Transcripts For CNBC Street Signs 20240713

At the table, we have u. S. And we have the chinese reformers and we have the chinese hardliners hsbc is reportedly set to slash up to 10,000 jobs as they look to cut costs on the new interim ceo. Buyer shares tick higher after another trial over the roundup weed killer is delayed the German Chemicals giant is inching closer to an out of court settlement. And ams fails in its 4. 5 billion euro takeover bid sending shares in the german Lighting Group lower, but they tell us the company is open to collaboration with the austrian chip maker well, good morning and welcome to street signs. Its the start of a new trading week so lets get into some of the price action wall street saw a higher close on friday. We had goldie locks employment report the headline number came inside lower than expectations still showed pretty firm backdrop with Unemployment Rate at 50year low. That yielded to somewhat of a mixed session for asia the focus overnight has shifted to those upcoming trade talks taking place between washington and beijing this week on thursday so, all eyes on that its going to be a critical week as far as those trade discussions are concerned. In europe after attempting a more positive start to the trading session, we have the stock europe 600 trading on the back foot, down. 1 percentage point. The stock 600 was down 3. 6 last week so very heavy trading session for europe and a lot of that was on back of the trade war narrative and also growth concern. Something that, of course, is underpinning the narrative around europe and the last couple weeks or so but lets talk about individual european markets because this isnt just the macro but individual stories we have the ftse 100 trading on the back foot down. 2 percentage point. Politics squarely in focus the gdp number slightly better than expectations. The focus still what happens the next couple weeks and whether the uk will leave the eu on october 31st with a deal we still dont know and the clock is ticking german down. 3 percentage point. The german factory orders came in minus 0. 6 . Weak factories hanging over the German Economy you also have the italian index down. 2 percentage point a gloomy mood. Switching to sectors, and lets look at the breakdown here up at the top we have food and beverages, still somewhat of a defensive bias to trading today. Health care up half a percentage point. As we were just talking about, byer is out performing on the back of that we have the German Chemicals Health Care Company trade up. 2 autos down 1 . Trade is very much squarely in focus this week with the conversations taking place between china and the u. S. And washington banks also. 7 percentage point one in particular were looking at there is hsbc but more on that story in just a little bit. A u. S. Court has indefinitely postponed a lawsuit brought against bayer. Mediator has been trying to negotiate out of Court Settlements between bayer and more than 18,000 american plaintiffs those plaintiffs demanded damages linked to claims about the herbicides Carcinogenic Properties ams failed mft they secured 51. 6 . That was less than the 62. 5 threshold required for all cash. They will explore other strategic positions. The Financial Times reporting hsbc plans to slash up to 10,000 jobs in a costcutting drive the interim ceo has worked to reduce costs in each of the banks four major units. They will target highly paid positions and of course will follow the roughly 4,000 redundancies the bank announced in august. They declined to comment to cnbc. Meanwhile, they slammed the ecbs bond buying scheme where they told the Financial Times the Central Banks policy will hinder consolidation and prop up average mediocre retail banks that should disappear in two years. He joins a chorus of other critics. Now, speaking to cnbc blackstone ceo Steve Schwarzman warned of the consequences of negative rate and urged for more fiscal stimulus. This is, i think, governmental issue and Monetary Policy feels like its sort of run its course. Youre in negative territory for 13 trillion dollars of bonds the way to get out of that trap isnt lowering rates further its really you need fiscal stimulus and the u. S. Jobs report slightly dampened expectation of a rate cut from feds this month but the market is still implying a quarter point move concerns about low inflation are unnecessary and meanwhile several of her colleagues on friday seemed more open to the possibility of another cut the job growth is pretty consistent with trend job growth still above trend job growth but slowing from last year and coming into this year, we knew that things were going to be slowing down because we were above trend last year. Pretty Strong Economy last year. Really now its really are we slowing more than that or not. And the head winds that were getting on the trade side of things, on export growth, the weak growth abroad of course feeds into our export numbers. Thats a head wind that we have to take seriously and watch. We take one at a time, were not on a preset course, but we will act appropriately to sustain low unemployment roit and solid growth and