tv Street Signs CNBC May 20, 2016 4:00am-5:01am EDT
good morning everybody. happy friday. welcome. you are now watching "street signs." i'm louisa bojesen. >> and i'm nancy hulgrave. these are you are headlines. >> a spring in your step for asia today. despite compounding fears of a summer rate hike. >> i'm convinced my own forecast is sort of on track. then i think a tightening, you know, in the summer, the june-july time frame is a reasonable expectation. >> only time will tell for reach
mont. sending shares to a three and a half year low. >> fiat shares are in reverse though ae competitives failed to show up for a meeting. >> and kuroda reiterates his willingness to act despite currency criticism as finance leaders gather for the g 7 meeting. >> good morning everybody. welcome to the show. it is friday. >> right. yeah. >> g7. to rest. >> always nice to open with markets higher. >> indeed. we're higher as seen here. the vast majority of european equities trading up.
stox europe 600 up by just over a percent or so. the nikkei up on a weaker yen. that story continues and the fed speak people are deciphering whether or not it means the economy is stronger than we expect. >> and dudley of course really putting any speculation to rest saying yes in fact june is a live event. >> and also we're not factoring it enough. 32% chance of hike in june. up from 15% we saw on tuesday. so the majority still think july. >> they do. but still the markets are responding in a way the fed wanted them to. as dudley even said himself. the last trading day of the
week. the ftsi 100 higher, the xetra dax higher 1.2%. the similar story for the ftsi mib. earnings in focus as well but seeing some weak nbc a few spok specif specific. >> this comes in the middle of weak demand for itsits. you have a number trading higher. hugo boss off 4.5%. >> let's look at outs,
specifically fiat chrysler. fiat reportedly canceled its attendance at the last minute. they described fiat's actions as totally incomprehensible. and keep in mind we don't have a word as to why they did cancel the meeting so we don't want to jump to conclusions but investors very nervous. >> i love these little cars. the trend back to small. just the small compact cars. have really made a dom back from a number of years ago where bigger was better, right sh. >> and you can see why too with the urban areas -- >> exactly. >> look at suv saelts they still have doing extremely well. especially given the fuel price at the moment. >> definitely. daimler has lowered its outlook for profits in the trucks division amid weak demand. the german out maker plans to
cut jobs in brazil, increasing severance cost by a hundred million euros. >> and unicredit is looking into sale of a stake in one of its businesses in attempt to raise capital. italy's biggest bank is reportedly considering reduction in holdings in turkey and poland. this as the lender faces shareholder concerns about its financial strength. claudia joins us now, great to see you. it also comes at a time where the ceo of unicredit is under more pressure. >> as you were mentioning the asset sales could also mean a sale of a stake of fineco bank which is a investment bank they
have a stake in. there's been a lot of talk about whether unicredit does or does not need a capital hike. the market's talked about the possibility of 5-7 billion euro capital hike but that could be avoided to come with these asset sales. the big news also is the idea that this could also involve a change at the helm of unicredit the ceo that's been guiding the bank for last six years and it's implemented a plan that's wanted to avoid the capital hike may in fact be stepping down. there are rumors that a board meeting could be held as high as tuesday. and rumors already that head hunters are working on finding a substitute.
