Transcripts For CNBC Street Signs 20240712

Data and parts of beijing are locked down. They see red after impairment charges and write offs that could hit 17. 5 billion in the second kwarquarter. Easy jet launches its first flight since march. Wed like to see it get replaced by Something Else and thats what the purpose is but there is the case that this should be tried and tested by the court and the french president lifts almost all virus restrictions reopening restaurants and bars as he claims victory over the virus. Starting tomorrow we will be able to turn the page. Well, a very warm welcome to street signs, everybody. European markets have now been open for about an hour we saw the stoxx 600 gain a percentage point. We saw whether it has further to run given the fragility of the Health Situation and thats in beijing and several states in the United States causing a lot of concern so certainly seeking a more cautious trade on friday. Lets see what the break down looks like in terms of region. We have red across the board here were seeing the steepest losses in the french and german market. Both of those down 2. 7 or more. The swiss index is holding up better, just about down 1. 4 and within that basket health care but still Health Care Stocks down more than 1 overall so a very clear message this morning is taking risks off the table, money out of equity markets this morning as they race for what may lie ahead. Theres growing con sercerns ab second wave in the u. S you can see nearly a 1,000 point drop for the open at the dow if that level holds theyre also due to come under renewed selling pressure this morning. Now a beijing district that has been put on wartime emergency mode after reporting dozens of new coronavirus cases for the first time in weeks sparking fears of a second wave this comes after Chinese Industrial production recovered by less than expected in may while retail sales fell for the fourth straight month. While chinas economic recovery continued in the month of may, the pace of it fell short of expectations. So fixed investments from january to may fell 6. 3 year on year analysts had been predicting a decline of 5. 9 . Industrial production expanded 4. 4 in may year on year analysts were expecting it to remain steady at around 5 as businesses got their production back up and running so while this was the second month that we have seen an increase it did fall short of expectations really suggesting that the economy is still struggling. Retail sales 2. 8 in may year on year analysts had been expecting a 2 decline. But certainly better than aprils 7. 5 drop. Now this was a major indicator of consumption growth so it does suggest that Consumer Confidence is trickling back but while more people are going outdoors and eating in restaurants and going to shops economists have told me that people are still worried about their jobs and tightening their purses now to make things worse and add to the growing concerns in china, beijing reported dozens of new cases linked to a food market in the capital. According to authorities china reported 49 new cases on sunday. This is significant. It comes after almost no cases in the city for almost two months now the alert level is raised in this area where this market is and that means that no Economic Activity can take place for now. This really does reiterate the fears of a risk of a second wave of coronavirus in the worlds second biggest economy which has been playing on the mind of the Chinese Government were seeing shares down nearly 4 . So a significant step lower. Certainly more of the more cyclical parts of the market lets take a look at oil majors. Selling pressure as well bp shares leading the charge lower down 4. 6 this morning we had hit a lower level than that bp in particular felt good after they came out with revised longterm price assumption they reviewed their intangible assets and say investors should prepare for up to 17. 5 billion worth of write downs in impairment charges so pretty negative news this morning. Lets take a look at travel names. Much of europe opened its boarders today trying to kick start the Tourism Sector just a lot of nerves overall around the reopening story and its one of the more cyclical parts of the market. Lets bring in the chief Investment Officer to weigh in on the Market Action we have seen william, its been a roller coaster to say the least for global equities. Last week, the sell off that we saw in europe, the sell off that we saw in the u. S. Clearly giving investors a reason to pause for breath, where do you think we go from here . I think that the market still had a remarkably good run in the last three months now. Yes we saw a bit of a pull back last week but theres still a lot of good news in aggregate i think and we would be a little bit sceptical about that we have been cautious on the market because its one thing to respond to the Monetary Policy and liquidity injections we had but ultimately we need to see the sorts of things that youve been talking about this morning. We need to see economies reopening and demand coming back and today will be coming back. Are they going to be in there and spending money the balance of probability seems to still suggest that this is going to take a lot longer to get back to where we were in jn a in january and february. What do you think about the different approaches being taken by the u. S. In terms of reopening. They not only took different measures when it came to locking down but now we have seen the