Transcripts For CNBC Street Signs 20240713

The country is leaving the bloc by the end of the month. Lebanons Prime Minister agrees to a series of Economic Reforms in an attempt to calm unprecedented antigovernment protests experts at the imf annual meetings raise concerns over negative rates in an exclusive interview with cnbc, axle weber warns Central Banks have lost their ways. In recent years, ecb loss of business has been much less policy, lost its distant to market they should guide markets rather than be in a standoff with markets about the future, and we have seen it in the u. S. , weve seen it here in europe well, good morning and welcome to street signs. Its monday. Waef lot to get through on the show today, but i just want to give you a quick recap of whats been happening with markets. The handover on wall street on friday was pretty negative we had all the three majors end the day in negative territory. Boeing was dragging down the dow. The s p is 1. 5 Percentage Points away from its all time high. Overnight in asia, pretty mixed tone as well, even though we had some positive language coming out of the chinese vice premier saying that china and the u. S. Have made substantial progress in many aspects and laid an Important Foundation so positive signs with the possibility of getting a trade deal passed perhaps as soon as mid november as President Trump suggested on friday pretty much a mixed handover from asia. The mood in europe is pretty positive the stock 600 up. 3 percentage point today, this after ending the week last week pretty much around the flat line so positive tone on this monday morning. Lets talk about the individual indexes. Im sure theres one index in particular everyone is focussed on the ftse 100 in the uk and were trading pretty much around the flat line really, slightly positive about. 1 percentage point higher we have seen some weakness in the sterling pound this after saturdays super decision and ultimately that led to the delay of the meaningful vote well talk about that shortly with stevein the index, were sa big positive bounce for Home Builders, for banks. It has been a positive day so far for the domestic exposed stocks dax in germany up. 7 Percentage Points big rebound here, was under pressure last week towards the end of the week, but overall the german dax continues to do quite well despite the negative backdrop when it comes some more protests in hong kong over the weekend dragging down on the french index. Ftse mib also up about. 4 percentage point lets talk about the sectors and the individual breakdowns. So right up at the top we have the banks. As i mentioned, a lot of the uk banks are leading the charge today. We have rbs up 2. 7 . Barclays up about 1. 5 Percentage Points as with el. So thats one of the reasons why the banks are doing so well. Remember, this is a big ecb week not a big decision week, but definitely a key one for the banks to watch autos also seeing a rebound up 1. 4 basic resources up a similar amount as i mentioned, luxury, Household Goods down about. 4 right at the bottom, we have defensive real estate down. 8 of a percentage point but, let me take you back to sterling because it has dipped this morning after british lawmakers voted to postpone a meaningful vote on Boris Johnsons new brexit deal forcing the uk Prime Minister to force a new delay for the october 31st deadline. Now, johnson sent an unsigned letter to the eu requesting an extension but also sent another letter arguing against a further delay. The government is set to push for another vote on the deal as early as today steve joins us live from westminster and perhaps, steve, you can shed us a little more light on the developments from saturday because many of the analysts that ive read over the weekend are saying that actually if you put two and two together and add up the lets win the votes it does seem as can happen today in an unamended format. Reporter firstly, i think those analysts and commentators are taking an enormous leap of faith on the numbers as well i have spoken to key lawmakers this morning, they dont know what the numbers are so the if dominic rob thinks he has the numbers as well, then he is in a minority quite frankly its moving so quickly. For instance who would have thought a week ago the dup would be voting with the opposition potentially for Customs Union in an amendment to the second reading of the Withdrawal Agreement and implementation bill its extraordinary permutations going around despite the fact i spoke to justine and she wont vote with the government getting those numbers could be absolutely torture rouse and of course it could be all kinds of amendments as well what happened on saturday was your question . Well, there were three things that happened. One, a millionperson march looking for a second referendum on the streets of london even if you thought it was less than a million, the fs a mighty expression of will from a large portion of the population. The second thing that happened that was absolutely key was the let win amendment to the meaningful vote actually meant there was no meaningful vote the third thingthat happened didnt happen because basically people lost trust with the Prime Minister to enact a deal regardless and not have a fallout a no deal as a default position as well so what this was doing