names running around from outside of unicredit as well as inside but in the meantime the top management continues to work on their plan in place and they continue to battle outside of our operative arena should not distract us in anyway. so they continue to work but we'll see next week if there are any news on these changes or capital hike or asset shares but certainly is a stock to watch here in italy. >> claudia. thank you very much. see you next weekend. deutsche bank is carrying out internal investigation into trades that could have produced millions of dollars of dishonest proprietary profits. this is according to the wall street journal. 51.9% of investors vote against the executive pay plans at the company shareholder meeting. this as the latest in a way of
remunerations. >> and the imf says a new bail out program for greece is contingent on loan terms. athens needs a long grace period, maturity extensions and very low interest rates. >> now meanwhile u.s. treasury secretary jack lew urges flexibility over greece. >> japan, the host country has been criticized for what a prime minister or -- foreign minister
taro aso has said. he has said he would consider intervening because of the strong yen. that's put him at odds with u.s. secretary jack lew because he does not believe the markets specifically warn any intervention. breaking the agreement among g 20 countries that they would not take part in any kind of competitive market devaluation. against that backdrop currency, fx market sbchx certainly one of the topics. there is a discussion about euro issues specifically as it relates to the brexit because there is a real con saern pro brexit vote could cause volatility. there is also discussion about greece. as you mentioned jack lew today
immediatie i meeting with euro group president today. i had a chance to ask him about that, he says he is confident the euro group will find a way to reach an agreement by their meeting next week on tuesday and i asked how close germany and imf are in terms of narrowing differences. >> there are a couple of things we can do up front this year or next year in terms of debt management. simply trying to reduce the cost of the main loans, loan package for the greeks. that we can do in short-term. long-term we have a number of options. debt maturity, grace period, looking at the interest rates also for the years to come. my preference listen to have quite clear choices in what kind of measures we are prepared to take and then see when they are needed and that is also
listening to my german colleague. he makes the point quite rightly, let's see what is needed in the future. we don't know what is needed in the future. we can estimate it. we don't know for sure. so let's move on. >> some movement. >> there's been movement on both sides. those who said we need major debt relief up front have moderated their stance. and those who said nothing is needed maybe in the future have also shifted a little so that is also closing the gap. >> with those euro zone issues aside bank of japan governor kuroda is out here explaining his policy but just yesterday coming out and saying that he doesn't -- he kind of shrugs off that criticism. he believes that his policy is
right for japan and he said that he believes just this really targeted towards a domestic market and him reaching that inflation target. and further questions tomorrow when we sit down with mr. kuroda. meanwhile talks on the steel crisis also high. that debate heated up after the u.s. slapped a whopping 522% tariff on chinese steel imports. last night carol had a chance to speak with the ceo of cliff's natural resources and asked whether or not coordinated options would be helpful in dealing with the supply over hang. >> we need to act in coordination with other countries. so far it's been only the united states talking and acting. it's very important we have other countries, working together with us to have this
massive problem of overcapacity resolved. >> china is not part of g7 and is widely cited as the main culprit for steel overcapacity. do you think it's been unfairly targeted? >> china? no. they are the perpetrator. they are the problem. and they had a chance to discuss this with the oecd and they elected not to participate. it's not like anything has been doing anything behind their back. >> other countries have also been cited as producing cheap steel. aren't they in the say basket as china producing very cheap steel? >> it is difficult to analyze in a generic way. it is a lot more fair to go country by country. each country has their own set
of subsidies, their own set of problems that at the end of the day create the massive problem of dumping steel in the international market but based on the numbers produced china is by far biggest problem. >> the u.s. has recently raised tariffed on cold rolled flat steel from china and japan. is this intervention much needed lifeline? >> first i don't believe this is government intervention. this is enforcing laws. what you are doing at this point in the united states is making trade fair again. you can't call yourself competitive if your competitiveness is based on cheating the international rules of trade. trade without fairness is not trade. it is war. >> is there a message for uk prime minister david cameron because the steel industry here
is also facing problems. -- steel has tried to find buyers. if no buyer is found they will shut down operations. do you think they should heed the same message the u.s. is giving about china. >> i think so. i think the uk is making a mistake by understanding they need to have their own domestic industry and by allowing steel to go away quietly they are making a mistake they may regret in the future. >> pleasant more to come here. emerging markets coming up. >> interesting how the u.s. election could really have an impact as well. >> i want to know which emerging market will be most vulnerable after the u.s. election. >> good thing we have david -- >> i know. e-mail the show. the address is "street signs"
off on that flight to cairo. and we don't know yet if that has any significance on the security of the aircraft itself. some big questions concerning what exactly happened to this flight. we're going to continue to follow it from here guys. >> hadley, thank you very much more that live out of paris with the latest on the story. it's one we'll keep you abreast of. let's move on now the u.s. stocks hit session lows after dudley said a summer rate hike is a reasonable expectation now. he said that the market had underestimated the likelihood of
a move in june. >> looking back a few days ago i think there was a pretty strong sense among fomc membership that the market was not putting in sufficient probability mass on the tightening in the june or july meeting. so i'm quite pleased to see that has in fact moved up. >> joining us around the desk is allen vest. fed's dudley saying we're quits pleased now. but i have to ask you, when you look at the equity space, do you expect it to keep going this way? >> i think so far this year we've had some quite strong peaks and troughs.
