that's all for this edition of "dateline." i'm craig melvin. thank you for watching. . ♪ good morning welcome to "street signs." i'm joumanna bercetche >> and i'm arabile gumede. these are your headlines germany enters recession stubborn inflation weighs on europe's largest economy fitch gives the u.s. a negative watch as the debt ceiling drives on. >> i am not going to give up we are not going to default.

we're going to solve this problem. i will stay with it until we can get it done. we have to spend less than we spent last year. it is not my fault the democrats cannot give up on their spending divisions emerge at the federal reserve over the future path of rates with the fed minutes showing members are less certain on more hikes. adp chief economist tells this show that central banks should be thinking further ahead. >> this is not a one and done even in the current inflation period there is every expectation that bouts of inflation are persistent and frequent over the past ten years what is the game plan? european chip makers stop the stoxx 600 after nvidia posts the biggest earnings beat since 2018 shares soaring in extended trade taking the market cap to almost $1 trillion.

good morning welcome to "street signs." so much to get to on the show today. first, we have data from germany. germany has officially entered technical recession with final gdp data showing the second quarterly decline in a row gdp fell 0.3% in the first three months of the year a downward pre-vision from the preliminary read which showed on the flat line at 0%.

however, the first quarter contraction was an improvement from the fourth quarter. we now have two consecutive quarters at 0.5% at the end of the year and 0.3% for this portion of the year.d revision from zero to minus 0.3% what was the catalyst? >> reporter: consumption is down more than expected consumer consumption and government consumption consumption from the state is down more than 5% compared to the quarter of the previous year general consumption is down quite a bit. the people are not spending as much money as before on food or beverage or new car sales which

are all down quite a bit it is a split world. the corporate sector is still doing quite well in the first quarter. that could be down on the mild winter analysts are saying the construction sector is not down so much as perhaps some would have suggested given the hold on construction and rise in mortgage rates in the country and elsewhere. the overall picture, though, is rather bleak if you not only look at gdp, because that is a backward looking indicator and you look at forward looking indicators like the print for manufacturing space, the topics are still high energy costs and high inflation which is weighing on economic activity also going forward. the supporting sectors are coming from outside germany.

exports are doing quite well and capital goods investments in the country are not as bad asp exp expected as i said, it is a mixed bag germany entered technical recession. the consumer is not spending any more because inflation is eating up the spending power also the optimism from the general cautious german consumer is actually fading people are sitting on their money and waiting until inflation rate is coming down and for interest rates actually going down an agn -- again we are seeing a stand still with the real estate market. >> annette, the efos institute pointing to slowing data it is not looking good

annette, thank you for the overview from germany. you can see a lot of red on the heat map again after another down day yesterday markets are gripped bring risk sentiment as stocks get closer to crunch time with the debt ceiling in the u.s also the rating agency fitch placed the u.s. on negative. we see the markets react and the rating agency as well. there are warning signs. investors are taking heed. stoxx 600 is down .10% we opened up moderately in the green, but couldn't hold on to gains for a long time. now slipping in red territory. switching to european markets, this is the picture. all of the indices in the red. the ftse 100 is down 34 points

.50% weaker. major day yesterday for uk assets, specifically for gilts after the red hot inflation number we saw the 2-year gilt rise 25 basis points taking it back to levels not seen since the uk mini budget. investors are pricing in two more 25 basis point hikes from the bank of england. we have come a long way. any sector with sensitivity to interest rates with real estate or retail as welcoming under pressure cac 40 is down .50%. luxury continues to come under selling pressure not as much as yesterday dax in germany is down .40%. here is where we are focused on the macro data and germany has formally entered into recession. this is the picture switching index. retail and media at the bottom we have basic resources at the top with a bounce and technology

doing well today 2.2% the story is all about chip makers nvidia, yesterday, came out with strong results in the u.s. on the back of the a.i. technology bid because they manufacture gpu chips giving them a lot of tailwi tailwind it is boosting all chip makers as for u.s. futures as we head into the u.s. session, it looks like we are in for a mixed bag s&p and nasdaq are opening up in positive territory dow is seen opening down over 100 points >> joumanna, fitch placing the sovereign credit rating on negative watch as lawmakers wrangle over the debt ceiling deadline of june 1st this comes after the white house and negotiators met for another

