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tv   Street Signs  CNBC  December 1, 2016 4:00am-5:01am EST

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good morning, everybody. welcome. you're watching "street signs". >> these are your headlines. >> no indication of a center rally as european equities stoppstart the month of december in the red. >> energy stops buck the trend. opec strikes a deal to cut production for the first time since 2008. basic resources bouncing
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after glencore may dig deeper for more cash. and constitutional countdown. italian equities slip as investors remain skittish with three days to go until the country's referendum. they warned cnbc of the consequences if yes wins. >> translator: i do not know what the prime minister renzi is going to do. we're used to his promises, which are later denied. we are used to him doing one thing and doing anothers absolutely unreliable. including with he is saying now in case of a no or yes victory. good morning, everyone. let's straight to macro economic data in the form of the eurozone november manufacturing pmi. 53.7 versus an october figure of 53.5. so a slight improvement.
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is and i'm seeing the full write up. the growth the strongest since january 2014. once again, prices rising at the fastest rate since august 2011. so pretty good news coming from the eurozone of factory growth. we are looking at numbers from italy. >> yeah. we have unemployment figures from italy just coming through. just looking at the main figure, the october unemployment down to 11.6%. we say down. that is still a high number. october youth employment down to 34.6%. they are dealing with a lot of high unemployment rates in the younger portion of the population. >> can i go back to the pmi. >> yes. >> we know the service sector economy is bigger than the
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manufacturing side of the economy. but the factory, that grew at the fastest pace since june. that is despite all the uncertainty around the referendum. >> i wonder which base. we are coming off the low bases. we have seen the countries dealing with it. there has been a trump rally. a lot of european equities haven't seen gains. speak is speaking of which, we are down 0.2%. looking at some of the bigger ones, the main european markets or the sectors, whatever flips your fancy. you have oil and gas hanging onto gains. you've got household goods and food and beverage. by and large, most of the board are trade anything negative
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territories of course it's the end of the month. >> yeah. it's december. did you open the first door of the advent calendar? >> no. i love those chocolate ones. >> some people eat all of them on the first day. i would never do that. >> we used to make them for each other and you have a surprise every month. it's a nice thing. the end of the month for november, stocks 600 for november. as i was saying, a lot of europe hasn't followed in the trump rally. we're seeing a little bit lower. down 0.2%. >> that's today. >> excuse me, that is today. for the month of november. it is up 0.9%. >> relatively unmoved. not a whole lot of movement. the dax moving on. pretty flat for the month itself. not a whole lot of movement.
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similar story for the cac, the ftse. we are on a wait and see pattern, hold pattern, especially after the brexit referendum as well. people are thinking what does it mean for europe when we see other countries following on? what's going to happen? >> the s&p up by 3.42% snapping a three-month losing streak. why? it's the effect. that very fast benefited the is s&p financials. up 13% in the last month. why? the prospect of a steepening yield curve. the dow up by 5.4%, the biggest monthly gain since march and second best of the year. finally, to round things off, nasdaq posting its fourth monthly gain in the last five months.
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rob, what do you do in the month of december when it comes to investments in we have opec. we have the trump rally still the going on. some people say it has already ended. we have the italian referendum. there's a lot at play. >> yeah. a lot at play. the italian referendum is one thing people aren't talking about as much. i had early on today we know it's there but nobody really knows what the consequences are. as a result of that, people are putting it on the back burner. as far as december is concerned, the expectation is the u.s. will continue to dominate and others will follow. and the trends we're seeing at the moment the barbell effect in the market will be maintained. >> we saw there is a clear divergence. having the two markets coupled?
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>> that is true. i think what the u.s. has done has kept europe and asia on a level playing for the time being. i think without that, without this sort of trump victory, the election, the u.s. would have been in trouble itself. europe would have been in a lot more trouble. that is the stabilizing effect. >> when do you think the trump rallies wears off or we stop focusing machinely on what's happening in the u.s. and start focusing on the bigger issues. >> at the moment the good thing that happened is growth. there was the trump effect. once the trump effect was taken into account. actually, u.s. numbers have been very good. confidence numbers have been very good in the u.s. europe is better. china. there is growth stability at the moment. you're assured of a fed move.
