Skip to main content

tv   Street Signs  CNBC  December 2, 2016 4:00am-5:01am EST

4:00 am
good morning, everybody. welcome. you're watching "street signs." >> your headlines. >> nervousness ahead of the nonfund payrolls report and itali italian referendum. >> italian bank stocks trade mostly lower as the finance minister warns a no result will make it difficult for the country's lenders to raise much needed capital. plus hollande delivering the latest shock saying he will not be running for a second term as
4:01 am
french president due to his lack of popularity. and pobama becomes an obstacle as he says he will block a chinese takeover. welcome, it's friday. >> and not the casual friday many people were hoping for. we have the italian infrastructure, austria elections, nonform payrolls. >> and more nominations for cabinets state side. which is causing people to be nervous. here in europe, we were mentioning the italian market, we have seen a recovery in the last laugh an hour or so from some of the early underperformance from some of the italian players. the referendum on sunday super important and we'll be crossing over to julia to get more on the latest of what to anticipate and why it's so importantly. we have seen the italian banks
4:02 am
continuing to come off a little bit, but again some of these losses that we saw earlier this week having just mild -- they have neutralized a little bit. >> but italian banks and stocks have been higher for three days up until today. so we did see narrowing of short positions there. i guess because of some of the more informal polls, formal polls closed three weeks ago, but informal polls and on social media, those have shown a narrowing in terms of the yes and no vote. >> we had the report out by the ft at least saying that it would be pretty dire for the italian banks if we were to see a no vote. but again, there is a lot going on. and there is a lot of differing pin p i don't knows, also, on no and yes. >> let's get to the credit suisse opinion. they say a no vote is probable,
4:03 am
and 50% of a soft note. >> the prime minister saying that a no victory would make it tougher for the italian banks to raise capital. he qualified his warning saying that the financial system is solid, but admitted that three of the country's lenders are in a difficult position. they are trying to raise 5 billion euros to avoid a capital shortfall. and some of the banks out there again not a lot of movement compared to initially earlier this week, we're just seeing a little buts of recovit of recov. again bearing in mind how much they're worth per share. julia is in rome. just map out why a no vote necessarily would have to make it more difficult for some of these italian banks.
4:04 am
>> the focus has been on what the results of a no vote would be. and the prime minister said that it would make the environment more challenging for the banks. why? because the likelihood is if we get a no vote, prime minister renzi will step down and then the search will be on for a new prime minister. so you're look at some elements of political instability even if renzi continues to hold the helm until that replacement is found. as you pointed out, you have banks like monty depassky undergoing a debt to equity swap as we speak and they were hoping to raise capital starting next week. so if you have political instability here, then the ultimate question is that going to create challenges and make investors more nervous about perhaps participating in this equity raise than they might have been before. remember there was already reluctance that we were hearing behind the scenes. let me give you a sense of what the local people and press are saying about the likelihood of a
4:05 am
result here in this referendum. we have the headline here, renzi continuing to say that look, this reform is a good thing and it will guarantee some element of stability in government itting for forward. and the clown here has nothing to do with renzi of course or the focus of the five star movement. and this paper is more to the left. saying it's an ultimate showdown between renzi and grillo. you have an estimated 07% of ittaliance living aboard, 40% believed to have voted already. an estimated third italians are up decided at this stage, so still difficult to call. >> and a very busy weekend for you. let get out to managing director
4:06 am
trusted sources joining us. thanks so much for taking the time. you say the markets are overplaying the significance of this referendum. why? >> because the referendum does not represent a critical path to any particular result. for example, the italian economy ministry you just quoted saying the kn no vote is what they're expecting and that's what the markets are betting on, which is different than the brexit, but if the no vote does win, you heard the minister saying that would make more life difficult for the banks. probably it would panic the eurozone authorities to relax their rules on state aid for bank recapitalization and their insistence on bail-ins in the process of restructuring banks. but it doesn't lead in itself the referendum to any crisis straight away. >> but it would if there is a yes vote and the five star
4:07 am
movement gains power and they want to exit the eurozone. >> and that is the point which the market is missing, the yes vote which would surprise the markets on the up side. so italian assets would rally strongly on monday morning which by the way is certainly not impossible. i think we've all learned not to place too much trust in opinion polls. and your colleague in rome there is saying there is a yes vote coming from the huge italian, london, many parts around europe. and i think that there could be a surprise. but i so agree that the yes vote would perhaps create greater risks. it would leave italy for us brits a bit like here in the uk. you get a lower house of parliament which can get outright power in the state. because the local governments would be downgraded, as well, in this constitutional reform. so you have a system where a challenger like for example an ally answer of the five star
4:08 am
movement in the northern league could win outright power in the italian state and take italy out of the euro. so the yes vote is a harbinger of risk and i think investors are missing that point. >> and we're hearing that the five star movement that they're backing a no in order to get n renzi out of power. >> and that could be short sighted. >> could be. and we talk about changes in democracy and whether it's a smart thing quote/unquote for italy to be taking away power from the senate. >> well, every democratic country has its open from a decisions. i think most people would -- although they may question one or another electoral system would say the uk is no more or less democratic than eigitaly. would italy become more or less democratic? you can debate that until the cows come home, but really these are democratic cultures.
