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tv   Street Signs  CNBC  March 10, 2016 4:00am-5:01am EST

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hi, everybody. good morning. welcome to "street signs." i'm louisa bojesen. we are live here from the studio. we're in frankfurt. we're in the london trading floors. we're also in the capital of cyprus. these are your headlines this morning. the ecb president is expected to unveil more stimulus to support the eurozone. can he do so, though, without piling even more pressure on the continent's very fragile banking system? >> reporter: and ahead of this highly anticipated decision, traders right here on the city floor are holding their breath. meanwhile, stocks in europe hold on to slim gains while hugo boss
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sets the trend. well, aviva is outshining the rest of the insurers after a hefty beat on the bottom line. the ceo telling cnbc he's unfazed by a potential ecb rate cut. >> it doesn't actually impact us that much. our book is so well matched it doesn't make that much difference. our new business doesn't really have those guarantees in it. of all the insurance companies, we're probably in pretty good shape for interest rate cuts. and of course, as everyone asked if the draghi's medicines are actually working, we have cyprus, which exited its bailout early with cash to spare. we've been speaking exclusively to the president, saying there's still much more work to be done. >> translator: the austerity policy does not help if we have no social cohesion or the repurr cushio -- repercussions on the vulnerable groups. hi, everybody.
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welcome. packed show today. absolutely packed. everybody is on the road, as you just saw. everybody will be adding a whole bunch of value to your trading day because i'm assuming you're not an expert on all of these issues that we're discussing. nobody is, right? so let's learn together. let's talk about how many hours we have before we're looking at this ecb decision. we've got just under five hours to go. so quite a lot can happen before the ecb rate decision. we've got a lot to talk about. about what exactly it is that the ecb potentially could do. now, a lot of analysts, they anticipate that the ecb is going to cut its deposit rate. we'll be talking a lot more about that in a couple of minutes with julia. she'll run us through some of the main expectations out there. might surprise you. not everybody is on the same hymn sheet. when it comes to european markets, we're looking at slightly mixed markets on the open. the ftse and xetra dax trending lower. the cac 40 and ftse mib trending
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higher. new zealand higher after the central bank cut its rates to a record 2.25%. that was a big old surprise. the governor of the reserve bank of new zealand citing china as being a big risk to the outlook. the kiwi fell initially by over 1%. the bank of canada also did not forget that, leaving rates unchanged in yesterday's trading session. so we're all about rates now. great expectations for mario draghi. most analysts are now prime for this ten basis point cut that could potentially come and an adjustment of the quantitative easing program. will the ecb chief actually deliver? he's dropped some heavy hipts over the last couple months. let's go to julia in frankfurt. a reminder we had five measures coming through from the ecb back in december, but the market
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really honed in on the deposit rate cut as being the one to focus on. >> reporter: well, louisa, good morning. i think the disappointment in december was due to the fact that there was great expectations. there had been a lot of chat from the ecb. i think the market believed they'd been misled. i think the ecb this time around has been very careful to not say too much about what could come today. they have plenty of options. in terms of qe, they could increase the number of asset purchases they do on a monthly basis. they could broaden out the collateral. they could extend the time horizon when we're looking at rates. they could also take the deposit rate further into negative territory, even talking potentially about tiering the deposit rate to try and offset some of the costs to the banks of this policy. as far as liquidity is concerned, we could see further long-term liquidity operations. now, what the market is expecting here is between 10 and 15 billion euro extra per month.