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and now it is a question for investors. if you believe that, you're into the cyclicals and into valuations where perhaps they will struggle from here. >> you talked about federal in december. given that oil has jumped and might continue higher, that will lead to more inflationary pressure? >> well, it is is not my level of expertise, but yeah. i think our belief is once this move kicks, we're back to sort of normalizing the cycle. and that will continue. so theoretically i think this is a positive back drop for equities. >> what do we do with the sector rotation since they moved into
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cyclicals, financials and the move out of the bond proxies cannot continue when it comes to the overall levels for the market? >> we think it can. we've been into resources for some time now, into the growthy areas of the markets, buying value at a reasonable price for some time. we think now this can be sustained. so we're looking to get increased exposure and industrial and those growth areas. the problem we have sexual banks. >> any stocks are you see particular value? >> at the moment, to be frank, at this moment in time, it is quite different. >> slim pickings, huh? >> yeah. it's not often lieu and go as we stand here now, there's not a lot to inspire you. you really have to the stay with the trends and two with the
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moment momentum. i would say what you do is people will be looking at those and will be enticed into them. the question is will they buy them? >> thank you for that. libra investment services. do we have live pictures of putin? we do. you're watching live pictures of russian president putin as he delivers his annual speech to the country. my russian isn't perfect yet. i guess we are waiting for some translation. >> a. >> i don't know even that that means. >> the. you can find us live on twitter. tweet us to. >> @carolyncnbc. >> we'll discuss the key
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takeaways of yesterday's meeting after the initial break. don't go away.
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welcome back to "street signs". we just discussed november was a pretty momentous month for equity markets, specifically also in asia. the high for the month of november was up 4.8%. back in bull market territory. another market where bull market territory doesn't really -- you don't hear that too often. that's the nikkei up 5% in that month in part because of the trade under trump. another reason why we are seeing that is the underperformance of the yen versus the dollar. the dollar has jumped 9% in the month of november. 114.21, not far from the crucial
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115 level. the dollar surge as a result of the president-elect trump and his proposed policies. another check of the trading session. >> thank you very much. we got a nice boost in asia with the opec on oil production cuts as well. broadly green especially with energy focused stocks, especially in countries like australia rallying. and also in japan as well. coupled with the weaker yen story of the day which is holding up at about 114 at the moment. so giving a nice lift to exporting and manufacturing stocks. in japan, sending the nikkei 225 to the highest close so far this year. and there was another factor. it was the official pmi day for china for the month of november.
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both the manufacturing and services pmi coming in expansion ear territory, higher than the before and beating market estimates. manufacturing coming in 51.7. that matches the highest level in july 2014. but if you look at the private it is coming in lower at 50.9. we know it is the structurally large state-owned company driving these numbers. and it is still happening. the excessive capacity issue there. so jobs were shed here and there in the spaces. investors seem to take comfort with the stability of these numbers for the month of november again. guys, back to you. thank you very much. just continuing on our recap for
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the end of the month i can't believe we're already in december. looking back at the month of november, in gold we have seen a down side of 8%. this isn't a huge surprise given we have been looking at this massive strength story coming through. we did see hedging. not by as much as people had been anticipating. gold has leveled off at 1168. in 2016 in general we have seen it recovers, only to come down during the second half of the year. just mitigate some of those a little bit. moving to the price of oil. of course amount of the gains that came through came through yesterday. we saw this massive, massive rally. almost 10% after we had the owe poke deal. the 11th hour opec deal.
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up by approximately 6%. that's what it looks like with wti. we have been a lot lower. looking at the contract just a year ago. indeed for the month of october, we have been leveling out having come off the lows that we saw here earlier this year. again, keeping in mind we more than halved the price of oil recently. brent, 6% or so. speaking of the massive moves that came through, the first production cut in eight years. it is a move that sent the price oil massively higher. it will cap off 32.5 million barrels a day. they will slash their production
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by half a million a day. iran, we talked about if they would be along in this deal. they will be exempt of the cuts. russia will cut its output by 300,000 barrels a day. just some more of those details on what we got from opec. steve spoke to key oil investors and got their reaction to the deal. >> we are extremely happy. it is the deal we have been seeking to give an impetus for investment flows to come at a healthy level into the market. >> we haven't finalized the deal. we need time to discuss and finalize the deal. as i said, i'm optimistic. and that we are in a position to enable us to finalize this deal.
