tv Street Signs CNBC September 21, 2016 4:00am-5:01am EDT
welcome. you're now watching "street signs." i'm louisa bojesen. >> i'm carolin roth. these are your headlines. >> european banking stocks shooting higher spurred on by the bank of japan's policy overhaul. the japanese central bank aims to keep bond yields at zero percent. wearing the pants. the world's largest clothing retailer sets itself apart from european rivals by beating
expectations for the first half of the year. >> i accept full responsibility for all unethical sales practices in our retail banking business. and i'm fully committed to fixing this issue. >> the ceo of wells fargo is accused of gutless leadership as he is grilled in congress over phantom accounts and speculation swirls that warren buffett could abandon his investment in the bank. all right. welcome to the show. we've had a lots going on overnight. we're waking up to massive changes from the boj. are they that massive? the nikkei rallying after the bank of japan launched an
overhaul of its monetary framework. they introduced yield curve control, yet another term by presenting a target for long-term interest rates aimed at keeping ten-year bond yields at around zero percent. >> japan's central bank also abandoned its monetary base target saying it will continue to expand the base until inflation targets are make. policymakers are opting to keep the benchmark lending rate on hold at 0.1%. >> i want to show you what's happening with european banking shares. we're seeing a rally across banks, financials. ubs in switzerland higher to the tune of 1.4%. same for credit suisse group. once again, it's also the insurers which are benefitting from this boost in sentiment, primarily because people say the boj has been targeting the banks, trying to help them out
through the steepening of the yield curve. there are two stocks not benefiting, one is deutsche bank down 0.2%. completely different issues. that's all about litigation. but once again, it seems as though, as jpmorgan and many other banks pointed out in a note on the back of the boj this is about the banks. this is about improving profit margins, net interest margins, because they suffered so much from the negative interest rate scenario and low interest rates overall. this is not about the yen necessarily, it's about profits at the banks. i don't know if you agree with that. >> in part. but i also think it has to do with the yen and whether or not these measures will help to drive yen depreciation or drive a strong yen. there's a piece talking about how the new normal has changed. they argue that ten years ago it would have been normal toll have
expectations being very different. would have had 2% inflation. would have had positive rates then. now we're looking at a different environment. still looking at this inflationary scenario way off from the 2% target. looking at disinflation for a long time, so that also makes it difficult to feed through market mechanisms. >> i mentioned the 2% inflation target. that surprised me. now they say they're targeting something higher than that. if they're so far away from that 2% target, how can they be so confident they'll reach plus 2%? that's something that puzzled me. >> definitely. a lot of questions that people still are asking. also this whole steepening of the yield curve, that they're trying to do, managing of rates. is that going to feed over, spill over into other areas in the bond markets? we're already seeing pretty
wonky moves in bond markets over the last year. are we going to see more spillover effect because of this targeting steepening inflatio inflation -- targeting steepening of the yield curve. akiko fujita has much more on this. we are all scratching our heads now. we have the announcement what will it do in the long-term? >> you're certainly not the only ones scratching their heads. again, here we are at the boj trying to break down the language and messaging here. we saw the markets rally on the initial reports of that policy decision. and the introduction of that yield curve control. but a closer look at this policy and the comprehensive assessment shows this is about tweaking an existing policy. the boj looking for a little more flexibility and looking to buy a little more time to get to that 2% inflation target.
you could argue this was a bit of a letdown for the markets because they were expecting the boj to cut further in negative territory. in some ways this is an admission of defeat for the boj on existing policies. we did hear from governor kuroda go out of his way saying the new shift towards yield curve control is meant to bolster the foundation the policy the boj has set forth. the two of you have touched on the takeaways that curve control means the boj is abandoning monetary base to buy long-term governing bonds to keep the ten-year yield at zero. the commitment to overshooting inflation is the over takeaway. boj saying they will commit to continue to expand monetary base until it exceeds the inflation target of 2% and stays above that target in a stable manner. we spoke with a former vice
finance minister, known address mr. yen, talking about the letdown here for the markets, saying the boj really didn't live up to expectations this time. >> this is a difficult time for governor kuroda. monetary policy in the past has been quite effective. it led to the depreciation of currency and increase in equity prices. but now that effect is less appealing. this is a difficult time for mr. kuroda. recent sort of action he has taken is not necessarily sort of -- does not necessarily satisfy the market expectation. market was expecting another aggressive easing of the monetary policy. he didn't respond to that. >> we certainly did see some big moves in the bond market. we saw yields on the ten-year reach positive territory for the first time since march.
