i'm craig melvin. thank you for watching. [music playing] ♪ welcome to "street signs." i'm joumanna bercetche and these are your headlines novartis raises a share buyback program and the group outlining lists plans for generics unit's. ocado hit a five-month high as the group returns to profit in the first half of 2023 while uk grocery inflation eases in

july for the fourth month in a row. the wall street big bank cuts the forecast for china on the gdp figures as the country wrestles with the post-covid recovery. and investor focus returns to wall street again following the bumper bank earnings with bank of america and morgan stanley results on deck. our u.s. colleagues will speak with jamie dimon and brian moynahan later today good morning let's look at how markets are faring yesterday was the day where markets took stock of the weaker gdp data from china along the activity date disappointing to the down side. on the back of that, we saw a dip in asian quities that negativity transpired into

today's session. as for wall street, the majors closed with a gain yesterday the indivisibces closing at a 15-month high. the stoxx 600 with a bit of green on the board the index is up .20% the attention has moved away from some of the data that has been coming out of china toward the earning report cards notably, results from switzerland the last couple days yesterday, luxury sector was pulled down by richemont today, we are focused on the pharma sector. in terms of the breakdown for individual boards, the dax is below the flat line at 16,000. 3 points weaker.

ibex is down .25%. the general election is coming up this sunday a lot to watch out for the political front. the cac 40 up .20% a bit of recovery from the luxury names that were hit yesterday. the ftse 100 over here in the uk is up .20% one name and one name only that investors are focused on which is ocado that stock is up 12.5% today as it finally posted a return to profit some good results out of ocado driving the ftse 100 in terms of sectors, we have luxuries with a rebound coming through in that sector up .60%. travel and leisure as well increasing with the pickup in travel autos looking good today up .50%. on the flip side, telco with

vodafone slipping a bit. some of the defensives are lagging today. we have key corporate earnings in focus novartis raised guidance for the year after the second quarter earnings ocado is also trading at the top of the stoxx 600 after the group reported a return to profit and finally a stock we were talking about yesterday, casino, the board has given the all clear for the 1.2 billion euro cash injection. the stock is down more so at 4% today. going back to novartis, the australian focus with the stock up 3.5% in trade it raised outlook for the year and launched a 15 b$15 billion

buyback program. the swiss drugmaker said the board bid off the business with the shares set to vote in the january meeting. let's dive into ocado here earlier on, it was up 12%. you can see quite a bit of a jump since the middle of june. ocado has backed the full full-g full-guidance. the british group flagged a strong business, but a pre-tax business had a loss of 289.5 million pounds speaking of the uk grocery sector, grocery inflation continued to decline into the fourth month in july at 14.9% in the uk that is the steepest fall since march peak

no doubt, a concern for many consumers. low cost store aldi seeing sales up 24% in the period compared to tesco's 22%. this is ahead of tomorrow's cpi inflation numbers. switching back to casino again, daniel kretinsky is closer to the bid to takeover after the $1.2 billion injection he is the sole bidder after 3f holding dropped its offer after the weekend. lots going on here charlotte is here at the desk with me. we were talking about the developments yesterday i guess the question for investors is how much potential upside to the can sino stock do this new bidder present?

will this change the fortunes of casino with kretinsky? >> we see very cautious movement this morning it is a wait-and-see offer with kretinsky to take over casino. you know that offer is 1.2 billion euro index to give him a 53% stake. he was the second largest shareholder. now he has some financial issues with casino. he is the man who has his hands in many retailers. one company in germany and here in the uk and one in france. he has many stakes in many businesses he would take control if the negotiations come go the board continues to negotiate and hopes to come to agreements by the end of the month. the question is what does it

mean for casino if the negotiations come good what does it mean for the str strategy casino is having difficulty with price cuts put in place over the past year. fear fierce competition in france the hyper supermarket is the business which is one p losing a lot of money will they downsize that? the one with the convenient store are successful and doing well with a strong foot behind that was part of the strategy he put in place for the group we were talking about ocado. this is a supermarket with a deal they pushing into the ecommerce as well. there is a question of the strategy and 53,000 employees in

france the interview this weekend where mr. kretinsky said he would make the greatest effort to preserve the maximum possible mission of casino it is not sure what he will do in the shaping of the business >> the casino story is interesting because it has been very much a micro story and hyper leverage and too much debt and emerging empire and cyclical trends against it. i wonder the macro and that performance on casino. we talk about the fact that the low cost retailers with lidl and aldi are gaining market share with the cost of living crisis the food inflation has been so high and people have no choice to move to the low-cost grocers. where does this mix in the offer of retailers

