tv Street Signs CNBC April 22, 2016 4:00am-5:01am EDT
good morning, welcome to "street signs" and a very happy friday. i'm nancy hall grave and these are your headlines. profits at daimler reverse as. a new emissions investigation also driving shares into the red. mario draghi gets backing in amsterd amsterdam. >> all central banks have to be independent in conducting their monetary policies, i think we all agree on that. >> and big tech pulls the rug from under the bulls.
margin pressure weighs on microsoft. while alphabet posted biggest earnings related drop in four years. ♪ ♪ purple rain ♪ purple rain >> tributes are flooding in for the music legend. that's prince of course, who has died at his minnesota home at the age of 57. ♪ >> incredibly sad story with prince. we'll bring you the details on that in just a little while. but here we are the last day of the trading week. the pmi data. a final reading, first the composite pmi at 53.1.
just slightly lower. and the services flash estimate was 53.2 and compared to a forecast of 53.3. so we're bringing the preliminary estimates. so just slightly under forecast there but as you can see the euro-dollar still range bound after volatility. right now the euro is holding about 1.127 against the green back. a view of the equities here. what's been a strong week for european markets now moving to the downside but nevertheless the 600 was still up overall about 2%. here overall we are off half . percent. let's get a view on individual
indices. and oil prices as well. and disappointments stateside overnight. ftsi 100 off just a little. and more. let's look at the sectors one by one. the auto sector all morning without a doubt the real drag here across europe. autos off about 2.7%. daimler sharply lower. some disappointment around the margins in particular. a lot of high cost but the real concern with daimler is the announcement it is taking on an internal probe into the way it does report on exhausts for emission standards. that is at the request of the doj but not a formal investigation brought on by the doj.
and we want to see how this is taking a note from the asian market. here is sri jegarajah in singapore. >> 11.5 week highs at the settlement before the nikkei. interesting price action in the run up to the close. we got a report saying the boj may be open, may be considering negative rates on the lending program for if financial institution. so if there is substance on in this does change the game somewhat. because heading into the boj meeting april 28 next week to all intents and purposes a lot of people were expecting a ramp up of qqe be it in jgb asset
purchases or equities or a little bit of both. so it looks like there could be more creativity another foray into negative rate territory. so that is interesting. the market running with that. dollar/yen was up. we crossed over 110. and that helped the others. not the same story for the shanghai composite, which registered its worst weekly loss since january. to broadly not a great deal of conviction round here in asia as we round off the week. seems to me a lot of these markets are in a holding pattern until we get greater clarity in terms of the tone. and all eyes on the boj next week now. >> all right sri. wait and see here too after the ecb meeting.
but stay with us because i remember that you are a music fan. it is a tough day for music fans. tough year so far when it comes to the passing of many of the greats and today the tributes continue to pour in for prince and fans around the world which have taken to party like it's 1999. i understand sri is getting into the spirit as well. >> we're going to do our own tribute. we are going to boogy in honor of prince. so come on, hit me. ♪ purple rain ♪ purple rain >> very impressed with that one sri. would have liked you to sing "little red corvette." >> there were so many classics. he's going live on in fond o
memory in my mind and heart. he reinvented the p funk era. >> and apparently so many unreleased songs as well. there is a vast collection of those. perhaps we'll get to hear what hasn't released yet. thank you so much for joining us and have a great weekend. getting back to the big story this week around the ecb, mario draghi has now rejected criticism, rameaffirming the central bank is not --. foreign minister led to that chorus blaming the ecb for rise of right wing parties. but president draghi said attempts to impede the bank's actions would only make matters worse. >> any time the credibility of a central bank is perceived as
being put into question the result is a delay in the achievement of its objectives. and therefore the need of more policy expansion. >> let's get out to jeff cutmore still on the road in amsterdam. >> reporter: this is fundamental nancy and i think this is why with one voice the politicians and european leaders here have been trying to nail this door very firmly shut. and the reason is its credibility. and if the central bank governor continues to insist we'll do whatever it takes, we have the ability to use whatever at all is in our armory to try and get
inflakes back in the euro zone. he's not going to be believed if at the same time you have a whole host of european senior politicians saying it is the wrong policy. you shouldn't be doing it now and we don't want it to go on for very long. so with one i think the voices here saying that the ecb has to be independent. let's hear from the president of the euro group. >> the politicians, to criticize the ecb that would mean political influencing. and i'm not in favor of in that. i think the ecb has to do its monetary task in an independent way. that's how it's written in our treaties and that's how it should be done. >> here in amsterdam there is an on going review of the greek bail out program and there is the desire to get a deal done to
allow further releases. at the moment it appears that that deal will not take place today. wolf gang schaeuble making that comment as he arrived at this meeting. the ecb issue, never very far away. i also asked the commissioner about it. let's hear about what he said. >> i have full confidence in the ecb and the think mr. draghi has the --. >> how confident are you that we are seeing progress in the negotiations over greece. >> >> in the group we're going to talk about the progress made in athens and the talks to prepare the review of the first program. very good progress in athens.
