ed to the heidts and hopes never to again. ♪ good morning. welcome to "street signs." i'm julianna tatelbaum in the studio and steve sedgwick is on the banks of lake como. these are the headlines. china stepping up support after propelling the yuan to a three-week high. the country's lenders to prop up the property sector.

the economy shows the issues telling cnbc they are concerned. >> i don't know if they he ave e leadership to manage their way through this. this is a complicated problem and china hasn't gone through this experience. the ifos institute issues a stark warning for the yoeurope' largest economy at the forum. >> the european economy is doing better than the german economy. germany is the sick man of europe at the moment. there has been a decline in manufacturing output since 2018. it is not a short-term phenomenon. european equities are muted on the first day of trade of the month with auto stocks lower with the series of downgrades

with the nasdaq closing up with the worst performance of the year. a long road back to 2%. u.s. monthly inflation ticks higher as they move to the non-farm payroll report. good morning. happy friday. welcome to the program. we are starting out the first day of trade for the month of september looking at august. the theme in europe was weakness in the macro data. we just got crossing the wires the financial manufacturing pmi for the euro area. it is confirmed, that weak picture. the final number is weaker than the flashes estimate. 43.5. the initial was 43.7. well below the break between

contraction and expansion. a little bit of detail on the numbers here. these numbers are not as terrible as they may look at first glance according to the chief economist of the survey data. all of the indices moved up or remained unchanged showing the downward trend is losing stream across the board. suggesting that we are seeing a bottoming. that is interesting certainly in the context of the inflation data this week which was hotter than expected. if the growth picture is not as bad or showing signs of bottoming could be encouraging. the second lowest reading since the covid pandemic. the cost of production in the last six months with passing on costs to consumers. 43.5 is the number. that is not the only data. we have hard data coming

through. italy q2 gdp has been revised to 0.4% contraction quarter on quarter and 0.3% year on year. we were looking at better numbers in the estimate. these are weaker than expected. the preliminary number were 0.3% contraction and 0.6% year on year growth. weaker than expected. let's get out to steve who is joining from us the forum on the banks of lake como. steve, fascinating stuff. i have been listening to your interviews all morning on "squawk box." i believe you have another guest joining you now? >> i do, indeed. i want to get to another sound here on the banks of lake como. i have been speaking to a host of people, including the nobel

laureate and asked him what impact central bankers or mistakes are having on inflation as he put it and what it could mean for the global economy council the road. >> big stimulus to the economy he which is offsetting the c con confrationary effects. we may move through this by luck. the fed has no effect of the i.r.a. europe and the rest of the world, i'm not sure, will be so lucky because for a number of reasons, inflation is persistent more in europe. that means the purchasing power of a lot of people is lower and more concern of risk and

uncertainty and the war at the borders. so, you already see the data. europe's growth is nothing like that in the united states. >> so, how bad is it going to be? are we talking serious recession territory for europe? >> no, i don't think serious recession because the u.s. is good for the global economy. we are still inter dependent. china which was the very big source of growth and recovery from the 2008 recession. >> that was joe stiglitz talking about policy mistakes, especially in the united states. very interesting speaking to the economist from ifos. he said it was a muted phrase.

germany is the sick man of europe. his words. i asked if he wasn't overstating the issue as the country tries to diversify the energy source as way from russia. >> somewhere the energy that's come. clearly, without the climate effect, we will have a volatility problem. sometimes there is no wind and sun. dark clouds. what are you doing? you need to fill them with conventional energy. it is difficult to have this structure which we will have to sustain in the future. on the one hand, the green energy and on the other hand the conventional energy to fill the gaps. this is a double cost. this is high energy cost and not good fores industry. it is a difficult course.

