Transcripts For CNBC Street Signs 20240714

May be cooling apple shares rise as they unveil the iphone 11 and put a cheaper price tag on its tv service. Good morning. Welcome to street signs. Let me take you straight to the bryce action in europe we had a mixed session for wall street yesterday s p flat, nasdaq a little negative again, the theme was that in the move of bond yields. Its affecting a lot of sectors. Overnight, we had positive news. China published a list of tariff exemptions including livestock, does not include pork, soy or corn the Market Reaction has been positive you can see a full sweep of green. Ftse 100 and we are all eyes on the october summit now up. 8 percentage points. Cac also up around half a percentage point changes around Luxury Brands and casino doing well up more than 1 the italian index also up. Lets talk about sectors the number one theme today is that the cyclical stocks in europe are doing quite well. Banks up 1 . European bank index now up 15 huge recovery. All eyes on that all important ecb meeting tomorrow where they are anticipating coming out with a whole array of easing tools, that could see a bit of an ease. Banking sources up and they had a good session right at the bottom. Defenses, utilities and food and beverages down talking about yields, weve seen a whole selloff. The 10year bond trading around 153 now. We have that ecb meeting there is a concern they may do a slightly smaller sas et purchase package this time. That is sending a negative signal 10year btp under pressure potentially putting forward a 2. 3 budget next yearover shooting their budget. 10year gils and 10year in france as well t theyearol the yields have been moving higher thank you big move in the yield space. Also big news in the retail pace the Worlds Largest retailer was boosted by warm summer weather zar around was boosted elsewhere in the retail space, hermes has posted a rice as a Strong Performance in Mainland China offset the recent protests in hong kong and confirmed the medium term revenue outlook. Casino shares are trading higher that carrefour is showing a bid. They say there is no offer on the table. Casino has been working to reduce its debts by selling off assets lets kick off with the carrefour retailer story back in 2018, casino said they rejected the offer for carrefour, today, they deny any offer is on the table. Any change from then to now that would make this likely to happen there has been changes on the casino side. They sold about 4 billion in assets over the past year. You had a new investor come in last week, a famous czech billionaire who took a 4. 6 stake in casino as well. In may, the group was put under a creditor protection process that had the group freeze the debt now they will retain control of the group. So all these things. Today, this report of carrefour saying this is not happening and i want to ask you about hermes, it seems as though the results were pretty positive the openings were actually positive may be because of the comments and continental china may offset the impact which could immy the q 3 quarter there. Also mention the release that they see growing economy they still confirm their fouryear target well keep an eye on that a bit of a surprising target there given that they have confirmed their target perhaps people are a little focus. Thank you for breaking it down speaking of china. China has released tariff exemption lists on u. S. Products certain cancer drugs, live stock, lubery cants and certain chemicals. Beijing said it will consider further exemptions china is removing quota restrictions as it looks to boost capital inflows. Saying it will make it more convenient and that china will be more internationally accepted china is looking for inflows amid decreasing yuan white house trade supervisor said we should be optimistic doing trade with china we know the structural issues well have important, frank discussions about that that will be behind closed doors. I think the chinese really do want a deal. They were getting hammered by trump tariffs. They were having to cut their prices and manipulate currency down to the toilet and they were losing their supply chain. Lets bring in the ceo of richmans Global Capital the markets are reacting positively today over signs between china and the u. S. I want to take it back to some of the numbers out of china this week negative 0. 8 year on year i was having a discussion with some people about whether or not the rest of the world should be considered about that. It means china can now start exporting inflation around the world. I think important to keep in mind when we are talking monetary policy, the central bank around the world, doing some fiscal and monetary effort for a while at this point. A lot of the data coming in more and the pmi side and expectations of inflation, they should start expecting what would happen six or eight months ago. From the chinese side of things perhaps we are seeing a shift with china sweetening the deal and buying more goods. Is this a true stepping back or preserving that stability ahead. It is really china they give you a little bit to keep the conversation it is clear china is not ready to deal with trump i think china is waiting to see if trump is reelected next year. They have been injecting monetary stimulus. We see the markets have reacted. Are you seeing signs that is actually having an impact on the chinese economy . Yes, a lot of the indicators are starting to show those policies in place. We havent seen any data yet we expect to see the inflation data come out by the end of the year in terms of the yuan, do you think that will come into the fold as a weapon con china is keeping stashed away yes this is a very bold gun for the trade war and the things they are doing. It feels also a little bit they are shooting their own foot. They are utilizing the yuan and making it useful for trade around the world they are keeping the volatile low so at some point you can nationalize the use of the yuan. Thank you. Meanwhile, President Trump has fired National Security advisor bolton over policy disagreements. Adding that he quote, disagreed strongly with many of his suggestions. He said others in his administration backed the move bolton tweeted that he offered to resign. Oil prices fell off the back of boltons removal off the idea of easing tensions. Coming up at 14 00 cet and apple offers a new nreaming service and a series ofew products. More when we come back welcome back to the show, apple has unveiled the latest iphone and more details on the streaming tv service the stock about 1. 