llhe other victims here that can't speak to-- to shirlee or thomas or roger or mary? ♪ good morning and welcome to "street signs. i'm joumanna bercetche, and these are your headlines investors snap up uk paper and homebuilders as they look for a loser rate environment while money markets pair bets on a hike and a 50-50 chance after uk inflation comes in softer than expected. the 10-year u.s. treasury yield hits its highest level since 2007, putting the squeeze

on wall street as the fed count down to a fed decision. cathie wood hails. >> there might be a little too much emphasis on a.i. when it comes to arm and not enough focus on competitive dynamics out there. and the vb maros sevcovic says its seeksing down for china. >> the investigation must be second ducted properly, but in the meantime we have to double ou our efforts. we remain very competent

good morning, everybody, and welcome to "street signs." there's so much happening in markets. of course, everyone is watching out for the fed meeting coming today. what will the guide' be for economic projections before that we had numbers come out. cpi fell unexpectedly to 6.7% in august, hitting its lowest level since 2017 core inflation, this is the number when you strip out food, nerm, and other vital components that number also slid from 6.2% to 6.8% in july. and it's fallen sharply in the wake of the data markets now see only around a 45% chance of the bank keeps rates on hold according to an analysis of overnight index swaps. so large, large moves we're

witnessing on the back of the uk inflation numbers today. let me take you to the reaction in sterling. you can see this number came out. of course, we did drop instantaneously, we were down 0.4% after the print came out. now we've paired back some of those losses, but still sitting 0.3% lower in terms of where we are, the pound is sitting at a four -monh low. remember, it was not that long ago we pierced through the 130 handle we're now at least seven figures below that. in terms of the gilt, all trading higher 10- 10-year, 428 we've come a long way. we're seeing very, very strong numbers on the front end the pricing for tomorrow is down seven basis points

2-year gilts selling more. as for the reaction in equities, this is what we're seeing in ftse today positive reaction, no doubt. up 0.6%. we're seeing quite a decent balance, you might have guessed, in some of the homebuilders. the sensitive parts are doing extremely well the homebuilders up anywhere between 4% and 6%. the government's policy is actually working. >> the path to lower inflation is never easy because it never happens in a straight line, but if you look at at the overall picture, it's down 40% that says the plan is working. but eecven at 6.7%, that's an awful pain for family who have seen their food prices go up, fuel prices go up. that's why it's essential we

stick to that plan and get it right down to 2% >> all right well, i did start off the show talking about the big fed meeting. we were talking about this yesterday on the show. 10-year yield sitting at 3.5 highest level since 2007 we had toy cha bank on yesterday. he said due to positioning, we may see the yield prices of current proportions. so the trajectory is definitely upward in terms of where the bond yields are going. 2-year also sitting above 5% 5.08% is where we are. it will be key whether or not the economic projections and the dots get improvised upward now, let's turn to a broader heat map and how the european markets are faring today

yesterday was pretty downbeet. we had all three majors in the red. today it's trading slightly more positive, about 0.3% we'll get into some of the macro stories and driving stories. the ftse 100 we spoke about, up 0.6% homebuilders doing quite while piers is one we're watching. a new ceo is coming in later we are seeing downward pressure on luxury stocks jeffries have come down. lmvh carrying down xetra dax down the peripheries also doing quite

well today as well in terms of sectors, this is where leadership is coming from this morning leadership, i spoke about the home builders in the uk. retail up 1% remember yesterday we were dissecting things. health care also up. we're seeing oil and gas slipping that's in contrast to the moves we've had over the past couple of weeks the price has come off a little bit, so that's putting some downward pressure on that this morning. the miners also coming off a tad as well. looking ahead in terms of u.s. futures, we have all of the three u.s. majors continuing with their negative move we had yesterday. they're opening up slightly, slightly negative as we get into the u.s. convection. ark invest cathie wood says she sees things moving faster

than expected. >> most aggressive fed in history. interest rates up 23, 24-fold in a little more than a year's time that has never happened before we have money growth negative, inverlted yield curve. it's been inverted more than a year now if you use the 10-year versus 2-year. you have commodity prices falling. you have the dollar moving up. and we believe these are harbingers of a harder landing than most people expect with the consumer giving way. now, we've been in a rolling recession for more than a year now, so the is not going to be like an '08/'09, but it's not going to be painless either. we think with hindsight that economists and others will judge what the fed has done as going too far too fast. >> well, it is a very big day for markets and market prices.