and in in my view we are close to an agreement. this agreement is possible. we need for that to have a credible package of reforms which are economically adapted, which are financially sustainable and which are socially fair. i'm confident that with an effort an agreement is in reach and we need to have that and we want to have that as far as possible. of course the targets that have been fixed for the prime minister through 2018 inside the mou must be met. but the figures given yesterday for 2015 go in the right direction. so i'm entering this meeting with will and with the idea that an agreement which is absolutely necessary fast is on view at site. how should we feel about the
debt relief aspect of the negotiation. this appears to be a key sticking point for the imf to be part of this new package of measures. how have you narrowed the differences between the institutions of europe and the imf on this debt relief deal? does it have to happen before a deal can be done? >> there certainly has to be a discussion about that. but first things first and today it is about the review of the program. successful closure of the review certainly paves way for further discussions. what i want is to have a positive and balanced -- >> i want to focus on that point that he made about the euro stat data. because i think the greeks feel that they could do with a little bit of luck, a little bit of good fortune from the gods, this
and that number 0.7% of gdp. and the estimation was 0.25%. so the greeks have stepped over that. so that is a positive sign coming into this meeting and perhaps that will give a little bit of trailing wind to the discussions taking place behind me. >> we hope the luck of the gods stays with them. jeff a beautiful background there. hope you have time to enjoy yourself. have a great weekend. joind now by cary craig. good morning is this a natural pull back we're seeing. >> i think this is a natural
reaction from what we've seen the last few years. they announce and sit back and wait for the market to react. i think people tend to focus on what's happening around the world whether the u.s. earnings, the direction of the euro, the dollar and rely back on fundamentals and that really hasn't changed. we're still in a period seeing a lot of volatility and still concerns about the pace of global growth. i think things are getting better just not as fast as we would like them. >> one thing did happen that was different from the previous meetings. we got more information on the corporate bond purchase program there. given the flows we've already seen into the corporate credit is this going to have any difference? >> the biggest take away was the size of whew they could actually purchase. and that really saw a lot of
analysts reestimate what they thought the size of the bond market actually could buy. so about 5 billion a month on top of the other they were going to buy. is bigger than thought and does more power to what they thought. and second guessing what the ecb is doing. we saw that when they started buying sovereign bonds. but it does show they are becoming more inventive to support the market. the question have they effective? and that is what the markets are worrying about. and that's what draghi is saying. the policy is great. we need the reform to go with it. >> -- in terms here. however banks have enjoyed a little bit of a pop for the last three days but not a good start for the rest of the year. how do you view banks if for
quarter. >> you have seen positive steps in italy. you have seen talk about ati and that starting to come back. so starting to recede a little bit. and when we look for opportunities we look for the improving credit growth. the consumer demands. the demand is there. the low oil price. all that should support the consumer. and think it will feed slowly into what you see in the financial sector. >> oil prices back up some 1% today. but ever since the doha disappointment we've seen some swings here. questions whether we can stay in the range. what do you think? >> i think it is going to be a sideways move for commodities broadly. for me it is a case of saying
there is a floor under the oil because if it drops too low you will see opec get together and say oh we're going to have that production freeze to support the price. and the ceiling is you have still huge amounts of play out there. still very elevated levels in the u.s. production is coming down but very slowly. so it is going to be sideways move for oil. >> pleasure to have you with us. cary craig, vice president and -- something something at j.p. morgan. >> we learn more about the music legend prince who has died at the age of 57. ♪ ♪ just keep your body moving ♪
overall auto stocks off about 2.8%. daimler have seen operating profit fall 9% in the first quarter. they did enjoy a 36% jump in mercedes sales in china. also weighing on the group daimler said it opened an internal probe at the request of u.s. authorities. >> shares of volvo trading hayer this morning. sweden's biggest listed company by revenue doubled output growth in europe. despite forecasting slower
growth in north america and brazil. >> and it's not as easy as abc for alphabet, missing first quarter profit and revenue, largely due to a strong green back. spending on acquisitions was another reason. the spending in the area will keep rising as the company shifts to mobile. >> it was also a bad set of numbers for microsoft overnight. as the group's big bet on cloud failed to pay off. shares pushing lower after hours. >> reporter: for microsoft it is still all about the cloud which has really helped the company transition into a new era faster than expected. even though the company's cloud business is booming, it may not be enough to offset declining pc market which hurt the first quarter sales of windows operating system. surfaces sales were sarply up.