was making watertight. The ben act as well and of course the third thing that did happen was that this photo copied, unsigned letter went along to donald tusk and he admitted he had received it. I think that should negate the session today which has legal proceedings. Just checking where the Prime Minister abed with the letter of the law. This was accompanied of course by another letter from the Prime Minister that was signed saying he think an extension will be bad for the eu and uk as well. Brings us forward to today as well is there a way forward i have been speaking to hillary ben. For those who have a historical nature, the son of tony ben, one of the foremost politicians of the bygone labor era speaking about is there a way forward for the governments waib Withdrawal Agreement and implementation bill if, if, listen in the compromise in the middle offered to theresa may but she didnt take it by my good friend is to say, look, we dont like your deal, but we are prepared to see it go through provided it is put then to the british people because then the voters can decide is that the kind of brexit that you wanted because although the referendum results said leave, it didnt clarify what kind of leave, what kind of future relationship were going to have with our biggest, nearest and most important trading partners i think if parliament cant make progress, then the numbers are gradually building i hope we might get to a point where a majority might say none of these outcomes are terribly attractive but at least this will give us a result a decision which people want. So there you can see a snippet of the opposition strategy this week if the meaningful vote happens tonight, of course the let win amendments means you wont get a full thumbs up until after the implementation, tomorrows reading, this is key, the opposition, can get amendments on Customs Union or second referendum, then it would get support. If he doesnt get those, then the government and go back to that original point you made about government relying on its own numbers as well to get this forward as well. But theyre going to need a lot of mps to back them, independent mps, mps they stripped the whip from, of course. Theres 21 tory rebels including the former education secretary, who said, no, im not voting for it unless i get the referendum lets listen in to what Justine Greening said to me this morning. It may be that only the british people really can be the final arbiters of whether this brexit and the bill that were passing through parliament really represents the brexit they want and if it doesnt, of course, then they absolutely should have the chance to say, you know what, i think were best off with that existing deal with the eu. Regardless of whether they let be another meaningful vote today, we understand the government is going to try to bring forward the waib, the agreement and implementation bill and try to get an accelerated process thereafter if votes go their way possibly as early as tomorrow just want to confirm, you as a former secretary of state, conservative secretary of the state you will vote against the government i will not vote for a deal unless its put to people in a referendum. Justine greening, the mp for putny talking to me earlier. For those historians, that was davids old constituency before he lost to tony coleman. Any way, thats history which you dont need to know about what is going on this week is what you do need to know about regardless of a meaningful vote, he may not let happen, the key day looks like it will be tomorrow now the government has to win two things one, it has to get the second reading victory on that, get this whole process going secondly, they want to accelerate the time frame for this so they need a timetable motion victory as well which mean that is a can use late nights, weekend sittings the house of lord going to think about that bless them back to you. No easy task for them or mps who are workingtheir socks off like you, steve. All right. Lets see the alternative angle, though, because the European Union is considering britains suggest for an extension. Sylvia joins us live from brussels european leaders will have received two letters, one signed, one unsigned from Boris Johnson. What do they do from here . Its indeed another request when it comes to this third brexit delay so the European Union received those letters from the Prime Minister, from Boris Johnson and at the moment theyre assessing what they should do with them, how they should react. For the time being, as you mentioned, theyre waiting for more developments in the house of commons to see how the lawmakers there want to take this brexit forward so then the u 27 know whats best to react, whether to say yes or no to this deal because when we talk about an extension, we need the u needs to think of should we say yes or no, but they also need to think of for what reason should we say yes and for how long should this extension be now we heard from the times reporting that the eu is likely to grant a threemonth extension if the deal does not get approved in the house of commons this week but its very early at this stage to know whether that extension would last those three months or if certain countries, including france who has been very vocal against further extensions, could ask for something