Transcripts For CNBC Street Signs 20240713

A record low after they overstate the value of its inventory. A surprise in berlin the win of a new sbd left wing leadership set the german bund yield to a threeweek high. And the uk election focus turns to terrorism Prime Minister Boris Johnson and Jeremy Corbin clash as they blame each other as the Early Release of the attacker. Well, good morning and welcome to street signs. Just in the last 10, 15 minutes or so we have been getting the final pmi manufacturing numbers across the eurozone. The final november has come in at 46. 9. That is higher than the flash estimate of 46. 6 so, little bit of an upside there, so some improvement versus the flash pmi numbers which came out a couple weeks ago. In terms of the breakdown, we have the final manufacturing output pmi come in at 47. 4 again, this is an improvement on the flash number of 47. 1 and october number of 46. 6 final future output coming in at 55. 3 again, higher than the flash estimate and higher than the october number, 51. 9 you could say this data gives further proof of stabilization in the pmis and certainly an upward trajectory of where we were back in october albeit still below the 50 mark. 46. 9 is the aggregate final number for the eurozone. Speaking of manufacturing data, chinas Manufacturing Sector grew at the fastest pace in three years in november. Unexpected rose to 51. 8 thanks to higher output and new orders. And elsewhere, china has also asked the Trump Administration to remove existi ining tariffs f chinese goods. Its a top priority for a phase 1 trade deal were spending a lot of time about the prospects of that phase 1 trade deal and whether or not it can happen before the december tariff date lets look at how markets are fairing this morning we had a positive session ash sha markets, nikkei up 1 but also big nice jump in the shanghai we had those positive indication numbers the manufacturing numbers almost the highest levels we have in the last three years. The handover to europe is quite positive, stellar start for the stock 600 on this first trading day of the month up. 6 already. Let ees break it down by individual indexes ftse 100 up about. 7 of a percentage point there were seeing a good rebound in some of minors basic resources names doing as well on back of the manufacturing numbers coming out of china. Typically basic resources stocks do well on those days. Ftse 100 still shy of the mark germany up. 7 of a percentage point. One name were looking at luf tan sa shooting to the top after reports that Qatar Airways may have interest in those particular stocks. Dont forget that of course there has been some Political Developments over the weekend. France up about. 6 and ftse mib up a similar amount. I hinted basic resources are doing quite well theyre right at the top of the board up 1. 3 outperforming gas also having a good rebound session in line with the better data were getting globally positive sign for demand we have all the important vienna opec meeting this week anticipated cuts potentially and being pushed for by saudi arabia theyre also going to price their first of the aramco ipo. Luxury goods up. 8 Percentage Points down at the bottom, real estate all just below the flat line, but very strong start to the day for european equities. I want to take your number to fixed incomes seeing big moves i want to turn your attention to where the tenyear bund is trading. Basis points terms we have moved about 5 bases points higher this morning. As i mentioned, there have been some developments on the political side a change in sbd leadership this is one of the Key Coalition partners of the cdu party. Lots of questions about the future of that grand coalition and what it means as well for german spending. One of the reasons why german yields are moving higher 10 year bdp up 140 we moved on the day. Fixed income coming under quite a bit of pressure. I want to bring in the head of credit from Hermes Investment management lots to unpack let me take you back to china and the data were seeing there. As a fixed income investor, how difficult or easy has it been to navigate the various trade warheadlines that have come up over the last couple months . Its been as difficult as any other asset class and important to try to distance yourself from that noise on a daytoday basis and concentrate on more medium and longterm horizon when it comes to actually making investments. That said, its quite difficult to avoid the daily tweets as im sure youre aware. Some of them, you know v added volatility which has been potentially an opportunity in terms of being able to be nimble and opportunistic when it comes to investing. What do you make of the data globally we have the better manufacturing numbers out of china best in three years, again, seeing some improvement in the eurozone pmi, still sub 50 but its moving in the right direction, improvement from october for you as a fixed income investor, is that a signal that perhaps the outlook from here is for fixed income yields to move higher on aggregate. The data is encouraging but it does need be taken in context. Still a lot of numbers below 50 at this point. So its not like things are suddenly fantastic the other thing