♪ welcome to "street signs." i'm arabile gumede. these are your headlines this friday morning. the euro see-saws as data from germany and france upstages spanish gdp growth and traders snap up bonds and eurozone data. the uk competition regulators takes a step toward approving microsoft's activision

deal saying the decision to sell to ubisoft opens the door for clearance. the yen slips as the bank keeps rates on hold over the stimulus program and issuing a dovish outlooks as inflation comes in above target for the 17th straight month. sterling nears a six-month low after the bank of england votes to pause its rate hiking cycle. governor andrew bailey warning that the uk isn't out of the woods yet. >> our job is to get inflation down. we have a big job to do as the way i see it.e encouraging, but cannot be complacent. we have to watch the evidence carefully as we always do. well, we have been following pmi data cross this morning. germany and france coming out

and it is improving slightly, but in contraction territory for the data points. the eurozone flash pmi has come out and composite at 47.1 against the 46.7 in august. yes, a slight improvement, but as i have noted, contraction territory. it points to q3 looking contractionary across the eurozone. you look at the services sector at 48.4 for the flash services pmi number. 48.4 against the 47.9. slight improvement on that side. still in contractionary territory. the manufacturing pmi is headed lower. 43.4 is where it is marked up at for september, but it was 43.5 in the month of august. marginal losses there. still all of the data is still

pointing to contraction. the eurozone economy likely contracted for the quarter as well. let's bring in chris williamson at smp global. chris, europe not in a good space, clearly. >> the third quarter is looking different from the second quarter. we appeared to have a respite for the second quarter with the demand for travel services for consumers and businesses. this led to growth stronger which was surprise to the upside. what these numbers are telling us is this bolted in the third quarter. you are looking at contraction. the numbers came up slightly from the signs in august, there is still in a zone that is contraction. >> we are not pointing to a real recovery yet? >> not yet. you have to be careful with the

volatility of the data. august is a quiet month for europe. any volatility in the numbers and look at the quarter as a whole and the forward looking indicators are saying because those are negative. backlogs of work and how many orders to support the growth going forward is falling at a rate we have not seen since 2012 or since the lockdown during the pan pandemic. it means less output going forward for businesses and then business expectations plummeted in manufacturing and services. >> the manufacturing one is key to me. if you look at the german data, 39.8 handle against the 39.1. you are still sitting in the doldrums there and that is recessionary territory. >> one thing we have been looking for is when will this

turn around and key to that is the inventory cycle. we are watching the stocks and finished goods index which tells us how much stock is in the warehouse. they are tracking that at a huge rate. this is huge concern of the demand outlook. they don't want to hold in the warehouses. no sign of the inventory cycle turning around. it could be next year. >> the job cycle being the one that has held resilient for a period of time, in fact, across europe in some situations. if you have a strong job market, but demand continuing to wane, the job market then suffers as well. >> the famous lagging indicator. what we see in europe at the moment is the big overhang of backlog accumulated in the pan pandemic. it helped german automakers

soften the blow of the recent weakening of demand. they have been drawing on the bag backlog. they don't deplete them and have nothing to do. they have been managing the flow of growth and backlog. when you see the new ordering pick up, it will get worse. they will deplete and then you layoff. >> can it help in the h high-interest rate environment? >> they are hiking rates and we still have the impact to come. that's why we're worried about the outlook. i see a q3 downturn and no respite in q4 and lack of interest rates hitting through to 2024 and that could add downside risk sdp. >> this recovery will take time. the worry of stagflation here, too. do you see a continued push by

central banks who are now perhaps on the wait-and-see mode where they might indicate a few hikes later on? you say the recovery is not until the first quarter of next year? >> everyone is dependent on the data. this is why we do it. this is why we compile the numbers. it helps give an insightful line to what we see now. this is why the spanish gdp data is overlooked. that is ancient history with which the way things are moving. we need to look at things carefully. the couple of months of input costs on the back of the higher energy prices. what the central banks is seeing

that still coming down. the costs may be rising, but you can't pass it on to customers like six months ago. this is a deflationary impact from the demand side . it is important to watch that transpire into next year. >> what is the best way to navigate this? i look at the pmi number and think it works as a proxy for the gdp number if you are being data dependent p as a central bang. you see that number which is overall in a laggard position and you might want to try to fix or not hike any further. how do you and a hnavigate in a situation like this? w are we saying hikes are not happening here or how can you best get involved with your economist hat here?