and some strong negative sentiment of markets up to yesterday. in fact yesterday we brought only msce china for the first time in nine months. in the bond space we've seen some incredible events on the long end. we're -- fifty to a hundred year bond yields are lower than u.s. 30 year which seems to be slightly insane to me and the high yields in the u.s. space go up massively even in -- is at a record high. so we've had a unusual number of events and equities are quite attractive again in recent falls. >> before the ecb new measures actually kick in because we're waiting for the corporate bond purchases to kick in as well in
june. how will that change things. is it already priced in. >> i think it is already priced in to be honest. and uniand july, i think it will be a good thing if u.s. rates actually go up in june or july. it is better to do it and get it a way in june surprisingly. >> and why would they do that ahead of the presidential election which might spur more volatility anyway due to a slightly different presidential election. donald trump, a very divisive nation. >> the problem i think they have had before is there's always been some event or the markets haven't allowed them to do it. so actually in a strange way june would be at the moment a good time to do it before as you say we have other worries in the market. >> and what made you say second ago that you bought for the first time in nine months that
stock? >> i think you see a lot of swing in sentiment. and at the moment the valuations are incredibly low. buying a market on 8 or 9 times. the largest constituent growing very strongly. and i think you are just paid at the moment the take on that risk. >> what is wrong with the pension funds. >> oh this is hedge funds. well this is interesting we've done a huge report on uk pension funds. typically 6% on average but some have been up to 17% in hedge funds. if you look at the recent performance of hedge funds they have been absolutely diabolical. one of the largest has 5 5u pounds and all --.
>> allen miller. chief investment officer at fcm group. now the serge for missing egypt air flight m srs 804. from what we understand according to u.s. intelligence there is still no indication of an explosion and the wreckage is still missing. is that what you are hearing as well? >> yeah i think it is speculation at the moment. what we do know is these airplanes are incredibly safe. they don't just blow up at
20,000 feet. we're just pretty confident nothing happened from the outside so that really leaves us with an explosion on board. and explosions on airplanes are used caused by a deliberate act of terrorism. >> why are we confident nothing attacked from outside? >> this area is in a location where there would be plenty of satellite s picking up anything. so we're pretty confident that's not happened. everything about the flight shows that everything was normal. the weather was good. so it appears something's happened inside that plane to make it fall apart. >> and we were just hearing earlier that some sources say there was a lack of chatter according to u.s. intelligence from isis organizations. what does that tell you? the next step if this was
terrorism is who will claim responsibility? >> yeah it is not unusual for isis to delay claiming responsibility. they like to do it in their own way through that irown channels and that's another not happened yet. that is not unusual. i imagine if they have been responsible they will be bringing something out in the next few days. the important thing is to bear in mind that we can't wait for that. we have to look at how this plane was likely to have been downed. so there will be a great deal of investigation going on into the passenger list and who was on board and could have taken something on and also where the planes have been. they are like buses these days. and go in and out of airports and every airport there is a vulnerability that someone could put something on it. >> given that no wreckage has been found is it still possible it could have been a technical fault and we just don't know about it because we haven't
found any black boxes or things like that. >> yeah nothing can be ruled out. absolutely nothing can be. and yes they have to continue with that possibility. but as i said these planes have been flying many years now and they have immensely impressive safety records. and the most likely thing to have happened is an explosion. particularly as we've seen both terrorist attacks in france and egypt on airplanes as well most recently. but also the aviation sector is continuously be targeted now by terrorists. >> all right chris. thank you for bringing that perspective us this morning. chris phillips. still to come an "street signs" a new poll shows donald trump consolidating gop support but is it enough to take the white house? that is the big question.
