narrator: the governor of california has issued a moratorium on executions. merritt will remain on death row at san quentin. he is appealing his case. -- captions by vitac -- ♪ ♪ good morning welcome to "street signs." i'm julianna tatelbaum these are your headlines european oil majors jump after opec and al llies announce a surprise cut and what they view as the bid to stabilize the market. that saudi led production provides turbulence to come.

airline stocks sending the travel sector lower. swiss prosecutors probe ubs backed takeover of credit suisse and reports suggest the new bank could cut up to 30% of the work force. and tesla delivery jumps to a record for the year, but records out pace demand over production very he warm well come we are just getting started. saudi arabia and opec plus members announce a surprise production cut of 1 million barrels per day. it is aimed at providing market stability. we had a steep price reaction in

the wake of the announcement up more than 5%. we we had been up more. brent at $85 a barrel. wti at $80 a barrel. this leaves the cut at 500,000 barrels per day. the second largest cuts nation is iraq. the white house has blind sided the move since the technical committee is not scheduled to meet until today the u.s. national security council doesn't think the move is advised this cut will last until the end of the year. brent prices will see $95 a barrel we are trading sharply in line with the price of oil. up around 4% for bp and total

and shell up 4%. let's get to hadley who has been following this story for us. hadley, give us details to how opec plus justified the move to cut production >> this will be in line with what we have seen from opec plus members, julianna. you remember in october where this was seen as a political move by the west the saudis say this is in line with the expectations. this is how we see the world and demand one thing that is important to remember is this is a move taking place in the middle of r ramadan. it is 1.16 million barrels a day. that is 3.7% of global demand. this is happening in the middle of ramadan this speaks to me that the saudis and others in opec plus

believe this is just reflecting of the state of the global when. they want to put a floor under the prices going forward, you will continue to see an active opec plus group with monitoring global mashrket. that is pressing given the white house has failed so far to refill the spr remember, several months ago with the energy secretary in the united states said when oil hit $67 to $72 is when they decide to refill the spr. they will have continued questions about the path of the administration when it comes to energy and energy security particularly in the united states also remember, in previous years, they talked about shale that has been on a downward trend. not a direct result of prices.

it has something to do with banks and interest rates those are the factors weighing on those in the administration this morning and that push back we heard in last 24 hours as a result of that at the same point, you have to remember we are talking about opec polilus as an organizationd i'm talking about his royal highness that when it comes to watching the market and the foreign prices and making sure we don't see volatility, these are folks who say the most important thing beyond price destruction is we have a consistent price guys >> hadley, thank you for breaking it down for us. let's continue the conversation with andrew, head of news s&p global platform. i'm not sure how much you caught of hadley's analysis of what happened over the weekend. i'm curious why now for saudi

and opec allies to move forward with the cut it happened outside of the normal meeting why the urgency? >> i think she was right when she pointed to the price levels and it is clear the $80 threshold per barrel is not what opec nations are looking for they don't set a price target, but, this is going to push up prices and push up prices beyond the level with inflation globally having an impact on global core prices and pushing prices closer to $100 a barrel is economically important. someone said to me following the move over the weekend that what you are seeing is the price reflecting the cost of neon, the giant real estate infrastructure project built in saudi arabia. saudi arabia needs the cash to build these big infrastructure projects and diversify the

economy and higher oil prices will do that the second part is this will not hurt, but extent to 500,000 barrels a day. when you roll it in, this is over 1.6 million barrels a day huge move by opec plus yields is close in terms of assets to the medium grades which come from the middle east and flow into asia the other important thing is this will crunch the spread between brent crude and dubai crude prices which are a benchmark for the medium stream of crude which heads from the middle east to the asian growth economies. >> so, would you say this is not a political move this really is about the price of oil for saudi or is it political to some degree >> i think from an observers

point of view, it is a big failure in terms of u.s. foreign policy in the middle east. it certainly would play into the narrative that the u.s. is losing it's influence into the region to either influence the actions of opec producers like saudi arabia and uae which have been clients of the united states to use oil prices to further their economic strategy. the u.s. has failed to do that hadley made reference to the spr. you captn't look at this from t wider geopolitical situation in the middle east which has seen the core producers shift close tore china and shift closer to russia they like operating in the multipolar world instead of tied to the u.s i think this is another example of a shift in the poll itics in

