tv Street Signs CNBC November 23, 2016 4:00am-5:01am EST
welcome. you're watching "street signs." i'm louisa bojesen. >> i'm carolin roth. a record session stateside failing to light up european stocks as the banking sector underperforming, we're led down by italian lenders. sunny times for thomas koch as they announce their first dividend in five years. a full recovery, vinci shares heading to the top of the
european particular kmarket as the last of the losses from a fake statement release. and the uk chancellor has not delivered his autumn statement, but already the shares in state agencies are plunging over fears that he will announce a clamp down on letting charges. good morning. want to bring you eurozone november pmi numbers. by in large they beat expectations. european business growth at the fastest rate this year in november. looking at a composite pmi print of 51.4. manufacturers leading the strong performance. if we look at some of the regional numbers, germany an france seeing quite a nice pick up in the services side of the economy, that bodes well for the
fourth quarter gdp numbers. for germany seen at half of 1%. the german manufacturing component was softer than expected. euro/dollar 1.0612. not a huge reaction, but bunts are rallying regardless of the data. quite a reversal. >> at the same time keeping in mind we have so much data state side today as well. some of the big key pieces being durable goods, weekly claims, home prices, manufacturing, pmi, consumer sentiment, new home sales, and the fed minutes which will probably be the least interested. >> they're outdated. >> everybody talking now. all the fed officials saying we'll see hikes. >> did you see what's priced into the market? a 100% chance of a december rate hike. i don't remember ever seeing a 100% chance. >> 100% chance. think if they don't do it. >> what if we're wrong?
>> exactly. >> european equity markets are pretty flat at the moment. opened slightly higher. flat lining a tad. just a bit more positivity versus negativity out there now. that's reflected on the main european marketing, showing a slightly more positive picture, but not by much. just flat lining with the ftse 100 outperforming by 0.6 percent. being weighed down by some italian banks. when looking at the sectors, seeing buying into basic resources, real estate, oil and gas, banks down by 0.7%, insurers and autos. this coming off the back of a stellar session yesterday. wall street setting new records. the dow going through 19,000. >> let's get another voice on this with steve macklo smith from jpmorgan. what do you make of the rally
state side and the lack of conviction in the european markets? we look at the german dax, the ftse, that's rallying because of the currency effect. europe has not made much headway. >> it's an interesting contrast. one of the issues we're facing is that the fundamental tailwinds in europe are being overshadowed by the political headwinds. people are concerned about elections next year. in the states, people were concerned about the elections, we saw volatility once mr. trump one, since then they are focusing on the potentially positive sides of what he might do, infrastructure and stimulus for the u.s. commodity. it has had a steepening of the yield curve, and in europe the financial cyclical sectors have done well during that period, even though the headline index has not moved that far. our expectation is that fundamentals improve into next year, but the politics is a bit
of a wild card. >> what about the u.s. then, i saw commentary when the market is at all-time highs t should be traded as such. the bulls are in control. aren't there pit falls to this? >> there are potential pit falls because we don't know the details of policies that will get announced once mr. trump is installed in january. one other point to make is positioning getting into the election would have been relatively conservative because people would have found the result difficult to call ahead of time. so there's probably some money put to work. >> when do you think things get too expensive, especially in the states? star mine data says the s&p 500 trading near 17.3 times earnings, the ten-year median close to 4 1/2. does there come a point when it doesn't continue to put money into equities? >> depends on the view of the people taking on earnings. if it's 17.3 times forward
earnings, the expectations is probably an infrastructure stimulus package would be good for large portions of the stock market. you have to remember arriving at a fair yew of what the price earnings should be is difficult where interest rates are so volatile. should you post it off the low interest rates we've seen over the last 12 months or expect a normalization of the yield curve, which might put pressure on the multiples. >> donald trump has not yet taken on the official presidency role, that comes the beginning of next year. how much do you think is priced into the market and especially looking at things like doing away with tpp, and also the infrastructure measures you talked about. obama promised infrastructure measures as well, he didn't. trump is doing the same. it takes more than just stating they'll do it to get these things lifted off the ground. they're huge measures. >> it's difficult to say how
much is priced in. i do think the rotation sectoral sectorally, there's been a light back away from the long duration sectors which have been favorites, and much more into financials and cyclicals, banking indexes with new highs. a steepening yield curve is good for banks. at what point will investors be worried about the strengthening of the dollar again? we saw the increase stall because we have not seen much movement in treasury yields. still at 13-year highs, in past years when we were close to those levels we saw a selloff every time. >> that point of view on a long-term basis, we just published our long-term assumptions book, we note that on a purchasing basis, the dollar looks overvalued. it could go further. we have yet to see significant impact on estimate revisions on
the u.s. stock market. nothing significant yet. if people started to have questions about improvements and profitability next year, yes that would be an issue. also coming back to your point of how there's a likelihood of a 100% fed hike priced in, if there's any scope for that 100 forecast to be shaken, maybe it would come on the dollar side. i think the likelihood is that the fed will go simply because now the communications market is so important. markets don't want to be surprised by monetary policy. they want to know in advance. it's a comfort blanket, what the central bank will do before they do it. >> steven, thank you very much for your time. >> before you run off, a quick question, which i don't know the answer to, but barry writes in and says can trump single handedly scrap tpp on the first day when he takes office?
