like my mommy. [theme music] good morning. welcome to "street signs." these are your headlines this morning. european equity markets move higher while u.s. futures look to crawl back some ground after the dow dropped more than 400 days. landmark lawsuit against amazon accusing the e-commerce giant of using monopoly practices to inflate profits.

we'll speak to the ftc chair. slow fashion. h&m flags new september sales. the prospect of a government shutdown looms large as the senate moves forward with a bipartisan funding bill. but republicans persist with a conflicting measure in the house. >> the senate has not passed one appropriation bill. i don't know how in the press stand and ask schumer what he's going to do, the house continues to do their job. we cannot sit back and look at the border and where it is today. very warm welcome to "street signs." a check on european market. we've been open for about an hour, the stockses open to a modestly positive start after the rough day on wall street yesterday. we saw heavy selling

accelerating into the u.s. close, but european markets are on the mend, we've got the stocks 600 up a third of a percent today, following a pullback of 0.6 .of the main benchmark yesterday. its fourth negative sentiment. yesterday, we got a weak consumer confidence and persistent concerns around higher interest rates for longer that's taken shape over the last couple of weeks. breaking it down by region here in europe, here's what the split looks like, the gains is broad-based. ftse 100 lagging somewhat up 16 basis points. from a sector perspective, we're keeping a close eye on retail this morning, h&m coming through with q3 profits beating estimates but a warning around sales in september, they're

seeing some signs of slowing there. you got technology out in front, up.9%, given the heavy selling in tech yesterday, state-side, the nasdaq dropped most heavily among the three major indices. the stock dropped more than 4% that of course as you heard in the headlines, the ftc launched an antitrust case against amazon. huge story we'll be talking about it later in program. oil and gas holding up well this morning. on to bond markets, which have been a key focus for investors over the last few weeks, this morning, yields lower aross the board in europe. the german bund trading 10 -- the 10-year treasury yield has hit its highest.

t we're keeping a close eye on what's been happening with fixed income. fed's kashkari put the chance of the u.s. of a soft landing at 60%. hold for long enough to bring inflation back to 2%. also, on a programming note, our u.s. colleagues will be speaking with the man himself later today. you can catch that interview at 2:00 p.m. cst. it has been a challenging couple of days for all classes, the s&p down 4% in the last week, it feels like there has been a bit of a positioning reckoning for the market, is all of this do you think in response

what we learned out of the fed last week? >> well, i think there's a few things going on, i mean, certainly, the fed was at the hawkish end. if you look at what's going on with fixed income, we're having a pretty rare moment of late cycle deepening. partly the fed being done, part of the fed telling you they're going to be done. boj's policy shifts. this late cycle is starting to create that rick aversion in market. >> real yields are moving higher, not led by inflation or inflation expectations, those have been stable, but it's real yields pushing up nominal yields because it tells you that the full expanse of monetary policy tightening delivered by fed hasn't been felt yet by the

economy, does that make you nervous of the direction of travel for the u.s. economy ahead? >> the underlying cyclical data it looks like things are starting to slow a bit and then you lay on top of that ten-year real yields that we have seen in many years, that typically leads to something breaking, to something in other asset classes starting to break. we're at a moment i think we need to worry about asset markets. >> you mentioned growth slowing outside of the u.s. and here in the uk, we had the bank of england come off less hawkish than expected and sterling in the wake of that meeting has dropped to six-month low versus to the dollar, what has driven slower? >> i think that it's the bank of england among the central banks

probably in the hardest position, they need to balance an increasingly weaker growth outlook with very sticky high inflation. i think part of sterling's weakness is less pricing for bank of england going forward, i think part of it is this recognition of low growth and high inflation, and i do expect sterling to weaken further from here, i guess the way i most easily think through the lens of sterling, we should be looking at levels of 90 at least in the coming months. >> when it comes to bank of england's decision to pause here, do you think that was sensible given where the data is? >> it was risky but probably sensible. if you'rethinking of a central bank that's truly an inflation-targeting central bank you would not expect a pause last week, but at the same time, the country around which we have seen the biggest weakening in growth in the last couple of