shorter and dub it as a technical extension to allow for this deal to get approved in the house of commons but, lets not forget as well when it comes to a technical extension we have seen that before and that did not help the process either so lets see how the things happen, how things evolve in house of commons in the coming days and then of course how the eu will react in the coming days i have to say as well that today we could hear from certain european lawmakers they will also have a say about this exit agreement that could technically happen already this week but they are also likely to wait for the house of commons to vote on the deal first so then they know whether they are in a good path to vote on this deal as well. But, as we have mentioned before, joumanna and been here before, the key to unlock any sort of progress when it comes to brexit at this stage is still in london, is still at the house of commons. Thats right. We spent all of saturday waiting for that meaningful vote to happen and indeed it got postponed now. All eyes will be on today, tomorrow whether or not that meaningful vote goes ahead that was sylvia in brussels. Thank you for the breakdown. I want to bring in the chief International Economist youre with me for a full hour. We can take our time on brexit starting with brexit, though, simple question for you, do you still think a brexit is going to happen on october 31st i think that will happen now. I think boris does just have the numbers. Its still very unsure its going to be very tight, the key votes this week. Of course Opposition Mps will try to amend the deals lots of different ways once those key amendments on Customs Union really change the deal and put in a deal to a second referendum, once they fall away, i think then our only leave boris still is i dont think the European Council will make a decision on whether to grant an extension until late in the day that you just couple of days maybe before the 31st of october and that means those labor mps who really are looking to back looking for a reason to back the deal, they i think that opportunity to go i think theyll be decisive in that vote. Just to pick up on what you were saying, though, you use the words fall away. Do you not think that these amendments that will be put forward will not get through then with respect to a confirmatory referendum Customs Union, et cetera so you think that those wont be able to get past i dont think they have majority support, those two. I think we have seen before in the past with those indicative votes we had in the Uk Parliament that a referendum didnt have the numbers and neither did the Customs Union. Theyre only just short of a majority but its not there and what you see is that conservatives dont back a second referendum. I dont see that happening but there will be, i think, amendments but be nonsubstancive ones i think there might be a bigger role for parliament agreeing the future relationship and i think there might be some concessions from the government on workers rights to try to bring those labor mps from brexit back into constituencies online to back the deal and get this through, but the numbers are tight. Yeah, the numbers are very tight, raiser thin depending on which analyst you read over the weekend, some saying there is a majority some saying theyre lacking two to three votes maybe in a bid to sway over the labor mps sitting on the fence they could offer something on workers rights. What about the possibility of a no deal brexit do you think that that has been completely obliterated for now on october 31st . We thought the probability of a nodeal on october 31st was very low because of the ben act. Once that was in place we put it at 10 . Also to the eu whether or not they wanted to grant an extension. The eu shown they dont want the possible chaos of a no deal. They have shown by making some important concessions to the uk government when they said they wouldnt but they have they have shown how important it is to them to have a deal. So not going to give up on this deal easily. They spent a lot of effort on it and i think when it comes to the crunch, they will offer that threemonth extension. But not until later in the day they want events in parliament to play out this week, to put some pressure on mps to back this deal, which they see as being the only deal available. Lets talk scenario now the pound is just shy of 130 now. If the deal does get passed this week and meaningful vote goes ahead, where does the pound go to if indeed the deal does not pass and it leads to a sequence of events whereby we get to another extension, where does the pound go i think if a deal passes this week, then sterling against the u. S. Dollar will head towards 135, meaningful rise from where we are now and then i think eventually overtime towards 140 of course, this is only the start of the process in a way. Were going to have if the deal is agreed this week, then well have potentially another convention at the end of 2020, at the end of the standstill transition period and really uncertainty will be brought forward from that date because by middle of next year they have to decide on whether to extend that transition period its unlikely the trade deal will be agreed by then, 14 months is just simply not enough time, i think. If there is no agreement