and phone sales continued to free fall. >> and next tuesday i'll be speaking with microsoft's head of cloud, jason zander. . you don't want to miss that one. and creo and founding partner o atom atomico and founder of skype. you of course sold skype, couple times but finally to microsoft. skype often seen as the real success story for european start ups when it comes to larger exits. from where you sit now as an investor into the european tech firms how do you characterize the current climate for exits? >> back when we sold skype 12 years ago we thought there would be a lot of great companies from europe. amazing the last few years, 40 companies reaching billion
dollar corporations. and we also see great flow in new companies. last year twice as many series a rounds compared to 2011 so a steady flow of better and higher quality companies. >> higher quality but still the question of global scale and really to reach that valuation you need these european firms to go global. i know that is something atomico looks at closely. do you think the political environment here in europe is fostering environment for the companies to scale? >> the entrepreneurs are building great companies. they just want to scale businesses. they just want to have a few borders as few friction as possible. i think it's been a cultural problem in europe. but that's something that's changed. entrepreneurs today want to build global companies and we try to encourage these companies to think bigger. and several have now become global category winners. super cell, king, spotify and
others have become global winners. >> the start ups themselves may not even care about the regulatory environment. but investors in abrad, there is still great depends on the money coming into the europe. when you see the headlines that it isn't fair to entrepreneur, do you think ha has an impact? >> one thing is late stage funding and companies in europe typically have to go abroad to raise money. that is one thing we're addressing. very different thing that is going on between eu and the u.s. tech company around thirty years. the start up scene is about can you recruit people? can you get access to capital. and those ro two really different things. >> so much talk of thin tech here in london. some questions over whether the start ups need the banks to
actually become true success stories. what's your view? >> we try to look at companies which are founded by great entrepreneurs who are big ambition and we're trying to be quite agnostic to sectors. you mention thin tech, we see many good thin tech companies. it is exciting sector. and lot of opportunities there. >> i also want your thoughts on the ride sharing market. of course uber tends to grab all the headlines there. i know you are invested in halh. uber in the news recently agreed to pay to settle a lawsuit. uber drivers will remain independent contractors. you know when we look at ubers
business model. this is crucial when it comes to the regulatory side. >> i think there is a bigger picture. it is not about ride sharing. it is about a sharing economy. there is a paradigm shift how people want to work and be more independent and not necessarily have a 9:00 to 5:00 full-time job. for any range of services we're looking at. so it's important again regulation has to change to consider a new environment. and you mentioned ultimately before here, that is one of the sectors going through an amazing change in the next ten years. >> when you look at uber, even halo, are they really threats to the auto industry? or will we see more partnerships? >> the auto industry is going to change tremendously. autonomous cars are happening. electronic cars are happening. when i was growing up, i was 18, only thing i was dreaming of was
i had a car. didn't matter what kind of car. of course more horsepower and everything there was something about it. 18-year-olds today. they don't need a car. they don't even have a driver's license. you are going to have existing players -- >> how do you invest in that trend. >> we look at technology companies. ai. companies trying to take advantage on these micro trends. >> have you disappointed with your investment in halo in its ability to scale to the u.s. >> a great success story here in london and became a household name in the london scene and had a challenge to scale into the u.s. and that was a big distraction. but the company is doing well here in ireland and uk and spain. >> nicholas enstrom.