stable inflation and we said that in june, july and september and im saying it to you tonight. I still have an open mind we still have more data between now and when the meeting actually occurs. Im going to be quite atentative to whats happening anything that indicates to the consumers changing their view. Theres still more data before the meeting. I dont think i should prejudge it at this point we already had two easings easings dont have their impact immediately. That was sequence of various fed speakers and interesting mood music in the background there. Richard kelly ahead of Global Securities joins us on set speaking of the feds mood music. We get the fed minutes this wednesday. Are like to show somewhat split committee. People were surprised last time around only Seven Members of the committee did werent convinced that the economy warranted an extra cut what type of signal are you expected the market to receive from these minutes on wednesday if it does indeed show that type of cacophony. The fed isnt thinking that far beyond meeting to meeting. Those seven dots we saw in june when they turned around and cut six weeks later. This fed think they have done enough but over the next six weeks the trade war and narrative gets worse and they see themselves having to ease further to sustain the recovery. Indeed, we are seeing the data deteriorate deep contractionary territory. Things on the ground continue to get worse. How much do you think that that is factoring into their decisions realtime now in the sense that these minutes are actually probably a little outdated at this point the minutes are always generally outdated by the time we get out because most of the members have spoke on the the public since those have come through. It gives you a sense of what the discussion was we think were at a point where this data when we see those ism, it certainly gives them concern. While theyre seeing the Service Sector hold up, they dont want to see this filter in because then they know they waited too long. I was taking a look outand zoom out and look at the price action, all of them rallied more than 20 bases points in last weeks session what was the catalyst behind that do you think theres some technical factors at play as well i think you saw a lot of strong positions in all of this. We saw an enormous rally through august as sentiment got worse, positioning was at extreme levels then you got mild, positive news when it came to the trade war and got a few decent data prints here and there and gave the market a bit of relief this is now back to the normal trend. Well see tenyear treasuries approach 1 by the time of the end of the year. You have unemployment at 50year low and inflation stubbornly refusing to budge you heard some of the comments from various fed president s. How does that factor into their decision making, do you think . It gives them a sense theyre not that far behind the curve or dont need to do as much as perhaps is ultimately have to be needed the problem is both of those lagging indicators waiting for inflation to soften or unemployment to rise, youre behind the curve were trying to be ahead of this the problem is this is a manmade slowdown this is coming about because of structural changes being done in trade policy and only so much the fed can do to be in front of that. In terms of what they can do, do you anticipate any significant change in their stance over the next few months . I think in october i would expect another rate cut. I also think theyre going to start buying treasuries again directed towards the problem we saw in row poe its not qe, but it will look and smell and get in the market talking about how the fed is once again buying bonds. What size do you expect 300 billion to come over the next year. Whether thats smoothly or 50, 80 billion to build that stock up that gives you a bet of an extra kick still another 100 bases points of easing to come from the fed because i think the economy is going to continue to slow. Interesting you have a very dovish talk. I want to take it back to the repo issues. The way they dealt with that has received a lot of criticism from the market in that they allowed repo to come under a lot of pressure, you know, for these overnight lending rates to spike up only then did they decide to act. What does that tell you about the fed when it comes to the actual plumbing and the money Market Operations . Are they behind the curve . Its not about the curve. We havent seen any lasting damage from what they did. I think it certainly took them by surprise this came as early they thought this would be something maybe at year end and were getting their preparations in place they responded fast enough to ensure that tightening didnt last long enough to have consequences into the economy, but it shows were in uncharted territory. They dont know any better than most people in the market how that plumbing is going and where the liquidity is needed. Hence theyll use the blunt instrument of buying treasuries because its difficult to target those injections via the repo facility. You said a few hundred billion and you dont know whether that will be in one lump or split over time, what factors determine that do you think . I think its a question ultimately when youre sitting at 1. 