>> that is the similar price cuts because of the cost of living crisis and level the debt they had, they were limited in the price gain they could have they have a low-cost brand they have certainly found competition from the german giant of lidl and aldi that is a unique story it is a financial engineering going on for years and it is starting to get opaque there was a question of things were getting some complicated with the restructuring here with the business and did they go too far and over-leverage? again, in 2015, those were muddy waters when they talked about when this failed and that was the beginning of the casino story. the revelation of casino and did that accelerate things to the extent that was the question

nu maybe he was in the dark for a very long time and they entered into the negotiations in may that level of debt has an issue. >> maybe this was the start of the turn around. investors are not reacting very well this morning. casino shares down 4%. sha charlotte, thank you for joining me on set. also coming up on the show, novartis shares shoot to the top of the stoxx 600 after it raises guidance for the full year we will look at the numbers more coming up next

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welcome back to "street signs. let's talk china wall street's big banks slashed the growth forecast for china on the weaker second quarter. jpmorgan chase and morgan stanley cut estimates down to 5% and morgan stanley cut the 2024

estimate as well in debted chinese developer last a combined loss of 81 billion billion. government curbs on industry loans and waning housing demand hit china property sector. shares of evergrande has taken a hit since march. let's look at the overnight session. the spot of green in the nikkei up .30%. big moves in the hang seng it was closed for trade yesterday with the typhoon we are seeing a strong selling session down 2% for the hang seng led by property and tech.

shanghai composite down as well. as for global fixed income, you can see the 10-year treasury is trading at 3.75. four basis points lower on the session today. we have the 10-year bund trading at 2.39. 6 points lower as we review the next ecb meeting next week 10-year gilt in the uk at 4.36 the number one focus is on the inflation data that comes out tomorrow which will be key for the bank of england. goldman sachs has cut the probability of u.s. recession from 20% to 25%. the bank has been more confident that inflation will fall to an acceptable level without recession. it warned it still sees slowing in the coming quarters as reduced bank lending has had an impact

happy to say the chief credit strategist from goldman sachs is joining me on set. wonderful to have you with us. >> great to be here. >> the probability of recession from 25% to 20%. it was higher earlier this year. what is the probability of a soft landing >> you look at u.s. or europe, it is consistent with a soft landing. the idea you can re-balance the market without pushing the unemployment rate higher and trigger a recession. i think the challenge, however, on the market side, not just in credit, is valuations. i think the prospects of the soft landing improved the last couple months. there are valuation constraints with the equity market or credit >> before we dive into that, let me ask you why have higher interest rates and financing conditions not actually

translated into the higher level of default there has bn't been the massive pickup >> we have been resilient, but we are beginning to see the reversion of the long-run average. there is one primary driver of the resilience we went into the hiking cycle in a position of strength at least if you look at issuers in the high bond yield market with leverage or interest or profitability, they are healthier levels relative to previous cycles. there are pockets of stress. the bank loan market is one example. the bulk in floating rate form with loans that resilience really speaks to the funm fundamental strengths >> we hear a lot of refinancing

debt we talked about it in the context of the real estate market how much of a threat is it to the credit market? >> that is a really different case here. on the corporate side, i don't think this is an issue for large investment companies they have all of the operational flexibility to transition to that higher for longer cost of capital environment. this is, however, a little bit of a challenge i think the lower you go in the quality spectrum and size. small companies with one or two bonds outstanding that will have to come to the market and refinance old debt issued at a low coupon with new debt at a significantly higher coupon will have a hit with interest >> your big house call on the long side is double b? not triple b why? >> valuation we live in a world that is