this week i think sterling will come off a little bit but were heading towards a general election i think there will be a threemonth extension of article 50 well have a general election. It looks like Boris Johnson conservative party will win a majority in that election and hell campaign on this deal. He put a lot of Political Capital into this deal he thinks hes won major concessions and believes in the deal he has a deal that he can say he can immediately ratify once hes got that new parliament. And i think well get this deal. I think sterling will eventually rally, its a matter of time whether its this week or late november or early december when we get that election result. It seems like you do think that this Boris Johnson deal will stick with us eventually. Well have to see how that pans out this week or after general election now, irish finance minister told cnbc at the imf meeting in washington they can preserve their economic relationship. I do see a path but it would be appropriate to acknowledge that no such paths in the future from an economic point of view will be the same as the one we had in the past where both countries were inside the European Union, but ireland always made very clear that we fundamentally respected the decision of the british people to leave the European Union. In terms of what that path looks like, they have two elements the first element is the nature of the relationship that the United Kingdom and the European Union eventually negotiate, which both sides will look to move on once were clear where we stand with the current agreement. The second would be the efforts that the United Kingdom and irish governmentwill make to continue to ensure the deep friendship between both governments protected and maintained in the future also coming up on the show, from hong kong to barcelona to beirut and to government protests erupt around the world. Well have the details after the break. Welcome back to street signs. Well, hundreds of thousands of people took to the streets of lebanon over the weekend to take part in antigovernment protests and one of the countrys biggest demonstrations in decades, protesters are taking a stand against poor Living Standards and alleged corruption amongst the ruling elite just in the last couple minutes, we heard from the lebanese president and hes saying that protests in the streets express peoples pain, quote, but accusing everyone of corruption is very unfair he adds also we must begin by lifting banking s ining secrecym current. Very interesting developments over the weekend lets get out to hadley who joins us live from beirut. Theres a lot of pressure on the ruling elite here, and we heard from the Prime Minister on friday giving himself a selfimposed deadline of 72 hours to come up with a plan over the weekend, four ministers resigned, but it looks as though the cabinet is just about to hold it together what more can you tell us . Reporter all remains to be seen Prime Minister is meeting with his cabinet. He suggested a series of Economic Reforms including that mps, members of parliament, the current president , former president s who all of course get a big tension take a 50 haircut and also suggested that they contribute to a 0 deficit fund those are some of the things he wants to see from his cabinet. Lets take a listen to what he told me in our exclusive interview just six weeks ago when we were talking about the economic crisis this country has found itself in. Listen in. I truly believe that everyone is there is a problem Everyone Wants to take action. The issue is how to combine all our efforts and, you know, one big package of reform that will cover all the things that we need to do its going to be tough okay but its worth, you know, worth the hours and its worth the tiredness were going to go through and its worth the risk because we will have demonstrations in lebanon. Im saying it from now but lets have it one time reporter so speaking of political miscalculations that was just six weeks ago that folks would come out and protest and it would be over and people would be willing to take that haircut. Four days and hundreds of thousands of people on the streets has seemingly proved the Prime Minister wrong and thats why we see this cabinet meeting. At the end of the day, were talking about corruption and crumbling infrastructure and talking about people being very unhappy with their lot in life at this point, particularly when they cant manage to keep the lights on as you very well known. At the end of the day, this is not just about that, its about Monetary Policy. Anger at the banks and anger at the men who have been leading central bank hes the longest serving Central Bank Governor in the world he managed to keep this country pegged to the u. S. Dollar. The lebanese civil war, he managed to do that and often when i would speak to him in our interviews this was to keep the poorest feeling the brunt of any kind of devaluation. It seems, however, again and again, that this country is just missing the boat when it comes to righting itself and that, of course, has to do with Economic Reforms, social and Structural Reforms they refused to doagai and again and again and that is putting people out on the street more than anything else. Joumanna you mentioned an interesting point, the Economic Situation in