31 trillion i dont think it would be one lump sum or 50 billion a month for the first three to four months and small pace go in depends on how the market is handling perhaps into the end of october. Do you think the spike is one of the reasons why the dollar has been so good so actually maybe by bringing the plumbing back under control again, theyll be doing President Trump a favor because it will take some pressure off the dollar i think the dollar bid just comes down to the slowing Global Growth it comes down to the environment that there still arent many europe is doing worse than the u. S. You dont have an alternative to go there emerging markets are still struggling because of this Global Growth environment. The dollar is good because it is still one of the markets. Now, another company were looking at today Metro Bank Shares are trading higher after the telegraph reported that the companys founder vernon hill is on the hunt for financial backers to help him buy back the lender and to take it private. And the shares are actually now trading lower on the day down. 6 on the year on the last couple years down almost 100 so big, big loss there we discussed a lot of things on the show already. If you have any views on the u. S. Economy, get involved tweet us at street shiigns or tweet us directly. Demonstrations continue in hong kong after another weekend of violence draws a first warning from the Chinese Military we call it the mother standard of care. Its how we care for our patients like job. His team at ctca treated his cancer and side effects. So job can stay strong for his family. Cancer Treatment Centers of america. Appointments available now. Cancer Treatment Centers of america. 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. Welcome back to the show more than 100 people have died and at least 6,000 have been injured as protests in iraq rage on after nearly a week of protests Security Forces have clashed with antigovernment demonstrators in a number of cities theyre demanding an end to poor living standards, high unemployment and alleged corruption the government of iraq has not faced unrest like this since the defeat of isis in 2017 authorities have offered a package of reforms focussed on housing and Employment Opportunities to try to calm the angry crowds meanwhile, hong kong protesters have defied new government measures to ban face masks that sparked a fresh round of violence directed at authorities. Chief executive reintroduced cone yal Era Education on friday in an effort to undermine the efforts of activists our colleague filed this report. Reporter the first weekend of mass ban here in hong kong didnt imagimanage to quiet this down some of the hardliners turned to violent and vandalism and tens of thousands of antigovernment protesters took to the streets and all of them defying the mask ban this past weekend. That friday, right after the mask ban was announced by the hong kong government, we saw an escalation in aggression we saw chinese banks and some probeijing businesses and mtr stations which is the main Transportation System for a lot of hong kong people being targeted and even today, hong kong is still reeling from the aftermath. We see mtr stations as well as expressway being partially affected today theres a lot of nervousness out there here in hong kong. We saw Hong Kong Monetary authority, which is the de facto central bank of hong kong having to defend the liquidity. And tomorrow hong kong, most of hong kong, goes back to work after the weekend and the Public Holiday today. Well see how much recovery will be done as the territory is trying to pick up the pieces im chery kang. China will seek to narrow trade talks with the u. S. Ahead of highlevel negotiations in washington this thursday the News Agency Reports that chinese officials will take industrial policy reforms and government subsidies off the table. This would represent a setback from President Donald Trump who pushed for a broader trade deal to end the longrunning dispute. Steve schwarzman told cnbc earlier today that the u. S. Must negotiate with different and often competing factions during any back and forth with china. The u. S. Has sort of called it now and said we want change there are many in china who say thats okay but there are others who dont want to change so, we have three parties at the table. We have u. S. And we have the chinese reformers and we have the chinese hardliners so were going to find out this week what the chinese positions are and then the u. S. Will have a chance to take a look at it. We were very close to a deal in may, and then china pulled back. And eliminated about a third of the agreement that was already had a handshake. There were still other issues that had to be resolved, but that led to the collapse of those talks. Now china is coming back to the table and well see what they put on the table were still joined by rich kelly. I dont know whether you agree with mr. Schwartzman on the idea of competing factions on the chinese side