u. S. Open in a piece mill way. Theres been a lack of a centrally planned approach but here in europe today is a great example. Were seeing travel restrictions lifted across many countries at the time which is likely to serve the respected economies better do you think . Thats a sort of good ext exitensial question. Individual states have a lot of autonomy when it comes to the policies that have been implemented. So imposing a lock down is probably going to result in lots of legal challenges in the federal system here in europe, you had approaches but you at least had a sort of centralized approach so countries can close boarders et cetera and as you say theyre now starting to reopen but a lot of this comes back to the fact that although we talk a lot about following the science, then its an extremely complex science and actually one of the things that is striking about the virus is that even three or four months into it being a crisis theres still a lot of uncertainty about how the virus is going to evolve from here whether or not there will be a second wave and all of these things are creating some obvious uncertainty. Whether or not the u. S. Approach is better than the european one, who knows but i think youre right that certainly in big states like california, florida, texas, and arizona, theres a pick up in cases there thats slightly worrying and you certainly had Governor Cuomo saying dont make me come down there. Videos of people in manhattan out looking like its fairly normal so still a lot to be resolved and i think that comes back to the market and the market has taken a pretty positive approach we think perhaps a little bit too positive. A lot of that positivity has been encouraged by governments of the fiscal and monetary stimulus thrown in the system where theres a very strong view that fundamentals departed from some of the markets because of the stimulus what is the role of fresh stimulus particularly targeting the long end of the curve also 150 billion dollars in qe could be added to the system. What would further stimulus do for the markets at this point . I think the response has been incredibly aggressive and vital to keep liquidity, particularly in credit markets and in bond markets. Thats allowed Companies Access to the bond market which has enabled them to get cash to keep their businesses going at the time of negative demand. So the monetary stimulus has been the right policy. It will be interesting to see whether or not the fed chairman powell changes his tone at all this week in his testimony to congress and at the moment the fiscal response is being very aggressive and correct but this is Disaster Relief. This is what you do after a Natural Disaster thats what the paycheck projection scheme is in the United States. I think that the Health Care Economy is moving. We probably need another wave of physical spending. But its just about keepingly quiddity going you need to see demand coming back and it will be interesting to see whether or not he shifts the tone a little bit because i think his remark last week certainly contributed to the nervousness in markets on thursday. Just on the second wave of infections and whether were going to get more Disaster Relief as you put it if there happened to be more lock downs at this point its hard to see what the second wave looks like. So what could we expect . Well, i think that people are obviously hoping there wont be a second wave and some of it is premature to be thinking about and pick up in the United States and some of the states and the ones that have opened and this was probably still the first waef i think the issue, i think theres no question that locking down the economy to the extent that we did in march, april, may is going to be very difficult to redo you can see just the frustration that people have and its going to be very difficult to do that. Having said that if you have nervousness about the virus people may take it upon themselves not to go out as much people are quite rightly nervous about this this is a very unpleasant thing to get, particularly in thouz groups in society in terms of age groups and existing Health Conditions this is a very serious thing to get. If the virus starts to come back again people will do it voluntarily. It makes it harder and harder to get the economy back to where we were in january or february and to some extent that questions the issues around can the liquidity keep things going or do Companies Just start to run into real solvency problems. Chief Investment Officer. Lets get back to markets. A couple of the corporate stories in focus today bp set to write down 17. 5 billion in the Second Quarter. The British Oil Major details the charges saying that its cut its longterm oil and gas price assumption in march. The ceo told cnbc that the virus fall out is going to hit the company hard. The outlook is uncertain. Its going to be a very tough Second Quarter you mentioned were absolutely deep in action we have taken a billion dollars out of our capital for that business this year probably going from 13 down to one or two riggs and the real situation that we have here is a fundamental situation of supply and demand. Demand in the Second Quarter we think would be down around 16 Million Barrels a day worldwide this year and thats about five times the previous demand which we saw in the Global Financial crisis in 20082009. Big news out of bp this morning. Shifting gears to the Financial Sector Commerce Bank board member has warned the lender will close significantly more bramplgs and cut more jobs than previously announced. A Union Representative on the Commerce Bank board said staff had become unsettled at the prospect of job losses theyre down about 2. 