tv Street Signs CNBC April 21, 2016 4:00am-5:01am EDT
good morning and welcome to "street signs" live from london and frankfurt. these are the headlines. >> here at the ecb we're expecting mario draghi to comment on the latest german criticism of negative deposit rates. finance chief has said these rates must not stay negative for long. a must watch ecb meeting here in frfrt today. >> a bout of motion sickness for
investors on the crude priced roller coaster also leading to cautious trade here in europe. the euro largely range bound. not surprised. weak first quarter results trigger a sharp fall in the share price. and hans vetsberg later in the show. plus later on "street signs" i'll be tackling england legend and arsenal invince al sol campbell.ible sol campbell. good morning.
a very exciting show for you. first let's get a view of the markets an hour into trade here. of course investors are teeing up for the ecb meeting. as you can see investors cautious ahead of the meeting. stocks are relatively flat. despite significant gains state side overnight that carried into asia largely due to gains we saw in oil overnight which have paired back a little but again a lot of the investors digesting earns and this is the view as well. we have the swedish krona strengthen against the euro but the euro-dollar trade relatively flat here.
and mario draghi's press conference a little later. ahead of the ecb decision we've heard from fitnenance minister e again criticizing policy, saying negative rates do more damage than good. this follows his recent claims that negative claims have helped boost the rise of right wing party afd. negative rates have put on some pressure. and we've spoken about exactly what the effect on european lenders has been. >> it was largely around not much solvent but profitability in the banking issue. and i started mid november. marconi and others have said
we're coming towards the end point of reregulation but there is also so much stuff still in the pipeline that is coming out that a lot of the investors are looking at how bank profitability will be once all of these measures are put in place. and i think we're seeing a lot of question in particular. >> important to establish a confidence also in the sector among customers and firms. so we cannot keeping this process of rewriting contracts every time we have a problem. but it is also important to look at the way the banking sector can be profitable again. and low interest rates are a big problem to that. and impact of this low and even negative interest rates for
portuguese banks and exists and need to be taken very carefully. and of course the risks need to be shared among all participants. >> jeff, it appears it won't be the decision itself but the great defense we're expecting to hear from draghi. >> yeah. it's really changed the nature and expectation of this meeting, nancy. because the comments from mr. schae scha schaeuble will now overshadow the meeting.
obviously now i think mario draghi will have to address the criticism from politicians who are increasingly concerned that the negative deposit rates are hurting german savers. and german savers have lost as much as 125 billion euros of interest income on their savings and others are starting to get concerned about what the impact will be on pension savings around the euro zone. i know the dutch have concern about that. it will be an interesting meeting. i don't think we're expecting any significant news on policy
but draghi will clearly have to field questions as to how he see it is comments from the germans damaging the independence and the independent legitimacy of the ecb at this point nancy. >> and you have to wonder whether or not president draghi will simply point the finger back to the policy makers. it is not just up to us. the government has do more but now the government themselves saying we don't want to do any further actions. what is the plan b here then? >> i think it will refocus minds somewhat. because there is a growing, i guess thought within some economic circles that actually the decisions taken by central banks on qe. and namely the ecb effectively took the foot off the throat of several governments when it came
to implementing reforms and tackling the banking system. we know the irish got on with it. we know some others. i think the spanish deserve some praise for the actions they took. but we're only of course just learning about this atlas fund which looks as though it will be woefully under capitalized for the job at hand. and this is what is holding back perhaps the animal spirits in europe because these banks are very unwilling to lend if their own balance sheets are distressed or somewhat weighed down by these npls. so i think mario draghi for choice will not want to mix it with the german politicians
particularly. he won't want to inflame the situation but i think you are right. he probably may try to deflect some of the criticism saying i can only do so much. you have to implement the reforms. >> do you expect we'll get any more information on buying the investment grade corporate bonds? >> i think we might get some more details here because there are some significant question marks as to how the purchase of these bonds will be done. what the mechanism will be. what the ratio of nationality of these bonds. that's tricky because these are commercial bonds from private companies. but there will be some attempt to explain where there is some
kind of national breakdown that reflects the membership and the capital put into the european central bank here. clearly i think most of the comment here will be dominated by how mario draghi responds to these challenges on the legitimacy of negative deposit rates. >> thank you jeff. meanwhile we want you to get in touch with the show. tell us what you think of the ecb about whether or not there is a feud brewing. @"street signs" cnbc. joining us is nicolnicolo.
