Transcripts For CNBC Street Signs 20240713

Pandemic kering gets paired down with gus gucci sales down volatile trading again in oil as brent bares the brunt of the selloff. Nearing 21year lows producers battling the glut and depressed demand the u. S. Senate passes a new 500 billion relief fund package. This will go to hospitals. Loans for Small Businesses and some assistance in the funding for testing. You cannot tell people to go out in the streets without adequate testing or the fear is that corona will come back doubly as hard as it came the first time a very warm welcome to street signs. European markets starting the morning off on a high note currently trading about 1 higher following a steep selloff with the main benchmark breaking the win streak this morning, european corporate earnings taking focus. We had a number of Earnings Report a raft of Different Industries movement around dividends and a lot of pressure on earnings. Companies sounding a more optimistic tone in the second half of this year and beyond 2021 Energy Market volatility weighing overhead. Weve seen continued selling on oil. Brent on that selling pressure we mentioned headlines and President Trump calling for a bailout for the Energy Market. A lot of uncertainty when p it comes to energy. Taking some rest when it comes to communication and positive news on Antibody Testing from roche as they plan to role out testing later this month lets give in to the markets to see the different regional split. We are seeing green across the board led by the italian market up by 1. 1 the dax also trading firmly up 1 in the uk, the ftse 100 also higher kering, one of the keyer understaunder performers across the Market Technology on top of the board at 2 . Texas instruments maintaining its dividend, a industry bell weather. Banks rebounding at 1. 7 higher. Yesterday, the european banks took a substantial hit rounding out, real estate, telecoms, financials and utilities. Lets look at the chip makers who have bounced on that news. We are seeing strong gains across the board ams higher, st microcame out saying they expect h 2 to be higher than h 1. Up nearly 1 sole tronic higher ericcson, another name in focus in the tech space. Core profits beat market estimates as the demand for 5g Network Equipment caused resilience the Swiss Company said no reason to adjust its financial targets. Shares reacting very well up about 4 in the chemical space, akzonobel jumped up in the First Quarter to 214 euros the dutch maker of paints and coating said the virus pandemic will impact sales in the Second Quarter. Those shares right at the top at 7. 2 clearly a better set of results than the market was expecting. In the beverage space, heineken saw beer sales fall 14 as most of the world went into staying at home. Scrapping all executive bonuses. Theyve insisted theyve taken the necessary steps to weather the storm and that the brand and Balance Sheet remains strong putting it together to mitigate the risk with the impact that they are seeing on demand. Investors dont like what they are seeing shares down 1. 1 speaking exclusively to cnbc, heineken ceo warns that the longer the economy is shut down, the harder it will be kick off again. Caller the on trade sector around 30 of your sales this has totally stopped worldwide. This is in a broad brush the extent of the damage the longer we stay closed, the more difficult it will be to restart the sector and it will ask from the industry as well from the different states that they perhaps operate with fiscal measures to operate them we are not going to get there. Another stock in focus is kering posting a 15. 4 drop with gucci taking an even harder hit. The luxury group cautioned over positive signs in the Chinese Market saying it is too early to judge rebound. Down 5. 9 . Clearing under pressure. Lets get to charlotte for more. What has disappointed investors so much this morning given that we already heard from lvmh and we were expect thg weakness especially in the asian market it is the numbers of gucci. All eyes are on gucci, they make 8 of their operating profit last year. This is the cash cow of the group. They were down 23. 2 gucci is heavily reliant on the asian demand with the lockdowns in that region, impacting the sales. Gucci sales down 60. 4 like for like for the group down 15 for march. Along the lines of what lvmh posted last week with their sales down 17 saying that this took a heavy toll on q1 looking at other brands, down 14 . So less bad than gucci but up 8. 5 organic because this has less exposure to asia. Good news for kering because theyve been beefing up other brands and other houses which is helping them and bearing fruit with a positive result for the specific brand they say watches and jewelry business was hit hard and reflects on lvmh last week when that division was down 26 same from kering bright spot was on line sales up 20 percent e for q1. Mainland china was up triple digits theyve been working on getting it for a while and offset a little of the lockdown effect. With less customers in the stores for q1. They have seen improvement in april with customers coming back too soon to show how big those rebounds would be. Quite interesting here for kering for u. S. And europe, if they dont see a meaningful recovery there before june or july. Being cautious about q2. Twothirds of the stores are still closed how quick will they start reduction with work shops shopsn italy. Gucci is so important for china. Can they restart in italy . There are questions of how quick they can restart there are questions about stock moving around different channels to address demand. They said they will sell less to wholesale to stores and on line and cutting costs and dividend by 30 compared to what lvmh announced yesterday, now down to 80 per share. A cautious note. Now the shares in kering this morning are down 6 right at the bottom of the cac this morning thank you lets push on and look at the oil majors this morning. We are seeing a bit of a bounce back in those oil names. Total higher shell up maybe the way to categorize today is stabilization lets look at brent and wti. We are seeing continued pressure in the june contract 11 a barrel down 1. 