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also an additional cut of around 12 basis points. so the question is, do we get that from the ecb? if he wants to more than meet expectations, the devil will be in the details when we get to the q&a. let's get to the expectations. what are you kprpti inexpecting ecb today? >> well, they're going to move. that's pretty clear. the expectation would be for the deposit rate to go down further. if the deposit rate drops further by 10 or 20 basis points t broadens the universe of the assets the ecb can buy. that's quite likely to happen in tandem. maybe extending the period, maybe extending the monthly purchases. you might also have something on the long-term liquidity provision for the banks so that the actual intent, which is to get credit going again, can be
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further promoted. >> reporter: if we look at the likes of denmark and switzerland, who have gone to minus 0.75 basis points in the negative deposit rate, initially you saw credit growth. now we're seeing credit decline. i assume in some way that could be because they're now passing on the cost to consumers. there's a tipping point that's reache ed reached. do you think the ecb is very conscious of this, and do you think we get talk of tiering? >> it's a bit of an odd concept because you try to do two things at the same time. you try to create a stimulus by enticing the banks to lend more because it's less attractive just to hoard the money. at the same time, just a little bit maybe. it's like putting your put it on the gas pedal and break at the same time. so of course it would help the banks with their problems they currently have with negative
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interest rates, eating into profitability. although, it wouldn't exaggerate it at this point. but at the same time, it blunts the instrument that qe and the negative rate actually is, which is to create this rebalancing. so you try to have it both ways with. i don't think this is particularly powerful. the boj did it. i don't think the effect has been very convincing. >> reporter: why do you think? that's a really interesting point to contrast the reaction we saw in the markets when japan decided to not only go negative deposit rates but also the tiering effect versus the ecb. why do you think the market was so distraught in a sense that japan had gone for that option? >> well, i think in japan, part of the hope was that this would also contribute to arrest the rise in the yen. that worked for a brief period of time, then the yen did what it did, which was rising. you didn't see a relief rally,
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or something, sustained on the bank stocks or securities. i don't think this was a powerful instrument. we're at a situation where monetary policy works not very well. we're below the zero bounds. that means you really need to engage in big numbers to make a difference. it is at a point where monetary policy is power. that's why we're here. >> reporter: i want to talk to you about china. we have just come off the back of the npc from china. yet again we hear they're targeting 6.5% to 7% growth. is that credible? >> well, they can generate that in the short term, but they can only generate that if they sort of add one stimulus after the other, both fiscal and monetary, by creating more credit. china as a society is highly indebted already. so the overall debt ratio is comparable to that of the u.s., which is a much more developed economy. so at some point, this strategy will have to give way to
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something else. i believe sort of the way forward would be just to be less precise and give broader ranges of targets or expectations rather than targets and that you're allowed ed tto whittle d the growth rate. what we've seen in the recent years is we've required more and more investment to generate lower and lower growth rates. so this is not a model for the long term. >> reporter: when they say, look, we're going to hit at a minimum 6.5%, you believe them, but you think they're going to have to throw a lot of stimulus to achieve it, or do you think i'm not sure i believe that number? >> well, i don't want to go into that debate, how reliable the numbers are. the only official numbers we have are the official numbers. there are lots of estimates out there in the market, what other observers think the real underlying growth would be. so i don't want to go into that debate. but what i would say is that if you try to generate higher
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growth today, it's as if you're mortgaging the future. at some point, the leveraging has to stop and has to probably unwind to a certain extent. that will be payback time. then the growth impact might be more negative. we've seen it in the eurozone. we've seen it in the u.s. it's not new. >> reporter: no, it's not a new lesson. i want to also talk about the oil price. cheerily that's filtering into the forecast that we're going to get from the ecb later. critical factor as well for the gcc countries, chb i know a lot of the rating agencies are looking at. we've seen a big spike, a pull back in the oil price. incredibly volatile. at what point do you go, hang on a second, we needed to rethink the adjustments we've made to our forecasts for those countries? >> well, we have forecastings of a mild recovery in the oil price. what we've seen so far is well within that projection. but it sounds big.
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we have a 5% increase in the oil price, but look at the absolute numbers. many of the public finances in the gulf, for example, are calibrated for oil prices between 80 and 110, depending on which country you look at. we're inching towards 40, so we're still a long way off. that's the reason why we have last year and again last month sort of lowered the number of ratings, including saudi arabia. >> reporter: the point is don't look at the percentage tu agage look at the absolute value. >> look at how much they need to run their economic model. >> reporter: thank you so much. very interesting points there. s&p's chief ratings officer. louisa, back to you. >> julia, thank you very much. we'll be crossing back out to julia later on the show. of course, also on the show dedicated to the ecb's rate decision as decision time is coming up here later on cnbc. get involved, by all means, here at the top of the hour. find us on e-mail,
4:12 am we're on twitter as well. @louisa bojesen. we'd love to hear what you think the ecb should be doing at the moment. nancy is at citi. what's the feel on the trading floor? >> you can really feel the excitement building on the trading floor. everyone trying to place their bets ahead of the all-important ecb decision. coming up, we're tracking all angles of this decision. we've been talking to credit players. we will be speaking to someone on the side of commodity financing. of course, they'll be looking out for the 4x plays as well. that's coming up. later in the day, don't miss the ecb special. we'll be speaking to citi's chief economist. he's been ringing alarm bells on the actual impact of negative interest rates for quite some time. we'll ask him exactly what he expects today and what the real impact will be from the variety of tools that mario draghi is looking at. we'll be back in a few minutes. >> yeah, everybody super concentrated around you.