>> >> it was interesting there. we finished with hans. we are speaking to stefan here this morning. >> good morning, steve. >> the obvious question of the world is the one i will ask which is how are we looking with energy supplies? the headlines look good in terms of the reppreparedness of the winter. just turned the month of september. people start to think about it in more of a fashion. >> we are in better position than last year in preparing for winter. the level of the storage reached 90%. in italy, we are 9393%. we are two months in advance from last year. the fact we are two months from june or july, it helped in august. that was not the case last year.

that represents a good platform for approaching next winter. we still have flows from russia which is supplying europe. we have supply on lng and volumes through ukraine. we represent a marginal part of the needs. the problem is how the winter will be in terms of coldness and that is the point. one thing is to guarantee the total volume of consumption and the other is to supply and demand. >> in terms of the volatility of price in august, a strike in australia and various strikes we were talking with various organizations. a strike in australia would have a ripple effect on gas prices as well. why was that given the fact we are so well supplied in terms of our storage capacity? we are in a strong position. i was surprised how volatile it

became in the pricing with the strength in europe. >> the lng market is a global market and a tight market as we say. most quantities of shore falling export can pose a ripple effect across the world. if you look at the prices now, they are higher in asia than in europe. that means some of the gasses that was eventually destined for europe could go to asia and cause a shortfall in europe. that is why we had volatility. that is the fact that the market has no margins to support some unpredictable events. that is again another indicator which is the fact we need to work on creating further infrastructure to make the system more resilient. >> we need more infrastructure to make the system resilient,

but we need more supply. my understanding from the data in your industry is the supply will come on board in some fashion after 2025 as well. we go from the position where we have the tight margins and we can talk about infrastructure in europe in a moment. the terms of supply of global lng from qatar and north africa and the united states is talking about oversupply situation early on, can't we? >> it is too early to say because some countries will develop in demand. china's recovery with 2022 in the summer and we had more tendency of import of the country with the climate conditions in the country. the major driver is the economic development. if china will start recovering in 2024 and 2025, demand will

pick up and that will help. that is the reason why china has a strategy of contracting of long-term capacity from qatar and other countries. >> we are still waiting to see if china can find its feet on the economic recovery. what are the european structures? i have been talking about it for years about gas meetings and all kinds of meetings. are we dragging our feet or are we really moving at a pace to get it where it needs to be? >> i think we did in the last 12 months. the sense that let's talk about italy. we put the first lng unit in at the end of may. the second one by the end of next year. we will add more capacity. the same thing has been done by

germany and netherlands and other countries in europe. we are reshaping the structure of imports. relying more on lng than the supplies because of the russian situation and the pipeline terms, we are working to strengthen the system. in terms of intersection with countries which happens from the atlantic coast to the central europe coast and same in italy through the new pipeline we will build to strengthen the capacity from south to north and that creates some opportunities for export to austria and other countries dependent on russian supplies. we are doing some of the initiatives that are required to

in in in interconnect. this has changed from 12 months ago. >> two other questions. a lot of debate of meloni's government doing or not doing of spending the funds and switching your secretor away from infrastructure projects. >> i think we should have distention. one is the next generation of funds and the next is the power of funds. the resources that will be devoted for larger inter connecting lands for electricity and gas fall into the power you fund. not into the next generation of funds. what the government is doing is to reshape in some way some of those funds.

these are complementing. >> one other question. this is regarding the role of technology talked about a lot which delivered a limited amount. carbon capture and storage as well. you want to talk about it. you see it as part of the mix going forward and it is in a strong position of the gas positions offshore. talk about the viability of carbon capture. >> i think it is a mature technology as it has been used for many years. we have three storage units and facilities in europe. two in norway and one in iceland. i think the point is now carbon capture is part of the solution for the decarbonizing the european industry. this is one of the solutions for the industries.

what you need for making this solution final is, of course, regulatory framework across europe and european strategies. those facilities that are required for capturing and storing the co2 gas fields. in that sense, italy has an advantage. we have plenty of depleted gas fields offshore the coast in the adriatic sea. we are developing a joint project for transporting the co2 in the area where the largest part of the industry is located into this depleted field. i think if this project has the conditions to develop and guarantee at least 50% of the co2 capture for the industry. >> you mentioned the conditions for the development.

