overwhelmingly, it was phenomenal. one of the most iconic sporting venue in the world, could not have been more appropriate. the youngsters, 17-year-old haiden deegan for the 250s, 20-year-old jett lawrence in the 450s. what a year it's been. thanks for watching on nbc. welcome to "street signs." i'm arabile gumede and these are your headlines this hour. the ecb governing council member says the risk of doing too much is now symmetrical with the risk of doing too little. telling cnbc the central bank is on the right track, he feels. >> we have a clear destination.

this is our objective. bringing inflation back to 2% by 2025 and i have no doubt about our determination and commitment to achieve this target in due time. italy waters down the controversial windfall tax again giving lenders a loophole an opt out if they set aside enough capital. and china could do a lot to help europe's perception of risk on the country, but stresses brussels went seek to cut off its relationship with beijing. and evergrande shares plunge as the property developer is unable to issue new debt amid a probe into one of its subsidies.

we in our previous show with annette conducting a great interview and we will bring you thane a that interview again. we will play that out for you. there is breaking news to come out of the wires this hour. german data we have been looking to with the september ifo business climate survey. we continue to see a decline in germany. that continues to be the case. the business climate index dropping to 85.7% in september. the expectation was for 85.2%. yes, slightly better than expectation. still low in the context of things. considering the last reading was 87.3%.

you have a two point fall in the initial data or headline data t expectations, the number coming out at 82.9 for the month of september versus the forecast of 82.9. pretty much similar. that is down from the 82.6 that was attained in the previous number for the month of august. still looking at the data. current conditions are 88.7% in september versus the 88 flat anticipated. still low when with one considers where it has been and how things fared. we have the director of ifo joining us to unpack the survey numbers. thank you for the time, clements. along with other scholars of the

german economy, we all looked at germany and felt things are getting worse. would you say that is the case with this data? >> i guess what this data is showing at least the german economy, as city, is stabilizing or leaving stagnation or slight shrinking. the current business situation is getting worse. at the same time, companies expect this to stabilize over the winter. i would say it is not a continuing downturn or accelerating downturn, but it is something between stagnation and shrinking. it is not good. >> we've had a few people, including jans, speaking about germany being the sick child or sick man of europe.

even speaking with my colleague in italy as well. as you said, not necessarily accelerating in its decline, but entrenched is what it feels like. >> yes, it seems entrenched. i don't know if this is enough to speak of a sick man of europe. other countries in europe do have problems as well. there are particular german p us issues with energy policy. there is a lot of uncertainty about energy policy. we are hit more than others by the russian attack on ukraine and everything this means for eastern europe. the trouble is, it seems the german government doesn't really have a plan to address this situation. we have a lot of uncertainty created by economic policy. one reason being is the government itself is not united. there are different views within

the government about how to continue with the decarbonization and energy policy. there is growing bureaucracy and the issues are not addressed. that makes life difficult for companies in germany. >> they say it is darkest before the dawn. is this the case where it is not accelerating and we know the issues at play including the climate notion or energy story. do things, perhaps, get better sooner rather than later or will it still be a case of higher interest rates and supply chain issues from china and that manufacturing process will still slow things down? >> there are positive factors. inflation does seem to be easing. it is easing slowly. the expectation is it will ease

more. the wages are rising. there will be solid demand from the private sector. still, this is a stabilizing factor in an environment where companies increasingly do say they have problems on the selling side as well. this is a positive. the easing of inflation will allow the ecb to not increase interest rates further. what is needed is a change in economic policy in germany that makes companies more confident. yes, bureaucracy will be reduced. there have been small measures and some tax incentives for investment have been introduced. that is positive. more needs to come. >> how much deeper could the problem become if you move things like savings people are

still spending from covid times and the healthy wage growth. would that concern you more? it does seem to be holding up the economy a little bit. >> yes. that seems to be continuing at least until the new year. the wage growth is continuing. that is stabilizing the economy. it seems we are now at the end of the rate rising cycle of the ecb. that does help. at the same time, there are significant issues not just with manufacturing and energy, but one sector with difficulty is the construction sector in germany. in particular, the cresidential construction. the construction of apartments. combination of high prices and rising interest rates have had a huge impact. this is not a sector that will not lead to growth. >> clemens, thank you for the time. you say not necessarily the sick