3 today, you can see the picture across the board for apple on the German Exchange was up and other chip makers also having a very strong start to the day on back of this exciting set of announcements. Ive got to say yesterday with the preview was the streaming service. That stole the show yesterday. It did. We were waiting for details. Investors were trying to figure out how this was going to fit. We found out the streaming service will cost 4. 99 a month. This is vastly undercutting others out there netflixs is about 12. 99. It will start november 1 and comes oneyear free with any new products the iphone 11 starting out at 699 so that is the lower price kind of a headline there less than the predecessor. Apple may be getting into price wars here. The iphone 11 and the iphone 11 pro and the pro max. Theyve released this camera system to keep up with competitors. Faster chips, longer battery life, water and scratch resistant. They are questioning if it will get people excited enough to pay these prices or wait until next year 2020 when their expected to launch its 5g device in terms of the pricing, apple is really seen as the premium player when it comes to margins. What does it say about their strategy as they have cut back on these prices. At the same time, they are shifting focus to apple tv, joumannas favorite. Not only was that iphone 11 a little lower and now the 8 will be an even lower point they say this is necessary to keep up with the chinese competitors. Apple phones do still trade at quite a premium relative to the kmien hes competitors they also lowered the price on their watch. The watch 3 series will now sell for 199 an indication it is trying to bring in new customers to that watch category part of the bigger question is the transition away from traditional hardware, selling the phones has dipped into services yesterdays announcement, would you say is emphasizing the fact that apple is shifting as a company . Certainly, no denying they announced this arcade effort and gaming. All about getting people into the Apple Services tariffs have been an issue over the past year. An effort to focus on services about 20 that has grown massively. You still cant deny that apple is an iphone company a lot of these investors are trying to digest how much of the impact especially in the trade sessions there thank you for breaking that down for more on apple streaming program, go to our website we are more than 20 minutes into the show and we havent talked too much about central bank. Deutsche bank is announcing 100 basis cut. The bank revised their forecast lower and their chief economist warns if the war escalates, a mild recession dimon stresses he is still making plans as part of the banks normal risk management. And as ecb president on thursday, they hold another sentiment before he says goodbye at the end of october. Analysts warning for more qe, a cut to the deposit rate. He said all of these measures are still options during his big speech back in june. Further cuts in policy rates and mitigating measures to maintain any side effects remain part of our tools. A fresh round of easing will not be a slam dunk the hawks are circulating. A vocal critic the savings bank has attacked low Interest Rates saying, quote, people feel there is an ever bigger hole in their future pensions on the back of that nervousness, weve seen a big sell off on yields with bund going minus 66. 10year italy back up at 104 so a broadbased sell off. Lets bring back the cio of global richman capital can this be traced back to that people are nervous i think the market is starting to realize that the ecb has to balance the cost of doing this kind of policy. Their main two channels, consumption and credit, they are not really working as well as the ecb would have hoped for the consumption base in europe is retiries. When you are lowering, they dont have the income to spend then we are talking about the credit channel, banks are not making any money the short end of the curve, there is some legislation likely to be passed where banks cannot give you negative rates. They make less money is there any elements of optimism as well talking some positive signs emerging out of china. There could be a stimulus coming out of china this time of year also they are not seen as bad. Is that one of the reasons as well why they are doing so well and bond yields are higher as well absolutely. If you believe on the base case and take into account the monetary and fiscal policies taking place, then the end of the year and beginning of next year becomes much more bright. In terms of the rally coming together, looking at some sectors that performed really well banks, autos, those are the most unloved sectors. It has been a sector that investors have really shrugged off in favor of the market should investors reconsider their allocation strategy and chasing the rally to the unloved value si value sickly it becomes much more short lived in terms of the auto space, this is a sector that has suffered because of a slow down in china picking up on your more positive view of things there, should we see a boost to the auto sector on the back of a more positive china story later this year . I should mention i look a lot at sustainability in investments. This is part of our mandate. This is part of our diligent way of looking at this that we can have a better view of whats happening. The reason why automakers ended up underperforming was because of the new rules of co 2 emissions. When you think about that, youll learn there is really not a lot of upside for automakers to make sure you are not putting too much co 2 in the atmosphere. Thank you for the conversations this morning coming up on the show Boris Johnson claims his suspension is undemocratic after reassuring the irish allies over the backstop cake in the Conference Room showing em youre ready. To be your own boss. Thats the beauty of your smile. Crests three dimensional whitening. Removes stains,. Whitens inbetween teeth. And protects from future stains. Crest. Healthy, beautiful smiles for life. Applebees handcrafted burgers now starting at 7. 