to remember is about on the valuation side there is a significant amount of positivity priced in both on the equity side in terms of multiples but also in terms of credit spreads within the corporate world. So for it to continue to be a performing asset class, this is going to not be a surprise this is going to be the status quo Going Forward and i would be quite skeptical about that. Just preparing for this i was reading your notes you said there were some high yield credit bonds in europe that trade at 99 fully priced essentially what type of distortion is this creating to the market, high yield credit market where typically in normal times you wouldnt see bonds with these types of fundamentals trading at those prices there is significant amount of disparage at the low end of the market and thats a reflection of likely rising default rate and companies in that space that are facing not just macro head winds but also technological disruption head winds. Beyond that, though, actually the rest of the market is an extremely strong space here both on technical side from buying and on the fundamental side. Apart from anything else, these companies are spent most of the last few years opportunistically refinancing and their cost of capital is extremely low on the fixed income asset its difficult to say what extent theres an opportunity at the very low end because those companies are very likely to default. The only exception to that rule is part of the basic industry and natural gas and Energy Spaces and top performers this morning with some of the data coming out, that scenario feels like its a little oversold, little unowned and potentially some opportunities in that space. Just a quick followup question on that again, i was looking at a stat this morning, back in 2009, the triple b rated companies had spreads that were almost 700 bases points higher than the Higher Quality companies today that spread is just over 1 . So theres been a massive tightening there do you think eventually the chickens will come home to roost for people who bought into that lower rate of credit i think thats a bet of a red herrings i would treat any weakness in that as a risk rather than a threat the market underestimates the ability to defend themselves, defend their balance sheets. Youve seen all of this Year Companies in that low end of the Investment Grade market cut dividends, cut share back buy programs, growth cap x being dialed down. All of this is a very credit friendly story and people sometimes miscommunicate whats good for equity versus whats good for fixed income. Our other top story today the future of germanys Ruling Coalition hangs in the balance after the social democrats elected to two critics of the grand coalition as the partys new leaders. They campaigned with the promise of renegotiating the Coalition Deal or pulling the party out of the government all together. The newlyelected sbd leaders said they would put the good of the party before that of the grand coalition. Translator we are very aware that this is not a question of victory nor defeat but a question of keeping this great social Democratic Party together and bringing it together again where it is already moved apart a bit. This is not only something that is great fun but also a great challenge. Translator we want to reach out to all we want to reach both our hands out to all those two decided otherwise and supported the other team, even in the preelection campaign. We know it you all know it. Now we have to stand together. Only together can we manage to make the sbd strong again, so stand credibly for a just future. Lets take a quick look at how the bund curve is reacting up about 3 basis points, 10 year bund up more than 6 bases points factorying in this future Political Uncertainty and perhaps little more spending out of the future german government. Lets get the expert voice, though anita joins us with more as i just mentioned, there seems to be an expectation that this new leadership out of sbd is less expected or less pardon me when it comes to the grand coalition. What could this mean from a political perspective from germany in 2020 . Well, worst case it could mean new elections if they really were to pull out from the grand coalition and Angela Merkel would not like to have a minority government. We are away from that extreme scenario we have a new spd leadership quite vocal about the fact that they dont like how the grand coalition was going and they dont like the content of the Coalition Contract thats the problem here. Thats at the center of the problem i would say because what they want is to have a reopening of the Coalition Contract. They want to have more spending, higher minimum wage and also yeah, as i was saying general more spending but also a clear commitment not to stick to the balance budget rule. I think that will be kind of breaking the neck of that round of negotiations because the cdu has already said that they are not in favor of reopening that Coalition Contract and especially they are actually not looking at all into abandoning that plan to have a balanced budget so i think they will be at logger heads here and a lot will depend on what the spd working group who is assessing the grand