Transcripts For CNBC Street Signs 20240713 : comparemela.com

The bank of france governor who is also an ecb board member says the Central Banks emergency purchasing plan needs to be flexible to be effective suggesting further bond buying could be on the way. If we cant to guarantee the maximum efficiency, we shouldnt be bound some capital banks should be able to buy more and others to buy less the World Health Organization halts trials of hydroxychloroquine over safety certains as studies show it increases death and heart problems happy tuesday, everybody and welcome to street signs. Lets kick off with a top story involving the travel sector. The German Government plans to lift the travel warning by midjune confirmed by cnbc sources. The new measures will allow tourists throughout the union, United Kingdom and foreign noneu countries taking a look at travel and looers stocks. Massive rally. Those shares up. Tui up more than 30 bare in mind, you can markets were closed as the broader uk market rallied a little catch up there. Broadly speaking, a very strong bid for the entire european travel sector. Lets get to annette with more on this story. A pretty robust rally we are seeing across the travel sector. What more can you tell us about this german story . I dont hear the program. Annette, we will try to get out to you shortly this is certainly big news and driving gains across europe. Interesting what this suggests about investor positioning we are seeing rallies of more than 15 possess. Our investors are positioned for the reopening trade that seems to be coming together. Ftse 100 up 1. 75 . So outperforming the Broader Market part of that is the catch up trade. We saw stocks advance in terms of the rebound of business the dax trading about 70 basis points higher. Cac 40 up 1. 2 the ftse mib up about 1 in terms of the week ahead, investors will be looking forward to the European Commission presenting the Pandemic Recovery plan the task showing that weaker states such as italy can add without adding to their debt burden with the socalled breakthrough between germany and france in terms of the proposal they put forward in the face of the coronavirus. Investors closely eyeing developments in hong kong. We did see markets come under pressure with beijing to move ahead with the security legislation. The fact that we didnt see a specific escalation in tensions between beijing and the United States providing for sentiment as well. In the week ahead, weve got Cloud Computing results to watch out for. Hopefully weve got annette back with us. Weve got our tech kinks worked out. Run us through what your sources will be telling you about this german travel story that has come together this morning essentially, germany is prepping to lift the travel ban for those 31 countries they have enacted a travel ban for the First Time Ever on march 17 that the authorities said with the Foreign Ministry. They plan on lifting it by june 15 because that is the moment when some federal states in germany, the Summer Holiday will start. The rational behind that is that it is essentially vital to kick start tourism and industry related to tourism especially to those countries most traveled to like italy, spain and greece this is the first bold move from the government to open the borders once again we are talking about 31 countries. It is not only the eu, the uk, the scandinavian countries and also switzerland which will be allowed to travel again to and from their respective countries to other european countries. That is a bold move helping travel Companies Like tui tremendously we have seen shares surging on that news. When will it come . It might come as soon as today there is a draft legislation working with the Foreign Ministry right now it could be approved by cabinet by wednesday this week back to you. Thank you for bringing us the latest stay with us i want to flush out this central bank story ecb board member has told cnbc that europes Emergency Purchase Program must be flexible to be effective. Saying it is the right tool to fight the virus crisis annette, you spoke to the ecb board member this morning along with geoff and karen really seems like hes keen to the flexibility of this Purchase Program. What are the implications that hes trying to convey to markets in terms of the flexibility of this particular tool actually, the flexibility of that tool is key what they want to achieve with that is to avoid fragmentation of the eurozone. Which is Something Else if you spike in italy and spain because investors start to bet on the debt stability then the ecb can directly intervene in these markets without taking care of the capital gain and normal asset Purchase Program it is the whatever it takes approach, once again flexibility with all respects when it comes to allocating the funds to specific countries or bond markets. Also size matters. He was stressing that and also the size matters he didnt want to say no to a potential increase of the funds. He was also saying that most likely the funds, they need to be bigger in order to keep the credibility at a higher level. Take a look at the potential of negative rates on the state and europe and the inflation target. I dont have to competence the debate starting with the u. S. And they are introducing negative rates in our case, it works and has been working still more efficiently when we introduce the advanced effect for banks last september since we developed also the incentive of what we