i don't think anyone out there is expecting the fed to go for an interest rate hike today, but there are still some people out there who think they may eke out one more hike in november. what do you think the risk is? >> it's going to be an exciting meeting. as you say, no chance of them hiking later today, but for sure, november and december are on the radar i think the odds of a hike at probably the december meeting, around 40% or so, but really it's about the dot plots and the projections and really any hints about forward guidance. >> let's talk about the dot plot because there are 100 basis points worth of cuts priced into those dot plots or forecast into the dot plot next year if they do revise them upward, would that be perceived to be

hawkish by the markets or have the markets already anticipated it >> i think they're currently basing 90 price cuts for next year and it's around 100 basis points the market is already anticipating potentially that hawkish tweak if you like. we have to remember the 2023 dot plots and just the signal that they keep that one hike in there because of the resiliency. >> i would say if they would move that one for 20 move that one for 2023, that would be a dovish surprise when it comes to rate cuts, what are you thinking it's been interesting how the u.s. economy has been. they don't need to cut rates at this point, so why is the market anticipating it next year? >> i think for sure the market

has been resilient and that's surprised so many people powell will acknowledge that fact gdp, the atlanta gpp now forecasting for q3 around 4.9% so for sure growth will be strock of course, their mandate is not gdp growth it's about inflation and falling employment inflation, we're getting good news, encouraging news, and that's what, i guess, the market focusing on. potentially there are more head winlds going forward into next year multiple headwinds for the near term with the potential uaw strike and obviously the government shutdown. further out, the sort of wider picture is for tightening financial conditions, which then means high borrowing costs, less credit availability, and there are other issues around it. >> i think your points about the

u.s. economy at the moment and the next couple of months is going to be a bit more challenging because of the shut joubs, strikes, more signs of a soft labor market. i want to turn and talk about markets and the price action that we've seen, particularly with yields. they keep moving higher. 10-year yields keep sitting at the highest level for the cycle, the highest level since then >> i think we step back for schilling. and obviously with that, markets anticipating the higher-for-longer narrative, which the fed has been talking about for some time now and obviously markets haven't been looking for that

that's what we're seeing in the 10-year treasury as you say. >> some people were saying in addition to the economic projections and today's decision, their estimate of the neutral rates further out is also going to be key because if they do downgrade that, perhaps that could be a dovish signal and that could be a catalyst for u.s. treasury yields to come back what's your view >> there's been chatter about that going higher. from the 2.5 neutral rate we've seen and 2.75% and 3%, there's, again, a number of factors with that longer rate, but i think important is just the fiscal loosening we've obviously seen in the previous administration and obviously as well the current one. and then that means the monetary policy needs to be more restrictive obviously to rein in

projection for sure that potentially pushes prices up over the long end, and then we also have wider macrofactors, which i think are quite interesting about the globalization and the slim birth rate. >> we can't forget the fitch downgrade earlier in the summer. what about the greenback here, the dollar against everyone's expectations that also has continued to climb we're sitting at a six-month high how do you think the dollar will react out of today's meeting if there is a surprise? >> it's fascinating because we already have this strong rally from the mid- to july lows up 6% from highs to -- the highs last week. we -- that's nine strike weeks of weekly gains. we haven't seen that since 2014.

the possibility of a double digit streak of that kind very rare you know, i think that's really important to remember. but certainly if we do get a hawkish twist, more hawkish flavor tonight, then possibly in the 2024 dot plot pluses we talked about and the rate cuts, potentially that will push the dollar higher. >> even higher, yeah. >> potentially. >> yeah. >> i would also think about seasonality because november and december are traditionally a softer time for the dollar and positioning as well in the dollar has been interesting. it's increased the gnat has increased but now we're the smallest bearish bet. >> interesting. >> we shall see. >> we'll keep an eye on positioning. thank you so much for joining me on "street signs." also coming up on the show, our guest says he remains

optimistic on defense spending we'll inyoth te tebrg u atapafr the break.