we are talking about 12 countries, they account for 40% of the global economy. congress could block him on this, right? >> i'm slightly outside my comfort zone here, because i'm not an american -- >> i realize that. trump can indicate he would like the tpp not to go ahead whether he can single handedly veto it, i'm not sure. >> he can take executive actions, right? obama has done that many times. >> he has. i'd love to know the answer to this. we'll look into it. >> i suppose it's a question really of whether the republicans in congress and in the house want the tpp go ahead. >> yeah. e-mail the show. get involved. streetsignseurope@cnbc. get your questions through like barry did you can find us directly on twitter, @louisabojesen. >> or at @carolincnbc. coming up, barring post brexit, we'll look at philip
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welcome back. you're still watching "street signs." chancellor philip hammond will deliver the first budget since the june 23rd brexit vote. foxtons and countrywide have been trading sharply lower on the thoughts that hammond will clamp down on tenant fees. jeff is in westminster. how harsh do we think the measures will be in this budget statement? >> harsh, you say, i suspect not particularly but maybe for the estate agents themselves. you will find few people in this country outside of the
shareholders outside of the state agencies who would shed tears over this issue of tenancy fees. it's been a problem for some time as far as this industry is concerned. i think people will be happy to see the chancellor actually dealing with it. tenants often feel that they are squeezed not only by the increase in rents, but by the agencies who gouge them, particularly on renewal fees, which does at times seem unfair. setting aside the crocodile tears for the estate agencies, let's talk about what else might be in the budget. one of the issues that i think could cause some political issues is how far the chancellor goes on easing the pain on those called jams, those struggling to make ends meet.
jonathan is with me. what do you think the chancellor can do to help this group of people who are working, but effectively just about keeping the wolf from the door? >> these are the people who should be at the front of the queue, people going out to work, on low incomes, inflation rising, they'll be the ones getting more pain in the future. there's a big support for those people scheduled to take place in the autumn statement, that's the universal credit, work allowances, how much you get to see of your own money before benefits are taken away. what we heard this morning is there will be a tweak of the taper, which will be changed. but that change, that u-turn is not going ahead. so anything helping the jams will be poor, if the number one group of people hit by the announcements already made by the government are not helped.
that is very disappointing, unless we're wrong. >> would the chancellor be better advised to focus on stability for the economy as a whole? we know that brexit must now be enacted starting from march of next year. anything that retains confidence in the economy and encourages businesses to invest surely is better at this stage than a giveaway to anybody in our society. >> i would certainly like to see a new set of fiscal rules, i think we'll get new fiscal rules. i don't think anyone thinks there's a surplus coming. yes, there's been a big impact from the referendum and the uncertainty that's caused. things weren't going too well beforehand. it's been a long time since i heard a conservative chancellor say all the targets are on track what we want is a proper framework for investment, not gimmicks or high profile announcements, getting this country's level of investment back up to where it should be had we not had the financial
cris crisis. it's not just about the terms of the deal with brussels, but the deal we get for the future of the uk. we've seen six years of failure, we have to try something different. >> a lot of talk bin creasing spending in infrastructure, perhaps some money for r&d, a house building program. 40,000 homes in the frame. would you widely welcome those moves? >> i want to see greater investment. some of those things we'll find reannouncements. but high profile announcements and gimmicks are all well and good. will they be change, is that bring about a new set of rules? new fiscal framework for the economy that allows serious investment to occur? we all love the high profile projects. what you need to do if you're the chancellor, make sure the overall framework for how the economy performs operates in such a way that it gets the big picture right on investment.