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excellent. listen, stay tuned. as said, we will be back for decision time coverage of mario draghi's big day. that starts at 13:30 cet. be sure to tune into that. we also have the presser coming up right after that actual decision. the presser starts at 1:30 london time. so 2:30 cet as well. now, one country which appears was to benefitted from ecb assistance is cyprus. more after the break on that from steve. can a business have a mind? a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?
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welcome back to "street signs," everyone. now, one country which appears was to benefits from ecb assistance is cyprus, which has now exited its bailout program ahead of schedule and with funds to spare. sounds nice, doesn't it? steve is in the capital of cyprus. they must be terribly pleased, steve. how did they manage to do that?
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>> reporter: i think they're pleased, but there's an enormous amount still to be done. i don't think anyone in this country is kidding themselves. i talked to a lot of citizens about the immigration and political issues, which are very much front and center for this small eurozone country. despite being one of the smallest countries in the eurozone, actually shocked the eurozone to its core. it was very much a test case. a guinea pig in many ways. we had the bail-in. we had capital controls. we had all kinds of issues as well for depositors who at one stage would have been on the hook. everybody single depositor, which was unprecedented. at a later stage, they came back and said, okay, we're going to only tax uninsured deposits over 100,000 euros. again, it was a very tough time. it was a very worrying time. i remember myself being in moscow speaking to the
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then-finance minister who was trying to get russian aid, russian support, and russian money instead. now three years later, they've got themselves on track. they had a 10 billion euro bailout. they only used 7.5 billion euros of that. it's been a very tough time for the republic of cyprus. people have many more challenges to come. i spoke to the president exclusively yesterday. one thing we talked about was the importance of bringing the people with you on this. that's not an airy concept. when you look at what's happened to governments in spain, in portugal, and most recently in island as well, populations have turned their back on austerity. you have to think about the human cost. that's something we spoke about yesterday with the president. just listen in to see what he had to say about the human cost.
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>> translator: i would say in any economic crisis, we cannot ignore the human cost because, as you rightly said, the consequences mainly on the more vulnerable groups are much more significant than the wealthier classes. this is why we need to have a balanced and very careful program. the austerity policy, strict austerity policy do not help if we ignore social cohesion, the repercussions on the vulnerable groups. this is why it has to be a combination, yes, on behalf of the state, strict budgetary discipline that will not affect to a tragic degree the people. >> does it show that there's a deeper flaw within europe, the eu, and the eurozone that we're seeing political consternation in portugal, in spain despite the relative success of the programs there as well? does it show there's something deeply flawed in the european
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project? >> translator: there are problems in following the experiences, as you rightly say, steve. there must be a much more careful policy. more social cohesion to any programs imposed or implemented, we must better review the policies being followed in order to be more human so europe can be a true union over and above so we can be more focused on what governments are spending. there should be a tidying up of public finances rather than measures that can affect vulnerable groups. we should separate the expenses of social policy. the costs are extreme privileges of either public sector, public servants, or officials of the state. high-ranking officials or other excessive expenses that cannot
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be justified. >> so are european leaders failing their populations? >> translator: i do not believe this is a matter of leaders. many times this is also intervention of the private sector or finance ministers that are tecnocrats and do not take into consideration the consequences. >> reporter: that was the president talking to us exclusively yesterday. we've also been speaking to the finance minister. i don't want to rain on cyprus' parade, but the fact remains they've got a huge number of
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challenges. the nonperforming loans, for instance, as a percentage of gdp are considerably north of 100% still. so they're still working through that as well. they're working out what kind of economy they're going to have forward. three, four years ago it was all about the russian money, offshoring here, and then using it as a center to speend fdi ba to russia. so that model is gone but not completely disappeared. the questions remain about the finances going forward. the broader eurozone crisis. i spoke to the finance minister about how they're going to finance themselves going forward. they're fully financed for the next four years but still have bonds which are below investment grade or at junk grade. they're not going to get support from any ecb bond buying to tie in with the broader issue of the day as well. so questions about when their going to go back to the market. i spoke to the finance minister about funding going forward. let's listen in. >> what the markets are seeing
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and have seen, and i'm very confident they'll continue registering, is a very positive trajectory. the debt is coming down. the npls are being restructured fast and will start showing. so it's all down to a very positive trajectory, which is becoming very clear, and it's becoming very clear to the markets also. i can confirm that we shall be out and about in the markets, even though i cannot say exactly when and if it's going to be a ten year or a seven. >> reporter: that was the finance minister of cyprus. louisa, i want to tell you a very important story and a very important part of this country. anyone who knows the history will know a little bit about this, of course. i'll just do it graphically. i'll speak and you look at these countries. this is the republic of cyprus in the foreground.