months is the uk, so it's a risky decision but we'll probably in the end be the right decision. >> i'm going to take you europe now, later in the show we'll be discussing the italian budget. it's becoming quite topical again. i saw in your copy that you're getting a little nervous ab about -- we've seen broken out to levels of the upside. >> you know, listen, i think italy's one of those classic stories, all the information we needed for a weakening in the bond has been there for months but now people are starting to pay attention. on the budget side of things, the fiscal deterioration has been in place for the last six months or so, add to that the weakening in both italy and the euro zone in general and the likelihood that it's going to speed up quantitative

tightening. looking yesterday, it's not just the spread but the level are very close to peak that freaked everyone out last year. my guess people are waking up to these negatives and we'll see a further move up in that spread. >> do you have a target? >> we should be thinking 225 with the potential of 250. >> let's wrap up with what's going on in japan, we'll take you around the world since you're willing and able to talk about everything's going on. in your latest note to country you don't think the bank of japan is fully control in the narrative anymore. elaborate on that. >> everything that's happened since they tweaked yield curve in july suggest they're losing control of the narrative in the sense the market is selling the yen, steepening the curve, trying to pay front end, telling

the bank of japan that it's getting behind the curve because the inflation numbers continue to print very high, so my guess is that as much as the boj wants to continue -- unless the numbers come down which is not likely. >> great to have you with us. cnbc delivering alpha summit is right around the corner, september 28th in new york for insight analysis. if you scan the qr code on your screen right now or visit cnbcevents.com you can find out more. top story out of the tech space the u.s. federal trade commission alongside attorneys

from 17 states is suing amazon, alleging that the e-commerce is illegally maintaining monopoly power, stifling competition and using its position to inflate prices. amazon pushed back against the claims arguing the tech giant's practices help to spur competition and innovation in the e-commerce. talk us through what the complaint alleges and perhaps most importantly for investors, what the chances are that this leads to major structural changes at amazon. >> two points at the crux of the ftc's allegations here, one, they claim that amazon stifles price competition through what they call an anti-discounting strategy, one of the ways they do this is through a price surveillance group, punishes

those sellers on its own marketplaces that are selling that same product elsewhere for cheaper. that's one of the allegations. the second is alleging that amazon using its monopoly to conditions for prime subscription with same-day or next day delivery, conditions by telling users -- sellers they have to use the full illment center. that's the crux of it. ftc painting this picture here of a behemoth that, using that all together to effectively create this monopoly, now whether this results in anything substantial, that's the question on investors' minds.

of course this has a long way to go to go through the courts to first find out is amazon liable he here? >> what i thought was interesting from what we found out yesterday they're not going after amazon because of a huge amount of market share it's the practice. it's important to stress here what they're looking, what they think are noncompetitive businesses not that they have a huge part of the pie. these things take time. how long are we looking at them to come a conclusion? ftc are coming off a rather high-profile defeat in the case of microsoft -- >> this is a personal battle for khan and the ftc. the defeat in microsoft/act have

been ivision case. the amazon's antitrust paradox, and in that there were arguments for breakup of some sort but also suggesting that the antitrust framework current ly doesn't take into account how dominant amazon is, they have this entire business, that they are using to carry out these alleged mow nope listic practices as well. this is going to take a long time to work out. lot on the line in terms of the stakes for the ftc and the precedent this sets for other tech companies. >> thanks so much. now on programming note, our u.s. colleagues will be speaking

to the ftc chair khan later today. coming up, italian prime minister me lonni is set to present budget projections today. plus, the chaos on capitol hill continues. as republican holdouts hamper plans to avert a government shutdown before the october 1st deadline. we'll have the latest when "street signs" returns. you deserve better than that. i'm hungry, i'm in a hurry, i don't have time to make anything healthy. you could if you had a blendjet. blendjet? it's the portable blender that makes the healthy choice the most convenient choice. i don't know. it seems like a hassle. hahaha! wrong. just pour in some milk, add some frozen fruit, and bam! you've got a nutritious and delicious smoothie. mmm! that is good. you're welcome, sad office guy. get yours today at blendjet.com are we in in an ad? we sure are.

