Transcripts For CNBC Street Signs 20170123

Ilian could be interested in quote parts of the business. And breicks and merger. Its proposing a tie up with a small arrival berkeley homes. Good morning, everybody. Welcome back. Thank you. Good to be back. How was it . It was hectic as always. I guess youve got optimism about trumps policies and pes mmp when it comes to the stances. And i guess the week was more about pesimism and America First. And the speech was interesting. But was it really a matter of everybody talking about trump or were people a bit i think they talked more about the symptoms of trump and brexit which is inequality and a middle class that feels very much left behind. I guess a lot of people just are of the opinion that we need to get on with it so they talk more about, again, some of the symptoms behind it and how we tackle that. Typical business. Right, the world goes on. Got to figure it out. A little bit lower here in trade. Off by 6 10 of a percentage point. Half an hour ago, all sectors were negative territory except for basic Resources Holding on to slight gains. And real estate popping a little higher. Bank software the most and oil and gas trading a little bit lower. Lets get back to our top stories. Shares in generali according to italian daly, the italian bank are interested in acquiring quote parts of italys largest insurance company. And lets have a look at allianz down. And the forum in devoes, we spoke to the ceo and talked to him about potential consolidation in the european insurance base. People looking for earnings growth. That is very difficult to come by with an industry and theres a lot of pressure to try to get the scale whether its on technology, regional coverages so theres a rlot of forces supporting that. Its not so easy to make the economics work. The team also caught up with the ceo of generali. I dont think there will be a mega deals in the insurance industry. I think there will be small or medium size deals. Very much focussed because companies will be looking for synergies for the reason will be industry synergies. Does he have the culum bow look going on . Yeah. And schroders is urging them to take part with the berkeley group. This request kmaz matter of weeks after bovis homes offered a warning on falling rates. And chief Investment Officer at conor listening to donald trump, specifically on friday was very much protectionalest, nationalistic stance when had it comes to his policies and trade policies. Have they woken up to that or are they in for a rude awake sn awakeening . Its a very difficult thing to price. Not only is it the outcome of policy, which is unclear, but its also the process behind policy at the moment because clearly we got a president whos using his own means to get his message across. Plus weve got the situation with the congress and the fact that hes not totally at ease with his own party. Even if we knew exactly what the destination was, we wouldnt know what the journey is. What we do know is discounts have been applied which are considered to be in the cross hairs. Emerging markets have sold off and had little recovery but not much and markets like mexico in particular considered most at risk. Still trading quite low. We know markets are trying to sort of discount this. You certainly cant say that itser not on the radar. Its just that how exactly one prices this risk is jolly hard. Everyones going to be watching very closely the next few months. Were seeing European Equity markets on the back of the speech. U. S. Equity markets the trump rally has fizzled out. Were trading at sixweek lows. Do we continue with the solidation approach or buy back into risky assets . Lets just start with has this actually been a trump rally . Is it just about trump . From our investment process which factors in a lot of things such as momentum and valuation and economic momentum. It looked to us as if the markets were already in a positive turn. And in a way they were looking for an excuse to continue in that vein. So we got trump and the markets went up. I suspect if we got clinton the markets would have gone up. There would have been different sectors had we got clinton. Weve had a good run. Its time for consolidation and i dont see anything toward about that. I find that mildly encouraging right now. We have these left field things which im not saying dont take me as complacent in any way. But i think this pause were getting now is perfectly normal. What if the u. S. Economy grows quite substantially and a loosening of taxes, more stimulus and even with p protectionism its going to better . Yes, round about the middle of last year when everyone was extremely gloomy and then we got the outcome, markets probably wont looking for on brexit. They went up, they didnt go down. I think one of the take aways was populous and that might lead to higher growth. Austerity which is being jedsonned. And evaluations in certain areas may be looking a wee bit stretched. I think thats certainly one of the plausible scenarios that we do get more growth but we might go through a goldy locks period and if people are still quite cautious and i think sentiment is still quite subdued, particularly outside of the u. S. , that could