tv Street Signs CNBC August 22, 2016 4:00am-5:01am EDT
painting an upbeat picture ahead of janet yellin's speech next week. >> inflation takes india bankers. new governor replacing him next month. good morning and welcome to "street signs." good morning again. >> good morning. i had a great weekend. one more week of quiet holiday period and back full force. >> went too fast. more on vix. >> in case he's watching, probably not, well done. double-double. >> what a guy. legend. >> makes you feel humble on this monday morning. let's give you a check how european market faring. opening on a higher night, .8%. we are picking up momentum first hour of trade, softness to open
the week. welcome news for investors a quiet period especially here in the uk as we get closer to the long holiday weekend. let's give you a picture of how markets are trading one by one in europe. investors counting down to jackson hole later in the week but also keying an eye on renzi, merkel&loan taking place. ftse higher by .2, french cac 40, .8%. also looking at commodities a stellar week, seeing a pullback in that as well. let's give you a check how it's playing out insectors, we did see weakness in resource at the start and that continues basic resources off 1.2% the only sector in the red tracking weakness in metal prices as well. no surprise when you look at chemicals pushing high 1.7%. a lot down to the strength we're
seeing. getting green light from uss regulators. elsewhere across the board autos, telecoms, insurance moving higher than 2%. >> as you quite rightly mentioned the fed close to full employment and 2% inflation according to stanley fischer. according to positive, vice chair declined to give guidance when central bank may raise rates. comment come ahead of friday's kickoff of the final jackson hole symposium hosted by kansas fed. chair janet yellin set to speak on the first day of the three-day event. this was a real favorite of bernanke to signal policy changes if he wanted to. that's why we get a bit excited about this. stretch smith ahead of japan morocco asset management joins us. steven, good morning, happy monday. i mentioned bernanke and he tended to use this to signal
policy. no one expects the fed to do in september. any surprises. >> i doubt we get a clear indication or surprise at this meeting. from memory one of the interesting thing aboutiacs hole you get a better sense of ecb, scrutinized speeches carefully, communicator and i think he likes to prepare thematic for a change in direction from quite a long way off. >> any indication from him? >> to be honest, the big question is whether ecb is going to think different about the way in which it's stimulating the american economy. but having already made a few key changes to the assets that they are buying recently, i'm not really expecting he's considering anything. >> one ron they have to think differently political risks, italian constitutional referend referendum, won't be too long talking about french elections. you're not worried about
political risks when it comes to equity valuations. why? >> the likelihood of getting a shattering direction in you're oh zone isthmus less than people think. when people look at surveys of satisfaction of you're okay zone generally speaking run to high level than people expected for sometime. when you get a dip, i think you need to interpret data fairly carefully. big difference between i don't think the eurozone working for me personally and i wish it could be run differently than i think my country should leave the euro. that is a really seismic change in policy. dissatisfaction doesn't equate to disillusion. >> when you put those make k ro concerns aside talk about earnings rap overall. people try to digest results. all together solid but there was some disappointment when you look at outlook. >> when you look at second quarter disappointment top line, bottom line with profits were sightly having been revised down
into the second quarter so this is one of the gains that the companies play, executivations, beat revised expectations. i think biggest in for companies is around the world, real dp growth, you need that and enflation. that pricing power is really what companies have lacked over the last two or three years because inflation has been extremely low. any recovery in inflation would pressure earnings. >> interesting, look at comparison between u.s. and european markets. we talked about u.s. markets round record highs. obviously as you point out european markets have lagged. outside investors from outside europe would say there's a reason for that. you look at brexit, potential spillover effects we see. i know you kind of poo poohed them to an extent. they are there.
for foreign investors they have been heading to the exit. >> one of the things that held back european equities this year. international investors have probably quite right said more political risk to wit stand and i'll stay in my own market. the only specter in europe, let's face it harks been fairly dull for five or six years. within that there's been a rolling bear market. initially bear market in earnings for banks. recently earnings for energy and material stocks. other sectors where earnings have been improving pretty sedley throughout the entire period. >> one of the elements as well as buybacks, we don't have same structural setup. lou at debt markets, debt-for-equity swap should be happening in europe. do you think that's one of the reinforcing elements we can point to here, too, going forward. >> potentially. i think there is compelling economic interest for companies to do that. what we're hoping is reinvest in
core business and drive productivity, the next leg. >> you hope. >> >> stephen, finally i want to get your thoughts on what's happening in energy, oil rebound was a huge driver for global equity margts at the end of last week and a pairback. where do we go from here? >> to be honest, oil prices immensely different to call, $42, now $50 recently. some kind of a pullback may well be on the cards but i think that a lot of the adjustment in output has already taken place. >> all right, stephen. thank you so much for joining us this morning. that is stephen smith head of european equity strategy at jpmorgan. >> and you can find out why one analyst sees fed risk triggering severe market consequences if it admits it won't like this year. that on cnbc.com. >> more confused every time we focus so much on feds. >> central banks are looking for.