round of talks speaker of the house kevin mccarthy reiterated there are a number of points which remain and have them a long way apart. >> we know the differences you have to spend less than last year that is not that difficult to do in washington, somehow, that is a problem. they have increased spending with the democrats on dis discretionary by 33% no household can afford to do that we can find ways to eliminate that >> minutes of the federal reserve policy meeting showed division over the central bank policy path. the decision to increase the benchmark rate by 25 points was unan unanimous. there was disagreement over the next move with officials generally agreeing the need for more rate hikes in the future

have become less certain char carl is now joining us for the conversation carl, does that mean that all three decisions are back on the table somewhat maybe not necessarily cut right now, but certainly in the future >> good morning. yes, all future decisions are on the table right now. that is what the fmoc was trying to tell us yesterday previously, they signalled as a group that more rate hikes would be required. now they are saying let's look at the data more carefully than before and keep our options open as to whether we are increasing rates again or not. >> is it a surprise that we are having this discussion we aring e having an economy tht did hold upper than some antic anticipated. the question if we should really

be holding is a significant one. any surprise this is happening >> high frequency economics and we were not surprised by the outcome. we look at the rates in the vicinity of 5% that is three points higher than the expected target and we all expect the fed to hit its target that should be our expectation with 3% real interest rates is restrictive and as the minutes point out in several places, the board is aware that monetary policy impacts with a lag. they have been schooled over the years to set interest rates with a long-term horizon and hold long term and ckconstant rates consistent with growth they are at a point where rates are high enough to slow the economy down and maybe the time component hasn't played out

fully. they will be waiting and watching and seeing the impact of what they've done before they do any more. the worst thing to happen is raise rates to 5.5% or 6% and reacting to current inflation numbers and see the lag effects and drive the economy into a deep recession they don't want to say oops, we shouldn't have done that. >> i think that is the situation that so many central banks found themselves in. rbc deciding to pause for that reason there are alternative views with the likes of ben bernancke coming out with an academic research piece yesterday suggesting that more work needs to be done in order to bring inflation down i want to ask you to what extent, do you think, the banking fears, the u.s. regional banking fears are going to be factored into the fed decision here at previous press conferences, the fed chair was adamant that

the u.s. banking system is in a good place and the fears around the u.s. regional banks don't seem to be subsiding >> the fmoc minutes show the committee is aware of the failures of the banking system and aware of the issues we have seen with the four banks which failed so far. they do point out, though, the obvious banking system is generally well capitalized and problems are restricted to banks and non-financial institutions with specific portfolio problems and not the generic system across the entire banking system they point out a tightening of credit conditions seems to be occurring and that tightening of credit conditions might mean they don't have to tighten as much themselves as they previously thought because the tightening in the market is being done for them.

i think they are aware of it they are watching for signs of systemic risk. they are clear in the minutes and statement. they don't see that systemic risk at this point in time. >> carl, inching closer and closer to the june 1st deadline with respect to the debt ceiling. fitch placed the u.s. on negative watch which is note worthy coming from a rating agency i wonder what you think of the tightening of financial conditions we have seen could have an impact on the u.s. economy. >> it depends on how long it lasts, of course with the fitch downgrade, that is about time. if any was teetering on the brink of default, they would not

hesitate to downgrade. we have seen this happen before in previous debt crises in the united states. it should be no surprise it was a downgrade. people in the market have been talking about this it has been expected i don't know what else to say about the debt situation this is in the hands of the politicians right now. i personal am scared that they won't be able to find the concentration or belief they have to do what has to be done to keep the worst possible case from happening i'm hopeful they'll do well and faced with this challenge. >> with that, the whole world is watching as they get closer to def default. carl, thank you very much for joining us carl weinberg. coming up on the show, wall street's most valuable company added over $2 billion after

trade yesterday. we'll be right back.