be the paint rate. In other words, markets are there to inflict the greatest pain on the greatest number. A lot of people dont want these markets to go higher and that might be exactly what they do. Your traffic light system. Is there anything in this traffic light system on whether to be red or green in the markets that we havent spoken about . The red theres a slight shade of red on sentiment. So we look at growth, particularly acceleration and deceleration. We look at valuation, momentum in markets, price momentum trends and so forth and sentiment. The first three are all positive or much or neutral to positive. And sentiment is neutral to negati negative because i think people have got a little bit over optimistic short term. Its mainly in the states and mainly in trading books. If you take a step back and look at longer term slower moving money and move away from the states, theres much less evidence of bullish sentiment. We want people to be gloomy and that allows markets to go up. So maybe a little bit of kp exuberance for the states. And chief executive officer from conor bradley. At a meeting in vienna. Opec and nonopec ministers sounded upbeat in the first oil out put agreement in over a decade. It helps the oil price in u. S. Drilling capping those gains. Brent and wti both trading off a little bit. And started by asking him what was behind these gains seen in momentum for oil cuts. Translator todays ministerial level meeting demonstrated that countries have been behaveing i constructively towards each other. The meeting was positive and we didnt expect things would be so positive in terms of the agreement in january and the actions of the countries exceeded our expectations, such as algeria and kuwait. Theres lot of work to be done in terms of monitoring the situation because we dont have any final statistical data but were seeing that the market is becoming significantly more bounced. And stablization of surprises, even a certain potential for rise in oil prices. And she also had the chance to speak to saudi arabias oil minister. I think significant in the last couple of years. I dont think there will be anywhere close to where we saw before the down turn. And as we all know there are too many variables that get in the way of what we would predict. So there are geopolitical events, demand and supply disruptions that could surprise us and with the presence of these variables, i dont think it would be wise for anyone to give a price prediction, but i do expect it to be higher than where they are today. Now to see more from this interview with the Russian Energy minister and hear what he hopes for 2017, go to cnbc. Theres loads more on there. And you can find us on twitter street signs cnbc. And louisa and i have both been tweeting this morning. So do join in. We have loads more to talk about. The u. S. Press secretary spicer is under the spotlight. The latest on the new regime after the break. Welcome back. Youre still watching street signs. Lets talk samsung. At an event samsung announced stepped to avoid repeating that incident. And lets check in on how markets in asia were trading. And shares actually ended up at more than 2 . Why . Yeah. They went up by 2. 3 and right after the news, the reaction was slightly muted. The shares creeped up about 6 10th of 1 . And why . Well, ib think investors accepted the explanation from a samsung in which they said it was tight specks around the note 7 supplied by two different suppliers. Sdi and also a chinese battery supplier. And consumers and investors seem to take comfort in the fact that they werent going to rush the next unveiling of their next device. Theyre going to delay their unveiling of the flagship galaxy s8. They dont want to rush things. Safety is first and foremost. In the broader markets in asia we saw the nikkei being impacted the most by trumps more protectionest trade rhetoric over the weekend, especially after he announced that the u. S. Is indeed pulling out of the Transpacific Partnership and said he wants to renegotiate na nafta by meeting with the heads of canada and mexico and we saw more safe haven buying of the yen. With the chinese markets, we saw a nice rally in shanghai as the pboc has said theyre going to inject temporary liquidity for 28 days to avoid any sort of crash crunch during the Lunar New Year holidays which starts this friday. Back to you. Good to see you. Thank you very much. Foxconn became the latest tech term to announce plans to up its building in the u. S. According to a report from the nikkei. It would be a joint venture with apple and create up to 50,000 jobs. Qualcomm instigated action over the chip maker. They accuse apple of charging too much for patents and with holding nearly 1 billion in rebaits. However it welcomes the opportunity to disprove the claims in court. Now phillips lighting sales and net income both missed expectations in the fourth quarter. They remain committed to achieving positive comparable sales growth this year. Its projecting the margin to pick up by between 50 and 100 bases points in 2017. Shares are higher by around 5 . And esentra is trading at the bottom this morning. Thats after they would meet only the lower end of its forecast. Challenging