tv Street Signs CNBC August 24, 2016 4:00am-5:01am EDT
isn't the in the center of the country. the mayor of telling a local radio thatle half of his town is gone. according to multiple media reports, the death toll stands at six at this stage we've heard reports in a various range keep in mind given the quake happened a very early hours. rescue workers are just waking up. working through the rubble and the devastation to get an accurate count of the death toll and other causals in the area. meanwhile, the defense has just announced it mobilized the army to the effects areas. you're looking at a map of the region, perugia and rome and the area highlight reside the most affected. with are talking about a 6.2 magnitude earth wake. we don't believe there was in
severe damage in cheeia itself. it's the areas around. where the mayor spoke strongly about the damage. we also heard the hospital has been damaged as well. that raises concerns for the rescue efforts there. you are looking at live pictures of rescue efforts underway. we did hear from prime minster renzi saying they've been in touch with the agency and activated emergency members. you can see the crews working around the clock here to try to get anyone who might still be caught under the rubble. we will continue to bring you updates throughout the show. try to get perspective on the ground as well. in the meantime, we want to bring you up to speed with the equity trading picture here in europe. the last week of the doll days of summer you might say and no surprise. rather quiet trading day when you look at yesterday. particularly on united states in wall street. one of the top ten slowest volume days of the year.
holding into polisitive territo. count down to janet yellen. also getting a slew of earnings reports here to diejt. especially in the uk. you look at the likes of wpp rallying. overall the ftse lower be been .20%. that is the clear under performer when you look at the xetra dax, cac, and smi. let's look at the movers. media moving higher by 1.1%. banks, financial services and industrials and travel and leisure all holding higher there along with chemicals. on the downside, basic resources is taking a dip from medal prices. oil and gas has been the real story of the week. watching moves in the oil price. we did get another boost just near in the session yesterday. we will have more details on the ongoing talks.
speculation that iran would be willing to get in talk of peck freeze. more coming up in the chose. oil and gas off about 0.3%. speaking of iran, they have told opec members it will attend talks set for september. the one line statement sent the kcar cartel's agreement. perhaps it can be reached. meantime, iraq's prime minster says his country has resumed pumping crude from oil fields. via a pipeline to turkey. this process allows the extraction of gas while avoiding damage to reservoirs. >> joining us around the desk is peter head trader and managing director. pierre, it's good to see you. >> good morning. >> so much to talk about despite it being the last week of august. first and foreman, letskand for
about the oil situation. others saying this is still much to do about nothing. >> definitely the latter. i think one thing they didn't bother showing up for the meeting that was earlier this year. and that was definitely not taken well by tv saudis. even if they do turn up, even if they do make an agreement to freeze, i think the main asset distraction, main point is they're all pumping at record levels. if they agree at freeze, they're agreeing at record ever output levels. it's not going to be that big turning point on the supply issue that's dominated the market for a couple of years now. >> the other side of the supply issue is the disruption we've seen in the smaller plays. goldman sachs saying that could be the bigger issue, perhaps thaw on some of those tensions when you look at nigeria and libya. >> i think that canter any freeze chat because nigeria
potential cease fire going on and iraq as you just reported, beginning to act from kirk again. these stories will certainly offset anything. the rumor mill within opec is extraordinary and i think ultimately it's a distraction. don't think we're going to see any major output alterations from opec. >> the other big far terror is t big factor is the fed. otherwise quiet week on janet yellen. >> there's nothing else happening so we have to focus on this. it is important. i find it very interesting the fed has made a concerted effort over the last couple of weeks to deliver a slightly more hawkish message. particularly dudly who said last week a september hike is possible. for a anymore terrorhouse dove to say that, that's quite
notable. yet the dollar remains trading weakest levels of the year. ranges, t note yields. here's a stat, talking about quiet markets. the range in august is a ten-year low. despite some hawkishness from the fed, your not seeing markets responding. i think the fed should hike in september. i don't think they will, but they should. they've got dollar weakness. yields are low. that i have got two big payrolls in a row. housing nice and strong. they need ammunition. >> we'll see if they have the fortitude to do it. pierre, stay with us. so much more to talk about in just a bit. we want to bring you some more information again on the quake we've been watching in central italy. several towns have been damaged. we're talking about mountain towns and at the epicenter it was recorded a 6.2 magnitude