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in the back ground, you've got the northern territory, which is basically turkish controlled following the invasion in 1974. my cameraman is pointing to a building. it used to be the most exclusive hotel. it's now in a green zone. it's in a green line buffer zone controlled by the u.n. in fact, the u.n. actually uses that building as its headquarters. that is because there is 180-kilometer divide between the territories and the republic of cyprus, which is the bulk of the land mass in this country. it's a very important point because they've been trying to think about a meaningful reunification ever since the rejection of a plan back in 2004. this year the presidents of both sides are trying hard to get a reunification back on the agenda. that comes with enormous geopolitical risk. turkey and mr. erdogan are flexing their muscles in all kinds of ways now.
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cyprus is in the middle of all that as well. plus, the fact the cost of reunificati reunification. eventually it could be really big on gdp. in the short term, it could be very interesting and expensive if they don't get enough eu funds and turkish funds to cover that. yes, this country is out of the woods in terms of the bailout. yes, it's done incredibly well to get this far. but huge headwinds still to go with the geopolitical position of this country, which is absolutely at the epicenter of events. >> certainly interesting. i didn't realize there was that 180 kilometer divide. i know all my lebanese friends, they call cyprus lebanese because their argument is they go to cyprus, resettle. so they say cyprus is ours. cyprus is lebanese. >> reporter: well, some might argue of that. the people who might argue of that are the russians. they call it another russian colony as well. there are so many russians
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businesses. of course, many years ago they were using this as an offshore center. that's when we had the bail-in, all those uninsured deposits. many russians suffered. there was a big problem. that's why i was chasing the finance minister at the time in moscow, seeing if they were going to get a russian bailout. so you're absolutely right in saying it is a trading hub for some of those key trading nations whether it be the lebanese or russians. at the moment, would you believe the republic of cyprus can't trade with turkey, and yet it's an eu member, which of course the rest of the eu can. so you can see the contention. so many different issues which get into this melting pot. absolutely a fantastic country. needs investment, but a great country. >> i love all this. so interesting, all these facts and the geographical, how everything goes together. look up cyprus on a map if you're watching from somewhere far away.
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steve has just ginn us a really good lesson. a number of you watching from the states very early wanting to learn something about how the world is outside the u.s. i know you know a lot anyway, but look it up. any anyway, more from steve later on as well. in earnings, hugo boss trading near the top of the stoxx 600 after saying it'll maintain a stable dividend. this despite plans to reign in spending on clothes. the german fashion house said it expects 2016 sales growth in the low single digits. this comes a month after the high-end retailer issued a profit warning and the chief executive resigned. a hefty beat on the bottom line for aviva. the u.k. insurer saw a 20% rise in operating profit just last year. the company also boosted its dividend. speaking to cnbc earler wearlie ceo said its company can now weather a cut if mario draghi should pull the trigger. >> we've been following it
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closely. i guess the ecb disappointed a bit last time. we're probably around market consensus. we think maybe 10 basis points lower and perhaps also 10 billion of qe. we'll see if he does stick by his mantra of whatever it takes, but probably much less than that is going to disappoint the market. it doesn't actually impact us that much. our balance sheet is resilient and our bankbook is so well matched it doesn't make that much difference. our new business doesn't really have those guarantees in it. of all the insurance companies, we're probably in pretty good shap shape. now, iliad rings in higher growth thanks to its mobile business. at the same time, the cfo is saying talks on the sale are gone joining and quote/unquote complex. >> shares in k-plus-s have been trading near the bottom after
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warning of a significant fall in operating profits this year. the company blamed lower potash prices and output restrictions as well. the oil and gas services company amec foster wheeler has revealed plans to sell its global power group. this is part of a drive to shed its noncore assets and have its net debt within the next 15 months. the british firm had swung to a net loss for 2015. it also announced a one-third cut to its dividend. william morrison posting a fall in annual profits that was in line with expectations. the supermarket price war has been squeezing its earnings. the british retailer reported full-year underlying pretax profits of 302 million pounds. that's its fourth straight year of declines, and that figure is at a nine-year low. carrefour has blamed restructuring charges for a 22% drop in 2015 profits. the french supermarket chain is
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now four years into this major turnaround that they're doing. they say they'll lift their capital expenditure this year as it tries to revive its fortunes. coming up here on the show on "street signs," he's hinted, he's teased us. is this the meeting that mario draghi will give us where they boost quantitative easing more? we're hours away from discovering whether or not the ecb is quote/unquote ready to act. we'll be back with more from everybody out in the field. much more to come here on "street signs." the flu virus hits big. with aches, chills, and fever, there's no such thing as a little flu.