Market Conditions in the personal Care Packaging unit expects the operating profit to be near 1 and u. S. President trump has vowed to fight tooth and nail over what it calls unfair coverage of the president s inauguration. Now this after the White House Press Secretary Sean Spicer claimed they manipulated videos and photos to make the crowds look smaller than they were. Kellyanne conway backed spicer after Host Chuck Todd probed her on the fac chauality of the cla. You did not answer the question of why the president asked the White House Press secretary to come out in front of the podium for the first time and utter a false hood . Why did he do that . It undermines the credibility of the entire White House Press office. Dont be so overly dramatic about it, chuck. Youre saying its a false hood and theyre giving our press secretary gave alternative facts to that. Wait a minute . Alternative facts . For four of the five facts were not true. Alternative facts are not facts, theyre false hoods. That was a very heated response. I find it fascinating that the Trump Administration chooses to fight the American Media tooth and nail in its first weekend in office. Doesnt have any other priorities, it wants to fight American Media. And i looked into the picture making the rounds on where you see whether or not there were as many people as during the obama inaugural speech and its apparently that particular picture was taken at exactly the same time on both days. But nevertheless. Yeah. An estimated 3 million demonstrators world wide took part in womens marches across the globe a day after Donald Trumps inauguration. The marches were held to abdicate for womens rights and stand against what many viewed as mr. Trumps misogynistic behavior. And new york, los angeles, and chicago as global marches took place in more than a dozen other cities across the globe. He initially tweeted he didnt understand why they didnt vote in the election. He lated tweeted he recognized the rights of u. S. Citizens to express their views in peaceful protest. But that came a day later. That took him a day to tweet that. They did vote. And keeping in mind that almost 3 Million People voted for clinton, right . The peoples vote was won by clinton but it is extraordinary in the first weekend of office. Once again it shows you how polarizing this campaign was and the presidency will be just as polarizing i guess. I think a lot of people watching internationally, watching the u. S. Dont understand why it is that so Many Americans are okay with a government that wants to control the press. Thats what a lot of people are wondering. The former french socialist Education Minister and party rebel has won the first round of the countrys leftwing primary. He was sacked by president alons government led with 46 of the vote while former Prime Minister stood in second with 41 of the vote. And a new old face for some of us and i say that as an old face myself. Good to see you after so many years. You havent changed a bit. Neither have you. 10 years on. Talk to us about what we saw over the weekend. Quite a big surprise. Enormous surprise and imagine what a day it is for Emmanuel Valls and he comes second and so he still has one week to try and turn the situation around because the second round is on sunday. But its going to be difficult for him and there is a televised debate on wednesday. It promises to be quite heated with valls saying wednesday that his opponent was going to the wall with unachieving promises, among which, and you might have heard about this promise, this new proposal of a universal income that would come whatever your resources are. 750 euros per month. That would cost a roughly 300 billion euros per year. Even though its very costly, it seemed to seduce the french leftwing voters and he seemed to have the newest things to propose to the leftwing voters. So they were seduced by him and in comparison, valls didnt seem to have as many new prupodoposa offer, because hes keen on legalizing cannibis, very board proposals to say the least. What does this mean for the president ial race in may and june . Because whoever is confirmed wont be frontrunner there. Yeah. Theyre asking themselves Big Questions right now at the socialist party because right now the polls are saying that socialist candidate would only rank fifth after marie le pens and after emmanuel who has been gaining a lot of steam these past weeks and a lot of questions this morning as to how this could benefit Emmanuel Macron with voters not convinced by hard left proposals and how the socialist party is going to survive this moment right now because the socialist party, as the press is saying this morning, is cut in half. And two left that are now too far apart to reconcile. So a lot of questions regarding the future of the socialist party, the main party of the left here in france. Claire, thank you so much for that. That was our very own claire in paris. Take a look at World Markets live. Its our blog. It runs throughout the the entire european trading day. And well be right back. Hello everyone. Yes, youre still watching street signs. Hi everybody. These are your headlines this morning. The dollar among protectionest concerns