>> the problem policymakers have is the obsession with wage growth. you say the job market is the lagging indicator. the data produces a lag. you are looking far too behind. you have to look more forward. that is output numbers. that is where they have been caught out before. we see with the pmi activity data are already warning signs of recession coming in, but they hike rates and there is a danger that is what we are doing now. >> risk of overtightening? >> absolutely. we're going to see concerns about this and that's why they are all starting to pause. recession indicators are starting to really come alive now even last month's data in the u.s. with the third quarter is looking good from the official basis perspective, but warning signs are creeping in about just how much growth will wane through the year as we go into 2024.

this is what policymakers have to watch and the pmi. think about the ecb using the pmi as an outcast better than the estimates. we are better at getting final gdp right. this is why they focus on it so much. the frustration we have is they then pull in all of the lagging data to really blur what should be a clear decision now which is to keep it on hold and see how it develops. >> definitely. that is the sentiment around keeping it higher for even longer may be something that central banks may need to employ. chris, i appreciate the time. thank you for joining us here on "street signs." chris williamson at snp global markets. let's look at the u.s. market or is set to perform as we head to today's trading picture. yesterday's numbers were in the

negative and falling substantially. wall street poised to end the week with steep losses. overnight action did see three days of losses out in the u.s. that is the picture for now. looking mixed thus far. where are we across europe? we are looking to head d down .50%. the market did start off in the same territory. we did lose 1.3% yesterday for the stoxx 600 and we're down again today. yesterday was the central bank frenzy and wondering what they were doing and where the issues would happen. we saw the bank of england and snb keep rates unchanged. continuing the fight against inflation. and tech stocks overall in aurp a in europe are down. we have a lot of european

markets in the red. marginal for the ftse 100. cac 40 is down 1%. of course, it will be interesting to take a look at the likes of ubisoft today with the news from the cma with that deal having come forward then and perhaps it could be happening sooner rather than later. we have a guest later on who will give us a sense of what they see with regard to the microsoft-activision deal. whether this will be announced in a couple of weeks time with the cma giving a clearance to the deal. of course, you have the microsoft numbers as well as activision which we are noting in the dax which down .50% today. we are looking out for the picture with the top end of the spectrum with tencent with the stake in ubisoft. here are the sectors.

because we saw them drop off significantly out on wall street and across europe with the technology stocks taking a hit around .10% on the back of the news that we are looking at today with microsoft-activision deal. it looks like it is closer to getting finalized. technology still taking a dip. basic remembersources are down . japanese is keeping interest rates unchanged early this morning. they are maintaining the ultra loose policy with short-term interest rates held at negative 0.1% and plus/minus 0.5% range on the 10-year jgp. the governor said the central bank will only change the policy stance when it believes it has achieved the 2% inflation target. it hasn't hit that mark for a

sustained period of time. in august, it was 0.2%. core was 0.4%. still with central banks, the bank of england's members voted 5-4 to keep rates on hold pausing the rate hiking cycle. it was the day after the uk inflation data came in softer than expected. that was the kicker that changed things around on whether they will hike or pause. they are beginning to see signs of rate impact on the labor market as well as the broader economy. investors pared back future hikes with the 50% chance of rates rising by the end of the year. the governor, as you see him there, andrew bailey, told broadcasters the central bank hiking cycle is beginning to have an impact on inflation. here are his thoughts.