looking at how the currency moved. we did see the yen weaken to the 102 level. the question will be whether that level and the weakening of the yen can be sustained. we're looking at 101.69. now looking to the fed. the big question will be how long can this be sustained? is this just an immediate reaction? will we see it go back down tomorrow? we'll continue to watch. back to you. >> thank you very much. akiko fujita joining us live out of tokyo. vincent is the global head of rates. pick up on a couple points that akiko was making. namely this potential admission of defeat by the bank of japan and that they didn't live up to expectations. do you think there's truth to both issues? >> i would agree. today was supposed to be a big
action day for markets, i think it's starting in a rather de-spiriting way with the boj. though want to keep ten-year yields close to zero percent. there's no better way to kill rate volatility. i find it a bit annoying. in terms of policy. the target of qe was to bring long yields to the down side and boost asset prices, now they're saying we have too much of a good thing. long yields went too low, we want to keep them around zero percent. they are pushing into control freaks. i'm not sure they are going to say they are running out of ammunition. >> what do you think the knock-on impact from this move from the bank of japan when looking at this move to steepen the yield curve? is there a spillover impact?
>> yes, we are seeing a slightly bearish opening in bonds. they have moved from minus six base points to zero, now they are close to the target. it brings further decline in volatility. volatility across markets have picked up from the lows of early september. for that to be sustained we need realized volatility to pick up. in rates we're not seeing that. the boj action will not encourage anyone to buy on volatility. we've seen a positive reaction in stocks, banks, insurers. i can understand. they're looking at the yield curve. again, this is a one-up move in terms of what this pom policy w bring to the economy, there's question marks. >> they're still too far away
from the 2% target, and this morning they say they want to overshoot that 2% target getting closer to 3%. what were they thinking? >> this is more dreams than policiment thy ment policy. the big question is whether this policy will support a pick up in inflation. it's not a given. >> dollar/yen fizzled out quickly. will we be stuck at that 100 level? 105, 110, 115, is that another dream for the boj? >> action will depend on the fed. after the fed we will increasingly focus on the u.s. election. possibly that could be a dollar positive. if the fed opens the door towards a december hike, i would expect the dollar to be quite firm. at the same time i think the yen
probably will remain within the group of strong currency performers. what we had this summer is what i call a sweet spot. bonds, stocks rallying in tandem. this might reverse because the sweet spot really was founded on the hope that central banks would be easing after the uk vote shock. this is not happening. i'm worried we might see a reversal into a sour spot, which would keep the yen quite strong overall. you mentioned the fed. let's talk about that more. the fed will deliver its policy decision later today. the doves are seen holding the power with 90% participants expecting them to keep rates and hold now. 88% believe the fed is likely to hike in december. speaking to cnbc, the chairman of ubs said the relevance of a fed hike was less about the timing and more about the message it sends to the markets.
>> i think it doesn't matter in the bigger picture when the fed moves, as long as it's clear they have a trajectory where they continue to respond to a strengthening economy with increasing rates. there should be no doubt the fed will raise rates if the economy is in a better place. >> let's get back to you, we are not expecting further rate hikes today. will that be significant for the dollar? >> you have two counter actions, one is opening the door further towards a december high, which they can do by reintroducing the balance/risk message that will open the door towards the high this year. that, i think, would support the u.s. dollar a little bit. but against that, yes. the dots will move lower. it will decline from 3% to
2.75%. this is a bit of an upsetting factor. overall i tend to believe this should exert some flattening pressure on the u.s. yield curve, which is what we've seen over the past couple of days. it's steepening a bit this morning on the boj. but we would look to fade that steepening. >> 1.7%, that doesn't scream a rate hike should be coming soon. shouldn't we be closer to 2% 2.2 when it comes to the ten-year yield? i know this is a result of qe by many banks, but it doesn't gel, does it? >> rates are very low. they have picked up. they will go higher, but i have to say this conviction is less strong after the boj this morning, as i said, rather dispiriting. after the fed, the focus moves on to the u.s. election. i think that will participate to that debate that worsening a
shift from monetary policy to fiscal policy. it's something that is flattening for bonds. you could get some trade deals which may be undone. so this will be a bit of a threat for treasuries depending on the polls. >> you think there could be that much of a reaction in the markets if we see a trump win? couldn't we see the opposite reaction, take care of your own economy, more protectionist angle, you see more domestic growth, organic growth? couldn't it be a good thing? >> it might not be a bad thing for stocks, but for bonds, you know, if you have a loser fiscal policy, which potentially implies a harder path for the fed, less imports which could be inflationary, that will be a