4:09 am
>> after the brexit vote, we haven't seen this massive uprising of other countries in europe expressing that they would want to leave the eu, as well, that that kind of hasn't happened yet. i'm sure there are more outlier parties that would want that to happen, but we haven't seen that real push from some of the main european countries. >> well, you have in the major european economies like italy and france which have had pretty dismal economic performance especially italy, you have parties that have a program tha you have to focus on single. others explicitly want a mandate to take their countries out of the euro.
4:10 am
and in italy, the scenario is a little more realistic than france. but i think these in any case even if still a low probability, but well below 50%, these are nonnegligible tail risks and the question is are markets pricing them adequately. >> stay with us. we want to talk to but another political story. hollande has announced he will not seek re-election for a second term. he shocked the nation in acknowledging his widespread lack of popularity and injecting new uncertainty into next year's race. hollande's decision marks the first time an incumbent president has not sought a second term since 1958. he delivered the news in a televised address. >> translator: being in power, ritual of holding power, never made me lose my lucidity,
4:11 am
neither about myself nor about the situation because i have to act. and today i'm con shups of the risks such a move would have if it doesn't get widespread support. also i've decided not to be a candidate in the presidential election. i wanted to tell you directly as promised if he beginning of december as i have announced it. >> christopher, to be honest, it didn't shock me at all because that's pretty much what france was expecting because his popularity ratings are at 4%, lowest since anyone of anyone president since the he said of the second world war. was it the right decision? >> i think the answer is obvious it was certainly the right decision in the sense that if president hollande had run again, he would have crushed out disastrously from the election. >> so what happens to the social lists then, what happens to the left side of the political spectrum?
4:12 am
>> he will face a primary election a bit like the center right party has been having. and he will be up against the left wing. and then the i said center left candidate. so there will be plenty of jostling for position on the center left and left part of the spectrum. but the incumbency at a time of economic weakness and terrorist outrages in france is going to make it extremely difficult for even a fresh or fresher face than president hollande as the candidate of the left to get through to the second round. so i think the boring conclusion has to be that france is still looking at a second round runoff.
4:13 am
>> so how do we trade it? >> i think investors need to take a view of whether the victory of a challenger party like for example the brexit cause or the trump victory in the u.s. in these core european countries and i stress again eurozone, france and italy, whether that is simply a tail risk talking say 5%, or whether it's a substantial possibility, is it 25% or 30%. because i think risk positioning would need to be very different in one or the other case. if you position that the national front in france has a one in tour chance of taking power in the french state, then that becomes not very likely but possible.
4:14 am
>> do you buy sovereign bonds or is that seen asing a risk play basically? >> the hire ygher you think thel risk is, the more you should be hedged for severe financial shock in the bond markets. >> and you say in the case of a no vote in italy, we might see a big selloff, that would be a buying opportunity you think. >> i think that some of that selling has already taken place. so as i said a minute ago, up like brexit or trump, the market is better positioned for another voter revolt. but never the less there would probably be more uncertainty, more selling on monday. and i think would be a buying opportunity. >> thank you so much for your time. once again a busy weekend for all of us. m m >> it's fantastic to hear from you always.
4:15 am
we're also on twitter live. you can follow us at street signs cnbc or tweet us directly. and still coming up, the deal is off. find out why president obama block blocked ax tron being acquired.