>> check it out for your self. still to come, talking a bit of a deal segment, monday merger if you want to call it. china take over of syngenta passed a curt review, a significant hurdle. expect the transaction to close by the end of this year. at $43 billion this will be the biggest foreign acquisition ever by a chinese company with outcome closely watched by other chinese firms looking at international targets? >> you can see actually look at that. almost 12% spike higher in share price. it had traded significant drop relative to the price that was going to be paid because everyone was worried about what the u.s. regulators would say. >> a done deal. >> revenues actually based in the u.s. huge security issues. >> my mathematics here, exchange rates relatively 1-1. the other price was 465 dollars.
>> close to stock 600. >> moved up another level with pfizer close to receiving a $14 billion deal. that works out at $80 a share, far above an offer made in april for over $52. shares in medivation raised sharply. fran-based company attracted by development of new cancer treatments that extends the life of patients. and ceo of uber said he would not pay more than $2 billion for ride sharing rival lyft. that comes according to bloomberg, told investors he wouldn't pursue takeover due to likely antitrust complications. lyft is unhappy that uber is interfering in discussions. a recent record suggested the company looking to set a sales price of $9 billion.
>> no offers. >> somewhere in between. >> uber stepping up its game. >> yeah. >> elsewhere production at some volkswagen plants remains disrupted as a dispute between the automaker and two suppliers escalates. the supplier in question stopped delivering car parts to the carmaker accusing them of canceling contracts without explanation or compensation. vw said 25,000 workers in six plants have been affected by the disruptions. according to ubs analyst if vw shuts down it's main mant for a week it will cost 100 million euros in gross profit. as you can see volkswagen higher by 1.3%. nonetheless a difficult situation on this one as vaccine wagon continues to deal with legal implications for the u.s. from diesel gate scandal. look, cutting back on scandal may not be the worst when you look at summer demand when it
comes to car sales. let us know what you think. get in touch on e-mail. you can always get in touch with us directly on twitter. >> @"street signs." >> coming up on the show, a $4 billion bet on when palace opens its doors today, a continued slump in gaming, are they stacked in the house. join us, we're back in two.
the prime minister on medical leave until 29th of august. this comes according to his office this. after he fapted whiinted while delivering a speech sunday. he returned to the stage after a rest. he was unsteady because of the long-standing and dehydration. his heart is fine and he did not have a stroke. let's check in broader market moves in asia this morning. joining us from singapore. >> fairly listless, comes down to the fed, what we have to hear from janet yellen. have to hear the tone. yes, the dollar pulled higher. we pulled away from the eight-week lows we've seen against yen and european single currency as well. weaker yen, good news from japanese equities. performer in fairly listless market. let's not forget broader line theme has been yield out here in force in this region chasing anything with a yield attached
to it. the big concern is whether we are overboard, are we going to see a correction, what's going to trigger the correction. a big sense out there could very well be the markets complacent about risk of fed hike. if janet yellen does talk hawkish could upset the ammel cart over here. that's where we stand. back to you now. >> thanks. after six years of development wynn opens in macao. opens as gaming revenues continue to decline. our reporter with the report. >> reporter: calls it single most important project to dead. also happens to be macau's most expensive yet. 1700 rooms, 8 acre performance lake and $100 million worth of
artwork. but it does face uphill battle drastically different environment from when planned. macau's glam bling revenue in a slump having dropped 20 straight months in july largely due to anti-corruption drive by government which manages to shoo away a number of high rollers from macau. this is coupled with slowdown in chinese economy and government in macau trying to tackle all these probably by trying to reinvent macau into family friendly play ground allowing only 100 tables when the palace had its debut and 50 more in the next years, a third of what steve wynn was hoping for, bringing 250 from its existing casino in macau and begs the
question of self-cannibalization. all these challenges from new resort, las vegas sands set to open next month and a couple more over the next two years or so. steve wynn has a history in building the most profitable resorts. we'll have to see whether another winning bet or bluff for steve wynn. back to you. >> will you. >> i wouldn't admit it if i were. >> a few tries on the blackjack table. that's my poison of choice. >> how did you do? >> okay. we're talking years ago in vegas. 21 is my lucky number. >> 21. my sister went there once and she was below 21 and they turned her back from the tables. she wasn't allowed to look at them. >> different policy. different, deputy governor appointed new governor, will take over from the chief
beginning his three-year term on september 4th. he will be the first governor under india's new framework where decisions are made by a six-person monetary policy committee. patel who has phd in economics from yale is believed to be hawkish on his stance, less outspoken as a personality. described as key architect of inflation targeting in india. >> this is kind of interesting, i think. you've got hopes of policy continuity, former deputy governor, architect of inflation targeting policy, which is crucially important. but i think the interesting thing here is the fact they are now moving to monetary policy committee. six people making the decision rather than one. three appointed by the government rather than rbi and four out of six we don't know yet. i don't know, good for investors. >> comes to the government's direct role in monetary policy side. >> absolutely. everyone saying he won't change rates. that seems ab a fair sumplgs.