threat for treasuries. what you hear -- i think people there have been quite complacent, what you hear, whatever the case the congress will be split and this president probably will have his or her hands tied. i'm not sure. if trump wins that re-election, there's a chance republicans could retain seats, and the policy impact could be substantial. >> thank you very much for being with us, vincent. as usual, e-mail us, email@example.com. you can find us on twitter, tweet us directly, we're all on ther
there,. >> my twitter feed this morning is ablaze with brangelina. >> i was reading why brangelixit might be bad for stocks. >> all right. we'll have to go for a quick break. we can take that offline. the discussion about brangelina. >> definitely. coming up, stay with us to find out what the vtb bank chairman has to say about the u.s. presidential candidates. narrator: adventure can be found anywhere but the best place to start is in the forest. kubo: i spy something beginning with..."s" beetle: snow. kubo: no. beetle: snow covered trees. monkey: nothing to do with snow. narrator: head outside to discover incredible animals and beautiful plants that come together to create an unforgettable adventure. kubo: wow! narrator: so grab your loved ones monkey: don't even. narrator: and explore a world of possibilities. kubo: come on, this way. narrator: visit discovertheforest.org to find the closest forest or park to you.
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central banks meetings out of the way. the bank of japan keeping its 0.1 negotiaative interest rates. youaw a pop taking place in the japanese equity markets. the topix up by 2% with the bank of japan saying 2.7 trillion of etf purchases will be linked to this index. in europe, higher across the board. all the markets trading in positive territory. the sector story reflecting the positive story with telecoms, insurers and banks trading up. not all banks are trading up. according to the financial times, the spanish bank has rescinded a former offer it made last month due to disagreements over price. separately rbs said it will close its shipping division following a failure to reach a deal with asian banks on a sale of its portfolio.
rbs down 0.8%. three bidders have emerged as the main contenders to boone unicredit's fund management arm, pioneer. amun amundi, general li and post italiane are leading the pack. other firms bidding are acsan, and allianz, along with aberdeen asset management. unicredit is looking to raise up to $3 billion from the sale of pioneer and wants to finalize a deal by november. inditex is up by 8% off of last year. strong sales benefitting from a strategic focus on its flagship stores and online channels. inditex shares have risen 8% over the last 12 months. . the stoxx 600 telecommunication
is down 15% year to date. some investors are seeing telecoms as one of the few safe bets. morgan stanley saying they are pretty cheap given that many european defensives are rich and telecoms look attractive. want to talk about the sector with david mccourt. thank you so much for joining us. you like telecoms, too, not just for valuation reasons but underlying growth opportunities. >> i think there's huge opportunity in telecoms, especially in the developing world, in the middle east and africa represents about 8%, and growing faster than the average. and there's 4 billion people that are underserved, have no connectivity or underserved one way or another. so you're seeing a lot of
public/private partnerships like we have one in ireland where the governor is saying i'll partner with you to build out fiber connectivity to our population. that's a huge growth market. >> to be frank, that story is not new. we've known for five, ten years that market is underserviced. does it matter in those markets if you're the first, second or third mover? can you still make money if you're the fifth mover? >> if only 8% of the market share, it's growing three times faster than the rest of the world for sure you can. in the public private partnerships ing about that for long time. ireland is a very, very small country. we were just short listed for a billion and a half project with the government to partner to bring fiber out to the rural communities. that's been years in the making, now it's just coming to fruition. the same thing in the uk. the same thing in italy and poland, same thing in germany.
>> in the middle east and africa, why are you seeing three times more growth? more to start with or the upgrading? >> i think they start with a low base. so, the magical low numbers. i think that's the number one reason. number two, the world has come to the conclusion that you can't operate an educational system, healthcare system, a government, social system without good connectivity. the governments around the world have realized that's a necessity. >> when you come in and help with connectivity, which level do you enter? we also hear many markets they skip a couple of cycles, then come in with higher technology in someplaces because the rest of us have been having this stuff for years. >> you see people come in here, then someone comes up with a better technology. i'm not sure there's anything you can do about that. clearly if you're building infrastructure you want to build
it to be as robust and future-proof as possible. you want to make sure you build the right technology. when you're in those countries you want the right partners. >> it all sounds promising, to be honest. but then i seem to think there are so many logistical challenges, political challenges, how do you overcome those? >> huge, huge challenges. you're right. you're overcome them by having the right partner. luckily for us, 90% of what we do is in partnership with somebody. so we learned how to be a good partner. >> that's the government. >> in the case of ireland, we partner with the government. we have crescent, a totally private company, so who you partner with around the world is critical.
