanted to speak to this guest is i thought he was going to say something about something he is an expert on and he will say something different from what he is an expert on i was wrong. i was speaking to heinrich nice to see you. let me explain to the viewers what i'm talking about i think you think the ecb is doing the wrong thing on inflation at the moment and it is tamer and they are far too

hawkish. i thought you would be bearish the situation because of the overkill from the ecb. you told me you are bearish. >> i think it will change quickly. the inflation momentum is gone in europe. in germany, it is going down the headline figures are high. it doesn't mean much the dynamics is downward it is quickly downward producer prices in germany have been the simple calculation that they don't fall further from now and will be in september minus 10 the producer prices in germany >> reporter: the public sector >> there is something on wages it is not much it is not compared >> reporter: you have to understand >> 10% in two years. less than 10% in two years two years is 5% per year and one payment. that is not inflationary

i told you i experienced the '70s as an economist we had 11% one year in the public sector. >> reporter: just carry on with the premise. the ecb has to act when is the pivot? you think the european pivot is coming in. >> yeah, yeah. definite >> when? >> some time in the summertime >> the ecb will cut by the summer >> i think so. you have to be bold. because inflation dynamics is fading away quickly. as i said, we will see producer prices first coming down rapidly. 2% we will reach in june maybe or july. producer prices in germany and europe this gives the signal there is nothing in the bottle for the next month or so there is no inflation dynamics

it will be difficult for the ecb to defend the course which i think is totally wrong because it was all temporary i think it will change quickly because the situation is really fragile. the real economy is fragile. the ecb will be under enormous pressure imagine the headline that says inflation on the consumer level at 4%. producer level at 2% who could say this is a danger for the next year? nobody >> nobody. you think the energy crisis will not come back. you learned diverse sources. we will not have resumption of the energy crisis? >> the energy crisis, i don't know what it is.

the energy crisis of 2022 and 2021 is over the prices are back to normal. the gas prices are back. oil prices close to normal coal is back electricity is back. there is no actual -- that doesn't include the next shock would come it will be observed for the ecb to raise rates how could you? you will desftroy the european economy. you know it is a one-off shock i must say here with my colleagues, they are not talking about the one-off shock or wage dynamic that doesn't exist in europe, it is a little bit acceleration of labor cost up to 5% in the last quarter of last year it is not inflationary dynamics. >> okay. how can i put this senior gentleman in the room who

remembers the '70s i remember certain parts of it you were an economist. were why isn't this the '70s >> someone mentioned the u.s who knows what the wage increase in the middle of the '70s in the u.s. it was 15% annually. in germany, it was 11. in japan, it was 25. imagine the uk italy was 20 france, 20 we have nothing like that. we have nothing like that. this is a big success in my view t they are not attempting to get everything. >> what should we be worried about? i'll preempt this by saying you have big questions about debt. >> the debt is a big question because it is in the heads of the people it is a big question the people are going crazy about debt because governments have taken on more debt than ever in the united states.

particularly everywhere else in the euro area also. we have to see that the logic of the whole thing is someone has to be indebted if people save with the private houses, we need debtors. there is no one else but the government >> 350% debt-to-gdp? >> there's no alternative. >> the kind of levels of debt we have now. >> look at japan with 300% demog demographics what happened in japan the companies stopped investing. if the companies do not fulfill that role, the government has to step in. otherwise we collapse in a minute this is a totally new situation and we have to understand this situation is totally new and we have to understand there is no way out.

if we understand there is no way out, we are getting relaxed about it much more than if we think we could cut everywhere and then the thing would be better nothing is better. either we are able to come back to a scenario of the '60s or '50s where the companies are the main debtors, we are fine. if we are not able to reduce debt, i don't see any country doing that for japan, the situation for 30 years now. 35 years so, if you are not able to do that, then the government has to step in and we have to see, otherwise our economies would collapse it is not the old economy that we used to have after the second world war. it is still an economy that can flourish >> i wonder if this is optimistic you said this is what it is. we just have to chillabout it, guys >> we can't get out. >> heiner, lovely to speak to

you. hamburg university ex-vice minister an economist who was doing it in the '70s back to you. >> steve, thank you. so many perspectives going on. l,"coming up on "street signs weook at the latest as we enter the final day of trade this quarter we'll be right back.

