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welcome to "street signs." i'm karen tso in london with annette weisbach in germany. the ecb is set to deliver its second straight rate cut for the first time in 13 years as the picture for the euro area is getting gloomier. tsmc is posting record profits on the back of the a.i. semiconductor. meantime, chinese developers sink as the public briefing underwhelming despite the housing ministry with measures to support the beleaguered

property sector. the morning session unfolding here in europe for stock markets and so far what we're seeing is a bounce across the board on the heat map. the benchmark climbing over .2%. a lot of catalysts on the record trading session. a bit more flavor for the tech giants. little more appetite there. it's been a terrific week for the banks stateside. here in europe, more earnings to trade around as well. we are getting it from the consumer giants and telecom players and, of course, the china story. we are sear eing more measures the chinese economyand the prop. the gains we're seeing around the french market .10%.

a pace on the italian names and the dax up .6%. left behind is the ftse, traveling behind, but yesterday, it was to the upside gaining 1% in the session. it is left behind in the context that it was on the better performer yesterday. to the sector gainers with the concentration of appetite today. it is the banking names. the color from the stateside trading window. we have about 1% on the banks. industrial names climbing .75%. media and financial services are one of the gainers. two of the losers on the chart this morning. there is a bit of red on the heat map around basic resources which is why we are trapped in the mark on the uk.

telecoms are trading down with nokia disappointing from the announcement from ericsson yesterday. as you can probably hear from my tone, it is a packed day. some of the top headlines is n nestle missed on nine-minuonth organic sales. a warning this earning season about how to pick your stocks. there is a contrast with the likes of unilever in the space. pernod ricard with the weakness in chinese on sales. and abb posted better than expected operating profit in the third quarter. meantime, to the nokia trade and i mentioned ericsson.

a pop on the americas market where it has been dominating recently. that pick up helping ericsson yesterday. nokia now sees full-year earnings in the bottom of the range after missing expectations in the third quarter. it is a big macro day in europe. we are counting down to the ecb decision. the central bank is expected to deliver the first back-to-back rate cut in 13 years with the 25-point move lower today and again in desk. december. a look at the session today. that trade is weaker. we have the dollar/euro sliding down 1.0852. let's get to annette with more. we don't typically see the back-to-back moves in the recent history from the ecb. that said, the growth profile is

weakening across the euro area. just to set the scene on the ecb is likely to communicate. >> reporter: yes, that's exactly the fact. ever since the ecb came out with the staff projection at the last policy meeting in september, economists already thought this was a bit too optimistic. now the economic picture like the real hard data has soured even more than the consensus had expected. so the ecb needs to at least verbally update us on the picture because the next round of staff projection is in december at the next policy meeting. having said that, the combination of inflation falling back faster and the economy going down more than expected, probably provides them more optimism or confidence, i should say, to start cutting rate on a

regular basis. they will not communicate that. what they will say is they will keep on being data and data dependent and not data point dependent. still, looking at the mixture, the debate is already started that there is a risk of undershooting of the inflation rate. i guess what we see now we can put or call it a watershed moment. for the next couple of meetings is a steady pace of cuts. even the hikes of the hawks did step out before this meeting here in slovenia and saying it is time for a rate cut. i never heard an official speaking before the meeting of cutting is moving in the direction to cut which is needed

for the euro area because the economy is going so poorly in the big parts of the euro area, not so much in the small countries like here in slovenia, but the whole of europe is doing poorly because of investment. the investments come if the interest rates fall. this is the picture they are looking at. the press conference will be interesting. stay tuned at 2:30 here in slovenia. >> annette, thank you very much. we are looking forward to the developments in the course of the day. we have the international cio with us at jpmorgan asset management. the third rate cut for the year, not only for 13 years, we haven't seen a back-to-back from the ecb. what is important for you today to get some messaging from the ecb? >> i think it is going to be interesting how the press conference plays out. if we step back three weeks ago,

we wouldn't thought we would talk about a cut today. like you said, it is not for them to go norm for meeting and it is likely to skip this meeting and moving on to december. the question as toiv to make this cut. obviously, we have seen weaker pmi and the inflation data be soggy than they like and euro up around 2%. the issue is what does the future look like? we will go into the realms of what happened earlier this year where the ecb did pre-announce a cut and it the wrong decision. we just seen a 50 bps from the fed. maybe a question mark if that was right with the data we sc seen since. that is interesting what sort of commitment we get going forward from lagarde. >> the interesting comments from the members.