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welcome back to the show. china's central bank said it will ramp up its policy adjustments and implement monetary policy in a quote forceful manner. it comes as the world's second largest economy showed the first signs of a rebound in august, industrial profits for the period soaring more than 17% on the year. so some stabilization coming through in investment profits. meanwhile, german sentiment

fell heading into october, a full point lower than september levels and below analyses' expectations. a chance of recovery have likely hit zero budget day for many of these euro zone countries. french president macron will present its budget. the budget is expected to announce delays to previously promised tax reductions and the paering back of energy support measures. analysts are forecasting for that number to come in smaller than where it was before. in contrast to, you guessed it, italy. italian prime minister meloni is expected to present her budget,

pare back. the controversial windfall tax on bank that was amended. we love to talk about ins and outs of italian public bank. ultimately it's looking at raising a couple of billion, 2 billion euros. we should be more concerned about the state of italy's public finances because they're expected to revise their deficit upward this year and next year. >> that's why today's so important when you're looking at italian finances. within this context it's worth keeping an eye on that spread between the italian bond and the german bund. if these numbers aren't positive for the markets, and of course, we're expecting that the government will increase their headline deficit for 2024, we're

expecting it to sit at about 4%, that's an improvement from this year but higher than what the government had originally projected earlier in 2023, going into next year. important to get those concrete numbers later on today. of course it comes at a challenging time because we just had the sag ya of the banking tax, and some analysts have told me that it's kind of pointless to have this tax because the money they'll get from it is very insignificant. it's actually from a political perspective for meloni to keep it because she's the one to put it forward. >> also the overhang of the disastrous -- tax as well very specific to italy, a construction tax incentive, but then there were lots of delays and block ajs. but let's go back to meloni

herself, another thing that's interesting in italy, is that whatever is happened over the summer hasn't impacted meloni in the polls. >> the polls are higher than what she had when she got elected a year ago. and we haven't seen some of the fears that some initially projected actually taking place, lot of people were expecting this weak clash between rome and brussels, that hasn't materialized but important to keep many mind there are a few points of contention when it comes to migration. still some open questions between the relationship between the eu and italy unfold in the coming months. for the time being it seems like they're on as positive term. in brussels, budget expectations from euro zone, your concern is on germany rather than italy.

>> what a change of pace. >> thank you for bringing us up to speed. now over in the u.s., in political news, president biden is showing solidarity with auto workers showing shoulder to shoulder with them on the picket line outside a general motors plant on tuesday. speaking on the picket line, biden backed union members. >> saved the automobile back in 2008. made a lot of sacrifices. gave up a lot. and the companies were in trouble. now they're doing incredibly well and guess what, you should be doing incredibly well, too. you deserve the significant raise you need and other

bene benefits. ok okay. >> it certainly interesting to hear president biden weigh in on what's been going on and beyond just weighing in on what's going on with the unions, to just be seen on the picket lines is quite a strong message, a bold message as we now look to republican party. we'll talk more about this later in the show with the next gop debate coming up later today it will be interesting to see how the republicans respond. the unions are pay jar part of the voting equation as we head toward the presidential election. >> on the opposite side of the country hollywood could be returning to news, writers are officially ending their five-month strike after union leaders approved an agreement.

details of the new contract still need to be voted on before approval u.s. senate leaders have issued a short-terming funding bill of keeping the government open. they're looking to pass the measure quickly but its fate remain uncertain in the house where hard-line conservatives t tend. mccarthy is urging members to back a package of long-term spending bills to fund agencies from defense to homeland security including legislation that beefs up border security. >> the republicans will put on the floor a rule to secure our border. i think that's the appropriate way to be able to keep government funding, secure our

border, while we continue to keep the government open. the president has ignored this problem. the president can no longer ignore what's happening on the border. >> so this actually going to be quite important for markets yesterday we were talking about some of the data rbc put together showing into government shutdowns we tend to see an extensive pullback on equities into the shutdown date. after the shutdown you tend to see a strong rally out of it. if in this case a shutdown manages to be averted you expect some of the risk baked into the markets over the last couple of days should get unwound. >> certainly a welcome relief if that does materialize. still ahead on the program, h&m flags falling september sales and promises to focus on cost-cutting. we'll break down the latest results after this break.