99. Now thats eatin good in the neighborhood my bladder leak underwear. Orried someone might see now starting at 7. 99. So, i switched. To always discreet boutique. Its shapehugging threads smooth out the back. So it fits better than depend. And no one notices. Always discreet. Signs. Im Joumanna Bercetche the retailers are reel can. Retarls sink hermes also faulters as protest striken hong kong take their tool casino shares jump. Carrefour denies the speculation. China exemptions a range of American Products in a sign the trade war may be cooling frankfurt listed apple shares rise as the tech giant unveils iphone 11 and puts a cheaper price tag on its tv service. It is green across the board here in europe this follows a fairly mixed hand overfrom wall street this morning, equities are on a rise as weve seen a backup of yields also in the treasury space yesterday. This is all in anticipation of the ecb meeting tomorrow, which is a key focal point for investors. We are expecting a bazuks of sorts. They have been scaling back expectations in particular in the cyclical value end of the spectrum especially those defensive names which have really been the darlings to this point moving to fx and skarchd tax an where the euro is trading. Sterling moving ahead. In t lets look at u. S. Futures, as i mentioned in the opening here at the wall, we did see a mixed hand overfrom wall street. It looks like more mixed trade from wall street dow and nasdaq looking at positive trade but very muted moves out of u. S Prime Minister Boris Johnson has vowed to continue working for the brexit deal but says they must be prepared to leave without an agreement the leader foster confirmed the Prime Ministers rejection of a Northern Ireland onlys backstop claiming the resent suspension of parliament was undemocratic. We need the queens speech. You always have a recess before a queens speech what a load of nonsense. With he were very, very clear if people wanted a democratic moment, an election, we offered it to the labor option mysteriously, they decided not to go for it willem is with us around the desk today what happened here the Prime Minister saying hes going to continue working towards a deal but there is still the issue of the irish backstop and hell continue preparations for a no deal some of parliament thinks theyve managed to block at least for october 31 all the money spent, time spent leading up to march 31 for no deal will have to be spent again. That is very frustrating for many people you hear from on that side of the equation. In terms of the alternatives, the idea of him getting a new deal is cand some version of theresa mays original deal might still find a deal. Some mps say they are interested in getting a deal. The challenge was in the past not only the labor party but with the mathmatic challenge there. One of the lead campaigners from back in 2016, they talk about areas of the uk with a stake in this that is a reference to Northern Ireland if you listen to what some in ireland are saying and the new commissioner of trade. He has publicly said the penny seems to have dropped in ireland and that possibility seems like the easiest way to get a deal by the end of october if that doesnt happen, postponement again that was willem marx reporting on the latest from brexit incoming president von der leyen unveils a new team the incoming president announced yesterday some of the names she shows to help in this task of leading European Commission for the next five years. Lets start here promoted to executive Vice President and is retaining her competition portfolio. Once called by President Trump as europes tax lady will be responsible for carrying out those investigations of big tech companies. We have franz being promoted being in charge of Climate Policy and the third executive Vice President. Hell oversee Financial Services and economic matters these three individuals, it is important to note all of them have been members of the outgoing commission. That should help in the task as president , the first female president of the European Commission we have the former italian Prime Minister leading the portfolio we should note the disappointment from italy given that the next kmircommissioner the expectation is that the next commission is not going to seek confrontation when it comes to Spending Plans the next cabinet is expected to focus on reforming fiscal rules. When it comes to distribution, perhaps the biggest win went to ireland. We have phil hogan as the next trade commissioner he is expected to be conducting trade deals with the uk. We also saw from france, being appointed as the internal markets commissioner she will oversee the reform on the front and that was also seen as a good victory for the french president macron and the youngest commissioner of this team. His age, 28. He comes from lithuania. Hell be responsible foreign viernme vie for the environment and oceans these names have not been cleared by the parliament. If all goes well, this team will take over on the first of october. Thank you what will be a very important commission for the coming years. Italys new government is reportedly planning to raise the budget deficit to around 2. 