quake hurt in the very early hours of the morning. for more perspective, let's bring in gilbert toe who is a senior researcher. he joins us on the phone. gilbert toe, thank you for joining us this morning. in light of the developing. situation so many questions raised offend what the situation is on the ground. can you bring us up to speed on what you know. >> good morning to you. the situation is that we had this main shock last night 3: 14 local time. after that we had more than 40 earthquakes with magnitude bigger than 3. the situation is that the rescue teams are on the scene now just rescuing and looking for
possible survivors. we are going -- we already have the teams there for installing additional size instrumentation. and there's monitoring going on and we are still waiting for continuous update about the level. >> one concern that rescuers have in these situations is the rescue of aftershocks. we heard estimates that 60 aftershocks occurred just within 40 hours. is that you're recording on the ground and what do you expect in the coming hours? could we see more? >> caller: we cannot predict earthquakes. it's difficult to say what we can assess about. it's quite usual that after such a huge earthquake, you have tens or even hundreds of the important replicas wherefore
important i mean earthquake being felt by the population. so right now, the alert is maximum. >> just another question because a lot of parallels have already been drawn. people thinking back to the devastating quake that took place not too far from this region. what are the differences there when you look at the magnitude, the depth of this quake that we're talking about today? >> the i didn't hear the question. >> are there any similars to the quake in 2009 which of course very sadly resulted in 300 people dying. do you see any similarities here? what are the differences we should be taking away just based on the mall feattitude, the dep of this wake. >> the similarities are very striking because the zone is the same. they are talking about the center sector of the upper nines in italy.
so the kind of mechanism we generated the 2009 earthquakes and today earthquakes are basically the same. the magnitude is very similar. we are about tonight we had the 6.2. in 2009 it was 6.3. to there are similarities. tod today's earthquakes are a bit shallowers. 4 kill meter depth. it is shallower. >> what can you tell us about the buildings in the regions that have been the hardest hit when we look at the infrastructure. looking at pictures from the rescue underway, looking at the rubble and deaf station already and what some of these buildings were talking about very old. the infrastructure may not be up
to par. how does that influence the situation? >> we are talking about the very oef old buildings which were in some cases abandoning in the 50s and 60s and later occupied again for holidays. so most of the cases they had not been constantly dated and not resisting the force of such a strong earthquake. >> thank you for bringing ut to perspective on the doping situation in italy. that is gilbert. i want to bring you a line out of a developing situation in turkey now. we heard that turkish tanks have approached a border with syria. this is coming from cnn. have approached the border and were firing on targets, but they
did stop short of actually crossing into the border. this is coming again according to cnn turk which had initially said there was a crossing into the border to syria, but now saying stopping within the turkish territory. turkey efforts against isis. we will be talking about that meeting a bit more in the show. >> well, still with us around the desk here, pierre, managing director. we will be bringing the focus back to the trading environment. i have to ask you, we were talking about the fed in focus ahead of yellen's speech on friday. put that aside for a moment and look at the fundamentals. we're two months on from the brexit vote and here we are with the relief rally many were not expecting. an unloved one you would say in the summer period. what happens in autumn. that's the big question. >> for sure the surprise of the summer being the lack of crisis
that the brexit vote. we were so worried about what would happen, the economic fallout. as it stands so far. that hasn't happened. the big thing to focus on going forward is the fed meeting on the 21st of september. before that we got an eu summit talking about brexit negotiations. that's a summit not including the uk. news that might be the first kind of signals to where is that whole saga going. we have this weird can. it probably won't last. it's traded within a 1% range for 32 sessions now at the all-time high. that's a big yelled play, but ultimately. that market can't go much higher, but we need a trigger point to start coming down. >> perhaps that market can, but ores say look where europe is relatively speaking. do you think it's time to get
into europe or was it the share uncertainty you were hitting on. >> i think buying equities at this levelins anywhere is expensive. if you're going to buy equities, sure europe is better from a valuation perspective. we've got a slightly better improving picture. the pmis that were announced yesterday were pretty solid. on a relative basis, europe is better. the emerging market space has had a big rally over the last few weeks as well. that's looking pretty expensive. i'm afraid from an equity point of view it's not looking interesting. >> all right. pierre, we'll have to bring you back when big business kicks in in september to see where things go from there. thank you for joining us. head trader and managing director at amplified trading. in the meantime, get no couch with us. do you think these gains hold in equities. is it time to buy, sell, get in touch. "street signs" europe @cnbc.com.
