that's all for this edition of "dateline." i'm andrea canning. thank you for watching. ♪ welcome to "street signs." i'm arabile gumede joumanna bercetche is at the bank of england to unpack the decision from the boe. these are the headlines. the u.s. downgrade equities for a second straight day in every sector deep in the red infineon died guidance is

bringing down the sector with results from quarlcomm overnigh. and bank of england is looking for a 25-basis point hike or 50 i'll speak with andrew bailey at 4:00 ap.m. and wall street futures are coming down with the results from apple and amazon and investors are looking to see how the performance division is doing. we have been following economic data this morning particularly on the pmi front. earlier on, we had german and french pmi numbers and now

eurozone numbers for july. the figure coming out at 48.6. the final composite pmi number for eurozone the flash figure had been 48.9 a slight dip when you look at the services pmi, it is 50.9. it is expansion territory with the flash number at 51 p.1 this is the final pmi number that was flash services at 50.9. the flash at 48.9. very interesting to take a look at the drawdown with the pmi eurozone activity does ak ex acce accelerate, but a decline with the composite number at 48.6

versus 48.9 which is what we have been looking at the european market has been one that faltered today. particularly in the last couple days and it is really just based off what has been the downgrade of the u.s. government debt coming through from fitch. they are worried about the brinksmanship and worried as they continue to put forward the debt ceiling for the u.s what are we watching with europe that is down more than 1%. all the sectors in red following from yesterday's downturn as well which hasn't helped the picture. infineon took a dip with the tech shares down significantly which hasn't helped the market we are seeing negative numbers come through here is the european market

pictures as i pointed to all the sectors in red a big dip for the ftse 100 of 1.5% we are tracking earnings numbers coming out today with the cac 40 at 1.3% weak in the overall trading picture. banks had an initial back-end trend early on and dipping .50% before 9:00. stoxx 600 closing down 1.3%. today, following all that notion, as you can tell with 1.7% weakness. ftse mib hasn't hit the best figures this week. here are the sectors where i have been speaking technology sector with infineon chip stocks and qualcomm pointing on ut to issues and

infineon has beaten slightly, but the problem is the weaker demand in futures. the outlook is what has really dipped off that tech sector. basic resources taking a slump at 1.5% weak insurance is down as well as retail and autos taking a hit. here is the u.s. futures it has been a sense of negativity over the last couple days which hasn't been brought forward by the fitch rating downgrade. s&p 500 firms reporting with 81% beating expectations we are anticipating the tech bellwether is apple to come out with results and the ecommerce giant amazon we will see how aws is faring there. will it continue to be a slow burner in europe, we are counting down to the bank of england rate decision with the central bank

all but certain to deliver the 14th straight hike uk inflation did ease to 7.9% in the month of june. that was lower than expected it is still well above the bank of england's 2% target core cpi has fallen to 6.9% from 7.1% in the month of may traders remain split on the bank of england hike today with the markets pricing in 2/3 chance the bank will slow the pace of hikes to 25-basis appoipoints aa larger probability standing at 37% for a 50-basis point hike. what size is the hike that the bank of england will deliver this afternoon researchers noting the risk of

overkill from further tightening warning of the wile e. coyote moment ubs citing second quarter inflation of the bank of england may projection and continue wage rises as reasons for that haw hawkishness. joumanna has been at the bank of england all morning. jo jo joumanna, it will be a busy day and a surprise >> reporter: to your point, arabile, the market was split for 25 or 50 the bank of england did surprise hawkish then with 50 basis points we see a different picture today from june with the inflation

data which is surprising to the downside before june, you had two consecutive inflation prints really surprising on the upside coming in much hotter than anticipated. since then, we have seen moderation go. the headline rate is 7.9%. core inflation is still sitting at 6.9%. this is above where it needs to be to be consistent. in order for the bank of england to put pressure on, they have to go larger with a 50-basis point hike i would add to that the bank of england will release the updated inflation and growth forecast. let's keep an eye on those of the analysts are talking about the balance sheet as well. the bank of england has been ahead of the curve in terms of reducing the size the balance sheet. they have 80 pounds of reduction