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welcome back to "street signs. nvidia slhares are raising afte they have the biggest top and bottom line beat in years. 50% higher than the wall street estimate you see the pre-market trade which is set to open up 23 points in theory, that should add around $200 billion of market cap taking it to almost $1 trillion valuation very impressive. as for the follow-up to other chipmakers to nvidia the german is up 24% other chip makers reacting posi positively asmi is up 9 points and ams is up 1%. arjun, stellar results from nvidia

>> absolutely. playing into the theme of the explosion of a.i this was very much an a.i. quarter. you look at the gaming chips they fall 30% year on year data business up 14% they make chips that go into servers that power the servers to train the data that train the a.i. like chatgpt. there was a huge demand there. what was more exciting was the outlook. the q2 outlook and forecasting $11 billion in sales they said that is due to the demand for generative a.i. the company said it procured higher chip nos in the second hf there is demand and the company can meet the demand. that is what is driving the after hour moves. >> we have gone from a shortage to a glut. clearly this is going to really bode well for the sector as a

whole. it is not just nvidia which is clearly seeing gains >> we tend to talk about semi conduct irreor space we look at samsung which makes a certainly chip which go into pcs. that market has done terribly this year because demand for pcs and devices have been difficult. you have seen samsung profit plunge this year it has not done too well nvidia, on the flip side, making chips for a.i. you are seeing the ripple effects across the supply chain. i talk about tsmc. the taiwan chipmaker they make the chips that nvidia designs. clearly, they are up 3.5% today in taiwan where investors say if it sales, who will make them

tsmc you look across the european chip sector. asml and asm two suppliers with the tools required to make the chips if nvidia is making the chips, what tools are needed? >> let's go back to nvidia a lot of this is about the ability to process cpu chips nvidia seems to have a dominant market share in that respect with a.i where would the competition come from at this point >> nvidia, at the moment, is the only game in town to be honest in terms of companies looking at chips for workers for a.i. the long-term risk and investors paying the respect with the massive surge. the long-term issue for nvidia is companies like google and microsoft and baidu and alibaba are designing their chips to

create their own a.i. chips to rival nvidia, but surpass them if a company has a breakthrough, that could be negative for nvidia they will no longer need nvidia chips. nvidia needs to stay on top of their game it is facing competition from the other players who have the capabilities and money to invest in a very difficult area of the tech market. >> nvidia will be on $1 trillion watch. that is for sure arjun, thank you for joining us here looking at the semiconductor market as well as the chips. travel and leisure stocks with the best performance of any sector this year as travel restrictions ease globally with technology stocks close behind on the other end is basic resources and oil and gas which are the two sectors in the red for the year in europe energy stocks lagged in the united states down 8% for the year that is while the communications

sectors which attracted significant investor interest. pippa stevens looks into if it is time to jump into the sector. >> reporter: after two years, the energy sector is lagging this year and has the lowest pe ratio relative to the s&p in more than two decades. drilling down on the sector, the refiners are the cheapest and valero trading at 5.2 and 6 times forward earnings apa and phillips 66 on the cheaper side hughes and williams is the most ex- expensive in the sector. halliburton is a top pick with more than 90% rating it as a buy. on the flip side, kinder morgan is 29% and osccidental at the

bottom and higher than expected russian oil demand and supply and industrial concerns. for cnbc business news, i'm pippa stevens. solar power is set to take over for the first time this year according to the new report by the international energy agency it will breach the $1 billion per day mark global energy spending is expected to come in at $2 trillion for the year of which $1.7 trillion will go to

renewables i will be speaking to the executive director fatih birol at 11:35 cet it is the first on cnbc interview. joumanna, this conversation is bound to get interesting that report speaking about solar investment and that growing substantially which i find interesting considering how there was a sense that maybe things are dropping off a bit. i got to go to the shetland isle and the project to build 103 wind turbines had taken 15 years as a project to put together if you want to get into the renewable sector and it is taking 15 years to get a project like that together to power just the shetland isle and scotland mainland, that is worrisome. you will not move the needle as

you should. >> it is also why we saw such a strong response out of the europeans once the u.s. came out with their piece of legislation. the inflation reduction act. all of that gives incentives to companies and investors to put money into renewables and clean tech investment. over here in europe and in the uk, there are a lot of hoops companies need to go through it is not just about money, but reducing that bureaucracy. i'm very much looking forward to the interview with the iaea. interesting stats for the first time the investment has taken over fossil fuels. also coming up on the show, macau adds a new neighborhood down the street from paris and venice and gotham city vegas launches its latest report we will get out to that