of the negotiating table or whether you think they have indeed decided to take things back off of the table that were once part of these negotiations if either is the case, surely its incredibly difficult to see any resolution in the near term. I dont think youre going to have a resolution into the u. S. Elections. This is just part of the negotiation. The best you could hope for this week is not any broad agreement because were not there yet. It will be some sort of small, narrow agreement to continue to discuss further and perhaps as a confidence Building Measure the chinese would agree to buy some further farm goods in agreement for the u. S. To delay the current tariffs supposed to take place on the 15th. Were nowhere close to a deal here. How does that timetable of the 2020 president ial election, how does the emergence of this congressional impeachment inquiry factor into all this, do you think . Its very difficult you could make arguments on both sides that now the Trump Administration has an incentive to move faster on the deal so they have something to deflect you could have an argument it makes it harder because theyre more distracted domestically you have to draw back. At the end of the day, i dont think theres incentive for the u. S. Administration to reach a deal because theyre still far away from election that if you want the political chips from this, you probably want an agreement in march or april next year. Wouldnt you say that time decay works in favor of a deal happening for this one, as in the closer we get to 2020 election the more likely it is that the u. S. Will want to get to some form of a deal with china . Theres two sides this is the peak period for agreement from the chinese side because this is a time when xi would have the most political take away. I think you go to march or april, theres more incentive from the u. S. But less than china. Why do you say from china, on the heel of the National Holiday . What is incentive . Since you have everyone meeting here and since you had the anniversary, this is a time when domestically it would add to that impetus where as you move along, it doesnt necessarily look like the chinese economy will be any worse. They started to reform Interest Rate side of things putting more stimulus in the pipeline in china to show theyre prepared for a long hall on this side of things i dont necessarily see any new impetus from here for the chinese side to come and give any more than they have. What about the currency, any indications that becomes a factor in these discussions . Outside of a quid pro quo of purchases or interests with dumping from the chinese side, i think there is potential for them to discuss the currency in this and while they tend to leave that outside, i think this is one where the chinese might agree not to allow the currency to depreciate on a real or nominal basis if they can get a deal only because the only real reason theyre letting it depreciate is the tariffs come into effect. You could see an agreement on paper that looks like a big concession from the chinese but, in fact, is just saying if you stop putting tariffs, well stop well be back to where we were before. Exactly. Looking at new positions, you said earlier in the show you said your long treasury is going to 1 and also long gold to me it seems youre putting all your eggs in the basket of risk off and the possibility of not reaching a deal is much higher than the market seems to be factoring at this point what if that doesnt pan out this week . You start to move on to that side it seems the trade war doesnt get resolved because of that spilling into worse and worse data and reenforces those trades the middle ground with that is equities that continue to rally on the back of this. The middle ground is potentially credit where we know as things get worse you have monetary stimulus step in whether thats good or not where as if things get better its because growth gets better. I think there are some Middle Grounds that may offer some sort of value or Something Like yen where we know that em Central Banks are able to ease in this environment making them a bit more resilient maybe theres opportunities in the likes of south africa or russia, for example, where as if growth gets better, now youre buying em on a fundamental basis. If things get slightly more resolved than perhaps your positions might anticipate, thats all good and well im going to whisper this, what about europe u. S. europe trade . I think that is still one the whole growth side is tied together so that is all some of that does come off i think this is another reason why im okay with this sort of riskoff positions the u. S. China trade front is only one end we have a small side of the tariffs will start between the u. S. And europe. We have another deadline in the middle of november and we know this is a u. S. Administration that is fine to push on that side of things if you resolve one, theres a number of areas we have to move down. Another battleground. Appreciate your time. Richard kelly. Also coming up in the show, the race is on for britain to steal a brexit deal as Frances Emmanuel macron