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>> high level to monitor. we included two additional members from nonopec with explicit mechanism of how to monitor. there's a strong commitment from opec and key nonopec countries to achieve what we had agreed upon. >> there is three from opec and two from nonopec. so there is a joint monitor. two, they have the ability to become much better than years ago. three, there was a lot of momentum. everybody was very great at getting to it. but there was a need to cut. >> ian r50ed is the head of european oil and gas research. welcome back. so the saudis bearing the brunt
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of the production cuts. russia will par take. what are your thoughts on the deal? >> it was all the market was looking for and more, to be honest. detailed production cuts for each country. specific ways of looking at monitoring. also bringing in russia is and some other nonopec countries. it is a bit dubious. russia normally promises these things and doesn't always deliver. so i suppose you could understand the action yes. it's a very positive move by opec. we now move into the kind of compliance when we actually see the cuts. the proof of the pudding is what happened to global inventories. they are at all time highs. we need to see the price come down into next year. >> and also how difficult it
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will be to implement. >> yes. these cuts don't take effect until the first couple of months of next year. of course there are a decent amount of stock levels. they could use production but still maintain exports. so we have to look at how important that is going to be. overall, i think 2017 is going to be a much better number than people were thinking of a few weeks ago. i think this agreement makes that a lot more plausible than it did some time ago. >> iaian, this opec cut provides the u.s. producers to come back in because they have been so nimble for the last two years. >> absolutely. >> is that a valid argument? >> oh, yes. if you look at the productivity improvements the u.s. producers have made in the horizontal wells over last year and the
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influence of the permeon, this new area in the u.s., you could see an additional amount being stimulated by the price rise. the u.s. ought to be stimulated by this by the end of 2017. although it gives 2017 a decent hike, you may want to worry now about 2018 or so. unless we he see the growth part of the equation up from current expectations. so, you know, we're not there yet in terms of -- we're not going back to triple digit oil prices. but at the same time, it is a step in the right direction. because the u.s. can't make up for all the growth. >> so what exactly does it mean for the oil companies that you cover? it is is not a game changer. i guess some of these oil majors are not going to be ramping up production just on the back of
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this deal. >> i don't expect a wholesale announcement of new projects. these companies are still in the mode of paying pash, reducing expenditures on all services, et cetera. and they're cautious people. they won't want to come dive head first into this. unlike some of their peers. and perhaps the u.s. might be more aggressive. so, yes, they will want to the look at this and consider before the long term is going. it is certainly a shot in the arm as far as investors are concerned. our top picks i think is the one to focus on. it is much more sensitive than it used to be. i would like to see that really start to move ahead now. what do you make of non-opec member russia coming on board with this? how politically and production alley important was this? >> yeah. as i say, russia in the past has said they would come in with
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opec on production cuts. it's been very hard to see whether russia has done anything on that basis. so they are always keen to verbally support these things. the proof of russia actually cutting production will be hard to judge. but, you know, they may well be on this monitoring committee, which is being set up. they may feel they hahave to do something more as well. >> glencore is way ahead of the previous forecast of $1 billion to $2 billion. swiss-based company will district $1 billion to shareholders next year. remember europe last year when
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everyone talked about solventsy issues. >> and anglo sells stake in exxaro. >> the seventh largest container shipping line is prominent in north/south trades. a subsidiary of the nass group says it expects the deal with complete by end of 2017. keep your questions and comments coming through. we're taking a quick break. check out world markets live.
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the blog runs throughout the day. loads of good stuff on there. we will come back and hear more about the italian refer dumb, the u.s. political scene. we'll see new a second.