lebanon. Over the weekend i put out a tweet actually trying to just explain to the International Community how bad the situation is on the ground youre looking at the third highest debt to gdp in the world, 150 , 25 current account deficit, one of the lowest ranks on the global corruption index the pressure has been building for a very, very long time and as you just mentioned the Central Bank Governor tried to do his best to keep the country ashore that it really feels like were getting to a breaking point now. The government says they will be enacting reforms what are some of the reforms they will be looking to introduce to help clean up the situation . Thats an excellent question and at the end of the day, as i say, it goes beyond just their ability to reform. Some of the folks we have been speaking to including current mps speaking to us off record, saying whatever is on the agenda today is really not going to be enough the anger at the banks, the anger, who as you know, has for so many years now been credited with keeping this country afloat in terms of the Monetary Policy, in terms of loans to the banks, at the end of the day it seems as if whats happening in the cabinet today isnt going to be enough really to make the public come back off of the street because this is taken on such a populist sentiment in this country. These protests have not been violent for the most part, theyve been largely peaceful. Seems like a big party at the end of the day, its about Monetary Policy, about folks who prior to this were really remaining silent, but for example the author of the black swan was saying in a tweet essentially there are a lot of questions about the, quote, ponzi scheme at what point the Prime Minister would consider resigning that he just doesnt have the credibility or tools in the political bag to keep all this going but it remains to be seen. Were expecting more people to head off to the streets, particularly to the square right behind me later today. You have to wonder what the end game is here and how long these demonstrations will be going on for hadley, thank you for bringing us the coverage from beirut there. Also coming up on street signs, a wakeup call for banks. We tell you why the president of germanys financial regulator and the chairman of ubs are sending Warning Signals over the industrys future. Thats coming up next. 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You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Welcome to street signs im Joumanna Bercetche and these your headlines sterling touches a sixmonth high as Boris Johnsons brexit deal suffers a setback in parliament, but the british Prime Minister eyes another attempt to push through his agreements as early as today uk banks and Home Builders rise as the eureceives a force extension request from Boris Johnson, but the British Government insists the country is leaving the bloc by the end of the month wirecard shares surge as the german says its hard and external auditor to address financial irregular lair allegations raised by the financial times. And experts at the imf annual meetings raise concerns over negative rates in an exclusive interview with cnbc ubs chairman axle weber warns they have lost their way. In recent years the ecb loss of distance is much less with policy but its lost its distance to market the central bank should guide markets on where they go rather than be in a standoff with markets in the future and we have seen that in the u. S. , we have seen it here in europe. Well, central banking was definitely in focus for this week with the ecb on thursday, the last meeting but the big focus for this monday morning is that of the pound and whats been happening to uk assets after that supersaturday parliamentary session, no meaningful vote yet on the deal. The decision has been postponed. We have to see what happens in the next 48 hours. The ftse 100 pretty much treading on water actually up about 1 point, pretty flat on the day. Drilling down into the details youll see that Home Builders, the uk banks, rbs up quite well despite the delay on fr saturday germany having a very good session up. 6 Percentage Points. We are seeing a a bit of a bounce gives the german industrials a bit of a boost france up about. 1 percentage point. Were looking at Household Goods and luxury sector in france today. Again getting hit on some exposure to the hong kong protests this has been a theme that weve been tracking for a while now. And then you can see the ftse mib in italy is also up about half a percentage point. So generally it is a positive start to the week for european equities after flattish week for the stock 600 last week. Switching to foreign exchange. And lets start with the euro. It is trading slightly firmer, just shy of the 112 mark 111. 80 is where were at we did see boost for the week. The pound initially yesterday when we first opened in asia trading it opened weaker to the tune of about. 3,. 