we haven't had that for quite some time. one of the worst thing charles osborne did was slash investment. that's why he failed on his own targets and why we haven't got the economy where we want it to be. >> to focus on the labour party for the time being, the international business community is still worried about john mcdonald and here domestically people are concerned that you're not presenting the kind of opposition to this government would be appropriate at this time. how do you react to that? >> i think since the end of the second leadership election, labour has been much more united and effective in the house of commons. in terms of the attitudes and business of the shadow city ministers who spend time with business, if you look at what labour said, similar to what the cpi, get investment up, get skills right, make sure we're not turning off the country's access to the top talent around.
people recognize concerns on the immigration end on the lower level of the market, but they want to turn things around. we have a competitive rate of corporation tax in the uk. they worry about access to talent. increasingly what we're saying is the same as the business community. that's a real significant departure. we're on the right side of this. >> there's been some talk, to come back to the work force, there has been some talk of increasing the minimum wage modestly, and also lifting the threshold before you have to pay tax to about 12,500 pounds. surely you would welcome those, even if they're coming from a conservative. >> i welcome the chances to the personal allowance, the threshold for the higher rate. things have been difficult for people this this country. let's give them some support where available. for people on the minimum wage or living wage, because of the
universal credit changes, they're still going to be worse off despite that increase. that's why it's such a mistake. if you want to help those people, everybody recognizes the people who need the help, let's change that. there's enough room in this autumn statement to change that decision. the government recognizes it because of what we've heard so far in terms of tweaking it. they should go further. >> in the absence of what's perceived as credible opposition to the government at the moment, there have been some rumors that tony blair might come back and start fighting in frontline politics. how do you react to that? do we need tony blair back? >> i'm a fan of tony blairs, like all former labour prime ministers, he was a successful leader. i can't imagine him coming back to frontline politics. any prime minister in this country should have a say on the future direction we should take, i don't think tony is interested on getting back on the frontline for a statement like that. we should respect anyone who made that big contribution to
public life, but times do change. i don't think tony would want to come back into the active involvement he had in the early part of his career. >> jonathan, thank you very much for being with us. jonathan reynolds. you'll forgive me for getting wind up in british politics for a moment, but i think we all want to know what tony blair will do next with his life. we're here all morning, we'll have the speech proper at 12:30 local, 13:30 cet. then we'll have reaction. back to you. >> i totally agree with regards to tony blair. seems like he's coming back, right? that's the indication. we'll see geoff later. >> we'll be covering the statement, too. >> exactly. >> an afternoon together. >> yeah. it was a roller coaster ride for vinci yesterday as shares fell as much as 20% on a fake statement. the french construction firm managed to issue a denial to
stock market regulators which saw shares recover most losses. the fake release said the company fired its cfo after accounting regularities. investigations are still yind way to determine the exact source of the hoax. this happens time and time again. >> does. >> in the u.s. we saw two high profile cases of that. i don't remember a case like that happening in europe, but -- >> no. i would be too scared to take initiative to do anything like that. the trail it must be pretty obvious these days with regards to who instigates something like that. >> yeah. >> if you're putting out these rumors. lufthansa has been forced to cancel roughly one-third of all flights wednesday as germany's pilots union goes on a two-day strong over a long-running pay dispute. this is the 14th strike to plague the airline in the ongoing dispute with this cockpit union. and lufthansa shares on the back of this news, not seeing a huge negative reaction.
most airlines maybe reacting also to kind of the underlying growth momentum and things like that. >> or price overcapacity. let's move on. let's talk about vivendi, announcing theypurchased telecom italia shares. they hold 23% of the italian mobile networking company as the vivendi chairman seeks to expand vivendi into a european powerhouse. and generali is holding it's investor day in london today. julia spoke to the ceo and asked him about the looming italian referendum. >> yes, people are concerned about the referendum. i don't know what the results will be, by the way.