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welcome back, everybody. you're still watching "street signs." i'm louisa bojesen. we're live here from the studio. we're in frankfurt. we're on the london trading floor. and we're in the capital of cyprus. these are your headlines. >> reporter: ecb president marco
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draghi expected to unveil z fresh stimulus to support the eurozone economy, but can he do it without disappointing investors and without piling more pressure on the region's banks? >> reporter: traders taking a deep breath ahead of that highly anticipated announcement from the ecb as stocks in europe are relatively flat with the countdown under way here on the city trading floor. >> aviva outshining the rest of the insurers here in europe after a hefty beat on the bottom line. the ceo saying they're unfazed by a potential rate cut. >> our bankbook is so well matched it doesn't make that much difference. our new business really doesn't have those guarantees in it. so of the all the insurance companies, we're probably in pretty good shape for interest rate cuts. >> reporter: and we're asking if the draghi medicine, his actions are actually working with cyprus actually coming out of its bailout early with cash to
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spare. i've been speaking exclusively to the president of the republic of cyprus who says the hard work still remains to be done. >> translator: the austerity policy does not help if we ignore social cohesion or the repercussions on the vulnerable groups. it's so exciting. so exciting i can hardly wait. i have to wait four hours and 11 minutes and a couple seconds before we get this ecb decision. now, analysts broadly anticipating the ecb to do something today. julia will run us through the different options here later on the show. we are looking for another cut to the deposit rate and possibly also an increase along something with regards to stimulus along the lines of either extending the time frame or extending the amounts. when it comes to our european markets, we're looking at slightly mixed markets on the open this morning. flattish. nobody really taking any positions ahead of the ecb.
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the ftse, the ftse mib slightly lower. when it comes to oil, we're currently trading just a little lower on both. we saw a surge overnight. you had a big u.s. gasoline inventory drop on increased demand. we're still dealing with record-high stockpiles. there's a lot of speculation about whether or not you could be looking at an output freeze by some of the major oil producers out there. no word on that of yet, but it continues to be one of the bigger talking points. as these oil prices continue to weigh on inflation in europe, a lot of analysts have said they are expecting mario draghi to go deeper into negative rates. nancy is on citi's trading floor in london. it's not all about the oil price, but it certainly isn't helping. >> reporter: that's right. that's just one element that mario draghi and the ecb will be looking at ahead of their
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decision today. even here getting excited, trying to place their trades. we've been looking at all aspects of this, talking to the traders themselves, people more with a view to credit. also casting doubt on the real impact. joining me now is someone taking a role in the credit side. that's the global head of commodity trade finance. chris, thank you for joining us this morning. so much excitement here on the trading floor. everyone counting down to the ecb decision. what exactly are you expecting, and how will it back your business? >> so for us in commodity trades finance, what is relevant here is really kind of what the impact had been on the stimulus for trade. we do finance in trade finance. we finance commodity traders, the producers worldwide, and the processing companies. oil prices are important in that sense. look at world trade data. about 80% to 90% of trade finance is rooted through the
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world trade. that means about 2014 before the oil prices came down, commodity prices came down, about $18 trillion of its trade is $3 trillion. >> reporter: and you highlight in there some of the volatility. incredibly volatile times for the commodities business. as you were just running through, there are two sides of the coin when it comes to volatility. obviously you can benefit if you're hedged in the right way. who are the real winners in this volatility? >> in our clients, the commodity traders. they thrive on volatility. so their profitability typically, if they run their business properly s not correlated to the price of commodities. it's correlate the to the volatility in the market. we see them having a good time, which is good for the banks, obviously. that's the good thing for the winners in the business. the losers in the business for commodity prices is the
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producers. >> reporter: obviously the producers not having a very good time at the moment. how is this translating into the demand for europe when it comes to financing? are you seeing a sharp pullback here on demand for financing? >> good question. the first answer is yes. there's a pullback of financing because as producers are reshaping their balance sheet, they're focusing on deleveraging and cutting costs, which is a normal thing for them to do, which is a reduced demand for financing. for those very big producers who used to depend a lot on raising financing in debt capital markets, we see them turning more to banks and making use of trade finance solutions these days more than they used to do before. >> reporter: and how do you see the appetite when it comes to producers, the appetite to increase financing and taking on more debt to keep paying the dividend? or do you expect we're going to see more and more producers, more companies slashing the dividend going forward? >> it's all about balance, i think. what producers have to do is reshape their balance sheet. they've got to get the leverage levels right. they've got to put their