good morning and welcome to "street signs." i'm nancy hulgrave. >> and i'm louisa bojesen. your headlines today. >> a strong wind in asia puts a spring in europe's step despite compounding fears of a summer rate hike. m convinced my own forecast is on track, then i think a tightening in the summer, the june/july time frame is reasonable expectation. >> >> the parent group is warning on future sales sending shares to a three and a half year low. >> executives failed to show up for a meeting with the german
government amid allegations of breaking the rules. >> and kuroda's willingness to act despite criticism. . good morning everyone. and welcome back to "street signs." good to be here on this friday. u.s. markets now on track for a negative week. here is the picture in the u.s. this morning. we're looking at futures, pointing to some green arrows here. the s&p called higher by about 9 points. dow jones called higher by about 75 and the nasdaq higher by 25. you can see a sea of green behind me. the ftsi 100 a good 1.5%.
the xetra zax by and the ftsi minute nearly 2b nearly 2%. >> for today. rate hike concerns. prospect of high rates environment. june being a live event for the fomc. all of that have has effected sentiment for the week. i wanted that talk ath the nikkei 225. stable at the close and this market was up by over around 2% for the week. thanks to the weakness in the japanese yen. remember we're dealing with a stronger dollar environment as we said.
how long is anyone's guess. existing home sales for april should give a sense of the direction and feed into the narrative. elsewhere not a great deal of confidence. given the fact that any upside seems to be capped by some of the structural pressures out here still because of the extern external situation still a drag on economies. taiwan doing a good job shrugging off the risk because we have a president now. president ing-wen. and there you have it. over the course of the week we are down because of the rate hike concerns. back you do! thank you sri. >> talking about his outfit. like it. >> very nantucket look.
meanwhile. we are watching the latest. and donald trump appears to be consolidating support from republican voters. that is according to a "new york times" cbs news poll. but the survey also shows trump still has ground to make up before november's election. tracy potts joins us live from washington. >> hillary clinton still has a six point edge nationally in that poll against donald trump. clearly this could end up being a horse race and we're starting to see that shape up now. let's talk about what's happening today in that support that you said that trump is consolidating within the republican party. today we will see him speak at a very influential conference, the nra convention.
the national rifle association. they have been very interested in putting a republican in office to protect their second amendment rights. as trump speaks today he spoke is there last year as well. he will address tens of thousands who want to protect gun rights. he has said he wants concealed carry permits available in all fifty states and hillary clinton likely to clash with him on this saying what trump would do would allow trumps in the classroom, which could be dangerous for children. she also slammed him saying that he's not qualified to be commander in chief because some of the positions that he's taken on foreign affairs, pulling out of nato on this nuclear weapons spreading to other countries. on north korea. she's really trying to hit him hard on foreign policy as trump today goes through one of the
the most influential parts of the republican party. people who believe they should have the second amendment right to hold on to their weapons! tracy. a slightly different question. we know trump said -- i'm quoting -- "a plane got blown out of the sky" with regard to egypt air. and she was speaking at the fundraiser in lawrenceville. and if anybody was thinking it wasn't blown out of the sky goex folks, you are a hundred percent wrong. he's taking a stance that according to the facts so far we don't know what happened. what's the reaction so far to those particular lines. >> well he came out and tweeted yesterday morning that this was terrorism, which has not been determined yet.
but he's made it pretty clear that he feels that is the case. hillary clinton also saying that this is likely a terrorist act but we just don't know that yet. and speaks to the criticism of donald trump that he jumps the gun and makes assumptions like this before the facts are all known. now as the u.s. presidential nomination reaches a crescendo our next guest is saying the policies of the next gern government will effect many levels. -- how is mea going to be effected? >> of course any u.s. president has tremendous influence on global macroeconomic policies.