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welcome to "street signs." i'm arabile gumede >> i'm joumanna bercetche and these are your headlines >> germany enters technical recession as the gdp is revised down compacting fourth quarter weakness as inflation weighs on the economy. and fitch placing the aaa rating on negative watch as the debt ceiling debate drags on ahead of the june 1st deadline >> i'm not going to give up. we're not going to default we're going to solve this problem. i will stay with it until we can get it done. we have to spend less than we spent last year.

it is not my fault the democrats cannot give up on their spending. divisions he mergeemerge wi fed less certainly on hikes. central banks should also be thinking ahead >> this is not a one and done in the current inflation period there is every expectation that bouts of inflation will be more persistent and frequent than over the past ten years. what is the game plan from central banks? and european chip makers top the stoxx 600 after nvidia has the biggest beat sign 2018 and shares soar in extended trade taking it to almost $1 trillion. las vegas sands is launching a london theme resort in macao

today. casino stocks are watched as the easing of covid restrictions on the sector visit numbers have surnged this year emily joins us with more emily, it looks as though you are standing outside abington green here to report on westminster politics you're not tell us where you are. >> reporter: that is right, joumanna the palace of westminster and not for from that is big ben this is the magic of tv or magic of macao las vegas sands brought this here to macao. it took a couple of years and it was unveiled in phasing during the covid period

now that everything is reopened, there is an official unveiling today with the arrival of robert goldstein, the chairman of las vegas sands. he is joining the wife of the late sheldon adelston. this is what they are calling the triumverate. first the canals and the eiffel tower and now the lands an markf the uk italy, france and now england. i was talking about the return of tourists post covid how fast does he expect things to go back to pre-covid levels >> you have to dissect macao

you had a large segment gone that segment created high numbers in terms of revenues, but less success in terms of bottom line and ebita income we live in a new world today i don't know if you will reach the same levels of top line. i think you can exceed the ebitda numbers of 2019 i don't know if it was 2024 or 2025 all i know the revenue and profitability is through the roof everyone is happy with numbers the may numbers will come out. i assume the highest since we reo reopened we believe in the quality of the product and people and hospitality to drive our business we are comfortable where we end up in macao long term. whether it is july -- this idea of predicting and definite about the timing is unnecessary. we know we will get there. >> you have a ten-year license

share the diversify ication pla. >> we pledge to spend more this idea we pledged $3 billion or $4 billion is irrelevant. we will spend more if we are able to. we are here long haul. we invested billions in 2019 when people said you can't invest before the license is renewed. sheldon never word about that. he said we would be fine all of the doom and gloom forecasts ended up being nonsense we had a ten-year license. we hope to be here beyond that if given approval, they will build more buildings here. we are huge believers in the market the fact we are sitting here is his vision people in hong kong 20 years ago

could not fathom the macao could be retail and restaurants and spas and hotels. no one in hong kong believed this 20 years ago. they chuckled. the growth in macao is something no one questions we will continue to invest heavily if we're able. >> how has business changed pre-covid compared to post covid? >> i'm not sure it changed that much we rely on great product and quality of product in the end, we're in the tourism business what drives tourism is product people want to shop and eat and spa. they want to come for business and stay in great hotels maybe they gamble. maybe they don't you will see the goal is the top tier product wins the fight. our business has always been that way the best products win. our goal is to create a must-see

destination product to cater to the highest end of the market. whether it is international tourists or hong kong or china, it is all the same to us the product dictates our success. >> reporter: so the big ben here rings the same as it does in london at the top of every hour. at that time, of course, in about 20 minutes, it will happen we are counting down at 5:30 local time is when the red carpet is filled with guests i have to zoom in across the street which is the londoner hotel. it will be a fanfare and speeches by rob and david beckham. another famous uk export speeches from pianist and followed by a gala dinner at 8:00 local team ime here