3 this morning. H m posted a 50 plunge in Second Quarter sales although that was slightly better than the market expected. Swedish fashion retailer said net sales came in at under 30 billion swedish crowns around 900 of the Stores Remained close worldwide but a jump in online sales helping offset the fall in resale traffic. Theyre holding up down 1. 8 coming up on street signs, emanuel macron announcing a swath of ea swath of easing measures and wei weig weighs in. Xtstl bring you all the late ne the covid19 pandemic is creating Food Insecurity on a scale not seen in decades. An estimated 54 million americans will struggle with hunger. With 200 food banks and 60,000 meal programs, feeding america is the largest hungerrelief organization in the country. Join Morgan Stanley in supporting feeding america and your local Community Food bank. And your local Community Food bank. Okay, give it a try. Between wisdom and curiosity, theres a bridge. Between ideas and inspiration, trauma and treatment. Gained a couple of more pounds. Thats good for the babies. Between the moments that make us who we are, and keeping them safe, private and secure, theres webex. Beautiful. 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 15 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. 5g is now included with all new data options. Switch and save hundreds. Xfinity mobile. Communities of color have always been underrepresented in the u. S. Census. That means less federal funding for schools, hospitals, libraries, and other Public Services for Diverse Communities and less representation in congress. This year, its critical that you participate in the 2020 census. Its safe and confidential. Lets make sure everyone is counted in our community. For more information, visit getcounted. Com, and to participate, go to census. Gov. The Coalition Government is planning to simplify the push for digital and Green Investments and bring more women to the work force. He shares the view of the Commission President that theres no going back to status quo. Meanwhile the Recovery Plan should focus on future generations. The European Union for the first time borrowing money from our children we should not as sometimes our Member States did borrow from our children just to spend the money today. Today we invest for europes next generation france will enter the next phase of the post pandemic recovery. Starting tomorrow well be able to turn the page. Territories will be classed as a green zone that will allow stronger resumption of work and the reopening of cavfecafes and restaurants in the region. Charlotte, thanks for being with us on the back of macrons address. Really interesting the message is loud and clear that france has been victorious. Maybe you can walk us through the easing measures but also a little bit of context into what is motivating macron and his messaging. Youre right. The fight is not yet they can come back to every day life and he mentioned that caves can reopen still having restrictions and they can go back to business as normal schools reopening for up to 15 years old. Back to normal and from june 22nd for just a couple of weeks before the holiday they begin to make a point as things need to go back to normal and also allow more people back into work and also we mention in the program that the boarders will be reopening to the rest of the world from july 1st with countries where the epidemic is under control as well. So he decfended last night the actions. And he said that the government will not raise taxes and when a politician talking about taxes and not raising them theyre containing and not too many job cuts will be done. Its interesting to see what it means for that and we can see what he means in the next month. Its a change of direction and so he addressed some of the concerns of racism and violence because we have seen protests this weekend in paris on the back of George Floyds killing in the u. S and too often in france, your sir name, and the color of your skin means less opportunity and france needs to look at its own history. Take a listen. Translator we will be inflexible when it comes to tackling racism, antisemitism and discrimination and new strong decisions will be made. But this noble fight is perverted when it turns into commun ixix communitarianism. Basically laying out for the next two years before the next election the economic recovery addressing the division in the nation and its additional reforms that could come out the next two years and theres also some talks of potential government reshuffle in the next few weeks. So we watched all of this announcement for the new direction. Coming out of this coming crisis. Thank you for bringing it down into all of that content. Now here in the u. K. , retailers in england will open for the first time in almost three months as the country continues to exit from coronavirus lock down but all shops will enforce strict distancing and hygiene rules and must impose limits on trying on products reopening the wider sector is key to the u. K. s Recovery Plan after data showed gdp falling over 20 on the quarter in april. Now it comes as Prime Minister Boris Johnson promises to review the countries 2 meter safe distancing rule. Johnson says it will help the recovery there are benefits in terms of preventing