man of europe, but problems of its own that are entrenched. the director at ifo joining us for the conversation. now ecb governing council member and bank of france governor says the risks of doing too much as well as too little are balanced going forward telling cnbc the central bank can now target a soft landing. annette had an interview with, of course, de galhau. it was an interesting discussion to say they are worried that any more hikes could hurt the european economy than they have already, annette. >> reporter: yes, de galhau, the

governor of the bank of france was making the point there is also a second commitment now and that is the pass. what he means is that it is better to have rates higher for longer than hiking rates further because the economy is better to have a soft landing than hard landing. that could actually happen if the central bank was to hike rates further. there is a time lag with the monetary policy and the effect on the economy and on inflation. i think that's what the back drop of his thinking. perhaps we will listen in to what he told me in the interview we did just a half hour ago. >> for the future, the risks are balanced. there is a risk of not doing enough or cutting too early. we can come back to that. there could be a risk of doing

too much. to say it in other words, we have a clear disty nidisty nati. -- clear destination. this is what we have to do. we have a clear commitment. under this conditions, subject to the primary objective, we can now have a secondary objective which is about the path of the destination if we can follow the route which is a soft landing rather than the hard one. follow the u.s. fed at the moment. >> let me ask what qualifies as a hard landing. the economic indicators indicate the economy is softening sharply now. what would be the moment or the

break moment where you say this is now in dangerous territory? >> first, we are seeing a slowdown with positive growth. modest, but positive. we see a situation on the labor market and on unemployment, which remains favorable. unemployment rates are low throughout europe, including in france. the hard landing would be and remember the fears in late 2022 which is recession. that would be a massive surge in unemployment. this is not what we see at present. including in our business survey. this is not what firms expect as a whole. this is not what we forecast. we have positive growth expected in 2024 and 2025. we should, obviously, look with

practicg pragmatism. i'm note a dove or hawk. i'm not a bird. we have to look at data. >> let me bring you back to the last rate decision. it was widely seen as the peak of rate hiking. the president did not want to call it the peak. would you call it the peak? >> no, can i quote our own monetary policy statement? i think it is important and clear. based on our current assessment and on present data, we consider that the present level is broadly consistent with the timely return of inflation to 2%. to say it in other words, there was a debate between the level of interest rates and duration. how long we should stay at this level? at present, duration is becoming more important than level.

it is persistent and patient strategy. if you use words like peak among others, i would insist on a plateau. it is data dependent. if we have to react, we will react in both directions. >> reporter: so it shows without any forward guidance in place, it is quite difficult for the central banks to guide the markets through uncertainty out there. we have the uncertainty potential with oil price hikes to push inflation higher if the uncertainty surrounding the economy which potentially impacts on the inflation rate. i think the word uncertainty is key when it comes to monetary policy setting now. the market is speculating about a first-rate cut in july next

year. there are other governor whose h -- governors who are stepping out trying to put forward guidance out. the march projections will be crucial to determine whether it's time to actually cut rates soon during the course of next year or longer means keeping the rates at level for the whole year of next year. uncertainty of the economic outlook of monetary policy, but we should think about this rate level as being the peak level for the euro area. >> annette, thank you for that interview with the bank of france governor. we will continue to have thoughts on that across the show. coming up, italian banks surging amid reports that the government could amend the aintroversial windfall tax