the region. >> what kind of response do you expect from the white house >> there is little the white house can do there was tightening security of drone patrols last week and the u.s. is still doubling down on the security and flows of crude. on the other side, it has failed to influence opec in terms of its relationship with russia and completely failed to influence opec in easing policies to help the global economy in light of inflation. the u.s. is in a hard place in the gulf what can they offer? there really isn't anything at the moment >> not a lot of leverage there what does this mean for the price of oil we have goldman sachs saying we could see brent hitting $85 a

barrel by the end of the year. what is your view? >> i think a lot now depends on where we go with the global economy. i think it is too early to say where we will be in terms of global demand for the year our forecast is 2.3 million barrels a day of growth in demand for the rest of the year. it could be factored in. there is a lot of uncertainty whether we will see more elements of the banking crisis take hold and how that could effect global demand and global economic growth. we have had signals that inflation is easing in the eurozone and easing in the u.s that is partly down to lower energy costs elsewhere, we have pockets of high inflation globally which could be a concern it all comes down to the economy. it all is now a battle with central bankers and opec plus i they continue to raise prices and continue to get inflation

under control and that demand forecast is harder to pin down at the system time, opec has to balance the policy as we said earlier in the interview, it wants to maximize gains from oil prices because fiscally these are high spend countries and economies and they need the money >> andrew, thank you for the analysis andrew is the head of news at s&p global platform. in terms of the impact on markets, oil majors are trading sharper this morning as for airlines, which are dependent on energy and effected by higher energy prices, they are trading lower. we have iag down 2%. pull back across the travel stocks we have fresh data from china overnight. chinese factory growth stalled in march as weaker demand weighed on producers

pmi fell to 50 from the expansion from the previous month. sam filed this report. >> reporter: china's factory activity is losing steam manufacturing growth slowed last month. march pmi at 50 which is on the line which separates from contraction and below the 51.7 which highlights the pickup was short lived. we have the smaller and private firms in china, but it was consistent data which also showed factory activity growth slowing. the data highlighting how manufacturing is struggling to keep up with the pace of the reopening services sector which has been helped by recovery in consumption amid the government infrastructure push. the uneven recovery is put down to weakness in the property sector also slowing global demand which has been weighing on chinese

exports. the survey out today captures a larger share of the exporters and economists say that explains why they are calling for more support for them and reassure the private sector the official services pmi grew at the fastest pace in 12 years in march in singapore, i'm sam baddas back to you. we got march final manufacturing pmi data from the eurozone the numbers crossing the wires now. the manufacturing pmi fell to 47.3 in march. down from 48.5 in february the downturn in factory activity deepening in march that is better than the preliminary reading of 47.1. well below the 50 mark which separates growth from contr contraction. chris williams from s&p global says eurozone manufacturing is in trouble with factories reporting a fall in demand for

goods for the 11th straight month and the surge in the cost of living has shifted inventory and subdued customer confidence. lower energy prices have helped in the economic picture in europe, but if we are looking at the uptick in energy prices as a result of the output cut from opec plus. the euro is trading weaker versus the dollar this morning. as for equities, we are edging higher on the first day of trade in the second quarter of 2023. it was a volatile end with banking stocks plummeting in march and recovering in the close. the stoxx 600 here in europe closed 4% higher outperforming the u.s. counterparts it was a strong week for europe. we are seeing outperforming in the oil market as for the markets, here is the picture.

it is mixed. we have the smi in switzerland a touch below the flat line. a flat start to trade in germany. we are seeing outperformance in the uk ftse 100 is up .70%. no surprise there given the move to the energy stocks in the basket as for the sectors, oil and gas up 3.6%. strong performance in the energy ma majors brent and wti trieading 5% high. banks up 1%. on the downside, travel and leisure is underperforming industrials down .60%. coming up on the show, ubs is returning the ceo after the swiss federal prosecutor opens a probe into the takeover of

credit suisse. we'll discuss next

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mario! yea! [ screaming ] introducing the xfinity 10g network. super fast internet today. with even faster speeds tomorrow. woo-hoo! welcome back to "street signs. the swiss regulator launched a