a serious assumption when it comes to banks passing on rates. >> $120 worth of sour loans. new challenges -- old challenges nor new governor. let's move on. leaders of france, germany, italy to discuss keeping european project on track in second meeting since the vote to quit the eu. earlier this month, prime minister renzi shared his hopes for the meeting when i spoke to him in rome. >> august 22nd, i will host angle and francois, a specific island, particular place, gorgeous place, the place which spin eli wrote the document about the umbrellas for europe. and we will discuss preparing
the counsel and preparing the very important meeting in rome in 2017. i totally sure if we choose a different europe, not austerity but investment. if you think about a result of barack obama's government, from 2008 to 2016 and european government 2008 to 2016, you can see with the public investment and private support, really united states of america reduce level of employment to half of the first month of 2008. why? in europe not, because the religion of austerity was religion of a lot of european leaders. i think with every effort, we can change this direction. >> he's got the french on board but i still don't think the
germans buy it. germans are saying a better europe not more europe. >> big question, right? >> exactly. whatever that means. meantime italian prime minister has confirmed general elections will be held in 2018 regardless of the outcome of this year's referendum on constitutional reform. >> renzi when you spoke to him was sounding quite confident. >> he was. you look at the poll readings pretty much 50/50, trying to get the move away from him and about the need for change which clearly is needed. >> could be the next big risk in europe. a check on how bond markets are trading. we did see softness in u.s. treasuries that support german bonds slightly higher. taking a look, 0.596%. wanting to straight to our next
guest at the desk from old mutual global investors. pleasure to have you with us. we look at august as quiet dog days of summer. that has not been the case for gilt activity. extraordinary amount of activity in this space specifically when we look at moves in the yields post brexit. what's this tell you? is there value in this trade. >> absolutely right about having the move we've had. to quantify that for a minute, if you look at the gilt market, this year alone you've had returns of more than 50%. 30% came post brexit. it has been a very exciting time in this slight back water of the market. now, the other side of it is probably still value because bank of england said in a very expressive way, we are going to throw absolutely everything at this. the minute yields start to rise, they will start taking them down again. that is before in september when
they get corporate bond pledges going as well. for us at the moment, it feels kind of a little bit like you're at the edge but actually realization you've got central bank buying, people who have to buy gilts, insurance companies. right now don't stand in the way of it. >> interesting you mentioned before corporate bond program gets started because just on a share announcement we see extraordinary corporate issuance, buying into this space. what do you prefer? is it corporate uk bonds or gilt. >> we have preference for corporate. all about a bit of extra carry. you get extra carry, a little more yield. as well as if you compare how much the sterling corporate bond market rallied compared to what happened to euros when ecb announced a similar plan, a third of the way through the rally in corporate bonds. half the additional yield, still want exposure to the underlying and should still be plenty of room for trade to go. >> does the data matter and have
you been surprised so far? obviously it's early days. have you been surprised so far by how relatively strong and resilient the data has been. >> benign. more, how extreme bank's response has been. they almost said i'm not going to wait to see if things are going wrong, i'm going to assume bad things are coming and throw things at it stateaway. it does put us up to next year. this time next year quite good growth, positive inflation in the uk, at that point they will have to stop backtracking and wind some of the stuff they have done. >> we're talking about inflation already, analysts out there concerned about inflation already. how soon do we need to be worrying about that. spooking the market. you're saying biggest buyer is bank of england. in a sense don't worry. at the same time there's a lot of other things benign, whether oil price at $50, whether fed not looking like it's going to hike until the back end of this year if at all. a lot of risk factors out there.
