tv Street Signs CNBC April 15, 2016 4:00am-5:01am EDT
good morning, everybody. welcome to "street signs." i'm louisa bojesen. your headlines today, no surprises. beats expectations with the slowest growth since the financial crisis. russia's finance minister telling cnbc he's not pinning his hopes on an output freeze to boost the crude price. that's as oil ministers prepare for weekend talks. spain's industry minister resigns after being implicated in the panama paper leaks.
this as the eu's five biggest economies strike a deal to clamp down on tax avoidance. >> the current events, the panama papers, confirms that we were right to strongly push for such an agreement, but our work is not done yet. >> and gains in the basket for carrefore. solid sales in brazil and spain sending shares to the top of the cac 40. hi, herb. good morning. it's friday. how fantastic a feeling is that? did you have a good night last night? do anything interesting? we had a fantastic event here at cnbc. catalyst is being launched. you'll hear more about that later. the ceo saying they want to play an active role in any
consolidation of the european steel sector. they're making these comments right now. it's unclear whether consolidation will take place and with whom. he says that demand is stable today but further growth will be immaterial. again, summarizing that. so we might want to keep an eye out on the company. currently a little higher here in morning trade. over the past three month, up by around 30% or so. speaking of trade, let's show you our european heat map, as we call it. you see how europe stocks are trading. so far today we're seeing a little bit of selling taking place with the stoxx europe 600 lower by 0.25%. we're just kind of drifting. of course, it is the end of the week as well.
why don't we just recap what type of week it's been for markets too. here you can see since monday in trade, the ftse is higher by 2.5%. the dax up over 4%. incidentally, just go on my twitter page. i need to log on. you can head on there because i was just tweeting something about the flows and where we've seen flows going out of and into over the last week, especially when it comes to the u.s. there's some interesting stats there. when coming to some of the bigger stories today, of course, china's mainland markets closing modestly lower after official first quarter gdp came in at 6.7%. that's in line with analyst expectations. dan murphy joins us from singapore. good to see you this morning. a lot of people suggesting this might be evidence we're bottoming out in the china slowdown. >> that's exactly right.
we saw a really interesting reaction on markets. stocks finishing the final trading day of the week mixed with traders digesting that latest gdp print. we saw that number coming in at 6.7%. it was bang-on expectations. still, the slowest growth since 2009. breaking down those numbers, we saw retail sales coming in at 10.5%. industrial output was the big beat at 6.8%. fixed asset investment also came in at 10.7%. as you mentioned, what this really shows is that those measures that chinese policymakers introduced several months ago to fight gravity as analysts at barclays put it, are starting to work. what traders were focusing on today is the fact that there are structural issues within the economy remaining unresolved. as a result, we saw share markets in china finishing the day lower. the shanghai comp down 1.3%.
the hang seng also 0.1% lower. interestingly in japan, we saw the market moving. it snapped a three-day win streak. investors taking profits. also concerns about the earthquake in japan that struck southwestern japan overnight. the 225 down 0.4%, losing 63 points. shares in seoul and jakarta also closing in the red. interestingly, there were some bright spots. i wanted to draw your attention to what we're seeing in sydney. the isx 200 has been climbing higher, rising 38 points at 5,157. and here in singapore, we're also looking at the benchmark index climbing higher, adding another day of gains, up 0.25%. that's the state of play in asia. louisa, back over to you. >> great stuff. thank you very much. we'll see you very soon again. have a good weekend. let's just continue on china.