as trump takes his America First mantra inhad to into the white house. The president s Energy Policies will be helping global producers. Shared soared, back on speculation that allianz could be interested in quote parts of the business. And bricks and merger. Shares jump that it second biggest share holder is proposing a tie up with berkeley homes. Good morning, everyone. If youve just tuned in, lets give you a sneak preview. The s p 500 off by nine points. The dow expected to fall and the nasdaq could fall by 11 points or so. On inauguration day, halting a 5day losing streak. Lets show you what european markeratts are up to. Were seeing downward pressure on stocks. Dax up and ftse 100 losing. And generali is high on news that allianz could take a stake. In terms of the currency markets, were seeing some dollar softness and thats the dominate story given the stance that donald trump took in his inaugural speech on friday and some of the policies announcements he made in terms of ripping up nafta and tpp. Those were not met by open ears. And keep an eye on the pound sterling as today were going to be getting teresa mays industrial policy approach and thats higher to the tune of 2 3 of 1 . The russian celebrations took place near the kremlin in response to Donald Trumps in g inaugurati inauguration. And asked novak whether Trumps Energy plans could derail the pact . Translator trust me were very closely following the plans. And its very pleasant for us that energy occupies first place. We believe, for the dwroindustr a whole that the aerj sector should develop and the largest, such as u. S. A. Will be doing this and it would make sense in the future to resume the dialogue. Do you anticipate with the appointment of tillerson as secretary of state that kind of dialogue will progresses or convene . Translator Rex Tillerson is a very Famous Energy specialist and im positive his actions will positive as a whole. Is there a chance they could push prices lower in the short term . Translator every country selects its own Development Strategy for the energy industry. Therefore, everyone, relatively in terms of their aims for strategic development, a large country such as the u. S. A. Will be taking into account the Energy Forecast and those will be taken by other countries for their own sector. And in terms of what this energy plan could mean for Climate Change initiatives, President Trump has spoken quite a bit over the last several months about clean coal and throwing out many of president obamas initiatives in the Climate Change sphere. Are you worried that threatens what other Oil Producing countries have tried to achieve . Translator i would like to stress that energy Development Strategy is a matter for each individual country and the choice in terms of the share of various resources depends on many internal factors. In russia we have a Diverse Energy mix, which including atonic energy, coal, thermal, gas power generation, Renewable Energy sources and we believe that the structure of the diverseification depends on a great extent on the structure of the economy. Therefore every country has a right to determine the share of its energy mix and i repeat we are using all our sources of energy and we dont see anything bad developing in other countries. Its a question of competition between various fuel times. Well, sean corgon is with us. Global strategist at asianomics. What do you make of trumps proposed Energy Policies so far . Not being a huge advocate of the renewable rent seeking energies which are an attempt to force technologies before theyre viable and hide in a welter of warm sounding rhetoric, americas reduced its Carbon Emissions faster than any other big economy partly because of obamas antibusiness economies and gas is more easily extract extracted. Let the free market reign. We have time and extra sources to devote to many other things, many will be beneficial to the environment. Were talking the day after the inauguration weekend and people are focusing on how protectionest the tone was and what thats going to do in the slightly longer term. How do we guard ourselvesprotec . For all the antitrump consensus, everybody would like to promise the same thing somewhere in the back door because thats where theyre worried their vulnerable flank is. The existential soul searching is why we the elite are no longer revered and the common man needs a lot of explaining why open borders for trade and capital are a good thing. Open bordrs for people are more controversial but there is some substance to where the argument goes. If he shuts this down that could be potentially bad for everyone, yes. But lets take a look at the bright sited. Weve been quite negative this morning of some of the protectionest policies. What does that do to bonds . We dont know whether hes just setting out a hard stance to negotiate to a compromise which is better and there may be some losses and some gains. He also, seemingly, his team have come up with good ideas for liberalizing the pursuit with reducing costs and other burdens. So there could be an offset in terms of efficiency. Do you think its an offset . There are positives from that side of the agenda. Among the most positive weve seen