that's all for this edition of "dateline." i'm andrea canning. thanks for watching. ♪ good morning. welcome to "street signs." i'm joumanna bercetche. >> i'm julianna tatelbaum. these are your headlines. european equities struggle the for a second straight day as asian stocks close near a ten-month low and the russell 10,000 turns negative. and crude prices stay in the red after a three-week low as the ceos of the biggest energy groups tells cnbc about the challenges of maintaining security and keeping pace of the transition.

>> we are not gods in our cou countries. we are responsible for refining. it is up to political leaders to find a scapegoat. tesla misses the delivery target as higher interest rates and factory upgrades weigh on the third quarter production. evergrande shares spike as trading in the troubled developer resumes after the two-day halt amid the official police probe in the billionaire founder. good morning. welcome to "street signs." let's take a look at how markets have been faring. we are one hour into the european trading session and once again there is a lot of red on the heat map. stoxx 600 is down .20%.

coming off a 1% close lower yesterday. that is a six-month low for the stoxx 600 and as ever investors are focused on bond yields and interest rates continue to move higher. ten-year u.s. treasury closing up on the session yesterday. again, that continues to be a factor for markets even as we are beginning to see the price of oil come down somewhat yesterday with the oil tipping lower at 2% lower. weakness in commodities continues. the handover was negative from asia overnight. we will talk about that shortly. another negative session down .20%. let's talk about the individual boards. this is where we are here with the green on the board in the spanish index up seven points.

the dax is down .20%. we hhave cac 40 close to 7,000. down ..25%. renault is at the bottom of the index. the ftse 100 is inching in the green .30%. we have hawkish comments from one of the hawkish members from the bank of england. the uk interest rates may have to stay higher for much longer. we may be looking at permanently higher interest rates in the uk. that is a bit of a warning shot. we are looking at boohoo in terms of sentiment impacting the retailers in that sector. retailers are coming under selling pressure after the boohoo outlook for the year. you will see retail is trading from the red down .60%.

we are watching boohoo in the sector. basic resources with minors coming off today. we are seeing the commodities completion sell off and that is impacting minors down .80%. utilities down 1%. on the flip side, we have a little bit of green in travel which is up .30%. and media as well up .30%. let's take you to the price action in asia. hong kong is back for business. it is opened after the public holiday that we saw yesterday. look at what we got. 500 points lower. 2.8% in terms of percentage losses being dragged down by real estate and energy sectors. those two major parts of the investment complex we have been watching as it relates to china have been dragging down the hang seng. japan is down 1.6%.

this as the yen gets closer to the 150 level which is prompting speculation that the bank of japan is coming in with intervention. let's continue the trip and look at u.s. futures. we have green across the board on wall street. it is modest in terms of the magnitude higher. s&p and nasdaq and dow looking for strong strtrade today aftere dow ended the day yesterday. we did have a rally that left the s&p little change with the nasdaq closing up in positive territory. it was an overall positive session. plenty of concern in the market. let's ain ntonio to talk through this with us. it feels we are in a moment of

transition no matter where you look from bonds to gold to cryptocurrency. my first question to you is what is the relationship with bond yields and equity performance? >> good morning. thank you for the innviinvitati. rates do matter for investments. what we have seen in the last few months is an increase in both of them, but more or less markets manage to handle them. the general resilience of the market is an issue. now things are changing a little bit. a couple of weeks ago we faced what we called a shadow rate hike from the fed. changing the narrative and stating the concept that rates are going to remain higher for

longer and case expectations of the market of rate cuts. the tightening of the financial conditions that the fed has been looking for here for a while. after the september meeting, we had higher rates and wider spreads with lower equities. now equities are simply reflecting what the fed wants and that is tightening of conditions to slow down the economy. >> within equities, if you say equities are reflecting that, do you want to be overweight the more defensive part of the market because the narrative has become more downbeat or are you sticking with cyclicals? >> this is the environment where the portfolio must be skewed to the approach with the names in the sector.

no doubt about that. >> antonio, let me go back to what you are saying about the shadow hike. i think that is the language you described with what the fed issued last week. because the situation on the ground and the economic back drop in the u.s. is much better than the analysts were pe pencilling in, they raised the outlook. where do you stand in the camp of soft landing versus rec recession? some have eliminated the possibility all together. >> soft landing requires a difficult alignment. you need to have many conditions being satisfied in the same time before it is a very difficult target to achieve. obviously, the fed cannot say anything different and it is legitimate with the outcome.