the disease now statistically those benefits become less valuable as we get the disease down but i dont want to sacrifice the huge efforts of the british people in beating this disease Prime Minister johnson and European Commission are set to hold their first direct talk since the u. K. Exited the union at the end of january. Beyond the first of january 2021. More on these talks that are set to resume and why are they holding these talks now. He was already there for sometime it was meant to be a high level summit between the u. K. And the e. U. The u. K. Will announce whether or not it was extending this period but because of coronavirus this high level meeting has been reduced to a video call and at the same time they were told not to be extending this transition place. So both sides will come out of this video call and say that they are committed to put together a deal that they would intensify their talks. And at this stage theyre still stuck over the same three main issues and lets see whether this intense schedule Going Forward will allow them to reach their differences and they aim is to really have the trade plan and trade agreement by october so then it can be ratified by the various parliaments across europe as well as here in london in the house of commons. If we dont get that then there will be a hard brexit at the end of the year. There will be more tariffs and trade barriers starting in 2021. That could be an additional head ache on both sides of the English Channel when theyre facing a lot of difficulties from the coronavirus pandemic. Astrazenec will have 400 Million Dollars of the vaccine a group formed by france, germany, italy and the netherlands. They could begin to receive the product thats still in Clinical Trials by the end of the years theyre holding up much better than the broader market. Just a touch below the flat line now when the European Market is down 1. 8 . Lets get down to steve. Were coming off on street signs. Europe was reopening its border with several countries lifting restrictions were live at one of the key airports in the u. K. Which Services London and indeed the surrounding area this for the First Time Since march 29th after china posts disappointing industrial data and parts of beijing are locked down after a local outbreak. Bp sees red after the british oil giants revealed impairment charges and write offs that could hit as much as 17. 5 billion in the Second Quarter. And travel stocks decline despite europe reopening easy jet launches its first since march but the ceo tells cnbc the industry has a long path ahead. We would like to see that the quarantine gets replaced by Something Else thats what the purpose is but we do believe also that theres a case that this should be tried and tested because we believe that its actually on local. I want to give you a look at European Markets at 1. 5 hours into the session we have announced off the lows in the morning and worth noting that the negative momentum has paused investors are putting money back to work and seeing red across markets here in europe this is after a weak hand over from asia. Most notably in japanese markets nikkei 225 down about 3. 5 mainland Chinese Markets holding up better. Finally lets take a look at u. S. Futures like were seeing in europe we have backed off the lows of the morning. Now back here in europe several countries are set to reopen their boarders today france will lift its ban on travel from other eu countries as part of a broad pull back on lock down measures greece will also open to most International Tourists but has expanded a van on u. K. Travelers saying they will be subject to increase checks on arrival spain will allow most travelers to enter since june 21st the return to normal will be gradual and cautious coming in days and weeks so we have collected a lot of data to base our decision on science and we have to ensure that even if there are cases the disease will not spread widely and finally were open in ensuring that we will take the localized decisions should there be a need to control the disease in a more strict manner. Easy jet is marking its first flight since late march as britains biggest Budget Airline looks to recover from a slump in demand lets get back out to steve that joins us no doubt about it today and the momentous day returning to the skies. Were still far from return to normal when it comes to services. Very much i think again, lets been hoest about it, i was standing next to it before it attacks it off and then flew to glasco. That was the first of the day and then we had to wait another hour and thenext one leaves at 10 45. Were on a skeleton schedule here and look at what could happen next from here on in and we speak to ryan air and the fact of the matter is that its very much down to what the government is doing and new quarantine rules that came in one week ago and includes 14 days of selfisolation and selfquarantining and that is unless you have some pretty strict criteria that you could meet as well and they really need the government to move next to save this industry. Theres no doubt about it. Its the ceo of easy jet talking to me first on cnbc this morning talking about what the government needs to do. We had like to see that the quarantine gets replaced by Something Else thats what the whole purpose is we do believe that this should be tried and tested because we believe our key focus is ready to make sure that from a Public Health point of view and also allow to do what they do best. Connecting people that it should be replaced by Something Else. Still with Public Health at the forefront of what were doing. Its really, really great to speak to him this morning and be there to see activity. No bones about it. This is my local airport i want to see the local economy thriving and just look at the sight as well. Just to show you the scale of the challenge here we have dozens of planes you can look at. And easy jets because of course being their main hub as well there is no activity a couple of gentlemen on the tarmac but thats it theres no flights at this moment over an hour until we get the next flight. This is a really busy airport. This is the busiest runway on the planet. 