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welcome back. these are your headlines. european equity markets move higher while u.s. futures look to claw back some ground after the dow dropped almost 400 points in its worst day since march. the u.s. competition watchdog announces a landmark lawsuit against amazon, accusing the e-commerce giant of using monopoly power to inflate prices, exploit vendors u.s. colleagues will be speaking to ftc chair khan. slow fashion. h&m post ed earnings lifting shares. the prospect of a government shutdown looms large as the senate moves forward with a bipartisan funding bill. >> the senate hasn't passed one appropriation bill.

i don't know how many in the press stand and ask schumer what he's going to do, the house has continued to do their job. we can't sit back and look at the border of where it is today. let's get a check on how markets are faring. yesterday was a very negative day for trading. we're seeing slight more positivity in some of these indices today. lot of focus on the political stories, so in spain, for example, we have a parliamentary vote on whether the conservative leader can actually be tasked to form a government unlikely that he does get the mandate, but again, we've been monitoring the political evolution in spain since those elections. whether that task is going to

pushed on to sanchez. another budget day we're watching out for in france, keep a close eye on what the government releaeases for their project protections. italy, slightly more problematic because the budgets are expected to slow slippage for this year and next year, coming at time when those yields have started to move wider, talking about the spread once more. we'll get to that in just a moment. couple more indices over here ftse 100 showing some signs of green as markets continue to digest the bank of england's decision last week not to hike interest rates and the impact that that's going to have on some key interest rate sectors. european yields today, we're actually seeing a rally back, the 10-year is a couple of

points lower. of course we're coming off very high level, the highest levels we were at since 2011. we're moving in the right direction once more. 10-year, up 4 -- we had a guest on the show earlier from citi who was saying by and large the analysts community is turning more cautious of where it can go. in terms of foreign exchange how currencies are trading. a bit of a mixed bag today, you can see the euro is trading sideways, continues to fall since that ebc decision and the fed last week that turned out to be more hawkish. euro's trading around 105. the pound also continues to fall as we were speaking about

earlier on the show. 121.60. we've come a long way since the highs in the summer. and yen, very committed to maintaining stability but haven't done an outright intervention yet. in terms of modties, we've been watching the commodities closely, this is a picture today, we're trading above 1.1%, again, a topic we've been discussing very closely, ultimately it's about the very tight supply in the market. what you get is a net deficit and it continues to move higher. wondering if we're going to hit that triple digits handle any time soon. a big focus for the macro

community. h&m has said that sales have fallen, the retailer posted a better than expected operating profit, amid a continued focus on cutting costs. looking into these numbers and he joins us with more. the stock is among the top performers this morning. what's changed that has investors cheering these results in. >> i have found -- they're speaking about september being a bad month. dropping 10% year on year in local currency terms and plans to close off quite a bit of stores, 200 stores but they're going to gain 100 stores in frout market but the difficulty is where are you doing those. you also had two things at play

here, one you've been focusing on profitability, meaning, you hiked prices quite a lot as an entity, so in the summer they became one of the more expensive retailers, in fact on the other side you had that 2 billion savings, i guess is beginning to take shape and actually be at play here. i think that's what investors are looking at. >> you talk about this focus on profitability, one line in their earnings report, the cost of markdowns in relation to sales was somewhat higher in the third quarter this year compared to last year and so you would think that their focus would be on keeping profitability, these margins, as high as possible, ultimately it's volume game and it seems they had to lower prices in order to get some stock off the shelves. >> a bit of weird one, they went

on to become more expensive the aim would to drop off prices, so it was a bit of mixed bag in regards of how they did that. achieve 10% operating margin in 2024. how they plan to do that plus in compe competition, perhaps a little bit higher in terms of scale because they appeal to a slightly more or less price-sensitive market that might also be -- they may have to face that quite a lot. earlier on a guest said, perhaps it's a little bit more of the lower end of the retailers who are going to do well for some time before the likes of h&m are able to make it in the market. >> thanks for the wrap-up on h&m. we'll shift gears to the upper end of the fashion spectrum, europe's luxury name on the cusp of a bear market,

down almost 20% from their may highson head winds from the high rate environment. they faced a slew of analysts' downgrades over the course of september. 30% off recent highs. john, thank you so much for being with us today. we've been paying alot of attention to this sector over the last couple of weeks as a slew of analysts have come through. you're not one of the bears on this sector, you seem to be bullish on european luxury. break down the bull case for us. >> the whole luxury sector long term probably one of the most attractive places to be in the sector. one of few sectors where being made in europe is actually a positive, high margins.