good morning and whack wk back to "street signs." glen core has reported a 13% drop in profit as it revealed progress with debt reduction program. anglo swiss minor. says it's on track to meet a freshly lowered year end net debt target. glen core says it expects to reinstate dividend next year at an appropriate level.
glen core shares have had a strong 2016 with the stock price up a fifth over the past 12 months. in morning investors were looking for more. that stock off 4%. it has been weighing on the broader mining sector in the uk. on the other end of the spectrum, wpp has posted a mixed bag of first results. offset a 56% fall in net profits. as you can see investors really cheering the hike this morning. told cnbc that it is still too soon to judge the impact of the brexit vote. >> it's impossible to come to conclusions yet, but the basic point is business ones certainty, government probably doesn't want uncertainty, but government probably wants to play this out further. i mean, you look at the press one weekend it's going to be red trigger article 50 until the end of 2015 that's denied.
the following weekend we won't trigger article 50 until april. that's denied. nobody knows where we are and that uncertainty does play in however the moves by the bank of england, the moves to stabilize and support post-brexit i think have been helpful in restoring a bit of confidence. >> joining me now for more reaction is analyst at po hunt. alex, good morning. thank you for joining us today. wpp investors like what they see in these results. stock hitting a record high at one point. are they right to be trading higher. >> i think they are. there's a big dollar play here. they drive 15% of revenue from uk. they drive a lot from overseas market. specifically the u.s. when we're translating profits we're doing so with a weak sterling rate. that gives them a big help on the bottom line. the story overall is showing no signs to date of brexit fatigue. >> none at the moment, but given
the brexit risk event is still quite some time off and we talk about triggering article 5050 clause and what the divorce from eu actually looks like, it will continue to weigh. is it too early to really buy into these companies given you have a cloud of uncertainty hanging over. >> i was is early days. i would point investors in viewers to the fact this company is a global company. it drives business and revenue in every region until the world. the uk these days is relatively small so any impact is likely to be localized. there's a good hedge here on the currency. the stock price reaction today is strong. as you earlier pointed out, like many equities, this is trading on a near all-time high rating. >> given the competitors are closely linked to the global growth environment wharks , wha see as the biggest risk. >> we head into a lull next year. this year we benefit from elections, rio, olympics, next
year the much calendar is looking skinnier. it could be allied with post-brexit concerns next year the growth rates become a little bit anemic. >> interesting you mentioned both of those factors. the wpp was telling "squawk box" the olympics were a huge success and waiting on the election as well. >> that's a big play. >> talking aside from the global factors. let's talk about the industry. we hear the giant saying it's becoming a two player world for google and facebook. how does this play out for the sector going forward. >> is the relationship they have with the big social media giants and are they at risk of being dissuperintendant mediated. to date that hasn't happened, but it could happen. digital sl the way forward for the industry. >> who do you think is better,
wpp. i think wpp. >> and do you think facebook will make any gains on the ad blocker war. >> i would say it's plateaued out. hasn't gotten worse. i think the apps on mobile is not a bad thing for ad blocking. >> very interesting. alex, thank you for joining us. that is alex, media analyst over at po hunt. meanwhile, qantas has announced first final dividend in eight years. matt taylor is in sidney taking a closer look at the results. give us the big take away here. >> reporter: hi, nancy. it was a record annual result for qantas. we did see the full year net profit figure rise 85% to $1 billion austral aus trail yen
dollars. some shares of qantas by the close up 1.5%, but the stock did rally by as much as 5% as we got news out of that initial dividend, that 7 cent per share final dividend. first dividend paid out by qantas since 2009. the airline also saying it will conduct a share buyback as well worth about $366 million. now these results are all part of an ongoing transformation plan that's been underway at qantas for a couple of years now. seen 5,000 jobs lost. a pay freeze. ways to cut cost in qantas today says total transformation savings now they expect after the end of fiscal 2017 will top $2.1 billion which is an improvement of what they previously flagged to the market. the biggest turn around was the neshl operation which had been