nobody knows what the results will be. we need stability in italy because we need to continue the reforms that have been started by this government. this is important for italy, for the country, important for europe as well. important for the business. i'm quite positive, quite optimistic, because whatever happens in the end the reforms will be made. >> with or without renzi? >> i don't know about this. but the reforms have to be made, so they will be made. this is true for italy, but not only for italy. mind you that politics slows down or accelerates the reforms, but at some point they will have to be made. they will be made in italy as in any other place in europe. >> thomas cook's full-year profit topping analysts estimates coming in at 308 million pounds, in line with what we saw earlier.
the travel company announcing plans to pay a dividend of 0.5 pence per share. thomas cook saying despite a slowdown in turkey it was inspired by fight chore demand. infineon reported a 2% drop in profit in fourth quarter missing expectations. infineon raised the midterm operating margin thanks to gains from a stronger dollar. hewlett-packard shares falling by more than 2% in after hours trade as the company delivered a cautious outlook on earnings. the fiscal fourth quarter numbers met expectations on the bottom line and beat on revenue. hewlett-packard enterprises beat the -- the shares slipped as it beat on earnings but missed on the top line. josh lipton has a full wrap up of these numbers from san
francisco. >> invest verse been piling in to hp inc. heading into this report. that stock was up nearly 40% in just the past six months. eps of 36 cents in line with estimates. revenue, though, 12.5 billion. that was better than expected. as for the outlook, hp inc. is guiding for fiscal 2017 eps of 1.55 and 1.65, in line with what finlt financial analysts predicted. a 4.3% operating margin. printing net revenue, down 8%, though total hardware units were up 1%. i did have the chance to chat with hp inc.'s ceo, dion weissler, as for that pc market he said it is broadly challenged but is confident that hp inc. can keep outperforming the market by focusing on the profitable end of that industry and that's where they continue
to see opportunity. he keeps seeing operating margin force that business between 3% and 4%. as for the printing side, he said that recent samsung acquisition should well position his company in the $55 billion copier market and he expects supplies to stop declining in fiscal 2017. bottom line, he said pc and printing markets are challenged, but hp inc. can navigate the markets. his product portfolio is the best it has been in decades. josh lipton, cnbc, san francisco. our colleagues in the u.s. will be speaking with meg whitman, the hewlett-packard enterprise ceo at 3:00 p.m. cet. keep your tweets coming through, @carolincnbc and @louisabojesen. check out world markets live as well, our blog. we'll be back on the other side of the break with much more. we'll be talking about autumn statement, the u.s. election and emerging markets.
welcome back. yes, you're still watching "street signs." i'm carolin roth. >> i'm louisa bojesen. your headlines this morning -- a record session stateside failing to light up european stocks as the banking sector yupd underperforms. >> fees fallout. philip hammond preparing to outline his budget plans. sunny times for thomas cook as they announce their first dividend in five years. full-year estimates are at the top. and russia says it will attend consultations of opec but not be part of the ministers meeting. good morning. they talk about the fear of big numbers. yesterday in the u.s. a big number, the 19,000 level, that was taken out for the dow jones.
>> i have to say, i'm surprised europe has not seen more buying on the back of these. it's a huge rally. these are huge levels in the u.s. >> all this political risk we're seeing in europe. just a week away from the italian referendum. we have the french and german elections next year. our guest from jpmorgan pointed out just that fact. >> yeah. just a couple months ago we also thought that europe could outperform the u.s. because we have further to go to catch up with this massive rally happening stateside. >> i guess we need more ecb buying. that's the panacea. u.s. futures, the s&p 500 seen up by roughly two points. the dow jones set to add to yesterday's record gain up 20 points. the nasdaq seen up by 10 points or so. just want to point out that u.s. equities once again finished at all-time highs for the second day running. the rally in energy stocks softened a bit, but the outperforming stocks or sectors
were retail and telco. plenty to trade on today. durable goods and the fomc minutes. we are not seeing the same extent in the rally, the cac 40 is marginally higher, xetra dax is flat, and the ftse 100 is outperforming. basic metals and resources are driving this market higher. we are at 1 1/2 year highs when it comes to basic resources, benefiting from higher metal prices, for the ftse mib, off by 0.7%. why? the banks. there is a report out there saying the ecb might be asking for higher coverage for some nonperforming loans, also the continuing jitters about the italian referendum next year. here's the story on currency markets. little trade in the yen, there's a holiday in japan. euro/dollar at 1.0607. we are seeing the dollar