they were so willing with the rate reduction. when i spoke to them, they were not willing to commit to anything after that. one was willing to provide guidance, but the rest said it is impossible to tell what's going to come down the track. as we look at a weaker profile in the powerhouse of germany, how important is that for the likes of the bundesbankers? >> that sihifted this thinking over the last couple weeks or so. i still think they are going to have a bit of retiscence of what is happening here and what is happening in the u.s. at the moment. you are right. we are seeing weakness in the eurozone. it is on the path of continual cut cuts. it is absolutely fair maybe not how she dodges the question, but answers that. >> the u.s. story has a bearing

on this meeting because it feels there was a lot of cover with the federal reserve managed to buy from central banks around the world with the 50-basis point reduction only for some of that to be taken back in the following weeks with the hot data. what has that had on the central banks for the ecb? >> it has given them a little bit of leeway. other central banks had gone. they had the ability to do 50 basis points which is why we are not anywhere near contemplating 50 from the ecb given they've already started their cover. the biggest central bank in the world has the impact on the do dollar. they are easing policy. the ecb and guidance is looking at the domestic data is right. germany is struggling. they believe they are restrictive. this isn't them going from accommodative policy to further

accommodative. it is going to restrictive policy. that's how i think they will frame this. >> standing in the way of the reductions in the year was the wage negotiations. there was a lot of pressure on the cycle and worried it would feed through it inflation. now we are seeing some cooling back into the wage negotiations. it does jump out in germany with the strong argument for wage negotiations to the upside. how is the ecb going to manage the pressure that they could still see in wages components? >> the wage negotiations are a lagged indicator because it is based on where inflation has been historically. all of the negotiations we have seen this year is based on what it was doing over the last couple years. as inflation comes down, the ecb should have a bit more confidence we should see some slowing in the wage

negotiations. that is how i think they would be framing it. >> on the fwrgrowth side, would make a difference with germany? we have wage growth in the model. does the rate cut make any difference? >> it won't hurt it. one way of framing it. interestingly enough, we saw you the bank lending data look better. you could argue the rate cuts are coming through. i think that's what the ecb has to be thinking about. we know monetary policy worked on the way up and it will work with the lag down. up want to get ahead of the game here and not waiting until the very last moment because they will go more aggressively than they want. >> how much expectations are built into the market if we look at what we are setting up with the .25% rate cut and pricing through to next match. is that likely the next course of action where we get a change

of a jumbo reduction required to bring forward monetary policy action action? how do we think about the expectation? >> we have the price cut for the next four meetingmeetings. >> if it's priced in, why not get on with it and do 50 basis points up front? >> i think there is a panic and i think the risk is they need to go faster or a lower terminal rate. it is going to be dependent on the data. for me, at the moment,reasonabl. the risk is we need to do further. >> you think they're behind the curve? >> i think when i look at the data, they are very much -- the difference with the fed and ecb, is the single mandate of inflation. they maybe have been hanging on when the growth hasn't been as favorable where inflation is and now inflation is where they want it to be or moving where they

want it to be. it feels they can get moving. it looks like three, at least three consecutive cuts in a row. i expect more than that. >> ian, thank you for joining us. international cio aftet jpmorga. you can watch the full showing including christine lagarde's press conference on cnbc or on the cnbc international news youtube page. coming coming up on the show, another chinese press briefing fails to impress. we will bring you the details next. what would become of them wh eyr robinhood gold allows others to earn their very liberal rates on idle cash, unlimited deposit bonuses and handsome retirement matching?