to be honest, in this environment numbers and data reflecting a strong u.s. economy may instigate the risk and narrative that rates in the u.s. might go higher and stay for even longer. for the reasons we said before, this may not be that positive. >> i think it was jamie dimon yesterday speaking to another station saying that he would not be surprised or it is within the realm of possibility to see interest rates up to 7%. you believe that would have impact on where people put their money here. how is this transitioning for the european market? >> europe is doing well, but the summertime weakness of the european economy with the exposure to the higher interest prices is clearly deployed.

this environment, the u.s. deserves some overweight versus europe. >> you think the u.s. continues to deserve an overweight position in one's portfolio? >> europe has been cheaper for ages. i don't think the fundamental conditions will see a reversal of that situation. european economy is weaker than the u.s. one. if there is an economy that is flirting with the recession, it is more europe than the u.s. >> i think most people are in the same boat, antonio, when it comes to the european economic outlook. unfortunately. antonio cavarero, thank you for okay the show. let's look at the energy complex. this is where brent is trading today. we pulled back a lot in the last couple days.

it was not so long ago we were approaching $100. we have come back since then. brent is sitting above $9$90. wti is now trading clearly below $90. both of them have fallen to the lowest level in three weeks with wti falling below $90 as concerns continue for outlook demands. the clean trans exition has bee top of the agenda in abu dhabi. steve caught up with the ceos and talked about the challenges of moving to the net zero world. >> it is the worst of times and best of times. worst with the recognition where it seems to be the time we the polar eize the debate more and

more rather than solve the world's biggest problems. >> we are trying to solve the situation all together. not recognizing one against the other. something should be fundamental about climate change. it is not one against the other. it will never work otherwise. >> i'm reminded if you want to keep everyone happy, sell ice cream. we're not in the business of ice cream. i'm reminded there are people lactose intolerant. the indication is we have to make tough decisions. >> ice cream is nice. dan spoke with the secretary-general and asked about the recent conflict with the iaea and asked about the peak oil forecast. >> it will peak by 2030.

let me ask this. this is less than six years from now. fossil fuel demand has been 80% for the last 30 years. it hasn't changed in 30 years. again, it goes back to the early discussion about the availability of critical minerals and everything required to move the whole energy system from the for sr fossil fuel sys. this is critical. we can't just replace the energy system that existed for years. that is why we continue to emphasize of investing in the oil and renewable energy and hydrogen and the important thing is the technology. ultimately, we are all striving for the same thing. meeting the paris accord investments. it is critically required by the world.

80% of the energy is by fossil fuel. 60% is by oil and gas. to say we unplug from that in five or six years is unrealistic. we are not in favor of that approach. we are in danger of energy security. we are trying to promote the investment of the oil and gas with technologies widely available. >> there is plenty more from the meeting and the oil industry top leaders which is all on cnbc.com. >> you can get in touch with us directly if you have anything to say about the show or questions on the platform x formerly known as twitter. i'm @cnbcjoumanna. coming up, uk primary e minr rishi sunak face a contentious

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welcome back to "street signs." evergrande shares are surged in hong kong spiking 42% at the start of the session despite the investigation ilaunched into th billionaire founder. it is just trading like a penny stock. the swings of up and down at 20% is the norm. another company we are watching is tesla. deliveries have fallen 7% in the third quarter missing expectations. the ev maker shipped 435,000 vehicles. the first quarterly decline in a year amid production haltupgrad. the company maintained 1.8 million deliveries this year. and german sandal maker

birkenstock will price its ipo listing at $49 a share indicating a non-delighted valuation of up to $9.2 billion. the ipo follows the listings from a.r.m. and instacart and this is the first consumer test of the ipo pipeline of the year. leslie picker has the story. >> reporter: moving ahead with the amended f-1 to mark the deal to investors. birkenstock will raise as much as $1.6 billion by selling 32 million shares between $44 and $49 apiece. more than $600 million of the deal is claimed by investors who cam indicated an intention for shares at that price. the birkenstock valuation would be as high as $9.2 billion on