shipstation saves us so much time it makes it really easy and seamless pick an order print everything you need slap the label on ito the box and it's ready to go our cost for shipping, were cut in half just like that go to shipstation/tv and get 2 months free loving this pay bump on our allowance. wonder where mom and justdad got the extra money? maybe they won the lottery? maybe they inherited a fortune? maybe buried treasure? maybe it fell off a truck? or maybe they switched to xfinity mobile - the fastest mobile service. save hundreds a year over t-mobile, at&t and verizon. now i can buy that electric scooter. i'm starting a private equity fund that specializes in midcap. you do you. switch to xfinity mobile today.

welcome back to the show german producer prices fwith the largest in august, prices rose by 0.3%. german defense will provide additional equipment to ukraine. we're joined from munich annetta, as we know, they play a crucial control there. what more did they tell you? >> that's exactly right. rheinmetall is one of the two producers, which are crucial in

ukraine. it's not just a tank but it's like a high-end tank, which, also, by the way has technology in it that's very precise when it comes to its ammunition we spoke about the defense outlook as well for the european industries because clearly it's been a game-changer to the industry perhaps we take a listen of what he said. >> the ordering will be excellent. my expectation is from the jer man german side it will be $15 billion. >> if you're looking into the future, it seems like a super cycle has started. how much are you going to benefit in increased spending across the globe in defense? >> there's one thing that we learned, that conventional war is coming back for conventional war, you need

conventional ammunition, and you need vehicles and electronics, and all three of them rhienmetall is doing also important is air defense. we have really good air defense in terms of f the cost because the cost is 5,000 bucks if you c compare it to $5 million it's very positive. >> how are you going to build a factory in ukraine as well you are bold in that plan and the russians are threatening at the same time. how do you do ahead? >> we plan for a brown field it's not a green field there are other factories in ukraine we can use at the moment we are in a joint venture. it's working the people are educated in germany, and we will use the facilities that they have.

>> how is the french/german project going to have a new tank which you are signing together >> i appreciate this relationship that we have, and it's a long-term project as you know, mgs will be ready in 2040, but that's the reason we createsed a new tank also, but i think it's a very good program. it's a very good technology program, and we should continue. >> probably one of the weaknesses of the european defense ministry going forward is they're not able to compete very efficiently there's a lot of nall issues taking place, and that's one of the issues with the tank project which i was referring to in my last question. of course, the demand is going strong they already have products, but

they have a new product which apparently they already have the first client but i had to ask him as well because obviously the leopard is in demand from across the world, and there's political tension from asia. take a listen. >> we have to help and we have to serve we must help ukraine our focus is in europe but i see a big demand in other areas like australia. >> i thought what was interesting in another part of the interview is they're seeing only bottlenecks in two years' time, and that's actually when they have probably met all the demand they're currently working

on and if the demand is staying as strong as it is right now, they would have to ramp up capacities, which, of course, they're only doing if they believe and it continues holding up of that high level of demand for that tank. so i guess lots will depend on the outlook for the company of whether the defense spending will really be up sub stan thally to at least 2%, meeting the natural target here in europe, but also whether they'll be able to sell their tanks in other regions of the world of course, we're talking about governments. only governments are allowed to produce from rheinmetall and whether the government agrees to selling the tanks in other nations because they need government approval. shares, of course, had a very good ride. they're trading close to record highs, but mr. papperger, given

the positive outlook and the discussion he's been having on the ground, still sees an upside when it comes to his own shares. >> annetta, thank you for bringing that interview and all of the coverage from the conference we look forward to listening to more of those interviews. shares of instacart rose 12%. the stock initially opened 42% higher at $30, but it peeled back some of the early gains the grocery delivery company, which is the first notable venture program to grow back is worth 11 billion dlurs our colleagues will be speaking with the founder tune into that interview at 1330 cte. the marketing company is offering 19.2 million shares,

looking to raise over $572 million in its offering. the ipo would value the boston-based company at more than $9 billion. and ark invest cathie wood told cnbc this morning her fund did not participate in the arm listing, arguing it was too focused on one area. >> i think there might be a little too much emphasis on a.i. when it comes to arm and maybe not enough focus on the competitive dynamics out there so we did not participate in that ipo, and we also compared to the stocks in our portfolios, arm came out, we think, from a valuation point of view on the high side, and we see within our portfolios much lower priced names with much more exposure to a.i. so -- but, i think, the point

you're make, the innovation -- or the appetite for innovation is stirring here, and i think one of the reasons is because many investors and analysts are starting to look over the interest rate hike moves we've seen, record-breaking in the last year or so. and to the other side. if innovation was hurt -- and it certainly was during the two years where we feared interest rates going up and then when they went up as we're anticipating the move down, when they actually move down as inflation continues on the low side of expectations, you just got a downside surprise here in the uk, then that should be a very good environment for innovation and, you know, global mega trend strategies. >> and wood's ark invest has

brought trade funds. it paves the way for expansion in the world to europe, uk, and the market globally. sterling slips we're going to talk more about the numbers and what it means for tomorrow in just a few moments.