called tltro 3 with march and april and substantive support for banks. On our side, we are pleased with the way negative rates work. I dont see any reason to change the level at present governor, what is more important is understanding how much more support economies and Financial Systems will need from here either from the ecb or from governments. Could you share with us. What is your assessment of whether weve now hit the bottom in terms of the growth decline for the French Economy and the eu more broadly as a result of covid19 if i look at the Economic Situation, it was a very severe downturn in april as well as in the u. S. We are now under way in the economy which will be gradual and gather slow and which will be some what different in different countries. The main effect we have to deal with is the inflationary effect. We must stick to our monetary mandate to an objective of close but below 2 we are quite far from that at 0. 3 at present. Our inflation target is i stress it flexible and not straight away and midterm. We will have a debate in the Strategic Review of the ecb if we should go so far to have temporary average inflation over the period over the crisis we have to compensate on overshooting of inflation. This is our main aim the second is to prevent fragmentation in this recovery do you believe we have seen the bottom in terms of Unemployment Rate . We have seen the bottom in the economic loss. If i look at the french economic minus 27 at the end of april and the recovery a gradual one is under way looking at unemployment, it has been quite table in europe if i compare with the u. S. Situation. This means, unfortunately, that unemployment will increase less than in the u. S. But this will be one of the challenges we will have to deal with at least for some time. Let me bring you back to the inflation and to the medium term i would really like to know whether you see a risk of inflation shugt up with all of these extra ordinary measures and all the money pumped into the system this is a very important question we have many uncertainties about the Economic Situation, as i said we have probably less uncertainties with the short term without any doubt this shock pushed inflation down. I mention this very low figure of 0. 3 . In the next future, probably the pick up in supply will be quicker than the supply in demand which should keep the inflation down there could be other affects in the opposite direction due to the increase of production costs. As a whole, most forecasters expect inflation to remain very low and hence the policies to be for the future we will have to keep very low Interest Rates and liquidity to accommodate this too low inflation. Well bring geoff into the conversation i thought your question to the bank of france governor around the potential to buy ecb companies was really telling he didnt rule it out but didnt take it take it totally off the table. What is your take of what he said there i think this was an incredibly important interview the remarks he has made should be understood by everybody let me spend a moment on this. Ill get to your question, julianna Central Banks other than the ecb have a symetric inflation which means if it is more than 2 , they have to respond if it is less than 2 , they have to respond the narrow meaning that they only intervene aggressively when inflation is above 2 . That was the aim of the ecb initially to prevent the kind of hyper inflation that frightens germans and everybody else as the price control getting way beyond where it should be. What the bank of france governor is clearly saying here is that the central bank is intending to respond aggressively to the fouryear drop this is the lowest inflation rate weve seen in four years in the eurozone at 0 dolt 3 . This gives them the mandate to be very aggressive with the action they can go into the market and buy up bonds as a way of providing up liquidity the fact that he doesnt rule out equities the fact that they are main tools suggests there are keeping in mind other ways of keeping in the market, buying assets to push money into the economy. Very interesting comments and it remains in the tool point as he said does not remain one of their key tools to remain higher inflation. Annette, i think i think the next take it away, annette i think the next stock they might go into is junk bonds. Given that we are most likely going to see more downgrades coming up with the Economic Situation with the eurozone and the financial situation of corporates deteriorating in the wake of the Coronavirus Crisis that ecb could go into corporate junk bonds Going Forward they have already a grandfathering rule. If italy wasdo downgraded to ju, they could buy it full on if it qualified as a junk rating i guesses that why i was saying that might be the next thing we see from the ecb if they see we are going to see a severe tightening from the markets that would be the enlarge of the junk otherwise, they rely on the banking channel or just traditionally in the eurozone because financial intermediation in contrast to the states is going much more to the banks so it is very important that the banks stay safe and sound in order to get all these lows to the corporate world which is needed for now, this seems like it is also working not just for now but for the rest of the year and here comes probably the most dramatic part because many commentators where it is clear to see would go sour that is a risky part of the policy