katie spielbauer: when something like this happens, it gives you purpose. and life has no meaning without purpose. ♪ good morning. welcome to "street signs." i'm joumanna bercetche. >> i'm julianna tatelbaum. these are your headlines. european markets look to close the week on a bland note with minors and luxury names driving gains as investors hoping the china economic slump has hit the bottom. european chip makers slide on the report that psmp is

asking for delivery delay of high-end equity. the ceo of softbank says the group is here to stay. >> this is the big a.i. time. i'm going to have a big role in that. >> we are aligned on the long-term view of the company. the world runs on a.r.m. and french consumer prices tick higher the day after the ecb hikes rates to a record high, but suggests it may have done enough to stamp outs inflation. although christine lagarde refuses to say it is definitely enough. >> both matter. the level is restrictive and duration. it is not to say because we can't say that now that we are at peak. thousands of u.s. auto

worker goes on strike hitting production at gm, ford and stellantis as the uaw union president warns the group will not buckle. good morning. welcome to "street signs." there is a lot of green on the board for the final trading day of the week. positive numbers for the stock market. we he finally got the a.r.m. listing. we saw all of the wall street majors end in the day in the green. in asia overnight, we had positive numbers with retail sales in china growing. industrial production surpassing

expectations. hand over from asia pacific is positive for europe. this is the stoxx 600. we are up .80%. this comes after positive session yesterday with the stoxx 600 ending 1% higher which is in reaction to the ecb and the fact they raised interest rates by 25 basis points. they seemed to hint they were at the end of the hiking cycle. that is the market interpretation. i see many notes in the last 24 hours and many analysts think the ecb is done for now. that is good news for the stock market. you are tracking the growth numbers closely in addition to how cpi fares from here. let's get to the individual boards. every board trading nicely in the fwgreen. we have leadership with cac 40 up 1.4%. 7,400. we are seeing a bit of love for the luxury sector today given

the rebound we had in the chinese data overnight. dax in germany 1% higher. shy of 16,000. the ftse 100 is up .70%. it has bceen a good week for th ftse 100. let's switch over. 3.3% for the uk index. 250 points higher. that is led by the bounce in commodities and minors. keeping a close eye, of course, on the price action in oil as it has pierced enththrough $90. we had a story on earlier in the week which came out of the state of the union european commission launching investigation into the helps measures from chinese ev makers which had a positive impact on

the auto space in europe. it transpired with the investigations taking time. something to think about there. the dax up 1.4%. the data from germany continues to surprise to the down side. in terms of sector leadership, this is what with we have today, luxury up 2%. construction and materials performing well. cyclical minors doing well. surprisingly, the tech sector is not doing well given the price action we had in the nasdaq yesterday. the secondary price performance of a.r.m., would you have thought it would do better. i'll explain in a moment. real estate sector down a bit. let me tell you about the chinese industrial numbers. it picked up pace in august for sales and retail. it topped expectations.

asset inffecvestment sales drop. perhaps we have come to an end of the disappointing months from china. the reaction in luxury today with the french names lvmh up 3%. h hermes up 2%. basic resources coming up as well. this is the reaction with the minors. i spoke about the ftse 100 being a good performance day and over the course of the week with the rio tinto up 1%. as joumanna flagged, technology sector is under performing this morning. big reason why is tsmc. it told suppliers to delay the delivery on the bid to control costs as it deal was delays in

the chip factory in arizona. this is according to reuters. int it said the firm is nervous about customer demand. you see a bit of a pullback. asml with a hit of 2.7% in the trade today to the down side. joumanna, positive side to the trade in europe today. it seems a few fact orfactors a play. you see china as the reason why and the luxury space which is a big driver, but the ecb event yesterday as well, that was a relief moment for markets. >> it depends how you interpret it. if i wear my fixed income hat, there was a rally in yields. that tells you the market is concerned. we're talking about ten-year time horizon here with the ecb of the monetary tightening and impact on growth and financial conditions.