4 , but since then we have retraced some of that negative momentum if anything, were now trading firmer on the day just about to breakthrough the 130 handle as we were just discussing on the show most analysts are saying that the possibility of a no deal brexit on october 31st is minimal and the chances are that some form of this deal or amended form of this deal will end up getting past. That is being reflected in the pound and the move in the pound as trades positive this morning now. Switching to u. S. Futures, we had a negative session on friday one of the big down movers was boeing that stock was down about 8 drags on the dou, but you see that today all of the three majors o epiing up positive, s p up about 10 points the dow up about 75 points and nasdaq up about 27 as well so positive start for the week for u. S. Markets after somewhat positive week last week as well. Now, as i mentioned, the ecb is expected to keep rates on hold when it meets on thursday the decision is president Mario Draghis final one with former imf chief Christine Lagarde set to take the raeigns at the end o the month. Speaking to cnn at the imf meeting in washington said it was flawed from the start. I never thought that negative Interest Rates are such a great idea they have very pronounced side effects, which come to bear over time you can see any banks net interest income. In the first and second year, that goes down a bit because you have one or two years of contracts that run out and need to berenegotiated. With the recent ecb move, anybody in europe lost the hope the next years to come we will see a different Interest Rate environment. The new fiveyear plans the new threeyear plans or the oneyear plans on banks will look totally different. Were becoming more like the Japanese Environment where any hope that the environment will improve and fix it for you is going. So banks need to focus on the levers they can move in order to be profitable rather than rely on the rebound of markets or on a better economy that is the downside of this policy, it creates a long term disincentive for really investing in fixed income and for investing in european economy because you just dont get rewarded for any risk you take with such investments. Are the critics right then that mario draghi saved the euro but the cost has been through his policies damaging europes Economic Future . No. I think thats going very far. Look, im not in the camp that would like to sort of talk down the achievements of mario. At a very decisive moment in euros history when the markets have lost fate in the euro and the euros future, mario was countering markets and he offered them a really deep bet on the euro is going to be around. Were going to stabilize it and it will be sufficient to do that at that point in time he eliminated the risk. Wasnt his man tate before but any central bank stepping into to preserve its currency is so thats a very decisive step he took. But the way the ecb has been working over the last few years, they lost to balance Central Banks have to keep in the early years, we were too close to policy. The line between fiscal policy and Monetary Policy wasnt clearly drawn and i think we went over too far in accommodating loose fiscal policy in some Member States rather than in the union as a whole. Is there a pathway for Christine Lagarde to very quickly reunify the council and do the right thing for the eurozone economy so one of the things i think is downside from the current decision it has tied her hands on Monetary Policy for years to come so it would be much more credible if she was driving the decisions rather than comes into the office and inherits them but she will she is somebody who is a very savvy communicator shes also somebody you see at the imf, she can forge compromises. And the two things she needs to work on is first get a more united council, but not by saying im the parol and you have to follow my lead, but by bringing people into a general consensus on the committee which sometimes might mean doing less of one thing and getting a compromise around a decision the second thing she has to do is bring the public on board that was the chairman of ubs talking about ecb policy and the low Interest Rate negative Interest Rate environment the impact its had on european banks. Many european banks are not happy with this negative Interest Rate environment. This week is Mario Draghis last meeting every at the ecb a historic day and it seems as though theres been increasing amount of criticism levelled at him over the last months or so, many people were unhappy with the september decision and feels slightly unfair because at the end of the day, this is the man who stepped up to the plate in 2012 and was solely responsible then for keeping the eurozone together its unfair that hes receiving so much criticism now. What do you think . I think thats right. In 2012 mario draghi said the bank would do whatever it takes. From that point on, the ecb then was the lender of last resort, which was needed the backstop you know, theres been a lot of criticism recently over the negative rates i think theres a lot of talk now about the reversal rate where rates become so negative that they start to have a negative impact on the economy i think what the ecb will point to is that the availability of credit is still, you know, favorable. Credit conditions are still favorable. So they will say that negative rates have worked. I think the counterargument to that now is particularly now that they introduced tiering is that what negative rates have when banks are not going to feel the full effect of them because of tiering and so i think that is on on going question i think part of it is that the