probe into ubs the watch dog says the aspects of the merger should be investigated the swiss politicians have concerns over the level of state support offered by the government and state central bank ubs could cut up to 30% of the work force after the ktakeover i complete around 11,000 jobs could be impacted in switzerland alone. cnbc reached out to ubs which responded no comment on the story. let's look at the banking performance in the month of march. it was a volatile period there is where things ended up state side jpmorgan chase down 9% on the month. bank of america down 17% wells fargo taking a hit the volatility and weakness in the regional lenders stateside we had a rehe covery in u.s. bas

in march last week, the s&p bank index climbed 4.5% deeply in the red for the month overall. as for european banks, here is the picture. worst performance there. the credit suisse and ubs merger in the collapse of credit suisse sent shockwaves in europe. the soc gen is down 4% deutsche bank down 21% barclays suffering closes. steep selloff across the european banking sector. credit suisse down after the takeover announcement. looking at credit suisse in more detail it is down 6% for the month of march, but investors have changed opinion over the course of the last couple weeks around what this takeover means for ubs. ultimately a number of investors

taking a look at ubs which got credit suisse on the cheap let's bring in the portfolio manager to talk about the action in banks and markets thank you for joining me on set. if you look back at the month of march, we come off the lows. banks have recovered somewhat from the selloff that we saw in the middle of the month. are you breathing a sigh of relief will this calm remain? >> as you mentioned earlier, this began in the u.s. with svb. we really would view that as a particularly special case as to how this all happened. they had enormous losses on the securities portfolio and very undiversified deposit base the bankruptcy of svb led to contagion across the market. i think it is interesting to see

european banks have performed worse than the american banks over the month that is something that i would from the fundamental base disagree with. you have seen a massive loosening of regulations in the u.s. on banking. it started in 2018 with the reduction in stress tests as to the requirements for the smaller regional banks and banks under 2$250 billion in europe, the regulatory regime has remained much tighter. we really do view european banks in better shape. there is potentially a relative value opportunity for athat >> okay. what about the revenue outlook for the european banks it is one thing to say they are in better shape from the market believes from liquidity and capital perspective, but revenue

potential and profitability moving forward, how do the european banks stack up? there they a good opportunity? >> at the moment, all banks are struggling with the shape of the yield curve. traditionally you borrow short and lend long. you make money if the yield curve is steep in the u.s., the yield curve is more inverted. it is not as inverted in europe. that puts them in a better place. also, you had better economic news coming through the eurozone more recently with gas p prices have fallen. that should mean the potential for bank loans to go bad and this liquidity and interest rate crisis to turn into more of a credit crisis is more limited. >> what indicators would you

suggest watch foing if you wanto monitor the implications of the turmoil in the banking sector? >> something that has been receiving a lot of press recently is the flow of funds out of bank deposits and into money markets. so, you get weekly data on this. we have seen an upparttick i think some people are reading too much into the moves. you would typically at this stage of the interest rate hiking cycle expect to see moving out of deposits and into high yield money markets banks are slow to raise rates, deposit rates, to make more of profit i wouldn't overplay the significance of this because much of this has been a gradual trend that has been ongoing.

there has been a jump in institutional money into money market funds you have to think more deeply about what is really going on here money goes into money market funds and they lend the investing in commercial paper which you could argue gives them a more stable long-term funding. you have to dig deeper into the numbers. >> what is your take on european markets more broadly if you are left out deep and the market is about the prospects for european banks? >> i think we are still going index returns are still going to be challenged over the coming year valuations don't look expensive, but that is based off earnings estimates which look too high to me in our portfolios, we are really trying to give more and more money to active managers rather

than where our fee budget allows and move into the path of trackers we think in the environment, whether it will be more dispersion of return or dispersion of fortunes of companies, that should be a good ground >> thank you, cj coming up on the program, price pressures continue to ease stateside and inflation across the eurozone moves ttho e down side i'll break down what it means for interest rates next.