strength stalling because yields are pretty much anchored at 2.2 or 2.3%. and keep an eye on pound sterling, 1.2371 ahead of the autumn statement. >> speaking of that autumn statement, the chancellor, philip hammond will be delivering the uk's first budget since the brexit vote. geoff is with us once again from westminster. we're looking to see how they're changing their budget plans to respond to this brexit vote. >> i think it's fascinating. just looking at the market boards as we have just done, to see that the ftse is up by 0.8%. while there's still a bit of political risk running into the chancellor's statement today. but is he going to say anything that is going to irritate or frighten international investors and domestic investors in the
uk? that's my question for simon wells. he joins us. chief european economist from hsbc. given the state of the uk economy currently and fears around brexit what do we need to see from the chancellor? >> my advice is don't do anything reckless. don't forget brexit will be a long and uncertain process. he has second bite of the cherry in the march budget, the main budget. so far the data has been all doing well in the uk. but i would be readying my plans for a major spend in march if it looks like things will turn down. we wrote a report back in august, when uncertainty rains call for canes. i think businesses will be paralyzed by uncertainty as we get deeper into next year. the government has to be ready to step in and spend more. but for today, play it safe. wait for a bit more of the fog to clear. >> he doesn't have a great deal of room to maneuver on the fiscal side. talking about current debt in
the uk for the government of 1.6 trillion? what's that, over 80% of gdp. we are relying on the kindness of strangers to support the government's borrowing at this stage. he can't afford to spend too much more in a kenzieian way without frightening bond investors. >> that's why you have to play it safe this time around. no need to take that risk. the problem is the automatic fiscal stabilizers. for every 1% off the gdp level, borrowing tends to rise half of gdp. add to that, the welfare cuts were dead in the water within a week of the march budget this year, you have at least 1% of borrowing higher than you had before. so very little wiggle room, absolutely. what do you think the chances are of the uk managing to defy the pessimists and deliver growth next year in excess of
2%? >> i think if we get a clear strategy about what we want and a welfare-based analysis of where we will place ourselves on the soft card brexit and why, and draw up a target list of where we'll aim for free trade agreements based on trading opportunities, both import and export, yeah, it's possible we defy the consensus as is. whether we get to 2% that would be quite a remarkable performance. but certainly -- the problem be is at the moment you look at the press today, everything is actually -- there's still no more clarity about what the strategy is going to be. >> clearly built into the preannouncements, there's been the suggestion that the chancellor feels he needs to ease the pain for those at the lower income end of the working community here in the uk for fear that brexit related inflation starts to make their lives more difficult.
do we need to question those assumptions that inflation is going to rise through next year? >> yes, pump up the jams. we don't need to question those as assumpti assumptions. the cpi basket is one-third. trade weighted sterling falling about 20%. prices on the back of that will rise 4.5% spread over two years. it's pretty mechanical. unless firms are really going to squeeze margins and wages, we will see a reasonably large pick up in inflation. of course that does erode real incomes and lead to a slowdown in spending. the alternative is squeeze nominal wage growth. the result is still the same. wage growth will slow. >> two things that dog this economy. one is the lack of capital investment in businesses, the other is productivity. do you think we get anything today that would encourage a
pick up in either of these? >> small stuff. we knows there going to be spending on science. that takes a long time to deliver a dividend. but it's good news. spending on roads. in government there's a lot of shelf-ready excuses for not spendingprojects. maybe what they're doing is readying the war chest for march and playing it safe today. >> just the markets are fixated on bond yields. i know this is not your job within hsbc, but there's ra view we could see gilt yields rise from here in line with treasuries, and some european curves. do you think that will happen? >> i think you sort of mentioned it earlier when you said we're relying on the kindness of strangers. we need a lot of capital inflow.