90% of what we do we do in partnerships and have been for 30 years. at some point we get pretty good at it, i think. >> how do you feel about telecoms in europe? very low growth. it demands plenty of infrastructure investment by big players and budgets are stretched. >> we've been hearing that story for a long time. i see this is level three in this building. i was a founding director of level three when they said there is no time left for a new entry. >> you can stop in and have a cup of coffee. >> exactly. so i think there's still huge -- telecom, i'm biased because tnt, telecom, media is the only space i know. it's the space i'm in. the space i've been in for 30 years. at some point, you learn a few things after 30 years, even if you're the dumbest guy in the group. we're plugging away in telecom
and media. we have a new app this month which is for emerging markets to bring them ctent where they're used to seeing western content, now they can develop their own content. we are in the media space, telecom space and love the emerging markets. >> david, thank you very much. david mckoucourt. airbus is reportedly planning an operational overhaul including a drive to eliminate duplicate functions. both initiatives will form part of plans to refocus the group. >> abb has sold its high voltage cable unit to nk cables for a total enterprise value of 386 million euros. the sale is part of a strategic review underway at the swiss power and out mission group. >> had a sip of water, thank you very much for that.
>> we all have to cough. >> doesn't just happen to me but also to the likes of hillary clinton. >> i sneeze, i cough, people have a heart attack in here, the gallery. don't cough. >> yeah. all right. diageo says it made a good start to the financial year. the drinksmaker said it was confident of achieving target of mid single digit top line growth. the british company identified scotch whiskey, u.s. spears and the indian market as key drivers of growth. we need to take a quick break. check out world markets live, our blog that runs throughout the european trading day. lots of good stuff on there. send us a tweet with your comments, questions. we're running a poll on our blog on whether or not the bank of japan is moving in the 9 right direction. we can tell you, after around 400 votes, the view is split down the middle. have a vote to yourself why not.
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. welcome, you're watching "street signs." i'm carolyn roth. >> i'm louisa bojesen. our headlines this morning. >> european bank stocks shoot higher spurred on by the bank of japan's policy yield overhaul. >> they are aiming to keep ten-year bond yields at zero percent and is lowering off bringing rates lowerments. >> inditex sets itself apart by beating european rivals expectations for the year. >> i accept full responsibility for all unethical sales practices in the retail banking business. i'm fully committed to fixing this issue.
>> and the ceo of wells fargo is accused of gutless leadership as he's grilled on phantom accounts and speculations swirling that warren buffett could abandon his investment in the bank. good morning. quick peek at u.s. futures. the s&p 500 seen up by 8 points. the dow jones could rise by 66, and the nasdaq could add 20 points. this after tepid trading ahead of the fed decision. the dow was up fractionally, the same for the s&p 500 and nasdaq. major averages closing around session lows. expect more caution in today's trading session ahead of the fed decision later on. want to show you what's happening in the markets. that's where all the focus is on given that we saw the tweaking of the boj's can qqe. we have another term, yield
curve control. we did see strengthening in the dollar/yen above the 102 handle, but we've come back down. now that has really fizzled out. only higher by 0.1%. euro/dollar really unchanged. the cable pair has fallen back below the 1.30 level, in part because the bunds chief said britain could lose passporting access in case of a brexit. many concerns there around brexit. want to show you the bond market. in japan we saw the ten-year steepening a tad. the yield still in negative territory. in fact, it did climb back into positive territory for a few minutes for the first time since march. that once again has fizzled out quite quickly. the ten-year german yield just barely in positive territory. by in large seeing some steepening here in terms of the
long end of the curve in the rest of the world, not just japan. european marketing are reacting like this green across the board. the ftse 100 charging ahead to the tune of a half percent. by in large, risk sentiment is positive today. that's driven by the advance in the banking sector and some of the insurance companies thanks to the boj. >> i think we need to talk more about that -- those precise points. eric moore is with us, fund manager. good morning. >> good morning. >> the bank of japan and its moves, does that change anything for you? >> i run a uk equity, so that's far from my concerns, but it is interesting. japan is the furthest along the journey of financial experimentation, extreme monetary policy, so they are a bit of a window of where we are in europe. so they have that comprehensive review. there was a school of thought
they might admit that monetary policy didn't seem to be working on. so many bonds have been buying back their own equity. and still they have deflation, so maybe they will say this doesn't work, we'll do something else. in fact they said this doesn't seem to be working and we'll do more and be more surgical in what they do. they still believe in their power to engender growth through monetary policy. the read across europe is that its monetary policy in the absence of fiscal policy in the absence of structural reform. >> do you think the european central bank, the bank of england, are they looking at japan as the example they don't want to be and could be getting the opposite policies here? >> the ecb certainly is worried about negative interest rates. and that's flagged as a concern. potentially damaging for the banking sectors.