ultimately, the reaction from the bond market was negative. the stock market reaction was positive perhaps the stock market cheered on that perhaps we're at the end of the hiking cycle. notes sent out suggesting their inter terpretation was the ecb done with the hiking cycle barring inflation which will not happen because of base effects. the expectation numbers will continue decline over the next couple months. the take away from the market, i think, was interesting. it feels we are at the end or close to the end for all of the hiking cycles for the major central banks. >> it seems from the equity standpoint, the thing investors want more is clarity and visibility. we did get a stronger sense from the ecb yesterday. the signal about where rates will go near term.

coming back to the china data and interpretation of the data dump overnight. it is less of a story of major impro improvement. the bureau that puts the data together calls it a marginal improvem improve improvement. it is signs the activity slump is bottoming. perhaps we're at a cyclical bottom for china which is allowing lvmh to rally. >> and also the a.r.m. ipo and it performed well in the secondary markets, but 25% jump was a strong signal for tech. when we had been talking about the tech, we talked about the tech players and investors wanted this ipo to succeed.

it was like a poster child for how people view tequch and ya.i. >> it was interesting to think tech was a small world and all players fate is linked. the tech giants had skin in the game. the share price performance was going to be linked to the performance of a.r.m. event yesterday. that is why reason we see the equity market reaction. you can keep up to date with all of the market action from europe in our newsletter the daily open. scan the qr code on your screen right now. i would encourage you to check it out. back to single stocks in focus this morning. let's zoom in on h & m. shares down 4.5%.

h & m pared losses. analysts expected a 5% jump after the beat expectations to be beat of a 40% jump. h & m results disappointing with tech doing much better, but both stocks have suffered this week. in in. in the auto space, gm and ford and stellantis unions have called for a strike. they were negotiating on pay and staff benefits. the union organized strikes at factories for high demand vehicles. about 14,000 workers will be on strike. we will cover more on the story later in the show. and the new ceo of bayer is

planning to cut jobs in the first step in the overall of the german company after bill anderson took office in june. novartis will hold a meeting today over the spinoff of the generic drugs unit next month. if shareholders approve the move, it will be largest company on the swiss exchange. the board of directors has endorsed the propose the al. as i said, this is a meeting that is kicking off. this is a long awaited spinoff for the company. novartis is looking on advanced medicine. >> i thought the spinoff had already happened. >> it has been in the works for a while. >> they have been segmenting their earnings.

also, as you have and i have spoken in the past, they have been big on the restructuring and spinning off is a key focus. >> a bit of the tick the box exercise today. we will keep an eye on it. we are going to take a break. coming up on the show, a.r.m. reaching higher pre market in the new york debut. gin t dail xt.

welcome back to "street signs." we will dive into a.r.m. the latest in trade of the new listing. you can see pre-market, we are up another 9%. this after the blockbuster debut yesterday. this stock surged 25% in thursday's trade sending the market cap to $68 billion. vindicating masayoshi son. this was the fifth highly traded company in the nasdaq. now investor satattention is

looking to rival instacart and klayiyo next week. a.r.m.'s f-1 filing flagged potential risk in the china operations. david faber spoke to the ceos of a.r.m. and softbank. he asked how much of a risk he sees in the relationship with a.r.m. china. >> china business reflects the growth in the rest of the world. we are seeing growth in the data center with cloud computing and a.i. and then evs. growth in china in terms of evs. china wants what the world needs. power efficiency and software ecosystem. a lot of the same software used across the world is used in china. what we are seeing, david, in terms of the china market growing with data center and

automotive. in terms of the broader issues, i share the same headaches other ceos these days. this is something we need to adhere to, of course, it is really a tricky market to figure out in general because of all of the things that are geo poli politically. >> you have done business in china, masa. you were a large holder of alibaba for years. what is the risk with china given the percentage of revenue it proposes? >> u.s. and china is having a complicated situation now.

china has significant impact to the economy of the rest of the world. i think i hope the situation gets better, but who knows. i'm one of the citizens who is wondering and concerned about the future of china and u.s. and the rest of the world. >> what a day it was yesterday and great get for david faber to get masa son and rene haas. arjun joins us now. the fact that the stock popped in after hours does tell you that softbank left a bit of money on the table. at least the inter tpretation o the market is this was a strong ipo. >> softbank may have left a bit of of money on the table. they could have priced a dollar or two.