from a year ago. they could go for a higher than expected to increase to 90 or 100 billion in the next couple months let's get back to what analysts are saying about the actual rate decision really happy to say that paul hollingsworth is joining us. good morning, paul as i described, the street is split for 25 or 50 i was reading your note. you guys are in the 50-basis point camp is one downward surprise on the inflation number not enough to convince you otherwise >> the bottom line is it is a close call you can make a reasonable case for a 25-basis point move or 50-basis point move. for us, the 50 prevails. that is what the bank of england will deliver and should deliver. for me, there are three key reasons underpining that the pay growth is strange. if i look at the momentum, three

months of pay growth in the sector and that is not running far away from 10%. it is not an environment where you get inflation, and in particular, inflation back down to target levels in a reasonable time timeframe. the pay growth is really bad the second is to do with service inflation. we have seen surprises to headline and now headline is back to where the bank of england thought it would be when it projected in may. if you look at the services inflation which is better than the generated inflation for the mpc placing more weight on, that is running well above where they thought it would be. there is still pressure for them to do more the third reason is an argument of front loading do we think the bank of england can get away with one more 25-basis point hike? probably not the market is pricing in a rate

close to 5.75 if you think there is more in the pipeline, there is an argument to front load it. that is one of the arguments that governor bailey put forward at the conference. argue view is that on balance, though it is a close call, 50 prevails >> very clear. thank you for clarifying the three points let me p ut the dovish stance o it city analysts are saying given how much titghtening has come through, is there a risk of overtightening from the glbank england? it will take a couple of months or a year for the existing interest-rate hikes to make it to the broader economy and we are activity to slow down. >> that is true.

the risk of overtightening increases. the bank of england needs to see more pressure that the tide starting to turn if i look back at the global picture, we have seen encouraging signs in the u.s. and in europe with the survey indicators of advertised wages which are softening as well. in the uk, they are still accelerating there is the risk of overtightening and the more you increase rates, you still have to be aware. the bank of england is weighing demand and the economy and the strength and inflation it is mandated with inflation and it needs to see the pressure start to drwindle >> paul, arabile here in the studio if another 50-basis point hike

is going to be put forward, how big could a recession be in england? >> our case is 50 today and taking rates up to 5.75 is sufficient to put uk in recession in the first half of next year. it is a mild recession or small peak compared to the shocks in the past fundamentally, if i take a step back and look at what the economy has done in the past year, it has barely grown. we have a flatline, but it is still efficient with the pressures which are persistent it is the balancing of the demand back drop and the weak in demand which is required to bring inflation down on the sustainable basis. >> how difficult is it for the bank of england in terms of communicating why they are hiking so much in the environment where inflation is

dropping in some instances whether it be food or wages which are coming down although not softly enough? >> it is a communication challenge and the inflation picture and dynamic is complex we have seen a number of shocks from the pandemic and associated impacts on supply chains and russia and ukraine war this is significant pressure some forces are dwindling and headline inflation is coming down which is good news for consumers. fundamentally, the bank of england needs to make a decision if it is sustainable the shocks on the downside fade and are we left with the target or above target and they need to tighten more until the pressures fade as i mentioned earlier, wage growth and services inflation and bits that are representative of the generated inflation are

sending alarm bells we are closer to the end now, but we are getting to a stage where the bank of england needs to deliver more to achieve the mandate. >> yeah. paul, to rwrap things up, there was talk a couple of weeks ago that they may increase the size of the qt envelope is that in the cards >> it is in the cards. our expectation is they increase the pace of qt we are looking for an envelope of 95 billion. this would be an increase compared to the first year of the program. i would caveat here this is not the bank of england accelerating active sales next year we have more maturing bonds. the overall envelope is increasing, but we expect them