losing money for some time. they're up 92% to about 512 median australian dollars. on fuel, the company says it doesn't expect to spend more than $3.2 billion next year. asked the ceo what the outlook is for oil. >> very effectively hedged the last three years and ended up participating in the lower fuel price when a lot of our peers haven't. so the way we look at it, we take a worst case position and protect ourselves from that. we said today or worst case oil price is the same price as essentially last year. $3.2 billion. we have over 80% to participation falling oil price. we are very well hedged this year. >> speaking to us a bit earlier. on the capacity side working on margins, the airline is going to reduce domestic capacity over the first half of the new fiscal
year. domestic capacity will either be flat or fall. competition in the domestic market. both carriers flooding the market with kmesz seats. hasn't done either of them any good so qantas saying it's going to pull out some of that capacity. hopefully margins on the domestic business will improve, nancy, back to you. >> thank you for the long day. get into your evening over there. hope you get out now and have a nice dinner or drinks. whatever you do in sidney. thanks for joining us. meanwhile, bringing it back to earnings in europe. shares hit a record high after it announces it is splitting into two listed companies. second largest maker of tissue plans to separate forest unit and hygiene unit. over at lloyds, ceo antonio
sl to circulate a memo to tchl employees expressing regret at any reputational damage caused by allegations he had an marital affair. this comes to reports that appeared on sky news. he was also expected to use the memo to reaffirm his commitment to leading lloyds bank during a time of rapid change in the british banking sector. italy, has asked an italian court to order vivendi to apply. asking vivendi to pay 570 million euros in damages for seeking to change the terms of a deal that gave full control of media set paid tv premium service. we have to take a quick break. stay with us. you can check out world markets live. that is our blog that runs throughout the european trading day. don't forget to get in touch
with us. you can find us on twitter. we'll be back in just a few minutes. stay with us. [music jess:are you good to dr shawn: i'm . ss: w many did yohave? shawi should bejess: u sho? offir: go on and step out of the vehicle for me. good luck! bud: see ya, ddy. , it tur out buzzed iving andrk driving, they'r'rsame thi and osts around $10,000. so notorth it.
good morning and welcome back to "street signs." i'm nancy hungerford and these are your headlines. italy gets the army after 6.2 magnitude earthquake shakes the center of the country. severely damaging a number of towns. shares in sca hitting a fresh record. up more than 10% after the swedish company announcing plans to split forest and hygiene business. glen core profits slide 13%. the company drilling deeper into debt pile lowering year end targets. wpp shares jumping as first half sales come in ahead of
expectations. this as ceo tells the program the recent olympic games were an advertising te inine ining trei >> congratulations to everybody in brazil for the efforts they made and the success of the tournament. >> good morning and welcome back to "street signs." we want to bring you updates on the developing story in italy where parts of the central portion of the country have been severely damaged by a 6.2 earthquake that hit in the early hours this morning. the epicenter of that quake was located near the town of norcia. a two hour drive from the
epicenter. several small towns have been severely affected with the mayor telling a local radio half of his town is gone. according to media reports the death toll stands at at least six. heard various reports of that number now. the ministry of defense has just announced it mobilized the army to the effected areas. you are looking at pictures in the region. we know prime minster renzi has been in touch with the agency. said they are activating emergency members and given this quake hit at 3:00 a.m. in the dark, you have to imagine that as morning broke, rescue efforts are still getting underway to try to determine how bad the situation is on the ground beneath that rubble. a lot of these mountain towns we're talking about extremely old ancient buildings. a lot of concerns about the infrastructure there and how that will impact the rescue and
the aftershock we often see in these situations. we'll bring you updates throughout the show. in the meantime let's bring you up to speed where equities are trading. 90 minutes into the session with europe. you are seeing the ftse 100 off .30%. we are seeing optimism with the likes of wpp. not enough to lift the market into positive territory. oil and gas sector remains under pressure as well. the french cac 40 and the main italian market, the ftse mib holding in positive territory. this comes after a positive session, but rather muted in the u.s. yes, we saw the nasdaq hit a record high, but it failed to close at that level and once again volume was light. no surprise here. in the summer days top ten lowest volume days of the year. again, a lot of questions around whether or not the relief rally we've seen has legs. whether there's conviction in an unloved rally.