very hard for banks to make money with zero interest rates. if you're trying to get the economy to have some sort of growth, you do need a healthy banking system. i think the idea that now negative rates are hopefully off the table is probably positive for the banking sector. you know, you have seen european banks bounce a bit today. that said, the japanese, they're hoping to get it from flat to ten years flat, that's still a tough environment for a bank to make money. taking -- if we can get negative rates off the table, that's a small positive. whether the policy overall will be more productive, i still doubt. >> you brought us a couple stock picks. you do like producers, is that because inflation is coming back or because central banks are failing in attempts in. >> it's a bit of a hedge against the extreme monetary policy that we've been enduring for the last eight years. it was supposed to be special measuring, dramatic response to
the credit crunch. here we are eight years later, we are still having discussions about a flat yield curve, no growth, and we're having more and more printed money. i have about 3% of the fund i run exposed into gold equities. it's a bit of a ledge at some point against the markets saying this policy doesn't work. all we've done is print a lot of money. doesn't seem we're there today. because we had more policy response and the markets are in the same way that pavlov responses, more stimulus is good. at some point we might get a view that we got more stimulus, it's not working. then what? >> you like some construction plays. once again, is this based on the premise we will be seeing more infrastructure spending on the back of brexit? >> bringing it back to the uk, a similar position. we had this extreme monetary policy but we have not managed
to get significant gdp, we have a new government. the autumn statement pending, i think there's -- i'm beginning to think we'll see something in addition to monetary policy, so some fiscal response, either government will do something in terms of taxing and spending. quite tricky because the government really doesn't have money. the question mark is where does the money come from? that gets you back to the idea that there will be private sector involvement. for companies that can help the government build infrastructure, schools, roads, houses, there may be some companies well placed. i think jong lang group is interesting there. we used to have the pfi in the uk, we may go to pfi 2. >> to mention, your fund does own all the stocks that you mentioned here. >> yes. >> so glaxo, shell?
>> i like the big internationals. i like at the mine income fund, we like stocks that have a good dividend yield. these big international companies have really benefited from the weakness in the pound that we've seen since the referendum vote. so, for me, as a sterling-based investor, those dollar dividends are worth more to me and that will support a good increase in the dividend that we can pay out to holders. there's been quite a strong trend in the uk market that the brexit vote didn't really matter. i think that is because, well, it's true nothing bad has happened, but it's going to be a long road. i would rather be exposed to international learned lenders. the u.s. has charged the man
accused of planting bombs in new york and new jersey. evidence filed yesterday reveals new details about ahmed khan rahami. >> donald trump used money from his charity to settle lawsuits, and he may have violated laws which prohibits peoples from using non-profits to businesses and themselves. both candidates are campaigning in battleground states on wednesday. trump will be in ohio with mike pence, while hillary clinton will travel to florida where she's expected to lay out her blueprint for an inclusive economy. let's get out to tracie potts from nbc news in washington. want to come back to that
"washington post" article about potential self dealing. how big of a deal is that? >> it's interesting, if the new york attorney general, who is a democrat, or an irs or another entity finds he did that, it could show trump was mixing money where he wasn't supposed to be. the details are interesting. the two largest cases involved are one where trump got a fine from the city of palm beach where he has a home. because he a flagpole that was too high. he refused to lower it. he refused to pay the pine. they finally settled. he gave money to a charity. it was a personal lawsuit, but the money for the charity came out of the foundation and that money is not supposed to mix. the other which was larger, really interesting case, he had a charity golf tournament at one of his golf properties, and someone made a hole-in-one and was supposed to win $1 million. he refused to pay it. saying it wasn't long enough. they went back and forth in court. he agreed to settle.