coalition on the social democrats with what kind of result they will come up with and what kind of vote they will have over the week and next weekend when the spd has its general assembly, Party Convention i should say. Most likely next week and well actually decide whether the spd will walk away from the grand coalition but that would have devastating affects also on the ministers. So you see the spd itself is still divided between those who want to shift them to the left, say the grand coalition has done us only bad things and the others who have minister jobs and do sit in the bundes and the majority of the lawmakers are not in favor of ending that. The jury is still out whether we see them walking away. Theres a lot of noise coming out of berlin on that matter and while most likely we get a bit more spending, but it wont be a revolution out of berlin, back to you. No. Never ever going to be seems like a revolution in german spending but at least theyre reacting to the potential of that i want to take it back to the politics what is the interest, what is in it for them to hold or push for a general election and break up the grand coalition. If you look at spds popularity in the polls, theyre only tracking around 11 . These are historical lows for the party. They dont have much to capitalize on if the country did go to another general election right now. Yeah. The new leadership and also the master mind behind that whole set of left policy which seems to be quite attractive to many inside the sbd is kevin who is heading up the young socialists. What they think is that its better to be in opposition and to kind of recalibrate the message of the sbd along the lines like the greens did it the greens which are hugely popular used their time as an Opposition Party i guess thats the narrative behind that potential option to walk away from that grand coalition because those people who are now in charge of the social democrats, they think its because of the grand coalition that the sbd has so low popularity with a recent poll having them at 14 or 11 as you were saying just now. So, i guess dont underestimate the potential to say we threw it all in the water to have actually a potential to recalibrate ourself to get our message right and to be attractive again to voters just to point out that according they are tracking 14 but in the context of history very low levels. Thank you for breaking it down for us a crucial week for german politics lets get back to the head of credit for Hermes Investment management this magic wand of miskal spending out of germany, does it come up in your discussions a lot and do you believe that germany will loosen the belt a little more going into next year in the case of germany, i guess, its possible but it certainly wont be a revolution as we just heard for me as much about the fiscal change as the likelihood that this potentially helps enable further flexibility with regard to the eurozone project itself i think thats potentially something that the market is also taking gains from this morning. Its a bit of a trade off because on the one hand what this type of news is likely to add more uncertainty and therefore more volatility as people price in different scenarios. Other, were it to transpire this would lead to more fiscal stimulus, more flexibility with regard to europe and that would be a market positive thing its too early to say which way to go here. Its interesting on the day like today, all the underperformance is being led by the core countries and germany and pef riffries are outperforming. If you think about it going into next year, theres less uncertainty in the per i haverries. Something people will watch very, very closely how you thinking about the debt here and trajectory for italian spanish debt in 2020 given how strong a year it was this time of year . It has been a very strong year so the valuation side needs be taken very seriously at these relatively lofty levels. It also has implications for the supply site and seen already in the last few weeks, for example, Something Like five high yield bond coming from greece. Banks moving loans into bonds for corporates that is a signal for what youre likely to expect going next year where there will be opportunistic supply again, that would likely be a head wind to any significant outperformance of the space given the already quite high levels. It seems everything youre saying to me, even though theres more supply hitting lower down the capital structure, theres an endless demand for that paper because the traditional paper is bought by the ecb, just reintroducing qe they still have the monthly redemptions. And so other investors are forced to go into lower rated and debt they wouldnt have bought in the past i think thats true up to a certain point and stops being true credit quality and certain level of cyclicality what you see on a day like today is significant outperforms like oil and gas, basic industries. You should expect them to be outperforms in any day like today. But only to a certain point and obviously if you look to the very low end of the market, there are suggestions that youre going see a meaningful rise in default rates. This technical coming from more buyers and sellers