tv Street Signs CNBC April 19, 2016 4:00am-5:01am EDT
good morning and welcome to street signs. these are the head lines. basic resources in europe soaring to a five month high. a turn around in the price of crude this after the dow crosses 18,000. a french cosmetic maker lace the foundation for another year of sales and profit growth with a promise to out -- the competition. quarley sales rise nearly 3%.
and netflix suffers a series of ratings downgrades. shares 8% lower in afterhours trade. before we get a closer look i want to bring you breaking data. ecb lending survey is showing that credit standards on loans for households for house purchases tightened here. there is the house lending and also the corporate lending growth when we talk about just the success of the ecb. overall we're seeing continued increase in loan demand across all categories according to the ecb and showing improving loan
supply conditions for companies as well. there was expectation for improve and lending against household money, demand i should say. but improving for companying as well. a check on the euro right there versus the dollar. but for now lending growth is improving across all classes here. >> a continuing trend, that eex seven gains out of eight. the big move is basic resources moving higher. wti, crude prices really gaining despite disappointment over doha. let's look at the boriss one by one here. and you can see how the trends are plays out. the ftsi 100.
dax out performing. the french cac forty and the ftsi mib. the dow crossing above 18,000. higher by about .6%. this boosts the s&p 500 and the nasdaq as well. s&p. and remember, energy stocks one of the biggest gainers, despite dip in the oil prices. different look this morning. wti and brent both moving into the positive territory. 1.4% for brent. 1.3% for wti. and this comes after the steep drop off in yesterday's trade. the move higher is partly waged to an oil worker strike in
kuwait. moscow is now considering increasing ill production. that's right. and that 540 million tons of output is a realistic level. hadley has been following all the developments in kuwait and joins us now. >> reporter: hey. i'm standing just inside the union of oil and gas works outside of the kuwait city. and this makes up about half of the work force here. what i'm talking about right now are kuwaiti nationals. at the end of the day the workforce, the rest are expats and they are still on the job. the government says that, you know, if this is a fight about salaries and benefits, the salaries for these guys will remain the same. but they haven't agreed as yet to keep benefits at the current level. that seems to be the sticking point here at the union.
a lot of these benefits are sort of the cream on top of the government's salary. and there's been a move in the last year in kuwait to bring budgets in line. one of the things they are trying to do in kuwait is to streamline government salaries and that would mean getting rid of a lot of benefits for workers in the oil and gas sector who apparently get the better benefits, as they say. we're going to be speaking to the head of the union and asking him what's it going to take. the government response has been interesting. sunday they had a harsh response to the protesters. they can on and said we're going to think about legal action. what you are doing is a threat to national security and they also talked about bringing in expat workers to fill the gap. at the moment it is a more conciliatory message today. >> what extent will the impact
we've seen kuwaiti officials whether or not they will be able to o increase output whether we get a bargain with the strike. >> they said they are going to do this with inventory they already have. at the end of the day this is a cautionary tale for the rest of the country. they are essentially dependent to make their budget meet. at the end of the day they have a parliament that has no more. and they have a national assembly that many here basically say should go just because it really makes the government grind to a halt, especially when their own workers can hold them hostage, which is essentially happening today. >> and hadley you have also been continuing to watch the developments post the doha here.
very strong comments from the venezuelan minister here. how concerned do you think saudi arabia is right now. >> at the end of the day what happened in doha is that the palace made a phone call while the ministers were mading. and they were going in and out. sot some point there was a phone call from the palace in yeeiad saying they were going to stand firm. they weren't going to do a freeze in output unless everyone was on board. and i think the trust was probably already broken but rubbing it in the face but didn't really help did it. >> hadley, thank you for bringing us all the latest twists and turns. that's hadley in kuwait. meanwhile the market response in
asia, of course the rebate in oil helping market there is, particularly in japan. sri joins us. >> hi nancy. broadly we are seeing a rally greased by the machinations in the oil price. so it is really down to the u.s. dollar and oil the big risk events in the market. that is dictating the pace and town in asia. i think it comes down to the fact that underlying sentiment remains fragile because we haven't seen convincing rebound
in export-led growth. that's central to a lot of these economies, especially the very open and trade dependent ones like singapore and korea. incidentally we did have the bank of korea hold rates. but the broad consensus view is that if we continue to see the strugishness in exports the next move could be a cut by the bank of korea. >> and you will notice japan's nikkei up almost 4%. @street signs cnbc. i'm on @nancy cnbc.