welcome back to "street signs. i'm joumanna bercetche welcome back to "street signs. now seeing a 50-50 schabs after uk inflation rates call in softer than expected the 10-year u.s. treasury yield hits the highest, putting pressure on wall street. in an interview cathie wood emphasizes the hawkish stance. >> the fed has been very

aggressive, most aggressive fed in history interest rates, 23-24-fold in a year's time. that has never happened before. >> instacart closes up at nearly 12% as the grocery delivery firm makes its debut on the nasdaq. >> we have now proven that we have kept the covid gains and grew on top of it and grew sustainably and profitably, which is really important. and european vice president maros sevcovic speaks. >> this investigation, to be fair, must be conducted properly, but in the meantime

it's clear that we have to redouble our effort that our industry remains very competent. welcome back, everybody. wheel it is a big day for markets, the fed meeting is coming up later on we'll be watching out for economic projections markets are trading more positively all the majors are up on the day. we've got the ftse 100 up 0.7% more on that in just a moment. as i mentioned earlier, luxury is in focus. downgrades coming through for jeffries in that big basket. xetra dax up we continue to watch the production numbers

as in foreign exchange, this is a picture into that fed meeting. the pound has dipped after the softer than expected uk inflation prints, but the eurois still seeing some gains versus the u.s. dollar, so it's almost 20 basis points or 0.2% further. dollar/yen also. don't forget we've got the bank of japan meeting on friday they may have decided to take a more hawkish turn, but that's not really transpiring for the currency not a lot of movement. let's go back to our top market story this morning uk consumer price inflation fell unexpectedly to 6.7% in august, hitting its lowest level since february 2022 and sending sterling sharply slower. core inflation slid from 6.2% to 6.8% in july, and the implied probability of bankof england

falling tomorrow is higher there's now a 49% the bank keeps rates on hold i'm very happy to say the director joins us. wonderful to have you with us. let me ask you straight off the bat. do you think the bank of england should be hiking tomorrow? >> they will hike rates, and they should. they very well should. one also has to remember there's a huge time lag between raising rates and dealing with the economy. >> that being said, the inflation is rising but core inflation is sitting if you had taken these numbers out of context, they would say these have been extremely high

versus where they were historically how is it that the bank of england doesn't keep up with the interest rate hikes at this juncture. >> what we're seeing it's still very high. [ indiscernible what we are seeing is a downward trend. that's clearly a positive sign we're also seeing a broader macro down prices coming we're also seeing -- [ indiscernible >> further down in the coming months. >> well, gdp did suffer its biggest contraction in seven

months back in july. so that was a bit of a warning sign for markets is it your expectation the uk may dip into a recession once again? the forecast has been all over the place. their gdp forecast has gone from a low recession to no recession, but the numbers have not been supportive. >> you're right. you look at strike action and the figures in july, that month. we're not expecting that we're expecting a pretty fat line over the next few months. >> the thing about getting to the end of the hiking cycle -- i was discussing this with a guest

yesterday. the question is how far are they going to go to how long are they going to keep rates for? that's interesting in the context of the uk because people are going to move on starting with bank cuts out of the bank of england when are you pencilling that in and when should you expect investors to change their tune >> what's interesting is we're expecting it to rise we'll look at how long the rates will stay high what i expect is it to be relatively firm. interest rates are going to remain higher well into next year next we get a recession -- but i think we are -- into next year. >> what about financial stability risks? these interest rates are very

high and there has been a lot of press about what this will mean for the housing sector even today, you're seeing some of the homebuilders rise with the ftse 100 should we be worried about financial security risks further down the track as the interest rate hikes feed out to the broader economy? >> i think it's not so much we're close in the rate psychs i think the rate hikes we've seen since the end of 2021, we like to see that with the housing markets. we've seen the forecast with it. what we might well see is peep drop off the mortgages what's also interesting is what's stopping the price of that market versus huge prices on laterals.