from a major leader in the west for a long time. This horrible trade borders thing and the bullying of individual corporations to try to bring them in line, not that there wasnt bullying from other administrations of course. We cant demonize him too much. Will he be radically different in his policies, really . The left is going to have to compromise and rebuild for the next four or eight years at some point and will have to work with him. I dont know. Reflation, yes. If america buys things more expensively at home, then, yes, you would think prices withed go up and if he shuts borders off, people wont buy american product because they wont have the money to buy them. I think its far too extreme to bring that analogy up now. But if if werer talking about whether this means inflation or deflation, this is the balance we have to try and see. But could it be trump that triggers the bond bear markets. 3 when it comes to u. S. Treasury. Were not too far away from that. Were currently at 2. 4 for the tenure. I think it stays and if you look at history, the bond market becomes. The longer durations become. So the bonds become more and more sensitive. Your longterm return on bonds depends pretty much and theres only one way they can really go in the long run. The problem is theres a huge short in the market which has hedge hadded a lot of exposures. In the absence of Something Real to hang on. Even before trump was elected, they were already on this mean that weve done all we can. Governments need to spend. That wouldnt be good for bonds in the long run. Do you think 2017 is going to be worse than 16 . It will be different. I think there are opportunities. There are dacngers of course, yes. And the u. K. Government is expected to outline a new approach to balancing its serving base economy to respond to post brexit britain. Thereeresa may in exchange for government support. The modern industrial strategy will ask businesses to Work Together to see how trade and investment deals can be used to increase exports. White house officials have confirmed that trump will meet with Prime Minister teresa may on friday. Sheel arer be traveling to washington for quote a couple of days. Reporter the british Prime Minister confirmed shell be visiting the United States to meet President Trump on friday. The first world leader to do so since his inauguration. She expects to discuss britains trade relationship with the u. S. Issues like terrorism, syria, nato. Remember that britain voted to leave the European Union which means eventually having to renegotiate its trade deals from scratch. She was interviewed on British Television today praising trumps inauguration speech for its America First message, one she said she could understand and said that hes committed to nato despite suggesting the military alliance is obsolete. Whats important is that we recognize the value of nato, which he does, which is helping us defend europe and the interests of all of those allies innato. May is expect to fly to wauks washington at the end of this week. In return donald trump is likely to come to the u. S. Later this year although the queen has yet to issue a formal invitation. Lucy, nbc news, london. Rv were going to go for a quick break. Well take look at upcoming. Welcome back. Lets get back to some breaking news. The kremlin says that the date of the first trump putin phone call, not a meeting is expect tootd be in the near future and says theres no immediate plan for an actual trump putin meeting. We dont know when the first phone call will happen and a meeting seems to be a long way off. Theyve been friends. Is it fair to say that . A breauxmanse. So maybe its not at the top of the agenda. If its your friend anyway. I dont believe theyve ever spoken. I dont know. Yeah. Donald Trumps Administration has vowed to fight the press tooth and nail of what it views as unfair coverage off the president s inauguration. Here with the latest. Reporter assembled in the east room, another first. The president and Vice President of the United States. Reporter President Trumps most senior level staff surrounded by their families took an oath to serve the public. Please raise your right hand. Reporter in a reflective tone the president acknowledged this traditional note left by president obama. Found this beautiful letter from president obama. Reporter left in the desk drawer for his successor on friday. It was really very nice of him to do that and we will cherish that. Reporter and he previewed his outreach to world leaders. Today with benjamin netanyahu. He invited him to the white house next month and this week hell host british Prime Minister teresa may. Trump says he will focus on trade deals. Were going to start some negotiations having to do with nafta. Reporter a thank you reception for Law Enforcement in charge of inaugill security. He spotted fbi director, james comey across the room and said this. Hes become more famous than me. Reporter extending his hand to comey who became controversial in his handling of the email. I get this network. And it showed an empty field and it said we drew 200 gift,000 people. Reporter but on meet the press. Kellyanne conway defended trumps press secretary who gave false