3 . That is according to reuters that would be higher than the goal currently in place. Potentially reig natiniting ten with brussels. Welcome to our guest i want to ask you about this budg budget clearly there is an understanding on their part they need to do something to boost growth are they also not taking a gamble that perhaps with a friendlier government in place and with this important seat at the commission that they can get away with a bit of the boundaries in the name of growth introducing measures i will be surprised if the government is pushing for measures and when the commission is actually formed they had the support already with the current powers. As joumanna was highlighting, it was an interesting appointment. He was a Founding Member of the Democratic Party and a propennant of the collation between the party and five star. How do you think this could factor into how he approaches this new role . Assuming he gets there he is more important about his role than personal position with the government. He has been a strong ministry of foreign affairs. I think he will do his job at the european level in the interest of europe now. Of course, he has the oversight of the man, strict enforcer of the rules. I want to ask you about the Banking Sector weve seen a huge bounce since midaugust what do you point that down to it has probably bounced back because people were fearful of what happened in italy banks are under pressure they tend to struggle to make good returns and the challenge for banks as mentioned was how to make money when the Interest Rate is so low speak about Interest Rates, we have this meeting coming up tomorrow, what would you like to see out of the ecb that would help your sector lowering the rate is difficult to transfer action that costs on to the retail depositors and that will not be helpful. I think what would be helpful would be more qe that would be lower because of the Government Debt and would actually help the government push for more fiscal expansion, that is what is missing at the moment. Another point for qe, it seems they have been dialing back expectations for the package we could see tomorrow. In terms of italy, would you like to see them change their issue or limits when it comes to the easing, given youve said qe is where we could see support for the Banking Sector what is important is the credibility of the government. In terms of sliding rates, that is down to less perception of the risk stability that works in the sense of control and economy that will benefit no matter what theyll do in terms of the governing cost what about telco 3 about to kick in . Also cut the spread on some of the offerings. Would that be a welcome announcement for you i dont think it makes a huge amount of difference we are seeing a large amount of demand the issue is not how much you can lower the rates but start the demand we dont ever think of the supply but the demand. In what way can we stimulate the demand side. If they could allow the government to drive more expansion and fiscal policy. It always comes down to fiscal policy at the end of the day. That is the maillion dollar question the big question is whether or not this set of european government will show inclination to spend more. The alignment politically is much stronger than it has been in the last few years and should allow for more relaxation of the rules and has already hinted that is probably the hint of what is to come. How do you think laggard will shake things up . Some say hell have to do all the heavy lifting so when laggard comes in, she wont have to make unpalatable decisions. Well see well leave it there then thank you for joining us the ceo of Bff Banking Group a pleasure to have you with us we have breaking news coming through in the exchange base, the financial exchanges. Lse shares are jumping and now 15 higher after Hong Kong Exchange clears a plan to buy both companies quite a strong reaction there from lse rivals up 3 and shares up as well. Across the board, we are seeing a rally in the exchange base a little more detail on that Hong Kong Exchange and clearing deal they have begun conversations with regulators in the uk and hong kong. It is expected that Key Management will take place following that proposed deal remember, we were looking at what was happening with these Financial Services it comes as a bit of a surprise. Also very interesting time for hong kong given the back drop of hong kong and the protests that have been going on for months over there clearly there has been concern from the Financial Community and the longevity of the Financial Sector and the place that has been beset by so many demonstrations. Opening up the offer obviously opens different markets and puts them back on the agenda again. This is a space right for consolidation. We are seeing another deal come through. It provides a massive boost to the sector thats what we are seeing this morning. New ibm Research Suggests car brands will be irrelevant. The rise of ride sharing ways on car ownership. Karen, very exciting time for carmakers. We heard from the motor show this week. You have an important interview coming up with ibm, i believe. Reporter fascinating changes. We are seeing the race for electric automomous. Lets get into the of customers the brand could be irrelevant. Almost half when you have an automomous emailing service. When you say the brand, b the issue is that the experience will be more important than perhaps the car itself than just a brand. They are linked together if you think of it this way, your brand is defined by the experience as ive looked around and youve walked around, two words come to mind is electric, the other thing is the experience. Really the number one thing they have to do is put in an open digital platform these are automakers that could barely deliver good gps back in the day. How do you see them unlocking the Digital Service and close the gap from