the non-diluted basis. investors slated to launch yesterday morning, but when the prospect of the s.e.c. closure looked like it would happen over the weekend, they tried to move it up to friday afternoon, but they were not able to cross the final "ts" in time. that is ago to people familiar with the matter that i spoke to. when congress averted the shutdown, birkenstock was able to move forward with the original plans. in documents revealed a few weeks ago, it showed top line growth for the year. i'm told the company is targeting a listing on the nyse under the symbol birk. for cnbc business news, i'm leslie picker. >> we will bring you all of the

developments for birkenstock. and planisware launches the largest french ipo next wednesday with the shares ranging at $16 to $18 each. british retailer boohoo says revenue fell 16% in august. pres the uk firm says sales could fall with the economic environment. it kept the margins and improved inventory management. that was not enough to reassure investors. rishi sunak's first tory party conference speech could be overshadowed after the media reports that the government is set to scrap the northern leg of the hs-2 rail project in a bid

to save money. the conservative mayor ruled out resigning over the issue. >> gripping the situation means reexamining it. it does not mean giving up and admitting defeat or cancelling the future. this has become a debate about britain's ability to do the tough stuff successfully as previous britons did. it is now a debate of credibility over a place to invest. that is at stake here. my message is we must not give up. we have to rethink radically how we are going about this. >> earlier this morning, sunak told the bbc he has not taken a decision on the railway. let's get to arabile at the

conference. arabile, it feels like the hs2 issue dominated the headlines. i understand the announcements yesterday, but they are not sharing the spotlight with the controversy over hs2. why is this so cdominant? >> reporter: perhaps a few factors, julianna, as we are in manc manchester, which is the leg set to be canceled. birmingham to manchester. the first railway line in the world was actually the railway line from manchester to liverpool where the labour party will have its conference as well and heading off that next week. very interesting we are talking about the railway line and that created from manchester to liver

the pool. that could be one factor. the other part is government here in the uk has been trying to decrease their cost as much as possible in trying to do so with looking at projects that are not feasible and not make sense in the high interest rate and high inflation environment. remember that government has had a high interest payments that they needed to makeover the last number of years as well. all of those factors could be at play. this is a project which is set to cost $55.7 billion in 2015 when it was planned. now it is soaring to 100 billion pounds. now that is a massive saving if they are able to get it right. it is a contentious issue. it doesn't mean you are creating the high speed railway with the south and going as far as

scotland in parts. what does it mean for the future? perhaps they are letting go of the future. we spoke to the justice secretary and we got a clear sense from him about what he thinks needs to be done with hs2 and if he thinks it is as contentious an issue for not just the conservative party, but consumers at large. here are his thoughts. >> prime minister, i'm in the privileged position with the justice minister. this is a guy who is ruthless about the evidence. he doesn't get buffeted around. he looks at the data and works out what is in the long-term interest of the british people and mindful these are expensive projects. it is important to note that everyone might be talking about that, there are other areas of inn vvest

investments. $30 billion of investment in the north. another announcement of 1.1 billion pounds of towns fund which helps the north. he follows the evidence and he will do what he needs to do. i know from working with him, he will do what is in the best interest. >> there will be alternative plans to hs2? >> the prime minister and chancellor will maybeke the announcements. it is out ofof my lane. what i can say it they'll make a decision by the evidence. >> reporter: pretty much tomorrow at 11:00 is when we anticipate that prime minister rishi sunak address. he will perhaps talk about the matter and outline what he thinks should happen when it comes to hs2.

we also got to speak to the ceo for the confederation business industry with regards to what she thought business would think of having this scrapped. it was really all about uncertainty. here are her words. >> the things that's going to be on the minds of business leaders is some of the key decisions that we need to see. whether that is thinking about our big infrastructure projects or hs2 or rail connections with the big cities in the uk, they want the government following through on the commitments. importantly around transition to a low carbon economy and the uk has been a global leader on that and they want to see the government following through on that commitment and attracting the best investment from around the world on electric vehicles and gigafactories for the

battery storage that we need to work for the transition across the energy systems. they want the uk to really be setting up the policies to deliver that as well. >> reporter: the theme of the conference is long-term decision fo decisions for a brighter future. one questions if they made the long-term decisions which would lead to a brighter future for the uk. decisions around green emissions as well as the high speed rail between the south as well as the north in the uk were meant to belong-term decisions to help. the issues for jeremy hunt and rishi sunak is reducing inflation and halving it to 5% which is akin to a cut in taxes. i thought the central bank was responsible for the cuts in inflation. nonetheless, a lot of contentious issues here at the conservative party conference.

guys. >> it is pretty remarkable, julianna. the fact that so much of the conference is taken up by topics not on the agenda. hs2 and tax cuts pushed by the right-wing conservative party. we have to wonder if downing street is happy with the conference. arabile, thank you. coming up on ""street signs" we will have the latest on the outlook for banks after the etgsn ptbemein iseemr.