you're with us for the first half hour of the show. i sound like a man this morning. >> very good party last night? >> big party here at cnbc, yeah. russ, china. the growth figures. first quarter gdp, 6.7%. i think, coming in line, that's good news. i think back exactly a year ago. a similar story happened. we started off the year on a bright spot, nice chinese numbers, then we had that massive correction that followed. are we going to see a similar story? >> i think the end, the chinese premier targeted 7% growth this year. i think that's what the economic statistics are going to reveal consistently throughout 2016. you said at the top of the show, no surprises. i think the headlines are going to show what the authorities are targeting and would like them to show. so i don't think that's going to change. it's the quality of that growth, if anything, that people can be
focusing on. dan flagged it, you flagged it. it's very property driven, investment driven. it's more old china than new china. that rebalancing story everybody was looking for, it's not going to be easy to achieve. >> i see that your microphone is just tangled on your watch. just so you don't rip it off. >> don't strangle myself. >> exactly. i also look at some of the other data. new loans, retail sales, fixed asset investment, all from china, all being better than expected. >> which is a good sign. lots of people always looked at the old index, which was electricity production, rail shipments, and credit growth, and always use those numbers to question the headline figure. i think electric consumption was up 3%, as data showed. we know the freight numbers were up. credit is still good. if you're looking at that old indicator, it still looks mixed. >> however, there's always the however. you have analysts saying, not
sure how much you can trust the figures. >> well, i'm trying to politely say that as best i can on a friday morning. >> sure. do we think the policymakers are moving to the old stimulus strategy, which is what they have doned in the past, to maintain this economic growth? then you also risk this asset bubble. >> i think the mixed number today does suggest it's more old china than new. but look at things like retail stats. they suggest that things are going in the right direction. this isn't going to be something -- this sh the world's second biggest economy we're talking about. it's not going to happen at the snap of a finger. it is going to take time. if anybody is looking for a massive disappointment from chinese gdp numbers, i don't think the headline figures will be what they're looking for. they'll be looking down into the mix. it's corporate profits and corporate cash flow. if there is a disparity between the official numbers and the reality, that's where it will ultimately show up. >> russ, you're with us for half
an hour of the show. by all means, get involved. send your e-mails and tweets through. doesn't help if i get them after the show is done. then i can't pose the questions to russ. send them through. email@example.com. crude prices have been tracking higher this week ahead of the producers meeting on sunday. 20 nations will be meeting in the qatari capital, debating the next steps of this possible production freeze. most notably, reports suggest iran's oil minister will not be attending. the country will be represented by an official. a whole list of who's going to be there. concessions for iran within any deal have been one of the bigger sticking points. saudi arabia saying its participation is contingent on iran agreeing. however, that stance seems to
have eased over the recent weeks. the saudi oil minister did take any talk of a potential output cut completely off the table, telling reporters to, quote, forget about the topic. the investment banking world has reined in its kpngss for the meeting, warning the long-term impact will be more political than price sensitive. so you have capital economics. they see a compromise deal that'll seek to cement ties between opec members. goldman, they're saying the meeting will be no panacea. while soc gen only sees a 50% chance of a binding deal. at the imf deal in washington, julia spoke to the russian finance minister and asked him how confident he was that a freeze could be agreed. >> translator: we still depend on our oil. our economy depends on it. we want to the say that we don't expect any changes in the price in spite of the negotiations, which are being conducted
currently with the oil executive nations. our economic plans correlated in relation to the current oil price, about $40 per barrel. that is why we see in conditions in the slowing down of the world economic growth rates, the accumulation of oil reserves by producers, there's no serious grounds talking about increasing oil prices. we see that we will have to work within the conditions where oil prices fluctuate around $40 per barrel. this is normal because there won't be any disadvantage for russia from the point of view of profitability for raw materials. the conditions have been created to further develop non-raw material industries. we have will be discussed this. this is why the country's dependency on high oil prices hurts other countries.
