tv Street Signs CNBC November 24, 2016 5:00am-6:01am EST
get zero down, zero deposit, zero due at signing, and zero first month's payment on select volkswagen models. this black friday at the volkswagen sign then drive event. welcome to an extended "street signs." i'm carolin roth. these are your headlines. not such a happy thanksgiving for thyssenkrupp. the german steel giant weighs on a quiet day as its full year profit forecast misses expectations, but the ceo tells cnbc donald trump could provide a lift. >> 80% of the u.s. customers are produced locally in the u.s. i believe we're in solid shape, and rather can benefit from the infrastructure program the newer government has announced going forward. >> estate agents in a state.
countrywide lowers its core earnings target, saying the brexit vote has led to a drop in transactions in the uk property market. shares in monte dei paschi lead italian banks higher as investors get set to approve a 5 billion euro capital hike at the lender's shareholder meeting. u.s. treasury yields rise, as the dollar index hits a fresh 13-year high. emerging markets hurt, with the malaysian ringgit falling to the lowest level since the asian financial crisis. hello, everyone. it is thanksgiving day. happy thanksgiving to all our u.s. viewers. that's why itself markets are closed today. let's peak at what u.s. markets did in yesterday's trading s session. the dow up by 0.3%. well above that 19,000 level that we breached earlier this
week. the nasdaq off by 0.1%. we had a slew of macro economic data, most in the area of durable goods rising 4.8 versus expectations of 1.5%. that sent the dollar higher. let's have a look at european markets. we're not seeing such a strong read across from the u.s. session. the stoxx 600 up 0.2%. trade today will be quieter with the u.s. investors not at their desks. european markets look like this, some underperformance in the ftse 100 to the tune of 4.5 points. countrywide bringing in another profit warning for the second time this year. xetra dax up by 0.1 %. the ifo index unchanged from november. maybe lower than some people forecast. the cac 30 off by 0.3%.
telecoms underperforming, real estate, utilities, beverages also underperforming. last but not least, quick look at the currency markets, i was talking all morning about dollar strength. the dollar today it is pulling back just a bit from the 14-year high. off 0.14%. that's helping the euro move higher, 1.0560. dollar y dollar/yen at 1.1293. >> the president of the ecb said the ecb always had a stabilizing role in favorable financing conditions and there's no need to change the baseline scenario. speaking on italy he said the consequences of the referendum are difficult to anticipate but the italian banking sector remains resilient.
i'm joined around the desk. good morning. >> good morning. >> do you think the italian referendum is priced into the euro right now. we're trading at levels not seen since last year. you would think it is. >> i guess euro may not be the best measure, in the case of euro/dollar since the dollar is having a significant role. if you look at btp bunt yields, we are at multi months if not multi-year highs there. >> seems like the perfect form store the euro now because of the dollar strength but also the returning worries when it comes to the political space. >> the root cause of that is the populous vote, which escalated with that trump shock surprise victory in the u.s. which led many to believe itf it's a similar wave in the your eurozo
that could spell trouble. the question is where do we go from here? on the political side, a lot of negatives in the price by now. if anything we expect that the political process in italy to remain complex. even if it's a no vote, that won't mean that renzi has to step down. if anything, the proposed reform, the reason for the referendum is the electoral reform and reform in the senate, that need not come to an end. not always bad for the euro. at the same time, you mentioned the monte dei paschi decision today which could play out as a euro positive. german paper is trading close to 70 basis points, suggesting that looking at the ecb, a lot of negatives related to the negatives are in the price of the euro.
after the italian vote, many people expect the ecb to suspend the floor, which would be like a rate cut. so that's also more or less in the price. so net-net, you think the negatives used to sell the euro is in the price. that's why i say euro/dollar is not the best price on that, because on the other side we have the dollar buying which is in full swing. >> why is populism so bad for the euro? in the u.s., we see a populous president, and that seems to be good for currency and growth. isn't it a chance that with the elections next week in france, italy, they could also be in favor of progrowth policies? >> that's the thing about the populous dollar story. investors are quite selective in what they pick. they like to focus on the growth
positive fiscal stimulus promises that trump made on the campaign trail. they are ignoring the populous -- the more controversial aspects of his proposal, the proposal on migration, suspending free trade agreements and all that, which could be negative for the u.s. dollar growth from here on out. coming back to europe, the big concern is that, yes, many of those populists -- so that are -- that are anti-establishment vote in europe is on the rise, partly in reaction to the fiscal austerity we've been having. ultimately that could be a positive story for growth. it also comes with strings attached, those are associated with france, italy or the netherlands leaving the eu or eurozone, so it is bringing the threat to the euro.