but again the money he agreed to settle with, giving money to a charity instead of paying a fine, that money came from his foundation, which essentially prevented or voided his company or himself from having to pay the money, therein lies the issue. >> also portraits of himself worth $20,000. thank you very much for that. tracie potts from nbc news. well, vtb bank was one of 11 russia-related financial institutions that received an outlook upgrade from standard and poors. they lifted their sovereign outlook saying they saw a stabilizing economic environmentibility environment in russia. geoff is in russia looking at this. how important is this upgrade? >> i think it helps. it's one more part of a jigsaw puzzle that suggests that the
banks have come a good way now from that crisis period immediately after western sanctions were imposed. the fact that the ratings agencies are being a little more benign towards these institutions is encouraging, i guess, for international investors who may be looking at russia as a place to put some money to work as they try and get some yield on their cash. the whole issue for the banks really still remains what happens with sanctions here? this ties neatly back into the conversation you were just having with tracie potts about the election campaign in the united states. here in moscow you get the sense that there is less antipathy to a donald trump victory in the united states this year. some here are positively warming to that idea. so when i spoke with mr. kostin,
i asked him whether he thought mr. trump winning in the election might mean sanctions get removed more quickly. >> it's hard to say. we know very little about mr. trump. we know more about ms. clinton, she was in the government. it's hard to say. we feel mr. trump is using less of this, which is good. i don't think any leader should use any anti-russian rhetoric. there are discussions about russian influence, frankly speaking, normal people, ordinary people like me don't very much care who will be the president of the united states. we don't make any reference. we shall see.
it's up to american people to elect. then i think to build up relationship with russia. any president should deal with russia. we shall see. >> is this just american paranoia then focusing on the hacking of political parties, finding a trail back to the kremlin somehow? >> i don't think paranoia, for us it sounds a bit funny, at least that moscow can influence one way or another the elections. it's a little bit strange for us. i don't very much believe in this. of course hackers may come from russia or china or america, i don't know. but i don't think seriously anybody can say that these kind of people can really influence the elections. i think that is very much now depending on the candidate themselves, how they cope with the debates and other things. i think they're coming neck to neck at the moment.
it will be decided at the very last moment. >> well, mr. kostin's attempts to play down the whole issue notwithstanding, there is close attention being paid here in moscow to who becomes president. a sense that in the closing days of the obama administration relations between moscow and washington are starting to get a little frostier. in recent days we've seen the undiplomatic exchanges around syria and the tragic bombings that have taken place there. and there are other issues that have become irritants in the relationship recently. not least claims that the democrats were hacked by russian hackers. of course the whole issue of the olympics. still people here in moscow feel sore about the way they feel the international community treated them around the whole drug taking issue. on many fronts i think there is
a view here that maybe it's hillary, maybe it's donald, at least it will be a change from what there is currently, which the people here don't necessarily feel is working in the best interests of warmer relations between russia and the united states going forward. back to you. >> thank you very much for that. moving on, president obama makes his final speech at the u.n. general assembly. >> the u.s. president's criticism of donald trump's plans to build a wall on the mexican border saying that would only imprison itself. theresa mae said the uk will not back down from issues that need international cooperation. >> the british people voted to leave the eu, they voted to turn inwards and walk away from our partners in the world, faced
with challenges like migration, a desire for greater control of their country, and a mountain sense that globalization is leaving working people behind. they demanded a politics that is more in touch with concerns and bold action to address them. but that action must be more global not less. [child speaking indistinctly] announcer: are your children in the right car seat for their age and size? is the seat supposed to be forward-facing or rear-facing? did they move to a booster seat too soon? it may be too late to check when you're on the road. [blaring car horn and skidding] fortunately, you're on the couch. everyone thought i was crazy to open a hotel here. everyone said it's so hard to be a musician, but i can't imagine doing anything else.