and effect emerging markets in particular. so the number one thing that effects yen among any u.s. president is really the strength of the dollar. we've seen of course in the last few years a very strong dollar. and it was partly because of reversal of fed policies but also because of the significant fiscal tightening. so if we could see if under a new administration you will see we weaker fiscal policy, looser, more spending on infrastructure, social transfers, etc. that would mean probably a softer dollar and that then means net net normally more flows into the merging markets. that's one channel. another channel is oil. of course relatively duffyish policies towards iran has been one of the reasons oil has been so low. if we get a u.s. president that is more hawkish for iran that would be bullish for oil and
supportive for emerging markets and the third is trade policy. protectionism could shift trade from emerging markets with the u.s. that are affected by some of these policies towards countri countries may not be effected. poland --. >> and on the other side of that which countries are in most danger if there is a protectionist shift in the u.s.? >> well it is hard to say at this stage because it is legally not clear how far any u.s. president could really go with this protectionism. we know that with the countries we mentioned in particular china. >> who benefits most from the weaker u.s. dollar? >> i keep saying only one thing you really need to know about
the emerging markets is really dollar strength. emerging markets outperform when the dollars weak. and the -- markets depend more on the cheaper collar and those typically are commodity exporters and commodities are highly driven by the dollar as well. a weaker dollar means higher commodities. which markets will that be? russia, turkey, south africa, brazil. >> and emerging markets remain highly sensitive to the fed's direction. you point out we could see maybe a different bent on the hawki /
hawkish/dovish side. what are you looking at here? >> new points due under the new president and that could tilt the bias of the board one way or another. so if you get a combination of looser fiscal policy and more dovish board that would clearly be dollar negative. >> under which candidate that would be possible? >> to be honest right now it is not that obvious. presumably more volatility with hillary clinton. donald trump has said different things about his views on the fed. we'll see how his view evolves there. >> we have you here talking about currencies as well. the rand fell 7% after south africa left things on hold this week and gave us a cautious tone on inflation. is there a trade there? >> we've been saying there will be a correction after the rally. and one of the reasons we thought the central bank would turn more dovish.
a lot of them still have a growth problem. after the rally that the rand has seen the central bank clearly want to turn more dovish. the other thing was the political situations africa recently has again deteriorated because there is now potential for the finance minister to get prosecuted. and the third thing is if your any global macro hedge fund trader the one currency in emerging markets you want to use is always the rand. it is very volatile. very liquid. so if you want to sell in may -- what you do is you sell the rand. >> and when do you expect the south africa central bank to act again? >> we expect them to act again in the fourth quarter. >> david, thank you very much. more on the show because
good morning and welcome back to "street signs." taiwan has sworn in its first female president. tsai ing-wen has worked hard to maintain regulations with china saying she would be a staunch guardian of peace. -- will take a careful look at proposals by president vladimir putin for refinancing projects in russia. also said the bank would be very
selective given its limited resources. >> france's prime minister given end to labor law protests that have turned increasingly violent. and brassal's interim president has named the new ceo of petro bras. well the front runner for yahoo's internet assets could offer almost half what was originally expected. verizon communications and a concertem will be bidding between 2 and $4 billion for yahoo's core business. the original range was suggested between 4 and $8 billion. the deadline for the bids has been set for the first week of
june. i wonder if it's because of the negativity surrounding yahoo's potential long-term worth and how they haven't managed to cement their position in that particular area. and investors have the luxury of saying i'm not going the bid 8 billion. >> and core internet business we're talking about and for a long time everyone was look at the value tied to the japanese assets the al bab stakes. and warren buffett, one thing he does like is to buy in the cheap sometimes. and when you look at the valuation that could be a potentially good deal. ao i wonder if he had some information there. >> they said they are going to ax something like 15% of their workforce as well. so the entire group, the entire