big event to reveal the london macao. one question to rob was the focus to macao in the concessions is the shift to non gaming they established the casino tables over the last 20 years and i asked would it make the city less attractive that puts macao on the map the gaming capital of the world t. maworld. he said it makes it more a attr attractive building the casino floors is easy, but the entertainment side takes more effort to create something where people want to see. we get a taste of it tonight i'll be on the red carpet in the next hour to see which vips and celebrity guests they will have here tonight maybe get to see rob goldstein as well. back to you. >> emily, i hope you can a spot

of afternoon tea you can hear more on the episod of the cnbc conversation. let's get the picture across europe and it has been a down beat day which follows from the session yesterday which was down beat and the second session in a row for a lot of european markets which had been in negative territory that is following on from yesterday's down beat numbers. .30% weaker for the ftse 100 following on from the inflation print which came in at 8.7% year on year. it is coming off that double digit number, but still less than anticipated that will be a continued look at the yields on that front being fairly interesting climbing to 25 basis points yesterday. even 6 points today. that is the uk ten-year yield.

economic fears heightening the risk the dax is in focus today. .50% weaker at this point. even on the yield side, it is up 1% germany is entering recession. 0.3% drop in economic growth across the board, we are seeing negative markets the dollar hit a fresh two-month high against the basket of peers. that was yesterday that strength is following through as well today as you see 19.92 for the turkish lira still dollar dominating on that front. euro/dollar. 107.37 now 14% weaker for the euro. sterling as well is dollar

strength coming through. still below the key 124 mark here is a look at u.s. futures this is fairly interesting a bit of a split picture with the dow jones industrial average looking to start the day off into some negative moves slipping, of course, after the fitch rating with the negative watch placed on that aaa rating for the united states. let's see how that floats into the market as well as nvidia numbers and will it reach the $1 trillion mark soon? we will see in that market picture. >> a lot of hype with nvidia and the german stock for nvidia is up 23% in pre-market with nvidia opening up 23% it is lifting tsmc arjun told us how nvidia's desire to produce more chips will directly impact tsmc

because they are the largest chip fab in the world. tsmc is up as well as micron up 4.3% alphabet and microsoft and names wading in the a.i. have a sympathy rally on the back of the strong nvidia earnings. coming up on the show, ron desantis entering the race for the white house, but his big day falls flat as his republican candidate breaks the internet.

rock 'n' roll star tina turner died at the age of 883. she had a career spanning five de decades. she died wednesday in her home in zurich after a long illness there will be a private funeral ceremony for close friends and family members florida governor ron

desantis' presidential campaign plans were derailed by technical glitches on twitter. elon musk said the servers were straining on the live stream where they were supposed to have a conversation desantis filed paper work earlier in the day putting him in the running for the republican nomination. gabe gutierrez has more from nbc. >> reporter: tonight, ron desantis, announcing his run for president in the new ad. >> we need the courage to lead and strength to win. i'm ron desantis and i'm running for president to lead our great american comeback. >> reporter: his campaign also hitting a technical snag with so many listens tuning in with elon musk that it appeared to crash the site. >> sorry about that. we have so many people here that

we are melting the servers >> reporter: desantis seen as the republican frontrunner and trump's toughest opponent. the endorsement was critical in desantis' first run for governor >> make america great again. >> reporter: but the relationship later soured after the landslide re-election win and he argues he is the best pick to take on president biden. >> we must reject the culture of losing that has infected our party. >> and stood for what was right. >> reporter: details of the desantis super pac plans to do it $200 million operating budget that includes hiring 2,600 field operators by labor day now in the state both men call home, a scramble for primary voters we met monique pope.