so all uk assets, gilts included, have to find a level of yield that makes them attractive. today, borrowing is much larger even though it's going to be ab relativity conservative government budget if all the leaks are correct. but still, what you've got to remember is funding that deficit is going to be difficult. but the long-term is -- the long-term of bonds is most interesting. why have forward rates risen so much? we've been talking about low shis, risk-free rates all over the world. the demographics, none of that has changed. in the longer term, all the slow-moving structural factors are down. >> and just to talk about some of the other issues for europe briefly, the uk to a certain extent has benefited from the distraction of donald trump while we wait to see what brexit
means. do you think the uk may benefit from a renewed crisis in europe next year if some of these political events go badly? >> yes. if the uk is still seen as a relative safe haven, that would be a further fact to depressing gilt yields. back in september or october, we were saying all the focus is politically on the uk. if the americans vote for trump that will switch that back. the mantle is now to yueurope. we have the italian referendum coming up fsh, if there's a mas rejection of renzi's reforms, he may be forced to resign. add to that the french political election, the german elections looming in investors minds. the political uncertainty mantra will be passed from the uk to the u.s. to europe. >> simon, thank you very much for coming to see us here outside the houses of
westminster. let me wrap up on that. so we still have a few hours to wait here until we see the whites of the chancellor's eyes, but the expectations are limited room for him to make major giveaways, probably a few concessions to business and encouragement for the so-called j.a.m.s., those just about making it. >> is he still carrying that red suitcase? is that still a big deal? >> absolutely. i'm not sure whether we see it for the autumn statement. it's a staple for the budget proper in april. he will use the little red case? >>. >> no, that's budget proper. we don't see it for the autumn statement. a lot of people think this autumn statement has actually become something bigger than it should be. back in the old days, when i was a young man without gray hair,
we never used to spend very much time talking about the autumn statement at all. it was tap on the tiller, and a revisit of some of the economic projections. somehow it's morphed into a policy event in its own right. which we have to take more notice of no. i guess this one will be a landmark, just because it's the first for this chancellor and it's the first since we had the brexit vote. >> thank you very much for clarifying all of that. thank you very much for that, jeff. it's true. in other countries, germany, the west, netherlands -- >> a non-event. >> yeah. >> there are two budget publications that the uk does per year, they're saying they're not super keen on that. and it should be down to one. >> i would be in favor of that. we'll have plenty more coverage of the autumn statement if you're not tired of it yet, and we'll bring you the chancellor's speech live at 13:30 cet. donald trump's charitable
foundation admitted to tax officials it may have broken laws against self dealing according to multiple reports. in tax filings from 2015, the trump foundation checked yes to a box that said it transferred income or assets to a disqualified person. according to the "washington post" penalties can include excess taxes and the charity leaders can be required to repay money. the president-elect, donald trump, who in his campaign rom missed to cancel the 2015 paris climate agreement has now said he has "an open mind about the deal." in a wide-ranging interview with the "new york times," trump offered that there's "some connectivity between global warming and human activity." the president-elect also defended his business dealings telling the times he had no legal obligation to separate the trump organization from the white house. i think a lot of people will be very, very -- trump supporters will be very, very disappointed by the u turns he's making,
including also he said he wanted to send hillary to jail, follow up on the e-mail things, he's now saying he's not. some angry people on twitter. president-elect trump is at his club in palm beach to celebrate thanksgiving with his family. it does look like the president-elect is inching closer towards naming his cabinet members. edward lawrence is in washington. what do we know? >> reporter: we know there could be an appointment as early as today. we understand that south carolina governor neikki haley could be tapped as the next u.n. ambassador to the united states. they're looking at mitt romney as a possible secretary of state. he's also saying -- donald trump tweeting out that dr. ben carson would be a good housing and urban development secretary. so these announcements coming quickly after a parade of people
going in and out of trump tower for these interviews. donald trump talked with the "new york times" editorial board burying the hatchet in that case and saying he would not seek a special prosecutor looking into hillary clinton's e-mail controversy. so, again, donald trump walking ba back. some of his critics may be upset about that. >> edward, thank you very much for that. it wasn't just the experts surprised by donald trump's victory two weeks ago, short-sellers were also caught offguard from his upset, and they're suffering the consequence consequences. >> it's no secret the stock market surged since donald trump's election, but the stocks who had the most shorts against them had the biggest rise. take the russell 3000, break it into ten groups of 300 based on which companies have the most
