Transcripts For CNBC Street Signs 20240712

Tiktok parent byte dance as hopes for a partnership with,el can avert u. S. Sanctions soft Bank Shares Jump as they agree to share to nvidia for 14 billion. The Japanese Investment company is looking to go private japans Ruling Party Leadership race setting him up to take over as Prime Minister placing the countrys longest serving premiere shinzo abe. Thanks for joining us. Let me take you to the European Market but we havent got 6,000 points which is very difficult territory in recent months so the dax chasing almost half of a percent and looking solid. Near 5,000 points last week and holding on to that leadership with another. 7 italian stocks also in the green. We saw last week that these markets would try to hold on to some of the gains despite selling on wall street very serious patches of volatility on the u. S. Markets but european stocks did try to put a little bit of distance between themselves and the market action. Lets take a look at the better performing parts of that market. Thats very close to a theme from a number of Fund Managers looking for the recovery stocks. We had the rally in technology and health care. But of course with some momentum investors have wondered whether there will be catch up in the target areas of the market but youre seeing industrial stocks again. Technology still in the mix now. A ton of activity taking place and you can see that again Construction Material rounding up the worst performers though, you can see it into the green and even real estate with food and beverages, health care is the only sector that trades weaker this morning but investors have been strong to pick up on the trade in recent months and amid last week were hearing the astrazeneca trial and it happened so i think investors are just a little bit cautious around the news flow from the sector thanks very much, karen lets get to the latest around tiktok oracle is set to be named as tiktoks u. S. Technology partner according to a source directly familiar with the deal byte dance wont give source code to any u. S. Buyers according to Chinese State media. The news comes after microsoft confirmed byte dance rejected its bid to buy operations they insisted the proposal would have been good for tiktoks users while protecting National Security interests. Chinese state media now said they will not sell tiktoks operations to oracle or microsoft or give the source code to any u. S. Buyers and it comes after a person familiar with the discussions told our colleague state side that they had now chosen oracle to be tiktoks Technology Partner in the u. S. Operations after the Parent Company rejected microsofts bid to snap up its u. S. Operations. So byte dance is in exclusive negotiations with oracle and discussing a sale of a significant Minority Stake in tiktok to the Company Making oracle the Technology Partner. So it will be interesting to see what shape this deal takes given that oracle will no longer be the outright owner from the sale which we are expecting to see but also given that state media said byte dance wont hand over at the source codes. China did announce new export controls in certain technology which includes the ai algorithms that tiktok uses to keep its users engaged on the app so theres still big question marks about how the Partnership May actually look like and how the Technology May perhaps be dealt with but interestingly when it does come with this potential partnership at oracle we also said that it is thought to be in compliance with the committee that investigates foreign acquisitions in the u. S. For potential National Security rist risks and it will be interesting to see how some of the concerns are addressed when it comes to claims or worries that tiktok user data could end up in the hands of the Chinese Government which is something the company has repeatedly denied. Of course the clock is ticking on the tuesday deadline for byte dance to divest its u. S. Operations of tiktok and its not clear at this stage whether the u. S. Government will approve the proposed deal. It comes after a report saying beijing was opposed to the sale. It would make byte dance and china appear weak so they have suggested that they decided to pursue this partnership in an effort to avoid the ban while at the same time, satisfying the Chinese Government back to you. We have a bit of movement on the diplomatic front as well the u. S. Ambassador to china will step down after three years in the position. Mike pompeo thanked him for his work in rebalancing u. S. China relations so that its results oriented are reciprocal and fair. Joining us, we will be watching this play out through the lenses of tiktok at this time and given the change in export rules. And another deal, what do you make about what is playing out between the chinese and the american side. Youre right to point out that there seems to be an attempt to try to have some kind of compromise. Some kind of balance here. But you have to see all of this through the lenses of the u. S. President ial election and while President Trump wants to continue to intermittently criticize china its all about trump trying to play up his domestic record and secondly, trying