they raised $5 billion. that is probably enough. this is not a company short on cash by any means, but in terms of what was at stake for masa son and softbank, it was in terms of they could bring it back to the market. they can get it off at a higher valuation. they can bring this company back to market. that is what it was all about, really. the optics and showing masa son it was all good. >> arjun, i want to bring in the portfolio manager from blue box asset management. william, let me ask if you were looking to get involved or interested in participating in the ipo? were you looking to get involved? what is the view of the event itself?

sir, i'll repeat the question to you in case you didn't hear. why were you looking or did you participate in the ipo? 12k3w4r are you asking me a question at the moment? >> yes. i'll repeat. did you get involved in the ipo or are you looking to get involved in the secondary trading in. >> i didn't. we have been looking since it was acquired in 2016. in the end, we were too worried with government banks controlling the bank with the questionable record for asset allocation. we wanted to watch from the sidelines a bit and see how the company operates as an independent business. >> the price pop at 25% and what i thought was remarkable is if you look at it from the

valuation perspective, that takes the price earnings at $170. nvidia, which is closest comparable, trades at 109 times earnings. are these valuations actually sustainable? if they're not, what does it mean for the rest of the tech sector? >> the valuation you are referring to are backward looking. they are taking place compared to last year's earnings. the point in particular with nvidia is that the forward earnings are far higher than the earnings to the previous period. if you look at nvidia on the forward multiple of earnings, it is by the recent record is trading in the 40s over the last few years. not because the stock price has gone down, but earnings or expectations of earnings have been going up so fast.

that would not be the case for a.r.m. i don't think it would have explosive growth that nvidia is seeing at the moment. you have to look at forward multiples. i thought a better comparable is synopsis. >> william, how far outdo do we have to go in the a.r.m. valuation to look more palat palatable? >> i suspect a little way. at the moment, it is not a bad time to buy a.r.m. all is not going perfect. the smartphone market is the biggest market. that is stagnant for a while. they have been einking out growh to rate roles and adding calls for eeach additional device. and all of the more exciting stuff on the other side of it. you have to go out a couple of

years before a huge increase in earnings for a.r.m. which would bring forward multiple down a bit. the problem with technology companies is absolute valuation is unknowable until after the event. success is so incredibly profitable. i don't get too attached to absolute valuation. >> william, we see the big bump in a.r.m. so far on day one in pre-he pre-market. given the slowdown in the smartphone market and slower transition to the new areas like data centers and automotive. do you think the share price can be maintained for the coming 12 months or so? >> as i said, we're sitting on the sidelines and waiting find out. i'm not saying this is the absolute right time to be invested. i'm an investor myself.

there's quite a lot of unc uncertainty here. there are issues with the chinese portion of the business, but it is still there. exposure to china in general. there's a lawsuit with these companies. this is an awkward one of royalty rates for the biggest customer. on top of that, you have the issue of governments and how good are the decisions going to be made? this is a profitable company and softbank has been a profitable company. that is not a good direction to change in my view. there is a competitor product out there which is essentially free, but doesn't have an ecosystem. you don't pay much up front, but you have to build the network up. there are question marks with the company and there always are with businesses. i really don't know whether to go up or down from here. the semiconductor industry has a

whole is in a strong position. this stock has just come to market and has been out for a while and a lot has chanchanged. >> fair enough, william. wait-and-see mode right there. what are you doing if you want to access thee him semiconducto space. what are your preferred plays? >> nvidia with the most obvious a.i. stock. a lot of positives in there. we have seen a huge amount of upside. there are other companies around it exposed to similar factors. mainly chip companies and semiconductor companies. behind that, the semiconductor equipment companies which get the benefit of everything going on in secrtech. not just a.i., but everything in tech which needs semiconductors.

this is a small group of equipment companies that dominate that market. that is the safe backstop for tech. if you are picking the chip companies, you need to pick the winners. that works out harder because it is a competitive market. >> so interesting to get your perspective. william, wonderful to have you on. portfolio manager from bluebox asset management. thanks to arjun as well with your coverage. are you happy the weekend is in sight and you can rest? >> i am excited we got to talk about risk in all of the tech topics. >> i thought it was risky. i realized it was a roman numeral. >> read the article. also coming up on "street signs," it has been 15 years since the collapse of lehman brhe.