this is the picture going into the open of wall street today. just two days away from janet yellen's speech. looking at modest openings here. dow jones lightly lower and the nasdaq called slightly lower as well. turning our focus back to the go political picture here. turkish tanks and turkish backed forces have entered syria. this comes to military sources on reuters. u.s. and turkish jets have been carrying out air strikes on the syrian border over the last number of hours. meanwhile the president of iraq made a visit to turkey on tuesday for high level talks. that were mainly focused on anti-terrorism measures. he met with both president erdog erdogan. turkey has sent an official extradition request for fethullah gulen.
however, a spokesperson from the state department has nothing to do with the attempted coup. >> you've obviously seen turkish politicians or authorities make allegations he was connected. all i can say is this request does not relate to his involvement in the 2016 or alleged vomit in the 2016 attempted coup. >> joining me now for more analysis is felipe. senior economist and global go political analyst at standard charter. good to have you with us. so many developments surrounding the situation in turkey. let's go into the central bank decision yesterday. they did cut rates in line with expectations. how much of this has to do with wants to offset any growth head winds coming from the go political instability and the terrorist attacks we've seen. >> i believe deed what they're trying to do is spur up growth. it's interesting the latest fears on growth are very
resilient and much better than anyone expected in q12016. at the same time, a lot of signals have turned negative for the turkish economy and i think also there's a lot of pressure on the central bank to continue its easing cycle. 225 basis points of easing since march. now, it's very clear that you have pressure on the central bank i think because the inflation is going up. the current account deficit hit a record in the year of june. you orthodox economy, i would say, would tell the central bank to be more cautious, but there are some pressure on the central bank to continue easing and finally take advantage of a very low rates environment in the world which allow them to have this over. >> certainly not a loan player in the world of easy money. i should mention you talk about the pressure coming from the
economic fundamentals. there's also the question of political pressure. of course in recent days we saw erdogan exerting more power. just exactly how much influence he has on the central bank and just hitting as we speak, comments from erdogan about the central bank decision really praising the move. he also said interest rates should come down rapidly. can they afford to keep doing this when you look at the inflation metric sgls this is exact lly the point. maybe the grace period for central bank needs capacity to continue easing. come to an end. there are threats to the investment rate status of turkey. as you said, inflation is coming back up. current account deficit is starting to grow again and so i think it's going to be more and more difficult to actually continue in this easing cycle. >> will turkey maintain investment grade status. >> i think it is much likely they're going to lose it. >> lose it.
what happens then to the lira specifically. >> i think the lira actually has picked up from slow after the coup. it's difficult to see it regaining the strength it had 18 months ago. >> we should also mention now the turkish president erdogan is speaking as we were just discussing. he commented on the wedding party. saying the bombing will pay a high price, the perpetrators of the wedding party. this raises the question between the talks going on between the u.s. and vice president biden. when you talk about the joint efforts of isis, what to you expect to come out of this meeting today. >> i think it was important for the west particularly important for the west and u.s. and the west seeing turkey as the main ally in this region to come and show some sort of support, at least for the democratic process d
and the fact the coup failed. i think that's what we're seeing in turkey right now, the growing parano paranoia. the perception they have on the country. they're trying to build bridges over there. it's going to be very difficult for turkey and it's relationship to its neighbors. its relationship with iraq as it was mentioned. >> should investors worry about that paranoia. >> i think what is sure, the currency situation in terms of the go political risk and domestic political risk in turk is starting to cause a lot of pain. we're seeing it typically in tourism where tourism figures have shown a sign of complete collapse. 90% less tourist in the first half of the year. it is showing. >> do you expect the u.s. to give in on the extradition
request? >> do you expect the u.s. to comply with the extradition request. >> i think it is difficult to imagine that they're going to go ahead. they would need a lot of judicial material to actually go ahead with that. >> all right. fee le felipe, thank you for joining us. meanwhile, turning attention to the race for the white house. donald trump extended his critique of rival hillary clinton on tuesday night. speaking at a rally in texas, the presidential nominee said his democratic equivalent was, quote, threat to the foundation of democracy. this comes after the associated press reported that over half of the people outside the government who met with hillary clinton when she served as secretary of state, donated to the clinton foundation in some way. >> it is impossible to figure out where the clinton foundation