to cast doubt about joe biden and the policy ajgenda domestically so china, at the moment, isnt necessarily going to be something that allows trump to completely remain his momentum in the polls its more domestic in focus. The rational thing to do is accept the compromise from the u. S. The uncertainty before we see the final decision in the u. S. Is that we see unpredictable positions from President Trump but on balance we probably look to allow the focus to go on to the u. S. Election. If trump isnt reelected then some of these concerns disappear and if there is some sort of agreement before the election about this particular deal and it is a partnership then we might have a new Playing Field that if Chinese Companies want to do business in the United States and we could possibly think beyond that in western countries thats some of the data that has to be ring fenced with a local player. Yes, that could well be a consideration. But it goes wider than that. Theres a degree of regulation that the democrats would be looking to undertake in terms of the tech sector, whether thats light regulation or the draconian situation of an antitrust investigation by the d. O. J. Which is, we think, unlikely so certainly the tech sector while having sold off now and bouncing a little bit into mid october is going to be keenly focused on the u. S. Election outcome and particularly what policies we would see if joe biden were elected as we know, President Trump is more benign as far as the tech sector is concerned domestically in the u. S. But if you look around the world were seeing the number of virus cases tick higher and it could be a resurgence of the virus in europe. How concerning is that to you given that hospitalization rates still remain pretty low so it looks as though the severity of this is perhaps less concerning than it was the first time around i think that you need to be concerned when you have a country the size of spain, france, the u. K. Thats rubbing at 3,000 or 5,000 or 10,000 new cases per day. Its certainly the case that this particular summer wave is less deadly. Partly because of the impact that its having on the younger rather than older and because of treatment and because people are using masks. But its not a good starting point to be going into the autumn and i think the medical profession and scientists are worried about a winter wave occurring, novemberdecember, january when we do get Colder Weather in the Northern Hemisphere and that can potentially have more bite so we may welsey this wave in europe subsiding by mid october and the cry sus being centered on latin america and india. And we will still be concerned about it before we actually get vaccine approval and vaccine roll out so i think that thats something to watch closely. Is it fair to say that well trade in tight range before we get data through for some of the leading vaccine makers that is the real game changer for the markets. So we had indications that toward the end of the year well get the results through which should lead to emergency use approval the markets are biased toward one of the major candidates being approved if not multiple of the major candidates. But we may welsey a bounce back in the market after the recent sell off but some turbulence around the u. S. Election particularly given if joe biden does win which is our expectation youll likely see a disputing election and donald trump really sort of challenging the result, but then as we get toward the end of the year, then i think the vaccine optimism and vaccine approval takes over and gives the market a real leg up into 2021. Its creating a little bit of havoc and investors getting concerned around no trade deal being established here theirish Prime Minister says most likely the reading is that british approaches a negotiating tactic and the u. K. Wants a trade deal saying i believe we can solve some of the issues the u. K. Is concerned about state aid and not that many issues for a thin trade deal with the u. K what do you make of the no deal risk at this stage its interesting to point out negotiating tactics because we have been here before. Not just at the end of last year but in previous phases where the u. K. Had a tough negotiating position and given way or found a compromise at the last minute. This is slightly more serious in that the reason for this is not just negotiating but the u. K. Realized that some elements of the agreement that they signed last year are perhaps not appropriate from their standpoint so its hard to tell whether its purely just negotiating or whether the u. K. Government truly believe this. So i think that its 50 50 or alternatively no trade deal and actually quite a bust up between the e. U. And the u. K. As we go into the end of the year so i think, you know, sterling in the fx market is right to be cautious at this point because if you get no deal then sterling can fall further. Thats always the worst Case Scenario what would no deal mean in that type of context or with all the Business Uncertainty supply chains being disrupted and reverting to wti rules it would probably still mean technical recovery in gdp for the u. K. Next year so positive growth but thats a lot to do with