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welcome back. you're still watching street signs. >> your headlines this morning. >> no indication of a santa rally as we start the month of
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december in the red after the inflation trade helped to hit record highs in november. >> energy stocks bucking the trend. european oil sector index hitting its highest level in a year after think deal was struck to cut production for the first time since 2008. glencore dig deeper for more cash. >> investors remain skittish. three days to go until the referendum. the leader with a five-star movement warned cnbc of the consequences if the yes side wins. >> translator: i do not know what prime minister renzi is going to do. we are used to his promises, whh are later denied. wr used to renzi saying one thing and doing another. he is absolutely unreliable even in what he is now saying in case of a no or yes vote.
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>> hi, even. welcome back. you are still watching street signs here on cnbc. more data hitting our wires. uk november manufacturing is 53.4. november is a bit weaker than october. it is also weaker than the expectations of almost 54.5. pmi, 53.2. that is also weaker than anticipated. as a matter of fact, four-month low. and input and output price growth eases for the month of october. british manufacturing growth cooling. factories trying to come to terms with some of the costs that have been soaring because of sterling after the referendum vote for britain to leave the european union. so we have seen the pound failing to boost export orders as much as what we have seep
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over the previous month looking at it on screen now. >> let's have a quick look at u.s. futures even though we are a couple of hours away from the trading session. s&p 500 off two points. dow jones higher by 18 points. and the nasdaq off by just two points. that's after the dow and s&p hit record highs yesterday, then closed at session lows. one outperformer was of course the energy tech tore leading with nearly 5% in terms of the gains on the back of the crude oil at the head opec meeting. we are seeing some bind in the oil space. but the dak is is seeing 7 overall. worth noticing that the ftse is in italy is seeing pressure as
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we go into the referendum this weekend. in terms of currency, we are seeing dollar strength on the back of higher yields yesterday. that was on the heels of the oil price jump. and dollar/yen is off 0.2%. 1.2514. i want to show you the month of november. it was all about dollar strengths on the back of the trump trade. here we go. the dollar index. we were higher to the tune of 3%. 101.34. that's the dollar index on expectations. also a fed that might be tightening quicker than previously anticipate. in terms of sterling dire, we are higher to the tune of 2.2%. that is the best month since the month of march. that came at the expense of the euro. people are focusing on on the
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weakness of the euro when it comes to the political weaknesses and the risks also looking at the italian referendum the. euro/dollar down 3.5% for the month of november. what happened to yields? that is the even bigger story, right? >> precisely. they are so related, so inter linked with that dollar strength coming through. we have seen massive, massive moves state side in yields with the u.s. 10-year yield jumping massively. we knew beforehand with the trump win we would have more stimulus. now with the price of oil higher it underthe scores the pressures that could potentially lead to a more hawkish fed. we have seen for the month of november, yields rising substantially on the u.s. 10-year. the same for the german 10-year with yields seeing quite substantial increases as well. this follows on from the same story we continue to see a lot
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of movement coming off very low levels with regards to all of the safe haven bidding we had seen heading into november for european yield story. glancing at the stoxx 600. relatively unchanged. so we're looking at just a little bit higher for the month of november. just shy of 1% on the month itself. so not a whole lot of movement. again a lot of political uncertainty is feeding into our european equity markets. not only the details of the brexit, referendum vote that needs to be ironed on out the next couple of months, i should say, but all the other elections we have coming up and the referendum this weekend. it will be very, very interesting in italy, the constitutional referendum. we will talk more about that in the second. in fact, just glancing at the ftse mib, off 4%. a lot of worries about the
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health of the italian banks. a number of them need top shore up their balance sheets. speaking of italy as well, the central bank in italy is saying that the country's top three lenders need a bigger capital buffer systemically importance. we know now that they need to shore up their balance sheets. that's something the banks will be working on the next couple of years. it is to start in 2018 and go four years on. that's what it is about this weekend of course with regards to the politics out there. >> all right. lou, let me pick it up here. the country's top three lenders need a bigger capital lender.
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they will be be be required to raise additional capital over the course of four years, starting from 2018. they are waiting for the outcome of this week's constitutional referendum to launch a 5 billion euro cash call. and raising the salary of public sector workers. the deal comes just days before a constitutional referendum on which prime minister renzi has staked his political future. pay has been frozen since 2009 as the country has struggled to contain its public debt. it is very difficult to say which way the boat will go. we have been in lockout when it comes to anything for three weeks. >> reporter: you're absolutely right. i hear people saying they're going to vote no. other people saying yes.