is not the same technical that will support low quality credit for that to perform, you need significantly higher growth. You potentially need a snap in commodities upwards and its a very different dynamic. Does it concern you that volatility levels were so low. I was looking at three month just the currency at record lows, lower than we have ever been even below the lows of 2007 thats for Euro Currency trading around 4 . When you look at that, does that fill you with a sense of unease going into next year because typically when volatility is this low, were bound to get some volatility shock, thats not good for carry trades. Agree we have had lower volatility for the best part of the last ten years for the most part. There is increasing stress risk attached to that particularly long eer duration than there us to be. That may well catch a few people out from Risk Management perspective. But again, if youre sized right going into these, it will ultimately be an opportunity all right the head of credit from hermerngs s Investment Management thank you for joining us on the stage. Uk Prime Minister Boris Johnson and Jeremy Corbyn clash after a deadly terror attack in london more after the break beyond the routine checkups. 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The ruling conservative partys lead over the labour party narrowed to six points down sharply from 13 points a week ago the bmg survey is the latest in a string of polls that show Prime Minister Boris Johnson lead over the opposition is tightening updated ugov poll show Jeremy Corbyn labour gaining ground on the government. Vigil for the victims of fridays london attacks will be held today three others were injured in the stabbing assault by convicted terrorist. Chan was shot dead by armed police at the scene. Political leaders clashed over the handling of terror suspects in the criminal system. Boris johnson said convicted criminals should serve every year of their sentence clear to me that this guy was out he served half of his sentence, out on automatic Early Release and i have long said that this system simply isnt working. It does not make sense for us as a society to be putting terrorist people committed of terrorist offenses, serious, violent offenses out on Early Release. We argue that people should serve the term of which theyre sentenced. Meanwhile, Labour Party Leader Jeremy Corbyn criticized cut backs and uk military interventions over successive governments. 16 years ago i warned against the invasion and occupation of iraq i said it would set off a spiral of conflict, of hate, of misery and desperation that would fuel the wars and the conflict and the terrorism and the misery of future generations it did and we are still living with the consequences today of that decision in 2003 while also coming up on the show, tense reunion nato leaders are set to meet for a submit in london with several members at odds with each other more after the break vo the flock blindly falls into formation. Flying south for the winter. They never stray from their predetermined path. But this season, a more thrilling journey is calling. Defy the laws of human nature. At the season of audi sales event. My mom washes the dishes. Before she puts them in the dishwasher. So what does the dishwasher do . Cascade platinum does the work for you, prewashing and removing stuckon foods, the first time. Wow, thats clean cascade platinum. Welcome to street signs im Joumanna Bercetche and these your headlines european stocks follow asias lead higher as chinas factory activity grows at its fastest pace in nearly three years while state media says beijing wants all existing tariffs scrapped as part of a phase 1 trade deal europes factory activity remains in contraction for the 10thstraight month but the slow down in germany eases while forwardlooking indicators offers a positive outlook. Shoppers flock online helping black friday seams hit a record 7. 4 billion in the u. S but ted baker shares slumped to a decade low after the British Fashion retailer overstates the value of its inventory and surprise in berlin the win of a new spd left wing Leadership Team puts chancellor Angela Merkel grand coalition on shaky ground sending the german bund yield to a nearly threeweek high. Well, half an hour ago we had the final pmi numbers for the eurozone asan aggregate higher than expectations final manufacturing pmi at 48. 9, that shyer than a flash estimate of 48. 3. So then again an improvement from the october reading and the employment balance is also the lowest since september 2012, that is according to ihs markets. They have cut jobs and manufacturers cut jobs at the fastest rate since 2012. But just to reiterate that the overall final manufacturing pmi number is indeed better than the flash estimate of 48. 3 so again, a positive surprise there when it comes to the numbers. Though a lot of the way the pound is trading these days is on back of the political environment and the polls and as we were just discussing there has been a tightening of polls between the conservatives and neighbor of the last couple days priced in somewhat to the pound this morning, trading at around 129. So that is the picture for sterling how about other currency euro trading somewhat sideways as we were just talking about earlier, implied vol on euro is at its all time low threemonth volatility levels not seen since 2007 and thats pretty much in line with the currency that barely moves. Just maybe moving sideways the last couple months here we have it today at around 110. 