ratchets up the pressure on Prime Minister Boris Johnson. All the details coming up in just a few moments with sofi, get your credit cards right by consolidating your Credit Card Debt into one monthly payment. And get your Interest Rate right. So you can save big. Get a nofee personal loan up to 100k. danny s voice of course you donte because you didnt . Your job isnt doing hard work. Its making them do hard work. And getting paid for it. vo snap and sort your expenses to save over 4,600 at tax time. Quickbooks. Backing you. Even after you clean, odours are still trapped in your fabrics. Febreze fabric eliminates those odours. And try Febreze Unstopables with twice the freshscent power. Tackle tough odours with irresistible freshness. La la la la la welcome back to street signs im willem marx. Im Joumanna Bercetche and these are your monday morning headlines. While the calm before the storm. Investors turn their attention to u. S. china trade talks after a report that beijing wants to narrow the scope of any deal blackstone ceo Steve Schwarzman tells cnbc that reaching an agreement will be tricky. There are many in china who say thats okay, but there are others who dont want to change, so we have three parties at the table. We have the u. S. And we have the chinese reformers and we have the chinese hardliners hsbc is reportedly set to slash up to 10,000 jobs as the lender looks to cut costs under new interim ceo. Bayer shares tick higher after another trial is delayed in a sign that German Chemicals giant is inching closer to an out of court settlement. And ams fails in its takeover bid of osram. But osram cfo says theyre open to a deal. While some fresh numbers were you dying sales of mercedesbenz rose 10 3rs in september. That was a Record Number for the month. They posted its best ever Third Quarter boosted by a Strong Performance in china daimler says they expect fullyear sales to increase despite, quote, challenging times. The auto maker may have to recall thousands of their sprinter vans due to concerns over potentially illegal Engine Software willem, lets take a look how european markets are shaping up on this first day of the trading week and this after a very heavy trading week last week stock 600 ended down north of 3 so actually the mood is not that pretty as well this monday morning, despite a positive end to wall street on friday and a mixed session for asia over night. All of the four majors are in the red already. Ftse 100 down. 1 percentage point still the relative outperformer the german index is down. 2 y orders coming out there, giving you yet another picture of a weak Manufacturing Industry in germany this morning as well cac down. 2 and the italian index down a similar amount. Lets switch and talk about Foreign Exchange friday after the payroll numbers came out, we saw the dollar dip a little bit and on the week the dollar as a whole was about. 3 weaker we are seeing a strength against most counterpart the euro is trading on the back foot still below that 110 mark 109. 60 is where were at again, the risk off environment is really playing into the hands of euro here dollar yen were seeing bid for yen overnight but cable the sterling pound trading around 123 but still on the back foot yet again about a quarter of a percentage point in the red today as well. So as i mentioned, it will be a crucial couple weeks when it cams to the political negotiations there lets take a quick look at u. S. Futures. Wall street did close in the green on friday. Even though for the week the s p and dow were negative. Today it looks as though the three are taking their cue from european markets s p, dow, nasdaq all seen opening up in the red. Dow down little over 130 points to the downside. This week watch out for the fed minutes on wednesday but then also all eyes on the upcoming trade negotiations between washington and beijing set to take place in washington from thursday so that will be a big data point for the market to watch out as we head to the end of the week. Well, here we are w9 35, going to talk about something we all love so much, brexit french president Emmanuel Macron has given the uk the end of the week to negotiate a new brexit deal macron told Boris Johnson over the phone that talks should continue and do so, quote, swiftly to, quote, evaluate the end of the week whether a deal is possible that respects European Union principles. Legislation passed last month in westminster will require johnson to ask for a brexit delay if no deal is agreed by the 19th of october but it remains unclear whether the Prime Minister will respect that requirement s p global says the risk of a no deal brexit remains high they predict uk gdp will contract by 2. 