4:16 am
4:17 am
4:18 am
welcome back. you're still watching "street signs." let's head out to singapore and get the latest on the asian markets. >> good morning. i'm afraid we at the present time gididn't give you a good lead-in as we saw a pull back as they're waiting for the u.s. jobs number and the italy we saw a pull bace waiting for the u.s. jobs number
4:19 am
and the italy referendum. hang seng down by 1.4%, dragged down by the casino sector even though macao's revenues are up year on year. the nifty oig continues to trade lower being dragged down by the auto sector saying november sales have been hurt by the demonitization move that happened earlier in the month. nikkei 225 ended down half a percent off its 11 month highs as we saw investors taking procht respe profits of off the table. kospi also down with the semiconductor space hit significantly. it was tracking its counterparts in the u.s. which ended more than 5% lower on the u.s. asx 200 down 1% with banking and resource stocks dragging down that index. back to you. >> pauleen, have a fantastic
4:20 am
weekend and see you next week. the british home builder berkeley posting a 34% rise in pretax profits in its first half, but warned of a 20% drop in demand since the brexit vote. they said uncertainty was com pounded by a rise in property tax. >> and reforming its financial targets. ceo says his firm is facing significant challenges. but swiss re says it is still aiming to increase its economic net worth by 10% at year. and i didn't see what the shares were doing. they flipped too quickly. >> very fast. got to stay on it or you snooze you lose. >> talktalk is the latest victim of a cyberattack. items left some customers without internet now for days. the hackers reportedly used the same malicious software used in a string of attacks on several
4:21 am
websites earlier this year. >> the white house has decided to block aixtron from being acquireded by a chinese buyer. president obama is expected to uphold the u.s. committee on foreign investments recommendation to reject the deal on national security grounds later on today as shares off by a little more than 3% in german trade. and huge moves in the price of oil as many oil related stocks after seeing a post-opec deal boost, shares there again in focus this morning. oil prices have now slipped as investors they shift their focus to details of how the deal will be implemented. the landmark production cut marks the first time since '01 that opec has coordinated with nonmember russia and of course those moves were yesterday and the day before yesterday. >> and meanwhile russia says it is actively working out details of the deal with opec, that is according to comments this morning from the country's deputy energy minister. the minister added all agreements will be based on november output figures and
4:22 am
that's quite interesting because there was there was some confusion as to whether there would be based on next year's output figure. so that seems to clarify some of the confusion. >> definitely. and also i guess keeping in mind as well that they're still putting out the most oil they have ever put out like saudi for example. russian president vladimir putin has said that inflation in russia may reach 4% by 2017. but he's warned that end of the year 2016 inflation figure might be below the 2011 record low. speaking in his am state of the nation address, putin said that the russian government will present a new plan before may of 2017 and he added that the country will consider changes to its taxation system and implement new mechanisms starting from 2019. daniel slaughter is the global head of equity strategy from renaissance and he's with us. talk to us about the trump trade and whether or not it's in place when looking at the russian
4:23 am
trade, you know, whether or not russian market is a trump trade given that we anticipate sanctions for an example might be lifted at some point in the future. >> sure. if you look at emerging markets since the u.s. election, you've got three are market which is are up. egypt, greece and russia. so the market is already telling us there is something of a trump trade. putin and trump have held out hands to each other. they have yet to meet, so we don't know what will happen on sanction. we don't know who the secretary of state is in the u.s. yet. but they have held out their hands to each other, so we're saying now that the possibility of sanctions coming off has moved to 50/50 probability rather than a 10% chance which we had thought previously. >> secretary of defense we heard more are about this morning, james mattis, we know bannon is probably chief strategy, reince priebus taking on a main role, as well. do you think that the emerging market trade necessarily has to be a negative one if we continue
4:24 am
to see the trump trade being in place? i mean aren't emerging markets being lumpeded too much together in the same -- >> so the trump trade so are far has been for emerging markets, you've had the strong dollar, rising u.s. bond yields and threat of protectionism. so people are cautious and uninvestors we speak to will come back in the first quarter, see what the actual will be and reassess.investors we speak to back in the first quarter, see what the actual will be and reassess. they are looking for i h idiosyncratic trades that can do well. >> listening to putin was quite shocking to hear him say that our economy is suffering because of internal problems. and he usually blames the rest of the world for the problems. now he admits that and also we're seeing maybe a seismic shift when it comes to the opec deal and oil prices rising.
4:25 am
how much of a change a does that mean for the russian economy? >> i think that the three things that can help russia, one is sanctions coming off. the second one is reform, that would help russia a lot. and the third is the oil price. so far we're saying the oil price is helping. sanctions we don't know yet. and reform we think is the story for after the 2018 elections. but putin is laying the ground for reform program after those elections. >> you have an overweight on russian equities. i would note msci is at an all-time high. >> it's the markets that not all investors have returned to. many that we speak to are still qui ske skeptical. and you have growth coming back next year. investors will be prepared to look at it again particularly if the geopolitical environment looks better. >> quick note a greek and egypt?