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chip stocks again on the radar today. let's look at taiwan semiconductor on the close and tsmc, you can see was down 1%. in after hours trade, fairly big moves trading up 6.4% as tsmc has reported a 54% increase in

net profit in the third quarter. that's a beat of market expectations. the chipmaker says it sees strong performance in the smartphone and a.i. segments and computing revenue rose 13 t% on the quarter. giving us a different interpretation of what is playing out in the chip cycle away from a.i. you see the european chipmakers are performing asml down 9%. the rest of the secretor gettina boost as you see today. elsewhere, the u.s. chipmakers in pre-market trade losing some steam. you ccan see the semiconductor index. philadelphia index was giving back a lot of territory this week from the high water level. this morning, nvidia looking to recover some territory. it's been quite a week at record level and quickly lost the

record high and looking to recover 2.5%. qualcomm perched high and broadcom and advanced micro set up for daily gains today. to the asian markets and it has been a big one on the macro, not just on the chip side, but macro as well as we watch the property conference in china today. it has moved the markets, but not on the upside. shanghai composite and the hong kong market. chinese stocks are fading. australia picking up on the wall street trade. you see the china story hasn't got the momentum as it has in the latest trade. the stocks off session highs among profit firms in hong kong trading lower after the briefing from the housing myste ministry light on action. an increased bank lending for

unfinished developments for 4 trillion yuan. let's get to our economist. we are hanging on every little scrap fed from the authorities in china than is the latest one today. there is a whitelist in the developers in the residential space. this is different from earlier in the year that companies that must do bankrupt, should do bankrupt. now it seems to be a different ball game. how big of a change is it in your view? >> i think, um, this approach is part of the sort of melee of policies they unveiled and reported over the past few weeks. i think among the stories we've heard in the last few weeks, this is a bit of a meh moment for me. the property market will be a problem over the next ten years or so whatever they do. it helps they're trying to do

something this front. the whitelist approach has not been that successful. they are now trying to do a bit more to get people excited about that side of it. the property market is too big a problem to solve and it's going to be a drag on the chinese economy for some time to come. that doesn't mean the broader package is going to give a technical rally and peter out. i think there are reasons to be positive on china. that comes as us as a house that have been bearish on china for quite some time. the thinking behind it is until three or four weeks ago, they were digging the hole deeper and making the deflationary problem worse and for getting about demand and really changed that. the thing we can take out of today's announcement is they are continuing with this u-turn on policy on the property market

that previously property was for living and not speculation. they are not saying go speculate on property. they are saying go speculate on equities. they are not saying go speculate on property. they are sort of turning the rhetoric around very firmly. that's one of many u-turns they made. >> the chinese property market is different from other crises. in this particular case, there are unfinished properties that people bought them and handed over big wads of cash and properties simply not completed. unless somebody takes delivery of an asset, it strains their animal spirits and prospects for a while. what is the reason to get these products done and keys handed over to a finished product? >> the problem with the pre-sales model goes to the point you made and goes to who's actually exposed to the fact

that these haven't been completed now even the asset management corporations which are supposed to be backing up the banking system and taking bad loans off the banking system and also they are used to national service to get the pre-sold properties actually delivered. you have the household sector that's very exposed in the way you outlined. the banking sector has been disinterested in the process, but still exposed to other channels. the amcs are exposed because they are now starting to be used for national service. it's a mess and it's not something that will be solved by the policies that have been unveiled today. it's just more broadly the signals that we're getting from china that they are no longer making things worse. they have done the 180s on the property market. they have done the 180 on the

pboc could not be used for speculation and now set up a relending facility to do exactly that. the broader policies that are started to be reported on bank reca re recapitalization, it is still only what is reported which is 35% of what we like to see. 1 trillion for pbank recap and trillion for the debt restructures. there are signs china ma more. the key is they are doing this when there susisn't an impetus m financial stress. there are other reasons why they are doing it, but the thing that's a good signal is that they are doing it before they really have to from a financial market aspect. that tells us they know something is wrong and they know some of the solutions.

>> there are no official numbers on how many properties sold and uncompleted. you crunch the numbers and 20 million units sold, but not constructed. the commentary today from the housing minister is this is a pot bottoming out of the property market. do you feel we really are in the trough here and there is no further down side from here? >> to some degree looking at the sales numbers, the numbers have contracted by a lot. they seem to be down in a level that seems to be more sustainable to us from a demographic standpoint. they are probably still at the top end of the range of what we expect. maybe more consolidation there to come in on the sales side. with the property price side, if china is successful on putting the bottom on the deflationary story working through the system, then possibly. i think at this stage in the

game, the previous mistakes -- the previous mistakes of the policy will still work through the system for a did six months or so. i would be weary that they bottomed at this stage of the game because they are focusing on other geopolitical factors and keeping the rimibi strong and this is difficult for the domestic demand to grow in any kind of sizeable way. those previous policies take a while to work through the system even if china is refocusing on the margin on domestic demand. possibly a stretch to say the property market has bottomed at this stage, but as i said, they are not making it worse. that's something. >> silver lining. thank you for talking us through the latest. chief economist at ts lombard.

ahead on the show, ntlese lowers guidance after missing on sales. we'll bring you more after the break.