7 brent for june down 10 at 17 a barrel brent, perhaps the proxy for market fundamentals at this stage. Interesting to see brent is now baring the brunt of this selling. Investors try to determine if we will see the same situation as we saw with the may contracts for june speaking to cnbc, he said his aim is to ensure Oil Companies get access to the funding in the crisis caller we want to make sure these guys get access to the liquidity being provided by the congress i dont know that they are being excluded we want to ensure that they are to the extent they can be included we want to ensure they are not being discriminated against. Weve heard stories of banks who dont want to lend to fossil fuel industry players. Lets bring in charlie more as head of asset brent joins this conversation and steve will be with us as well charlie, you are head of multiasset here. Your view, what this means for other asset classes. How has it made you adjust your view, if it has . Caller in the short term, if not we are getting into higher they deserve it. They cant stay at these levels forever. In the short time reaction to the sharp drop like this, with commodities, we are seeing stress across the sector it will take time. Inflation and deflating is not good it is good to hear from you it is obvious, massive description now for the foreseeable future and for banks as well. Not many banks will look excitedly about new shale wells going forward. Do we create a situation where we see sharp moves to the upside although we dont see the time scale . Caller it will take time to flush out literally. With sessions going back 100 years, it has always been about this we thought we had solved this with computers the system is cloged up. It will take time to all of these things looking at the oil and the action yesterday was telling that could be on the way to making those i seem to be a buyer of oil stock because it is easier to store. Ill pursue the. 1 more time, if i can a lot of the investment in energy isnt about new energy or increasing supply. It is about maintaining current supply the 100 Million Barrels a day picture has been shot to pictures well see that come back well see population growth. Even if it is just about maintaining supply, if investment isnt going in, that creates a problem, doesnt it . Caller absolutely. That goes back to 2014, the fact that investment in the sector had been falling a lot of what you shared in particular are backed by cheap credit to go away in the lower term was the problem. This was the 1970s type view that harder credit absolutely, well have Higher Oil Prices in the future for what you buy right now and all the oil tankers are full thats the issue good morning, charlie i see you are overweight growth. Given we are grappling what earnings look like going forward, what growth looks like to you what kind of companies are we talking about . Caller Companies Like amazon, i am ordering things and they are coming the next day the machines theyve been building the last few years to stand up to the market is incredible the lead areas of the world are unscathed. If anything, they are amplified. But it is true it is an existing trend. Less high street in the short term and in the long term. We have seen netflix come through with strong addictions to subscribers there was a measured outlook for Reed Hastings. Weve also seen ad revenue start to fall away for businesses like facebook and google here how much caution do you need to analyze for some of these structure businesses caller for the spec la tiff growth and companies will be like tesla very strong indeed yesterday, had a bit of a checkup. There is more speculative stuff. You cant underestimate what markets lack and that is money i do need to look at the 1970s when we had the inflations then back to 1998 where we had the liquidity, strong market and emerging markets that had been 0 running for years now. I would point to something interesting. And that would happen looking at 1996, two years later, the market goes up four fold charlie morris, the head of multiassets. When we come back, well take a look at what is going on here in the uk there was a lot of news yesterday on vaccines. Hopes of human trials. And talking about the phone call between Boris Johnson who is umdold back to work and na trp. That is after the break. P, there is a chance that thats the last time. 300 miles an hour, thats where i feel normal. I might be crazy but im not stupid. Having an annuity tells me that im protected. During turbulent times, consider protected Lifetime Income from an annuity as part of your retirement plan. This can help you cover your essential monthly expenses. Learn more at protectedincome. Org. Swithout even on yoleaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 12 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. Roche confirms 2020 outlook saying it expects sales to grow. Market volatility had a limited impact reported today 7 rise to 15. 