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an estimated 40,000 people protested in madrid over plans by the acting prime minister to grant amnesty for separatists. this could mean sanchez would remain in power despite not winning the election. and there is a first vote to become prime minister set for wednesday. spanish vice president as well as the transition minister told cnbc the socialist party is united in support of sanchez. >> we heard four or five people which represents a lot for our country and they are speaking against sanchez and never against what is happening with

the movement in the country. it has been a little bit hurting for the whole party and the members of the social democratic party. we did not expect the reaction from someone we admire. it leads people to believe we are ieeeing challenges. it is not easy to speak with the challenges which need to be dealt with for the secretary. it is a pity. the reaction of the party is unified. not only people which have the responsibility in the party. voters and all people that did

accept the principles of the party did not expect this type of comments. it has been a movement of the gains and we are now down .20% in the early morning trade. we are down on the three-month basis across europe having seen the market open for an hour and 20 minutes at this stage. we have focused on the economic data. ifo numbers from germany with the economy continuing to be recessionary-like. there may be positive outlays that clemens from ifo was speaking about. it does look to be headed in a downward trajectory. overall, last week, we saw gains coming out of the ftse 100.

the european market, overall, to start off the final week of september does seem to be headed in negative territory. i want to point to the ftse 100 which is down .25%. actually for the month, it is doing much better than the others. it is doing better than the u.s. and european counterparts. it is on course to finish the month slightly higher. even push through the best level since may last week although it finished lower by the close on friday. still a slightly better sentiment there. it perhaps comes about with the bank of england reaching the interest rates. we saw microsoft and activision come to a close last week. basic resources leading to the overall picture down 1.8%.

travel and leisure taking a hit down 2.4%. we are seeing a bit of no-man's land overall for the market. banks are managing to gain from health care. let's go to the bond markets. interesting to note with the ifo data and ultimately it was weaker from the previous numbers. september numbers dropping off. the 10-year german bund hit 2.781 number. the highest since july of 2011. the yield dropping off or rising then. that is the highest since july of 20181 1 after anthe ifo data. it is showing weakness. not accelerating, but not

getting better. we also saw the 10-year gilt out of the united kingdom at 4.3%. interesting to look at that one. it was trading at 4.24% on friday. continued weakness and hurting the pound as well which will see the worst month this month. that is the british pound. on to the italian banks. we are looking at these are the back of somewhat of a reversal out of italy. that windfall tax, 40% windfall tax, announced a month ago which was aimed at putting more money in the pockets of consumers. the government is saying if the banks could keep more credit, then it can keep the profits. that is where we are. unicredit going down on the news. planning to amend the windfall

tax to allow lenders to strengthen reserves. the plans are expected to be approved this week in parliament. it comes after the ecb urged the italian government to reassess all of the proposals. italian deputy prime minister welcomed the changes saying they would protect savings and ensure market stability. clau claudia is joining us from milan. they have gone back here and it is a lot of credibility. >> it is a reversal in some sense. not surprised to see that happen. when this announcement did come out, it was poorly communicated and not very clear. the wording which was used is taxing these extra profits.

it was not clear what they meant by extra profits. banks lost up to 10% on the day after this announcement was made in early august. theyrecuperate, but not at all. they recovered .20%. after the announcement, it was unclear and concerning with a cap put on the maximum amount. 40% tax on the extra income was capped at 0.1% of the lenders' total assets. that calmed markets a bit. it was clear that something needed to be changed. the ecb also stepped in and urged meloni to rethink the tax as it put a risk to the banking sector. the things it could harm are not just the banking sector, but investor confidence. it can harm investment coming into italy and the government being able to possibly tax extra

profits on other sectors as well. it was a very discussed and a very unliked announcement. this does come as a welcome and it gives the banks the al alternative to strengthen capital instead of paying this tax which has been reduced which is now 10% of the net interest margin growth from 2023. earlier, it was a higher percentage. certainly, this is going to be helpful possibility with the ecb stating this is changing. we are waiting for this to come in and be approved. certainly this won't compensate fully over what happened, but this is a welcome outcome to the issue. back talk. >> thank you for that report on the banks. we'll continue to unpack them this week with the ratification of the decision.

it is a punishing start of the week fore evergrande for th week as it was unable to issue new debt into the subsidiary. it is latest blow for the most indebted company after police detained staff at its wealth management unit. shares are sustaining some heavy losses there. 22% down for the vehicle segment. evergrande services down 14%. coming up on the show, fed officials warning more tightening could be on the cards after last week's pause in the cle si bank's ratring cye. we'll have more after this break.