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welcome to "street signs." i'm karen tso. these are your headlines. nestle cuts guidance and pernod ricad. and concerns over the eurozone growth prospects. tsmc posts record quarterly profit on the back of the demand for the a.i. semiconductor. chinese developers sink as beijing's public briefing underwhelmis despite the measurs

to support the be leleagured product sector. a quick check on markets for the morning session. we were up .2% on the benchmark as we started the show a half hour ago. you see we are building north of the position. certainly picking up some steam and that is reversing some of the losses from yesterday also over the course of the trading week where we have been setting up for losses before the session. in terms of performance, it's been a real switch in terms of the improvements today versus yesterday. we saw declines yesterday on german and french stocks. those are the gainers in the session today. the major european markets bolstering the fortunes of the market today. you can see how it plays out for the french stocks up 4%. out pacing the italian stock market. the dax picking up steam.

.7% in the green. it is different for the ftse with the basic resources names under pressure. pernod ricard with weakness in china. the french spirits maker, however, still expects to return to growth in the full year. charlotte joins us with more. charlotte, we were poring over lvmh numbers yesterday. the significant drifnks presenc and the reverse today. >> the picture they gave of the appetite from the chinese consumer here. that is what we her as well. the q1 organic sales down 6%. that was a big hit from china down 26% in the quarter. they downgraded the forecast for the sales for the region. now expect to see a more significant decline than last year. last year, sales were down 10%

in china. we know that some tariffs are coming into play for cognac as well as china decided to put the new tariffs there. we hear from pernod ricard will take actions to mitigate the chinese tariffs by marketing costs there. we know they make 10% of the sales for pernod ricard with that were cognac. looking at the other markets, the u.s. is continuing to see normalization of the market there. they had heavy inventory post-pandemic. they are pushing into the pre premiumization for spirits. last year, people not wanting to spend as much on their spirits there. they say things are going back to normal. in europe, adverse weather conditions impacting sales down

3%. india was a bright spot up 2%. they see demand coming back into q2. despite the negative frtone fro china, they did have the full-year guidance with organic sales back to growth. continue volume recovery. it is interesting how they shift from premiumization to volume. people maybe don't want to spend that much extra on spirits like they wanted during the pandemic with a big trend to cocktails. that's fading away very much with the cost of living crisis once again. again, reconfirming the guidance of growth despite the difficulty in china. >> there was a post-pandemic to lean into cocktails. wine now? >> apparently. cocktails and back to basics i guess. >> charlotte, thank you very

much. nestle lowered the 2024 guidance after missing the nine-month organic sales forecast citing the challenging environment in europe. they expect full-year sales growth of 2%. john cox is head of european consumer at kepler. run us through the numbers. there is a disconnect with how weak the organic sales look like. we were downgrading for the year to at least 3% back in july. now we're talking about numbers in the range of 2%. this is a long way off the 4% we were promised, isn't it? >> it is, indeed. a lot going on at nestle at the moment coming in at 1.9% organic sales growth for the quarter. the street was looking for something closer to 3%. keep in mind a new ceo is coming

in. if you are going to do a reset and punch out a pretty bad print, probably better to do it on your first reporting date rather than down the road. so, i tend to view some of it as clearing the decks ahead of, you know, what will happen next year. the company hasn't given guidance for 2025 or midterm guidance for that matter. some of that weakness, i'm sure, is really clearing the decks to get things ready to actually start to accelerate growth in the future. >> john, one of the criticisms is the company is too slow to move on pricing. we know earnings report after earnings report, they were moving prices higher with the inflationary environment. some prices seem to exceed the inflation levels. other rivals tried to recapture the volume. was nestle too slow to recognize the shift in consumer behaviors?