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welcome back to "street signs." i'm julianna tatelbaum. >> and i'm joumanna bercetche and these are your friday morningheadlines. >> the week looking to close on gains as investors hoping china's economic slump has hit the bottom. a.r.m. surges pre-market after the new york bedebut, but t but the positive sentiment is not indicated with the ceos say the group is here to stay. >> this is a big a.i. time. a.r.m. is going to have a big role in that. >> we are aligned on the long-term vision of the company. i believe we are one of the most moun foundational companies in the industry. the world runs on a.r.m. french consumer prices tick

higher the day after the ecb hikes rates to a record high. the ecb president christine lagarde refuses to say this is definitely enough. >> both matter. the level is restrictive and duration. it is not to say because we can't say that now that we are at peak. ford and gm tick lower pre-market as thousands of u.s. auto workers do on strike. uaw president shawn fain hints the makers are slow to negotiate. we are an hour and a half into the trading section. let's check on the european equities with which started out on the strong note. cac 4040 still out in front up

1.4%. the luxury names driving the gains. better than expected data overnight from china suggesting we have seen a cyclical bottom for the chinese economy. in terms of fx markets, let's look at where things stand. euro trading up against the dollar after pulling back yesterday. down to the 106 handle. 106.62. u.s. dollar trading firmly against the yen. sterling this morning getting a leg up against the dollar. up .20%, but below the 125 mark at 124.35. we are getting a couple of lines from the bank of england. the expectations for the coming

year have dropped to 3.6% in august. i should say increased. they have gone up in the last couple months. that is interesting. medium term expectations were 3% in may and now 2.9% in august. that colors the picture into the bank of england meeting next week. the market is undecided whether or not they will do for another hike. at this time, leaning toward one final one and possibly two which is why we are giving a lot of the data and inflation expectation data more weight than usually. speaking of inflation, french inflations rose 4.9% in august. prices rose 5.7% on the year. french supermarket chain carrefour is pressuring su

suppliers on prices. charlotte, it looks like shots fired, essentially. aggressive move from carrefour. >> everybody is pointing the finger to who is responsible for the high food prices. we have seen that acceleration in inflation with the 4.9% for august. core inflation is stripping away energy and food is going down. food prices are going down. the fifth meonth they are going down. that is really too timid with food prices which is the core of the conversation. the government putting pressure on the retailers. one retailer now is putting the pressure on the suppliers. baby formula produced by nestle

and others produced by p&g. all talking about shrinkflation. going down in product and up in price. we have seen that in france and a wider conversation with the prices being high in france. the government was pushing last year with the data which was lowest in the eurozone. that is part of the conversation now. the opposition is criticizing the government saying they are not doing enough. the energy price caps have been removed and may be removed more in the next year. >> given the struggles that carrefour's parent company is facing is throwing stones at glass houses. these suppliers are important to them. they are attacking pepsi and su

companies. what are they trying to achieve 124. >> the negotiations are about to start. the negotiations between supplies and food companies once a year in the spring. we see in the hope of bringing lower prices in january. the government is trying to be seen as much as they can to put pressure on the suppliers. now trying to get customers on their side with the negotiations with the suppliers. it has been a broader conversation. we are in a cycle in france with the european action next year. we know the far right to the crisis at the heart of the campaign and that is where they are pushing at the moment. prices are going up. we expect electricity prices according to the regulators to go up 10% to 20% next year. they are running that message with the government not doing enough. household consumption is a concern. there is a concern that people

start tightening their belt too much. >> to joumanna's point about the suppliers here, these are big suppliers. unilever and pepsi which are companies that distribute all over the world. they have been talking about pushing through price increases. fascinating to see this push back in other markets and if we see a response from the suppliers on a more global level. >> we have seen after this story from france and the uk that people are calling for similar moves. they should put the labels on. >> difficult for them to justify also keeping prices high in the disinflationary environment. charlotte, thank you for the report. the naming and shaming in france. the ecb hiked rates another 25-basis points which lifts them to the record high with the base right at 4%. european bond yields and euro is back on the move as the ecb