market share in the asian market and eastern europe, africa and the middle east. >> the ceo of publicis gave us his outlook. >> we expect to offer about 1.5% and we think that the impact will be felt in the second and the third quarter, mostly. >> meanwhile it is getting results from german online retailers. shares under pressure. the stock off some 2%. the group gave guidance the arrive will range between 788 million euros to about 8 hundred million euros in about three
months at the end of march. >> shares rallying. after a drop in 3%. the fremplg dairy products maker warned the economic backdrop would remain challenging in 2015. >> the food and ingredient supplier says it only expects a marginal decline in adjusted full year earnings. >> and shares in access nobkzo >> and rio tin toe has put
guidance for 2017. as you can see reto tinto higher about .8%. resources really soaring today. the top performer in europe. up.8. overall the basic resources higher, pairing some gains we saw just as the show got started a and. also moving we're looking at gains in oil and gas of course as we've seen oil prices get back into the positive territory. autos under performing somewhat. similar for utility, travel and
leisure. but this will be good news to investors who have been watching to see how long this relief rally in europe can hold. we're now talking about gains up higher 7 out of the last 8 sessions with today's strength and of course really tracking the gains we saw in the u.s. overnight with the dow back above that crucial level. the ftsi 100 up about .8%. pairic back some strength we saw at the start of the show. the dax holding the momentum. the cac 401.2. and proneny has a new pareneron.
evian besh shares up about 2%. and we've been watching remi con troe's performance in chincoint china. among the best performers there in france. look in the global macro picture we want to bring in fidelity worldwide investment. tom thank you for joining us. a real pleasure and what's turned out to be an exciting session. >> it's been a very strong start
to the market today and looked a very different picture 24 hours ago when the oil price was down 7% at its worst since then. the oil prices really recovered all of its lost ground. what we're seeing that stock markets and the oil market are really moving in lock step. they have all year where the oil price fall, equities fall. when it rises again the stock prices are buoyant. >> -- from that relationship yesterday on wall street. even though oil ended negative territory, are we starting to see more of a disconnect? >> i think what we've got is other things going on as well. there is lots going on. earnings season is fully under way now. expectations for earnings have really been talked down so much in the first three months of this year. as the results are coming through, even when they are bad, we saw with the banks really quite disappointing figures on
the face of it. but expectations were so low for the likes of morgan stanley. and later today goldman sachs. expectations so low that even a fall in net income is positive. >> should we be putting more focus on guidance and in so what do you expect for the banks in europe. >> you are right. it's what people have to say about the outlook going forward that matters. and i think that -- again, i think we can't get away from what's going on in the energy markets. i think that if the energy markets pick up. if they stabilize, then that is going to be reflected in the bank's earnings as well. the banks very heavily exposed to energy's companies debts. and fit feels like those energy companies are going to be more relaxed about paying back their debts that is good for the banks.