n we have to develop our own industries, and this will create more stable economy as well as profit base for our budget. we are ready, and we plan to work within the current price categories and for russia, that is quite acceptable and correct. >> well, russ is still with us. a lot of expectation for what possiblying come out of the talks on sunday. how would a potential deal look? it doesn't seem like anybody has anything concrete to speculate a about. >> i suspect you'll get some carefully phrased communique. if there is a production freeze, fantastic. but opec's track record on sticking to these agreements is truly dreadful. there was a great piece of research which came out suggesting the saudis in the short term are quite happy to talk the talk because they have a big bond issue to place this quarter. oil improves, makes fans look
better, get the bond away more easily with a lower coupon. after that, they question whether this oil price we've seen recently will stick. we may then see reversions of what we've seen in the previous 6 or 12 months. >> as an investment director, can i trade off this? can i invest off this? >> i think people already have, if the truth be told. oil has had this huge run going into the meeting. >> oil companies? >> i think if you see the oil price maintain this momentum, stocks like bp and shell aren't going to hang around, offering a 7% to 8% dividend yield forever. if there's real faith in an oil price bottom, that would be the first call for investors, whether retail or institutional. >> okay. russ, hang on for a second. the international monetary fund has raised doubts over whether greece can meet its budget targets. speaking in washington, d.c., christine lagarde cautioned that greece's debt is the not sustainable, and she called for a, quote, debt operation. lagarde also addressed concerns over the imf's participation in the bailout, saying that the
group will not abandon the so-called troica. the euro group president called on eu lenders and the imf to align their views on greece. >> i think the greeks fully understand the involvement of the imf is very important for the european partners. >> do they really understand that? >> they do. and the imf is actually helping greece where the issue of debt is concerned. whether we do need to do more, how much, and when is yet to be debated. but the imf is actually supporting greece there. so i really need the imf on board to get the right balance and to get the firm kind of package that we need. >> what's the toughest sell for you domestically? debt relief for greece or an exit of the imf from greece's bailout program? >> we've promised greece, if necessary, we will do more to relieve their debt burden.
that promise still stands. we will, in the coming weeks, have to debate what more is needed. so i'm good for that promise. what i cannot accept is that the imf leaves. i need their involvement. financially they're involved, but on substance, they're very valuable. they have a lot of experience, and they keep us focused. let's put it mildly. >> well, spain's acting industry minister has announced his resignation effective immediately after being implicated in the panama papers leaks. the european union's five largest economies have forced a deal to share information on the beneficial owners of companies and trusts. germany, the u.k., france, spain, and italy are all working together to deliver what the british finance minister describes as a hammer blow to tax evaders. the german finance minister also welcomed the pact as an important step forward.
>> you already pushed forward the laws against unfair tax practices. the progress we've made in recent years is indeed impressive. and the current events, the panama papers, confirms we were right to strongly push for such an agreement. but our work is not done yet. >> now, meanwhile, speaking to a local newspaper, austria's finance minister says that he will propose a compulsory worldwide company register to clean up tax havens in the aftermath of the panama papers leaks as well. so a worldwide company register compulsory. get involved. e-mail the show. what do you think of that? privacy is kind of the thing of the past now. but the address, firstname.lastname@example.org. get in touch with e-mails, if you so desire.
on twitter, we're live as well. @louisa bojesen. @streetsignscnbc. you are writing in this morning. anthony says, who would not want to party with you? i have no idea. lynn is a wan-- linda wants a comment on the ftse. we'll talk markets in a second. loads of you writing in, happy it's friday. brilliant. stay with us. next week on cnbc, swagger is back. we'll be speaking to key players across europe about how the continent is getting over its crisis of confidence. first, though, let's just take a little look back at last year. >> europe needs a bit of swagger. the best ways to have more confidence, swagger, as you might say. >> we need to drive investment. >> there's one sector that has swing in its walk. it's luxury. >> the quality of the hand that
we have is very high. >> we don't just need swagger, we need money. >> the u.k. has got swagger. >> that's become really strong in worldwide competition. >> europe is obsessed with debt. >> this is the last hope for europe. >> it's just a barrage of negative stories. >> the reality is that we are seeing quite good times in europe. >> oclients are believing again in europe. >> you're looking for swagger, i think you'll find it here.
view during his upcoming visit to london. the white house has openly indicated it believes the u.k. should remain in the european union. however, obama will make it, quote, very clear, that the brex brexit debate is a british issue. the big banks have been weighing in on the brexit debate. the deutsche bank drrceo cautio that london would lose its reputation for trading sovereignties. mean while, the euro group president has told cnbc the brexit debate hinges on the fact that european citizens no longer understand what value the eu actually delivers. >> i think it will be a negative impact, both on the eu and on the u.k.