signals the thursday hike could be its last of the cycle. the ecb said rates had reached high levels to make a substantial contribution to get inflation back down to target. that was april line that caught people's attention. annette was there. annette, perhaps you can give us more nuance than the knee jerk reaction as the ecb is done. >> reporter: i think the action was interesting of what was happening in the governing council. the statement clearly was a anaa analyzed. perhaps we will listen in to what christine lagarde was saying about the decision making process in the governing

council. >> some governors would have preferred to pause and reserve future decision once more certainty and more intelligence would have resulted with the passing of time and impact of many previous decisions. i can tell you there was a the solid majority of the governors to agree with the decision that we have made and that i have just read to you. yes, there are a few members in the dgoverning council who woul have preferred another one. we had to rely on a solid maj majority. >> reporter: some analysts call that move not very tactical. clearly, now they cannot move in

october and not in december because they committed this level of interest rates for the foreseeable interest rates are restrictive enough. the next move is a cut, which is what the market is anticipating, when we heard from the ecb which remains to be seen. clearly, christine lagarde, as i said we're not at peak rate. we're data dependent. in case the inflation rate re-accelerates with higher energy price and the wage route we are witnessing, this could put inflation higher or keep inflation at the high level which we are currently and the ecb could act more. i think they haven't done themselves a favor by leaving

that open. clearly there is now plenty of room for speculation. that is what the markets really like. >> you could say that again. anything can change. the door isn't entirely closed. thank you for your reporting the last couple days. the global banking watchdog basel committee said several banks failed this year leading to the collapse of several big names, including credit suisse and silicon valley bank. the bank of spain governor accused bosses of failing in the most elementary responsibilities. the ubs ceo says he plans to stay at helm of the swiss lender through 2026. he told the economic club of new york he intends to finish off job of integrating ubs with the collapsed rival credit suisse.

he felt compelled to help the bank when he got the call. he spoke to cnbc and said ubs is focused on fixing the failed business model. >> the backstop was only for part of the balance sheet and assets. not the entire bank. it is different than saying what is the underlining business model. it is now 15 years since the lehman brothers collapse of 2008 and showing bankers leaving their desks for the final time. the financial crisis would torch trillions of dollars of wealth according to the san francisco fed. mohamed danir joins us now to mark this moment.

mohamed, were you trading the market back in 2008? i'm curious when you look back and the turmoil we have seen in the banking sector starting with the u.s. and moving to switzerland and whether you think this was reminiscent of what we saw back then? >> things have changed and haven't changed in a way. when you look at the different dr troubles with credit suisse, it is the same story. it doesn't look like we learned our lesson over there. it is always the risk and return in the markets and banks will always want to take more risk to execute more money to execute more trades. when it comes to the banking sector, small banks, it is a different story. the reason is different, but impact is the same. it looks like the regulators are either not applying the stress test properly or the stress test

is not good enough to regulate the banking sector. >> mohammed, i'm surprised to hear you likened the collapse in 2008 where you said the bank ended up in the arms of ubs, but it was contained and the market was resilient. where do the parallels stop? >> if you look at both cases, two big banks back in the day, 2 2008 with lehman brothers and now ubs have partners with other investment banks. the risk comes into play here. because they were about to fail obligations and as a counter, it would have a knock-on effect if the other banks in the financial system. in both cases, in the first one,

the government bailed out the big banks so there is no competition in the financial markets. the second one, another bank bought the credit suisse with the push of the government and regulatory body over there. in terms of who saved the market and contagion, it is different. in terms of the cause and effect relationship is almost the same. if you look at the market, it is more than $600 trillion market. it is almost 20 times gdp of the u.s. if anything goes bad over there, you have trouble globally. >> you are painting a dismal picture. if you look at capital ratios and liquidity requirements, those have gone up in last decade. i remember back in march and april when we discussed the