ends and the state department begins. it is now abundantly clear that the clintons set up a business to profit from public office. they sold access and specific actions by and really for, i guess, the making of large amounts of money. >> the clinton campaign has argued that the ap report is flawed because it did not consider meetings with foreign diplomats or u.s. officials. the analysis also only covered the first half of clinton's stint as secretary of state. joins us now is nbc tracie potts live in washington. good morning tracie. no surprise. we continue to see the attacks, the criticism just increase between trump and clinton as we get closer to the first debate. does it resinate in the polls? >> well, we're not necessarily
seeing it yet. we'll wait for the next big poll to come out. clearly donald trump is trying to improve his numbers by going on the attack against hillary clinton, but it's not just donald trump. this associated press analysis is showing that yes, there was clearly crossover between people who gave money to the clinton foundation and people who were doing business with the state department. sometimes what seem to be very legislate ways. for example affirm that was working with the state department on genocide issues, but also on the charitable side, but also that firm was giving money to the clinton foundation. now, the question becomes how will she explain these crossovers and these ties that donald trump is clearly trying to take advantage of and point out on the campaign trail. he's called for special prosecutor to investigate not only that, but the extra 15,000 e-mails that have now shown up that weren't part of the first batch that she turned over. it's not clear that's going to happen because of the way that
special prosecutors are appointed. the other side of this is that hillary clinton and tim kaine are increase comply trying to focus on red state. traditionally republican states. he was in arkansas yesterday. they're focusing on missouri for example where the polls are showing hillary clinton and donald trump almost neck in neck in a state that's traditionally voted republican. >> all right. tracie. thank you for the update. tracie potts of nbc news, live in washington. japan's prime minster has called the latest missile launch from north korea unforgivable. shinzo abe said it launched a missile towards japan posed a serious threat to the country's security. launch showcased north korea's improving technological cape bltds. in the meantime, japan will train troops. to be involved in overseai ins
military operations. >> elsewhere, china's central bank has used 14 day reverse purchase agreements for a first time since february. a move designed to calm the rally in bond market by curving access to short-term financing. join us now for some market reaction in asia. >> anything with a yield attached to it has been bid quite strongly. this move is to calm down some of the excess in the somvereign bond market and shake out the leverage. this has been a hoe hum market as you expect in the mix of the summer dull drums. janet yellen speaking at jackson hole on friday so we need clarity in where we are heading in terms of the policy risk and
the policy direction. let's face it, as you've been pointing out, nancy, all the common try has been rather hawkish, if it's from fish herb dudly, and the dollar seems to be reflecting that. case in point, dollar has been firmer. a little bit of give back right now, but we are seeing stability above this pivot point of the century mark for dollar yen. the pull back in the japanese yen that we were seeing for the large part of the day is now reversed. been constructive for nikkei and japanese equities which settled today higher by 100 points. we really are in a holding pattern until we get clarity from janet yellen. >> i always wonder with so much focus on janet yellen if we're setting ourselves up for disappointment. in the meantime, let's give you a shot of how european equities are trading here. nearly two hours into the session, looking at early gains.
good morning and welcome back to "street signs." tesla has made pretty big claims. phil has all the details. >> reporter: tesla shares moving slightly higher after the company announced it will be offering a larger more powerful battery pack for model s vehicles. that's about 10% more than the largest battery pack right new and because of that the model s and the model x not only have greater acceleration, they have far greater range. when you take a look at the madle s, the range tops 300
miles. 315 miles. go 0-60 in 2.5 seconds. when it's if ludicrous mode. as for the model x, the range increases to 289 miles. 0-06 until under three seconds. musk says for now the company is just ramping up production of these 100 kilowatt hour batteries and they expect to it be 10-12% of volume. >> we think we can do 200 cars a week. 200 packs a week and we're working very hard to wrap that up as quickly as possible. so somewhere in the order of 10-12% of our volume. that's as much as we can figure out how to make. obviously we're going to work very hard with each passing week to try to increase the number of
100 kilowatt hour we can make. >> as tesla starts building larger more powerful battery packs, owners of current model ss orb xs can upgrade. or if they want to take the existing vehicle and upgrade it, they can trade in the battery pack, bring it into tesla, swap out the battery pack. it will cost $20,000. it's all about production of the battery as well as production of vehicles in free month. >> that announcement did give the stock a bit of a boost yesterday. that was off the session high, but still the best day in two weeks. that was certainly good news for elon musk. >> meanwhile, get a check on the oil picture.