vaccine roll out in the u. K. But the u. K. Would be lagging behindand structurally it would hurt the u. K. As a Foreign Investment destination well have to leave it there. Thank you so much for joining us today. Talking on a range of topics coming up on the show, he wins the leadership race gearing up to take over as the Prime Minister of japan. Greece has announced to buy 18 they did not provide further details about the purchase but said it was the first time it received an order from athens in almost two decades they could shed as much as 15 of its work force of 9,500 that is if the airline cannot come to an agreement on salary cuts with the start according to a local newspaper. The unit is looking to cut costs by a fifth the french finance minister will do whatever is necessary to help air france this after his dutch counter part warned that the survival is quite not a given. The immediate future was secured by 10 billion bailout alone in july but the airline is looking to cut over 6,000 jobs to save additional costs. A bit of activity in the m a space today. The European Exchange operator submitted a nonbinding offer to buy from the lse group the tie up could create a major player in European Capital markets. Hermann houser says soft banks sale of the group nvidia is a disaster. They have agreed to sell in a deal with 40 billion. The Japanese Investment firm acquired the british chip designer in 2016 for 32 billion. Were taking a look at the european chip makers this morning. Were seeing the names trade modestly higher on the back of this news. Executives revived talks to take it private frustrations over the 115 billion equity valuation have driven discussions they have embarked on an asset disposal following a series of failed bets. The Financial Times reported that softbank had taken a large number of options in major u. S. Tech Companies Recently as the group looks to shift its Investment Strategy away from private start ups. Japanese politics, suge has been elected the new leader of the Japanese Party he is expected to succeed abe as Prime Minister fascinated by one of the opening comments from suga saying he was born the oldest son of the farmer without any knowledge of blood ties and launched into the world of politics and his opening is that hes just not part of the establishment. He says that he will continue the policies of shinzo abe of course one of his close allies for 8 years is the chief cabinet secretary. Not a lot when it comes to a change in policy but youre right it was an emphatic win for him it was looking as though it with was going to be a three horse race when it came to which one of these three men would lead and then become Prime Minister we did see a large number of factions really throw their support in the last few days behind mr. Suga. He managed to win with such a significant majority when it came to the other candidates as well as the former foreign minister only scoring as a widely strong leadership contender only with 68 votes now there wont necessarily be a sharp deviation from the former Prime Minister shinzo abe policy this leader is the best person to lead in the current era and he is saying he must continue with the policies of the abe government weak monetary policy, act over a number of years. Also fiscal spending but also structure changes and structure reforms which may say he wasnt actually able to do that effectively so he is saying he does want to implemented the Structural Reforms and create a government trusted by the people listen to some he had to say a short time ago as he was announced the victor in this party race translator amid facing the nationwide crisis of the coronavirus outbreak, we need to overcome this challenge. In order for every Single Person to have a safe and stable life i need to move it forward. I believe this is my mission the japanese market ending before we got the results of this party vote out we are seeing the yen strengthen as well pushing back below the 106 level. Well be eyeing the possibility of an early election or a snap election in japan because theres been some speculation that if he is able to get that socalled suga rush, the honeymoon period now that he will become a Prime Minister come that parliamentary sitting on wednesday whether or not he will try to improve his mandate by going to the polls. Its due to be held in september of 2021. It would be a cause of a snap election or an early election but well wait and see what transpires after he is sworn in there and then confirmed as the Prime Minister a little bit later on this week back to you. I want to pick up on the pointer on the snap election because theres a history around politicians making very similar judgments once there is a leadership change whether theyre overthrowing a current leadership or natural progression. Theres almost a feeling as if this politician wants to ensure they had a proper mandate. And in this particular time frame who knows how theyll feel about covid19 and how its being managed by the incumbents so maybe its the right time to go straight back and bring about the change and a longer term in office at this point yes, you might get that immediately after you become the new Prime Minister but