Transcripts For CNBC Street Signs 20240712

Caixabank and bankia talk a merge. U. S. Futures are none volatile with job growth expected to grow in august a warm welcome to street signs. Happy friday it is all about markets. Wall street took a nose dive breaking a 10day win streak now the question, is this a start of a bigger rotation out of growth quality stocks into more valuable parts of the market which have underperformed europe stands to benefit thats the way many investors are thinking about it the cac 40 and the dax in positive territory. The spanish market performing very well. Getting a big boost looking to merge there. Look at the sectors. The major gains coming in the most cyclical part of the market banks up, travel and leisure, basic resources, auto round out the best resources the most defensive parts of the market underperforming, food and bev down apple shares in frankfurt fall wiping 150 billion off the market cap it speaks to the size of apple that it can lose that many man in one day we are looking at those things trading lower. Reporter want to talk us through more detail with the u. S. Markets yesterday this is an extreme everyone is talking about this fall in the u. S. Market, hold your horses. We are down 1. 26 . Yes there was a quick fall and it was violent if you look at any mercedasure,e markets are anywhere but extreme. The biggest factor undoubted technology for the week, it is down 1. 5 . It had been strongly up. Now it is 5 away from that record level elsewhere, we saw apple being one of the biggest negative factors. We saw it fall 4. 96 for the week, down from where it come from. A year of covid and the new type of valuations trading on 15 to 20 to 25 times tesla, at its lower for the year was trading around 86 a share and up to 450 a share and down aggressively down around. 2 of one percent lower at the moment. Thank you for breaking down the u. S. Market. Well be back out to you shortly. Elerian warned. We could have another 10 fall do you look at absolute valuation or relative valuation. In relative terms, stocks seem cheap to Everything Else in absolute terms, stocks are expensive. If you are fundamentally based, you ask, am i being paid enough yield and highyield bond . The answer is, no. Not in this economy. Weighing in the market reaction. Great to have you with us. The big question for investors is whether this is going to improve the temporary blip or is this the more significant rotation of the tech winners or the key lagardes in those value parts of the market. A lot of this will depend on the discovery of q 2, 3 and 4. So far, a lot of pentup demand those things placed to continue through the consumption. At the moment the valuation those might be lagardes and offer stops but really for that to change, we need an economic environment that is supportive for these names that the profit can recover. What was the catalyst we saw for the selloff yesterday. A lot of the investors are pointing to the Options Market there have been big positions built. That meant there was always going to be the sort of dynamic hedging where some stocks would move to be exaggerated to some extent i think, looking behind that, what we have is the situation where we have very good fundamentals good to long term, we push to those levels and extremely skub rant any change that could change quickly and have a very big impact thats what happened we were overbought looking at the technical market indicators. Any sort of snap back was always going to be quite large when it comes. You and i and people have been looking at the markets for years from you and tesla has the price. How you can feel about the value stocks down 43 . Down over 19 . I want to put aside the madness of the oscillation and concentrate on the stuff we can price. Are financials overpriced and underpriced or are they cheap . Relatively, they look very cheap. Looking at two different categories, there have been structural categories for oil Going Forward youve got less challenges and you are right. This is like what we saw in 2000 in terms of what performed afterwards, these economy names had been overlooked by investors and they do represent the value that was supportive enough to have allowed these names and are very low especially european banks, you have to have a grimmout look to come to fruition do you know, roger, you touched on Something Interesting there. If your name is walking backwards. Com, youll find your bit in the market. But if you are a bank or an oil company, they are going down they cant catch a bit they are trying to dig ties and looking at new energy as well. Why isnt anybody looking at that part of the story in terms of these stops, investors dont believe it as they are looking for it in 10, 20 years almost the extent investors want to see that is starting to come to fruition. These measures are going to drive the future of the business in the longer terms. Theyll almost have to deliver and show the story to the investor for the investor to buy it coming back to the tech selloff. A take that a lot of the action was from the selloff a lot of the headlines, the market selloff it suggests market activity and that investors are pessimistic to the world there is a concern about the rest of the market should we see further declines in technology and should we look at that as a testament to investors feeling more optimistic as they look more exposed to the market and a return to normal absolutely. That is a valid point. I am supportive in the Economic Outlook and the vaccine credibility where the market is able to look at the end of the trouble for the sensitive stops. That is in europe today against the u. S. Yesterday will get this extreme