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leverage levels at the point where investors and banks are happy with them. if that is done, if there's still room in the cash flow generation to pay out dividends, they will do that. if that's not yet finalized, they'll have to cut dividends. we've seen quite a few companies do that already. >> reporter: overall, when we look at the different measures available to mario draghi in terms of additional stimulus, which one do you think will have the most impact when it comes to improving credit availability, credit terms? >> stimulus for our business and commodity traders has an impact on the liquidity. the more there is in the banking sector, the more competition there will be for the smaller size of the cake that i talked about earlier. it will not directly impact our business when you look at the commodity trade funds business. it's typically shorter. it's a low-risk business. liquidity usually finds its way to those businesses already
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without stimulus. >> reporter: all right. well, there you have it. just yet another view here on the citi trading floor. everyone counting down, waiting for that all-important ecb decision. louisa, coming up, we'll have another interview with the chief economist here at citi. he's been ringing alarm bells for quite some time on perhaps the unintended consequences of this negative interest rate policy. we'll be getting his views coming up in a few hours. back to you. >> nancy, sounds good. thank you very much for that. listen, we're not just in london, in cyprus. we're not just in frankfurt. over 2500 top ceos are gathering in dubai as well for the annual ypo ceo summit. hadley is there. tons of ceos are gathered. >> reporter: that's right. so many folks gathered here in
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dubai from all over the world. they're coming from a bunch of different sectors. a lot of excitement surrounding what's going to happen next. this is in spite of where oil prices are today and of course also worries about the global economy, what's happening in china. a lot of excitement on the ground here with these young ceos. i'm joined by eric anderson. i want to talk about what you've got on your agenda. you're basically telling me that the key to the solar systems economy is going to be asteroids. and this is going to be a trillion-dollar business. tell me about that. >> well, there's no question about that. what you've said is all true. i know it sounds audacious. it is. but it's also very long term. we're starting pl ining -- plan resources was founded several years ago. we're starting the prospecting phase. i gave a talk here at this edge conference. we're talking about mining. it turns out the nearest asteroids are literally worth
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trillions and trillions of dollars to us. as we move towards being resource constrained, the literally limitless resources of space will help drive our economy and prosperity as humanity forward during that time. >> reporter: incredible opportunities perhaps on the horizon. what does this mean in terms of cost structure? we're not talking about humans working on asteroids. we're talking about robots. >> that's a great question. actually, one of the great things about having robots work on asteroids is robots are computers, and computers are up proved upon according to morris law. so we get our energy to produce asteroidal materials and fuels from the sun, which is free, and we use robots, which reduces the cost substantially from what it would be on earth. >> reporter: incredible. talk me through this whole structure. you have a lot of people right now talking about, you know, the space race. does that really mean that
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state-sponsored space programs like nasa are essentially obsolete? >> that's a great question. i absolutely think there's a role for nasa to go and do the things like the gravitational wave detectors and the real basic science. governments have to do that because there's no profit there. but we find out fundamental truths about the universe. but as far as actually driving economic growth and progress, that's not nasa's job. so the business side of it isn't what nasa should be doing, but the science side certainly is. >> reporter: we're here at the ypo conference. over 2500 ceos from all different sectors. how much excitement is there around this kind of space exploration? >> well, i think there's quite a bit, actually. people during my talk, you know, a lot of them came up afterwards and said, wow, i had no idea this was happening. >> reporter: people are buying it? >> i think so. >> reporter: what's the timeline? how quickly will we see people working on asteroids? >> we're going to see
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prospecting missions over the next three to five years. this is where we send swarms of these small autonomous robots out to map the asteroids and find the really good ones. another three to five, seven years after that, we'll go and extract. it's basically the same sort of time scale as terrestrial mining. it takes a few years. you have to identify and come up with a plan to build the mine. it's going to be no different in space. >> reporter: really exciting times. eric anderson with planetary resources. louisa, lots of fun things happening here in dubai. back to you >> hadley, thank you very much. from dubai to the u.s., following hillary clinton's primary victory in mississippi and bernie sanders' upset in michigan, the democrat presidential candidates faced off in a cnn debate ahead of next tuesday's big ticket prizes of florida and ohio. now, nbc's jay gray has the latest from miami. >> reporter: hillary clinton came out confident as front runner. >> i'm continuing to work hard for every single vote. >> reporter: while bernie
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sanders is riding a wave of momentum after an upset win in last night's michigan primary. >> we began this campaign, i was 3% in the polls. i was probably 60 or 70 points behind the secretary. we have come a long way in ten months. >> reporter: donald trump doesn't take the stage until tomorrow with the rest of the republican candidates during their debate. still, he was the focus early for the democrats. >> i called him out when he was calling mexicans rapists. >> i think that the american people are never going to elect a president who insults mexicans. >> reporter: next, the discussion turned to immigration, each taking swipes at the other. >> madam secretary, i will match my record against yours any day of the week. >> reporter: but ultimately agreeing to what they would do as president. >> the undocumented people living in our country, i do not want to see them deported. i want to see them on a path to citizenship. >> i will not deport children from the united states of