it's very hard to predict. i think one of the main issues is that we need stability rather than instability in europe across the board, political stability, stability at our borders, economic stability. we've had too much instability in the financial sector in the eurozone yes, we need to do a lot of work to improve how the eu functions and what it delivers for citizens. that's the key issue in the u.k. debate. >> do you think europe's let the people down? >> well, europe has been very much for almost 40 years or more about peace and prosperity. that was a given. it was not something that was debated. people took it for granted. of course, there was europe. that was a guarantee for increase in prosperity and peace. ever since the start of the financial crisis, i think that was a main turning point. there's been concern that are
there risks, is it damaging, is it risky. so that insecurity of what europe actually delivers has been on the top of people's minds for some years now. >> do you think we take it for granted, just being a european citizen and the benefits the union brings? >> well, as always, it's never about what you have accomplished. it's always about what you have to offer in the next coming years. so what europe has accomplished is taken for granted. thank you very much, let's move on. what else have you got to offer? so what we have to offer people is more security in terms of social economic security, prospects, perspectives. security at the outside borders and dealing, controlling the asylum issue. you can't make it go away, but you can manage it well. so we need to improve that.
all around europe now there are conflicts and it's threatening us. i think we have to work closely together. >> i lose count of the number of americans i speak to, particularly here, that say europe focuses on its limitations, whereas in america, they think the sky is the limit and it's a different mind set. would you agree with that? >> no, i wouldn't. that's the traditional way to look at the difference between the u.s., opportunities, and europe. but if you look at the debate in the societies on either side of the atlantic, the debate is very much the same. it's about large group of people who believe their income hasn't improved or has actually decreased the last 10, 20 years. their perspectives, their chances to get a new job have decreased. and there are a lot of international threats. migrants coming in taking jobs, international treaties where the jobs leave the country, and the debate at the moment in the u.s. and in europe is very, very much
the same. the populism is the same. the kind of arguments is the same. it's basically about what you have to offer us, how can you give us security. >> all right. so the issue of brexit is not going anywhere. >> not until the 23rd of june at the very least. >> exactly. again, is there a trade here? can we take the uncertainty to our advantage somehow? >> i think you probably can. i personally think in the events of brexit, the long-term ramifications for the u.k. will be a weaker pound and potentially higher interest rates. from a consumer's point of view, that's not great. your holidays are more expensive, your mortgage is potentially more expensive. so let's see what happens. on the day, i think sterling will go up, come what may. if there isn't one, the longs will have their wicked way anyway. long term, i think sterling down if there's a brexit vote.
>> okay. that links quite nicely to a viewer question i just saw coming through from linda. the ftse is two hairs away from its all-time high. >> 10% anyway. >> yes, exactly. excuse me, i'm reading there, she sent in a couple. 7,000. can we reach it if the oil deal at qatar takes us to $50? >> the oil price increase would definitely help. oil is definitely a key part of the ftse, but you're also very heavily reliant on banks, which have been absolute dogs this year. it's the worst sector in the u.k. 12-month relative lows in europe as well. and you're heavily reliant on the big pharmas. i think it might be quite hard work to get to 7,000, given the
mix the ftse 100 has right now, unless banks and pharma join oil. >> briefly, forward thinking suggests india, not china, will be the dominant demand driver in the not so distant future. >> massive potential, but i think there's more work to be done there. >> russ, thank you very much. have fun this weekend. >> have a great weekend. >> you bet. party on. >> i'll be building legos with the kid. >> i was at lego this week. go try to build anything. i dare you. now, he had the home field advantage. it was a home run, though, for bernie sanders in last night's democratic presidential debate. was it? >> do we really feel confident about a candidate saying that she's going to bring change in america when she is so dependent on big money interests? i don't think so. >> this is a phoney attack.