so, no, it's not positive for the euro from the looks of it. i see the fundamental side, which is potentially positive, but very to avoid the existential risk. >> you will stick around. the sterling got a bit of a boost on the back of the autumn statement yesterday. you think it has more room to run to the upside. we'll get to that in a second. still coming up in the show, nerves of steel. we'll hear about thyssenkrupp's full year results from the ceo. stick around.
welcome back. thyssenkrupp has issued a lower than expected forecast for its full-year operating profit after the net profit declined more than anticipated after a drop in annual sales and a slump in orders amid pricing pressure in its materials pressures. thyssen says further price costs will be key for it to meet its targets. earlier we spoke with the ceo and asked if the end is in sight for volatility. >> we were hit in the first half year by strong price erosion.
then we came in with a good finis finish. this was the result that the material prices have significantly increased in the second half of the year. now we are quite cautious running in first quarter for two reasons -- the price is quite stable, but what we have seen in recent months is a strong uptick on the core prices. we need to be cautious until we fully understand how we can transfer those effects on to the market. >> anetta, we saw shares slumping in the morning trade but now they recovered a little bi bit. >> they are actually trading up and are among the biggest winners here. they will firmly in green territory now. adding 0.6%. the reason behind that is
perhaps they're reassuring investors that the tata steel merger of their steel business with tata steel is not off the table. it's conditional as they say on a solution for their pension scheme. this sounds tricky but also like they're still talking. that's something really net positive for the shares. of course they're saying this is not happening tomorrow. it will take some time. but still the consolidation of the industry is really key. the steel business is under severe pressure. looking at the future, they are still cautiously optimistic for next year. they're seeing net profit with a clear improvement coming in. also a positive net cash flow for next year. that probably as a combination
makes investors more positive for the shares. they're buying in. with that, back to you. >> thank you very much for that. rio tinto aims to generate $5 billion of additional cash flow over the next five years over a productivity drive. the company's co says he will sweat the company's assets and will not hesitate to cut iron ore production if that boosts cash flow. the world's number two miner warned that capital expenditure this year would be lower than previously suggested. and remy cointreau increased its profit by 7%. the french drinks maker says it expects full operating profits to rise in line with previous targets. back to the autumn statement. britain's borrowing could rise by 122 billion pounds over the next five years, significantly
more than people expected. that's according to new figures. delivering his first and last autumn statement as uk chancellor, philip hammond warned brexit alone would burn a $150 billion hole in the uk's project, announcing a wrath of projects, but hammond was forced to backtrack on george osmond's surplus target. >> in view of the uncertainty facing the economy and in the face of slower growth forecasts, we no longer seek to deliver a surplus in 2019/'20. but the prime minister and i -- the prime minister and i, mr. speaker, remain firmly committed to seeing the public finances return to balance as soon as practical while leaving enough flexibility -- while leaving enough flexibility to support
the economy in the near-term. >> let's have a quick look at cable sterling/dollar trading hands at 1.2448. it has a lot to do with the dollar weakness we're seeing in today's trading session. the dollar index down just a fraction. let's get back to valatin. we did see buying in the pound sterling yesterday on the back of the autumn statement. i guess investors focus on the positives, not so much the negative. >> no doubt. the way things look for the uk economy right now, everyone is expecting a slow down. so long as they could in a credible way provide some stimulus, reduce the downside risks ahead, that could support the currency. if anything, on the fx space, it's more the case that the pound was -- of all the g 10 currencies, the pound was the only currency able to hold its
ground against the dollar since the trump victory. there's two reasons for that. one was the fact that the rize of the populous vote, seen as so negative for the euro is playing out as a mixed blessing for the pound but not asset negative for the euro. that could explain why euro/sterling came under pressure and remains vulnerable. the second one is market positioning. it is the case that we still see very significant shorts in the pound. that makes it the least vulnerable of all 510 currencies. so it's riding on the dollar's coattails as the dollar keeps rallying. on the day, clearly it's a quiet day. i guess people are taking -- trying to exploit that the shorts are still very much there. if you want to buy currency against the dollar, positions are being squeezed. the pound is likely to remain one of the most resilient ones. >> before we let you go.