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germany's 10-year bund yield spikes to the highest since june of 2011 as the business sentiment has worsened. falling for the third straight month in a row. the ifo president telling cnbc the economy is treading water. >> it seems entrenched. i don't know if this is enough to speak of the sick man of europe. other countries in europe do have problems as well, but particular german issues with energy policy and decarbonization policy. there is a lot of uncertainty in germany. finding the right balance. ecb governing council member de galhau says the risk of doing too much is the same as doing too tlittle. estathe states the central bankn the right track. >> our objective is bringing inflation back to 2% by 2025.

i have no doubt about our determination and commitment to achieve this target in due time. italy waters down the controversial windfall tax yet again giving lenders a loop the h -- loophole if they set aside enough capital. and the eu president says brussels will not cut off its relationship with beijing. markets overall have grown negative across the board in europe. smi in switzerland is seeing marginal gains. interesting to take a look at the ftse mib.

.20% weaker. the italian banks will come into f focus. unicredit may have a reversal with the italy windfall tax which was slapped on the banks. 40% is what it was meant to be. that tax was aimed at putting more money into government to aid consumers who are struggling with high inflation and higher interest rates at this time. they found a loophole to get out of it by saying if you put enough money away, you won't necessarily have to deal with this windfall tax as you have. the rest of the market is relatively down. ftse 100, cac 40 and dow are down .50%. with the currency markets, the dollars had found gains. climbing to its highest since march of 2023 highs. early this morning, 1105.85 whe

you look at the dollar index. the hawkish pause will play into the market picture. you see strength across the board against the euro/dollar which will be significant. euro did dip against the broadly stronger sense from the dollar. trading at a six-month low on friday. will that market be reached as well. dollar/yen hitting the 150 mark. does that mean intervention comes into play out of japan which we are continuing to look at. the bank of japan decided to hold interest rates and keep them at the ultra easy levels. no change thus far. here are u.s. futures. we are expecting a mixed market thus far for this start of the final week of september. stock futures into the last week of september with losses at play. s&p down 4.2% this month.

second straight month of losses anticipated. it would be the worst since december. speaking to cnbc earlier this morning, embark group cio peter t too toogood. >> run away. they're insane. move away. think about where to be and what is winning this year in terms of japan and uk. >> run away from the magnificent seven. we have the chief investment strategist joining us. anastasia, welcome. you had some slightly different thoughts with regards to not

just the magnificent seven, but the entire tech sector. >> run away is not what i would do from the magnificent seven. i would run to them on any dips you have. obviously, the broader thing at play right now in the market is yields are spiking because economic growth is persist ent r the fed will sky htay higher fo longer. i don't think higher yields are denting the tech stocks. for exam, if you look at the leverage ratios across the s&p, then tech stocks are lowest leverage from the other sectors which is muted. i'm not worried about higher rates denting tech stocks for that reason. at the same time, you know, you have a secular grower when you think semi semiconductors.

>> a slight come off this month and maybe more in october. you are seeing we are pretty much running here. >> if you look at earnings estimates and you look at the projections, the s&p grows between 5% to 9% depending on the year, but tech stocks can do double that. when you look at the valuation and price to earnings, you adjust that for that growth. on the price to earnings to growth, that is one point. then price to what earnings? earnings forecasted for right now or future earnings revisions? if you think about the latest reporting season with nvidia and br broadcom and marvell, they

raised estimates and those stocks are not that expensive. >> this is according to facts who say earnings for the s&p for the third quarter are forecast to edge lower by 0.2% and decline for the fourth quarter in a row. that outlook is improving somewhat from where they were then. were you ckconvinced by the tec ipo? a.r.m., instacart and klaviyo? the tech play or a.i. play. >> it is a healthy development. i'm glad to see those come to the market and the investors got to par mticipate in the opening. that is a sign of the market ready for more activity. we are in a kconstructive seaso. you look at the fed which may