going back specifically to any additional information on the corporate bond purchases, how are you positioning ahead of this decision today? >> good morning. yeah i would say this would probably not be a very exciting meeting. dag delivered a lot last month. cut rates. delivered four new trtl operations with borrowing rates between 0 and minus .4%. it would be surprising if we get any new measure today. i think the focus will be on the press conference as always. and i think here we might have some interesting snippets. draghi will likely be asked about helicopter money, possibly brexit. possibility of new measures like
rate cuts and possibly about the euro. and these comments will be interesting. but let me start first with the corporate bonds that you ask. i think details will be delivered with more substance in june because the ecb said they would start the purchases at the end of the second quarter. on the other topics that i mentioned i think draghi will be cautious on helicopter money. mentioned it was an interesting measure in the past. i think he'll back pedal on that to some extent, given the german public opinion. on brexit again i think he will probably skirt the question to some extent. i think instead on the rate cuts it will be interesting because at the last press conference he said that the ecb did not expect to have to cut rates again. i think he will back pedal on
that to some extent and le probably say that the rates remain part of the ecb tool box. and i think he might be asked about the exchange rate. and again he'll probably be very cautious on those comments but i wouldn't be surprised if he said something along the lines of if there is further sustain in the euro it will be taking into account. >> on the rate specifically draghi has a real problem with voices expressing concern about the interest rates specifically for the banking sector. do you think he'll be more cautious and go further into negative territory? >> i think he was very cautious in march because of this concern. he had to be balanced. he couldn't say we are going to go very far but at the same time
he didn't expect further rate cuts as that led to further up trend in the euro. so i think there are certainly limits to the amount you can deliver without significantly hurting the banking sector and profitability. but there is probably a bit further that you can go at this stage. so yeah i think draghi will still say rates are part of the tool box. that the ecb is aware but there are also ways to limit these consequences. >> and you suggest we may not get additional information on the corporate bond but what do you expect to be the big winners? >> to some extent the announcement itself might be more important than the actual purchases. what we saw in the past with previous qe program, not just in europe but in the u.s. often there is an element of the
news -- you know, the announcement is actually more important than the technical purchases that take place post announcement. so, you know, i think credit markets remain well support ed. in the case of europe you have the ecb direct support. so i think the markets will benefit. but not necessary -- you know, a lot of the benefit has already been seen. >> thank you for joining us. stay tuned. right here on cnbc because we're going to bring you the ecb decision live along with all the market reaction. live with julia at 13:30. meanwhile a check on i'll.
basically flat. strong gains in the u.s. session. wti higher. brent crude above the 45 level. we're keeping in focus the political diplomatic side of this trade as well. and now russia saying it could in fact ramp up oil production to record highs. now this just days after saudi arabia threatening to flood the market with more crude. and telling local media there were no plans to hold another meeting rumored to take place in may in moscow. iran is pushing ahead with plans to produce 4 million barrels a day. the country insisting it can cope with low prices. on the other side of the things we've got supplies in the u.s.
in focus and oil inventories rose less than expected last week which of course has provided upside sort. and comments predicting a dramatic drop in non opec supplies. >> still to come, the biggest earnings movers. ericsson. we'll be speaking to the ceo hans vestberg just a bit later in the show. stay with us.
>> what is your take? >> my take, it's a very broad deal. at least judging on what we see so far. vw really takes care of customers. they offer what it seems a buyback option or to fix the cars. you can't really force people to do anything. and it seems customers can also expect a generous compensation around $5,000. that is what the market wants to
see. >> how does this add up to a total cost? >> we surveyed investors before the deal and the market was expecting 18 to 19 billion of gross. i would estimate that the real number will more be in the area of 10 billion, 8-10 billion, max, financial damage from the u.s. >> so some significant damage there of course. does the stock reaction we're seeing both today and yesterday because the stock was up another 6% or so yesterday. does this suggest investors are breathing a sigh of relief? >> well, exactly, the stock really moves in two stages here. the first is derisking the situation, which is happening now. and the whole diesel saga. the second set will be a credible turnaround story bringing the vw brand back on
track. it has insanely high cost base, and margins are terribly low. and the company has to be to really target its 6% margin. if they present a convincing plan the stock has upside to 200. >> you're expecting preliminary earnings tomorrow ahead of the full report next week. what are we going to get here? any chance of a dividend. >> tomorrow is very important. i believe the company will prevent a provision number for the entire diesel scandal. i assume that is going to be in the area of 15 billion euros and it will include potential legal fines in the future or litigation risk in general. if they really do that, then the whole vw story is significant l
derisked. >> does that include -- >> they have already basically pled guilty and that they have cheating and that's why they should be able to put a number on all the legal claims potentially for the future and y yes. >> -- and perhaps take some of those angry customers out of the legal process as well then. >> yes. i think the company after what we expect today and tomorrow can move forward and speak more in public. and it can end this very painful period where no one really could say anything.