>> if you start to dig into the numbers, you see the price component has shrunk below 1%. certainly, the company pricing has come down. if you look at north america during the quarter, the prices declined. that is what is happening in pet food and creamer. i still think overall, we're not in a deflationary environment. i don't expect overall group pricing to go negative. i wouldn't be surprised actually if this is actually where we are given the fact that two impacts, cocoa and coffee are at record ties or near record highs. they will have to start pushing prices through again given what's happening with raw materials here. >> the sales decline we are seeing this year, some attributed to the diffivestiturf

the frozen pizza business. the change of habits and people moving to healthy eating habits? >> certainly, lauren is happy with the portfolio and thinks he can grow above the food and beverage industry. personal, i would like to see them get out of the packaged food industry. this is what is happening with the glp-1. you see the increase of the uptick in the anti-obesity drugs in north america as in reaction to the price increase in north america where they have the biggest frozen business in the u.s. still about canada.

in the u.s., they still have a big pizza business and frozen snacking business. i personally like to see that disposed. it's very competitive and impacted by glp-1s. if you look at the overall portfolio, 70% is in coffee, pet care and nutrition. these are all great categories. they are all glp-1 resistant. with nutrition, you can provide products that can benefit glp-1 users. the overall portfolio is in decent shape. >> what do you make of who is best in breed? unilever is best and the market is picking through competitors in the space. who do you like in the cycle? >> i personally prefer danone. that has been a stalking horse in the last year. the stock hasn't performed in the last year. unilever is linked to what will happen in the next couple of years.

will it still have a food business? will it transform into an overall personal -- personal and home care business? in danone, it is part of the glp-1 where the doctor will tell you that you need to eat more protein. danone is best to benefit from that. i would not write off nestle either. a strong portfolio. good balance sheet. it is not fashionable to say today, the stock has been under pr pressure the last couple years. there will be a time when it is attractive and time to get back into that one. >> and gut health. we haven't spoken about that one and who is positioned with kefir as well. john, i want to ask about beverages with pernod ricard after lvmh yesterday. it feels as if the chinese consumer and threat of tariffs

weighing on the sector. how concerned are you about the outlook for some of the beverage giants? >> actually, i could say the same about consumer overall. it's a very fragile environment with what's happening in china and concerns about the u.s. new tariffs and increased corporate taxes, potentially, if kamala harris comes in. nestle flagging today and europe looking worse than it did. talking about germany and turkey specifically weak. on the pernod was weakness, but the big miss was on china. the china consumer is really struggling. at the moment, a lot of government initiatives, but we still don't think the government initiatives are enough to stabilize property and rebuild consumer confidence. certainly keep an eye on china the next couple quarters key are

luxury and spirits with pernod and others. >> john, thank you very much for weighing in. john cox, head of consumer equities at kepler. here are more of the stocks we are watching on this packed earnings day in europe. abb posted better than expected profit in the third quarter. the swiss engineering group saw orders rise 2% in the period. speaking on "squawk box," they have told us about the rise of electrification and boosting business particularly in china. >> overall, china, we see the same trend there as across the globe. the world is going electric. the electrification of business and electrification of business and decarbonize of business is happening in europe as well as united states. there are challenges building in china, but we are able to compensate with some of the more of the utility and power side of

the electrification side of the business that takes up some of the slower part of what we see especially in the residential and building market in china. nokia disappointing today. it sees full-year earnings within the bottom half of guidance after missing sales in the third quarter. with revenue falling 19% on year. it is still seeing weakness out of india, but a slight pick up in the americas business along with participating as well in the americas. it is transitioning to data centers and fence. left see if that helps the company get back on track. meantime, 400 million pounds of revenue in the quarter. that is up from 487 million pounds a year ago. coming up on the show, netflix subscriber numbers are expected to disappoint as the

password crackdown bump fades. we will discuss the outlook for the streaming giant as day unfolds. stay with us.

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taking you to brussels with the live pictures coming your way. volodymyr zelenskyy is flanked by shcharles michel. they call for more support on weapons and also energy security ahead of another crucial winter. let's listen in. >> not to block this decision, i think, will help. this is the closest one and i think the leaders can do it. >> mr. zelenskyy, so many points have been rejected in the past already. why should this change now? >> not too many points of this because there are some secret

documents, yes, and some very important sensitive points. yes, we asked about some of them earlier. you are right, for example, how to take over permission and give us possibilities to use long-distance weapons. yes, everybody been against it. then we began to produce our capability and possibilities. then, mostly, partners began to think about how to provide. now we need to move some partners forward and i think only with the unity in eu, we can move and move not only eu leaders, but other leaders. >> thank you. >> thank you so much. >> president zelenskyy there wrapping up a conversation as he talked about a dangerous winter ahead. meantime, let's push to