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what i would say it is not as clear-cut as some anti-establish thement vote against matteo renzi. remember this should have been a domestic political issue. do you want matteo renzi threatened to resign if the people vote no, it has become about him, despite the fact that he tried to back pedal. it is is about renzi versus all the other parties. i can tell you he has been furiously in the media the last 48 hours saying, look, an vote no is the establishment in this that has kept italy in the doldrums the last two decades. he is trying to invoke change. but people are telling me they are scared of consolidation of power under one party. that is what is confusing about this vote because a yes should favor parties like the five-star
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movement. ultimately it would help them being able to get some kind of majority. yet they are pushing for no. why? because they want representationy to step down and they want to see elections forced here. i spoke to a prominent one, the deputy speaker of the lower house. and i asked him about the banks, the achilles' heel of italy and what the five star movement would do about the banks if they at some point came to power. listen in. >> translator: for sure one of the first measures we would like to approve is five-star government is a serious anticipate-corruption law. this process will include laws to stop to abolish acts and reduce red tape. it is said that in case of a no victory, foreign investors could run out of italy. foreign investors are already running out because of judicial system, red tape delays, and
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corruption. these issues are of the utmost importance for us, together with the fight against poverty on the one hand and investments on the other. the target is more investments. that means to rediscuss u and euro parameters f. they don't listen to us, we will propose a referendum on the euro. they never asked if we did want to join. now we is ask the citizens if they want to stay in the common currency and address a two-tier scenario or return to monetary sovereignty. >> in the short-term, would you accept an interim prime minister, a technocrat in order to create calm, particularly if we see turbulence in the markets? will you support whatever take place to calm that? >> translator: another executive led by the democratic party does not mean to reassure the
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markets. it means to spook them more. let me remind you that actually the government decided not to decide, an issue of the utmost importance, both international finance and the italian economy. they preferred not to decide, being on stand by. we moved to transform it with with state investment. therefore, we are against any other government formed by technocrats or any other way. we are in favor of a new election. >> i want to reiterate that everything i've heard since being here and the foreign minister when i spoke to him at the back end of last week, what the government will do is try to ensure some kind of stability. they are very clear. they understand the risks, as you were mentioning, what that means to the debt to equity swap. i think the government very
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aware here of how critical it is is for the banking sector that stability is. no matter what happens here, a yes or no vote. guys, back to you. thank you so much for that. moving on, mark carney warned that european economies could be heard by freezing out the city of london after britain leaves the eu. speaking after delivering the bank of england's stability report yesterday, he called europe's investment banker and argued an orderly brexit transition is is in the interest of the eu. >> additional risk to the euro area could emerge as a consequence of the uk's withdrawal from the european union. banks located in the uk supply over half the debt and equity issuance by continental firms and account for three-quarters of foreign exchange and derivatives activity in the eu. if these uk-based firms have to just their activities in a short time frame, there could be greater risk of disruption to
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services provide to the european real economy, some of which could spill back to the uk through trade and financial linkages. >> donald trump says he is separating himself from his businesses. the president-elect announced via twitter he is taking steps to hand over management of his companies to his children in order to fully focus on running the country. trump gave few details he said he would expand at a press conference later this month. in a joint statement, educate lawyers from the bush and obama said, they must use a blind trust or equivalent. makes sense. he is not so bound in his businesses. >> and i don't think you can set up a wall between your kids and yourself. you're still going to have dinner with them, right? >> in the meantime, trump's
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cabinet is taking shape as well. steven munch in was selected. >> wall street heard a lot of what it wanted to hear in cnbc with the new leaders of the economic team trump announced thursday. they talked about aiming for growth between 3% and 4% rather than in excess of 4%. >> our most important priority is to stand economic growth. it is absolutely critical for the country. >> they will regulate parts of dodd-frank that reduced lending rather than wholesale scrapping of the bill. and ross said tariffs were a
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last resort and trump trade policies would aim to remove tariff and nontariff barriers. the two even praised fed chair janet yellen. >> tariffs are the last thing. they are part of the negotiation. the he real trick is going to be increase american exports. get rid of some of the tariff and nontariff barriers. i think she dealt with a difficult situation and did a reasonably good job. >> the key will be actual policies proposed by the new president. those will be passed into law by the u.s. congress. for the moment, president-elect trump's designees are closer to the sister than candidate trump. steve liesman, cnbc, business news. eu to boost defense spending to the highest levels in a deca
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decade. it wants to set up a fund to invest in new planes, helicopters and military research. top eu calling berlin to up defense spending to tackle increasing threats to the region and respond to questions the president-elect raised during the campaign on whether the u.s. should protect its allies. in germany, defense spending is is 1.2% of gdp. and nato, 2%. so there are lots of calls for berlin to up their spending. ukraine is conducting air missile tests today. they said the trials are being carried out in accordance with international law. all right you are watching live pictures of russian president putin delivering his annual speech he said the work on the bridge to crimea is on schedule.