iran has told oil produces it will attend oil talks set for september. raised hoping for an agreement to freeze output could be reached. country has resumed pumping oil from fields. this process allows the extraction of gas while avoiding damage to reservoirs. getting the check there both brent and wti off more than 1% at the latest check. for more on the commodities picture, i'm joined by eduardo. vice president of europe gas and power research at wood mckenzie. whether or not with le get a freeze from opec. let's shift the focus to your special, which is the gas market. the outlook. interesting enough you say there could be some stabilization in the oil market, but for lng the worst is yet to come.
why? >> gas prices have depressed quite a lot over the last few years. there shouldn't be much surprise there. in a lot of the gas in europe and global lng trade it's linked to brent. as the oil prices dip, so does the gas prices. the global market is really a turning point at the moment. so in 2015, global production was about 250 million tons. by 220, it will grow by about 16078 million tons. that's 65% more. now those investment decisions were made at a time where the outlook for the global market was much brighter and tighter. instead it's going to hit the market at a time where global lng demand, particularly in asia, the most of the debt was expected to grow is going to grow at a lower pace. the implications for this is a lot of lng has place to go is going to end up in european sport hubs.
europe is going to see a tsunami coming to market. >> so what's the play here for investors? what do you recommend? >> for gas it's pretty blake environment we say. you might well see an upside in oil price over the next five years as you were eleading to in your question. the global gas market is about to get worse. and the linkage that we're historically seeing between oil prices and gas prices is likely to break. >> then it of course raises the question of when does the supply response kick in. when will this halt supply, when will this force particularly in the u.s. shell side of things to cut back. >> that's right. we see two really. one is the slng and economics. we think that's uslng will be a part of the global energy supply. if you look in a situation of increasing gas prices in the u.s., we think the cash cost of
delivered lng into europe would very much be the margin. this means a lot of the u.s. lng trades in europe might not be affected which means it could be well below 70 pgt over the next five years. this would very much be a price mechanism for europe. >> when we talk about the share influence of the u.s. gas exports, what are we talking about? will they become the single largest exporter? how many years out from now. >> they will eventually we think. the next five years are going to be challenging trying to again, lift u.s. gas at a very cheap price and global and european prices being quite depressed there's a big risk a lot of the u.s. lng. going forward post 2020, u.s. does represent the cheapest source of supply for global lng to grow. that's where additional will
come beyond 2020 as well. >> given the price dynamics, it does raise the question of when will it improve demand as well. for those players looking at the lower price, they're saying we can shift more into gas. isn't that right. >> sure. there's a lot of discussion and players are quite active in trying to create market. you've seen a lot of developments in markets that previously were out of others. most recently deals with smaller countries including kwa tar. those are small volumes, but do create additional demand. it will take time for the demand to create. >> all right. thank you for joining us. that is mos mow, vice president for europe gas and research at wood and mckenzie. before we go, i want to bring you updates on the earthquake in
central part of italy where several town haves been damaged by the 6.2 quake hitting early hours this morning. multimedia reporting the death toll stands at 20. we are looking at pictures there. rescue efforts underway. our thoughts and hopes are with the rescuers in the area as we continue to watch the developing situation. just before break, we'll give you one glance of how u.s. markets are set to open. another sleepy summer day ahead perhaps. we will certainly be watching for developments later in the week. that's it for today's show. i'm nancy hungerford. "world wide exchange" is coming up next.
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mplts good morning. today's test for the market, housing and oil. two key indicators could drive trading on wall street. developing out of italy. dozens of caussualtiescasualtie details straight ahead. clinton controversy. the latest as the presidential hopeful foundation comes under fire with trump calling her tactics of secretary of state, quote, pay for play. it is wednesday, august 24, 2016 and "world wide exchange" begins right now.