then you have an Election Campaign as we know very quickly but it will also be interesting to see how voters react to of course the economic policies of the government and whether or not they want to see it continue because it was the largest contraction we have seen on record and annualized pace, Something Like 28 was the contraction that we saw in japan. And the sales tax or consumption tax may need to pay for some of the social pressures that he wants to introduce but he quickly walked that back and said perhaps that would be for the next decade and not necessarily immediately. We can talk about increases down the track at the u. K. As well. I think politicians just giving the population something to think about. Thank you for bringing us the latest on the developments in japanese politics. I want to show you implied poll ti volatility has risen thats the highest since early april as sterling has risen 12858. We tried to pick up on some of the trade. Clearly around concerns that it will be overridden thats been the main headline in the press as it has been put on the agenda today thought to be mounted time is running out for tiktok as byte dance hopes a partnership with oracle can avert chinese sanctions. Shares jump as it agrees to sell chip designer to nvidia for 40 million. The Japanese Investment company is looking to go private. Suga lead wins the race. Amid facing the coronavirus outbreak, we need to overcome this challenge in order for every Single Person in japan to have a safe and stable life, i need to move it forward. Theyre all posting strong weekly equity performances now we are getting a bit of support on the vaccine front with astrazeneca resuming the trials of their covid 19 vaccine candidate. Also theyre announcing theyre looking to expand it but so far the optimism outweighs the pessimism on that front. Currencies sharply in focus. Lets take a look at how fx markets are trading this morning. We have the federal vefsh meeting on wednesday bank of england and bank of japan on thursday. Perhaps the most exciting trade this morning is in sterling. Riding to 14. 4 since April Goldman sachs weighing in saying lower odds than the market implies. It got its first two week losing streak since may. We are looking at a positive start to trade so a bit of a bounce back expected for the u. S. Markets but this comes after another tough week for u. S. Equities last week. Thank you very much lets push on to uber which will fight its london ban in court for a second time this week as it seeks to continue operating in one of the biggest markets. It will argue with londons transport regulator over the safety of the service. He has bet onselfdriving cars the Company Announced it would be spinning off its joint venture with uber into the selfdriving group they also became the majority owner of the business after purchasing shares from uber. Were joined by the cfo and coo. Great to have you with us on the back of what is an exciting announcement for your company. Talk us through the decision to spin out this unit as what are your plans for this business moving forward . We purchased some shares from uber as well as injecting into the business to support the r and d of this venture. Were looking to obviously continue our tests were running. And so far around 4 million miles of real World Driving conditions including all sorts of weather conditions on to the platform obviously the car industry is undergoing a huge amount of change and so far we have seen new players leading the way when it comes to electric vehicles and pulling out the rest of it with it now were seeing them get more and more involved in cars of the future and electric vehicles and in terms of the industry landscape who do you see as your main competitors on a 5 or 10 year view . In selfdriving technology as a whole. As a difficult area it requires a lot of expertise in Artificial Intelligence and Machine Learning and this is where we clearly benefit given our deep expertise from our search business where were clearly the Market Leader and have over 22 or 23 years of experience there. I think Going Forward that particular focus on a. I. And Machine Learning will be critical for success. I want to bring up a little bit more about the reorganization discussed because as much chatter as there is in the market, having another area of the business being selfdriving cars that require such huge investments maybe it would be better to get rid of that arm of the business and prove the financials before any ipo. Can you argue with that . Can you tell us that it doesnt prove the financials at this point . It doesnt set you up a little bit better. So i think the purpose was not targeted around the ipo or ride hailing business that is something that were pursuing. We have actually seen a pretty rapid recovery so far. Were seeing growth. Currently our bookings are growing at almost 30 which is impressive the focus is more around putting more capital and putting more focus behind it. Also increasing ourownership i this critical part of the business that we think is part of the legs of the future. It is extremely important. So more focus on the future. And not so much about is this configured in the right way for