8 despite that risk, s p base case is that britain will secure an agreement with the European Union. Thanks so much for being with us a lot of people throw around percentages at this stage. And those percentages change since last week, when the uk presented its latest proposal to the european commission, has the risk of a no deal gone up or down in your view . Well, were not sort of, quote, commenting on percentage change every day of the week, but actually our view is at this stage and its remained at this point for a while that the risk of a no deal remains meaningful, should not be ignored but at the same time, recognizing whats going on and given it takes effect at the end of the month, we think that a no deal at the end of the month is actually quite unlikely the landing zone to a no deal follows potential election depending on what the outcome would be. Can you walk us through how you crunch the data and how you come up with those hard numbers for gdp and output. Yeah. Our economic team, they run a model, so we look at certain assumptions of sort of entered into that model. Thinking what the trade effect would be, thinking through what the effect on investment which has already been under pressure over the last couple years looking at the impact on sterile chg is a key driver for inflation and Consumer Confidence were coming up with a scenario which actually which we think looks reasonably realistic in a no deal type scenario. Obviously you have to benchmark that against what happened in the financial crisis as well to try to make sure that were sort of in the right ballpark. In terms of rating ramifications on a no deal brexit, is it fair for investors to expect a oneoffmove or could there potentially be longerterm ramifications . Would you continue to monitor the situation especially if it leads to secondary effects like say a scottish ref ren zmum. I think this is the whole point about this report to highlight that were really trying to manage this risk as it transitions from as it sort of becomes potentially reality so, were trying to what weve done so far with our Risk Assessment here is weve been doing stress tests to understand what sensitivity is of entities that we rate in the event of a no deal. If theres a very material effect, then obviously that warrants potentially an outlook change now and in a few case but to your question ultimately the big effect here we think will play through from the macro downside scenario and how that plays into the economy over time we wouldnt expect a majoro deal for investors listening to someone like yourself, what should they be looking out for in terms of nations, sectors, even individual companies that could see the worst downside from a Nodeal Brexit . Yes well, weve gone through the different sectors, as you can see in this report and actually when you look at where the greatest rate in sensitivity lies, we think that lies in pretty much the Public Sector so, we see some vulnerability in housing negotiations and potentially universities as well in the corporate space, i think the main vulnerabilities still lie in sectors like you talked about automobiles and aerospace and complex cross border supply chains consumer facing sectors would be exposed as well as transport infrastructure and then this real estate has that same dynamics. Back in july, the bank of england pib lished a report saying the piggest risk and worse case disorderly brexit have been addressed. So, in their eyes they think the financial industry is somewhat cushioned or built up a sufficient buffer to be able to deal with the ramification of a Nodeal Brexit do you share that deal as well thats a good point the bank of england stress test was a worst case stress test which speaks to a global recession or nodeal type brexit scenario as you say, the banks came out pretty resilient in terms of capital and the like but over time you would expect to see obviously the impact on asset quality and the Consumer Sector weakening and that would play into some sort of head winds coming in, but in terms of racing impact, we would think it would be more reflected in outlook changes and over time rather than any rate in change itself. Interesting. With 24 days from this current deadline, october 7th, how different is this compared to 24 days before the last deadline, march the 7th . Good question thats an interesting question well, in terms of substance n terms of economic implications this is probably not quite as severe but in material terms probably not that different. The reality is obviously the legal position is quite different in the sense that we have this extension bill, the Prime Minister obviously will respect the law, has to respect the law, and so we do expect an extension to happen at the end of the month most likely. One final question actually just to take it back to your initial point, you said a no deal brexit would likely be followed up by a general election how would s p view another general election and also the possibility of it bringing in a change of government perhaps with a more proeu or an intention to have a closer relationship with the eu post brex it . Well, we would respond as and when we saw the results of the election but clearly theres many different outcomes could follow out of an election obviously self brexit would be seen as a positive Financial Market perspective and obviously probably from a racing Agency Perspective as well initially. Well leave it there. Paul, thank you very much for taking the time to speak with us today. Paul waters, head of Corporate Research from s p global