you mean the price coming down? >> i'm referring to the regulatory framework that sets the market design for co2 business. the regulatory framework for technology for shipping and storing the co2 and the financial side. of course, we need to have tools like financial tools like countries to guarantee to make investments for the infrastructure because ccs is like the other technologies. capital intensive and infrastructure intensintensive. you need the platform with the appropriate guarantees with solutions for those to invest in the base technology. >> expensive stuff. capital intensive. always a pleasure. i'm glad the sun has come out for you. >> thank you. nice to see you. >> thank you very much, indeed,

for your time. to tell you, we will be speaking to pierroberto folgiero. that is coming up in a short while on "street signs." back to you. >> thank you, steve. in the address in the summit, volodymyr zelenskyy said there cannot be a sustainable peace in his country unless they regain control of all of the territory occupied by russia. coming up on the show, signs of hope of fresh data. we will breakdown the surprise china pmi data next. how can you sleep on such a firm setting? gab, mine is almost the same as yours. almost is just another word for not as good as mine. save 50% on the sleep number limited edition smart bed. plus, free home delivery when you add a base. shop now only at sleep number.

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and there's no catch, it's fre. we make money from ads, but they don't follow you aroud join the millions of people taking back their privacy by downloading duckduckgo on all your devices today. welcome back to "street signs." let's check on the european equity markets. the main benchmark up .25% after the mixed hand over from wall street yesterday and hotter than expected inflation data. we got fresh comments from the

ecb board member saying growth prospects weaker than the baseline scenario in the june proj projection. part of the reason the stoxx 600 is marching higher and rate expectations have evolved in the last 24 hours. investors dialing down the expectations for the ecb and if they raise rates at the september meeting. the consensus seems to be the expectation is they will hold steady. breaking it down by individual re regions. this is the split. the swiss market down 2 basis points. otherwise, a green start to the session. ftse 100 is up. johnson mathey is trading at the top of the stoxx 600 after the industrial investor announced a 10% stake in the company. cac 40 up 10 basis points. ftse mib up 15 points. breaking it down by sector, you have the top of the board up

1.6%. basic resources up .60%. on the down side, the auto sector. that basket of stocks down 1.4%. it is worth taking a closer look within that basket. we havenews this morning from ubs. they have been moving around estimates. downgrading renault and volkswagen. clearly that is having an impact on those two stocks and perhaps dragging down the sector as well. as for the asian hand over, the asian markets closed in overnight trade with big news from the pboc. cutting the fx reserve by 2 00 basis points on september 15th. you have live shots on the screen from hong kong.

they have halted trading as they brace for a typhoon. as for the rest of asia, shanghai trading .4% higher. nikkei is trading .3% higher. i gave you a teaser to the pboc. they said it will cut the foreign exchange ratio to 4% as it alleviates pressure on the yuan. the pboc says the move is aimed at arresting the decline in the yuan and the banks ability to free up $16.4 billion of fx. this is not the first, but one of many measures the pboc has tried to take to arrest the yuan decline. five major chinese banks cut deposit rates. the cuts range between 5 points

and 25 points. the pboc will allow first-time home buyers to apply for a lower loan as they boost the property sector. and the china factory activity rises to 50.1. that was better than the contraction expected and strongest pace in activity since february. joseph stiglitz warned china may not have the leadership required to lead through slowing growth. steve stoke to stiglitz at the forum. >> it is not a surprise with the bad policy mistakes that they made that their economy is in bad shape. i don't know if they have the economic leadership to manage their way through this.

this is a complicated problem and china hasn't gone through this experience. no country has actually gone through -- every country is different -- and the analogy may be useful. it used to be said that china was very special. it was like riding a bike and if you kept going at 7%, you could stay stable. if it slows down, there were so many forces with winds blowing one way or the other and the questions were would they be able to keep it going? an example being the way the property sector works. coming up on the show, as giorgia meloni approaches one year as prime minister, we will

look at how she is doing. steve will speak to pierroberto folgiero. that is next on cnbc.