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get yours today at blendjet.com are we in in an ad? we sure are. warm welcome back to "street signs." i'm julianna tatelbaum. >> i'm joumanna bercetche and these are your headlines. european equities clawing back losses as banking and travel stocks lead the way. the recovery looking to extend to wall street. crude prices stay in the red after touching a three-week low as the ceos of the energy groups tells cnbc about the challenges

and keeping up with the pace of transition. >> we are not gods in our countries. i don't know why. we have energy prices and we are responsible. it is up to the political leaders to find the scapegoat. tesla suffers the delivery target miss. and evergrande shares spike as the trading resumption after the two-day halt after the official police probe into the billionaire founder. we're about an hour and a half into the trading session. things have turned around. european equities clawing back the losses. we were edging lower in the first hour of trade.

now, as you see, .30% of the gains for the ftse 100 and ftse mib. the spanish market up .50 p%. the dax and swiss market trading at the flat line. the key is the change in momentum. we will see if it sticks after the weak hand over from asia. joumanna talked about the steep losses for the japanese market and hong kong market which reopened after being closed yesterday for holiday. the majority of markets are closed for the week for the holiday. the dollar was the key beneficiary of the challenging trade in the bond and stock market yesterday. we have some stabilization in currency markets. euro/dollar holding steady. the yen is not a lot of movement. sterling is holding steady. at the new lower levels, we are trading below $121 as the

conservative party conference takes focus neihere in the uk. rishi sunak will deliver his keynote speech tomorrow. as for wall street, all three majors are looking to open higher after the mixed session yesterday. equities under pressure for the majority of the day, but a rally left the s&p little change on the session. multiple fed officials say rates need to stay restrictive for some time to tackle price pressures as markets are split if the central bank will hike rates again this year. michelle bowman says they need to hold rates higher for longer. while governor michael barr says it is how long they will stay at the restrictive level. amid the slew of comments, jay powell joined fed president

patrick harker on the tour of the town in pennsylvania. they were concerned over high prices and ability to find wo workers. we have bill ackman who told cnbc the rate hikes are starting to hit the u.s. economy. >> i think the fed is probably done. i think the economy is starting to slow. i think the level of real interest rates is high enough to slow things down. high mortgage rates. high car rates and credit card rates is having an impact on the economy. the economy is still solid, but weakening. seeing lots of evidence of weakening. >> european banks were resilient in september despite wider market weakness amid regional banking concerns in the u.s. and collapse of credit suisse. we have the head of jp morgan

joini stanley joining us. thank you for being here. talk about big picture. if you look at where european banks valuations are against the u.s. counterparts, there is a steep discount. do you see that as an attractive buying opportunity for people watching the show? some people think the european banking sector weathered the storm well in march. is this a better place to do it? >> we believe the european banks are more attractive than the u.s. at this point. they are paying dividends. the yield in europe is around 10% on the consistent basis. they have less regulatory pressure unlike the u.s. and they pressure on the deposit pay up that hits the u.s. banks more than europe.

however, we see the era of the european banks coming to an end. 2023 is a great year and profits growing by 30% which is driven by net interest income at 20%. that should stop and flatten out going forward. >> i was going to ask about net interest income. if feels the ecb hit the top of the rate hiking cycle and for so much of the year, we see net interest margins balloon across the european banking sector. going forward, do you think these margins are no longer able to be sustained even if the ecb keeps rates where they are? >> absolutely. that is the key point. what we have seen historically as that customer gets around 50% of all of the deposit rates and 50 goes to the bank. what we see right now is around 20% which is only passed on to