to keep sales more or less the same as the case so far. would that be a surprise i think it is well telegraphed this will be a meeting where they accelerate qt they also could decide to accelerate the sales which would do more active qt. the bank of england doesn't think the qt has a big macroeconomics impact. it is more signalled it is not the same as qe or in reverse. a small macro impact and the feeling is the markets digested well so far. there is scope for them to e accelerate further our central envelope is 95 billion. >> paul, thank you for the time. i appreciate it. we will see what the bank of england does later today chief europe economist at bnp

joumanna, thank you as well. we will continue across the day. don't miss the live coverage of the bank of england decision later today on decision time catch all of the coverage on cnbc midday. joumanna will speak to the bank of england governor andrew bailey that interview is coming up at 4:00 p.m coming up, earnings are in focus as european equities open in the red we will breakdown the latest numbers reporting after this break.

welcome back infineon released guidance for the full year and revenue coming in below forecast in the third quarter. just over 4 billion euro the german chipmaker says it sees full year revenue of 16 billion euro, but the ceo warned of weak demand for consumer electronics. while this stock is down 10.6%,

it is at the bottom of the stoxx 600 today. it does follow on from the other chipmakers taking a hit in the likes of asmi down 2%. out of step as we look at the chipmakers let's look at the bottom of the stoxx 600 with the airlines. second quarter profit jumped at lufthansa with profits tripling sending shares higher pre-market the german carrier raised guidance for the year with ebit in the third quarter to exceed . the demand is forecast to remain high

lufthansa is down and close tore t -- closer to the bottom of the stoxx 600. wizz air is taking a dip followed by norwegian air this morning. the beverage industry has reaffirmed the guidance for the year after the strong performance in china pushed regional profit above pre-pandemic levels to offset the anti-lgbt boycott of the bud light product in the united states for anheiser busch. it received more than $1 billion less from the same period last year ing with the net profit topping expectations of higher

interest rates helping to boost revenue. earnings per share per quarter was 0.4. the stock is 1% higher this morning. and soc gen reporting group net income for the second quarter which is above expectations the french bank confirmed the full-year guidance and launched a euro share buyback program charlotte joins us from paris with more on the story charlotte, with bad loans on the focus, soc gen lowered its guidance >> that is the take away this morning. revenue is lower down 9%, but better than expected at 63 billion euro

you remember a year ago, they had a heavy loss of 1.5 billion after they disposed of the russian business to get back to profit co looking at the different parts of the business, french retail banking has fared the worst in the quarter. revenue down 13% due to decrease in the net interest margin they are merging in france to cut down the agencies and costs on the french businesses this will have a strong increase in revenue and online banking business is getting steam after a few years of not making money. they are making profit on that front. good performance in private banking. in international banking, revenue was up 6%. particularly with the businesses which they made a couple of

years ago with that acquisition. that is up 18% still in the part of the business where wthey announced disposal of four businesses in africa which is the start of the wider look at the geographical spread there revenue in the family banking with revenue down 7% talk about less favorable market environment there. overall, all eyes are looking at the first set of earnings for the new ceo after the 15 years being at the helm. the bank will present a strategy for the banks and these earning are just good enough they

on the earnings which are positive for the market with the few stocks in the green on the cac 40 which suppup 2.2% in pars >> thank you for that, charlotte. coming up on the show, wall street braces for a mega cap market day with thtwvaabe o lule companies set to release after the bell we'll discuss that next.