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america. >> and can you promise not to deport immigrants who don't have a criminal record? >> i can make that promise. >> reporter: their conversation did touch on other topics, but immigration dominated this debate. sponsored by the spanish language network univision. each of the candidates, regard lets of the language, making their last face-to-face pitch before next tuesday's primaries. jay gray, nbc news, miami. >> and stay tuned because our colleagues state side will be speaking to the republican front runner donald trump. that's at 8:00 a.m. eastern, or 1400 cte. coming up, more here on "street signs." of course, also keep in mind that we're going to be having a special decision time program where basically we'll be breaking the ecb rate decision and also following mario draghi into his press conference. that starts 12:30 london time, so 1:30 cte.
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welcome back, everybody, to "street signs." tech valuations are coming back to earth. that's the view of greg becker, who heads up silicon valley bank. the california-based lender has today published its annual survey of tech startups. that shows entrepreneurs a replaced unbridled optimism with rational restraint. nancy spoke to mr. becker yesterday and asked what those surveyed, what they thought of a potential brexit. >> we do every year a survey of our clients both domestically and internationally. more than 900 clients were surveyed. a little less than 200 were from the u.k. we asked them this question about the potential for brexit. 72% of them said it would negatively impact their business, which is a pretty substantial number. >> and i want to get your view on valuations because that's been a key topic as we talk
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about volatility in the marketplace kicking off the year here. some have said ipos have become the new down round for startups here. do you agree, and what do you see in terms of the appetite for hitting public markets versus m&a? >> you look at valuations in a couple different ways. one is the public side and one is the private side. for the last few years, companies that have gone public have ended up trading below what their ipo price is, and private companies really haven't seen the correction. well, given what we've seen in the first part of the year, you saw the downturn with the public markets, the public stocks. you're starting to see the same thing filter down into the private sector. so valuations are definitely correcting. we're seeing that in the u.s. i think the same thing is happening in the u.k. in greater europe. >> is this having a ripple effect when it comes to the ability for entrepreneurs to fu fundraise? are you seeing a winning appetite from investors to put more money into start-ups? >> from an equity perspective, very different banking than
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equity. but from an equity perspective, you're seeing investors where it was more challenging for them to come in and invest because valuations were so high. clearly i think there will be a slowdown on one hand. on the other hand, when valuations start to improve, you're going to see people look at these opportunities and say, how big is the opportunity they're going after, and what is that valuation? if valuations are more reasonable, i believe you're going to see investors come in and support these high-growth innovation companies. i think the correction that we've seen actually is going back to normal and quite honestly, i think it's healthy. >> for the first time in your survey, you've taken a closer look at china. what is the mood there given the market volatility? we've seen concerns over a slowdown. >> i think the first thing that's interesting is whether it's in the u.s. or the u.k. or china, what we love about the market that we serve is that entrepreneurs tend to be very optimistic. so even though maybe the optimism isn't quite to the
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level it was before, they're still very optimistic. when i think of china as a market, what you can be seeing is actually a benefit in the innovation side. as the chinese economy moves from old, traditional economies and they see that slowdown, you could see a transformation or a speeding up of the innovation economy in china. so that's why we're thinking long term in china about our opportunities. we think that push toward innovation will be a healthy change and benefit us and the market. now, square has beaten expectations in its first quarterly results since going public. the mobile payment company led by jack dorsey reported better than expected revenue growth during the fourth quarter, boosted by a 47% rise in payment volumes. square shares closing higher by close to 5% in new york trade. jack dorsey told cnbc the company is in great shape. >> we have a very healthy payments business. we have a very healthy and growing software and data
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business as well. so it's not a matter of matching costs. it's really making decisions around investment. we put our people first, our employees, and what they're building. we will continue to hire great people to build services that the people value and people love. >> now, staying with tech, our colleagues in the states will be speaking to the twitter co-founder biz stone at 8:40 eastern time. super cool name. biz stone. anyway, vw's top u.s. executive is stepping down. the automaker announced that michael horn, president and ceo of the group's u.s. business since 2014, is leaving by mutual agreement to, quote, pursue other opportunities effective immediately. his departure comes as volkswagen continues to negotiate with u.s. authorities over its emissions rigging scandal. shares have fallen around 32%, 33% since the scandal broke just last september. and another exchange deal.