index level response where he could see the u. S. Equities falling and been quite buoyant in that type of environment. That is better than the actual u. S. Market. Just looking ahead in terms of the u. S. Catalyst, you mentioned the outset data is being the important fundamental driver of where we go from here. What specifically are you looking out for . There are two elevation markets and unemployment that have to come down. Weave to mix and see the jobs that will be lost, come back to other areas in the labor market. The second aspect we cannot ignore takes the fiscal response by europe and the u. S. If that continues in the measure for the fiscal position, that will be supportive for popping up the consumption in the short term thank you for being with us today. Steve . Thank you. Weve been hearing about how this time potentially is different for the likes of the Prime Minister well bring you that sound after the break. Well diverge away from joe politics and economy and speak to the ceo of new technologies which is the world leader of smart urban mobility, thats e ll bafr rs webeack tethis short break. Give you my world how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with xfinity mobile. Welcome back to street signs. All about steep action today we are looking for a mixed picture. Dow jones to rebound the dow jones dropped 800 points now it looks as though the nasdaq is taking pause for a breath whether at a beginning rotation out of tech stocks that is more into the lagging parts of the market. Whether the more value part or a temporary blip the u. S. Economy is expected to have added 1. 4 million in august. The slowest uptick expected to fall 1. 8 . Newest jobless claims came in at 880,000. Due to seasonal adjustment, this season is not comparable to last week 1. 7 million figure, continuous claims under 1. 2 million. Meanwhile, rising to around 760,000. We have green across the board in europe. This question about whether we are seeing the beginning stages of the rotation under the value slant where we are seeing green across the board the ftse 100 up. The cac 40 up. The spanish market outperforming. The spanish Banking Sector rallying strongly on the back of this news of the banks considering a merger that would be the largest domestic lender in spain the broader sector and Banking Sector doing quite well. Lets look at the bonds and yields we are seeing those move higher. The 10year italian is the btp actually moving lower as investors bid for italian bonds. We are seeing a risk on mode compared to what we saw yesterday in the u. S we talk about the market sell off between the growth parts and the more cyclical parts of the market now or never for the reforms telling cnbc that roam is on its last chance amid its outbreak. We go live for more. How many last chances can italy have this time the money micks a difference if the 209 Million Euros is spent correctly then the mistakes can be changed around and it can invest in the south and in Green Economy and invest in the youth as well. We know italy is not the only country struggling with youth unemployment the gdp in the Second Quarter a little worse came in at 12. 8 down real problems as well. Exports down 26. 4 debt to gdp has gone up. Now around about 155 to 160 i mentioned, the former Prime Minister is now an academic in paris. I mentioned how he sees it different. Lets listen to the man himself. Okay ill tell you what he said he said, now there is the money. Tough to make reforms when you cut the budget that was the case for the last seven or eight years it is possible to do it. Now there is money to invest as well we spoke to carlo himself that found it tough to do so also a former director of the inf who said hes still worried over the medium term and is critical to take this opportunity for the reform that is overdue reforms across the entire country. That is what italy has not done enough of. Im delighted to say another former minister standing in front of me. Well speak to the former minister about banking as well that will be another blot on the horizon. Hes the ceo that promises a new form of banking here in italy. Welcome back to street signs. Im Julianna Tatelbaum these are your headlines the selloff stops in europe the dow sinking 800 points amid broad tech declines. Apple shares continue their declines after losing 8 , wiping over 150 billion over the market cap caixabank and bankia discuss a merger and job growth expected to slow in august european markets have been open about an hour and a half now we have green across the board the selloff weve seen in the United States driven by the tech sector not driving through to europe we did see a selloff in europe. The main benchmark did fall 4. 4 a little rebound important to know we are seeing the appetite and seeing for a more cyclical part of the market we have basic resources, travel and leisure and autos. One of the overarching question is whether the selloff we saw in tech marks the beginning of the rotation in growth sectors to one of the more valued parts of the market. On the down side, we make one of those sides underperforming to make food and bev. Weve got the euro trading a little light lets look at the u. S. Futures looking at the dow and the s p 500. The nasdaq trading on the flat line to those levels it will stabilize if these levels hold after that selloff yesterday. We want to give you more detail in shares of the Banking Sector on the news that two Spanish Banks are considering a merger it would see a group of assets over 650 billion euros. Shares up 55 . They are lifting the broader spanish Banking Sector a quick check more broadly weve got green across the board and providing a list to the broader