>> okay. and you still have a buy rating on the stock, to clarify? >> i do. yes. >> okay. thank you. let's give you look at another earnings mover today. angelo american. the stock off just slightly as first quarter production fell on the back of cuts and asset sales. iron ore production fell 27% at one unit. and bright spots were in nickel and platinum. the group also announced a strategic over haul back in february. and dassault stressed the
chinese market is still holding up well. >> as well as in asia, america, europe. so as the good sign that the digitalization of the industry, despite the health of some of the sectors is going -- is going on accelerating. >> novartis has suffered a drop in the first quarter. profits actually came in above expectations although revenues in the period disappointed. and actelion lifts guidance. let's also give you view of sky shares. under pressure this morning. among the worst performers off almost 5% now.
the broadcaster has shrugged off concerns over cord cut iting something something something. the pay tv provider added customers bringing the total base to 21.7 million. and sab miller saw rises in the fourth quarter. still to come here on "street signs," steve shoots and steve scores. but which former football giant will he be tackling later on in the show? >> one of the legends for england. played for tottenham but was an
welcome back to "street signs." raising concerns over the independence of the european central bank. german finance minister criticism ahead of today's press conference from draghi. >> oil prices also leading to caution here. the euro meanwhile largely range bound. >> not satisfied. weak first quarter results trigger a sharp fall in the share price. we'll be speaking to hans vestberg a bit later. and vw speeds to the top of the
600 aboard reports of a u.s. deal to buy back thousands of the cars fitted with the cheating device. good morning. and welcome back to "street signs." looking at european markets relatively flat ahead of the crucial ecb meeting. investors really awaiting the press conference from draghi. before that we we've been awaiting data on retail sales. looks as though march sales declined 1.3% on the month and increased 2.7% on the year. compared to forecasts, consensus was looking for a smaller decrease about .1%. the actual was lower than more than 1%. so sterling is off against the
greenback. it will be interesting to see if we get more reaction. overall in march, grew by 4.8 billion pounds. a smaller increase when it comes to the public sector net borrowing. just to recap the uk march retail sales including fuel, that was down 1.6% on the month compares to much smaller forecast for about 0.4% decrease. meanwhile a view of u.s. markets. it was a solid day on wall street overnight. some of the best levels of the day and dow closing highest levels since july. we're looking at continued strength for u.s. markets. dow higher about 36, t.
here in europe we can see a mixed picture. footty 100 off. the xetra dax moving higher. for a second straight day volkswagen leading the german market higher on reports of an imminent deal with the united states. the cac 40 basically flat and the ftsi nib holding on. >> a former footballer. he's played with and against some of the greatest players in the world of football and he's definitely got sporting swagger. steve sedgwick, we're not
talking about steve. but he is with -- >> we're joined by sol campbell. in addition to all of what you just said. 73 caps for england as well. one of the most powerful defenders england had in the last 20 years or so. really nice to see you. look, we're a business channel. we cover economics and politics, and you waded into all of those areas as well. a perspective -- there are too many very average players in europe and maybe a brexit will actually solve some of those issues. >> i think it is all about quality really and all about control. when i started there were few scandinavian players now.
and i don't players at the top going out and finding those top world class players, but for me it is all about the british players growing up through the ranks and having that opportunity. having the opportunity to succeed or fail. where you have big clubs getting players at 13, 14, bringing them into the club and schooling them and all of a sudden you are a home grown players. so that's actually take an lot of opportunities away from young british players for the future. >> players who did grow up through the system and actually did compete with a lot of international players. thinking of teams of old, they have always had a smashing of very very good players as well. do you think it is the structure of the premier league that create this is influx of mediocre players rather than the
eu. >> i think it is the money is the reason a lot of players are here on the other level. opportunities taken away from british players who in the future could make a difference. that is how i'm looking at it. you are allowing this to happen. top level i don't mind that because you have to pick the best of the best. but i think you have to have a little bit of structure because this is just going on it and it doesn't really help elsewhere in europe. >> do you think the other players would want to come over? >> no i think you have to look at it. why would the faa, the premier league look at this structure, this fantastic prefecture afran blow it all up? you have to look at it and say let's don't break that up. let's look at the structure of allowing british players to get
through the ranks and allowing them to have a chance in the end. >> we have some wonderful young players coming through in the premiership who might give us a good chance in the euro championships as well. do you think the structure of the english premier league and this huge number of foreign players is creating a problem on an international level. >> i think it's the conveyor belt. yes a few players are coming through but i'm talking about conveyor belt. continually having those players coming through. you need that kconveyor belt of players trying to make it. and i just want the best of the best of players in the country really. sometimes you look at some clubs and what's going on there. a british player could easily play at that level.