>> i believe president trump is the man to bring us across the finish line. >> reporter: and p onone man mo his business to florida. >> we saw the leadership during covid when everyone was yelling at him to shutdown >> julie norman is the professor at the college of london julie, this does bring in another fight in the political landscape for the united states. who fares better and who has a better chance although ron desantis is far behind he is still the best possible chance of defeating trump if republicans want to do so. >> he is the most likely contender. trump is still ahead of desantis by 20 points or 30 points. desantis is entering the race on

the back foot. with that said, i think he believes he can carve out a lane within the republican party and try to catch some of those who are not as enamored with trump i think he knows he cannot peel off that many from the trump base he is saying i'm positioning myself as someone who can appeal to the rest of the party the 50% who don't want trump to run and double down on culture war credentials on the ability to get things done and he is the one to take down biden and the democrats most likely in a general election >> it is still a party for trump. if anything, donald trump has continued to lose. when he got elected, he lost the popular vote at that stage technically haven't gotten back to where one would think congressional republicans would get back to a majority in the

house. only gaining one seat in that time does donald trump still stand as the true leader right now of the republican party >> well, i would say thrump is leading the party if he is not leading the party to election so to speak for trump, the midterms seem as a loss for him and his candidates trump and his supporters still believe he won in 2020 and deflect the losses to the flaws of the candidates who were not trump enough to win. trump and his base have a strong grip on the party. i don't see that going away any time soon. >> julie, i want to take you to what is happening over the debt ceiling discussions. we're in an extreme state and

rating agencies have started to take note. fitch placing the aaa rating on negative watch i wonder which party has been impacted more in terms of how the public is perceiving the negotiations which party stands to suffer more should we breakthrough the june 1st deadline? >> good question i understand if the deal is reached, it is still undermining the economy by having it get to this point there is an interest to have this resolved. politically, it is coming out to be awash both parties are hearing who is to blame in this both are hearing the other one is objstinant. we see that most republicans are blaming democrats and democrats are blaming republicans.

bottom line, if a default happens, all americans lose. it is in the best interest to get to resolutions. >> as we gear up to the next election and ron desantis throwing his hat in the ring, what topics will resonate the most with the voting public? we talk about the state of the economy and recession which hasn't p happened yet and still we talk about it a lot what do you think are the main themes that the respective leaders of both parties will be pressing on this time around >> i think the economy, by the time the general election come around, the state of the country plays a state in how voters vote we know from the past that biden will focus on that a lot if he steers the economy in the right direction. at the same time, if the economy goes south, that is something

that will hurt biden as well the difference with the u.s. elections is the focus in the primaries is different from the general. the primaries, we usually see candidates leaning into issues that matter to their base. the culture war issues we expect more from desantis and trump on anti-woke and abortion and immigration and some of these talking points the general election, the economy and the abortion will be a big issues and state of the country in the 12-to-18 month period. >> last time the unemployment rate in the united states is this low at 3.4% was in the 1960s. president biden may still have something up his sleeve. julie, who do you think joe biden might prefer to go up against?

would it be donald trump again or would ron desantis offer a more difficult challenge do you think in this respect? >> so it is a question that many p democrats are focusing on right now. i think booiden would have a better chance against trump than desantis with that said, even the polling on trump and biden is not decisive it is a closer race than democrats are giving it credit to potentially be. in reality, desantis is a more formidable opponent for biden. many independent and never trump republicans would support desantis although they would not vote for trump just the closeness of the elections means if you lose that demographic, it would be hard for biden, i think, to beat someone like desantis. compared to donald trump >> thank you, julie. julie norman

associate professor of politics from university college london i want to bring you flashes from the german finance minister on the gdp print revised down 0.3% this year. weak economics is a dynamic for politicians and he is focusing on the numbers that are coming out. those are the remarks that the german finance minister has given. leaving you with a snapshot of european markets which are in the red. i'm joumanna bercetche >> i'm arabile gumede. "worldwide exchange" is up next. stay tuned

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it is 5:00 a.m. at cnbc global headquarters. here is the "five@5. heading for $1 trillion. shares of nvidia soaring after the record-breaking quarter and what could be the biggest market cap gain of all time. not close enough progress on the debt ceiling talks and we are one week away from the treasury's x date fitch taking hold on the aaa credit rating. and a stock market overseas disconnect in the largest economy. germany officially enters a technical recession with