1 swiss franksing. Roche is currently rolling out coronavirus test kits after u. S. Approval a solid set of numbers here about being able to offset erosion from biosimilar competition on that front, they are continuing to deliver. From a broader perspective and what the results today mean for a Broader Market sentiment with regards to coronavirus they gave updates to Antibody Tests and trial to treat severe covid19 pneumonia roche announced the launch of Antibody Test to be available early may. They reiterated expectations with regard to those tests and expect to be able to produce high double digit million of these by june. They commented in contrast to the current monthly he can u allstar tests that detect whether the individual has the virus, these Antibody Tests which detect immunity are able to ramp up faster from a technical view and then on severe treatment for covid19 pneumonia and they are going through trials on their arthritis drug the hope is that this drug can reduce the inflammatory response they are ramping up the testing of that drug while they await trial results. The roche ceo criticized the uks approach saying there are regions where there are high highcapacity testing. I want to go to steve. Hes been following the uk story closely. I think Matt Hancocks story yesterday about the vaccines and the home around the uk potentially getting a vaccine to protect, it is not a substitute for testing. Im curious your take on this and why the uk is so keen to emsies vaccines when they are so far behind on testing where they reiterat reiterated having that vaccine we spoke to matt hancock a couple of times. He said by the end of this month, april which we have eight days left. He said uk would be conducting 100,000 tests per day. Yesterday, we conducted 18,206 sometimes you dont need to add editorial. The fact is, there were 18,206, he promised 100,000 by the end of the month perhaps thats why he wants to tout it so well. Thats been the conversation among europeans. Keen to put the focus on vaccines the uk is at the global forefront. Weve put more money than any other country into the global search for a vaccine and of all of the efforts around the world to these leading efforts taking place at home at oxford and imperial in normal times, reaching this stage would take years im very proud of the work taken place so far at the same time, well work on manufacturing so if these work, we can make it available for the british people as soon as possible lets go with the positives on this hit here 22. 5 Million Pounds have gone to imperial and more to the latest search and another who is very bullish saying there is 8 0 success saying it could be ready for public use by september and mass roll outs by the end of the year that is optimistic especially when the chief advisor said it is a long shot we cant make it something that just solves coronavirus, it has to be safe as well you know thats why we have such long periods of testing. Ill leave that there today. I want to tell everybody where i am today we are outside a building you know very well, julianna outside the Stock Exchange i want to show you where exactly i am i am at Christ Church gray fires. It is a shell of a building. It has been rejuve nated after two of the most catastrophic one in 1666 with the great fire where it was gutted. Then, we had the rebuild for the ring church. It was then destroyed in one of the worst firestorms that could possibly happen during the blift in 1940. What you can also see behind it and around here is rejuve nation you can see the bank of america, merle lynch building it is a beautiful area this is a metaphore we do recover. This place has recovered a couple of times. What a great reminder so many of us are adjusting to this new reality thank you for that coverage in the uk and your tour when we come back, well be talking netflix who saw a massive jump in subscribers as viewers stay home but the streaming Service Warns that this membership tick could be the last dance for membership growth this year more after the break welcome back to street signs. Im Julianna Tatelbaum these are your headlines u. S. Futures rise. A lack luster session in asia as getting a boost from bell weather Texas Instruments as the group maintains its dividend powering to a First Quarter profit beat saying the industry will show further resilience against the pandemic netflix blows away expectations signing up 15 million subscribers. The stock with gains and warning the boost will wayne we think well see a slow because of that. We dont use the words guess lightly. We use them because it is a bunch of us feeling the wind volatile trade in oil brent holds the selloff as producers battle to deal with the glut that has formed depressed demand european markets are now open seeing broad based gains across the region the uk higher up about 1. 4 . So gaining some ground in the last half an hour or so as investors put money to work. The dax up 1. 