strange. the ig index and dollar market barely yields anything over cash if you are stranined, there are reasons to own ig. in a world where cash has established itself as an al alter alternative, we don't believe the risk has been there. >> we talked about commercial real estate. how dire is the situation there and whether or not the valuations are looking at the pessimism in the industry? >> the one thing i would look at is the security market if you look at the csmb market which is the real-time market

for real estate and spread levels are double the level you get in the high-yield bond market the market has re-priced you have to be nuanced with real estate the challenges are concentrated in office properties other types of properties are doing fine multifamily or industrial housing. two, i would not attribute the challenges to lose the writing standards which was the playbook in the run-up to the global financial crisis this is not what we are seeing rapid rise in interest rates coupled with structural challenges which are primarily effecting office properties opposed to other properties. >> if this soft landing materializes, do you expect buyers to scome back into the space? >> i think buyers on the debt side, yes

it has re-priced there is a big discrepancy with private and public real estate you look at the performance of public reits which has been poor for some time. private real estate because transaction volumes are so thin at the moment, you haven't really seen a big risk transfer. that will take a little bit of time. >> a lot of the narrative is negative and pessimistic so much of that is priced into the valuation. that is the distinction we need to make for viewers here one last thing, we are getting into e sarnings season now first quarter earnings and people are focused on the state of the balance sheet and leveraging will that change in the earnings season >> i think over time it will the type of structures we saw

pre-covid. the large debt funded m&a deals will look different today. the cost of debt is higher the strategic bid is there and it is not gone the structures will look different. you will see probably more cash and equity deployed as opposed to more debt >> good place to leave it. thank you for joining us the chief credit strategist from goldman sachs. earlier on, we were talking about novartis, the pharma stock we had been looking at all morning. interesting couple of days for any name giving the report from switz switzerland. yesterday, richemont was disappointing to the down side the stock was down 8%. today is a different story with novartis strong earnings. it has been treated well by the innvestment community it is getting a boost to the

pharma sector. with me to discuss is the healthcare analyst great to have you with us. novartis is an interesting story. the company was in a strong period of restructuring over the last couple years. now it appears they have turned a corner and the focus is back again on growth rather than downsizing and eliminating businesses that are not part of the core. >> yes, indeed that is the structure. when he came into novartis, it was more of a conglomerate he wanted to refocus the business on what he calls innovative medicine business it is due to spin out the business, the generics business, later this year in q4. once that happens, novartis will be a key player in the bio

pharma pharmaceutical industry. >> last month it purchased a company for $3 billion what does this enhance >> it is too early to tell with the acquisitions the business development is certainly something that novartis is looking to bring on with the non-core businesses a couple of months ago, the published results from breast cancer which is a specific sub type the drug trial was practiced with results and this will be a big indication for them. in addition to that, they have

very many other drugs in the clinical development which are really interesting in pharma, it tends to be trying to offset what you lose on the patent loss. >> that is always the way. the hot topic in the pharma space is the obesity and weight loss drugs we have spoken about wegovy and ozempic. how can companies keep up with the hype if they are not involved in that space >> as it happens this morning, novartis announced the obesity drug will not make it through. what is interesting about novartis is even though they are not in the spaces exciting today, they are involved in new-age therapy.

we have therapies where you attach a chemotherapy agent to a molecule and that delivers the therapy. they use a drug in prostate cac ca cancer they use other therapies as well with >> i want to get your thoughts on the breakthrough yesterday from eli lilly the antibody treatment slowed down memory loss and cognitive decline in alzheimer's pay shec -- patients >> it appears potent one feature of the medicine is half the patients were able to discontinue the drug because it cleared the issue in one year. it is a short-duration treatment with long-term impact.