a potential ipo. I want to get into the timing around selfdriving cars it was going to completely disrupt entertainment. You put more money into this venture but when can we see decent returns because even though trends have accelerated with covid, having someone in the car driving you, perhaps more people would feel comfortable. A lot of companies wanting to trim the cost of operations by not having drivers in cars so how do the trends change and when do you think that youll get solid returns from this part of the business . Its not so much a question of when well get selfdriving but a question of where well get selfdriving and importantly there i think when you talk about geo fenced areas, areas where traffic conditions are simpler. Whether its because of weather or the number of cars on the road youll have selfdriving much sooner so if you take a look at the places where we currently operate, we operate in certain towns in russia and currently we already have Services Running there now clearly its going to take a lot more time before we will get selfdriving in places like, you know, new york city during rush hour or moscow during rush hour so its a question of when and where, not if. What were hearing is theres a huge Global Initiative to get selfdriving action at this point but what we have seen behind the scenes in technology, a huge fight playing out between u. S. And china for tech dominance and where theyre sourced down the track it could become an issue. Is that causing concern as you try to plan for the future so overall its a combination of hardware and software. And obviously all the software is built in house and thats a critical part of the platform that were building. Its full ownership of the Software Stack which is based on the whole ecosystem. Greg, i want to come back to the roll out and the trajectory that you see for the adoption of selfdriving cars. I appreciate the approach that youre describing right now. Perhaps the technology is more conducive to smaller towns and not necessarily new york city but when realistically could we see selfdriving adopted in major metropolitan cities around the world . Thats something that is a few years out. Could be three years could be five years . Certainly. I dont think anyone knows when we will get there but its going to be gradual and it going to be a function of rolling out piece by piece and learning alock tnge way and improving. What we have done is we have put 4 million miles on our platform already and we learned a lot and as we will accumulate more and more experience in simpler weather conditions well be able to improve much faster and roll it out much faster to more complex cities like moscow and new york et cetera i know through the pandemic you made huge efforts to expand your offering to try to get off Line Companies online and parts of your business have really, really accelerated grocery expanding at six times when it comes to growth since january. Last time we spoke earlier this summer how are things going now in other parts of the business now that the world has changed a little bit and people have come out of lock down for the most part and are no longer stuck in their homes and perhaps dont need the services to the same degree that they did. Sure. If you look at the food delivery side, volumes are still doubling and its growing still very nicely the interesting thing thats happened there is Consumer Habits have changed post pandemic so certainly people are ordering probably a little bit less than they did before but the number of people that are actually ordering has grown if you look at groceries, a bit of a slow down but still rapid growth and the interesting thing is whats happening is the average check is coming down so instead of ordering a whole lot of groceries once a week, people are ordering smaller baskets more frequently. And at this point we covered almost all of moscow and st. Petersburg with 15 to 20 minute grocery delivery which is extremely remarkable in terms of comparing soour offering to oth cities around the world. So they can go out and have it delivered to their door 20 minutes later. Thats a completely unique Product Offering that we currently have and volumes that are starting to grow again as i mentioned. Thank you for joining us today to talk us through the story. We have developments and we have been closely tracking this morning following the news of a 14 billion sale of the chip designer to nvidia its a huge deal and the market is looking at reaction we had the ceo of nvidia come out to say we want to grow it and keep it based in the u. K. Those comments following a rejection of the deal by the cofounder effectively sayng and coming out to say that theres still a plan to keep it based here also we had comments now just crossing from the ceo that says that they believe there is a really exciting future for the company with nvidia and how competitive it would be with some of the rifles comments now crossing on the rise from the ceo and pushing on u. S. President donald trump will continue as wildfires devastate the coast. They claimed 30 lives with many more reported missing. Jennifer, what can you tell us about the state of play there on the grounds for