15 also seeing strength in the dollar versus the yen, 109 64. Bit of a rebound there we just talked about sterling and safe haven, swiss franc, not much movement. How about markets . We have all of the majors trading up in the green. Up about half percentage point or so, ftse 100 just shy of 7,400, up 40 points or. 6 firmer on the day and here were seeing a big bounce for some of the minors basic resources names doing well today in the ftse 100 index. Germany up about. 6 of a percentage point luf tan sa we have been watching closely but all eyes on the Political Developments over the weekend with new spd leadership and what that could mean for the grand coalition there. Moving along, lets take a look at how u. S. Futures are looking. We did have a negative session on friday. But still, that belies the fact that the month of november was the strongest month for u. S. Equities since june with all of these indexes staging big, big jump of around 5 versus say 7 back in june very strong month of november for u. S. Trading s p, dow, nasdaq seen opening up higher today its cyber monday as well. So people will still be shopping was a very strong black friday according to initial estimates of sales and looks like thats going to continue today as well. Now, opec and nonopec producers could implement deeper output cuts at its meeting in vienna this week speaking to reporters, the group could take another 400,000 barrels off the table taking total reductions to 1. 6 Million Barrels a day. So we are seeing a bit of a spike in the oil price today we have brent up around 2 wti up similar amount. Brent up at around 61 also worth bearing in mind, as i mentioned earlier, that the initial ipo out of aramco, the local listing should be priced towards the end of this week something to watch out for in addition to that opec meeting in vienna coming up another big meeting thats happening. Global leaders will gather in london this week for a twoday nato meeting marking 70 years since the alliances creation. The gathering comes amid tensions amongst key allies with france and the United States questioning natos relevance turkish president erdogan has hit back at french leader Emmanuel Macron following his comments calling the alliance, quote, brain dead with erdogan saying macron should check if he is brain dead. Turkey has also been criticized for launching military operations in syria and purchasing a Russian Missile system well be hearing from the nato secretary general Jens Stoltenberg tomorrow from 7 00 a. M. So stay tuned for that very important interview ahead of this big week in london nato meeting. I want to bring in the director for Center Defense studies at Kings College london. Thank you very much for joining me around the set. I was reading an oped in the ft yesterday saying that nato really needs to redefine its purpose. And certainly it appears as though the nato, as an alliance, is going through an existential crisis what is the purpose of nato today in todays day and age and who is the common adversary . Its interesting. I think nato always been an organization you have different agendas. Its purpose to give something all those needing comments quite tough discussions coming from trump who wants the europeans to spend more money and other countries who are less, lets say, urgent in their response to this its an organization that everybody wants to continue but Different Countries are deciding how much to devote to it and how much relevance it has got today. Not for the future ironically. All want it to continue but not sure how pressing it is to support the organization today. How much can you actually achieve on a oneday summit, though its only a oneday summit. Well, this is an odd occasion its called a celebration according to the british to recognize the 70th doesnt have to be a summit every year is the suggestion. I think it is reflective of some tensions in the alliance but its also about the fact that many of the working streams are trying to bring this definition of a future role. What i expect to see is a pathway rather than some big decisions. How do you think the nato members should be dealing with turkey because justrecently we were just talking about this, turkey launched a unilateral incursion into northern syria. They purchased s400 missiles from russia who obviously used to be a traditional adversary of the nato and so they continue to do these things and take decisions on a unilateral basis without getting consensus of other nato members, but at the same time, no one is coming down on them too hard what is the balance here turkey is a pivotal member of the alliance pretty much after the big three you might say is america, britain and france perhaps four with germany, turkey is key for the interest of the Alliance Members the middle east, north africa and beyond now, turks im sure would say its the United States that unilaterally announces they were