hello, everybody. when c welcome back. you're still watching "street signs" on a friday. your headlines this morning. no surprise there, china's gdp meeting expectations with the slowest growth since the financial crisis. greet shoots from property and fixed asset investment suggesting that beijing stimulus is paying off. russia's finance minister tells cnbc he's not pinning his hopes on an output freeze to boost the crude price as oil ministers prepare for weekend talks. spain's industry minister resigns after being implicated in the panama papers leaks. this as the eu's five biggest economies now strike a deal to clamp down on tax avoidance. >> the current events, the panama papers, confirms that we
were right to strongly push for such an agreement, but our work is not done yet. and gains in the basket for caffefour. solid sales in brazil and spain outweigh weakness in china, sending shares to the top of the cac 40. hi, everybody. welcome back. if you're just joining us, good morning. we're just getting the prints through from the u.k. construction data. we're looking at u.k. february construction output, minus 0.3% month on month, which is a little bit worse than what the polls have been anticipating. we're looking at the u.k. february construction output, plus 0.3% year on year. that is a little bit weaker than what was anticipated. house building showing its
biggest three-month rise since march of 2014, up by 6.8%. so u.k. construction slipping a bit during the month of february, but house building remains strong. sterling, you'll note here, very flat at the moment. you saw the bank of england yesterday voting 9-0 to keep rates unchanged. they spoke about the uncertainty given brexit. we saw a little bit of a dip in the pound on the back of that. u.s. futures and how we're setting ourselves up for trade stateside, we're being called a little lower. that's seen on the implied open on the right-hand side of your screen. the dow being called down by around 25 points or so. european markets are seeing a bit of selling taking place. one of the bigger stories heading into trade here in europe today, china's first quarter gdp showed the slowest
annual growth rate in seven years. bernie lowe sent this report. >> like a clock ticking over on the dot, china's economy grew 6.7% in the first quarter against the same time last year, right in line with what was expected. now, while it was a tick down from the previous quarter, many feel this clearly illustrates that the slowing economy has seen the worst of the bottom. other metrics surprised as well. industrial or factory output came in faster, advancing 6.8%. economists felt the number would be a lot lower than that, say around 5.. and the power of the people and their shopping money. their dollars showed up in retail sales growth, which notched up a gain of 10.5% ahead of expected as well. after a rocky start this year, a degree of confidence has returned to the markets. stocks have been gaining
incrementally, and property prices have been rising in major cities. there is still concern that emphasis on headline growth could slow much-needed reforms in other areas. government recently announced plans to close around 10% of excess steel, but that timetable is spread over many years. in the meantime, headline gdp looks set to continue to grab attention. >> good morning, good to have you with us. tell us a little bit about what we're seeing in terms of the recovery and whether or not this credit-fueled recovery can be sustained so we can avoid further stimulus. >> as you mentioned in your report, china has seen the slowest growth since2009. but of course, there are
indications that the economy is now beginning to bottom out and stabilize, and you should see some signs of growth coming through. really, this would be a reflection of, again, a little more investment driven, fiscal stimulus driven growth coming through. i think there are a few points to remember here. the manufacturing sector will continue to remain weak, although you've had a good manufacturing printout today. over the course of the next few quarters, there is still a lot of overcapacity in certain sectors, which needs to be reduced and taken out. that means on the manufacturing side, you will continue to see weakness in the performance. if use compare that to the services sector, clearly that has been growing a the a very robust base, even if you look at the gtp breakdown today. you'll see again the services sector has done fairly well growing by more than 8%. again, that's the main driver of growth. in terms of our outlook, we do think that china can grow by about 6.8% this year.
it will be a stable rate of growth, really fueled by the services sector growing sharply, but also good consumption data and really driven by a little bit more stimulus on the fiscal side from the government. >> i hate to be speculating along a pessimistic line, but let's just say we have kind of a worst-case scenario for the europe and u.s. not even a worst-case scenario, but a not super strong scenario. maybe we have a brexit in the u.k. maybe we see weaker economic growth coming through from the u.s. would china still be able to hold on to its own growth at this point? >> well, actually on our forecast, we are looking for weaker growth out of the u.s. we're looking for 1% growth, which i think is well below consensus. of course, because of the uncertainties related to the political environment in the u.k., we're looking for weaker growth here as well and in europe. overall, our general projections are for a lot of weakness this year in the developed world.