but clearly, you don't want to be buying these stocks chasing toward the upside it's when they come back 20%, 30%, which we have seen currently. >> it was somewhat surprising to see some of these analysts' downgrades come through, off 20%, 30% from a month or so ago, what do you make of the argue thamt the u.s. aspirational consumer is showing signs of weakening? concerns out about china's growth. on top of that, so much the bears is saying that europe is beginning to crack, the reduced inflow of tourists from europe are putting pressure on europe, i mean those are some pretty compelling head winds. >> yeah, but i think you have to take it on relative basis, the way the stocks are acting heading into 2008/2009

situation. from our discussions with luxury companies, this this is a period of normalization, we have growth in that post-covid period, maybe that some of that was excess savings was being used. interestingly the u.s. federal reserve still saying the top 20% in the u.s. still have excess savings left over. now we're seeing a normalization, more likely to be mid to high single-digit growth. calendar q4, china, was locked down last year and obviously that's been weaker than overall expected. so it's not like the sky's falling in, i think that's the message and basically the time to look at these companies, time to pick them up of course is when they're under pressure, not to chase them higher as many of my colleagues seem to be doing in q1 or q2 where they've made

outstanding gains over the last 12, 18 months. >> sort of chasing the price actions there, i wonder in your view you think the luxury sector is a cyclical sector, again, looking at the other notes from your peer group and going back to something that you said at the beginning of he interview, the fundamentals seem to be pretty cyclical, there's strong profit profitability. higher point of entry, all of those are very specific to the luxury sector, but to what extent is it behaving a cyclical class in. >> actually luxury is not cyclical in the same way ten years ago luxury people aren't interested in luxury anymore, people want to take holidays instead. i think you need to look at the middle ground.

yes, there's bond to be some kick callty in anything, you're choosing to go out and buy something. you don't need to eat diamonds or golds or watches for dinner, you need to go out and buy food products for dinner. if you look over the medium term, incomes are rising, gdp multipliers. i'm confident that the sector will become good again. yes, there will be a slowdown, we're seeing that now, but the sky is not falling in, looking ahead to q4 the come pacomparabs are pretty easy. u.s. and china may be stronger next year. it's certainly not 2008/2009 situation. no reason to panic. if the stocks have moved down and you're a holder of these stocks i would say keep hold of

th them. >> interesting. what about the medium term, you talked about the gdp multiplier effect. the data china's macro economy, chinese growth is expected to moderate in the coming years, structural issues here, high youth unemployment, aging demographics, super high level of debt, don't necessarily bodes well for income generation and for the luxury sector, what's your view? >> i think there are segments of growth all over the world and you have to look, india at the moment, obviously, its population is close to china, a rolex retailer like in india is exploding.

demand. the chinese economy is going to decelerate, but the growth is going to be better than the developed world and that's why i tend to be quite positive. travelers, a lot of focus on mainland china, but look at data points coming out of hong kong, thailand, even places like japan, chinese tourists are likely to be in europe in q4. >> john, let's wrap it up. what are your top picks in european luxury? >> we really like the top quality names given the environment. hermes is amongst our preferred picks. lvmh. we're pessimistic on some of those numbers relying on a new

designer to turn things around. probably not the best environment for that. a quick sneak peek at the hard luxury segment. i'm a big fan of swatch group, watches of switzerland as well. some interesting opportunities. when you get down to ten times p.e. on these luxury or retail names they start to look very attractive. there are some very interesting sort of cheap luxury stocks there but otherwise quality is what we favor. hermes ss and lvmh. >> jcoming up on the show, the battle for republican presidential nomination heats up in the u.s. we'll look at those in the running next.