welcome to the second half of "street signs." i'm arabile gumede here are the headlines european markets stumbling for the second straight day. every major and sector deep in the red. infineon guidance disappoints putting shares on track for the worst day in three years and dragging down the broader european tech and chip space. echoing sentiment from qualcomm overnight. attention turns to the bank of england where wdecisions are split of a 25-basis point hike

or 50. i'll speak to governor andrew bailey at 4:00 p.m. and to the u.s. where the wall street futures turn to the red from tech giants amazon and apple results and apple looking for the third straight month of falling sales for the iphone maker. as we have been saying, we have been following data coming out today. pmi data the uk global july final composite number for pmi has come out at 50.8 which is slightly better than the 50.7 flat figure. growth is cooling, but still in expansion territory with the pmi

number final services pmi is 51.1 which is in line with the flat figure of 51.5 which we have seen uk services growth cooling to the six huf m-month low confirmation of 51.5 the confirmation number of 50.8. today's big story is the bank of england and the decision to hike interest rates for what would be a 14th time in a row the question is 25 basis points or 50 basis points joumanna is joining us for more. joumanna, the question around the interest rate hike is based on data, but how far the bank of england can go from here as well, right? >> reporter: absolutely. i think the markets have been unclear on how much more the

bank of england will do or should be doing. if you look at interest rate expectations and how they have changed since may, we moved more than 150 basis points in both directions one point, the rate was 6.5% we are sitting at 5.5.75 the market is expecting a 25-basis point hike and maybe a 50-point hike, arabile that is all in regards to the inflation data we he e know going into june, wd 50 points, but we had a couple of headlines one figure we received for inflation was moving to the downside is that enough to convince the bank of england for a moderate ways of 25 points or will they want to keep the pressure on some of the hawks will suggest and saying services inflation, which is a better reflection of

domestic inflation pressures, is running hot at 7.2%. that tells you the economy if you pull out of the volatility issues, it is running hot. wage growth is 7%. the bank of england has to keep the pressure on to ensure the levels are in line with the target of 2% i think it is interesting where you were reporting the pmi data. that tells you the activity levels are starting to moderate. one criticism of the bank of england is the forecast history is not that stable recently, they massively upgraded the forecast for growth they see it growing at a .25 impofo the year i would not be surprised to extend that forecast again with

the release of information today. this is getting into granular detail, but the decisions from the bank of england is basing the forecast off market interest rates. as i saet it up, market interes rates are moving a lot of the we are -- moving a lot. we are moving a lot. we have to justify why they are going for the 25 or 50-point hike it all comes together with the bank of england and the forecast track record which is why we saw the former fed chair is coming here to see how the bank of england is looking at the forecast numbers as we head into today, arabile, the market is looking at a 30% possibly of the 25-point hike

and if the reaction is looking to the inflation data and forward guidance and what they will do next in regards to the monetary tightening should persistent informlation pressur arise. we will speak to the bank of england governor andrew bailey at 4:00 p.m. today >> joumanna, the priority is to bring down the inflation figure to 2% and the question has been, as you pointed out to the previous guest, paul hollingsworth, that overtightening could come in as well if recession is anticipated next year and they have to get to a point where they bring inflation down substantially, then that 5.75 expectation with the terminal rate figure gives them a chance to front load today

all of the permutations are what you are unpacking with the bank of england governor. we will continue that today. don't miss our live coverage of the bank of england decision today. we will kick off coverage at 12:00 p.m. bst joumanna will speak to the bank of england governor andrew bailey later today that interview is coming up at 4:00 p.m. bst. stay tuned for that. coming up on the show, saving the biggest for last. apple wraps up a bumper earnings season, but looking for the sales performance. we unpack that next.

another day of weakness in the united states with the debt downgrade. earnings news, of course, coming out today. infineon have been brought out

the demand with things looking cooler unfortunately, that number has hurt a little bit. infineon down 10% in the trading picture. even lufthansa losing 6% today and bt being 5% weaker 3% loss there with the results g picture. in the united states, this is what we had seen for the market picture. losses across most of the board. we have seen the nasdaq record its worst day since february as the tech stocks began to tumble out on that front. both s&p and dow jones industrial average closing lower. more than 2% the worst day on record for the nasdaq since february. that is deep selloff there

breaking the streak of not losing more than 1% for the s&p. down 1.3%. let's get into the treasuries following the downgrade from fitch the 10-year treasury rising to the highest level of november of 2022 that is all on the back of what we are seeing. 4.157 currently. european neyields are down. interesting to take note to see how this fares all of these will still be impacted by that downgrade coming from fitch. u.s. futures here. this is how we see the market. stock futures going down today we are seeing things contending with the u.s. downgrade on debt.