the customer. we expect a continuous increase and that's really the main driver by net interest income will flatten out in 2024 and 2025. >> great to put numbers on that. great to have a sense of how much they are passing on to depositors. i take your point that we are nearing the end of the nirvana stage. is that the end of the bank stocks? would you short them? >> we believe earnings die natio -- dynamics is negative. we are returning 13%. we expect that to go down to 12.5%. if rates go lower toward 2.5% in the long term, we will see even

further downside to earnings. more importantly, the sector is 18 times leveraged. that never used to be a big issue in the global financial crisis or pre-global financial cri crisis. now we don't believe the sector will re-rate. the sector should re-rate from seven times earnings. if you are paying 18 times leverage, we see better industries out there. >> no catalyst for further re-rating. let me ask about the top pick in the sector. you have a positive view on some stocks. ubs is one you like. talk about what you think the buy case is there and what about this bank looks a tttractive to you with the inn -- integration

by credit suisse? >> in europe, we have mainly tier-ii traders. that's reflected. when we come to private banking, it is controlled in the top layers of the situation. ubs generates 60% of the profits. from asia, we are the fastest structure growth area for the private banking sector. we expect the cost synergies and business that ubs to continue relating for the stocks that trades at tangible book. morgan stanley trades at two times the book. we believe it will re-rate to the share of 30 swiss francs. >> i interviewed mr. amoti a

couple eof months ago. one decision is to maintain ownership of the swiss domestic bank. do you think that was the right decision in the sense it is going to be revenue added to the combined entity despite the overlays and overlaps with the swiss bank? >> we think it is the right decision. the swiss bank make around 11% return on equity on a consistent basis. as we saw the cs, when they were in trouble, the swiss bank was the market maker performer with the cash flow generator and created stability with the private bank. private banking will be volatile. there will be equity sales and trading.

that creates stability in the business. it is a great outcome for ubs to own the asset. we believe the cost savings are low. target 3,000 staff reduction in switzerland. that is 8% of staff. that is a small reduction. over time, these numbers will creep up. >> on the other side of the spectrum, you are negative on uk banks. why should investors stay away? >> as we discussed, the deposits you pay to customers in europe is low. in the uk, it is quite high at 40% of ali -- all deposit funding paid to the customer. that is going up. we have much more concern of asset quality in the uk of deterioration. thi thirdly, we have a lot of regulatory headwinds in the uk which is also a concern. we don't think uk is

structurally a bad market. it is a good retail market in the long term. we see the earnings dynamic negative with the deposits declines and margin pressure and concerns about asset quality. when the market gets negative, you want to step in and buy them. >> you say the regulatory r headwinds. you are saying there is pressure to pay up on the deposits? >> the asi is offering 6.2% interest rates. we have a government intervention, so to speak, to drive up the beat which we call to deposit holder. as a result, we see that as a regulatory intervention. we have it in some european countries like belgium. belgium, the deposit holders pay 20 billion euro to the belgium

government which is 5% of total deposits into retail bonds. we are seeing the competition increasing in europe as well. in the uk, it is acute. >> very clear. it has been a delight chatting to you. insightful comments. the head of european bank from jp morgan. research from the bank of america global research suggests global banking lifted the interest rating from 5,000-year low. the current rates are below average as central banks keep rates on hold to tackle inflation. how high do they need to go from where they were in mesopotania? we need to manage 20% to get back to bc levels.

history is good context. back to modern day. still ahead, sam bankman-fried facing criminal charges over the collapse of crypto exchange ftx. we'll be right back. meet the portable blender we can barely keep in stock. blendjet 2 gives you ice-crushing, big blender power on-the-go. so you can blend up a mouthwatering smoothie, protein shake, or latte wherever you are! recharge quickly with any usb port. best of all, it even cleans itself! just blend water with a drop of soap. what are you waiting for? order yours now from blendjet.com before they sell out again!