let's talk about the u.s. dollar. are you still a u.s. dollar bull? even though a lot of people tell me this dollar run, this has gone way too far. other people argue don't fight trump, don't fight the fed. >> it's an interesting question. given it's been rallying for three weeks, we've exceeded the highs from last year on a trade weighted basis, that's clearly a valid question. still a lot of uncertainty regarding the fiscal stimulus plans of mr. trump or president-elect trump. from that point of view it's difficult to argue that would be a big sustained change in the u.s. economic outlook. what we could see is further convergence between the market rate expectations and the fed's own rate expectations as reflected in the dot plot. addre as it stands, the market is still short two rate hikes looking up to 2018. you think the u.s. rate
expectations will move by another 50 basis points to the upside, that gives you 4% further upside for the dollar trade weighted index. important thing is which currencies are likely to be most vulnerable if the dollar continues to rally. i think by various measures the euro/dollar is down. i also think dollar/yen may have further to go to the upside, but not as much. in the risk related currencies, commodities could be more vulnerable as the dollar rallies from here. the associated tightening in the global financial conditions, the risk is that it will choke global growth prematurely as everybody prepares for the trump bonanza, they may choke the recovery. the more vulnerable ones are the
green light to the bank's recap plan on the same day share holders are meeting to approve the plan, enough met to approve the $5 billion share issue. shares up 6%. let's turn to politics. former french prime minister francois fillon is expected to win the nomination for the upcoming french presidential election by a substantial margin according to a poll. the 62-year-old topped the first round of primaries on sunday and is forecast to win the second roind with 6round with 65% of t vote. we have an analyst here to talk about the french elections, the dutch and italian elections. let's take about france first. nobody expected fillon to do so well. do you think key go all the way?
>> if we look up to the first round of the primaries, it appears that that alain juppe would make it, and that nicholas sarkozy would come through th. that has not happened. fillon won the first round, is he on course to win the second round. if he does make it through, that would be surprising. juppe is doing everything he can to undermine the fillon campaign. if he does make it, it would be a worry from the view of marine le pen, she was expecting to come up to mr. juppe or mr. sarkozy. it will be interesting to see how that plays out. >> lots of polls pit mr. juppe against le pen but very few fillon versus le pen. how would fillon do versus le pen? and do you want to trust the polls? >> that's a very important issue, which you raise.
we've seep the polls being wrong on brexit, on the u.s. presidential elections. i think fillon, given he has -- i would not say adopted some of the political instances which le pen would have adopted herself, but given he's more right of center than juppe, he poses more of a problem to le pen than juppe would. if the polls are right this time around. and whether or not even another candidate could make it through, like emanuel macron. it's still uncertain. what seems to be certain is that marine le pen will make it through to the second round in may. >> italy has had roughly 64 governments in the last 40 years, do you think a constitutional reform, if approved in the referendum,
would change that? >> it's interesting. italy has attempted constitutional reforms in the past, most eventually ten years ago under berlusconi, that failed this time it looks interesting. the referendum is about reducing the powers of the italian senate, reducing senators, increasing the lower chambers. along with this referendum, there's an electoral law which has been passed, it's in place, the italian constitutional court will review it, and that law guarantee as majority of 55% of the seats for the party that comes in first place, so long as the party gets more than 40% of the vote. would it create stable government in italy? probably yes. but the problem is right now you have the rise of this party, they are polling behind renzi's party in the opinion polls. there's a possibility if this
law were to go through, if the referendum were to pass this may end up benefiting them. it's still a lot to be seen. >> one of the central questions is will renzi go if it's a no vote or will he not? he staked his political future on this question. do you think she? >> if he were to lose, it would be difficult for him to continue, and there may be a push for fresh elections next year. >> thomas cole, thank you very much. still to come, shop until you drop. the black friday bonanza is upon us once again. while the craze is embraced by the uk, some analysts suggest it may not be the biggest shopping day of the year anymore.