>> the effects of what we have done over the last two years are coming through. we used the word restrictive. what i mean by that is we see it having effects. that is reducing the inflationary pressure in the economy. coming up on the show, uk regulators open the door for the microsoft takeover of activision-blizzard. we'll give you details after this break.

welcome back. now it seems to be game on in the gaming industry. we are looking at the microsoft and activision deal after the cma came out with statements saying they addressed the concerns and opened the door to the deal being cleared for microsoft and activision in the $75 billion deal. that is microsoft in pre-market

trade. activision is seeing a similar gain around nearly 2% at this point in time. activision having come out and said actually to the ft that it is great news for the future with microsoft saying that of the preliminary approval. it does look to be headed for some positivity. the uk competition and markets authority saying the door is open to clear microsoft to take over of activision. ubisoft rising on of back of this after the proposal to sell the gaming company cloud streaming rights to ubisoft. ubi soft taking in 3% higher. sarah cardell says it criticized microsoft and activision for not submitting the changes during the initial investigation. tom smith is also the former

legal director at the cma and he is joining us now. tom, thank you for joining us. does this language for an entity you used to work suggest that the deal is more imminent and could be announced within days or weeks or do we stick to the timeline of october 18th of being the extended deadline for this? >> that's right. it will take most of the time between now and the 18th because they have to run a presentation process over the latest announcement and you may think there may be plenty of presentation processes already. >> they do still say they identified limited residual concerns. what could those be in the deal like this? >> microsoft offered the restructured deal giving ubisoft the cloud gaming rights outside the european economic area.

so the residual problems were the cma just wants to retain a bit of control over this after the deal is done and dusted. make sure microsoft doesn't undermine the deal. they still control the games in the first place with the link with the game and ubisoft sale of the cloud rights. >> does this have a setback for microsoft? it structured the deal they would not get the cloud gaming from activision in this regard and now they have to do away with it and not make it part of the deal. does that, you know, put some negativity in for microsoft? >> i know they will be pleased to get the deal done as it was blocked in april from the cma. looking you will get the deal through with all but the outside

cloud rights getting through is a good deal in the end for microsoft. they will be happy. there are concessions that no other agency has got. it has been a messy process, everybody would agree. it looks like a pragmatic outcome in the end. >> is this materially different from initially offered? microsoft said they would never let it escalate to the point they would have sole proprietary with the games of "war of warcraft" or "call of duty." >> that's the big issue through the case the cma is looking at cloud gaming is the dominant ways in which people game in the future.

it is not now. this is all about what would happen in the future and that is why it is a difficult case because the cma is looking to decide whether everyone is streaming in five or ten years times rather than buy on a playstakes. t -- playstation. cloud gaming wasn't a huge part of the price. we'll have to see in ten years time. >> we will. tom, do you think microsoft is ca taking chances here? the coo noted they could have done this earlier. they could have put a deal like this on the table earlier. they were clear mitigating circumstances that could have been put together which is the removal of the cloud computing business or the sale to someone else. could microsoft have done that? were they taking chances initially?

>> yeah. it is interesting that the cma chief executive put the boot in saying microsoft could have offered this remedy back in march or april. that is true to a point. they could have restructured before the first final decision. they didn't know what the final decision would be, to be fair to microsoft. a lot of this comes from the cma rigid stance on behavior recoremedy on how to behave after the deal. that is why we ended up with the tortured process. we will see if it continues. >> how much of a nod of approval does this give the cma? they have the stance clear to microsoft saying come up with a better deal and they have. microsoft has come up with a better deal. how good does this feel for the

cma's stamping authority? >> it is interesting. the cma's take on one of the world's most battled companies and microsoft has tried its hardest to an assuage cma's concerns. this has been an interesting test. is the cma up to the job? i think they have done all right in the end. they have the extra concessions. microsoft has made the concessions and everyone found a reasonable outcome. >> tom smith, thank you for the time this morning. former legal director at the cma. i appreciate your time this morning. what's coming up? we will look at hollywood studios and writers who failed

to seal the deal. om'll unpack that and the latest fr tinseltown after this.