not be cutting rates, but we may have a stable rate environment. as a result, we have the soft landing narrative and more ceo confidence. that was the thesis for why the ipo markets would open up and the three ipos did well initially despite the marcro fears. >> i know i'm laboring on the tech sector. amazon saying they will invest $4 billion in anthropic. that is arrival to open a.i. is there value in that and the businesses are the ones to worry about, not the concept of a.i.? >> i love the launch of the artificial intelligence theme. you want to look through the hype. you want to look through the times when valuations are rising quickly. you want to purchase on the pullback. we had the mini correction with

the stocks and now when i look at the spot prices of the stocks relative to the analyst i mplie price target, then i want to be buying the dip. by the way, there's so much to believe in. i do know there's a lot of enthusiasm about this. we're talking about trillions of dollars of potential tvalue add. a lot of i.t. managers have the fear of missing out. they have to spend on a.i. software companies benefit. >> let's get back to the fed. last week was a crucial week with central banks. the toughest part of this, perhaps, interest rate cycle is behind us for the most part. do you believe they could react to oil going toward $100 a barrel? you know, in a time when he

th things are difficult for the consumer? >> i don't think it will overreact. if you look at transportation cost and motor fuel and jet fuel that people are paying, that is about 7% of the overall cpi basket. that is a relatively small percentage point. another way to look at it, for every 10% move higher in oil prices, we expect something like 20-basis point increase in headline inflation, but only 10-basis point in core inflation hikes. you might see a scenario where headline inflation trends up somewhat as oil prices rally, but at the same time, in the u.s., we have the core pc this thursday and we are looking at 3.9%. the fed will focus on that more than the headline inflation. >> anastasia, those yields are interesting to look at. i want to get the sense of

valuation. thank you for the time this morning. chief investment strategist at icapital. and the fed has chosen to hold interest rates and some officials have come out to warn that more tightening could be in the cards. fed governor michelle bowman said it would be appropriate to raise rates further to battle inflation. she warned the process of bringing inflation down would be slow. boston fed president susan collins said further interest rate increases is not off the table. the san francisco fed president mary daly said the central bank needed to see more data to decide on its next move. after a week of central bank moves, attention turns to the

macro data. investors in the u.s. will watch out for the pce price index data as well as the final reading of second quarter gdp. that comes out this week in the u.s. in europe, the spotlight will be on inflation numbers out of germany, france and spain and italy as well as the euro area. more macroeconomics data will be released this week. including the ifo business climate reading and german retail sales and the industrial production. cnbc's delivering alpha summit is around the corner. join top investors on september 28th in new york for insight, analysis and ideas to help you balance risk with maximizing returns. scan the qr code on your screen now or visit cnbcevents.com/deliveringalpha to learn more.

and eu trade is showing ties with supply chains are an issue as the eu and china economic trade dialogue gets under way. sylvia is covering this one. sylvia, we just had the issues with the ev sector, but there is politics at play? >> we had announcement from the eu commissioner less than two weeks ago. investigating chinese subsidies into evs. of course, made in china. this comes at a tricky time for the eu's trade chief. his trip to china has been in the making for a while. it happens it coincided with that announcement. what he is trying to do these days in china is explain what is the target and what do the

european union do with the investigation and he is also asking for a more balanced trade r relationship. all of this with the trade deficit with the eu and china of almost 400 billion euro in 2022. that was a record high. overall, he will be keen to stress the idea from the eu is not to decouple, but derisk. we are hearing more of the term coming up, arabilarabile. the issue is to ask china to take more of a pro-active role with the russian invasion of ukraine and support the ukrainian side and also look at one of the main developments when it comes to the grain deal and europeans would like china to take a pro-active stance with a solution. >> and maintain a sense of not really pragmatism, but the

opposite side of that. they said we want to discuss trade. this is where we are right now and if you want to discuss that other thing, let's sort this out first. let's talk about the trade issue first. are you getting a sense there will be a solution to either side of the conversations? >> the aim of the trip is to have an initial discussion and explain what the eu is looking to do with the investigation on ev subsidies. on the other hand, the europeans are looking for action from the chinese side to address some of the concerns. so far, what europeans are saying they are seeing a lot of issues in china with the espionage law and data laws which is hindering business for european firms in china. that is what europeans want to change. let's see if china offers conce concessions. >> we will watch that.

thank you so much for that. still ahead on the show, shutdown showdown. the clock ticks down as capitol hill rushes to avert a government shutdown before the october 1st deadline. we are live in washington with the latest when "street sign tus.s" make a splash with the ultimate pool party essential. blendjet gives you ice-crushing, big blender power on-the-go, so you can soak up the sun with a frosty beverage. enjoy 15+ blends before rapidly recharging via usb-c. and it even cleans itself with a drop of soap and water. stand out even when you're accidentally twinning with our kaleidoscope of colors. make this summer the coolest ever. order yours now from blendjet.com.