where they are . First, i think they all clearly see this 83 said data and turning it into an experience someone loves in a car only 18 said that ive got the right open digital platform yet. As an example, bmw with the connected drive platform it is an open platform built by the way on red hat it allows them to spin up a thousand different kinds of capabilities from wherever they might be this is a world where youve got to be able to pull the innovation and make it look seamless to the person driving the car. Back to that survey. People said if im just looking at car sharing, i care about cost and convenience introduce a great experience for me, those will become second thats really what you see everyone trying to do. Down the road with this huge change coming. Open digital platforms, how does the trade war fit into this . We have huawei and china and access to American Hardware and software it is impossible to see how these companies all Work Together on open platforms ive had many discussions on my visit here. When i say open digital platform in many ways why we did this acquisition of red hat, it means im able to put my information in processing in any platform where i need it. If i move myself to a country and they say i want my application here i built it once and it can be run on any platform anywhere thats what an open digital platform means i think weve got the right answer for that. You want to be able to do as an auto company is build it once and put it into whatever configuration, sometimes dictated by regulations and sometimes practicality and moving things around there is absolutely a technical answer there seems to be a logical argument what about all these chinese automakers and watching the tray play out from huawei moving anything from the west down the platform. It allows you to use any service wherever it is i would want an open platform, to respond to who has the best innovation that i want to pull in let me ask you about quantum computing. There has been much criticism that germany is well behind the United States and china when it comes to new technology. Youve been meeting with chancellor Angela Merkel tell us about the announcement youve got we will be bringing the ibm quantum system, the q system 1 here to europe it is a partnership with an institute wellknown for putting things into use. It could serve the continent here you look at when will quantum be in commercial application. That is still a couple of years out. Because of the problems you solve, you have to start now building the skills. Having Many Companies start to use it here at the auto show, for example, daimler, theyve been using the quantum system to work on different types of materials for batteries. Chemicals, materials, logistics, risk management. These are the kind of applications this is an announcement im pleased with we are doing this here in germany. It does allow for many firms and skills to fit here when we talk about quantum computing, and delving into job skills when you talk about ai and the workforce, you are looking into skills replacement you are talking about unionized work forces providing a skill set to the future. Ive said this over and over again. I dont believe ai replaces all these jobs one of the topics ill cover is for all of the companies here, this is about reinventing the workforce. You cant buy all the skills you need either. This is going to be everybody lives at that intersection between the job they did before that slightly keeps changing they looked at almost a quarter of the work force needs to be reinvented that is over a billion dollars we have been very dedicated. If you make these technologies, you prepare society to use them. Weve made an announcement here from one of the auto universities about bringing these skills forward weve had many apprenticeships sixyear high schools so everybody doesnt have to have a University Degree to come on in here let me ask you about preparations and how concerned you are about the prospect of a hard brexit. Weve been in the uk 100 years. Well be in the uk for the next hundred years. We have prepared for all the different outcomes, know our way through. We know it will be important i speak for everyone, no matter the uncertainty. As we nail these things down all the better i feel really well prepared as the ibm company for that we are looking forward to that conversation on stage the chairman, president and ceo of ibm live. You got the messages clearly branding could be challenges on the facts that automakers could be challenged. Joumanna, juliana, let me toss it back to you lets get back to this major breaking news story that just came out with regards to lse hang congress exchanges and clearing has made an offer of 29. 6 Million Pounds this bid is valued at about 2,000 pence in cash as well as hong kong shares they say it would strength enboth businesses, put them in a better position. This space has been ripe for consolidation. This is a major data deal to transform them into a company that could compete with the likes of bloomberg most notably. Interesting time for hong kong given the unrest there. A major story to watch that is it for our show today. M Joumanna Bercetche and im Julianna Tatelbaum Worldwide Exchange is up next. where are the bagels . Well, cdw can help you modernize your company the right way, with a scalable infrastructure from hpe, making you more efficient and secure. Great. Oh. [ drones buzz angrily ] lets find a different room. For transformation that works, you need Hewlett Packard enterprise and it orchestration by cdw. People who get it. It is 5 00 a. M. Here is your five at 5 00. Searching for direction. Wall street in a Holding Pattern as investors look to the first of several key meetings coming up apple delivers tim cook unveiling a host of new hardware products and details on the Services Suite was it enough to get investors excited . And peloton prepares as wework brushes off one of its biggest investor