>> sometimes inflation and what gilt yields do do not relate. if you think 5% inflation in the uk, gilt yields fell and fell and fell. because you have the bank of england saying we are here. that's one side of it. now, for us what you've actually got, the statement and budget coming. if you're a chancellor and want to spend some money and have a very, very flat, borrow 100 year money. you will never have to worry about paying it back. spend it today. it's a vote winner. that for us is the political risk, if government starts to say a bit more expansionary and want to issue more debt, the long end of the curve, the biggest compression. >> a message in there for europe, isn't there, as well, with negative yields. borrow. >> yeah, exactly. >> christine, just on treasuries here, investors looking ahead to
jackson hole, janet yellen's comments, is there anything you can say that will move markets in one direction or another, or leave investors as more confused? >> she would have to be quite hawkish, which nobody is expecting. it's not really in anybody's interest for her to go down that route at the moment. we will more interesting she's endlessly changing target of what it is they are looking at. she's talked a lot about the lack of wage growth. starts saying actually not inflation now, no longer unemployment. what we're targeting is wage growth, that puts the fed out of play for another year. >> want to pick up quickly with what's going on in financial space as well with banks. because of january rules changed in europe. it became toxic. the mood is changing. what's going on? >> for more socialized. people historically said would never touch it find themselves owning it. actually what's happening the
regulator needs this asset class to succeed. you can't have massive failures, you need it to work. just behind the scenes slightly changing the rules to slightly favor bank activity around whether or not you can pay coupons, seniority of coupons. for us realizing we're a bit strict before, dilute them back away to make sure market succeeds. >> hallelujah. how exciting. we have to go now. sorry. being naughty. >> christine, pleasure to have you with us. christine johnson head of fixed income at global investors. we have to take a quick break. stay with us, world market blog runs throughout european trade day. we'll be back after the short break.
welcome back to "street signs." these are your headlines. syngenta found themselves at the top of 600 as china gets green light from regulators. china closes in on $14 million bid after hiking it's offer price over former suter. >> vice chair says central bank close to achieving employment and inflation targets painting off beat figure ahead of janet yellen. >> takes helm as patel named new governor replacing rajan next month. .
welcome back to "street signs." dow indicating 16 points higher. we did close in the red for u.s. session on friday but we keep sitting around jordan highs. 9% rally, rotation we seem to be seeing out of more defensive to cyclicals. the question is what does this week bring. here we are for european markets this morning, green across the board despite overall losses that we saw last week. a bit of consolidation here relatively unchanged for the fz 100. .8 higher for german market likes of autos lifting here. one of the outperformance, smi in switzerland, syngenta out performer getting green light from u.s. regulators over their bid at well. here we are. nancy. >> thanks for that, julia.
we are taking a look at short interest across ftse 350 jump by 15% since uk's brexit referendum. this comes according to report by market which shows short sellers eyeing domestically exposed low momentum uk stocks. joining us now to explain is analyst at ihs market. simon, thank you for joining us today. perhaps not a huge surprise at the domestically focused uk firms have for the brunt of the short seller interest here. give us some perspective on just how significant the short interest is. >> quite significant if you look at rotation internationally focused commodity stocks the favorite at the beginning of the year. obviously now we've got brexit uncertainty. as you mentioned it stands to be symptom stickily exposed shares tend to bear the brunt of that. what we've sienna lot of covering in the commodity names shorted earlier in the year and
now short sales targeting domestic names that are retailers, likes of some of the banking shares and some real estate names are short targets now. >> interesting to me because you point out there has been a bit of a pairback but not as significant as the rebound. >> you look at shorting activities sings brexit the fact it increased even though stocks are trading relatively flat, short sellers aren't going anywhere, holding their position. look at current interest across shares we deem to be quite decent target due to the fact they are domestically exposed, have low momentum, relatively high evaluation, if we look at these names, they are over 40% more than stocks with international. >> what are specific names. you mentioned sectors. >> if we look, intu property.