short interest, the best returns came from the top group of most shorted stocks averaging 13% in two weeks. the second best was 12%. data from ihs market shows the short covering is driving these big moves. healthcare and biotech stocks have been most helped by trump's election. many had assumed a hillary clinton win would lead to increased regulation in those sectors. but with trump, those bets are off. plenty of well known names with high short interest have seen massive rallies, including u.s. steel, wwe, pandora, shake shack, solarcity and go pro. the interesting thing is that short sellers are giving up, they're not trying to go against the latest rally and there's a significant decrease in the demand to borrow stocks to go short. the question remains at which levels will the shorts come back? back to you. >> barack obama presented his
final presidential medal of freedom yesterday. the medal was awarded to 21 recipients including bill and ma linda gates, bruce springsteen and diana ross, and tom hanks and the basketball player, michael jordan who apparently shed a tear. as obama joked, the guy from space jam. in one of his final acts in office, obama paid tribute to the winners who he said all touched him in a personal way. >> these are folks who have helped make me who i am and think about my presidency. and what also makes it special is this is america. and it's useful when you think about this incredible collection of people to realize that this is what makes us the greatest nation on earth. >> while inside the white house, one of the honorees ellen
iraq saying on tuesday that opec should allow the country to continue raising output without restrictions. if a cut were to be made, the current output would be reduced by 1.2 million barrels a day. the russian energy minister said russia will take part in negotiations on november 28th, however he said his country has yet to receive an official invitation for the november 30th meeting. jpmorgan morgan has been threatened with legal action from the venezuela state oil fi firm. he said the u.s. bank falsely reported the oil firm was in default. pdsa said it was using a 30-day grace period for bond period but other reports from jpmorgan were false with the president saying it was part of a conspiracy against venezuela by foreign opponents. the imf cut its 2017 growth
forecast for mexican gdp by 0.4% bringing it down to 2.2%. the revision is due to risks to mexico from trade protectionism. the imf recommended the central bank slow the pace of rate hikes. the co-president of teneo intelligence joins us. let's start with mexico. again, trade protectionism is something that is featured highly for mexico. will they struggle a lot more than what they currently are? what should one anticipate if you're investing in mexico? >> it's very early days. if we look on the protectionism side of the story, specifically about nafta, it cannot just be the president here in this case, president-elect trump, soon to be president trump making a huge difference. it needs to go through congress. let's be cautious about that. the other way around, it's clear
if we look at the political outlook in mexico, it trajectory remains positive. there is significant ability to remonday respond to emerging market territory. in politics, it's a constructive story if we take the horizon of now and next year. >> you put out a report, what are some of the main findings of that report? >> it's mixed. we're looking at more than 20 emerging and frontier markets, looking at election events. the best stories, south africa, venezuela, the middle stories, romania, czech republic, and the positive runs, a couple countries in latin america,
argentina, mexico, and malaysia as well. it's a mixed picture. >> where does iran feature in all of this? you didn't mention iran. if the iran nuclear deal is scrapped under president-elect trump what does it mean for the government? i also know there are elections coming up. >> as of now, if the deal is scrapped the ability for ruani to win again is unclear. there is a council of guardians who decides the candidate. so they will decide ahead of the election who is likely to be the likely winner and they won't let it get out of control. as of now, iran is a positive story still. we still believe that we are not
going to see a full reversal of the deal with iran. it's not just a u.s./iran deal, there's only so much damage that if -- that can be done on the front by new u.s. president. >> is there a surprise story when it comes to politics? is there one country where you thought, wow, this was going to be a negative story, but for next year it looks better? >> a couple of african countries, kenya, even ghana, they're facing a significant electoral challenge, but the political outlook in our view remains generally stable. we don't see major risk of unrest. there's able to deliver reforms. that's one of the upside surprises. >> turkey jailing more journalists globally than any other country. >> yes. >> the eu parliament talks to
freeze talks of succession, that can't come as a surprise. >> no, and erdogan could careless about that. the issue is that this is a country that is, in my view, politically doomed. there is no way -- there is no -- we are past the breaking point. the question is how long will it take for politics to manifest its and to have a negative impact on the economy. as of now, the external environment is beneficial this will change. and the ability of the central bank and so on to respond to turmoil will be very limited. >> thank you very much. >> pleasure. >> that's it for today's show. we'll be back at 12:30 london time. >> for the autumn statement. tune in if you're in the uk. >> we'll see you then. good-bye for now.
good morning. dow 19,000. u.s. stocks soar to record highs. >> oil shock. new questions today about an opec-led production cut. details straight ahead. and a post-brexit budget. the uk finance minister outlining the first spending plans since the country voted to leave the eu. it's wednesday, november 23, 2016. "worldwide exchange" begins right now. ♪ ♪ >> good morning. welc