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welcome back to the program. a florida republican has followed through on the threat to try to remove kevin mccarthy as role of speaker of the house. trump ally matt gaetz filed a motion to vacate. kevin mccarthy faces a vote where the majority of the house must vote in his favor. this is the third time in history the motion has been filed. mccarthy responded with "bring it on." let's get to brie jackson who joins from us washington, d.c. brie, this is a rare motion to see in washington. tell us what happens next and what we may actually see from some house democrats. >> reporter: so what we know now is kevin mccarthy is in the

fight for his political life. this after republican matt gaetz filed a res resolution to file vacate of his seat. this is after the short-term funding bill passed to avert a government shutdown this weekend. gaetz warned that he would try to oust speaker mccarthy if he did just that. that brings us to now after the short-term deal was passed to keep the government open until november 17th. the house has to vote on mccarthy's future and it has until wednesday to do so. gaetz says he does have enough votes to remove mccarthy. that is unless democrats move to save the speaker. you need to see how democrats play this and whether or not they move with republicans to oust their leader. mccarthy has been defiant saying that he will survive, as you

mentioned him posting on the platform x. he said bring it on. bring it on. the votes to oust him. he is confident he will stay in position. mccarthy said he did the right thing to keep the government open so that we can keep the government up and running. democrats will have to play a role in this. it is unclear whether or not republicans will have the vote to actually oust the speaker. it is going to be something we keep a close eye on over the next day or so. >> brie, thank you so much. we will keep a close eye on that and see what happens in washington. elsewhere, preparations for the trial of fallen crypto boss sam bankman-fried begin today with jury selection getting way in new york. the 31-year-old faces fraud and money laundering charges relating to the collapse of ftx. sam bankman-fried has pleaded not guilty saying he followed

advice of his lawyers and believed what he was doing was legal. here to talk about the implications of this court case is jonathan hobbs, the founder of saving.com. jonathan, for many ninvolved in the cryptocurrency, this was the nail in the coffin. the poster child, the head of the celebrated exchange in crypto, is now potentially facing up to years of jail time and alleged counts of fraud and multiple other allegations and including money laundering is not a positive sign for the industry and scared many people away. critics are saying this is ultimately what happens when you venture into an industry that is very low regulated. it does open up the space for fraudsters to exist. what is your interpretation of

the impact of the broader crypto space? >> thanks for having me on the show. i think it will slow things down. you know. it is not a good look when this type of thing happens. any emerging technology and cryptocurrency, you will have bad actors when the regulation has not caught up. it will slow thing dos down. last year, we say a drop in the price of bitcoin after the ftx collapse. that brought bitcoin below $20,000. since then, it has rallied the rest of the year. obviously, it was a slow summer range at the moment. there were other things to look at in the crypto market which are potentially more from the bitcoin side, favorable to the market.

>> jonathan, looking at the bitcoin side of things, it gained prominence during a time when interest rates were ultra low levels. now rates have risen and you have more attractive environment in the risk-free in u.s. ten-year treasuries. what does that do to a speculative asset like bitcoin's appeal? >> i think always with the low interest rate environment you will have risky assets do better. with that said, it doesn't have to be the case with bitcoin. there are a few things going on with bitcoin that override that. i would say that is the bitcoin etf. we don't know when he that will be launched. we know it will be approved at some point. a lot of investors will probably try to front on that. that is why with we are seeing the price move higher over the last couple of days. there is the bitcoin event which

is expected to be in april of next year. that is when the block reward for miners when they create the supply gets cut in half. the reward will go down for bitcoin. it makes it a scarce commodity for the miners. it is a self fulfilling prophecy that it runs als up after the e. that weighs the macro things going on right now. it hasn't been tested in a higher interest rate environment. you have to consider rates coming down. >> we're up against the clock. i have to cut you off. jonathan hobbs, thank you. thank you for joining us on "street signs." we leave you with a look at u.s. futures. i'm julianna tatelbaum. >> and i'm joumanna bercetche. let's take a look at u.s.

futures before we head out for the session. this is how all of the u.s. markets are seen opening up today in positive territory after the markets were searching for direction with the higher move in yields. ten-year treasury at the post-2007 high. stay with cnbc. "worldwide exchange" is coming up next. my name is ashley cortez and i'm the founder of the stay beautiful foundation when i started in 2016 i would go to the post office and literally fill out each person's name on a label and now with shipstation we are shipping 500 beauty boxes a month

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it is 5:00 a.m. here at cnbc global headquarters. here is the "five@5." stocks searching with direction as the rate shock puts the squeeze on global equity markets. higher for longer mentality is raising the odds of the soft landing. we debate what's next. $100 crude less likely as recession fears hit demand and prices. we head to abu dhabi with the latest. more ripple effects with the uaw strike in the third week. what ford and gm did that's raising the stakes.