withdrawing from syria but they would point to the americans doing the same i think it shows the tensions that kind of rise in this organization but crucially, whats behind it. I think turkey wants to get sbo the f35 fast jet program with america. They want to pressure the americans to let them in americans are saying no because of the purchase of the Defense System they also point to the fact that they werent allowed to buy an american air Defense System which they would like. Meanwhile, President Trump wants to force countries not turkey, it does spend more than 2 of its gdp but other countries in european nato to spend more on defense. So far hes been pretty successful on that front, hasnt he all of these countries committed further incremental amounts even germany . Yes the german plan is to do it within 11 or 12 years. But this is a country thats moving slowly towards a political change with a new chancellor in a couple of years. I think nato does face an existential crisis of identity, but i still would believe its going to survive it. Whether president macron was right telling the alliance it was brain dead will be part of the discussions that take place. Nato has to be relevant for cyber security, hybrid threats and climate in the future. So those are the common threats rather than specific agent, its climate threats. Its actually intangibles rather than tangibles. Well, i think nato now believes there are state threats more than they have been in the past 15 years. The organization has to deal with both, overarching threats but also russia clearly that is more active and future rising states sir, well leave it there thank you for joining me around the set. Director of the center for defense studies at Kings College london now, spanish Prime Minister sanchez is welcoming heads of state to the top 25 summit the Climate Summit taking place. You can see that throughout the morning at the newly reelected spanish Prime Minister sanchez welcoming people to madrid and earlier we saw the u. N. Secretary general as well also welcoming other leaders, big climate event taking place and it certainly a lot of difficult discussions to be had visavis respecting some of the commitments made in paris in 2015 so, well keep you up to date on the arrivals and on some of the key decisions made at cop 25. Also another thing to consider now that the u. S. President is coming to europe, coming to the uk today, of course, and he has been quite vocal on pulling out of the paris 2015 climate accord as well now, Hong Kong Police used tear gas to break up prodemocracy protests in a busy shopping district during fresh demonstrations following a brief lull in violence city state has seal a repiet from clashes amid local elections which saw antigovernment candidates make large gains. Protesters initially gathered at the u. S. Embassy to thank washington for its recent support. Some demonstrators held up signs urging President Trump to liberate hong kong. Also coming up on street signs, the United States is readying a response to frances digital tax. Well look at which french goods could be at risk stay with us plus, if black friday wasnt enough, retailers are now gearing up for whats set to be the biggest u. S. Online shopping day ever well talk cyber monday in just a few moments. Even after you clean, odors are still trapped in your fabrics. Febreze fabric eliminates those odors. And try Febreze Unstopables with twice the freshscent power. Tackle tough odors with irresistible freshness. La la la la la [ dramatic music ]ing ] ahhhh ahhhh elliott. You came back welcome back to street signs. Russia has just started supplying natural gas to china through a giant 55 billion pipeline president s putin and xi watched the televised watch via video link the power of siberia pipeline is 3,000 kilometers long and will deliver 10 million cubic meters of gas a day and u. S. President donald trump will not take part in congressional impeachment hearings this week with the white house, siting a lack of fundamental fairness President Trump had been invited to give testimony on wednesday the same day the u. S. Leader is in london for a nato meeting however, white House Counsel left the door open for the president to participate in future hearings. And the u. S. Is set to announce any potential action against france today after paris imposed a digital tax which targeted major American Tech Companies earlier this year. Charlotte joins us now with more. Let me run you through the timeline of this agreement between france and tus in july the French Parliament voted a law to put a tax of 3 to Tech Companies for companies that would be about 750 Million Euros in global revenue. And that was after failing to come to new agreements france decided to go its own way and put its own law. In july, President Trump said it was foolishness on behalf of the french president and he mentioned that he could have a tariff on french wine. He preferred American Wine to french wine. Later in august, g7 meeting all the countries came to an agreement to put ocd in charge with coming up with an agreement for a global taxing rule for all these companies to adapt to more Digital Economy and then there was a truce for 90 days that came to