the tech bellwether apple and amazon will be ones we will look at today my colleagues on "squawk box" spoke to the head of macro policy research at state street global advisers and a former role which is a member of the s&p sovereign rating team when it downgraded the u.s. in 2011 he said recent data overstates the strength of the american economy. >> i think it is interesting with the market today. why is the deficit growing with a robust economy that is what you should be asking we have a stealth fiscal impulse with revenues failing to come

in the strength of the keconomy is not as rebobust. the cracks are showing they really are happening. >> our colleagues stateside caught up with ceo jamie dimon he called for the debt ceiling to being scrapped. certainty is required in an uncertain world. dimon urged fitch to restore america's aaa rating. >> it doesn't matter that much the markets decide, not the ratings. number two, they point out i issues with the debt ceiling crisis and then, number three, this is the most profitable nation on the planet and secure nation on the planet ratings are rated higher with aaa, but they live under the

american enterprise military system that is ridiculous. >> as i noted earlier, it had been a bad day for the nasdaq in trade yesterday. the tech is impacting nasdaq with a 2% dip in the nasdaq there. recording the worst day since february with a steep selloff across the day's trading second negative session as well in a row it is also set for a second negative week of the last three is what we are seeing in the market picture chips may look at qualcomm with the numbers which were released yesterday. that is interesting to note. qualcomm really pointing toward how the u.s. export ban means they could not ship chips to huawei the smartphone market not

looking good there more than 2% down was qualcomm in the picture nvidia taking a hit at 4.6% and amd with a set of results taking a 7% dip by the close of trade let's continue p ththis converso with arjun arjun, the chip story is one to follow significantly here. qualcomm really stating the obvious in many ways that the smart phone market is still taking a bit of a downer that might elude to something for apple. >> let's take a step back to add context to where we were with the semiconductor cycle. we went from the height of the pandemic and put that chip shortage into a chip glut.

companies were stockpiling chips to avoid having a shortage problem. what happened is demand for the products of smartphones and pcs eroded as the macroeconomics concerns were taking hold. there wasn't demand for the products companies can put chips in devices and they are not orderings as many from amd and others we got to a point where the companies were signaling the second half of the year will be better the cycle will wpick up and inventories will reduce and supplies will come back into the market qualcomm comes out and throws a wrench in the works and says this is our guidance for the next quarter and missed expectations from wall street. there is concern of weakness that the pickup in the second

half of the year where other big giants may not actually come to pass i think there is caution in the market with the chipmakers right now coupled with the fitch downgrade and selloff which is weighing on chipmakers overnight. >> one might ask that you get the slowdown, but you see the big falloff for nvidia it is not the same kind of chips. it is the a.i. sector which could still have higher demand in this case why would the likes of nvidia take a hit in the situation as well >> nvidia is a momentum trade recently you see that massive run-up 200% this year. huge gains than other chipmakers at this point. you will see profit data and some recognition that this is a stock that has run up a big

amount and maybe it has gone too far too quickly. there is demand for the a.i. chips and we heard that from all of the chip companies reporting. there is a shift from spending on cpus to the graphic processing units which nvidia is making amd is ramping up to mass produce gpu and intel is getting into the game as well. competition is ramping up. nvidia won't be the only game in town that is part of the equation as investors are looking at nvidia to see how much it maintains going into the rest of the year and into next year as demand for the a.i. chips are likely to continue. >> we had call tqualcomm and we antiand adve -- we had anticipated apple and