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welcome back to "street signs. i'm julianna tatelbaum and these are your headlines european oil majors jump after a surprise cut in output of 1 million barrels a day for the opec plus organization the saudi led oil production sent travel and leisure sector in the red. and the new bank, ubs, could

cut up to 40% of the work force. and sources tell cnbc that the parent company endeavor is looking to take over wwe in a deal worth over $9 billion quick check on the european equities which are trading higher for the most part this morning. we are seeing a lag in the swiss, spanish and german markets. ftse 100 is up 1.8% due to the strong performance in the energy majors speaking of the uk, we get the final pmi manufacturing numbers at 47.9. that is a touch weaker in the flash of 48. notably in contraction territory. uk factories continuing to suffer in the face of elevated cost pressures in terms of the details, the

survey data provider s&p global says the downturn in the uk was driven by the decline in the consumer and goods sectors now in terms of costs paid by manufacturing, which is usually a decent guide into propducer input inflation, that measured eased from the lowest level of june of 2020 factories continuing to struggle with the prices. some hopes on the horizon in terms of where we go from here in terms of the faculty activity. sterling is weaker against the dollar down 0.15% speaking of inflation, the fed gauge rose less than expected in february providing hope that interest rate hikes are helping to ease price

increases. including food and energy with the headline personal consumer expense rose 0.3% month on month and 5% annually. both 30 basis points down on january. now here in europe, eurozone act activi act act activity shrunk in march with consumers pull back on spending. i'm pleased to say the chief economist is joining us. daniel, it is wonderful to have you on "street signs." you spoken many times on ""squak box. thank you for joining us we got insight into what is

happening in the u.s. and eurozone together, we're finally seeing downside surprise on the inflation front. what is your take? have you taken comfort in the latest prints? >> i think that the inflationary pressures will continue to subside. i think, in general, what we have is massive slump in money growth all over the developed economies. that is certainly going to reduce inflation however, what we need to look at is core inflation. what is worrying is core inflation remains extremely elevated for an environment in which rate hikes and the level of reduction of manufacturing activity and the level of weakening of credit growth should help core inflation be

significantly lower. so, on the one hand, the positive is that, i think that we will continue to see a reduction in annual inflation, but the overall core inflation will remain elevated and that is certainly going to make central banks maintain at least the rate hike path and certainly not cut rates. i don't see a rate cut in the current macroeconomics environment. >> rate cut coming from the fed or ecb in 2023 in your view? >> in my view, it is very likely that the ecb and the fed around july will stop hiking rates, but i don't think they will cut rates. they need to deal with two very different things on the one hand, the european central bank and the fed need to

deal with a banking crisis that right now is manage ablemanageae it needs rate hikes because banks have been decimated by negative rates at the same time, inflationary pressures will come down quite fast however, core inflation is likely to remain elevated. so, for central banks, it is like being caught between a rock and hard place central banks need to keep rates at least normalized and pay attention to the economy that still has been showing in the last data that has been published and it is very weak. >> daniel, does the surprise production cut announcement from opec plus over the weekend change anything about the inflation outlook? >> i think that the surprise cut from opec is a very clear sign

of how weak demand is. i think it is a reaction to a very poor picture of demand and much slower recovery from china than initially expected. if you think about such a surprising production cut, the reality is that in 2023 and also throughout the last months of 2022, oil prices were weakening despite the fact that china reopened and despite the export cuts from russia and despite the geopolitical tensions. all those things together added to a manufacturing sector and industrial sector that is significantly weaker than was previously expected leads to the production cut opec is actually trying to defend the oil price not trying to make oil prices

rise for no reason they are simply reacting to a very weak level of demand which comes back to the inflationary pressure that is why the disparity with core inflation and headline inflation is likely to continue into the next month because energy prices, food prices are certainly coming down much faster than those stickier elements of inflation that pop rate the core inflation figure >> certainly take your point of the difference between the core and headline trends. if we are looking at the oil price potentially moving to $95 a barrel by year end which is what goldman sees, will that change the trajectory of headline inflation it sounds like it won't necessarily have a big bearing in your view >> if oil prices go to $95 a barrel, as goldman expect,