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welcome back to the program. costco has beat quarterly earnings expectations. shoppers turn to themembership club for cheaper fuel and bulk discounts. average transaction volume dropped 4%. retailer has benefited from strong grocery sales, consumers are spending less on big-ticket and discretionary items. target will close nine u.s. stores next month citing vio violence, theft. including one in new york and three in the san francisco area. >> they've got a maternity lineup. >> they certainly do. someone has been checking out my twitter. >> i discovered that when i was pregnant he the u.s. a few years ago. >> great maternity selection.

i was surprised to how similar i was to the mannequin. i was similar. >> you look like the mannequin because you're the mannequin, right. let's move on. a new york judge has found donald trump and sons liable for fraud after quote repeatedly go desantis. who is polling 16%, very happy to say that tom packer our research fellow joins us.

good morning to you, tom. thanks for joining us on this show. let me start off by asking about the impact these debates actually are having on people's perception on who they want to be leading the republican party. because donald trump continues to be the front-runner yet he doesn't participate in any of these debates. so what's the purpose of still having them? >> well, at some point he may join them. worth noting after the last debate he fell back and most people in the debate went forward. if he lost the debate that could hurt him more. in many ways what the debate's end up being is the competition of who's going to be the alternative to donald trump. will someone break out and be better tonight and end up in being in stronger contention for

nomination? >> the first debate, we talk about about the impact vivek ramaswamy had on the stage, very charismatic i would say and did catch a lot of attention but it hasn't translated into polling numbers, only putting him around 2% to 3%. why is that the case in. >> i think he did gain a bit from it. some of the polls, it depends on what poll you look like. he's had a standard problem with his polling numbers, online polls and he goes up. random polls he doesn't. one argument his supporters are making is because his name is most difficult for most americans, might not be saying to polls yet, i'd say it did help him last time. dominating the debate. but i wouldn't say the debates don't matter.

tendency they matter for everything. they give opportunities to people at the back to break forward. >> tom, speaking about the impact of the last debate, ron desantis has a much more muted performance than many had hoped and he chose to stay out of the spotlight he got a lot of flake for that in the wake of that de debate. any more risk taking tonight in. >> hard to predict. general rule of thumb, ron desantis sticks to his plans, he's very successful politician, one thing that i think did happen is this weird situation, they gave him all kinds of suggestions, on how to campaign, he didn't do that, presumably

because he thought everyone would be ready for him to do that. we'll see tonight. >> looking at the polls that we've got, the latest nbc news poll in front of us conducted just a week or so ago, donald trump out in front with nearly 60% of support among republican voters. as we already noted he'll be skipping the official debate later today, what could derail trump at this stage? >> well, always a possibility that he goes to prison or do kind of plea bargain, in the early states he's not as strong, well below 50% there so i could see a scenario of ron desantis or someone else beat him in iowa or possibly in new hampshire a very open race that donald trump could lose. a bit like hillary clinton in

2016. so i think that's the kind of -- one thing to remember, we're still quite a few months away. even the kind of vote who vote in the republican primaries are quite political people aren't following it that closely. >> tom, we'll leave it there. thank you so much for joining us today on the show. really interesting insight ahead of this debate. of course, donald trump will not be participating in the debate. he's set to be giving a speech, he'll be joining some of the people who are on the strike on the picket line at one of auto plants. interesting as well, particularly in light of president biden also participating if the picket line yesterday. >> absolutely. pretty serious ramifications for the election given the importance of unions in the u.s. let's take a look at markets

and see how u.s. futures are shaping up, we have green across the board. the dow futures up 100. nasdaq is looking at rebound and the s&p 500 not far behind also looking at a positive start. aing high at european markets as well. all of these indices are trading in the green. ftse 100 is basically flat at this point. moderately green. we're keeping a close eye on the italian budget today. that's it for our show today. >> "worldwide exchange" is coming your way next. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for

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it is 5:00 a.m. here an cnbc global headquarters, here is your five at five. we begin with wall street whipoff. investors come to terms with the real world impact of higher for longer. also, just days to go, and congress still has no answers on avoiding a government shutdown before that october 1st shutdown. we are nbc with the very latest. in detroit, president biden becomes the first sitting u.s. president to visit a union picket line voicing his support for workers and their right to ask for more. next up is former presiden