>> also the question of the emerging market exposure, particularly here in the u.s. and questions whether or not it is too easterly to call a reboundrly to call a rebound and where the dollar goes from here. >> the dollars absolutely key to the outlook for emerging markets and the dollar of course is determined by the pace of tightening of u.s. monetary policy. i think if moultrlt monetary po is slow, the dollar will be weaker and puts less pressure on emerging markets. it may be a little early to call but looks healthier than three months ago. >> and a stronger dollar, does this become a real concern for u.s. earnings next quarter? >> a stronger dollars clearly not good news for american overseas earners, american
exporters. but i think that actually the pace of tightening of u.s. market policy is going to be relatively calm and slow. i think that is going keep a litd on the dollar. a rise in dollar not good news for u.s. earnings but i don't think there is too much to worry about on that front. >> the euro surprisingly resilient given the measures the ecb has put out as well. could this being something that was too fast for me. >> helpful for european exporters and overseas. as many may be repatriated to europe, that's been a bit of a drag pushing up the euro. >> what are your top picks in terms of just the sectors? >> so i think that if you look at the uk for example, i think that with all of the uncertainty about the referendum coming
upful there is clearly a big divide between domestic stocks and overseas sox. at the moment the international facing stock, the exporter, the commodity related stocks, oil and gas related, are helding much better than the domestically focused stocks where there is anxiety about the referendum. >> some anxiety undoubtedly priced in. but what about the eu export reliant firms? >> the referendum result, if there is a vote to leave, i think it would create a shock. not just for the uk but also for eu. it would be bad news for the eu and i think it would be reflected in financial markets in europe as well as the uk. >> thank you for walking us through your view there is. tom stevensen at fidelity
worldwide investments. it is that time of year again. we're talking europe and swagger, or the need for swagger, if you will. and the lifting of china's one child policy is making one thing almost certain. yep. that there will be more kids in the world's most populous nation. and we'll speak to the lego people. >> reporter: lego is one of the world's most profitable companies. a far cry from 2004 when at that point it was losing a million dollars per day. but with a big company though,
also comes big responsibility. and part of that responsibility is guarding against overconfidence. but lego doesn't seem to be resting on its laurels. it us now set sights on becoming china's number one toy brand. >> this is a country slated to be the world's biggest economy we think like many others half a billion people will move into urban areas over the next 20 years and that constitutes very unique opportunity for growth. >> however many companies have run into difficulties expanding into china and lego no exception. it recently refused to sell bricks and mask to dissident chinese artist with critics accusing lego of not wanting to wrong foot the chinese government. here the lego ceo explains the artist request.
>> we've seen people building concentration camps out of lego. so we noticed a few sensitivities to so called political topics. in this case one of our staff members locally found in the purpose was too sensitive. so the order was refused and we later reviewed our policy and simple decided that for us to determine what's sensitive and what's political is too difficult. >> politics aside, another challenge lego faces doing business in china is bridging cultural divides. a key part of lego's appeal for western parents is educational value. in china the concept of learning through play isn't so well established. lego is working to change attitudes and funding studies focusing on the cognitive benefits of play. and as part of broad strategy to win fans in china, lego has
updated its product offering to include more asian characters and settings. >> a ninja must always be training. >> reporter: though it is not surprising lego is careful planning its china expansion. with sales in core markets at record highs, it now needs to look further afield in search of growth. the stakes are high. we'll have to wait though to see how awesome it ultimately can become. ♪ everything is awesome ♪ when we're living our dream >> still to come here an "street signs" we're hitching a ride from paris to london and beyond. is ride sharing the future of intercity travel? i'll be talking to be the the co-found ner a minute.
welcome to "street signs." let's get to the market t. impressive overnight. with the bowe over 18,000. dow jones higher by nearly 50 points. s&p 500 by 7 and the nasdaq by nearly 15. now within two% of t2% of highe. and double digit gains from lows of february 11th. the global rally playing out in europe as well. the boriss are fairing, ftsi higher by .7%. and just 30 minutes ago this was more than 1%.
higher by less than 1% at this stage. the xetra dax. the french cac 40 and the ftsi mib. >> investors too keep an eye to oil. a different story this morning. seeing wti crude higher .8. brent at 43.36. and seeing gains across the commodities picture. spot gold and silver higher as well. >> and the focus in on central bank continues. today the finance minister in japan, taro aea taro aso. let's get to reaction in the
markets. >> reporter: the comments came as the surprise. the u.s. treasure secretary seemed to warn japan. that led to a wide spread perception that japan will find it difficult to undertake any currency intervention. but aso stressed --. those comment's seemingly put a break on the yen's further rise. to the country the yen surged since the beginning of this year. and monday it climbed the 170 yen range for a high.