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welcome to "street signs." i'm arabile gumede and these are your headlines. equities taking a drop and the euro see-saws as the data from germany and france upstages better abthan expected gdp grow in spain. and mi and microsoft and activision deal is closer to conclusion. the bank of japan is issuing a dovish outlook as inflation comes in higher for the 17th straight month. union bosses and automakers are stuck in talks with the unions promising expanded price action unless progress is made.

we have been continuing to take a look at the eurozone area and just how the pmi numbers have looked. the strength of the manufacturing sector which really does sit with little strength when you look at the likes of the german numbers to have come out. we are anticipating the uk flash pmi numbers. those numbers have just dropped. the uk september flash composite pmi at 46.8. that's a drop from the 48.6 that we saw in the month of august. that continues to show that rapid decline. more risks of contraction for

the market overall. even in the uk as the indicators show a worsening economy in the uk. 46.8 for the composite figure down from 48.6. when you look at manufacturing, slightly better with. still in contractionary territory. as i said, slightly higher. still we sit in the contraction territory. a dip on the overall number can contrasting services. still all of that is in contractionary territory. as we were speaking with chris williamson from snp global markets earlier and he has

stated we are seeing that in the market. we had seen the euro take a bit of a hit against the dollar earlier on today after the pmi numbers. those losses were pared with the data coming out of france. overall, european markets with the mining stocks push up the ftse 100 at this point in time. some of those really do include glencoe up 1.4 p%. ocado is rising 1.2%. the dax on the back of the microsoft and ubisoft situation. microsoft and activision deal could go through sooner rather than later. we are down with technology in

the negative. on the forex market, we are down .30% in the market picture for the euro. the the dollar compared to the with the bank of japan keeping interest rates unchanged. they want flags to inflation to remain at 2%. euro/dollar at 106. u.s. futures here as we head toward the open. it was a negative day yesterday. expected to close out the week on relative negativity across the board. sticking with the united states, right-wing republicans blocked their defense spending bill for

the second time in three days in the house of representatives. that was increasing a chance of the u.s. government shutdown this month. the u.s. must pass a short-term or a full-year funding bill next week if it wants to avoid a shutdown. garrett haake has filed this report. >> reporter: chaos in congress as the government lurchies to a shutdown. >> nobody should leave town. >> reporter: the federal government runs out of money at the end of september. it will shutdown without action on october 1st. >> it's not september 30th. the game is not over. we continue to work through it. i've been at this place many times before. >> reporter: democrats and some republicans have argued for a stop-gap plan to buy more time

to pass bill ps to fund the government. house republicans backing away from the deal struck with president biden earlier this year are demanding steep spending cuts of $300 billion. slashing education, nutrition and environmental programs. this d to pass anything at all. >> what do you say to people back home who expect you to get the basic function of your job done? >> we're dysfunctional. >> it is that simple? >> we are so dysfunctional. >> reporter: a government shutdown would force hundreds of thousands to be furloughed or work without pay until the shutdown ends. food safety inspections and passport inspections and business loans would be slowed. president biden and democrats hoping to lay the blame at the gop feet. >> we're back at it again. breaking commitment and threatening more cuts and

threatening to shutdown the government again this month. adminisustralian alliance agreed to end the strike over job security and career pr progr progression. the strikes were threatening 7% total lng worldwide. for the and gm and stellantis strikes continue for the seventh day. the uaw and carmakers are necesgotiating over pay and worg conditions ahead of the deadline today. general motors urged the union to put their interests of the members above their agendas. adding they continue to bargain in good faith. here is one that is continuing for some time. movie studio chiefs and writers

guild of america failed to conclude a deal to end the months long strike as the second consecutive day of talks ended in a stalemate. they agreed to meet again today raising hopes that a deal may not be too far. tanya has been keeping us aware of this story. we thought it was a deal, but it is no deal. it is more complicated than more pay. some actors in particular have been receiving a lot of pay, but writers and some of the other have been asking for clarity when it comes to things like a.i. and disruption in the sector. >> there are a number of issues, arabile. it is about pay, yes, absolutely, but also about how a.i. will impact them and for the actors with the images and writers impacting their scripts. there are so many issues to

overcome. this strike has been going on since may 2nd for the writers and july 14th for the actors. we're going into the fifth month. last few days, there have been negotiations. they have been talking. the big four, ted from netflix and you have bob iger from disney and you have donna from nbc universal and david sazlav from universal. they were all sitting down with the motion pictures of television producers and the writers guild. they have been negotiating for the last two days. it was reported they could have rehe covered the i-- resolved te issues yesterday. there has been no agreement made. >> do you know why? >> we have been talking about the particular issues.