welcome back. you're still watching "street signs." i'm carolin roth. these are your headlines. not such a happy thanksgiving for thyssenkrupp. the german steel giant weighs on a quiet day as its full year profit forecast misses expectations, but the ceo tells cnbc donald trump could provide a lift. >> today already 80% of the sales we have in the u.s. are to
customers produced locally in the u.s. i believe we're in solid shape, and rather can benefit from the infrastructure program the newer government has announced going forward. >> estate agents in a state. countrywide lowers its core earnings target, saying the brexit vote has led to a drop in transactions in the uk property market. shares in monte dei paschi lead italian banks higher as investors get set to approve a 5 billion euro capital hike at the lender's shareholder meeting. german economy is unfazed by the u.s. election. that's the takeaway from the november ifo survey which points to pick up in gdp growth in the fourth quarter. good morning. happy thanksgiving to all of our u.s. viewers. u.s. markets closed today for the holiday. that means a bit lower volumes across the european space. we're seeing tentative buying across the board. the xetra dax up 0.2%. the ifo data did not move the markets much. the cac 40 up by 0.2%.
and underperformance in the ftse 100, down by 0.2%. countrywide with its second profit warning this year. the currency markets, the story has been dollar strength, by today given that volumes are lower, we're seeing that pull back the dollar down just a fraction. that helped dollar/yen at an eight-month high. alibaba recorded a staggering $18.5 billion worth of sales on singles day, but will black friday be as big? courtney reagan filed this report. >> reporter: it is a significant day for retail, the national retail federation expects 137.4 million americans will hit the stores at some point over the
weekend. that's 59% of the country, will shop at some point over the weekend. in stores, online, or potentially both. black friday will, again, be the busiest day of the weekend with nearly 102 million americans planning to shop on that day. that's about on par with what we saw last year. online is becoming more and more important and a bigger part of the holiday. ado adobe predicts that black friday online sales on black friday will top $3 billion for the first time this year. that would be up 11% from last year. and retailers did begin to offer some good deals online earlier in the month which may pull some of those sales forward. that's okay for retailers as long as they get the sales. 29 million americans do plan to shop on thanksgiving day. that's also about what we saw in 2015. what's different this year is many retailers are sticking with those thanksgiving day opening times and not moving them earlier. that halts a multi-year trend we
have seen. jcpenney's door busters begin at 3:00. best buy, toys "r" us at 5:00, and target and walmart at 6:00 p.m. on thanksgiving day. many people ask are the deals the best they could possibly be on black friday? and the answer in many cases is yes. retailers can only go so low and they'll go that low on black friday on the prices that they can. a television at best buy, that's a 50-inch l.e.d.tv was on sale earlier in november for $650, but on black friday it will be on sale for $400. courtney reagan, cnbc business news, new york. >> we're joined by stacy whitlitz, can we still call it black friday? isn't it the black second half of the year, because promotional activity is throughout the second half.
>> the promotions are now all the time. when you talk about black friday, the promotions used to be just black friday, now they start a month before. even in the uk now, the promotions this year, they started mid month. black friday is becoming less important. >> you're also talking about the americanization of the uk. you say that's near complete. that doesn't spell good news for margins either, does it? >> no. that's the issue. over the past three years we've seen black friday creep into the uk. over the past year it's just -- it's here. we're officially americanized and margins are coming down on this side of the pond. >> there are some holdouts. such as next and asta. didn't they start this trend? >> they did. >> does it make sense to hold out and not participate in black friday or will you lose out either way? >> what's interesting, azta
brought this black friday craziness over here in the uk, now standing back saying it's too dangerous. people are beating each other up over tvs. so they'll stand back. and also next has been a stand-out. they're not participating. that's a mistake. when everybody else is promoting 50% off, you can stand back but lose market share. >> do you think in general on black friday and the weeks surrounding it that the volumes you're getting -- because of the increased traffic you're seeing, will upset the drop in margins? because promotional activity is so intense? >> no. the issue is as retailers started earlier and earlier, you're pulling forward sales. you're not creating incremental sales and you're pulling forward sales at a lower profitability. that's not good news for these brands. >> it's all about brand recognition, isn't it? you still want your brand to be recognized after the new year.