banking space. Back out to you. Im really glad you finished on the banks, you give me a nice segue. You may remember him as former minister of economics here in italy. Lovely to see you. This is your home town this is one of the best place in the world exactly there. Indeed. So many things have happened over the last 10 years one thing that hasnt changed is meaningful reform of the Banking Sector there hasnt been as near the sector may i disagree . Of course a little more than 10 years, we turned this industry from about 1,000 banks to 100 which other country in europe has done Something Like that think about germany, for example in any case, we have done a big part that we have to do a lot of consolidation has been done there is room for more the level of efficiency has increased. Why am i still terrified. The number of zomby loans out there. Lets face it, there are companies and debts that are still there that shouldnt be there 10 years after the gfc the length of the recession between 2008, 2012, 13, 14 it created the mass of exposures. A good part of it has been sold between capital increases and sale of this position on the other side today, we are not far from the european averages. What is happening because of covid, we will increase the level of bad debt throughout the world. Today, the system is much better equipped to handle this. Also some specialized banks like ours are better equipped lets give you the average. And one thing i admire, aided by the situation, when there is a loss to be taken on the debt, they take it early on. Potentially, theyll see that in europe they see the problem or the down grade. Europe waits years to come through in the books and makes them far more fleet of foot. You are right the main reason, now this has been increased in the provisioning to push these out, we make the european end much more similar i dont know if there is going to be a down side of move or dramatic move to the up sight. Will the Banking Sector scloes or have a higher session that remains quite low for quite a period of time that would be an emission of failure . That is an acceptance of the situation. Obviously Monetary Policy cannot cope with the situation by it self. We have to put together the policy lose with the fiscal policy because today is the day of investments with the single country and union on the investment. Given what you have just said and correct me on the number of banks, why do we feed a new one . For sure, because we need a new paradigm banks Digital Technologies and monetary are making the old banking models almost unsustainable. We need those specialized in the industry where those are not good at. We are not going to lend to those different ones on the same credit score rating or not Different Companies we are looking at the companies that traditional banks would like sme with strong growth but not with enough equity strength. Companies that have gone through travels and have been restructured the traditional banks do not like there is room for creating value and defending employment there is a psychological problem with european banking . There are a number that are formerly weak and we are focusing there and those values are enormous even bad debts there are enormous reserves of value, under estimated, neglected and thrown away that can be redesigned. We are lending money and buying credit to companies that have Growth Potential and where there is some hidden value to be extracted. Lets put those two things together you are tapping into some things as well. You believe that actually we need five trillion euros of investment in europe to catch up internationally. Is that going to happen . If we add in power, there are global powers. Europe is not yet one of them. We have not yet had a federal budget, power, weapon. Today, we have euro bonds that have been used for those solidarity projects. Theyve gone beyond expectations we have to use this weapon to catch up special in terms of technology to be big powers. Europe will be the big power at the federal level. Youve gone to a different level. Youve just said well have a super natural body of the scope. A german or danish investor yes because brother is a common interest if you talk about solidarity or debt materialation and helping other countries. You talk about investments this side and financed at the federal levels that make the area more dynamic and push growth, i expect the political resi resistance of those countries. Thank you lovely to see you, sir the ceo of the bank and has a great vision for European Future thank you so much in the u. S. , joe biden visited kenosha, wisconsin amid protests of Police Brutality his visit comes two days after President Trump has traveledto the city President Trump has called for voters to vote twice he says voters should test the system saying that postal votes could be subject to fraud. Send in your early ballot and then go and make sure that ballot is counted and if it is not, vote. Then they have the job if it comes in late and if it is not too late, they have the job of making sure they dont count it but follow that ballot because these people theyll be lost. Theyll be gone. The numbers are incredible 35 , 20 off follow your ballot our u. S. Colleagues will speak with mike pence today at 15 30 cet. Here on street signs, well take a departure from italian politics and talk smart urban mobility, thats escooters and the ceo yan li well discuss after a short break. Offers investors a broader view. We see companies protecting the bottom line by putting people first. We see a bright future, still hungry for the ingenuity of those ready for the next challenge. Today, we are translating decades of experience into