an end just last week. And as a consequence the u. S. Trade department will publish the findings of its investigation. They started in july when the French Parliament voted and is going to come up with recommendations and potential tariffs come on french products. Of course, the wine sector is quite nervous because you remember in october, after wto ruling on illegal subsidies to the Aerospace Industry in europe, the u. S. Was allowed to put tariffs already on some european products and french wine is taxed now at 25 so extra tariff on the back of this tech tax dispute would be problematic for this sector. Theyrer in rouse here the truce could be extended a little bit until january when the first conclusions from the oecd report come out and then the u. S. Will establish whether there could be an agreement or put tariffs on st up to President Trump if or when the tariff will come in place. Now we know that President Trump and president macron are holding a bilateral on the sidelines of the nato leaders gathering in london no doubt this topic will be on the table among many others. Certainly contentious time for all of those topics to be discussed not just nato but potential for tariffs on back of the digital tax discussions, one also to think about in addition to those wto tariffs that were applied just a month ago some company news. A 500 Million Pound bond issuance for ocado the move will help finance the construction of robotic warehouses for overseas partners the bonds will be due in 2025 and are expected to have coupon up to 1. 25 per year. Ted baker shares have hit their lowest level since march 2009 after the company said they may have overstated its inventory by up to 25 Million Pounds the retailer says any changes to its inventory value will not have a cash impact the revelation comes amid mounting issues that the uk company which recently appointed page as new ceo following misconduct allegations of former boss the stock was down 10 at the beginning of trading now down 5 . The u. S. Has broken black friday sales with records of 7. 4 billion spent online in 24 hours. Over 60 of revenue came via desktop with top selling products including frozen 2 toys and Football Games according to Adobe Analytics cyber monday event is expected to be the Biggest Online u. S. Shopping day ever with 9. 4 billion in Sales Forecast as well u. S. Consumers are expected to spend more than 140 billion online over the entire holiday period some bumper numbers there. Lets get to john riley, the retail expert from publicist and former head of ecommerce at amazon as well a man who knows a lot about the ecommerce space. I just want to ask you about those numbers. Looking at the 7. 2 billion number from friday, that shows a 14 growth year on year. And today the numbers are looking like theyre going to be north of 9 billion as well for cyber monday can online spending continue to grow at this pace, double digit growth every year . I think online spending will continue to erode real world spending that when history books are written about this black friday and cyber monday, it will be the Tipping Point between digital and retail while, of course digital doesnt take all of online sales, it influences virtually every sale. Were seeing that more and more consumers are interested in shopping at home versus necessarily going to the stores. Well, exactly there was wall street journal article that i was reading this morning talking about how target were anticipating a flood of customers to come to the stores instead the flood of people running down the aisles were their own internal employees trying to grab things off the aisles and package them for all of the online orders that were received do you think that the shift away from inhouse spending towards online spending puts soninlaw of the traditional malls, Traditional Department stores at a disadvantage versus the giant ecommerce websites like the amazons, walmarts and targets of the world . I would argue that every retailer has a different path. And mall stores no question are suffering, but during the Holiday Season, theres a large social component to going to the mall and experiencing winter wonderlands and santas there still will be a fair amount of foot fall in malls ecommerce is here to stay. A Digital Strategy for any retailer, walmart, target or smaller retailers is the path to success in the future. And companies that dont digitally transform themselves in order to do that will struggle against ones that do. And just picking up on amazon, i know you have expertise obviously having worked there, looks as though the numbers as a share of the whole percentage of total online spending, amazon is still set to capture north of 40 , huge part of the overall market. Can any other Online Ecommerce retailer compete with amazon at this point compete is probably a strong word i think what were seeing from the other large retailers is that they found their own path the best path to success for the walmarts and targets of the world is not necessarily to compete with amazon but to find ways to service their customers better where they want to be theres an awful lot of pie to be taken in terms of ecommerce only amounts to about 10 to 12 of total retail