potential contagion from the u.s. regional banks and credit suisse and ubs, then back then we were saying the european banking system and u.s. banks are in a strong capital position. they have good liquidity ratios. they were in a position to potentially suffer some losses on the balance sheet. many people say that is the reason why the system held up because the regulation did do its job. the banks were better equipped to deal with the shocks. what do you say to that? >> you can look at the latest problem with the regional banks. the current capital ratio requirements are good enough if there is no tail event. the extreme events comes up when the economy is this a changes phase. for example, in the case of

silicon valley bank, the reason is the bank did not have a problem with the counter parties, they didn't expect interest rates could go up this quickly. they invested in a lot of treasuries which have huge interest rate change impact on them. yes, if you just think everything is going to be fine and do business as usual, you o won't have issues. if you have an extreme move in the market with interest rates or volatility or any other inn p p -- input or pricing, you end up with silicon valley bank or first republic. the crisis is contained just because the government regulator pushed other banks to contain it

and bailed out the deposits of the investors and customers. if they hadn't done that, we would have a different picture. >> thank you for sharing your view was us, mohammed, over what happened 15 years ago. head of capital markets at swiss finance corporation. still ahead on "street signs," factory workers at three u.s. auto workers drop the t tools. we will bring you the latest next.

welcome back to the program. factory workers at gm, ford and stellantis collapse as the negotiations at the midnight deadline came and went. we have nbc's jay gray with the latest. jay, my understanding more than 10,000 workers involved here.

what happens now? >> reporter: absolutely. the talks broke down and the strike occurred at midnight with employees walking out in wayne, michigan, outside of detroit, as well as gm plant in missouri. this is a ford plant. stellantis builds chryslers in ohio. 145,000 employees left the assembly line for the picket line. you see them marching here. that is what the union calls a stand-up strike strategy which shifts between plans and divisions. the idea is to keep the automakers guessing and create some confusion and not knowing where the next strike may occur. now, this is something that really both sides had been moving toward for the last few days. each as the talks broke down yesterday accusing the other of negotiating in bad faith and

saying that neither side wanted to find a resolution to this ongoing problem. basically, what we are looking for here is increased wages and benefits as well as job connections for the union. they wanted a 40% raise in the next four years. the automakers said they made an offer they claim is best in the 80 years of working with the union and did include a double digit raise that they just could not bare the brunt of what the union was requesting. now the negotiations step up. both sides are still willing to come back to the table and the strike conditions. >> jay, thank you so much for giving us the latest. fantastic to have the coverage on the ground. this is the story that is having an impact on markets. i'll give you a look at the key names and how they are performing. ford is indicated to open 1.9% lower.

gm down 2%. joumanna, i'm keeping an eye on tesla thanks to dan ives. he was out in the market yesterday. he was saying they were looking at the negative impact on the carmakers. he feels this is a game of poker and elon musk and tesla is the winner. >> let me add the reason they are the short-term winners is because they don't have unions. it is an advantage of uaw to come to agreement that is sufficiently attractive so tesla workers are incentivized to start unionizing. there is a circular here. perhaps more medium term, if uaw comes to settlement, it could pose problems down the line. >> looks good for tesla workers in the future. >> it is having an impact on the key automakers.

stellantis at the bottom of the stoxx 600. this is the picture for all of the boards. all trading in positive territory. we had a strong reaction on the stoxx 600 which ended 1% higher yesterday. today is another strong day as the market digests the language from the ecb. this is the week to date picture. 3.5% for the ftse 100. strong reaction there. the italian index is up 3% for the week. cac 40 in france up 2.5% as well. a lot of that today with the luxury sector. >> it has been positive start to today's trading session with luxury and basic resources leading the way higher. the u.s. futures right there with the bounce at the open for the dow jones industrial average and s&p. nasdaq with a slgi sugshtart. that is it for today's show. i'm julianna tatelbaum. >> i'm joumanna bercetche. "worldwide exchange" is coming up next.

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it is 5:00 a.m. here at cnbc global headquarters. here is the "five@5." breaking news. thousands go on strike as the united auto workers fail to reach agreement. and disney ready to deal. media moguls line up for abc. disney says no decision yet. big bounce for a.r.m. on day