corporate news. yo uber shares are lower. citing people familiar with the matter, financial times reported that uber looked to a deal, but said the company is in the early stage. if this were to progress from explore tore conversations, it could be a huge one in the consumer space. you may recall, most of us actually forgotten the ceo of uber entwined in that business is the former ceo of expedia from 2005 to 2017. he is executive director over expedia and no formal approach required. the ambition could be to create a type of wechat super app like the one in china. it has gone into the airline bookings. the next is hotels and an accommodation. netflix is expected to report the lowest number of new

subscribers in the last year and a half when it reports today. wall street is looking for that figure to come in at $4 million according to lseg data. in terms of financials, netflix is expecting to post $9.75 billion in the third quarter. the stock has more than doubled the benchmark s&p 500 return since it last reported earnings in july. let's get to the deputy cio at asset management. david, no caution with this stock. it has been traveling around record high levels. what do you think of the bar? is it set too high as we await numbers today? >> good morning. the bar is pretty high. as you noted, it is $4 million in times of net sub ads. the buy is at $7 million. it is important they come in

close to that and more important they talk about price and standard tier with the content they have coming on as the year goes on. secondly, they exercise good price control. they really are in a good position to push back against some of the studios in terms of having more success base and payments and just exercising that clout and size they have. >> david, this is a company that's following in the footsteps of other technology names trying to steer away from subscriber numbers. the market is keen to glean how they are reporting those numbers. how does the company push us to the profitability model around tiered advertising? >> it matters certainly in the short run. in the long run, we love to follow companies with pricing

power. netflix certainly does and in terms of expense and control and free cash flow. they should do $1.5 billion or more in free cash flow. that's going to be growing. they want us to look at engagement. netflix has been consistent of 8% of total consumption. even with the competition, this stayed stable. with "squid games 2" and two footballs on christmas, they are in a good position to push t engagement. >> engagement matters when you have provides on board. david, it feels we have gone through thy days from netflix and disney were splashing the cash. they have live sport and gaming. what is the content proposition

look like to you? >> it's certainly broadening. at the same time you are broadening, you take on the risk. what if gaming doesn't work? they will continue to ride that up. you are taking more risks and adding more layers of content as opposed to the core offering which is movies and tv shows, et cetera. certainly sports is a great area. you can drive a lot of engagement on sports. that's what they're banking on. whether in terms of fights on in terms of football, that is what they are banking on and certainly the proof is in the numbers. you will see it a lot faster in terms of advertising as that ramps up, that is a direct, direct tie into what user engagement is driving. >> david, for a long time, many thought competitors were crowded and start eating netflix's lunch. as we had a more disrupted

higher for longer interest rates environment, it feels netflix held its moat. why is that always the case from here? >> content, certainly and sacal. i did a survey in terms of our office. you went from the gamut of zero with the services they use to nine. i'm at seven. i'm still working to not be a piker and get up to the nine level. even with nine, netflix and another question is if you had to drop somebody, who would you drop? netflix was one of the last anybody would drop. it is that content and people just get used to whether it's a dollar here or dollar there, that pricing sensitivity is not that great for most people. certainly at the lower end, there is churn. people follow month to month. overall, the pricing sensitivity for that viewership which is so important and content driven, which netflix has, keeps them in

the driver's seat. >> david, thank you so much for joining us. expectation still high. $750 is what jpmorgan has called with the rating. david volpe with us. a quick look at what you are seeing on the stock market here in europe today. it's been a challenging one. a big corporate earnings day. ecb expected to cut rates today. the stock market is higher and you can see from french stocks right out in front at 1.2% gain out pacing italian names and german stocks up. the ftse 100 is getting a little bit of momentum now. it was flat most of the morning session. now picking up .2%. u.s. futures early on are mixed on the day. nasdaq called to the green at this stage.

just a reminder, stay with cnbc today for our coverage of the ecb rate decision. i'll be back at 1:00 p.m. london time. that's all for today's show. i'm karen tso. "worwi ehae"s nt.lddexcng iupex

it is 5:00 a.m. here at cnbc glbl headquarters.