statements. It undermines the credibility of the entire White House Press office on day one . Dont be so overly dramatic about it, trump. Youre saying its a false hood and theyre giving our press secretary gave alternative facts to that. Wait a minute. Alternative facts . Four of the five facts he uttered were just not true. Look, alternative facts are not facts, theyre false hoods. Well, that a lot to take in. Lets discuss this more with gina sanchez who says the likelihood of trump disappointment is higher than a trump home run. What does this mean for equity markets . Theyve obviously started to ease off from the rally that happened post election. And a lot of that i think the had to do with with removing the uncertainty of who was going to be elected. The election had the markets on edge and at the same time we had earnings starting to show some some positive momentum for the first time. So really it wasnt until after elections that scene was able to let loosz and a lot of people called it a trump rally. At this point theyre in wait and see mode. What happens now . If you look at valuations, over 21 times youre talking about a lot of anticipation. So pretty much trump has to come in and execute perfectly. His first move was to complain about the size of his crowd. Im not sure people feel like hes focussed on the right things. Goldman sachs says its all about whether trump can execute and you just said hes unlikely go stoog do that. So is earnings season, is that a thing of the past . Thats fascinating. So dont look at this hand while this hand is doing Something Else seems to be a common now way of dealing with this. Earnings matter and if you look at valuations, theyre extended for where earnings will likely end up because they were always slightly aggressive and if you look at earnings for 2017, theyre more aggressive and probably going to have to be taken down unless we see significant changes. I think what happens with policy will matter but only in perception terms. We wont get that data for two years. From here until we start to get real data, everybodys just going to be guessing. This is going to be an emotional and volatile year. And you think this year will be worse in 2017. Our previous guest says he will hedge himself. I think you have a lot of binary outcomes and that tells you we dont know how its going to be and volatility is quite low. Weve been recommending for clients to participate in the market but hedge some of the upside and cover your down side because we really dont know where its going to go but probably not going to stay in the middle. If you take profits from equities, where do you go . Were not suggesting that. Were saying keep your Equity Investments where they are and sell volatility. Volatility is extremely cheap right now. We did see that with trump to the extent we saw the trump rally, we saw that with brexit in the pound led to a record high ftse 100. What tells you thats not going to be the case for france, germans, the netherlands, you name it . Oxford economics did various ske nairs, the paths they could take and the problem with the outcome not the problem. This was ininteresting point of the outcome of the study is that it showed that the down side was a symmetricly smaller and the down side included significant cuts into consumer spending. If you look at the tax plan, its highly aggressive. If you look that problem, it is spending. Its not their ability to generate earnings. Their its their ability to generate sales. Since the beginning. Were eight years into the recovery and still have extremely weak demand. A regreszive tax policy and a regreszive set of tax cuts do not help that problem. What election in europe are you most worried about . I think the election im worried most about is france. I think most people assume it dutch could go to the far right candidate but that a coalition will form. I think most people feel Angela Merkel is going to retain her post and really its france where you have a question. If i were betting i would say marie le pens would not get it and i think were going to continue to be surprised. And macron 20 . Its a little close for comfort. Its very close. Do you buy europe or the u. S. At this stage . Interestingly i think you buy the u. S. Relative to europe . Because its going through all of the gyrations. These elections are going to take us into the end off the year. At least into the fall and in that time period youre going to get Donald Trumps first visit to the g20 and you could see geopolitical saber rattling. So i do think theres going to be a lot of potential gyrations and europe tends to feel it more than the u. S. Does. Thank you so much for that. A very combative gina this morning. Quick look at futures. And were looking at an implied open a couple of points lower at the moment. Thats it for todays show. World Wide Exchange is up next. Well see you tomorrow. Bubye. Bye for now. Good morning. The first 100 days. As President Trump prepares for a busy first week. And yahoo reportedly facing an sec probe over its data breaches. And super bowl 51, the patriots and falcons advance to the big game. World Wide Exchange begins right now. Dont believe me just watch good morning and welcome to