that's where black friday would help, isn't it? >> yes. you want to be out there, off their consume their big headline discount to get hthem in the store, but also it degrades your brand overtime so there are certain holdouts, they just don't do it. they continue play the game. >> i saw an interesting state, they say mobile will overtake desk top, 53% of the visits will be on mobile versus desk top. it doesn't necessarily translate into higher sales. it's frustrating to buy stuff on your smartphone because of the technical difficulties and also the transaction size, that tends to be smaller on mobile. so mobile is not really a blessing after all, is it? >> that's very true. we've tried to get something on our mobile phones and it times out. these websites crash. last year 15 brands had their websites crash.
finally i would say as we're moving online, again, that comes with the lower margin. we saw urban outfitters stock down 10%, why? because it's not always a blessing to have that migration. >> we had mixed numbers from walmart, beat from target, best buy in q3. they seem to be keeping up with amazon. what are some of your top picks going into the holiday shopping season? >> we saw this big trump retail rally, the question is can the q4 numbers keep up with that? the big deal was inventories are in line. so margins were better. things were not worse from a top line perspective, that was enough to send stocks sky high. i would be cautious going into q4. >> okay. be cautious when it comes to q4. stacy, thank you so much for that. happy thanksgiving.
a group of u.s. lawmakers is reportedly warning that president-elect trump could provide protection for deutsche bank. some house democrats say he will have ample opportunity to influence policy decisions including the justice department's proposed $14 billion fine. in a letter sent to financial watchdogs, lawmakers claim deutsche bank is the only major wall street bank that has continued to lend to trump inc. donald trump is trying to add diversity to his cabinet selections. kristen welker reports. >> reporter: president-elect trump with a thanksgiving message for the nation. >> it's my prayer that on this thanksgiving we begin to heal our divisions and move forward as one country. >> reporter: it comes as he's trying to diversify his cabinet today, tapping two women including 44-year-old south carolina governor nikki haley to serve as ambassador to the u.n. haley, whose parents emigrated
from india, is a rising star in the republican party. she was sharply critical of trump during the primary. >> i will not stop until we fight a man that chooses not to disavow the kkk. >> but taking a more measured tone after meeting with the president-elect last week. >> i did vote for him. i was absolutely thrilled to see him win. >> haley earned national praise for leading the call to take down the confederate flag in south carolina in the wake of the emanuel ame church massacre. while she opposed trump's muslim ban, she supported a block on new syrian refugees entering her state, something trump also supported. governor haley made eight international trips but lacks foreign policy experience. >> she'll have to navigate this role. it involves a realm of knowledge she doesn't have directly in her portfolio. >> reporter: if confirmed, haley
appointment could strengthen trump's hand, giving trump a key ally in a southern state, something a transition official disputed was part of the decision. mr. trump's second pick, betsy devosa billionaire republican donor and school choice activist, who wants to expand school voucher programs. the move was praised by jeb bush and decried by the largest a 2 million vote lead. wow. wo weeks on from the election, hillary clinton's popular count is increaseing with the overall tally at 64.2 million votes for democrat, and 62.2 million for donald trump. this prompted further calls from clinton supporters for a recall in certain battleground states. a group of academics and lawmakers point to evidence that
she did worse in counties that use electronic voting machines instead of paper ballots. the clinton campaign has gave no signs it will join for calls for a recount. green party presidential candidate jill stein has launched a campaign to crowd fund election recounts. the campaign reached its $2.5 million goal this morning to fund recounts in wisconsin, michigan and pennsylvania and has now extended its fund-raising target to $4.5 million. stein said the recount is not to help hillary clinton but is part of an election integrity movement attempt to shine a light on just how untrustworthy the u.s. election system is." coming up on the show, it's turkey time as millions of americans get ready to celebrate thanksgiving at home and abroad. we'll check in on preparations on both sides of the pond. we'll be back in two.
i don't know where they got that from. the biggest price is in turkey. there was avian flu last year, so this year the average pound per turkey is down to 22.74. we paid over $36 for a conventional turkey. and for an organic turkey, almost $62, meaning the price of this was more than the entire average price for this. guys, happy thanksgiving. >> wow, $61 for an organic turkey. i guess people would think we won't go organic this year.