certainly there is a risk that the improvement in inflation that we are seeing into the end of the first half of the year is reversed afterwards. that is a very big and dangerous situation. $95 a barrel is not a good figure for global economic growth considering how weak the environment is for the eurozone in particular, but also for some of the most dependent on commodities economies. india is one i'm thinking of for example. i would be prudent about that estimate i think it is likely that opec is simply trying to defend the price more than raising it if oil prices reach $95 a barrel, it will have two negative implications. first, as you mentioned, higher

inflation and, second, and more dangerous, that the geopolitical tensions that are created and around the ukraine invasion are likely to accelerate and get worse because obviously $95 a barrel oil means almost 4% gdp more oil revenue for russia. >> so many factors to consider great overview and how to think about the higher energy price outlook. let me switch gears, daniel, and ask about earnings we wrapped up the first quarter of the year. how do you think about earnings risk and where consensus sits in europe and if we translate your economic views to what we should think or how we should think about stocks >> i think that the earnings outlook is certainly poor. we had a very good earnings season in the first quarter.

surprisingly good earnings season all of the negative signs were al already embedded we saw margin compression was evident. we saw new orders and guidance being vaguely modified by companies. when companies start to be vague about their guidance, it is very likely that there is an earnings recession ahead. i think that concern is likely going to underpin cuts in the earnings estimates in the first half of the year i think that estimates of recovery of earnings in eurozone in particular look exceedingly optimistic if you look at the stoxx 600 estimates, it is aiming basically for consensus at

earnings for 2023 that would almost be three times higher than gdp growth. very unlikely. so, it is very typical of this environment to see big earnsings rev revision followed by u.s. stocks where there is downgrade to go earnings recession is something we should think about at this moment >> certainly take your warning very clear, daniel what about the european banks specifically you talked about the difficult earnings environment if we do see rates pause in july at the ecb. what about the banks more broadly as an investment opportunity here >> i think that banks are in a

very, very difficult position. let's put the two eltmements together on the one hand, banks have to make significant provisions. they need to do it they need to do it because the macroeconomics environment is weakening. there will be a number of low performing loans and the investment side of the balance sheet needs re-evaluation. that is an important factor to at least take a little bit of froth from consensus estimates of the banks earnings estimates. i think the situation of banks right now is completely different from that of 2008. if we look at the core capital ratios and liquidity ratios and level of strength in the balance sheet is phenomenal compared to what we would consider a crisis environment. that is for sure

banks need to do something about the negative domino effect that convertible contingent bonds create on the equity if the cocos fall, that equity falls with it. that negative cycle of destruction in the price of the convertible and the stock is something that we have seen in the past, not in banks, but for industrial companies, and they should pay attention to it right now, the situation with banks is manageable. the core capital ratios are much better and we are not seeing tension in the lending between banks which is something i think is very important. banks need to make provisions and make investors confident

they are cleaning up the balance sheet of the risk of low performing loans and mark-to-market side and prepare for an economic situation that all of the things we have been discussing production cuts from opec, manufacturing weakness, level of concern be about consumer confidence that is leading to a much weaker demand for credit. all of those things, they need to prepare for and provide the level of confidence that avoids a contagion risk in general, i would say that bank situation is manageable if we move into negative rates again and if we forget the lessons from 2008 and managing the contagion risk, then it becomes a big danger. >> very clear.

daniel, always a pleasure to speak with you daniel, chief economist. let's get a check of futures and shaping up on the wall street after the strong finish last week. all three majors closed higher the dow jones industrial average with a 100 point jump at the open mixed start indicated for the s&p and nasdaq. sources told cnbc that the endeavor group is in talks to buy wwe. the two leagues would be combined to one publicly trading company. i have someone here at the desk who is excited about the deal. avid fan here. arabile, what is the thinking for the companies? >> it has come to head where endeavor figured this is a sport that so many people continue to follow sport that actually survived

covid and continued to make profits throughout that time as well the struggle hasn't been as majors would have thought and public issues with vince mcmahon. endeavor owns ufc and that continues to make them a lot of money. in fact, just revenue, ufc brought in $1.3 billion for end endeavor the same figure with wwe just last year, $1.29 billion. clearly, two businesses they have synergy and can bring under one sporting umbrella and make the most >> let's talk financials what price is endeavor looking to get wwe >> this will be a tougher one. how the structure might work,