sales depending on which numbers you look at, so theres a lot of room to grow for all retailers, not just the walmarts and amazons and the targets of the world so, in order to be successful Going Forward, Digital Strategy is the way to go and competing with amazon is not necessarily the way to win amazon, of course, is its own challenges and the ability to spend lots of money to succeed finding ways to service your customers is the way to go forward. You say that Digital Strategy is the way to go fwrd but equally very high barriers to entry to that space because if you want to be competitive when it comes to same day delivery and allof these other sweeteners that retailers offer, you have to have the logistics capability that are up to speed and line as well so, what sort of potential does that open up for new entrances or existing retailers to improve their logistics offerings . Youre exactly right. Logistics is the lynch pin to bring it all together and also the achilles heel for many retailers in order to make that work there are many Logistics Services offered to retailers to help them do that. Amazon is kraegt its own logistics empire via prime air and trying to create its one day shipping model at the end of the day, those types of shipping models are probably not sustainable for any retailer, be it amazon or any ore one. I think were in a little cusp period while we figure out where and what needs to be there tomorrow, what needs to be there in two days. And customers will be trained over the course of the next two to three years where oneday shipping for some things is acceptable and two to threeday shipping for other things is acceptable and that will take a lot of the pressure off retailers in terms of logistics. Talking about training customers the other phenomenon seems like the Holiday Season gets earlier and earlier every year people started doing black friday sales before black friday this year. What does that mean for the future of the industry if customers know that theyre always going to be discounts on goods. Nobody in the right mind would actually buy anything at full price now knowing there are plenty of opportunities to get things at discounted prices. Very true this year was a little anomaly because the thanksgiving holiday in the u. S. Came so late in the year theres a lot of competition right now for deals in general retailers were offering black friday specials up to the second week of november to your point about when to buy, black friday has been frequently seen in recent years not necessarily purchasing holiday but more of a getting to know whats out there holiday in spite of the massive numbers we saw on black friday and predicted for cyber monday, were predicting nearly 150 billion in sales over the course of the entire holiday period, which is also compressed so, people are shopping not necessarily buying and i think theyre going to see a lot of people waiting for the best deals to come and retailers are climbing over one another in order to offer those best deals to get consumers to go to them versus their competitors. Certainly difficult space to navigate for retailers, but a great one for consumers. John, thank you very much for taking the time to chat to us. John reily, former head of ecommerce at amazon. A quick look at how u. S. Futures are shaping up on this cyber monday all three majors seen opening up in the green, this after a red session on friday for wall street despite november being the best month of the year since june very strong year for most of these equity indexes year to date and today looks like a strong start for the day as well that is it for street signs. Im Joumanna Bercetche Worldwide Exchange is coming up next. Tom steyer wall street banks took advantage of millions of americans during the recession. So, my wife kat and i took action. We started a Nonprofit Community bank with a simple theory give people a fair deal and real economic power. Invest in the community, in businesses owned by women and people of color, in affordable housing. The difference between words and actions matters. Thats a lesson politicians in washington could use right now. Im tom steyer, and i approve this message. No coverup spray here. Cheaper aerosols can cover up odors in a flowery fog. But febreze air effects eliminates odors. With a 100 natural propellent. It leaves behind a pleasant scent youll love. [deep inhale] freshen up. Dont cover up. Febreze. vo thewith every attempt, strto free itself,piders web. It only becomes more entangled. Unaware that an exhilarating escape is just within reach. Defy the laws of human nature. At the season of audi sales event. It is 5 00 a. M. Here at cnbc and here is your top five at 5 will it be a december to remember for the markets and your money or like last year another one to forget. Wall street bracing. The clicks have it, online crowned king once again. The Holiday Shopping season rolling on a Winter Weather alert thousands of flights delayed hundreds cancelled freezing temperatures, snow and wind all reeking havoc on the holiday commute. Another day, another trade deal debacle what china is now asking fro the u. S. In response to that prodemocracy resolution signed by the president last week