3 . The cac 40 is up just 60 basis points kering is up right around the bottom of the stock 600. They are seeing caution numbers out of china but urge investors no the to get too excited just yet and the ftse mib leading technology is higher sector wise the chipmakers green across the board. Soul tronic, st micro. They expect the second half of the year to be stronger than the first half overall getting a boost from Texas Instruments that yesterday maintained its dividend providing a boost for the european market. It was a downed day yesterday as Oil Market Volatility weighed on sentiment tracking lower fought the second day in a row this morning, we are seeing u. S. Markets are also poised to rally out looking at a triple digit rise also looking to perform quite well let me take you to netflix seeing global subscription jump as they got a boost from viewers being force to stay home with popular shows like tiger king and net heist they prepared for gains in after hours trade. Lets push on speaking with an Earnings Call with investors Reed Hastings added the outlook for the Company Remains uncertain. My guess is that subs will be light in q3, q4 because of that. We dont use the words guess lightly. We use them because it is a bunch of us feeling the wind and it is hard to say. Again, will internet entertainment be more andmore important over the next five years . Nothing has changed in that. We break down the numbers in greater detail netflix adding 15. 7 million new subscribers in the First Quarter. Roughly double what most anticipated. With 7. 5 million new sub skriepers in the Second Quarter. Higher than expectations the revenue of 5. 7 billion beating expectations by a hair earnings came in lighter than the 1. 55 per share projected. Saying there are three main effects of coronavirus on the company. In addition to subscriber growth accelerating due to home confinement. The company is seeing International Revenue that is lower than forecast due to the dollars sharp rise. Some spending on content will be delayed. He expects viewing to decline and subscriber growth to decelerate as home confinement ends as to the shutdowns, they expect some delays of when shows will arrive on the platform by a quarter. They expect Second Quarter content to be modestly impacted. Saying, quote, since we have a large library. Viewer satisfaction may be less impacted than by our peers with less new content fund manager joins us now steve and geoff will also join the conversation a substantial spike in subscription growth. Over 15 million new users. That is really staggering. What do you make that the bulk of new users came from outside the United States . And what is a realistic trophy je trajectory from here good morning. Given that the lockdown started outside the u. S. First, clearly had people staying at home more and looking for what they could enjoy staying at home. You can understand why a lot of those subscribers came from outside the u. S. Clearly netflix is a penetration of the opportunity they a res. They are more underpenetrated outside the u. S. All of that makes perfect sense. Some of Reed Hastings word of caution, i think hes probably wanting to remind everybody that these are unprecedented times. The surge of demand that theyve seen for services in q1 and into q2 based upon these unprecedented times. They just dont know the impact of those subscribers as we hopefully get to a conclusion of the Current Situation and get to a situation where we can now start to have quarantine restrictions lifted and spend more Time Outdoors and clearly go into the summer months. As that happens, people will clearly be spending more Time Outdoors rather than glued to their tv sets. I think Reed Hastings is calling for caution. I think the company has suffered in the past when forecasters have extrapolated shortterm results. I think hes just reminding everybody of that right now. Fair enough, jeremy i think about how this stock and the company would fair in a prolonged session. We dont know how long these streaming services will hold up. Whether when people are forced to cut back on spending, guying groceries, are they really going to hang on to these. How do you think netflix fairs if we are heading into a prolonged recession. Any element such as netflix has a discretionary element. Consumers look at the vast amount of things they spendon which are necessary. Some people would say that having access to some good call ilt content this they enjoy watching even in times of recession is their opportunity for escapism and getting away from negativity in the news and being able to watch something to keep their minds off day to day in the news. I think theyll be an important spend for some subscribers clearly some will decide that is too much but some will look at where else they spend on in terps of Subscription Services weve seen people switch off subscriptions to cable or satellite plans before they switch off subscriptions to overthe top content like netflix a couple of important drivers has been the focus on hardware manufacturers and the Chip Companies that sell into that. For providing models like facebook and others. Looking at the cowen estimates for companies. What is your reshuffling for those . Good question there are very few pillars that are still as robust as they were a few weeks ago. The question around advertising is an interesting one, an internal debate we are having at the moment what we have seen is that we think the like of advertisers on facebook and google get a pretty good investment for those dollars or pounds that they are spending relative to other forms of media. So, yes, we would expect the overall spending levels would come down. We actually think google and facebook would be resilient. Whether that is on tv, on outdoor advertising, movie theaters we think some of those advertising and media platforms might actually fill the brunt in the down turn with the likes of