we'll see as they hang high with the mortgage costs. >> ultimately homeownership is still quite high and a lot less people are on floating mortgages than in the past so perhaps that gives them a little bit of a cushion. but, again, it's one of the big questions hanging over the bank of england thanks so much for joining me on the show today also coming up on the show, we are going to take a look at the european auto space and battery powered evs exceeding 20% share for the first time we'll be right back.

shipstation saves us so much time it makes it really easy and seamless pick an order print everything you need slap the label on ito the box and it's ready to go our cost for shipping, were cut in half just like that go to shipstation/tv and get 2 months free

signs. the white house has told nbc news it will no longer send key officials to detroit this week to help broker a deal between the striking autoworkers union and the big three car companies. a senior adviser and julie su

will speak to reps by zoom they will expand strike action friday if no serious progress is made. and ford says it is developing contingency plans for work stoppages in the u.s. after it reached a tentative deal with the union, avoiding what would have been the second round of industrial action in a week. details of the offering which will be presented to the members to vote has not been disclosed. ford uk has made plans to water down its net zero commitments, including its pledge to faze out car combustion says by the end of the decade it needs three things from the government, ambition, commitment, and consistency.

speaking of autos, new car registrations in the eu rose 21% in august with battery electric vehicles exceeding a 20% share for the first time that is according to the aca and companies despite august typically being a quiet month for car sales. we've been having a closer look at all of the numbers. >> especially the ev market. >> tell us more. >> that's quite interesting. the overall figures expanding 21%. 787,626 in the overall market there. that's the 13th consecutive month actually of growth, as you said typically that's the slower month, the month of august rebounding from the component shortage they have pretty much subsided for the most part, gaining 37% in the overall picture but that ev market as we spoke about, very important.

exceeding 20% for the first time for that market. 21%. it's up from 11.6% they scored in august of last year they overtook diesel as the preferred choice for the second time this year, which makes diesel the fourth biggest choice, making ev the third biggest choice with hybrid electric cars in second place with a 24% market share, petro cars still the most popular, but that market share is declining from 38.7 to 32.7. >> that's quite interesting. i see these numbers, and the first thing i think of, this is a growing market no wonder chinese automakers are looking at the space and thinking here's an opportunity for us to expand outside the mainland one of the reasons obviously the eu commission have been looking at anti-subsidy and anti-competition practices. >> that will take some time, yes, but it does give you a

clear sense that there is this massive push into the ev market and wanting to do that is quite evident. the eu battery registration car industry surged from 18% to 165,000. that tells you clearly how beg this part of the business is. speaking of electric vehicles, cathie wood told cnbc this morning the ev stock is hugely underappreciated. >> the target is 200,000 dollars and that's a 2027 price target, so we think it has miles to go it has just started. and we do believe it's the biggest ai opportunity in the world today. the autonomous taxi platform opportunity is going to be a winner take most opportunity, so the first company that gets

people from point a to point b the fastest and the safest is probably going to be the beggest winner in the united states. what's so interesting about autonomous taxi platform is the margin structure it's -- compared to evs, which are in the 20% to 30% gross profit margin range, the profit margin are s.a. as.a.s.s.-like. we believe it will be in in the perhaps higher range again, this is the biggest a.i. project in the world right now, a and we think it's incredibly undervalued. >> cathie, are you worried about the chinese getting in the way are you worried they're going to go after the dominant u.s.

market position and prove a real challenge to some of those traditional players in the states >> i think evs generally, yes, will, and especially companies that are focused only on evs they're probably riding down the cost curve of electric vehicles and are going to be able to cut prices much like tesla is doing. many people when they see tesla cutting prices, they say that's terrible they must be losing a lot of business otherwise they would be pricing this way. no, elon has always promised that he would pass along cost savings to consumers, and if the consumer's feeling a bit weak right now or has lost some confidence, those lower prices are making a difference. >> wood also defended her approach to chipmaker nvidia despite missing out on this year's surge after cutting holdings in january.