still, we are projecting 6.8% growth in china. it's really being driven by domestic factors in the services sector, by the fact you already had quite a lot of stimulus. we're looking for our fiscal deficit of 3.8% gdp china. it's one of the few countries that's not really trying to reduce the fiscal deficit, but we have steadily seen it increase its fiscal deficit. that should drive up consumption. that should drive up local investment. and that will really be the factors that will drive growth. for us, really, the kind of stagizati stabilization will be driven by domestic factors. >> thank you very much. good to see you. now, democratic presidential candidates hillary clinton and
bernie sanders clashed on wall street. campaign finance and gun control were the topics ahead of the new york primary. tracie potts joins us from nbc news. it was described as being a very fiery debate. fiercely combative, a u.s. presidential debate. who won? >> reporter: well, it probably depends on who you supported going in. in this situation, we're in new york, in brooklyn, which is sanders' home turf. but also home turf for hillary clinton, and she has a big lead in new york right now, an even expanded lead according to our latest poll here at nbc. it's gone up a couple poinlts just over the last week. sanders is actually in the air as we speak, headed to the vatican. he's doing a conference there, speaking at a conference today, which we expect to be a lot letless contentious. some of the issues they covered, gun manufacturers. clinton has repeatedly hammered
him on supporting a bill that would shield gun manufacturers from being sued by the victims of gun violence. we just saw a court decision allowing the victims of the sandy hook school shooting to sue gun manufacturers. she says that sandsers is supporting them. on the other side, you have the big banks issue he keeps bringing up, that hillary clinton take is taking all these fees, no way she can be tough on the big banks. and the judgment issue of hillary clinton, where he's yet again questioning her judgment. all of that came up at this deba debate. now it's up to the voters next tuesday to decide who won and who they want to represent from the state of new york. meantime, all of the republicans were actually in new york last night, too, at a fundraiser where they were trying to win voters, although donald trump has a huge lead, over 30 points there. . >> so cruz's earlier new york values comments didn't go down that well? >> reporter: no, and donald trump has actually been using this now.
last night at that fundraiser, he spent a significant amount of time dealing with this issue of new york values, saying that new york values are being honest and straight forward. he's really trying to turn what he perceived as a slam on the people of new york into an advantage for him, not that he needs one with such a huge lead in the polls. >> tracie, thank you very much. do stay tuned. tracie was just speaking about cruz. he will be on "squawk box" today at 8:00 a.m. eastern. that's coming up here on the channel. carrefour shares trading higher after first quarter revenue grewly 2.3% on an organic basis thanks to a boost in sales in brazil, spain, and italy. this despite seeing a drop in china sales. meanwhile, man group shares have been trading it higher. this after the hedge fund
navigated a tough first quarter of market turmoil by posting only a slight dip of $100 million in assets under management. according to the group's ceo, market conditions remain challenging. and the unicredit ceo has played down fact he's lost the support of several shareholders. he says the bank has already approve pd an investment in the new backstop fund for the italian lenders of up to a billion euros. meanwhile, bmps is mulling on whether or not to invest in atlas. the chairman says the fund could help the bank find a merger partner and divest some of its nonperforming loans. claudia is in milan. so we're looking at some of these banks thinking about the decision on whether or not they should invest in this backstop fund. >> yes, well, mostly what's
going on is that they will benefit from this fund more than participating in it, as they are, of course, the biggest bank in terms of how much nonperforming loans they have in percentage of total loans. 40% of their total loans are nonperforming loans. bmps has been looking for a partner to merge with. as the chairman said, moving forward to find a partner, we do need to manage this situation. the fund will be helpful for that. unicredit is participating up to 20% of the fund. these two largest banks are participating both with about 1 billion euros. other groups that will be participating are the government-run gdp as well as banking associations and insurance group. it's still not clear exactly how this fund will work, who will be participating, as you were saying, and how much they will
actually be able to raise. it's expected to be about 6 billion euros total which will help but not solve the nonperforming loan problem. the jury is still out as to whether this fund is comprehensively positive. of course, it will help reach these capital increases that two italian banks have to go through to raise 2.75 billion euros in the next months. that's the first objective. the second is the nonperforming loans, as we were saying. need to still clarify the underlying mechanism as well as financing structure. a lot of work to be done, but for the time being, these banks have certainly benefitted from the idea that this fund is actually being created. it has improved the situation here in terms of confidence towards these banks that do need to definitely improve. we have seen strong losses in the banking sector in terms of how they've moved on the equity market. so we're ending this week on ab positive note for the italian banks. >> claudia, thank you very much. joining us live from milan. mike says, don't apologize for
pessimism on u.s.-european economic growth. the influx of the unskilled will weigh on both. fantastic to have you with us this morning. keep your comments coming through. email@example.com on e-mail, or on twitter @louisa bojesen or the show @ve shoshow show @streetsignseurope. >> coming up, find out why microsoft is taking the u.s. to court, right after the break.