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. welcome back to "street signs." in entertainment news, brangelina has broken up sending shockwaves throughout the entertainment world. it's an ugly end for angelina jolie and brad pitt, as she filed for divorce marking the end of an 11-year relationship and two-year marriage. jolie said she made the decision for the health of the family.
she is expected to seek custody of their six children. very, very sad story. i mean, there is really no business angle to this. the only thing i can remotely see is, wow, $500 million in combined wealth that will now need to be split up. how do you do that? >> it's more the impact that people like this, fortunately or unfortunately, have today in terms of the celebrity world that we live in, right? i would hate to go through a divorce under normal circumstances, to do it publicly, wish them the best. u.s. lawmakers grilled wells fargo ceo yesterday. john stumpf said he was deeply sorry and accepted full responsibility for all unethical sales practices in business. but many were unmoved by his apology including senator elizabeth warren who called for a criminal investigation into the scandal and told stumpf he
should resign. >> i'm not asking about regional managers i'm not asking about branch managers. i'm asking if you fired senior management, the people who led community banking division, who oversaw this fraud or the compliance division that was in charge? >> kerry toll -- >> did you fire any of those people? >> no. >> no. so you haven't resigned, you haven't returned a single nickel of your personal earnings, you haven't fired a single senior executive, your definition of accountable is to push the blame to the low-level employees who don't have the money for a fancy pr firm to defend themselves. it's gutless leadership. >> that was some very aggressive questioning. >> wells fargo's largest shareholder, warren buffett, may be walking away from the bank. it was noted why stumpf was on the hill, it was announced that
buffett's investing deputy was joining jpmorgan's board. bove said the move wasn't a coincidence particularly since jpmorgan doesn't own stock in jpmorgan. the fed is expected to keep rates steady in its statement later today. investors will be focusing on any hints that the u.s. central bank might proceed with the hike later this year. speaking exclusively to cnbc, the chairman of ubs said the relevance of a fed hike was less about the timing and more about the message it sends to the markets. >> i think it really doesn't matter in the bigger picture when the fed moves, as long as it's clear they have a trajectory where they continue to respond to a strengthening economy with increasing rates. there should be no doubt the fed will raise rates if the economy is in a better place. tim speiss joins us.
good morning. thank you very much for being with us. so we heard there from mr. weber about the course that this potentially could turn. is this more about the market or the actual move at this stage? >> right now it is all about the messaging. the federal reserve has been consistent saying it wants to see inflation at the 2% target rate and that has not yet happened. we saw in august and in july manufacturing and industrial production down. so you have negative growth there. we have a 10% under employment, a key fact. 10% under employment. while unemployment is still moving along at 5% target range, now you see what's happened with the bank of japan. it's unlikely now that the united states would be raising rates when the bank of japan also in trying to create stable,
they're trading at negative interest rates right now. it appears there will be no rate increase and we'll go back again in december and see what happens then at that month's board meeting. >> do you think money will continue to flow into u.s. equity markets up until we get this hike? >> well, certainly in speaking with our clients they're very bullish about the u.s. economy and the u.s. equity markets. however maintaining a diversified portfolio of equities and also long and short bond components is a fairly good portfolio design right now. >> what proportion of your clients are concerned about the bond bubble and whether it's about to burst? >> in speaking with our clients, they realize there will be an interest rate move into positive territory.
but just not yet. they're behaving that way in how they invest. our kleins are long-term s acl investors, they have a 10 to 15-year investment horizon. they're not looking to micro manage portfolio holdings, and they are mindful that rates will be increasing. it's not a question of if but when. >> what, to them, is the bigger issue? is it the next fed hike or the u.s. presidential elections? what are you hearing? >> for many reasons, including any potential tax legislation, looking at the presidential election has attention, certainly. portfolio designs, not much so. it's about the larger structural issues, healthcare policy in the united states, tax policy in the united states. more macro issues. >> thank you for your time. tim speiss.
u.s. futures a quick glance. as we head towards the u.s. open in 4 1/2 hours. the imply ied perception is up higher. the boj is targeting the yield curve and that is benefiting many financials and that is the best performing sector across europe. the banking stocks are looking like this. there you go most of them higher except for deutsche and rbs, those are very, very specific reasons. that's it for the show. i'm carolyn roth. >> i'm louisa bojesen. >> "worldwide exchange" is up next. would you help me make art? ♪ each one of our journeys ♪ keeps us young hey, i have an idea!
. good morning. breaking overnight, the bank of japan announces a major policy overall. the details and global reaction coming up. it's decision day at the fed. we'll talk expectations coming up. and mylan's ceo heads to capitol hill ready to face a grilling over the epipen. it's wednesday, september 21, 2016. "worldwide exchange" begins right now. ♪ good morning. welcome to "worldwide exchange" on