red. >> gucci falls out of fashion as falls short of expectations as asia weakness hits growth. >> big tech pulls the rug from under the bulls. margin pressure on microsoft and google parent outfit posts its biggest -- drop in four years. ♪ purple rain ♪ purple rain >> tributes flood in for prince who has sadly died at his minnesota home at the age of 57. good morning and welcome to "street signs." a very sad announcement there on prince. we'll get to more in a bit but first back to the markets here.
we did see global markets break that three day winning streak. u.s. markets now pointing to a mixed open but basically flat. the s&p 500 slightly lower. dow jones and nasdaq lower by about 39 points. of course investors were reacting to the ecb but a bigger focus on earnings now. when you look at the markets they were hitting near all-time highs within 2%. perhaps a natural pullback here as well. the biggest movers here in europe. it is not quite luxury day. a 2.7% increase in first quarter
revenue for kerrining. and a similar story at their other key brand which reported 8% drop in comparable sales. >> bank desab deadell. >> helicopter money, it is becoming a hot topic in the world of central banks. and president draghi was asked whether he would consider helicopter money as an alternative stimulus measure. >> and i said we haven't really thought or talked about it. it is a very interesting concept. it is now being discussed by academic economists and
various --. we haven't studied the concept. it clearlies involves complexities, accounting wise, legal wise, and may mean different things to different people. and in answering to an mp who asked me about the same question a few days ago i said it is fraught with difficulties. but the bottom line is we have never discussed it. >> chief european economist at jeffries. hard to read that one. saying we're not discussing it but it is still quite interesting. do you think it gets to that. >> i'm sure it hasn't been discussed at the actual meeting but i'm sure they have explored the issue and looking at the legality and so forth. i don't think at this point they have to introduce it. far from it. and they can continue doing qe as we understand it. but yeah they will certainly be discussing it behind the scenes. maybe not at a meeting but
behind the scenes as an option. >> and yesterday we need to wait, see how the measures take their course through the markets. we were talking about the second round of tell troes. didn't get a lot of mention. >> the ecb this is a big deal. increasing the amount of eligible loans and get them back to basically 1.5 trillion. and they can roll into the twos. it is a combination of the tell troe with the negative depo raid and recovering economy. for the ecb was a big deal. for the markets was all about the corporate bond buying and getting more clarity about that. i think the ecb kreb believes it is putting out a whole raft of measures which are baring fruit. i think they are on hold until september and the brexit
decision then and will decide what to do next. >> a rough start to the year here. do you think there is an acknowledgment at the ecb that they have limits to negative interest rates due to the impact on the banks? >> they certainly have limits but they are not at that point yet and again that's been made very clear by mario draghi yesterday. vice president and peter pratt. minus .4 is not necessarily the floor base. so really sort of telling people they could cut rates further. and essentially the margins of the banking went up in 2015. there is a limit to how far they could take rate lower but they could go lower from here. and introduce two tiering. at this point they don't have to. >> the ecb doesn't act as an island. they have the fed to consider and here we have the boj saying
they are once again looking at additional measures if need be. >> i think the brexit think thing is most key. for the federal reserve their meeting is just ahead of the brexit vote. if you had -- something. if the brits leave the eu it won't just be the bank of england's reaction. >> surprises haven't seen reaction so far. >> -- market confidence is actually going in that direction. so i think the ecb that could be considered another piece of welcome news. >> you provided us the perfect transition because we are talking about u.s. president barack obama kicking off his visit in the eu. he's expected to reiterate support a bit later today. jeff also had the chance to ask mario draghi to weigh in himself
at the ecb press conference. draghi said the uncertainty in the lead up to the referendum would continue to have significant impact in the markets. >> let me state unequivocally that we view the participation of the uk to the european union as mutually beneficial. and will continue to say so in the coming weeks. certainly, the discussion about this possibility has already produced some significant consequences on the markets. for example an appreciation of the sterling. quite significant. we do expect a continuation of market volatility. certainly until the referredeen.