demands. eamon javers sent this report. >> reporter: microsoft filed a lawsuit on thursday. the company is challenging the government's ability to examine data held by microsoft while blocking the company from telling customers that the government has accessed that information. we believe that with rare exceptions consumers and businesses have a right to know when the government accesses their e-mails or records, wrote microsoft's president and chief legal officer brad smith in a blog post. he wrote, yet it's becoming routine for the u.s. government to issue orders to keep these kinds of demands secret. microsoft said it received 5,624 federal demands for customer data over the past 18 months and 2,576 of those came with gag orders, that blocked the company from telling the customers in question. the department of justice had no immediate reaction to the suit. a u.s. government source said the feds only learned of the legal action through media
inquiries today. the filing coming in the wake of the dramatic standoff between apple and the fbi over encryption. for cnbc business news, i'm eamon javers in washington. well, blackrock has posted a 20% drop in first quarter profits as it struggled with the sharp pullback in financial markets. the ceo and chairman larry fink told cnbc how performance fees contributed to the miss. >> one area that dragged earnings that we had in terms of our hedge funds, we had performance fee reductions. so that's the biggest. the street was anticipating higher performance fees. that's where the miss was. >> and u.s. banking stocks posted their fifth consecutive day of gains yesterday after a torrid start to the year with earnings from the big names turning performance around for the sector.
financials had been the worst performer this year. wilfred has been looking closer at the financials. a whole bunch of them reporting this week, wilfred. >> that's absolutely right, louisa. it's driven share price performance, as you've just said. the three main takeaways from the banks we've heard from so far. first up, the u.s. economy is actually doing okay. loan growth has been decent. wells fargo, for example, saw growth in all segments in terms of loan growth. despite the market volatility in q-1 and the hike we saw in december, there is good demand for loans across the board. second takeaway, energy provisions have been high, but only as high as was expected. however, guidance for the rest of the year differs between the main players. jpmorgan seemed confident that the worst is behind them, whereas wells fargo sounded less confident in that area. capital markets, they've been weak as forecast. m&a more so than sales and trading. but march did see an
improvement. given the challenging top line environment here, investors have focused also on expense control, applauding bank of america yesterday on that measure more so than anyone else. as we look ahead to citigroup reporting today, all those themes will be relevant, but also keep in mind the significant international exposure that they have. at the margin, could that help the trading side? both jpmorgan and bank of america have alluded to the fact that asia was a bright spot as things started to improve in march. citigroup hits the tape at 8:00 a.m. eastern time today. we'll be watching that. right now, u.s. futures pointing slightly lower after a bit of a gain yesterday, taking the dow to its highest close of the year. louisa? >> thank you very much. have a fantastic weekend. whatever you get up to. >> you too. >> fun and games. let's move on. the show is coming to an end. the st. louis federal reserve president says it's, quote, prudent to press ahead with rate
hikes this year. in his bank's annual report, he said that the central bank would stay exceptionally accommodative, but he hopes that hikes this year will be the first of many. speaking to cnbc at the imf meeting in washington, the imf chief, christine lagarde, seemed to welcome the prospect of turning up the rate hike cycle. >> being data dependent, being gradual and well communicated, we're more likely to have an interest rate race rather than a move into negative territory. it could probably mean a move in 2016. let's hope so because it would mean that the u.s. economy is faring better. >> the exchange operator bats global markets has priced its ipo at $19 per share, at the top end of the indicate the range. the company raised over $250 million marx making it the biggest ipo of 2016 so far. it also upped shares issued from 11 million to over 13 million. this is the bats second launch
attempt after a number of issues forced an ipo withdrawal back in 2012. investors pulled $4.8 billion from u.s. based stocks, funds in the week ending april 13th. that's according to the latest data from lipper. it happened despite u.s. shares moving higher on the week itself. funds specializing in european shares posted their 11th straight week of outflows, bucking the trend. you saw energy stocks garnering their biggest inflows in five weeks. jeffrey kleintop is the chief global strategist at charles schwab. why are they doing that? >> well, there are a lot of global concerns. you mentioned christine lagarde earlier here in your comments. she's spoken to some of the global concerns the imf is focused on. of course, the imf took down their global economic forecast