company is restructuring. wondering whether they would -- are we looking at the full split up? >> were some reports could have been even potential takeover of the entire group. we've yet to see any confirmation but it's been dragged on here. we shall see what happens. nevertheless let's give you an update how volkswagen is trading th morning. because we are getting news from the company. the wage increase is 4.8% for the workers from one of the main german labor units there and wages rising by 2.8% in september 1st 2016 and first 2% in august 2017. picked up momentum during the session and nevertheless good news because it means reducing risk of a strike. which given the state volkswagen is in at the moment, already
trying to reduce cost before the diesel scandal they certainly can't afford to have a strike. >> google is not planning to extend its self driving car relationship with fiat chrysler. the news after the two companies agreed to build a hundred drooifrls minivans earlier this month.iverless minivans earliers month. wilfred frost live from cnbc head quarters. always dapper wilfred. >> louisa, thank you very much. b gap posting in line with cautious for the rest of the
year. amaid sales slump gap plans to close all old navy stores in japan and some banana republication outside of north america by the end of the business year. there was one big retail winner of course this week. yesterday walmart outperforming where many in the retail sector has struggled in the last couple of weeks. some odd sector performance as well where banks rallied on wednesday post talk of a fed hike they suffered yesterday. and utilities the best performing sector right now this morning called higher by about
70 points for the dow. half a percent or so so looking to wipe out yesterday's losses. louisa and nancy back to you. >> let's give you check now on oil prices because after we've been watching for days equity investors continue to take their cue what's happening in the energy space here. brent and wti back in the green up now about .9%. >> venezuela certainly laying into the oil picture we've see . uruguay's former president weight in calleding nicholas maduro as mad as a goat. maduro accepted saying yes, i am mad as a goat. and aem mad with love for venezuela.
joining us is nicholas watson, senior vice president at tineo intelligence. the situation for maduro seems to continue for by the day. can he continue this fight? >> he's certainly trying to. his aim is to extend the recall referend referend referend referendum battle as long as he can. t >> when he look at the odds of surviving in his post how crucial to consider the political tides of change across the continent because we now have brazil's president suspended on an interim basis here. what does this suggest about the
climate on the continent. >> warren buffett said when the tide goes out you find out who's been swimming naked. and in the case of latin america with the oil price drop that's been the story. and venezuela is oil is the sole life blood and since the price drop it's been on a road to crisis and that's really accelerated the last couple of weeks. >> they are sitting on the world's largest oil reserves. i see piece after piece written describing it as the monstrously unique economic basket case. that quote coming up again and again. some of the things they have done. they have moved clocks forward an hour because of electricity crises. closing schools on fridays. two day workweeks. maduro has even asked women not
to blow dry hair as much in order to save on electricity. who is to blame though? is it the previous leadership? >> these are problems that have been build b up across the economy. building up really for the last 14 years. when chavez died maduro didn't have the political capital and the charisma that chavez had to push through with any kind of meaningful reforms that could alter situation. >> with inflation as rampant as it is and causing so much distress, what is the best way to get inflation in check at this stage? >> we're on the cusp of hyperinflation possibly. i think the only real solution is an imf package. and if the opposition were to
hold a recall referendum and the government was to allow that referendum to take place and if maduro was to lose that referendum -- so several "ifs" and scenarios along the way -- and an opposition government twor come in i think the first step was to call in multi lateral assistance. >> and it's painful. as we've seen in argentina. but the shear threat of political social unrest could it unwind? >> absolutely. and that is the big unknown. what injects so much uncertainty is when you have thousands of people every day on the streets cueing outside super markets. hospitals. 8 in every 10 medicines is lacking. sort of 7 to 8 out of every 10
basic food products are missing. all it takes is a spark with heavy handed security forces deployed all over the capital particularly. all it takes is a spark we could see major unrest. having said that there was major unrest in 2014. so there really isn't appetite for that. >> nicholas, thank you very much. senior vice president at tin owe intelligence. that is it for today's show
good morning. ready for a rally. green arrows as investors brush of hawkish fed remarks. >> and on the agenda, currencies and negative rates a live report from that meeting coming up. >> and retail wreck. gap joins the growing list of companies throwing up caution flags on the consumer. friday may 20, 2016 and "worldwide exchange" begins right now. ♪ ftf-t-g-i ♪ ♪ >> good morning. ha