these wildfires . Its going to be a difficult day. We expect that things will shift as far as the weather is concerned. Im here north of sacramento at the north complex fire that already claimed 14 lives theres still 7 people missing and an hours drive to the south at the base, cal fire operations they are expecting a visit from President Trump later on this morning where he will land he will get a briefing from local federal fire officials and speak with members and their families if you were watching last week, the amazing Daring Rescue as the National Guard helicopter made into this fire area picking up stranded campers and hikers surrounded by flames with no other way out. They air lifted about 300 people out of the woods and to safety over the last few days and weeks. But there are still 29 major wildfires burning in california. Some of those have been burning for a month. To the north in oregon, fires have already consumed nearly a million acres. Forced 500,000 people to evacuate and in Washington State more than 600,000 acres have burned crews are working to sweep through burned remnants of towns and looking for remains, sadly at least 33 deaths have been flamed on fires since they got going a month ago. Ill pick up. Thank you for bringing us the latest amazing rescue efforts underway over there well squeeze in a quick break but coming up on street signs, astrazeneca and Oxford University resume testing of their Coronavirus Vaccine after a week long pause. Welcome back a few notable developments gilead is acquiring immunomedics for 21 billion. Its an 8 premium theyre looking to boost revenues by expanding the oncology portfolio the transaction is expected to close in the fourth quarter. Pfizer and biontech unveiled a plan to expand testing of their potential Coronavirus Vaccine. The move will increase to 44,000 people while increasing the diversity of patients in the trial population they hope to submit the drug for regulatory approval. This is the vaccine as early as next month astrazeneca and university of oxford will resume testing of their candidate. This after trials were halted when a participate in the trial in the u. K. Fell ill this is a story we were closely tracking last week news that they had gone ahead with a routine pause in the Clinical Trials of their vaccine candidate. Reports suggesting that one patient fell ill with a suspected case of an inflammatory reaction in the spinal cord. They havent given any further medical explanation as to what happened to the patient. The bottom line here is that the independent review has deemed it safe to continue and they are going to and in terms of time line, astrazeneca ceo said if the trial were able to resume quickly they would still be on track to determine whether this vaccine will be effective and whether it is indeed safe. It feels as though there was a line and this was perfectly normal and you saw these things happen in some of the phase three trials often so perhaps the paperwork is being filled in and the patient is when are there more cases and just how significant they are to what that means for the optimism around the vaccine or not and its very relevant for the way the market feels about getting out of this covid19 situation i know that if you look at the trade around wall street last week we ran out of steam and some momentum was lost and some might have been down to this vaccine news a couple are still optimistic. I was looking at one this morning. They had a note out saying the reopening of the Global Economy is endicing us a basket of 14 back to work stocks versus a basket of 14 high flying covid 19 winners so what we have got, the market trying to workout whether we broaden out the exposures away from the tech and the Health Care Winners to play catch up on some of the other stocks out there. Its so instrumental to that development around what stocks to trade and hold in the portfolio. Well, that is exactly what i have been hearing from investors as well. It really comes down at this point to the vaccine data that we get and were due to get read outs on the phase 3 trials that are underway as early as october. Potentially more likely we get that data in november. But it feels as though until then we could be in a little bit of a Holding Pattern but certainly a huge opportunity when it comes to the reopening stocks the key laggards that havent performed as well as the safer assets in recent weeks. Were going to wrap up with a quick look at u. S. Futures today. This is how wall street is perched ahead of the trading session. That looks like a recovery day is on the cards. Very significant marching on to the boards in the wake of a little bit more selling. That is all. Thank you for watching Worldwide Exchange is cong urayext. Mi look here, its your very own allinone Entertainment Experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. It is 5 00 a. M. And here is your top five at five. Futures surging triple digits after stocks log their worst week since june. Technology on the rebound as well despite some investors betting against specific stocks or the sector entirely well dig into the numbers move over microsoft as the saga takes a turn ahead of the deadline call it the soft b