>> when we learned that gpus were probably going to be the brains or the central nervous system of electric vehicles and other robots, we took nvidia up to the top of many of our portfolios and we wrote it from -- we still own it in many of the specialized ones you are talking about our flagship strategy. when we see nvidia at 20 times revenue and tesla at six to seven times revenue, and we told you that's the biggest story out there, we're going to make that trade-off in our flagship, which has to include all of our innovation platforms if you look at the flag ship since inception, nvidia has been the fourth largest contributor to performance after tesla, bitcoin and others in the space. nvidia was the fourth.

please don't take that away from us we were there first and anyone who listened to us has made a lot of money. >> that was cathie wood speaking. maros sevcovic says europe is working to expand trade with china. then they say they were stopping trade of evs that's interesting >> big announcement on this investigation. potentially china giving subsidies to carmakers over there, but from the conversation i had with the vice president, it seems the european union is not anywhere close to imposing tariffs on china's evs they're going forward with an investigation. we'll see how far they go. i have to point out at the moment, there's already an import tariff on cars that is at 10%. potentially what we're talking

about here is we could see the eu raising that specifically for chinese evs. but let's take a look at some of the conversation i had with the vice president of the european commission. >> it's free but fair at the same time. before because we receive d several pieces of information, they decided to start an investigation into the possible subsidies for exports of chinese and electric vehicles through the european union of course, we will conduct it in all fairness and we'll be governing all the necessary data. >> is the plan, do you think at this stage, to increase tariffs on evs from china or is it more likely we'll see the eu providing more subsidies to european carmakers what's the solution here >> i think we're very far from imposing duties.

this investigation, to be fair, must be conducted properly but in the meantime, it's clear that we have to redouble our efforts to make sure that our car industry remains very competent. we've always been very proud we want this to continue to be the case also in the future we work with battery sectors, car manufacturer sectors, and i'm organizing different sets of roundtables. i want to discuss even closer with the european car industry, what we need so we can really roll out more ev models and be stronger not only in the european but global markets as well. >> that's the vice president of the european commission. one important event for us to monitor next week is the trade shift to china to see how the business story will unfold but i also want to show you this

specific conversation with sevcovik on the gas shortage he's responsible for this. he's at play at this stage. >> you have the companies who are serious about the decarbonization, about the possibilities of carbonization capture stories. they want to make huge profits as they did, i have to say, over the last year. the policy makers, according to public opinion, are working full court, to use basketball terminology d to work on it. to get to the climate needs, all efforts from all the partners should get together when the situation will reverse it's a very dangerous path we are right now on we need to make sure our planet will be habitual also in the

second half of the century. >> so the president of the european commission also highlighting the block is a sound place compared to what it was a couple of months ago if you look at gas storage levels at this stage, they're at 94%. considerably high. indeed, it does seem the block is in a googs pod position. >> i remember the discussions in the spring, we managed to make it through the winter. it wasn't pretty, but we got through it it looks like going through the winter, storage is decent. >> exactly and there was a question what will china's reopening mean? when you look at it, because it was not as predicted initially, they actually were at a better place than earlier predicted. >> still a lot to be mindful of as well. we're watching the price of oil closely. that's going to have an impact

as well on energy prices but at least europeans are equipped to a certain degree thank you for bringing us that interview. so interesting to hear what they have to say on the actions provided by the chinese to their own automakers that's the story we've been closely watching jo a quick like at european markets before we head out all of the major markets are in green. we have seen softer inflation move upward, and the homebuilders, they're trading 4% to 5% higher here are u.s. futures as we get into the u.s. session. all eyes on the fed. more to come from our u.s. colleagues on that one that's it it for today's show. i'm joumanna bercetche "worldwide exchange" is coming up next.

every business deserves a great deal. that's why comcast business is launching the mobile made free event. with our business internet, new and existing customers can get one year of unlimited mobile for free. it's our best internet. powered by the next generation 10getwork and with 99.9% reliability.

plus one line of free mobile for an entire year. it's the mobile made free event-happening now. get started for just $49.99 a month. plus, ask how to get one free line of unlimited mobile. comcast business, powering possibilities.

it's 5:00 a.m. at the u.s. capitol. here's your "five@5. key for investors, if the central bank remains highly attendant to inflation risk. also here in washington, the shutdown showdown showing know signs of easing up as kevin mccarthy struggles to get his house in order that's even before reaching across the aisle. fina