trades on exchange, a lot of commercial property funds, their assets coming out of brexit. so we've seen short sellers target liquid real estate names there. also developers. if you have a big london exposure, the likes of barrett development and counties seeing big short interest jumps from the levels that we saw at the beginning of the year. they did see a pretty significant increase in shorting activity leading up to the referendum but short sellers are willing to stay the course despite the fact shares rebounded. >> aftermath of the referendum you were saying to investors get exposure to companies that have revenue exposure in the u.s. or in europe outside of the uk. this is their bottom line. are with you going to say there. what are you telling them now? a lot of bang for the buck. >> suggesting. >> analyzing the trend and
speaking around the numbers we're seeing. i think if you look at names like rolls-royce heavily started at the beginning of the year, share price rebounded significantly for january-february's level, again, due to the fact you've got decent international revenue, you know, your export orders are that much more competitive global. we've seen short sellers cover. short interest is the lowest it's been in over 12 months. you should take that to heart as significant of a greater trend here. >> what are you suggesting now given what you've seen and given the rally that we've seen? because like i say, there's a lot of benefit achieved from shifting exposures at that point to today. look at the ftse 100 up more than 12%. >> the trend is away from, again, domestic names. international exposure. >> do you take profit? >> we haven't seen anyone take profit. i think people are still willing to play the trade. again, you look at the fact that
brexit is still very much -- a lot of unknowns that play, a lot of balls in the air still. even though we've seen a bit of a decent rally, aren't seeing that kind of big rotation back into the domestic names. there's still that bear sentiment there. >> back to something you said on rolls-royce. isn't it true this is in part more than a macrostory with them when you look at ambitious restructuring under way, is it possible a vote of confidence. >> definitely if you look at results in rolls-royce have been better. even before brexit vote we start to see recovering. i think that's kind of helped provide further tail winds to warrant recovery story there. so it definitely kind of adds another element to what's at play. you have to look at the -- you look even on the day of the referendum rolls-royce shares were trading roughly flat. i think we're seeing that in surveys that came out. in the wake of brexit people essentially tell us they did see
decent pick up in export orders and that provided silver lining to what was very, very bearish report. >> all right. almost two months now is it, since the brexit vote. a long way to go. we'll have to bring you back on to see. simon, thank you for joining us. donald trump's campaign and to waiver as to whether the republican nominee will continue to port the mass deportation of 11 million illegal immigrants. in an interview sunday trump's recently promoted campaign manager kellyanne conray said the stance on the deportation was to be determined. edward lawrence joins us now. edward, is that the sound of a mexican wall crumb ling i hear? >> i don't know about the mexican wall itself. donald trump said the wall will be built but clearly an interesting development in his
position. donald trump campaign said he had the best week yet. after meeting with spanish advisers, newly formed council he has, he may be reconsidering deporting 11 million illegal immigrants. again, as you said, kellyanne conway, the new campaign manager said, quote, his position is to be determined as he considers policies to help hispanic businesses grow. in a in ad on the other side hillary clinton criticizes trump and questions whether he truly believes he regrets saying some of the offensive comments. clinton foundation said they would no longer accept foreign donations should she become president. this is a highly contested election with a lot of strut any, more than any other presidential race. in a new poll that came out, weekly trending poll by lank times and usc, since revamp of his management team donald trump is actually up two points nationally among voters. that poll, though, is within the
margin of error. nancy, julia. >> edward, i want to ask a bit more about spending rates here. we've heard once again that donald trump's spending is trailing not just rival hillary clinton but other candidates at this stage in the campaign. does this suggest to you we're going to see a great pick up in spending in the coming months? >> i think you're going to see donald trump double his spending. he spent something around $19 million, hillary clinton has spent $38 million in a month on campaign ads. donald trump has benefit freddie his free publicity he's gotten from being on television for some of the outlandish things he's said. his new campaign manager is trying to tone that down a little as you've seen in the rhetoric over the last week. they are trying to broaden the base and bring in hispanic voters. you're going to see more campaign ads from the donald trump side, that $19 million number is expected to grow. >> great to chat with you.