let's see whether president obama is going organic. he pardons two turkeys as he took part in the time-honored transition for the last time. tater and tot were spared by the president in a joke-filled ceremony in the rose garden. >> i wanted to take a moment to recognize the brave turkeys who weren't so lucky. who didn't get to ride the gravy train to freedom. who met their fate with courage and sacrifice and proved they weren't chicken. >> obama also struck a more serious tone taking a moment to thank the american people for their trust and kindness over the last eight years as he also reflected on family life after the white house. >> thanksgiving is a family holiday as much as a national one. malia and sasha are thankful this is my last presidential turkey pardon. what i haven't told them yet is that we're going to do this every year from now on.
no cameras, just us, every year. no way i'm cutting this habit cold turkey. >> having some fun there. in new york preparations are underway for another tradition, the macy's thanksgiving day parade. over 3.5 million people are expected to line the route to one of them is jay gray who is in new york. how are the preparations going, jay? >> good morning. as you would expect, just a few hours before this thing starts, frantic, people are hustling around. the excitement and energy building. the stars of the show, they're ready. it's the giant balloons that are a part of this parade, they are ready to roll here. they'll take the nets off. get the handlers. 50 to 100 on each balloon, they will help wrangle them and move them through the parade route. leading them off is charlie
brown. back in the parade for the first time in a long time. we'll see dozens of floats. 1,000 clowns or more. i don't even think i was counted in that number. we also have marching bands from around the country that will be a part of this holiday tradition. 3.5 million along the parade route. 50 million around the world watching. i have a pretty good seat as well. back to you now. >> thank you very much for that. enjoy the day. hope it's not too cold out there. as you may have noticed, louisa is not next to me. today she's at the restaurant balthazar in london. what are you doing there? >> i'm checking out the thanksgiving scene here overseas. traditionally it's a u.s. holiday, but no longer the just like with halloween and valentine's day, as well as thanksgiving is here to stay. the last thursday of november it's held, balthazar is putting
on a feast of a menu. you were talking about the prices and how much it cost, including everything, the stuffing, turkey, pumpkin, pie, drinks, that will pkut you back about 58 pounds here. i was talking to the head pastry chef about what he's been doing for the festivities today. >> i'm here at balthazar on one of the busiest days of the year, namely thanksgiving, thanksgiving, who knew, has also come to europe. it's not just a u.s. celebration any longer. we like to adopt it for the sake of these delicious thanksgiving meal
meals. what are you doing? >> making pecan pies. >> and how many would you make? >> around 300. >> just putting on the finishing touches? >> yeah, before they go in the oven. >> how long do they need in the oven? >> approximately 1520 minutes. >> what's the key thing if you're making sweets or desserts in order for them to turn out good? i tend to burn mine quite often. what's the key thing to do if you're baking? >> the most important thing is your pastry, lying the pastry. it should always be rested overnight. the most important thing is the baking as well. the setting the ovens on the right temperature and checking it, not overcooking it, not undercooking it. >> so, in this kitchen now, super busy. >> yeah. >> is this something people enjoy? everybody is running. we're trying to stay out of the way. is this a festive time for you guys or just hard work? >> it's a festive time and nice.
it's not -- once thanksgiving is finished we're in the christmas mood. it's a busy period. everybody is enjoying. not a hard tile, bme. >> do you say i fancy putting beet root in this, or does it have to be square and traditional? >> a few things have to be traditional, a few things we can play with, adopt flavors, but few things have to be traditional. >> i have to ask you, are there ever any leftovers after you make these couple hundred pies? >> not much, but a few. >> i might have to find one there. any way, i'll help roosevelt do a bit of pecan decorating. for now, i need to get on with my work. >> i don't know how they put anything in the oven or take anything out without trying it first, right? that would be my theory. we're just an hour or so away
from the time when they start serving the first of these meals. they anticipate around 500 portions of the thanksgiving day feast will be served. it's also worth noting, you come into a place like this, a nice atmosphere, you have the classical music playing, we feel relaxed, we have a nice piece of pie or a bit of turkey, downstairs in the kitchen it's nuts. they are so busy down there. worth remembering what these people do in order to make you and i able to enjoy these meals. >> most important question, how many of the pies have you had? >> too many. too many. i'm embarrassed to say. my first pie before 9:00 a.m. i should have maybe waited a bit. you live once. it's only thanksgiving once a year. >> then comes christmas and the next holiday. always an excuse. thank you very much for that. have a fantastic day. see you tomorrow. quick look at the european markets, we're fairical icallly