ratings. Now, our colleague Julianna Tatelbaum asked how brexit could affect the consumer goods giant. Brexit for us comes down to one issue which is friction. We dont want friction at the border we really appreciate the free flow of goods, free flow of people, free flow of capital and were taking a bunch of steps to make sure we can service out of Continental Europe we do stockpile a little bit just so happens a lot were summer seasonal businesses so if anything in october date is easier for us to deal with. But its by far not the Biggest Issue we deal with were used to geopolitical instability of a different order of magnitude in places outside of europe. Have your brexit plans changed at all on the back of bearing in mind its very recent but Boris Johnsons proposed proposal he submitted to the eu . Not at all. Were planning for the worst Case Scenario which is an exit with no deal and hoping for some kind of deal that reduces friction so by planning for the worst, anything better than that is good news for us a second whistle blower has come forward with direct knowledge of President Donald Trumps dealing in crukraine. Kelly odonnell has this report. Reporter tonight, a second witness is challenging President Trumps ukraine call and the foreign help he sought to investigate the bidens the new whistleblower is cooperating with the Intelligence Community Inspector General Michael Atkinson but is not expected to file a separate complaint. According to legal sources, this Government Official has firsthand knowledge that supported the first whistleblower who submitted this ninepage document august 12th first hand knowledge is critical because whistleblower one was not a direct witness but claimed to be informed by more than half a dozen u. S. Officials for democrats, this new whistleblower could aid their impeachment inquiry. We will want to hear from that person people who are in the very core of all of these events are saying this cant happen. Reporter President Trump taunted on twitter, theyre going to the bench and another whistleblower is coming in from the deep state keep them coming but party unity has a few splinters, three gop senators, mitt romney, ben sasse and now susan collins, criticized President Trump for urging china to investigate joe biden and son hunters business there. The bidens deny any wrong doing. Collins is considered vulnerable for reelection in maine. I thought the president made a big mistake by asking china to get involved in investigating a political opponent thats completely inappropriate. That was Kelly Odonnell from nbc reporting there. Now, north korea has called off talks with the u. S. Over its Nuclear Program accusing washington of inflexibility. The state department rejected the accusations, saying it brought, quote, Creative Ideas to the table sweden, which hosted the talks, has extended an invitation to both countries for further discussions in two weeks the u. S. Has welcomed the invitation but pyongyang said washington wouldnt be able to present alternative plans within the fortnight. Something else we need to keep an eye on in addition to all the other geopolitical risks throughout get involved tweet us at street signs or tweet us directly also coming up on street signs, put up or shut up. Hong kong exchanges and clearing facing a looming deadline to make a formal offer for the lse. Well be live from outside the London Exchange with more in just a few moments we call it the mother standard of care. Its how we bring hope to our patients like viola. Her team treated her cancer and strengthened her spirit. So viola could focus on their future. Cancer Treatment Centers of america. Appointments available now. Introducing a razor that works differently. America. The Gillette Skinguard has a guard between the blades that helps protect skin. The Gillette Skinguard. Welcome back to street signs. Vodafone is Testing Technology in the uk to reduce the cost of phone calls and access to mobile data the roll out of the new technology would allow them to challenge the three Largest Network equipment suppliers. Meanwhile, dialogue has acquired creative chips in a bid to expand its portfolio of internet of things product the uk chip maker says it will fund a deal with a cash payment of around 80 million and creative chips also stands to receive an additional 23 million in the deal if it meets its revenue targets. And shares are trading near the bottom of the cac in paris they lowered the price target to 38 euros down from 54 euros. And its crunch time for the Hong Kong Stock Exchange the group has until wednesday to make a formal bid for the london Stock Exchange or walk away from the deal according to the times newspaper, they will raise its 29. 