google and facebook. Hardware there has been a surge of some aspects of hardware. Weve been hearing shortages of laptops, for example, as more employers give laptops to employees to be able to work from home. The Cloud Computing giants the likes of amazon, awz have been ramping up to cope with increase in demands during the recent times jeremy . Hi. Im going to jump in. Time is very limited everything you are saying makes total sense. Companies have already been talked about in terms of higher and utilities, will that increase the regulatory scrutiny and cause for more scrutiny and regulation on these if we see them as utilities from now on . A good question ive got to admit, my crystal ball doesnt give me the foresight into that. They could go one of two ways. Companies need to thrive to provide the services they do so maybe the regulators need to sort of ease off a little bit in terms of the scrutiny they give them and the other is the scenario youve painted because they are strategically important that regulators need to scrutinize them even more right now, i dont know which way it goes. I know these services have proven themselves to be pretty valuable i think we can all agree on that thank you for being with us. And geoff and steve as well. Sticking with the tech space, shares of reliance jump after facebook announced it is taking a huge stake in the digital arm. Theyve made a 5 bot 7 billion invest in in geoplatforms. Facebook has invested 5. 7 billi 5. 7 billi 5. 7 billion in geoplatforms what is geoplatforms the digital arm of indian plan under this plan is reliance, which is indias biggest geoplatform. Getting into the india market. A big push resolves around wat whatsapp and a partnership between whatsapp and geomarket and youve got access to a power powerfulm powerful man in india. That is a tricky market and all of this together gives facebook a big push and what is seen as growth for the company reporting for cnbc news. The european semiconductors were getting quite a boost in chip makers. After texas instrument said it is gracing for a tough Second Quarter. This despite the chip maker beating analysts in the First Quarter with revenue declining only 7 and income falling only 4 despite the coronavirus disrupting its market. Investors welcome the companys profitability and confirmation it will continue to pay dividends. A big bill for Small Businesses passing a relief package of almost 500 billion. Is that enough we discuss more after the break. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 12 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. Welcome back President Trump is expected to sign a new order on the immigration ban that will put a halt to those seeking permanent residence to the United States on a temporary visa or those coming to work as farm workers will not be accepted the u. S. Senate passed a 500 billion relief package with democrats being unable to pass more funding for the states. Provides a fresh 300 billion loan to protect paychecks. Hospitals and other Health Care Providers will receive additional funding minority leader Chuck Schumer welcomed the bills for testing budget but argued that a testing strategy is needed we will not get america moving again until we have a nationwide, well thought out, well executed testing program. This administration doesnt have one. We proposed 25, we initially proposed 30 billion we got 25 billion most important is a National Testing program. Testing production and supply chains, free testing and involving contact testing. They are lagarde you cannot tell people to go back out to the streets without testing for fear that coronavirus will come back stronger than the first time well go to tracie potts. Nearly 500 billion more in relief is it enough what is your take . Some people think it is not enough but it is certainly more than we had last week when that Small Business program ran out of money you heard Chuck Schumer there talking about hospitals and testing. These are things democrats pushed for this is why this was delayed republicans only wanted to deal with Small Business loans. They also pushed to get some of that Small Business money set aside for businesses owned by minorities and women we saw in the first round of funding that there were Large Companies that were able to get the money because they applied in their individual locations but they are trying to make sure Small Business money actually goes to Small Businesses this time around. So the plan, the Senate Approved it members of the house are scrambling back and we could see the president sign off during the week a warning of the second wave of this virus in the fall right when flu season begins traci thank you for breaking this down for us thank you for being with us. Lets get a look at u. S. Futures. Yesterday was a difficult day. All 11 s p sectors were negative led to the down side by tech different story today, we are looking at a bounce at the home with the dow jones looking at a 330plus point jump. Thats it for today. Im Julianna Tatelbaum Worldwide Exchange is coming up next. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 12 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. Will stocks reverse a twoday slide as crude oil crashes . The crude crunch continues now hitting the world. The International Price sinking to its lowest level in 20 years as producers are desperate to find storage well show you how to potentially make some money. And the white house waiting on relief. Maybe this one will last