welcome back to "street signs." i'm julianna tatelbaum in the london studio. steve sedgwick is at the forum on the banks of lake como. these are your headlines. china steps up support propelling the yuan to the three-week high after beijing cuts the reserve ratio and lenders move to prop up the property sector. economist joseph stiglitz tells cnbc he is still concerned. >> i don't know if they have the economic leadership to manage their way through this. this is a complicated problem which china hasn't gone through this it experience. italian gdp revised lower in

the second quarter while the ifo leader issuess a stark warning for germany. >> the european economy is doing better than the german economy. je germany is the sick man at the moment. there has been a decline in the manufacturing output since 2018. european equities trade water on the first day of the new trading month while u.s. futures point to a muted open after nasdaq closes out the wo worst month of the year. u.s. inflation ticks higher as they now turn to the crucial non-farm payroll report.

we have some final manufacturing pmi numbers coming through now for the uk for the month of august. the figure, headline figure at 43. well into contraction territory. slightly higher than the 42.5 initially estimated. uk factory orders tumbling as rates remain high, but not as bad as feared. sterling holding steady against the dollar this morning. a bit of color from the global market intelligence who wputs te figures together. these are rarely seen outside of forces and purchasing activity and inventory holdings and staffing levels were all cut back as manufacturers strive to cut margins and operate a lean

er activity. this is lightly what we heard that is a bottoming out of the eurozone. policymakers will be focused on the economy's health as they need further rate hikes. that is from the provider of the survey data. the bank of england still dealing with incredibly high wage pressure. now they're grappling with what seems to be a protracted and severe downturn in the manufacturing sector. we are also seeing spillover into the housing market. there had been a lot of debate of the higher rates filtering through and lead to a downturn in the housing market. uk home prices dropped 5.3% on the year in august according to data from nationwide out this

morning. the reading marks the sharpest fall since 2009 and 11th month of steep declines. this captured investors attentions. it was a steeper fall than expected and market acceleration of the pace of decline from back in july. you have a look at the uk home builders this year. a mixed performance among the names. let's broaden out and look at the markets. ftse 100 is holding up .50%. strong for oil and gas and basic resources. heavy tilt within the sector in the uk market. cac 40 in france with marginal gains. we have a bit on the board for the dax. no massive moves as investors in europe brace for that crucial non-farm payroll report stateside. we have seen a lot of movement in bond markets in the last 24 hours. this morning, yields are higher across the board in europe.

bund trading at 2.48%. we have fresh insight into the ecb yesterday. this is impacting trade in money markets. t they warned in the july minutes of a coming recession. years of bond buying compressed term premiums and limiting the scope of the curve. robert holzmann says the ecb may need to continue hiking rates this month as he has not seen enough to warrant a pause. investors are betting on a because, but holzmann says another hike or two is still to come. we have comments from schnabel from the ecb. she said this does not end the need for further rate hikes. this could not be tried off to hold rates at a certain level to

raise time and consistency issues. the piece that caught my attention is recent developments point to weaker growth from the june projections. steve, the data from europe over the last month or so has been quite weak. i would say it is the prominent theme for europe over the month of august. the deteriorating macro environment. you are in the forum on the banks of lake como. give us more. >> reporter: we are getting a good gauge. at the moment, the benefit of the doubt remains for meloni. she made misstep with the banking windfall tax is a concern. this is surprising how the meloni government interacted

with brussels and interacted with the business leaders around me here as well. i have been speaking to the ceo of felco enterprises and asked about his take on meloni. >> when meloni came on power, i was concerned about the fact that she was coming from a real extreme right position. i don't share that particular idea. there was a certain amount of concern. on the other side, as demonstrated by the fact that when people enter the room, they have to converge to a different position. this is what meloni did. i think she has taken a lot of initiatives that are going to be good initiatives for italy. i think she picked up from mario draghi the playbook and she continued which is fantastic. the only thing that disappointed me was the fact that for

somebody coming from the right spectrum of the policy to decide at a certain point to put a tax penalty on the income of the banks, even if it is a large amount, doesn't make a lot of sense. for that, i didn't -- that part of the decision making i did not like. on the other side, i would say for the time being, might not be a plus, but a minus or b plus. >> highest mark i got in school. in terms of the economy, interest rates are elevated and set to be more elevated if the ecb takes on the hawkish stance. ecb will have that take with the high sovereign debt? >> absolutely. as i said, we cannot look at the economy of italy as just one single entity. we have to look at italy in the old part of europe because, by