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also talking at length about the economy. he adds there were internal problems that were the main reason for the economic slowdown in russia. putin says we have insured there is macro economic stability and we have preserved reserve. this year inflation will be below 6%. in 2017, we can reach 4% inflation. is and this will allow us to achieve significant growth. so far talking about the economic side. i wonder if he will make any comments about trump and the bromance? >> everybody is measuring how many minutes does everybody get. anyway, we will continue to monitor what mr. putin is saying.
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it is starting to look a lot like christmas in manhattan. the 84th rockefeller center christmas tree has been lit in front of thousands of people. it is a 90 feet norway spruce. it has become a worldwide symbol of the holiday season. i like to the see the trees in the forrest with little bird in them. >> so you're a tree hugger? no christmas tree for you then? >> i actually have a -- no. it is too difficult. >> that's a problem for many. >> what about you? >> not this year. >> coming up, go pro sheds its
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media content and more tech news after the short break. we'll be back.
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hi, everyone. welcome back. go pro is shedding 15% of its workforce closing its media basis. promise you that will never be me, never ever. shares have fallen 70 since the company went public back in 2014. and u.s. tech start jaap commaai software announced it had open sourced the code for the driver-assisted system which it planned to the start selling by the end of the year. the company was prevented by the
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national highway transportation safety which demanded that it prove its device is safe. >> reporter: driverless cars is one area that uber is really focused on on right now. we got to catch up with one of the early investors. this is why he is excited about the long-term potential of this company. >> i'll own it five, ten years. it has the disruptive speed. just innovating, creating an entirely new way of thinking about logistics and moving not just people but bits and ats all around the world. it makes money. i don't know how much you spent on facebook, but i know how much you pumped into uber. i'm a believer in this. i think it goes beyond rides. they say this all the time.
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i think it is one of those companies that is just getting started. >> the ceo talked about holding off on ipo for as long as possible. will they go to market soon? >> it is totally up to travis. travis is getting everything he has to get done without having to explain the strategy and apiece shareholders every month. as an investor, explain about anything. he has been new things. he will when he is ready to go public. right now i'm a happy investor. >> how do you think they will react to the a company like uber when and if it does go? >> uber is much easier for the public to understand. the business model is easy to wrap your head around. they use the product. they're familiar with it. contrast twitter, instagram, the
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companies in their early days, how is this ever going the make money? uber, it's an obviously clear and understood business. >> we don't know when uber will go public but chris sacca will be an investor for a long time. >> why does your background look like a mosh pit at a concert. that's it for today's show. >> worldwide exchange is up next. we'll see you tomorrow. bye-bye. >> bye.
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>> good morning. the trump rally stocks jumping post election. but can we hold onto the gains in december? the debate straight ahead >> and the trump transition president-elect hits the road for a tour today. he makes his way to the white house. plus, tiger is back. the 14-time major champion making a highly anticipated return to the fairway. it is thursday, december 1st, 2016. worldwide exchange" begins now. ♪ good morning. welcome to "worldwide exchange"


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