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big news in judu.s. politic. former president trump has been indicted on criminal charges the charges are brought on by the hush money surrounding the 2016 campaign. he is expected to turn himself in on tuesday. sam bankman-fried pled not guilty over trying to bribe

chinese officials. his lawyers will file a meetings against charges. his trial is due to begin in october. let's look at the hamarkets. there has been a big turn around in the tech sector and the banks with the crisis. we have arabile gumede with more. >> thank you, joumanna a month which has been key to the banking sector which has been in heavy focus. on the other side of the scale, we had a de-risking of sorts by investors moving to some of the other counters which haven't been bank stocks finding themselves in the tech counter. perhaps a bit of risk-on trading. nvidia and salesforce moving higher so, too, is meta, which had

fallen a bit tesla is the stock to look out for. that took a knock particularly last year changing pricing moving up nearly 60% over the last quarter as well royal caribbean cruise tells the story of the change in holiday makers opening up of china helping that as well. let's look at the board in the s&p. still in the u.s., this will feature the financials and insurance. first republic bank has taken a nearly 90% drop in the bank stocks from the halfway mark of march. insurance companies is a key part of this let's move to europe as well the best performance in the european market.

outlier has been unicredit which gained 30% on the quarter. doing fairly well. rolls-royce has been fairly interesting. of course, the war in ukraine has still helped their stock move higher. so, too, is some of the tech counters moving in lockstep with risk the worst performers in europe the theme remains the same a lot of these have been financials resources not moving up. the diversified minors have taken a trip down. perhaps not enjoying so far. china is not opening up yet. negativity across the board. guys >> arabile, thank you. credit suisse is the worst

performing stock with history of where stocks go from here, head to cnbc pro to find out. in terms of data, we will get the latest on the eurozone in nine minutes time with flash cpi for march due at 10:00 a.m. cet. that is 11:00 a.m. cet investors are worried after german inflation declined slower than expected in march eu cpi and the largest economy increased at the pace of 7.8%. the latest read of the fed inflation gauge is due today the core pce came in higher in january jumping 4.7% up from 4.4% the year before the reading today is expected to show a 4.7% jump on the year

joumanna, this inflation reading is closely watched by investors because if you look at the market action, it seems a lot of the move higher in tech is tied to reduced expectations moving forward. the inflation print, pce price index, could have a significant impact on the way the market thinks about rate hikes moving forward. >> it is key to determine if the downward trajectory is continuing i have seen estimates out there. for the number itself, it is worth pointing out that the last number is underunderestimates. that's the number you need to watch out for in terms of number and how it impacts the fed thinking, we have to see the impression that the market got from the fed at the last meeting was they are close to the end, if not at the end already. it is telling in the last

conference when they were asked if they were thinking of going for a pause. the fed chair jay powell said they did consider it there were a few members who thought it was time the to not hike given all of the banking stress since then, talking about markets, the banking concerns are put to one side, but they are still there. the fed is in position where the primary goal is getting back to price stability and 2% target. they are keeping a close eye on financial stability. you have to wonder if the two are in lockstep or do both at the same time. >> it's quite a difficult balancing act for the fed and investors. the other piece here is the fact that investors in the market for the most part have never lived or worked through a period of inflation like the one we're in right now. the expectation that the fed

could pause, you know, the fed is committed to bringing inflation down i think that sometimes investors under estimate the fight that central banks have in them to fight inflation. >> it was interesting. i don't know if viewers caught on to this steve's interview with the former minister of finance from germany and you think germany and you assume they are hawkish. actually the numbers in germany have started to drop quickly we had an upside surprise today. the numbers have started to fall in his view, he thinks the ecb is where they have overtightened relative to the data which is backward looking we would be in a situation where ppi numbers are in negative territory and maybe the ecb may have overtightened the market is still expecting another 25 point hike come may

we will see. >> i guess coming back to the data, one reason the fed likes this inflation print this gauge is it looks at consumer behavior as opposed to just price changes over time. we could get insight into how people are being affected by price rises with goods and get insight and expect a pull back of inflation. >> one thing we have been talking about is the difference with the headline and the core the core number is sticky in all of the places. that is it for our show. i'm joumanna bercetche >> i'm julianna tatelbaum. stay tuned to cnbc "worldwide exchange" is coming your way next.

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