the yen's rise has been described as excessive. the central bank could decide to take its already aggressive monetary policy one step further. that is all for the nikkei. >> thanks for the update. we continue to watch updates in the ek dor. the death toll from the 7.8 magnitude earthquake has now reached 413. over 2,500 were injured in the quake. as rescue missions continue. damage with was wide spread throughout ek dor with the coastal province of munabe being the hardest hit. argentina's debt attracting orders according to the ifr source whose say the bond will likely applies price today with a lower yield than previously
thought. it will be the largest bond offering from a developing country in the last 20 years. another check on oil because we've been watching big swings here after the dramatic drop yesterday. gains in wti, brent in the neighborhood of .9% there. joining us now with reaction is alex, ceo at gore street capital, a renewable energy investment firm. thank you for joining us. >> thank you. >> we've been watching weeks the volatility in energy and dramatic drop off in crude from the highs of last year. how is that impacting demand for renewable energy? >> used to be always oil was correlated with new bills and renewables. not the case anymore. we're seeing new bills and renewables in countries such as portugal, spain, italy built
without subsidy and correlated from the energy from oil. the oil is not there in terms of factoring in our bills and renewables. we're also seeing secondary activities take place around storage in the uk, things around efficiency all lowering need to correlate back to the oil price. >> you hit an interesting point when you talk about storage. a lot of this has do with diversification of the uk and eu energy supply. walk us through the real opportunities when it comes to storage. >> storage is big thing here in the uk. driven by the fact that the western grid has been massively underinvested in. and lots of problems. huge renewables going on the grid, solar and wind, and those issues. and the electric vehicles. lithium ion prices dropped 40e% last year. that's huge opportunity for us to provide power and services. >> how are you investing in the
lithium ion space? the providers themselves, the manufacturer, the components? >> we're -- providing services back to the grid. so actually owner of the asset. >> with the lithium technology you scale. >> yep. >> you need mass adoption of electric cars presumably. a lot of auto makers say we need more government assistance to push the technology along. how o close are we to governments doing that. >> on the electric vehicle side that is the larry that's already left the factory. the battery manufacturers scale up their operation hugely. for us the battery prices are at a price that allows us to properly put in systems. for ev they are growings exponentially. and to us it seems oil mispriced
what's happening in 2025. there will be two million barrels a day taken out because ev is replacing traditional cars. >> what is that going to do to electric car demand? >> initially decreasing to 50% over the next ten years. independent of oil. given that price decrease and that is a major price point in the car, ev will have a future regardless of oil price at 40. >> you talked about the need to revive the grid, is the appetite there from governments? >> energy storage for -- can be built without substituidies. >> outside lithium and storage
what is the other top area for investing. >> solar in italy. >> all right. thanks for joining us. that's ceo of gore street capital. shifting focus, taking an eye of u.s. politics because the remaining candidates are set to battle once again to be on top of the heap when the polls close in the new york primaries today. tracy potts is standing by in washington ahead of a another big day in voting. hi tracy. >> good morning everyone. this is going to be a big day because in new york for the republicans there are 95 delegates at stake and the polls are showing us that donald trump has a massive lead. what that means is this could make it much more difficult for ted cruz to get the nomination. if he loses big in new york today, he would have to win 98%. almost all of the remaining delegates for all of the remaining contests to win that
nomination outright. otherwise there would be a big floor fight at the convention this summer which is what it's looking like if ted cruz wants to go after this nomination. our latest poll numbers here at nbc show donald trump is actually up 10% over the last month. but he has a november problem. he can't seem to beat hillary clinton. 2/3 of all voters see they don't see themselves vote for donald trump. and almost as many for ted cruz. interestingly john kasich is the only one who is able to beat hillary clinton in our latest poll and by a significant margin in november, 12 points according to that poll but first they have to get through new york and the nomination. on the other side you have got the democrats where hillary clinton has the edge in new york. she's now fighting allegations of what bernie sanders calls fundraising, malpractice, using money that was intended for other lower democrats, is that going to have an impact on the
new york vote today? we'll know in 24 hours nancy. >> we'll await the results. thanks for joining us. >> meanwhile the focus may be on the next president but president barack obama is still full swing in his travel schedule and set to visit germany and the uk this week. phil hawn is running us through exactly what you can expect from the visit. >> reporter: for probably the last time as acting president of the united states barack obama is touring europe. specifically the united kingdom. obama's position on a potential brexit grabs the most attention. believed to --. some believe he could use this trip to weigh in on the debate.