is it enough to endanger the local economy? the assess of our is that the risk of this happening is limited. >> we just heard draghi answering jeff's question saying that the impact would be limited of a brexit of a recovery. do you agree? >> no i do not. heightened volatility spreading out. the something would go down. and if the bank of england moves to cut rates in august following the brexit decision. he knows in a perfect world we won't obviously vote to leave the eu and won't have to do anything more. but a brexit decision for him
would be putting further pressure. and maneuvore over and qe and o things would go on longer and even more problems going forwards. >> so that is the case if we get brexit. but even if we don't get brexit you have to wonder what the political ripple is for the eu and what it means for draghi. and at a time he says we need governments to step up here. fiscal structural reforms. >> we've got anti-political establishment sentiment has grown because of the financial crisis really and we've seen weak recovery. so yeah it remains an issue. but brexit i think if we clear that as a hurdle i think we can
move on and all will return. >> are you more optimistic about greece now? >> we'll find out more next week. no not really. >> have a great weekend. shifting back to apple. co-founder steve was knaeeiak saying the company should pay more tax. he argued all companies, including the tech giant should pay 50% to the government. and it is not as easy as abc for google's parent alphabet. shares dipping after they missed the street on profit and revenue. josh lipton filed this report. >> a swing and miss for alphabet. the company reported epps of 750 on revenue of 22.6 billion. analysts modelled on 27.3
billion and so disappointment there across the board. also net revenue clocked in at 16.5 billion. also a miss. that's important because it implies that perhaps google is paying more money to its partners and that could be margin dilutive. google segments posted a revenue of 21.1 billion. other vests posted 166 million. alphabet had been marching higher and was close to taking out the all-time of 794 before this print but investors initially are sellers after this q 1 report. i'm josh lipton. >> star bucks has a disappointing full year forecast. global sales rose 6% compared to 6.7% in the same period last year. in europe the middle east and africa sales rose a mere 1%. according to starbuck's coo, the
region faced a extremely challenging consumer economic and geopolitical environment. >> and cutting 2,000 jobs in the first quarter. slashing the cap ex to $2 billion. the group hosted a 25% decrease in revenues. >> and fans around the world are celebrating the life of prince to the beats of his iconic soundtrack. he sold more than a hundred million albums. ♪ ♪
♪ >> the legendary pop icon prince has died at age 57. too early. at his home in paslay park in minnesota. jay gray is standing by in minneapolis. fans around the world sending in tributes. a very sad story. and questions also arise as to exactly what happened. do we know anything yet? >> at this point that is an ongoing investigation, nancy. we are outside of paisley park right now. and you can see the growing memorial behind me. as news spread fans began to show up with cards, flowers, balloons. they were looking for comfort as authorities continue to try and piece together how and why the pop icon died. what we do know is that there was a frantic call to 911. two calls early yesterday
morning. they said that there was a man who was not responding. and then the call back was that that man had in fact died. police, as well as paramedics arrived on the scene were unable to revive the man, who we now know was prince. that happened in the morning. as slfrs deputies continue their investigation now through the night. we've seen a steady flow of fans coming to this spot just drawn here like so many were to the pop icon during his life. again, 57 years old. nancy, as you talk about, way too young. and a lot of people mourning his death here this morning. >> certainly. and a legend who is loved the world over for sure. thank you jay. well from one royal to another. this of a very different kind of
royalty. queen elizabeth's birthday. here in the uk. it is no surprise that making a splash on the silver screen has become big business for the movie industry. what is it that's caught hollywood's attention? joining us, oscar winning visual effects supervisor and creative director at double negative. paul franklin joining us with a very special guest with him as well. a real live oscar we have here. what is it made of do you know? >> i think as the alloy with a gold plate on top of it.
pretty heavy. >> where do you keep them is this. >> actually we've got a special little display area in our house. >> let's talk about the -- what makes london attract ed ed to artists such as yourself. >> we've got a fantastic tradition of theater, design and film making. so the visual effects sector has grown out of that over the last 20 years. but really it's taken off in the last decade. the advent of the harry potter films gave us an amazing boost. >> and how crucial is talent to this? your hiring is quite high level. engineering, visual arts. do you hire from within the uk. within europe? where is the talent coming from? >> we try to hire as much as possible from within the uk. but the demand for talented crew who have the combination of skills we need means we have to
look outside of the uk. and we get a lot of people from europe. there are some fantastic schools in france and germany. we're in germany at stuttgart recruiting right now. >> what impact would brexit have on your business? >> i can't really see how it would be positive for us. we do have somewhere in the region of 40% of our crew come from the continent. and like you say there is an amazing wealth of schools that teach people how to do exactly the kind of things that we need to do. >> and what about just the shear technology here? because we talk about the innovations in ai, augmented reality, virlt realittual reali.