it is the streamers and re residuals is the key. the writers feel strongly also about the mini writers rooms they want to impose the studios as well. they say we don't want to be told we have to reduce our writers staff. that is key for them. i think for the actors, it is ongoing pay and the impact of a.i. in the last few hours, we had news they will return to the table today. that is hopeful. that is progress being made. of course, in ten days time, if they don't resolve it, it will be the longest strike in history for the writers dps guild of america. and i would like to add the american public, over 50% of them, are supporting the writers and actors.

>> it is a fair flsplit. very interesting. let's hope the negotiations do reach some sort of resolution today. tanya, i appreciate the time. in another big media story, rupert murdoch stepping down from fox corp. the company said the move will be official in november at the next general meeting. the 92-year-old will be appointed emeritus. his son will be sole chairman of news corp and continue as fox corp executive chair as well as ceo. let's unpack this one. tim mulligan is the research director at media research. tim, thank you for your time this morning. if we start off with rupert murdoch and him stepping down.

it is not him retiring. he is still chairman emeritus. do he rule by proxy now? >> that can be an argument made that will be reality. let's recognize that rupert murdoch is 92 years old and in the eighth decade in the role of the media distribution and consu consumption. he has a capable successor. there are concerns he is stepping aside, but we recognize this is the reality of what it says. >> he has had a major influence in media globe aally. do you see the sum of the empire split up whether it goes to each

of his children or sold off in some some respects? >> everything is on the table now. he doesn't often get the recognition, but rupert murdoch is a pragmatist. from my specific lens of covering video and streaming video, i would argue the biggest impact rupert murdoch had on the media landscape globally was the decision to sell the majority of the 21st century assets to disney which concluded in q1 of 2019. that laid the foundation for disney to go out on the consumer strategy. it also allowed the residual fox corp formed out of the remaining news and sports assets at 21st century fox which allowed the

murdoch empire to rely on the live strategy. that proved to be very successful as we are four years in the disney consumer and they are losing money. it is still a challenging business model which takes time to be able to play out. underlining all this is pragmatism. rupert murdoch will have that rigorous time with his children and he is pragmatic about the approach. i would argue everything on the table. the fox corp is in a strong position. >> cue the "succession" theme song here. when you look at this, you think this is a man who could make or break the governments across the

uk and australia and u.s. as we have seen in recent times. do you think the influence of his empire begins it wane on politics because of how much he had in terms of the influence before? >> of course. let's just recognize that we're in a more complicated world than we were 70 years ago when rupert murdoch started out on building his global empire. the reason is predominately because we have gone digital. media has done a lot of work around consumers engage with media and the wider entertainment landscape. the underlining truth is people engage in media now on asynchronous moments. in the past, everyone watched things together at the same time. this means people have their own identities and understandings of

who they are signalled for the news they watch or media they consume. it means it is harder to have a homogonous majority to maintain the coalition in an increasingly complex landscape. >> this is a big story. this is, no doubt, one of the most consequential leaders in the media for the last 60 years. we will wait to see the impact on the 2024 u.s. elections as well. fox playing a critical role in the last two elections. i would be remiss if i didn't ask about the writers strike in the u.s. no resolution as we have been speaking with tanya earlier thus far. how do we get to a point where

each of the parties get it and sit down and finalize this deal? do you think we're nearly there? >> i think we are nearly there. i think the point about 55% of americans behind the writers and the actors is underlining the importance of the studio heads and head of streaming services means this needs to be resolved. it will be difficult, but it is essential. this is all a function of streaming tv. the majority of how we engage is streaming services. the mondday monitization piece be figured out. they recognize they need to change how they enumerate artist