6. 6 million passengers a year. And look good. The ceo spoke to me earlier. Its really important this year for us. Also been talking to him so they fully understand what we require but for us, what we want to see is the entire eu opened up we want the entire eu which is very similar to what is happening on mainland europe today. Whether the corners are coming down and they started to travel freely between the countries that was him speaking to us earlier just saying how this government needs to maybe change its review which is of course on the 28th of june if the Airline Industry is going to have any chance at all over this summer as well the airport itself i have to say has done an awful lot. I have been wondering around and i had my mask on all day theres screens at check in and you sanitize and also theyre doing a lot to try to show the government that safe travel can be conducted to and from the airport. Im on the sky bridge. There was no one there this is a place that i normally scurry across because im so late for my flight because they tell me im boarding as well and i love busy places and you can hear a pin drop. And the founder and chairman and thomas, thank you for joining us and of course you have a niche end of the market as well but presumably youre having the same problems with the same restrictions. We do have to see restrictions we never shutdown. We are around the globe of 115 aircraft and lets take the United States as example were back to about 85 of the traffic prepandemic and that is an economy which is open of course it can fly from florida to california. Today is a big day for europe because europes bordered within the area are mostly opening up and then of course the restrictions will be okay. I was looking at the financing model. Do you think its a Business Model which will actually benefit from new restrictions and new concerns about global travel. It is travel and i think the key here is nerms of Business Model that companies dont need to buy an airplane they just buy the hours they need and they can use our entire Global Infrastructure of all the airplanes. Were in asia, were in europe, were in the United States were in africa and you dont need to buy a share open aircraft and you just hop on our business anywhere in the world what happens really is that the traffic goes where the demand is so we dont operate out of one specific call and i believe that the load factor is that the Airlines Need in order to operate profitably has that commercial infrastructure. Smaller jets flying point to point. Its that point to Point Service that will be not available for commercial islands for a long time and thats where they will fill the gap and help restart the economy. Pretty remarkable you said 85 was back to 85 of where you were precovid19 can you give us an idea of how your customers have evolved . Or are these new customers that otherwise would have been using commercial services . Yeah. I mean, we have a sales force of over 100 executives around the world and its 71 of any new incoming or sales code were having is for people that use Business Jets regularly. So theres a huge influx while some of our competitors have withdrawn or have massively down sized and we believe this Business Model will benefit to some degree. A lot of new people coming into this marketplace we see today opening up and people were just waiting for that june 15 and then spain coming with june 21 right on the back of that and thats seeing us as a Global Infrastructure and global company. What does this mean for pricing moving forward. We see a relatively stable pricing. What we did see in the month of march as the world was shutting down, a lot of Business Jets were withdrawn from the marketplace because corporations will usually have withdrawn it because of Health Concerns or wanted to keep that aircraft in the back for emergencies so we have seen a slight spike in pricing in marchand now things are more normalized and we believe that just buying the hour that you need shields you from a fluctuate of pricing for the aircraft itself. Just a reminder you can follow us on twitter and also tweet me directly i would be curious to hear your thoughts on returning to the skies now that thats a possibility and still ahead on street signs, the umt. S. Reports growing numr of coronavirus cases prompting fears a second wave. More coming up after the break announcer americas veterans have always stepped up. But with the covid19 crisis, many veterans are struggling to make ends meet or get the care they need. Dav has helped ill and injured veterans for one hundred years, but today, the need is greater than ever. Give to the dav covid19 relief fund and help provide critical assistance to veterans in need. Go to dav. Org helpvets or call now. Your donation will make a real difference. Theres growing concerns about a second wave. They reported a jump in cases over the weekend florida reported a 3. 