ecb wants to say that it can do more on all its tours, including going further negative in rates. But just to pick up on that, though, you mentioned tiering. You saying that the negative rates has become less diminished because of the tiering mechanism thats been introduced because the banks will simply not be passing on the negative rates . Well, the idea of negative rates, of course, is that you encourage banks not to pour their reserves at the central bank but rather to lend it out in the economy because theyre going to be charged for their reserves if they leave them at the central bank of course, now that you got tiering, fair chunk of the reserves are going to be at zero rate rather than negative rate, then you that if that was an incentive to lend it out before, then that goes away and the question is why have negative rates well, draghi would say as long as its part and parcel of a whole package. Its tiering with quantitative easing, restart of expansion of the balance sheet, its not just negative rates alone they would consider their primary driver of the easing in the eurozone right now. Indeed. Mario draghi announced a large easing package, of course, in september. Now the ecb is pretty much on auto pilot i think that was important because it gives the in coming Christine Lagarde time to fit in and make decisions later theres no urgency to make big decisions. Thats important the negative rates are part of a bigger package and we have those that are there to make sure theres availability of credit for the economy and the data shows that the Bank Lending Survey shows that Credit Availability is strong, that there is easy financial conditions. If you read pundits talking about the eurozone over the last couple months, you would think that eurozone is right in the heart of a recession but eurozone is growing positively germany technical recession but again the numbers for next year still point to a positive Growth Outlook for 2020 even for italy as well do you think that people have got overly bearish about the prospects of the european economy here i think so, yes clearly theres pockets of weakness the weakness is concentrated in germany and italy in particular and because more exposed to the world economy, have larger industrial sectors and exports are more important to those economies. So they have been hit by a slow down in the world economy. The eurozone as a whole is growing okay its roughly around potential growth but because i suppose we still estimate theres a negative output gap, we would like or expect in normal times for the eurozone economy to do a little better of course, those external head winds are waying on the economy. And one of the reasons why inflation is still solo. Well talk a little more about some of those external head winds not least the trade war. I want to take you to some Company News Wire card shares are trading higher after they hired an external auditor to investigate the alleged accounting irregularities they published documents showing the Payments Group fraudulently inflated its earnings. The president of germanys financial regulator told cnbc that the body may have to review its supervisory guidelines for newly emerging business areas following the wirecard allegations. That could be a Lesson Learned from that that generally speaking we will have to review a couple of rules and guidelines but frankly thats too early to tell but were watching it and there are mechanisms in place in germany to possibly take a closer look at that from the auditing side of things, but we, as a regulator, are in a position if we feel its necessary to pull it up into our hands, which we dont intend to do currently but we could do it at a later stage. You mentioned the short selling band are you comfortable that the Market Mechanisms are in place to manage any future situations like this where you do get extreme volatility in a Company Stock and debt because of allegations like this . For short answer is yes we believe the mechanisms are there. Just to be clear, volatility as such isnt a bad thing its part of market activities, even strong volatility is part of legitimate market behavior. We as regulators only step in as we believe if we believe there are signs that the way pricing is created may be impaired by illegitimate activities or certain activities which may fundamentally impair market confidence in general. That level has to be reached if it doesnt reach, there can be quite extreme volatility. That per se would not trigger a regulatory activity on our side. And also coming up in the show, why ubs chairman axle weber says investors are staging a walkout of global markets. That exclusive interview coming up in just a couple minutes time here at. Snowfest. For your worst sore throat pain try Vicks Vapocool drops. Its not candy, its powerful relief. Ahhhhhh vaporize sore throat pain with Vicks Vapocool drops. 