now, this economy is the european economy is so inte integrated together and everything is connected. now the concern i have which is more important as far as europe is concerned is the fact that germany is slowing down. you know, the recent data about production and investment data for manufacturing is negative data. for germany, that is the biggest engine for growth we have in europe which is not a very good sign. >> reporter: let's have another conversation with the top italian chief executive. pierroberto folgiero. lovely to see you. nice to meet you in a wonderful setting. so much to discuss about your industry and about the future of your industry.

i want to talk about, if i may, what the current market looks like. we talk about the demand on the global basis. how does business look to you at the moment? >> the ship building business, despite the uncertainty, is having very good prospects. mainly driven by two engines. the first is our business in brussels which is driven by a general increase in the ex expenditure in the military expenses. the second engine is the 40% market share leadership worldwide and an the cruise market is giving a good level of growth. there is a lot of demand going

back and there is also a lot of interesting new investment in cruise ships. >> i was talking about the demographic issues the world is facing. that plays into the cruise market. it is given the events around the world and across the asia pacific as well. and specifically growth in the naval area. is there a certain type of ship in unmanned or driven by a.i. expectations with the next generation of naval vessels or something else going on? >> there are two big trends. the first trend is the trend in increasing the footprint of the most important navy in the world. needless to say, there are certain geopolitical issues

request withing additional investment for different purposes. i have to say the navy and expe expenses are the ones that are more versatile. it is not only for the defense, but important for the defense of commerce and critical infrastructure. the expense in the naval assets is the one that is more future proof because it is useful for different purposes. the second in increasing demand is under water. there is a big trend of technologies in submarines. obviously, it's the most

ecological domain in the industry industry. >> let's move on. if someone says they will build a 150-foot tall turbine with 150 by 100 by 100 base and it is floating, i would say it looks like a bear. the most enormous structure. we have the concept that you are thinking about and how the next generation of turbines can be built. this is at the center of the concept. >> you are absolutely right. there is a third pillar in the strategy which is the new economy around the wind farms. the offshore wind farms. renewable energy is wind. not only onshore, but offshore.

whether you described is the frontier of floating offshore. you build the wind farm at sea in deep water. far from shallow water of. far from the typicalinvasive ness from the environmental perspective. you can take advantage of the windy spots. you can be effective and efficient in producing energy. the floating is what you said. it is a big triangle of steel and 100 meter by 100 meter by 100 meter with a big pole on top and on top of that a turbine of 250 meter. this infrastructure will have to be manufactured from scratch and

using big quantity of steel. this is a typical industry exercise in which we believe we can add a lot of value and make it happen. >> how far from the concept are we to making it happen on scale? >> the technology is mature. the design of the big open is mature. now it is time to industrialize it and replicate it to achieve the quantities we need and in order to achieve the unit cost we need. >> amazing. i look forward to seeing it. i can only imagine to see it. lovely to meet you. thank you for your time. fascinating to see. pierroberto folgiero. stay with cnbc because we will

have more coverage from the banks of the como this afternoon. i'll speak to arancha gonzalez. the former spanish prime minister. that is coming up at 13:00 cet. >> steve, thank you for that interview. look forward to the next one. a.r.m. is targeting the 14th of september for the ipo according to a report from reuters. the chip designer is launching the road show next week. back here in europe, big news for novonordisk. the diabetes company now turned into an obesity pharmaceutical drug company. the market cap surpassed lvmh. $421 billion, including unlisted stock. what a journey. shares are up 200% over the last

five years. it has been going from strength to strength as investors price in a rapidly growing market for its new suite of obesity drugs. the stock with a boost after trial data that came through earlier this summer. you can see it has been a steady increase in share price over the last five years and getting a significant leg up recently. it is now at 300% in the last five years. all right. coming up on the show, traders eye non-farm payroll from the u.s. today as jpmorgan chase makes a bullish call on the world's largest economy. we'll discuss next.