whether it will continue to work through the exiting Banking System you covered for us the Deutsche Bank ecm and saying now is an opportunity for the Banking Sector to be a pivotal solution to the stark contrast thank you for bringing us that interview. Pushing on, asian markets closed slightly higher as they reiterated there is more stimulus in the pipeline telling the Japanese Parliament they were ready to do more for the economy after the Prime Minister abe lifted the state of emergency ahead of schedule. Chinas governor has reiterated a pledge to raise policy and keep the rates low. Saying they will remain flexible and said economic recovery is unchanged. As National Peoples Congress Continues this week. Sfl coming up on the show, chinas diplomat warns of a new cold war as tensions raise between u. S. And hong kong i love these fries. You know, the chef here trained in france. Mmm, it shows so good. Oh hey, did you say you needed help with investing . Because i know someone whos really great. And you trust him . Totally. Yeah. We went to school together. Ill check him out on investor. Gov. So, whatll it be . Ill just have the burger. Before you invest, get the full report. 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Hong kong chief executive has tried to calm concerns that chinas proposed legislation will hamper peoples rights and freedoms after a weekend of street programs of firing tear gas and arresting people before assessing new laws the assurances are latent in the draft position as well as the explanation given by the National Peoples Congress Leader there is no need for us to worry because time and again in the last 23 years whenever people worried about hong kongs freedoms of speech, expressions and protest. Time and again, hong kong has proven we up hohold and preserv those values we should see that legislation in front of us and understand why at this time, hong kong needs this piece of legislation for the bigger benefit of the majority of hong kong people taking a look at the markets, the hang seng has closed 1 higher this comes after they saw the index plunge after 2015. A bit of a rebound in hong kong. Lets get to emily, you warned us about the incoming protests over the weekend and the scope of relations break it down for us where do things stand now . Is. Well, protests are very much on the top of mind we have two pieces of legislation here that all of us in hong kong are keeping an eye out on the National Security legislation being worked out by the peoples congress. Speaking to the deputy early this morning, he says the npc will approve draft legislation on the National Security law and it will move to the Standing Committee to work on that legislation. Because they only meet once every two months, it could be the end of june or august before the National Security law comes into place here in hong kong they still need to legislation the article 23 legislation with some other details aside from four points sustain egs, subversion and terrorism with the Hong Kong Affairs with the current National Security law which they will cover. Talking about all of this as we have exhibitations of protests tomorrow the Weekly Council meetings which will contain the debate for the National Anthem bill they have already warned theyll be taking to the streets as a result of this, police are deploying 3,000 officers and water cannon at the office this is to prevent crowds from gathering in anticipation of a large turnout. With waterfilled barriers and riot officers in the area. Tomorrow, the officers will have the second reading of the National Anthem bill this is the mark of volunteers if you misuse it or insult it, you face a fine and three years in prison. If history is anything to go by last year, june 12, it was the second reading of the extradition bill which has been withdrawn. Thousands surrounded them not letting them get into the chambers maybe they are trying to rep kate the same thing. Police have prepared because they learned from earlier lessons and the protests that were brought on on the weekend in response to the National Security bill the npc is working on keeping an eye on the situation here these pictures coming through yesterday. Some peaceful protests in the mall where they are singing. This is the ifc mall in the Central Business district. You can see carrying various flags. Mostly peaceful and abiding by social distancing rules. Thank you for breaking it down for us. One sector on the back is luxury the luxury industry is expected to lose up to 640 billion in sales as the coronavirus pandemic keeps customers away. The lockdowns have pushed more people to try ordering on line, it has not been nearly enough to offset the loss of foot fall joining us now, thank you for being with us. Before we get into what is happening in hong kong specifically, which is a huge market for luxury. I want to get your view on china overall. In terms of your numbers here where the chinese expect 35 of luxury spent even though china is coming back on line, the rest of the world is much slower on coming out of lockdown what is your take on china in recent weeks caller it is developing very strongly this was, in a way, expected because today was no Chinese Tourists spending elsewhere. The name of the game of the spend is returned in recapturing the spend. Hong kong, as traditionally being a very important destination for chinese consumers to spend and buy luxury product in 2019 already, hong kong had reduced s