according to the sources, endeavor would own 51% of the new entity with 49% being owned by the wwe shareholders. of what portion that goes to vince mcmahon? we are not sure. he might still be involved in the business. >> is it family? >> vince bought it from his father in 1982 for $1 million. it is a business that has been around for 70 years. 1953 is when it was formed it is a legacy business when vince's son hoped to carry on, but he still holds a leadership position within the business as of friday, the business was worth, wwe, $6.9 billion it gained 33% this year alone. that really tells you with this sale moved and it is showing

rapid gains over a period of time and what it could bring to endeavor the level of sponsorship and endor endorsements it spread across the world so much so that a few of the headline events, whether elimination chamber or whe wrestlemania have been hosted in middle east. we know how much posturing toward wanting to make more money and really looking good which the middle east has done several billion looks like a feasible amount. endeavor could see $9.3 billion. >> all right something we willcontinue to watch. a deal could be announced today. thank you, arabile coming up on "street signs," former president trump will face charges as he bemoans the state

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welcome back to "street

signs. let's talk politics. former president trump will appear in a manhattan court tomorrow over charges of hush money payments to an adult film the star he will leave florida today saying america is not expected to be this way he is the first former president to have been impeached twice and first to be criminally indicted. brie jackson has more from washington, d.c. brie, so much over the weekend in the wake of the news. two questions for you. what happens next? what should be on the radar this week and what are the implications for former president trump's 2024 election bid? >> reporter: good morning, julianna as you stated, former president trump confirmed his travel plans this week. for the first part of the week he says he plans to travel to

new york later this afternoon. he will stay at trump tower ahead of the arraignment on tuesday. that is when former president trump is planning to surrender voluntarily to new york authorities. trump is the first former president to face criminal charges. there are 30 of them related to alleged document fraud the nature will be revealed on tuesday. the indictment is connected to the hush money payment made to stormy daniels trump has denied any wrongdoing and denies the affair. his legal team says he is preparing for the legal fight. when it comes to how this could possibly impact the former president's run for the white house again, his campaign says that they already received more than $5 million since he was indicted last thursday over the past couple days, we have seen supporters rallying

outside his mar-a-lago home. it remains to be seen if this is, in fact, going to impact him. the constitution does not say a person has pending criminal charges or convicted that they cannot run for office. that is not in the constitution. this case is not going to affect the former president >> fascinating stuff brie, thank you for bringing us up to speed. i look forward to the continued coverage this week. turning back to stock markets. tesla is focus today record deliveries in the first three months of the year, but fell short of analyst estimates. short of 423,000 vehicles in q1. revenue growth was modest as tesla discounted prices. there is one to watch for you at the open stateside today let's check the u.s. oil

market exxon is up 4% chevron up 4%. volaire energy is up 3%. all of this on the back of the surprise production cut announcement from opec plus over the weekend. we are seeing the underlining oil price move higher. wti and brent up 5% apiece we were up strongly earlier on now the saudis say the move was to stabilize the market. they obviously want to see higher energy price and oil price good for them for revenue. was it politically motivated that is up for debate. a lot of focus on the biden administration strategy in the middle east and the lack of leverage that the biden administration appears to have in the region as of now. as for u.s. airlines impacted by the surprise production cut and what it means for energy prices moving forward, you have several of the major airlines lower pre-market. delta is down 1.3%

american is down 1.3%. similar in the uk stocks iag is down% 2%. ftse 100 is up .80%. the swiss market is below the flat line. ibex has been underperforming down 12 points dax has been below the flat line we are crossing into positive territory with muted gains k cac 40 is up 0.4%. that's the picture of u.s. futures as we close out "street signs. coverage continues on cnbc that is it for me. i'm julianna tatelbaum "worldwide exchange" is coming your way next. ed to p your online store, to pconnect with customers, and to bring your dream business to life. because when we work together, the future is

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it is 5:00 a.m. here at cnbc global headquarters. here is the top "five@5. stocks kicking off a new week and quarter after the best p weekly run since november. this morning, futures are mixed. shock in the middle east surprise output cut by one of the largest oil exporters in the world. we have the details coming up. and it may have been a swiss shining knight, but regulators are looking closer at ubs and the 11th