welcome back to "street signs." august non-farm payroll could mark a turning point with economists gaining 100,000. that could be the smallest tick since 2020. the smallest number of job

openings in more than two years. simon harvey joins us now. simon, wonderful to have you in studio. thanks for coming in. this week, we had a number of u.s. data releases. looking at the market reaction, it looks like we're in the paradigm is bad news is good news when it comes to markets. if we get a soft print in the non-farm payrolls, do you think investors will point that as a positive given the implications for the fed? >> positive for what is the big question that markets are expecting. positive for equities? yes, take the pressure off. positive for the dollar? questionable. that is the data release issue. the data is looking like a soft landing right now. it does this at the back end of the cycle before it starts to sour. what we are seeing at the moment is the u.s. labor market especially is showing signs of cooling. the data we have prior to the payroll release this week is all looking like the u.s. labor

market is starting to normalize. that is good news for the fed. at the same time, we are seeing signs the u.s. consumer is durable and that's another sign that the fed may have to go and do more down the line. we are in the flux period. we don't think today's payroll data is going to tip the balance one way or the other. >> how does the dollar react if the fed pauses and given if they pause, it is because the economic picture has deteriorated which is a risk-off sentiment which is positive for a dollar. on the other hand, if the ecb continues raising rates or the bank of england has a downward dollar pressure? >> that is in the sweet spot where the fed will pause more likely. it is unlikely they resume the hiking cycle the this year. at the same time, we are not

talking cuts because the u.s. economy is rolling over. at the same time, prospective cuts elsewhere in the globe in the uk or eurozone or anything related to china is not looking good. it remains in the sweet spot area where the end of the fed hiking cycle should lead to the dollar tailing off. we are not there yet with the global growth factors. >> euro/dollar breached the 110 level in july. trading above that level for a couple of weeks. it has come down in august and now it has settled below the 110 mark. what is the bound of trading range for the euro/dollar? >> anything above 110 to 112. we are looking to fade the rallies primarily because the ecb looks like they will have to hike again and lead the economy into a stagnation which is a good outcome. >> stagnation at best? >> exactly. if not, it will be a recession.

we are talking about the prospective cuts. w where can we get decent cuts? the eurozone is not there. you will see a narrowing in nominal rate with the eurozone and u.s. that will not be positive because of the context in which that lands. that is a bleak economic outlook for the euro economy. >> one place investors are not keen is china. pboc intervening with the fx markets and the ratio that banks are committing to. how much will that impact the yuan? >> we don't think it will be much. we are seeing the pmi starting to show signs of improvement. we are seeing continued incremental policy support from

the pboc and other chinese authorities. we are seeing continued defense below the 7.3 handle. despite these, any rallies in the yuan has quickly faded. that is something you need to keep a close eye on. that is suggestive that we are getting to an area where the cyclical pessimism potbottomed . we are not bullish on china. >> not a reason to believe we will see significant growth there. where is the best place to park your money in fx? >> outside of u.s. capital markets, which difficult to do. we still like mexico. we saw the measures overnight that flushed out of the positioning there. we are talking about quality fundamentals here. mexico and parts of latin american are positive. outside of that, it is not looking good.

>> simon, thank you so much for your take and helping us set up for the non-farm payroll reports. simon harvey at monex europe. that is the big event today. non-farm payroll reports from the u.s. yesterday, u.s. stocks with a mixed session which rounded out a losing month for the month of august. a difficult one if you are invested in the u.s. market. right now, futures rate we will see a little bit of a bounce back in the dow jones industrial average. that index is looking to open 100 points higher if the levels hold, of course. that is it for "street signs." thanks for joining me all week. "worldwide exchange" is coming your way next.

it is 5:00 a.m. at cnbc global headquarters. here is your top "five@5." wall street looking for a stretcfresh start. kicking off a new month in the green. futures are big. investors looking ahead to the big jobs report for the month of august and what it could mean for the federal reserve interest rate decision. a new month and new round of incremental stimulus from beijing as it looks to free up some $16