earlier this week. i think that's what investors are focused on. all the risks they see to an outlook that's fairly lackluster, at least as it relates to profit growth. i think they're a little too pessimistic. economic growth appears to be accelerating in its momentum in the last month or two rather than the decelerating pace we've gotten used to over the last year. >> do you think we're going to see continued outflows, or do you think that people are going to be re-evaluating things halfway into the year, once we start getting closer to a potential rate hike? >> well, i think they may be re-evaluating things. investors have been net sellers for years now, going back to the financial crisis. individual investors are not the drivers of this market. corporate share buy backs have been the driver to the upside. it would be great to get a
second wind of buyers, but they haven't been the leaders here. i expect they will eventually come back to the marketplace, but really the key is getting earnings to turn around. i think eventually you'll begin to see them follow the money, follow the earnings. but again, that could take a little bit of time. we may not really see that until late this year, early next year, which means markets are probably kept in this range-bound volatile environment. >> at the same time, i'm looking at the dow, s&p, nasdaq all seeing their highest intraday levels of the year. yesterday's session, the s&p 500 very close to its all-time highs. what's the driving force behind this? what could change that as well? would that be oil moving higher possibly? >> well, i think we've certai y ly seen a great rebound. yes, we're up. we had a great rally since the lows back in february. we're really just a little positive on the year for most global markets. so we can't cheer too much. i do think we start to see a slowdown in this rally. it was driven a lot by the reversal in the dollar, the move lower in the dollar.
of course, the stability in commodity prices. look, i think as the fed begins to ponder interest rate hikes as we look to the second half of this year and it becomes more evident they will be hiking rates later this year, we may see the dollar begin to firm back up again. that's been a real plus for the emerging markets and u.s. markets as well. that may begin to take some of the wind out of the sails. >> so what would you be focusing on at the moment? where do we find value? >> you know, i think where you want to look right now is -- particularly as we go through this earnings season, where are we hearing better prospects for the future? financials are very important. lately we've started to see inflation expectations around the world begin to tick back up again. that's great news for lending margins. i'd like to hear more of that from some of the big banks. if that's the case, we start to see more loan growth, more loan demand. at the same time, the ability to make more on each of those loans. that's a great backdrop for financials. i'd note, strong demand in asia
for credit here, some of the data we've seen in the last month or two, that's great news. we're starting to see it in europe as well. watch the financials. they might be a leadership group. zb >> jeffrey, thank you very much. have a good weekend. some news out on fiat chrysler. the ceo saying they see toyota, volkswagen, and ford as remaining potential merger candidates for the group. fiat chrysler ceo saying merger efforts have never ceased. just a couple comments there about potential tie-ups to take place. again, they're underlining that toyota, vw, and ford all remain as potential merger candidates. so wrapping up the show for the week, why don't we show you what european markets have done since monday in trade, in case you forgot. the ftse seeing a bit of a rally, up by just over 2%. nothing compared to what the dax did, what the cac has done so far, the ftse mib so far.
all these markets higher by just over 4%. some strength in equities this week. the u.s. futures. we're 4 1/2 hours away from the market open stateside. the dow jones being called lower by 20 points. the nasdaq and s&p called pretty flat. a number of you have been writing in throughout the show. we're always on e-mail, live on twitter as well. have a fantastic weekend. immediate for swagger, we need to strut more, like in "saturday night fever." good. strutting your stuff for economics. go strut this weekend. have fun. see you again on monday.
good morning. breaking overnight, china gdp. the country posting its lowest pace of economic growth in seven years. new this morning, russia throws cold water on hopes of an oil deal. and a blowout in brooklyn. hillary clinton and bernie sanders square off in their final debate before next week's critical new york primary, and they didn't pull any punches. it's friday, april 15th, 2016. "worldwide exchange" begins right now. good morning. welcome to "worldwide exchange" on cnbc.