in germany obama will visit hanover mesa. and attention may be diverted to the refuge and migrant crisis. merkel's --. but it won't be all work and no fun. obama may have to sing happy birthday as he privately lunches with queen elizabeth the ii a day after she turns 90 >> that's something i would love to see, president obama singing happy birthday to the queen.
now expected to hit back at that government report details the risks of a brexit vote. expected to further intensify divisions already within the ruling conservative party. in a speech today he's set to accuse the campaign of treating people like children. this after the report argued that leaving the eu would leave households 3400 pounds off per year. karen spoke to the chairman of some firms to get their view. >> obviously brit listen always remain part of europe. as the question of whether we're be part of the eu. i worry that it is a growing threat to our democracy. i think that we lack control over our own borders.
i worry that with ever closer union we'll be at some point forced into the euro zone which is zooerl a failing project. the stresses and strains of having a common currency has put on those nations. we are a substantial net contributor to the eu budget. i don't think they spend their money wisely. and this is perhaps the only time in our lifetimes we will get the option of becoming a truly independent nation again. and give away the fifth largest economy in the very well without the extra cost and regulation and bureaucracy that being part of the eu entails. >> some might be confused by your comments given they would see you as someone who had something to lose if britain did exit europe. you have ability to bring in
food at fairly cheap rates with no borders across europe and throw into the mix that you have an economy that's been a fairly decent consumer somd would say derived on the profits of financial sector. don't you think you might have to trade through difficult times if there is brecht? >> i think that is scare tactics by those who are froen eu. i think this is project fear as as they call it. truth is food costs would almost certainly. high values in the eu have special preference now. and globally tariffs are the few percent. so the idea that if we were no longer part of a single market everything would go up is simply an error. still to come. we are hitching a ride.
good morning. and welcome back to "street signs." let's look at what is making headlines around the world. >> at least seven people have died with over 320 wounded in a car bomb attack in kabul which was claimed by the taliban. the afghan president condemned the attack this is the strongest possible terms. >> ash carter announced monday the u.s. will send an additional 200 troops to help fight isis. most will be special forces but added he does not expect the u.s. to be the only contributor. >> i, more importantly, of
course, the president will continue to be asking even if we continue to ask ourselves to ask more of our partners in europe. >> homes floods as 18 inches of rain in texas. govern governor abbot. >> most ploi employees who currently make less than $10 an hour should see wages rise in may. well, who wants yahoo? it's question we've been asking for some time now. and the deadline to bid has passed with yp holds just the latest name in the fray.ings jue
latest name in the fray. after the company extended the deadline just to yesterday. report suggest a handful of suitors are still left. the value is roughly $34 billion with verizon the front runner at this stage. we spoke with re/code's kara swisher and. >> i think it's the only buyer really. bankers try to create a lot of froth around a purchase like this but in general a lot of people have gotten a look at the yahoo books and aren't very impressed with what's going on in the core business. that's really the show at yahoo. it's a declining business and very few company can afford to fix it. and verizon is one.