i want foreign players to come in also. i want it to be fantastic. i want the -- it is all about the youth players coming through ranks. i want that to continue. >> do you think we got a chance given everything you just said and about the lack of depth of our young players. >> we've got a fantastic chance this year. i think there is a young team that's got a great kind of attitude. no fear. i think that can be very positive and also negative as well. sometimes you can be too fearless and don't realize what's going on actually. but i think england has a fantastic team. the guys at front are playing really well. kane and vardy. i'm excited about it. at least the quarter finals and semi finals and we'll see what goes from there. >> i have to ask you about the
premiership as well. you are a fan of arsenal and you have been quite derogatory can i say about tottenham's chances. do you think now actually as the shoe in that leicester are going to get this title? or tottenham are going to come up the rails or could your old arsenal come up the rails as well? >> there are two who can win. leicester and tottenham. they are the only guys in pole position and it's leicester's to lose. i've never really been derogatory about tottenham. played fantastic, unbelievable. the power, the pace. those two -- >> they have grown up this season, haven't they. >> both teams. leicester's really surprised everybody. even the bookies. all i'm saying when you look at the history there is no kind of experience. it's all gone out the window.
it is all about how you approach it. what you have got to do for the last few games. leicester's to lose. tottenham is playing unbelievable and they are waiting to pounce. and only two teams. >> the fans of the show will know a west ham fan. but we also know arsenal have failed to deliver so many times. amazing squad. amazing manager. great set of fan base. why are arsenal and -- failing to deliver on such a regular basis? because they have everything in place. >> it happens. you have to look at yourselves and say, listen, we've had some injuries. and rourkeshire and the sanchez and. if arsenal didn't have any injuries i think it is going to be a different story. it all comes down to that.
you can't keep on buying players in. you get some injuries and you get what you have and it's a difficult situation. and that's whether i think happened to arsenal this season. >> not down to the manager? >> no. arsenal has a fantastic manager. he knows what he wants to do and he's been excellent. it's just the injuries they have come at the wrong time. >> any other club i guess he might have gone a long while ago. you think wenger is still the man to lead? >> if the board change their mind they changed their mind but he's fantastic. yeah, of course the fans want a win. i think obviously the premiership is the one they would probably think in that it was probably one of the easier
years to win. but she's still the man and he's got great philosophy. you know, i think the injuries just hit them at the wrong time. >> one more question. when are we going to see you managing a big side? >>, i collect in may and who knows. it is all about slow burn. some of my friends have crashed and burnt and it is all about taking your time and finding the right club and building up and mang mistakes and doing it right but, you know, slowly, a slow burn. i don't want to crash and burn. i've seen a lot of guys crash and burn and i don't want to be in that scenario. >> thank you very much indeed. always great to meet a legend. nancy back to you. >> great interview. i didn't want to rub it in there but since you showed your allegiance, i'm actually a tottenham fan. feeling into the season this
year. >> not gonna tell you mine though. for more on how european soccer has become a swaggering success in the world of sport log on to cnbc com. google says it looking forward to working with commission to demonstrate the design of its droid model. this after they were charged. >> we think that we have found wrong doing so that google is getting even stronger in search and making it more difficult for the newcomers, the invogtinnova and the customers in the end.
>> -- is saying actually there are loads of google free droid devices. hundreds of millions of these things as well. it is a free set of open source software that they put on to these devices as well. and there is no prevention whatsoever for other apps to proliferate as well. that is what they are saying as well. and samsung and others have mobile phones with apps pre installed from google's rivals. that's what they are saying. >> that is right. but that is not the point. i think it is very good that android is open source. but the thing is that if you do android and you want the play store, well then google says well then you have to take google search and you have to take google chrome. and all of a sudden it seems to be a oneway google street.