>> plenty of examples how story telling has been impacted. i don't see it as a threat. i see it as an opportunity. and certainly something a lot of our clients are very interested in finding out how they can extend into the new world of virtual reality. >> tech players or into the space themselves. >> a bit of both reallies. as technology becomes more successful you don't have to go through someone else to find out how to do it. it is not the computers that make the pictures but the people who are operating them. >> the cost of the kind of work for the film studios are incredibly high. what is the appetite at the moment for continuing the high level visual effect work that you do? >> i think if anything the appetite is just expanding all the time. it's very difficult to think of a film today that doesn't think
of some kind of digital visual effects. we recently completed work on captain america 3. that's a movie that's almost entirely digital. >> what is the most proud? >> recently the work for stella, creating the black hole for that film. produced something that was i think both creatively beautiful and also we got new science out of it. we actually published scientific papers on the back of our work. >> whether this is a trend to stay in i think it is. when you look at the visual effects. paul franklin, creative director at double negative and two-time oscar winner. well, remember when analysts said that the future of shopping was heading all online?
a lot are still saying that but now even amazon has bricks and mortar stores and some are saying that physical shopping is making a comeback. why europe is at the forefront of the retail renaissance. >> welcome to a global first. a retail space that wants to convince consumers it is time to turn off that one click buy and return to good old fashioned shopping. this lond institution has been in business 130 years but things are changing. a 300 million pound -- something something. >> we asked ourselves a lot of questions about what we wanted to do with the categories of
lingerie, swim wear, hosiery and active wear. and we realized the solution was just to combine them in a really eclectic environment. and that vision has turned into a one stop shop for a woman's well-being that aims to transform shopping into an experience at a time when customers are increasingly turning to e-commerce. >> ultimately the idea originated with a brick and mortar sensibility. >> online sales grew over 18% last year. a trend that's only getting stronger. but they say they are not concerned with the growing clout of immere-commerce. >> we feel equally strong about the digital media. as we've launched the body studio we've also spent quite a lot of time replicating the experience as best we could on
the website. >> over 150 brands of established names are featured alongside new, up and coming young european designers, that say the space is unique in the way it showcases the products. >> we spend so much time in the beauty of the product on the inside as well as on the outside so it is nice for our customers to be able to see this firsthand. >> it is also great to see our brand represented alongside these others. and actually what brands are really looking for now is spaces that offer a real brand experience and that is what's so great about the body studio. >> so is their investment in bricks and mortar or in this case body wear and night wear truly going to pay off? only time will tell. i'm tonya breyer. >> before we go on the last trading day of the week, the
broader stocks up 400, and now you can see ftsi 100 lower, and. [ slow down ] let's look at the sectors. autos in focus. the worst performer in europe here. that came in part due to disappointing news from daimler. earning -- and the real focus on daimler today being on that they are going to have an internal probe looking into emissions standards. that came at the request of the doj. and we did get word from volkswagen they came to an agreement. but we are still waiting more information a bit later. and ahead of this announcement
reuters is saying that the volkswagen is due to hike its total provisions to 16 to 17 billion euros. from various sources. we await confirmation hopefully a bit later today from volkswagen. >> and u.s. markets also broke a three day winning streak yesterday. dow jones now lower than when we started looking at an open of negative 27 points for dow jones at this stage. s&p 500 culled lower by about 4 points. that's it for today. "worldwide exchange" is coming up next. have a great weekend.
good morning and happy friday. earnings parade. google and microsoft both under pressure as results disappoint. up next, general electric, oil pressure and mcdonald's. >> and -- >> and new this morning. president obama pens an op ed calling on the uk to stay in the european union. friday, april 22, 2016. "worldwide exchange" begins right now. ♪ this is how we do it ♪ strutting it back street ♪ yeah we do it like that ♪ that is --