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. Tlok the show. Ubs chairman axle weber warned that on going trade and Political Uncertainty is keeping investors on the sidelines. Youve seen pretty much with brexit but also with the trade disputes theres been enormous increase in uncertainty. Uncertainty has been bad for investments all along. What youre seeing at the moment and were seeing in our client base is almost an investor strike and the way i look at that is that as Interest Rates were very, very low and cost of investment are at historical lows the increased uncertainty whether rejigging your entire production chain will pay off by having parts of that production chain be in china or for europeans in the uk is a huge uncertainty. People will not take these decisions until the political decisions are taken. Im more positive that well see an orderly brexit, but investors still want to see it on the table. There have been too many times the project has been delayed and now theyre just holding out and waiting for investments. You can see that how investment in the uk has fallen off a cliff. That is not good as a dynamic part of the economy, so, you know, where i see a big risk is kind of broad based investor strike at the moment about the uncertainty that we have in the Global Economy, which is politically made rather than made by markets. And thats a really bad environment. Meanwhile, jeff asked imf deputy managing director if weak data in china and the United States is encouraging both sides to work an agreement. The economic slow down itself has its own reasons, which this is true for both countries but of course, i think the policy Decision Makers, in their minds the economic consequences of the trade tensions. And certainly i dont think any of the leaders or Decision Makers very much like the economic slow down and achieve the other purposes lets get back to daniel the chief International Economist from una credit. Daniel, do you think getting a trade truce, just a trade truce at this point would be enough to stop the Global Economic slow down thats happening . No. I dont think so the trade truce thats been talked about seems very partial, piecemeal because it is the deal as i understand it is where china agrees to buy Agricultural Produce from the u. S. And in return for that the u. S. Delays or maybe possibly cancels the planned tariff hikes which are due to come into effect possibly including the mid december one on the remaining 100 odd billion of chinese imports but its very partial. The uncertainty will remain. And that uncertainty which is really hitting Business Investment and confidence. Thats something that mr. Axle weber was saying uncertainty about the trade outlook, uncertainty about brexit, geoPolitical Uncertainty obviously damaged sentiment. Going back to the imf, though, last week christina, the new imf Fund Managing director said they have shaved off 700 billion from the Global Economy. Is it an case that in order to bring back that 700 pl, everything needs to go back to where it was before this trade war kicked off in the sense that tariffs need to go back to where they were two years ago . Yeah. I think thats right i mean, you see the weakness in the Global Economy and its completely broad based is manufacturing trade and that weakness is stemming from heightened uncertainty particularly related to trade tensions at this point in the Economic Cycle where Spare Capacity is pretty much closed in most advanced economies, that is the time where you expect investment to take up the baton you need to increase the productive capacity of the economy. Firm profitability is still relatively good and the cost of capital is low, the Interest Rate environment is low. So that this is a Good Environment for investment so the only Thing Holding investment back and why its so weak is because of this uncertainty in the economy and until that goes away, we will not have that much needed investment that we need in the trade to go along with it. Just quickly, what do you think the feds we have to cut fully price for the end of october. Do you think they cut again . I mean, theyre now into their blackout period. So we werent hear anymore from the fed before the end of the month before they make their decision of course markets are now pricing over 25 bases point cut around 80 and the fed havent said much for the markets to think otherwise. Theyve said act as appropriate to sustain the expansion so, we think they wont actually cut until december, but the risk is certainly they go out. Seems like a risk of the market getting disappointed. All right, thank you very much for speaking with us today on street signs. Quick look at u. S. Futures before we head out its a positive start. Looks like it will be a positive start for the three majors but that is it for our monday show im joumannaertc bcehe, Worldwide Exchange is coming up next. My gums are irritated. I dont have to worry about that, do i . Harmful bacteria lurk just below the gum line. Crest gum detoxify, voted product of the year. It works below the gum line to neutralize harmful plaque bacteria and help reverse early gum damage. Gum detoxify, from crest. Here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. It is 5 00 a. M here is your top five at 5 on a monday morning get ready for a huge week of earns. Mcdonalds, ford, microsoft, caterpillar and many more on tap this week. Another day, another delay uk Prime Minister Boris Johnson suffering a setback in his push to avoid a no deal brexit. No end is sight. Protesters taking to the streets and again clashing with police in hong kong were live coming up. Boeing tries to bounce back after the stock sees its worst day of trading in three years. We have the latest and opioids on trial