6 billion pound offer the lse rejected the most recent bid and says it prefers to stick to its plan to buy refintive our colleague joins us live from the lse and youve been monitoring the development the last couple weeks. They have been on a Charm Offensive trying to sway lse shareholders what is the likelihood they succeed in the coming days reporter well, joumanna, its a great question and doesnt necessarily just come down to price but also around assurances that Hong Kong Exchange could give on the governance front and of course this deal remains weighed down by political and regulatory uncertainty. To help us understand what we would expect from hong kong around around the overall feasibility of this deal, im now joined by stephen grub from vision 57. Thank you very much for joining me out here today. So even if we see Hong Kong Exchange come back this week with a sweetened offer, higher price, higher cash opponent, some governance, reassurances, can they do anything to alleviate the political and regulatory uncertainty surrounding this deal. It still looks like it will be a little bit of a challenge because as well as the view from london, you also have the issue china holds over a trillion dollars worth of u. S. Government debt and lsh, owned by lse clears most of the u. S. Treasury swap transactions. So youre going to get an american view weighing in here, too, even if the view from london gets better. Even if the view from london, even if the view from china gets better, so a huge amount of political challenge surrounding this deal. Now just honing in on the timing from hong kongs perspective, its hardly the best backdrop given the escalation and tensions on the ground in hong kong why do you think theyve stepped forward to launch this offer now . Well, its a very interesting question because i think the idea first came about over a year ago, but clearly they have decided that with the lse refintive deal their hand was pushed somewhat and they had no choice but to push ahead reporter now, do you think that Hong Kong Exchange has a backup plan . If lse doesnt work out, whats the opportunity for them at that point . Well, certainly, you know, the intellectual positioning in terms of connecting east v west makes a lot of sense at a intellectual level the problem will be who will be another potential suitor with deutsche failed to do deals itself with the lse a couple of times, so looks like its hard for them to find another natural partner in this really. Lch, you just mentioned there this is really central to hong kongs vision for lse. This is their clearinghouse, which is the Worlds Largest processer of u. S. Dollar denominated swaps. Would this business be attractive to a u. S. Exchange . Well, potentially yes, of course, it would again, i think you still stoke up the same kind of deal nationalistic tensions between the u. S. Acquiring a bit of uk vital infrastructure. So at this point would you say its unlikely we see a u. S. Counterbid for the lse. I think thats unlikely at the minute, yes, for no other reason with all the brexit uncertainty, people want to wait and see whats happening on that front as well. To that point, we obviously heard from the Hong Kong Exchange chairman really playing up the opportunity and vote of confidence this suggests in the uk market from the hong kong side now the refintive deal, this is one of the key conditions from the hong kong side lse has to ditch this deal in order to proceed with theirs from an lse shareholder point of view, is there really much merit in dropping this deal . Well, not from a shareholder point of view because it exchanges the world over but its all about the data. So the idea of lse with refintive was a nice play there enabling them to look at monetizing all sorts of different types of data in new ways, a. I. , Machine Learning and so on. So i think again it looks hard from an investor point of view to not want to do that deal. If i look more broadly at the sector, we spoke to the former lse ceo and his view back in september when this deal broke was that globally were going to see this sector consolidate and we will see very few players emerge well see a lot of deals come together and wont be a lot of room for local and regional players. As an industry expert, what do you think of this view i think theres always going to be room for smaller bosses that can focus in on a particular sector or the marketplace of course the government is keen they dont see the trading in their key names go to foreign venues i agree with the view in a longterm vision. Reporter thank you very much the date to watch this week, october 9th, that is the deadline by witch Hong Kong Exchange must submit a formal offer for lse or walk away guys julianna, thank you for covering the story and as she has been the last couple weeks quick look at how european markets are fairing on this first day of the trading week. Not a pretty picture cac down around. 2 percentage point. The italian index is down. 3 the u. S. , we did have a positive close to wall street on friday after the payroll number came out a little disappointing relative to expectations but still firm when it comes to the overall Unemployment Rate but now the mood has shifted downwards and you can see the s p dow nasdaq are all pointed to open up in the red when they do open up in a couple hours all eyes on those trade discussions later this week. Thats it for our show today im Joumanna Bercetche. Im willem marx thanks for watching. Worldwide exchange coming up right now. 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