6 rise on saturday that was the biggest jump. A number of Southern States including alabama and North Carolina registered a Record Number of new infections in the past three days. New york Governor Cuomo issued a stern warning saying the state could roll back reopening an area that violates the safety protocols. Antiracism protests took place across the United States this weekend intensified by the Fatal Shooting of 27yearold brooks in Atlanta Georgia his death was ruled a homicide after a Police Officer shot him in the back three times. The officer in question was fired and atlantas police chief has resigned. The incident amply identified calls to review police authority. Lets bring in the Founding Partner of Hamilton Place strategies thanks for being with us as always lets kick off in terms of what were seeing first and foremost. Were seeing spikes in the number of cases in places like florida, texas, arizona. Thats the key question everyone is trying to figure out right now. This isnt even the second wave. Theyre talking about a return of the virus coming back in the fall for a lot of these states, texas, arizona, North Carolina, south carolina, florida, this is some extension or the first spike of the first wave. I want to see more of that but its really hard to imagine some kind of reopening when you have these kinds of spikes in these major markets in the United States right now so much of this reopening and return of activity depends on the labor market whats your take on what this these continued little outbreaks, i dont want to use the word little but these continued outbreaks and spikes mean for the return of jobs. The return of some of the furloughed workers who are waiting to hear whether theyre goingto be able to reenter the workforce Governor Cuomo cautioned about this relief we saw last week but we saw a lot of restaurants reopening a lot of businesses are reopening. Were reconsidering or trying to adjust the timing to come back to our offices as a lot of companies are. And people do want to get back to work where its safe and theyre doing the proper distancing to do that. Theres still really large weekly people adding to the unemployment role so they want to come back to work its not going to be back to normal its going to be less than normal Economic Activity i went to our restaurant last week for the First Time Since february which was wonderful. And the political implications of this. Big movements like this in the past lead to increased voter turnout and the emotional response over the past few weeks so we can expect that and it has been a significant swing although i do caution people that five months ago we did not have a single coronavirus death in the United States and now were five months from the election a lot could happen over a five month period but these kinds of very large emotional events at this time leading into an election season do have the ability to jeopardize one side or the other and were seeing it on the side. This push to reach voters and to get them to register a mail in ballot process so we do expect it in november. Thank you Founding Partner Hamilton Place strategy. Lets get a check on European Markets and a fairly eventful morning. Were seeing red across the board there but we have bounced off the lows we have the swiss index proving to be the most resilient among the major regions. Very health care heavy the dax and the cac 40 bouncing off the lows of the morning but still under pressure as investors digest the higher coronavirus moments causing concern and causing investors to pause for breath lets take a quick look at sectors. We have seen a particular pull back in the more cyclical parts of the market but the losses have been paired back. The hardest hit in addition to these concerns and the virus and the spread in the u. S. And china. Those investors also digesting weaker industrial data out of china overnight and lets take a look at wall street. We are in for a negative start to trade but not as negative as we are looking at earlier. Also poised for a weeker start and this comes after a difficult week last week the dow lost 5. 5 for the week overall. Thats it for todays show Worldwide Exchange is coming your way next. Hello everybody. Its me, gru. But you already knew that. And ive got some tips to help you get through these challenging times. First, practice physical distancing. Im sorry, i did not see you there. Ive been doing it my whole life. Or there. Plus, there are lots of things you can do at home. Like, stay active with some sick dance moves. Be daring. And whip up a new dish. I love the combination of gummy bears and meat. You can do video calls for all of your important meetings. What . Sorry. Or just have some fun. Ok, not that much fun. Now, this does not come naturally to me. But, try to be kind to each other. This is a tough time for everyone. So thats it. Stay home. Stay healthy. And remember, were all in this together. What . But totally separate. You know what i mean. Yaaaaay your top five at five starts with brace for a sell off. Dow futures off 630 points markets on edge. New hotspots around america as beijing locks down the market after a first of new infections. Trump brainstorming new ways to get people off unemployment and back on the job action employment disincentive. Tough talk from Albany Andrew cuomo issues warnings from bars and other businesses in violation o