that was a good color on hillary. peach and white, kind of more neutral colors suit her. very important clearly. other than that crazy red dress she wore that time, that burgundy one. right. let's move on. saturday's suicide bomb attack wedding in sweeft turkey carried out about 12 to 14-year-old according to turkish president erdogan. he said isis extremists responsible for the attack that left 51 dead and a further 69 injured. according to government officials at least 22 victims under the age of 14. deputy prime minister described the bombing as, quote, massacre of unprecedented cruelty and barbarianism. white house called it barbaric. vice president biden said he will discuss terror when he pace
a visit this week. hadley joins us from the desk. hadley, to what extent can we tie this to erdogan's personal decision to get involved in the syrian war? >> undeniably a connection. at the end of the day you have to remember so many moving parts to the story, the connection turkey and russia, what's going to happen next in terms of that relationship. we've seen them set up an investment fund but still an uneasy relationship in terms of what they do in syria. end of the day turkey is pretty much surrounded. they now feel they especially with what's happened over the last several weeks in terms of this coup attempt they have to start making friends out of enemies they have created for themselves whether president putin or president netanyahu. >> it's quite interesting. i looked at what some of the comments were, it wasn't isis they named.
>> it's all falling apart for turkey at the moment, isn't it? they are grasping at any straw to not only justify what they are doing in terms of tackling islamic state, in terms of finding domestic stability. that, of course, leads you to the bigger questions about draconian laws in terms of what they are doing detaining people and taking away passports and whether all that is necessary. whether it's necessary or not, at the end of the day it has major repercussions not only for western allies in united states, nato allies but also for europe itself. >> what do you think the u.s. will say to them here. >> come in with usual scoldings, we all have to work together. the big question not about human rights, inform preceded by true worry, this is nato ally, one of the largest militaries in the world. this is supposed to be a group of people who are helping us in this fight against the islamic state and really seems like they just gutted security apparatus.
members of the pentagon making comments how worrying, generals replaced, moved outfit of the military, who do we work with now. serious concerns as we talk about this with regard to migrant crisis. >> let's continue, german government will advise its citizens to stockpile food and water for attacks according to a newspaper. germany under high alert following string of terror attacks in recent months. such guidance would be unprecedented in the country since the cold war period. it's expected to be discussed by the cabinet on wednesday with the potential to be announced that same day. this is interesting. you pointed out something recently vice president of intelligence suggesting -- >> for some migrants out of syria and turkey. this is the big question going forward, what is going to happen next in terms of european relationship with turkey. >> talked about sleeper cells
coming in. >> something nobody wanted to address before brexit. nobody wanted to talk about this. it's dangerous ground really for any politician to talk about within all these humanitarian efforts you're going to miss people, this will be people that get in. now that they seem to acknowledge this is the case, the question is how do we control what we know is here and how do we prevent more people from coming. that plays into the bigger argument whether or not they should be given access to millions of turks, turkish citizens possibly coming to europe as well. >> hungarians, a referendum october 2nd because they don't want to take their fair quote, of migrants. causing not only fractures with turkey but within the eu as well. >> absolutely. when lou at the success of the program in the relatively short span of time that was in existence, there was evidence it was working when it comes to turkey stemming flow of migrants into greece specifically. >> will they continue, that's
the big question, in terms of relationships not just angela merkel especially but what they want. at the end of the day they don't want anyone telling them what they can and can't do in their country regarding human rights and post this coup attempt. at the end of the day president erred kban felt threatened and that's been the root cause he's taken since. >> the crackdown. thank you. meanwhile, still to come on "street signs," we kick off our personal week of coverage focusing on commodities. stay tuned as we take a look at the devil's coffer. we'll tell you what that is after the break. new bikes aren't selling guys...
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a check on oil prices. wti big mover at the he said of the week especially on wall street 689 today looking at trading lower after third positive week in a row for the first time since may. well, victoria has been taking a look at what's powering movements in crude this year. >> this year's oil rally seems promising but it's been far from smooth sailing. in january oil at rock bottom having slumped to 12-year low. fast forward to april when prices picked up on expectations of much anticipated production freeze from the world's major producers at a meeting in do ha. a case of boy the rumor sell the fact. >> opec and non-opec members meet in qatar. >> what would have been first global output deal in 15 years lay in tatters and crude slumped
% in a single session. in may we bid fairwell to saudi arabia's veteran oil minister after two decades in the post. incomes his replacement, ceo of state-run oil company saudi aramco. khaled made his mark in june helping break stalemate of doha. >> market balancing, trends are all good in terms of supply and demand, prices have come up somewhat and i believe they will continue to recover. >> but no deal once again. for the oil majors hits kept coming with cost cuts, asset sales and dividend plans topping long list of concerns. >> our shareholders expect us to manage risk. >> after a brexit blip, things looked brighter in august but fears investors are back to buying the rumor on news of another producer meeting in
algeria in september kept prices in check. >> people are pumping oil out of the game because they know in 10, 15 years those reserves might be worth zero. >> so many near deals and no deals, don't be surprised if the fact ends you up getting sold. all this week on cnbc digging deeper into commodities to identify best strategies for portfolio, the commodity index up around 20% year-to-date, 40 in line with like crude. surprise surprise. put us out of our suspense. >> i know. we should have asked viewers to tweet in. what do you think devil's copper is? we'll tell you now it's nickel. >> why? >> do not ask me why. do not know the history. we do know a guest who may know. >> i'm going to hold that one. jeremy martin ceo of minerals joins me. great having you on the show.