strategies for the road ahead. We are morgan stanley. Are a major security concern. Cdw can assess your needs, then design and implement a secure Mobility Solution using the hp elitebook powered by intel 8th generation core processors. The hp elitebook features groundbreaking builtin security, like sure view to thwart visual hacking and cdw configures them to your companys specs. For mobile security, you need hp and it orchestration by cdw. [intel jingle] if Everyone Wants a recovery plan, they seem to be focusing on that same aspect of the plan, whether it is climate or digitization that should tap into a company such as new technology lets ask the ceo yan li who joins us on skype live from shanghai hello. Good morning how are things going at the moment for you hi, thank you it is actually going good. It is going great. The First Quarter has been impacted by covid19 since the First Quarter, china has been recovering and we are seeing more growth how long do you think the covid impact will affect that aspect of your business . Initially when the covid hits, that is the time when people stay home as the whole covid starts, people realize they do need the daily commute. And because of social distancing, People Choose not to take Public Transportation and they are looking for individual mobility devices in china, we are seeing it pick up and where we are seeing a faster pick up of electric scooters and electric bicycles short of the covid19 push, its much easier to pick up on the individual electric device and fill that daily commute. I spoke to many and they all say the same thing, we hear it from the u. S. President and from shanghai as well infrastructure is the key. Are you seeing that coming through or is that just promises globally more or less, i think people has been talking about the infrastructure of a charging station. We saw china stop building some. In terms of mobility devices, our product is a lithium battery use. It is quite light. Riding distance about 50 kilometers the battery are portable from our business perspective, we dont require infrastructure. We are seeing a different government start to push you are seeing in the uk where the government subsidizes the value. If you choose to buy the electric rather than petro motorcycle italy has Just Announced they will subsidize 30 of value to accelerate con suchlgs of electric vehicle, motorcycle and skooters youve explained your battery life you dont need physical charging stations on the streets. But you do need the roads and systems to get in and out of major metropolitans. From where im sitting in london, im still seeing gridlock of people sitting in their cars i have to agree with you. A lot of cities are still jammed it is difficult to add a road or widen a road we are trying to convince people, hey, instead of driving a car to work, drive a two wheeler. By picking a twowheel device, you are saving road spaces in china, 80 of people travel in the city alone. You do the daily commute and you save the road space that will help reduce the traffic as well. I mention the nasdaq listed company, are you getting embroiled in that community. Are you, a, getting embroiled in any way, shape or form, or b, do you fear even if you are not at this point, we are in the heat of this political situations because the target where we are trying to assert on that mobility in the travel device to the city movers. That demand globally is valid looking at the stock price to increase about 2 x in the past two months or so as you move to the cd issue to solve it and put more cars on the street those with no names here at all. Theyve manufactured here and say why havent they got more places to manufacture. Is there anything can you do to negate concerns . That is a very valid question we are not just selling in china, we are 45 countries about 20 in sales and going faster in china we will set up the manufactured plan set up in asia and look at the United States to value options to set up factories in north america. In this whole light of the whole world is moving. They call out for our company, really a smart electric Scooter Company to have a Global Supply chain and manufacturing basis. To say a resumption of covid and what is the biggest barrier to growth in our company to be honest, when growing so fast, in the last few years at 70 and growth weve been so fast and the barriers where we are seeing the trend. Not anymore is the cost of batteries. It used to be, we actually tried to convince people from petro to electric it is very difficult no matter how much you convince people, this is cleaner and better, no this is still too costly as this whole industry, not just us the Automobile Industry is moving from petro to electric. That declining of the cost space enables us to provide a smart electric moped or scooters at a reasonable cost where people can enjoy it we see thats the destructive trend in the technology and declined battery cost. That has been a real education. Thank you yan li ill be honest, ive never been on an electric skooter maybe it is time to try it steve, good luck on that. So good to see you out there lacking at the markets despite the steep nose dive for tech stocks, we are seeing investors bid for markets this morning. U. S. Markets posed to open with green across the board well hand it over to our u. S. Colleagues state side for all the action sis. Trt or watching see gn good morning breaking market news asia selling off overnight european stocks trading higher right now. All of this comes ahead of the key u. S. Jobs report we have complete Team Coverage of everything that matters to you and your money it is friday september 4, 2020 you are watching Worldwide Exchange on cnbc