then nintendo is up for the year with revenue coming in at 460 billion yen. "super mario" is a positive for the stock. >> "super mario" quarter it reported a decline in revenue two quarters and decline in profit they were concerned. has nintendo switch peaked has nintendo peaked in the current cycle? then the june quarter and revenue up 52% it was on two factors. the "super mario" movie has had a positive effect across the products it has driven people to other mario games on the switch. it has boosted revenue in the mobile division and the company is seeing the positive effects

in the portfolio the second big game is "zelda" has sold 18.5 million units since released in may. it is a big driver of hardware and software sales and driving people to buy more switch and existing customers to spend again. these two have created a halo effect for nintendo where the franchises have helped get the company back on its feet will this continue >> i would like to say it is the sustainability and you lead "mario" and "zelda" from here. arjun, thank you for joining us. apparele posting after the l today wrapping up a huge week for investor earnings. they are expecting a downgrade from the world's largest company with quarterly revenue set to

show the largest third quarter drop since 2016 according to ff rifinitiv. also on check is india where tim cook expressed growth in the region it is not just apple reporting after the bell, but amazon earnings are also on the agenda with web services and retail front and san fcenter the commerce giant posting 8.5% jump in revenue for the year which goes to more than $150 billion. we are lucky to be joined by the senior analyst thank you for the time i appreciate it. your immediate thoughts? amazon to show a good set of numbers here in your opinion

>> yes, amazon is posting 7% growth which is what they indicated in the earnings last qua quarter. we believe the growth is coming from the u.s. segment and retail and subscription services. aws is a small increase. what we have seen over the course of the year with spending slashed off and cautious spending we think aws growth is impacted for sure this quarter. >> still despite that a.i. boom and higher rates for aws, how does it catch up >> i think a.i. is yet to unfold because amazon has started

rece recently the large super computers. these are mostly started this year and you have other venues coming in over the period of the quarters to deploy a.i. takes time and it is very expensive. the company would be seeing the growth from specific a.i. investment in the next quarters >> how much impact would that have when it is finally deployed into amazon? we have seen microsoft say it added 1% are we expecting the same here >> i think it is too soon to comment on how much amazon will add because they have not disclosed how many items are specific to a.i. 1% growth for microsoft reported which comes directly from a.i. is a baseline.

we would still wait for amazon's comments on what exactly is the a.i. venue in the segment of growth as i said, it is a very layered deployment of a.i. we would see the growth coming in the future quarters. >> you also have a cooling environment in terms of inflation. will that benefit amazon with more competitive pricing >> oh, definitely. cooling inflation is what amazon is seeing in the supply chain. it is helping out the margins and helping amazon become more efficient in the supply chain from the cost perspective. on the other hand, it is offset by a.i. spend as the company

indicated. that is super expensive. i think this will be a very delicate balance as amazon will see that offset by the cooling inflation costs. >> there is a fight for advertising dollars and online sales for a lot of the businesses how has amazon fared and how will it fare in the coming quarters >> i think ad spend is up for amazon if i look up on amazon how much advertising contributes to the venues of amazon and compare with google and the big chunk of revenue from ads in the case of amazon, it is retail commerce company followed by aws it is how the venues go. we see ad spend improving a bit

considering the amazon suite of services specifically the prime membership and ecommerce side of it it is still not as big as what google and meta has seen and the i be impact is larger for meta and google we will see amazon's ad revenues increasing considerably with as the sentiment which is positive. >> thank you so much we have to leave it there. thank you for the time this morning. senior analyst at counter point research we leave you with the latest as we look for the bank of england decision coming up later today of the -- later today.

it is 5:00 a.m. at cnbc be global headquarters. here is your "five@5." downgrade day two. after the bad showing on the fitch cut, the globe is awash i red ink again. what jamie dimon told us in an interview coming up. and earnings in high g