>> that is the ceo david ricks there. that is the phase three results. how positive is it for the industry and eli lilly in. >> -- lilly? >> it is significant this medicine for salzheimer's disease. they published in march this year and they presented the full set of results it did underline the headline results which were positive. it managed to see some of the data interms of will it benefi the most what you saw is a range of efficacy it will slowdown the decline for alzheimer's if you treat it in the early stage and maybe up to seven months, which is really important. eli lilly is the company we have been talking about with obesity. it has multiple ways of getting

revenue growth. >> jimmy, great to have you on the show very exciting time for the pharmaceuticals industry we'll have you back on the show in the coming months the healthcare analyst from investech. our u.s. colleagues will speak with the ceo of novartis later this morning. coming up on "street signs," we well discuss the implications of the black sea deal called off. we'll have that after the break.

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welcome back to "street signs. i'm joumanna bercetche and these are your headlines novartis raises guidance and announced a $15 billion buyback program as second quarter sales come in above estimates. ocado topped the stoxx 600 hitting a five-month high as they return to profit while uk

grocery inflation eases in july for the fourth month in a row. casino resumes trade after the board continues rescue talks as daniel kretinsky trace to save the retailer from bank bankruptcy and china wrestles with weak demand and waning post-covid recovery russia launched a series of over overnight drone attacks in the south of ukraine this after vladimir putin said he was preparing a response to the attack on the road bridge in crimea in a televised meeting with russian officials, putin called the attack a cruel and senseless attack adding the bridge was not used for military

transportation he did not say if ukraine was behind had the attack, but local media said it was a special operation by the security services and navy. russia has pulled out of the agreement that allowed ukraine to export grain via black sea shipping route the one-year deal prbrokered by the u.n. in turkey the kremlin now says the in international community will need to agree to demands for russian grain or fertilizer. the u.n. said this will strike a blow to people in need and vladimir putin called fora ref start -- for a restart of the deal without russia. we have arabile with more. arabile, talk about the deal on key commodities. >> the commodities will head higher wheat prices drop off consistently ever since the

black sea grain initiative was put in place in july of 2022 we did see a bit of a step back from russia at one point they came back into the deal the next day this time, they were saying they like the russian agriculture bank put back into the global electronic payment system swift. that has not been agreed to. they have said we will back out of the deal. then, of course, as you pointed to, joumanna, there was, of course, that unfortunate bridge bombed as well which creates greater animosity with the two as well. this is the shipping route 400 million people used to be fed with the food that was produced out of ukraine. particularly in the likes of north africa, europe as well as the

turkey the shift then was hopefully the black sea grain initiative would then ensure that a lot more of those grains, would be shipped back to the nations and then things would get better. in fact, 5 million metric tons per month shipped off to lower-income nations that number dropped off to zero and back to 4.3 million metric tons once the deal had been put in place overall, 33 million tons has been exported to the lower income nations it is a deal that has worked sunflower oil seeds makes up 46% of the exports maize which is significant to the stabple diet millions of farmers now will not be able to get all of the crops.

joumanna >> arabile, thank you very much for that report. europe is bracing for another day of extreme heat with temperatures expected to peak across southern europe this week temperatures in rome could hit 43 degrees celsius smashing the previous record set in 2007 others could see 48 degrees celsius. meanwhile, wildfires are burning in greece forcing thousands to eva evacuate high temperatures have closed tourist sites like the acropolis in recent days we have one who spoke to cnbc about the global transition to clean energy. >> the first thing you measure to avoid climate change and that is to stop creating investing in coal plants. china and india.

this is why this is so important. in addition, here in europe, we should accelerate the energy transition with the storage and electrification. >> on the subject of spain, do not forget the general election is coming up this sunday a very closely contested election to look forward to. now the g20 meeting of finance ministers and central bank chiefs wraps up today with the officials addressing the challenging of climate change and rising debt. it comes on the back of talks from treasury secretary janet yellen and the finance minister where the two agree to cooperate particularly in the face of heightened china tensions. we have a special guest today visiting from singapore.