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welcome back to "street signs." the hollywood writers union reached a tentative agreement with major studios provisionally ending the five-month standoff. the writers guild of america announced settlement on sunday describing it as exceptional with meaningful gains and protections for writers. the three-year contract will still need to be approved by wga leadership as well as union members before it can take effect. no deal is in the works for striking actors. > take a look at the media

stocks. netflix and walt dusisney takin in positives there. and president biden will go to detroit to show support for the uaw. the uaw expanded the strike to 38 general motors and stellantis plants across 20 states. ford is staying out of the expansion citing positive contract talks. transportation secretary pete buttigieg told "meet the press" that both sides are hoping for a win-win deal. >> president biden is a deeply pro-worker president. not compared to the anti-union issues of the president trump

era. we will see this on the picket lines. we want the auto sector to succeed and pushing the parties to get to a win-win deal. u.s. lawmakers are warning a government shutdown is increasingly likely as the clock ticks down to the october 1st deadline. last week, house speaker kevin mccarthy failed to advance a stop-gap spending bill after facing stiff resistance from within his own party. speaking over the weekend, mccarthy called on lawmakers to seek a compromise. >> it is like they want to walk you into the shutdown and blame you for the shutdown. that doesn't make sense. i want to show we can govern. that is what we all have been doing. i watch what is happening on the board each and every day. i want to secure our border. i think bringing the bills up is making it difficult for us to be

successful. >> if the government shuts down, many will face a paycheck out including military personnel and civilian workers. drew petrimoulx is joining us with more. drew, this played out many times in the united states. we always reached the deal just before d-day. is it looking better this time around? >> reporter: there is pessimism on capitol hill as we he come i the last week before the deadline. this is a high stakes week on capitol hill. federal government set to run out of money on saturday. some la mwmakers say the shutdo is inevitable. they tried to find a deal this weekend, but appeared to make little progress. a bill is stuck in the house.

democrats in the biden administration are out warning of the dire consequences. you heard mr. buttigieg talk about that on the sunday shows over the weekend. federal employees and military service members would not get paychecks. thousands of kids would lose access to pre-k programs and small business loans in jeopardy and food safety programs affected. while much of washington is pessimistic before the september 30th deadline, mccarthy tried to inject optimism. saying he thinks a deal would be reached in time to avoid a shutdown. reporting from capitol hill, drew petrimoulx, back to you. >> thank you, drew. we will touch base on this story as it continues to progress if there is progression in finding a way to not shutdown that u.s. economy. let's look at the european markets trading at this hour.

it has been two hours since the open in europe. smi has gone down with the ftse 100 as well as the cac 40 down .80%. the ftse mib head ed lower. the german 10-year yield is slipping. the yield is going up to the highest since 2011. the german economy headed weaker there. u.s. futures are a mixed picture. what we anticipated now looks to be headed into the final trading week of september in the red. that's it for the show. i'm arabile gumede. "worldwide exchange" is up next. stay tuned to cnbc.

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i stole them from an airport. it's always something with you, man. great! solid! -greek salad? exactly! don't delay the game with verizon or t-mobile 5g home internet. catch it on the xfinity 10g network.

it is 5:00 a.m. here at cnbc global headquarters. here is your "five@5." we are starting off with stocks looking to shake off a losing week. futures are in the red right now. we are following breaking news out of hollywood. the writers strike poised to potentially come to an end. details on the contract breakthrough. a different story around the auto workers. ford suggesting speed bumps remain in a deal with the uaw. the countdown to a