just tell us what nickel is so important, what its uses are and why you're focusing on increasing capacity in brazil. >> nickel, around 0% of nickel gos into stainless steel, which would be used in corrosive environments, power stations, oil refineries, bringing it closer to home, knives, forks, kettles, pretty much in every day life we would be using nickel via stainless steel. >> why brazil? >> brazil we've been down there seven years. brazil is one of the regions globally that has highest grade nickel deposits. probably brazil and new caledonia would be deposits over 2% nickel. if you look at that globally, australia has 1% nickel, africa 1%. you're on the upper end. the other reason brazil has good infrastructure. you need good infrastructure to develop projects. >> some would say in this environment it's lagging. you say you've been there seven
years, quite a reverse of fortune for brazil. has the scandal, government instability hasn't made your job any more difficult given what's going on with construction firms, other suppliers in the area. >> we've been down there seven years. it was a discovery project we've worked up leading into production. brazil has had fairly major macrostruggles over the last two years starting with government impeachment. has had a difficult time, obviously being commodity backed economy a major stepdown in growth. brazil is a state driven country. i think if you're operating with a state which we are, you can still operate very effectively. the government there is intact and will be intact for the next two to three years. i think actually what's happened over the last three years has played to our advantage and competition has decreased. the big thing is the
devaluation, at the beginning 4 to 1 to the dollar. goes further. >> can't talk about any commodity, nickel, without talking about china as world's biggest consumer. what's going on in terms of supply and demand here. when i was looking at it, you've got philippines potentially talking about not supplying china that's created a spike. you've got indonesia changing its laws. they seem to be shipping chinese as well. what's the key driver here? >> good question. i think if you look at the global nickel market $2 million tons annually. of that china is a buyer of about half of that. we've seen a period downwards pressure on pricing, slowdown in china and all of the commodities drop to multi-year lows in q4 last year. nickel is 14 to 15% up mainly last two months.
significant global, lme, around 450,000 tons, about a three-month supply. there have been a couple of big changes in the industry. indonesia brought a ban in direct ore shipments to china, and china buying from indonesia, that ban closed off that supply. that shifted to the philippines and philippines moved in and picked up that supply. what we've seen in the last three months with the new president in is that they are now going through and doing environmental orders on direct shipping operations. they have closed seven down and talk of closing more down. i think all of that compounded by growth figures out of china have been better than people predicted, should see nickel growing at 3, 3.5% this year. i think we're in an interesting dynamic, see pricing in around 11 to 12 mark but going next three years could see significant increases in nickel
pricing. >> jeremy, great to have you on. we'll have you back. jeremy martin. the curtain has come down on another summer olympics. fireworks lit up the sky for the closing ceremony assignations reflected on their medal hoard. shinzo abe, super mario, hosting games in four year's time. what a moment. >> great sense of humor there. well done, rio given doomsday scenario. it wasn't perfect but they did a brilliant job. >> final medal standings, going to love this, even though my own country comes out on top, have to say well done great britain. great britain slipping into number two ahead of china.
their record mledal count for great britain. >> fantastic. >> a great event all around. i think we'll be a bit board going into the last of august. we need another sport to cheer on. >> weather is what we care about. european market, a look at those as we head out to the end of the show, higher across the board as you can see. ftse 100, 0.7 to .8 higher across the board rainfall here is the picture wall street open janet yellen and jackson hole, modest gains across it is board. that's it across the board. >> we'll see you tomorrow.
good morning, focus on the fed, looking forward to key speech from janet yellen. >> pfizer looking at a deal to buy cancer drugmaker ahead. >> new numbers on campaign fundraiser and spending. it's monday august 22nd, 2016. worldwide exchange begins right now. ♪ ♪ good morning and welcome to "worldwide exchange" on cnbc.