>> will wilfred joins us. hi. >> good morning nancy. how are you doing. ibm and netflix both already reporting yesterday. netflix topping the estimates on every metric. shares dropping after the firm says it expects to add 5,000 subscribers in the u.s. and two million in the second quarter. that is blow expected. part of the problem? the space is getting crowded. netflix ceo read hastings addressed the issue. >> there are so many competitors and everyone is working hard to build the best content. so we are seeing growth in the overall internet tv market. of course that is displacing linear tv.
and it is natural that everybody is coming in as they realize that the future is internet tv. >> also reporting ibm and big blue earnings in arrive slid in first quarter though still beat expectation. but its older businesses are shrinking faster than new businesses are growing. shares dropping sharp lir in the market. yesterday some other stuff. and more to focus on and of course how markets opened following that oil volatility yesterday. >> incredible moves no doubt but a lot of focus on earnings. and same story on wall street. it is the guidance everyone seems to be honing in on now. thanks. ride sharing company blah blah cars expecting the number of rides in india to grow tenfold. as more customers embrace longer
travel. joining us is nicholas broson from the paris studio. nicholas thank you for joining us this morning as part of our europe needs swagger special. you're looking at success stories in europe. is the message here that to really go from good to great you need global expansion out of europe? >> yeah. thanks for having me. in a way we started this company about five years ago only as the tiny company with the french market and about five years ago we decided to expand all over europe. and about two years ago we decided to expand in emerging markets. and today i would think for any start up in europe to truly
exist in this global landscape you need to be at least european and you probably need to be global. and that is something we recognized probably like four or five years ago and we've put in motion. >> one barrier to entry we often hear the is regulatory approval. given the nature of your business, which if you can explain in more detail, the fact that you don't have employees necessarily but that you are connecting users. does that help you get around some regulatory concerns? >> yeah i think that is right. i think europe is more challenging in a sense that you need to go country by country. if you look at what we've done, essentially what we doe is allow drivers to share a car when you drive between cities. driving from london to manchester we allow drivers to share that cost.
and because we created the concept around something as traditional as cost sharing we had actually low regulatory problems. we've been lucky that as we created the communities country by country we had very low friction on regulation. and that is also true of countries like latin america. or india. so it's been an advantage for us not to sort of battle regulation one by one country by country in europe. >> you touched on something interesting there. that the drivers in fact don't make a profit. from what i understand, the fee that users charge or pay is to cover mainstreatenance, cost of ride. what is the value to investors because of course you take a cut
of that fee. >> exactly. what we create is a marketplace where drivers are driving anyway. we optimize the empty cars traveling from paris to brussels and so on and allow passengers to essentially share the cost with the driver. as you do that essentially why the driver doesn't make a profit. you dististill have many people exchanging on the platform. we have nearly 4 million people using the service every month. and we end up eventually taking a cut. the business model is to facility t facilitate the interaction and then take a -- >> would you go head to head with uber in that model and would you look for ride and share in a different format? >>ed to we are very very focused
on creating the communities of the drivers and passengers. today we operate in 22 countries, pretty much all over europe and countries like brazil, mexico, india, turkey. so a pretty large footprint. the main focus for us so to grow usage and the activity on this footprint. when it comes to the competition with short distance services like uber or lyft in the u.s., today i sigh see it as two very different market. one is on demand and the car is coming and you have a professional driver providing a service driving you to wravr you want to go. that's a completely different paradigm, where we actually have two people driving or traveling from london to manchester, sharing a car to the destination. so i don't really see an
overlap. if anything it is almost complementary. becau because. do you feel within europe the government is doing enough? the red tape in brussels is hurting innovation, do you agree? >> well today i think it is a bit more complex on that. on one side you still have lots of country by country regulations. so the reality is your french or german company. i think what they are trying to do is level playing field for the companies
and when they save, you save. so you can tell some of your dollars, "good news, gang! we're going out for ice cream!" auto and home insurance for the modern world. esurance. backed by allstate. click or call. good morning. earnings central. netflix and ibm post their stocks and watch shares fall. >> and the corporate earnings braid isn't slowing any time soon. >> and decision day in new york. the empire state holding presidential primaries today and the stakes are higher than ever before. tuesday april 19, 2016. well, that exchange begins right now.