she is joining us at the desk over how the economy is moving along and modi is moving on the international stage. he has been doing a tour in the u.s. with macron recently as well talk us through the indian pro prospects. >> i think the state address as well witas the address in congrs has changed the game for india his visit has had an impact, joumanna thank you for having me here i lost track of that i think all of that has led to u.s. funds and global funds for india. they want to strike the market more india is cracking 1% the expectation is that would go up i think there is part of the relative valuation story here

for china and other emerging markets. that is predicated on the fact that global growth is 6% to 7% to take india into the global economy. we don't know what happens with the may elections next year. for now, policy continuing and the fact that there is a focus on reforms on the agenda and pushing forward is something that is helping india. infrastructure spending and demographics is working toward why this is getting excited about the market you can see over the last five years, it out performed the s&p 500 and shanghai composicomposi. a lot is happening. >> there is a lot. at the same time, prime minister modi and the indian policy

failing to protect minorities for the nationalistic rhetoric i wonder if the ideology gcan stand in the way of progress >> there is an interest in india in understanding how the economy is faring from here. on the political front, on the geopolitical front, with his own nat nationalistic agenda, the investors are feeling the focus is more at the granular level. the other issue is if we can back the trade with money. i think there are a lot of things happening i know that prime minister modi has faced criticism for the policies, but they are giving him credit for what he has done right with the economy and

spending on infrastructure and creating jobs and all of that will come together with the litmus test being the2024. >> that is the political front for the likes of apple, seeing the opportunity in the indian market and big part of the growth potential in the next decade from india and less from the chinese market to what extent will india attract the like megatech companies and trust >> i don't think there is a firm commitment now i think india is a diversifier away from china and the rest of the reegions. people are looking at qualcomm and the supply chain which is on japan, australia and u.s obviously, china plus one strategy makes it more logical to look at india closely how much does that translate to

the a.i. the ease of doing business has come down. it is now ranked 16th in the world. the heart of that translates depends on momentum and policy making from here i don't think that is relative to china on apple t, it is interesting. they are setting up shop in india, but margin. it is not really diffiverging supply chains. it has taken 20 years to get here we have to watch how things play out. i'm watching for the numbers as far as india >> it is wonderful to have you with us in london. you are here for a month >> yeah. >> i think we will do shows together >> a lot more on the region. >> i think this is after five years we are sharing the same

location >> don't give too much away. great to have you in london. >> lovely. >> our colleague from singapore. coming up on the show, more u.s. bank earnings are on deck today and a packed week for both sides of the atlantic. we will take you through the wall street earnings coming up next hi. i'm wolfgang puck when i started my online store wolfgang puck home i knew there would be a lot of orders to fill and i wanted them to ship out fast that's why i chose shipstation shipstation helps manage orders reduce shipping costs and print out shipping labels it's my secret ingredient shipstation the number 1 choice of online sellers and wolfgang puck go to shipstation.com/tv and get 2 months free

welcome back to the show let's get a check on european markets and how they are faring. yesterday, we were focused on the gdp flnumbers from china whh set the tone today, a lot going on with switzerland with novartis leading the swiss index up 3.5%. that is the reason the defensiv swiss index is out performing. the cac 40 is up .10%. recovery in the luxury names after yesterday. the ftse 100 is up .20%. ocado at the top of the index there and some grocery inflation

numbers from cantar showing a decline. that is welcome news for consumers. 49.4%. elevated, but moving in the right direction. uk cpi data comes out tomorrow this is the futures look with the s&p opening down two points. flat line. dow up 2 points. a lot to watch for in earnings and in terms of data in terms of data, we have u.s. retail sales coming up later and industrial production. on the earnings front, we get results from bank of america and morgan stanley we will talk about that shortly. microsoft and activision-blizzard secured a two month-stay in the competition and markets authority giving them more time to resolve the dispute this after both parties went to the london tribunal on monday after this would extend the

deliberation process by six weeks. as part of the judgment, the cma must issue an explanation by thursday why it changed its mind this comes as microsoft and activision is in talks to extend the deal contract which is set to expire midnight tonight san francisco time this could put microsoft on the hook for $3 billion break fee if it chooses to walk away. there is a third option. microsoft could move to complete the deal without the cma approval in breach of uk law that could lead to a fine of 5% of the combined global revenue by this time tomorrow, we will know which option they have decided. the least disruptive is to extend the timing of the deal. this as warren buffett said it cut its deal in activision to