s for music. they need to do the same for actors and writers. the basic agreement was in 2007. the landscape has shifted. it is not just the appropriate thing to do. it is the essential thing to do to make sure the writers are sufficiently renumb erated. these are technology companies. they are more data centric. they will give less time for a series to play out. that means less revenue and also that challenge around a.i. where does a.i. come in from the credit perspective? where does that lead to pay? you need to be aware. >> let's unpack that a.i. perspective. this strike could be critical to

the fundamental future of the entire media and entertainment industry. this could set the tone for what we could see in the future. does it change the landscape? do you think actors look at their jobs differently and writers ask the question of everything from redundancy and efficiency of their jobs and the amount of money placed in the productions now doesn't necessarily always go to human elements now? it could just be going to technology advancement. >> absolutely. this is the existential question of entertainment on a global level. do we want entertainment driven by algorithms or show runners and directors and actorstalent? >> there are ways to manage it. >> entertainment has been overly

focused on being able to serve the consumer. one of the challenges is overwhelm the consumer. this is too much content to consume. how do you decide what to consume? in the old world, you have a programming schedule with humans being paid to decide what people watch. you have marketing teams to promote that. this is now driven by algorithms which is not where it needs to be. media research shows the single main source of recommendations for new shows on streaming service is word of mouth. 40% of consumers is the main way they get the content. that is the reflection of how the technology is not yet where it needs to be. this writers strike is the way to recalibrate to make sure the human element remains essential. >> very important. this is a consequential strike.

tim mulligan, thank you for joining us on the writers strike and rupert murdoch stepping away from the fox corp empire. coming up on the show, eyes on gucci. the director gets ready to unveil the first collection for the company. all of that after this.

the u.s. lists the shares of alibaba higher in pre-market trade having the biggest intraday gain in three weeks in the hong kong session after the tech giant could file a hong kong ipo of the logistics armas soon as next week for cainao. this comes after alibaba revealed plans to split up the business. you see the market trade up around 4% for each one. u.s. cosmetics company coty is planning to list on the paris stock exchange. bloomberg says the announcement could come in the next few days. earlier this year, coty said it was interested in pursuing a secondary listing in europe to

bolster the presence in the region. so paris seemingly is that spot. gucci's new creative director sabato de sarno is set to reveal his first collection for the company kering. the stakes are high for gucci as the brand makes up more than half of the kering revenue and two third of the operating profit. charlotte is joining us for more on this one. charlotte, this man has been primed for the limelight. in fashion for 20 years. he does have experience in dolce & gabbana. >> certainly, a lot of experience with the italian houses. lots at stake with the first collection for sarno. what is important for gucci is

important for kering. half of the sales at kering come from gucci. almost two third operating profit from gucci. what happens for the brand is the important for the group. it shows the scale of gucci. it was successful before the pandemic under the previous creative director with the flamboyant direction. that is why this has been underperforming since the pandemic. they needed new blood and reinvented the brand. they want to focus more on the heritage and the leather goods and men's wear and high-end jew jewelry. now the new collection today and the new issue with the kering management shuffle and the beauty division this year and

high-end perfume. 30% valentino. we will see what happens with the collection today. a lot of changes on the way. >> just black shirt and black jeans and black t-shirt. then just a pair of converse sneakers. surprising that a man of that caliber of fashion would dress in that way. what do i know about fashion? charlotte, thank you. i appreciate it. a quick look at the futures board. a mixed picture here. that's it for today's show. i'm arabile gumede. "worldwide exchange" is coming up next. do stay tuned for that live here on cnbc.

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it is 5:00 a.m. here at cnbc global headquarters. here is the "five@5." we begin with stocks trying to bounce back after the surge of yields and sky rocketing dollar. the clock is ticking on the big three in detroit with the talks on union leadership before more workers hit the picket line. a broader strike seemingly inevitable. no deal with hollywood studios and actors and writers as the strike to