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nasdaq has announced that it's buying the u.s. options exchange operator international securities exchange from deutsche boerse for $1.1 billion. the deal will see nasdaq strengthen its position as the top u.s. options exchange operator with more than 40% of the market. speaking of the u.s., looking at the u.s. futures, we're still a couple hours to go, 4 1/2 hours to be exact, before the u.s. markets open. we're being called flat to a little bit higher. incidentally, you're writing in. you're an active bunch again on e-mail, on twitter. e-mail, glen saying, everything is saying the same thing on what the ecb has to do. as fragile as all the markets are, does draghi have any choice? and what do you expect the u.s. reaction to be if it does go as expected? i don't know. my guess is depending on how big the ecb announcement is, that
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obviously the u.s. markets might, you know, see some reaction. we'll talk more about that in a second. we'll continue that discussion on our special rate show that comes up at 12:30 london time, 1:30 cet. are these great expectations from mario draghi? a lot of analysts are primed for a ten basis point cut, an adjustment to the quantitative easing program. will the ecb chief deliver? will he give us something to go on? he's dropped some heavy hints over the last couple months. take a listen. >> the ecb is ready to do its part. the governing council will review and possibly reconsider the monetary policy stance in early march. >> well, julia is in frankfurt. julia, glen speculating how the markets will react, especially the u.s. market, if we get an announcement from draghi. i'm not so sure. >> reporter: well, it's going to be an interesting one.
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when you've got the market pricing around 12 basis points, the expectation is that we see 10 to 15 billion euros additional purchases on a monthly basis. that takes us to 70 to 75 billion euros overall per month. if that's what the market is expecting, the question is what more can he add in the q&a to garner or at least point out that he's capable of doing more here? does he have more talk about how he can take away some of the limitations on the purchase program, the issuer limits, the caps they've got. he has to buy based on a ratio of the individual gdps. there's concern he's running out of collateral. do we get some discussion of tiering the deposit rates as well to try and offset some of the damage it's doing or at least the pressure that he's putting on banks' net interest margin. so there's a whole host of factors here, not only whether or not he meets expectations here, but can he do more in the
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q&a. and of course his ultimate dilemma here is we can see there does seem to be further need to support the eurozone economy and to lift inflation expectations. at the same time, the policy that focuses on negative deposit rates does seem to be having an impact on confidence in the banking sector given the fall we've seen in banking shares, down 30% since july of last year. so it is a difficult one for the ecb to play here, louisa. >> yeah, and also, i mean, we were talking to one of our guests yesterday from jeffries about how the ecb, it's also acting differently depending on the country. so it's buying up bonds, for example, in italy, buying bonds and the italians are taking the money that they get from that bond buying program and reinvesting it back into the bond market again where in germany, for example, it's a completely different story. you end up dealing with a multilayered cake, basically. not everybody is acting in the
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same manner. >> reporter: no, absolutely not. and of course as you see bonds being bought as well, we've got more and more trading in negative negative territory. that limits what the ecb can buy. if we hear some kind of discussion of adjusting the issuer limits, ie how much the ecb can buy or which countries they can buy, i think that would open the door to a greater euro downside here and basically say that they have more potential to buy more here. louisa? >> julia, great stuff. thank you very much. we'll see you again for the actual decision. again, that show coming up at 1:30 cet, 12:30 london time. that's it for today's "street signs." i'm louisa bojesen. "worldwide exchange" is up next. see you soon again.
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good morning. it's decision day at the ecb. will the central bank announce more stimulus? the global markets in wait-and-see mode. square's revenue beat the street. shares rising on the news. but investors still want to know if ceo jack dorsey can really run two companies at the same time. and the race for the white house. sparks fly between hillary clinton and bernie sanders as focus turns towards florida and ohio. it's thursday, march 10th, 2016. "worldwide exchange" begins right now.


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