and that makes it very difficult for the one who makes our phones to give us another choice to show us other things and therefore for innovators and up and comers to present. >> earnings season rolling on, wilfred frost joins us for the latest rap from the u.s. >> first nancy i just want to say i never knew you were a tottenham fan. it upsets me deeply deeply but i like that you are wearing red today the colors of arsenal. >> i know how to pick them. >> exactly. great to see sol campbell on earli earlier. yesterday, american express beat the street on top and bottom lines. revenues rising the first time in five quarters. high spending by card members in
the united states among the reasons. qualcomm reported third quarter profits below estimates. expecting chip shipments to fall. the stock under pressure to 3 1/4%. shares of yum rising this morning. helped by chinese new year promotions. ma tell is struggling. to name but a few. plus weekly jobless claims come in this morning.
at the moment futures pretty flat. fractionally higher. "worldwide exchange" coming up in about 15 minutes. >> all right. we look forward to it. and a volitionist harriet tubman will now become the first african american on a u.s. paper currency. this when she replaces president andrew jackson on the $20 bill starting in 2020. and five feel leaders of the women's suffrage movement will appear on the back of the $10 bill. a big victory for alexander hamilton. he gets to may not his space. rousseff plans to seek support against her impeachment from the united nations on friday. she's called the impeachment a coup d'etat without weapons.
hans vestberg, ceo, live in stockholm. thanks for joining cnbc this morning. you have announced reorganization but investors are not pleased. tell us exactly what you are hoping to achieve and how this positions you going forward. >> i think that we are, of course in a big transformation. the whole industry is in a transformation. we have invested in some new areas, from media to building systems and etc. and now the structure to execute and build profitability and enhance the profit growth. the long-term plan is there and we're putting the new structure in place. >> you expect to go further but are your hands tied when it comes to this macro environment? what is the real deal when it comes to the sales and the revenue forecast?
>> we are dealing with everything we can control inside the company. our cost structure and we have a big program we're executing on and doing right-sizing measures in the this and next quarter. and several emerging markets now for quite a while having currency fluctuation and macroeconomic challenges and at the same time our customers in the market are investing a little less. on the other hand we have southeast asia being strong for us. north america stable. so it is a little mixed here. it is not new markets. it is just that they have been in the situation for quite a while. >> you have the demands of course with lack of spending in some areas. also the lack of competition. and several analysts citing this merger with nokia and ak tell here could provide more competition for you as well.
>> it's hard to say but of course we have seen a slow down in europe when it comes to larger mobile broadband projects. we had a little higher pace last year and now some of our customers are slowing that down. i think it is important we get the legalization going in europe for the rest of the year but right now we have a lower pace when it comes to mobile broadband development. >> is that a trend you expect in the u.s. to continue? >> i think that we saw the first half year of 2015 being fairly weak in north america. lot of things were happening. it stabilized second half and now we see that continuation in the first quarter. and of course it is a market that is enormously important and we hope it will continue on this stable level. >> all right. thank you so much for joining
us. that is hans vestberg, the ceo over at ericsson. let's get a check on banking stocks ahead of the ecb announcement. as you can see banks enjoying a turn to the upside today. higher by about 1.6%. this continues a trend we saw yesterday with the index moving higher by about 2.2%. important to keep in mind the index is off some 28%. let's get off to jeff awaiting the decision at the ecb. >> and that is the rub. the reason that index is so weak in europe we have a bank-based financial system. and quite frankly since the financial crisis those banks have been struggling to deal with their non-performing loans and reset in a way that mario
draghi hoped they might do. we may hear a little bit more about the details of how some of the new initiatives are going to evolve. as i know we've had one analyst on already today who says he doesn't think they will come until the june meeting. overshadowing this is the criticism the ecb has received from german politicians and schaeuble have said economic --. expect there to be some questions today about the independence of the body and what impact these comments are
going to have. >> thanks for that, jeff. and we'll be back with you later on cnbc. stay with us. we'll have an ecb special and bring the decision live with market reaction. that's from 13:30 cet on decision thyme. we'll leave you with how the markets are trading. global rally coming to a halt and u.s. futures pointing to a flat open. for now investors are waiting on the ecb and a slew of other earnings coming out of u.s. "worldwide exchange" is coming up next.
good morning. a barrage of market-moving news. earnings reports. a bold oil call from the eia. and an ecb meeting. new this morning. volkswagen expected to buy back diesel cars in the u.s. and pay owners a billion dollars. >> and the country is going crazy about currency. the u.s. announcing new $20 bills will feature harriet tubm tubman. and alexander hamilton will stay on the 10 and social media is blowing up this morning around that. "worldwide exchange"in