14.5 million shares putting the total holding of 1.9%. morgan stanley and bank of america are the latest banks to report before the bell today morgan stanley is expected to be hit by a slowdown in deal making with the rising cost of financing and and alysts expectg a rise of succession planning. profits are expected to rise at bank of america with the boost of 15% of net interest income according to data. investors are looking for details of hold to maturity bond portfolio which reported a loss in the first quarter morgan stanley's james gorman will speak to cnbc today at 4:30 p.m. cet and bank of america

chairman brian moynihan will be on this afternoon. let's bring in our next guest. great to have you with us. let me start with the results we got out of jpmorgan chase on friday i wonder to what extent that is a bellwether for the rest of the u.s. banks reporting this week jpmorgan chase was solid across all lines of the business. >> jpmorgan chase came out with a solid set of results in general, in the u.s. banking industry, you are seeing things pulled in two directions you have increasing interest rates despite the fact that depositors remained strong the big banks benefitted from that people want to leave their money

in there they are getting cheap money to finance activity lending based on net interest margins, but the banking side are more muted even at jpmorgan chase. we saw that at drag the bank down with morgan the bread and butter lending is doing well, but investment trade not doing well i expect morgan stanley not to have impressive earnings, but bank of america to do well >> it seems like it is playing out in the earnings season over a couple of months ago to what extent to the larger banks benefitted from the turmoil in the regionals >> i expected to demand higher interest rates on checking and savings accounts that has not happened. we have seen the flight to safety the flight to safety, i thought we would see,would be in fixed

income and u.s. treasuries with high rate of return. it seems a lot of depositors would leave money in big banks and get 0% if you sifted through jpmorgan chase results, you notice they have a substantial portion of savings and deposits that is good for the bank overall. there say sis a flight to safet saying i'm willing to accept low returns for the large banks for the perception of safety >> octavio, as you look at bank earnings, to what extent are the watching out for the communication from the ceos? i bring this up because over the last couple months we heard from the big banks cautioning about the state of the u.s. economy and the fact it may tip into recession. now we are looking at the sags

wh -- situation where the u.s. may not get into recession and now looking at a soft landing. >> i think we are trying to focus on the numbers how are they faring and what does the net interest margin look like and what loan losses and decllinquency rates. many have been saying there is bad recession coming and turmoil. jamie dimon at jpmorgan chase a year ago was making sounds like the end of the world was coming. that has not come out. the pronouncements of the ceos you have to take with a grain of salt it is more fruitful to analyze that and see what is going on

beneath the hood. th i will say the results are positive and surprisingly positive >> let me ask you quickly about goldman sachs. a lot of criticism directed at david solomon with the management decisions he made ill-fated investment and so forth. what do you expect in terms of the months we will see this week from goldman >> i don't think the numbers frommpressimpressive it used to be they are the smartest player in the room. that changed significantly i think the worst thing goldman sachs with the ill-fated for ray into banking is not working well they thought we were so smart, we can get into banking and it

has not worked out the way it wanted they will have to focus on the core business and banking and trading and they have to the been able to expand outside of that i don't think that will change any time soon. they are looking at retail banking space and say that is not where our strength lies. we should concentrate on our core business. >> yeah. absolutely that would make a lot of sense octavio, thank you for joining me on the show and giving me your perspective quick look at u.s. futures before we head out as i mentioned earlier where they dipped into the negative s&p is opening up in the red on a big earnings day as data day as well. that is it for my show i'm joumanna bercetche "w "worldwide exchange" is coming up next.

it is 5:00 a.m. here at cnbc global headquarters. here is the "five@5. big banks are boosting for earnings finish line in sight for microsoft. some are striking and some talking. and the latest streaming service that says it is raising prices and later with another company looking at