4:26 am
>> yes. three markets that are up, greece there is optimism about the review that the eu is doing about the reform package in greece that is due next week. and then egypt, you've had a huge devaluation, currency is very cheap. so that is a decent recovery story we think over the next 12 to 18 months. >> daniel, thank you very much. global head of equity strategy from renaissance capital. check out world markets live, our blog, which runs throughout the year. we'll be back in two.
4:27 am
4:28 am
4:29 am
4:30 am
welcome back. nervousness rains in early trade with the ftse underperforming its european peers. >> italian banking stocks trading mostly lowerish. they have come around here over the last half an hour or so. that as the finance minister is warning that a no result are ma will make difficult to raise much needed capital. francois hollande with the latest shock saying he will not run for a second term as french president due to his lack of
4:31 am
popularity. >> and obama becomes an obstacle for ax drixtron and shares sink warns that he will block a chinese takeover of the company. good morning and welcome back. a bit of data just hitting our wires here in the run p to the weekend. you have uk november construction pmi of 52.8 versus ap-october figure of 52.6. so a little higher, also higher than reuters. and when measuring it in months, highest since what we've seen since back in march. input prices highest since april of 2011. so we have continued to see growth in the construction industry in britain continuing to add unexpectedly touching this eight month high for the month of november. we're looking at kanl there on
4:32 am
screen for you right now. and sticking with the uk -- >> yes, i want to tell you what the uk foreign secretary boris johnson has been saying. he says if the eu wants a common defense policy, they should do so. the uk is not seeking to impede further integration. and he also backed president-elect donald trump's campaign to get nato countries to spend more on defense or he says it cannot be justified that the u.s. pays for 70% of nato spending. >> just want to mention as well some comments that president erdogan has been making in turkey. the turkish president saying that there is no option other than cutting interest rates in turkey, that has pushed the lyra to a record low against the dollar. and also stating that people should convert their effects ho fc fx holdings in to fold agold an.
4:33 am
so much political opposition now, a lot of uncertainty and a lot of people saying staying away from turkey. >> let's have a quick look at u.s. futures. fr you could a wonder is it really all that important because we know the fed will hike anyway. the s&p 500 seen lower to the tune of five point. dow jones set to fall by 18, nasdaq by 22. this is after the dow tipped its outperformance yesterday and kicked off december with a record close. the s&p 500, nasdaq fell for a third time in four sessions. also want to show what you european markets are up to and they are lower across the board european markets are up to and they are lower across the board.
4:34 am
the ftse mib off by 1%, all eyes on the italian referendum taking place on sunday. but bated breath for that jobs report. and we're seeing the dollar pulling back a bit after we had a 3% jump in the month of november. dollar against the yep is at 113.74. and you're row dollar not teuro week higher, but almost 1%. i want to tell that you you tha sterling higher by 0.1%, but we saw a jump yesterday because david davies, minister task with the transition for brexit, he said that the uk might pay into have access to the single market. but why think that can happen. eu says you can't buy access to
4:35 am
the single market. >> you have to pay to the eu budget and all the other good stuff that they wanted not to be a part of. fwloo not to be outdone by all the political news to come out of italy, hollande in france has now announced that he will not be seeking re-election for a second term in france's 2017 presidential election. he shocked the nation, some, in acknowledging his lack of popularity. this is the first time unkincumt has not since 1958. >> a no vote is the most likely and the banks say there is only a 25% chance of yes winning. while there is a 50% probability the vote will result in what they call a soft no. >> meanwhile italy's economy minister says that a no victory in the constitutional referendum
4:36 am
would not cause a financial tha make it tough to raise capital. as mentioned, austrians will be voting in presidential elections on sunday, rerun of a previous poll. last time green party politician narrowly defeated the far right candidate, but the result was annulled after investigation revealed that voting irregularities had been taking place. they say this weekend's rerun is still too close to call. >> and united technologies has received $7 million worth of tax breaks from the state of indiana as part of a deal to keep jobs in that state. in exchange, carrier will invest $16 million into the indianapolis plapts where it will retain just over 1,000 jobs. but at least the same job of numbers are still expected to move to mexico. donald trump and mike pence visited the indiana factor yesterday to kick off a that you
4:37 am
think tour for his election win and to celebrate the deal lauding the agreement, trump said his administration was going to do great things for businesses while warning against those outsourcing jobs. >> companies are not going to leave the united states anymore without consequences. not going to happen. it's not going to happen. tell you right now. we're losing so much. so one of the things we're doing to keep them is we'll be lowering our business tax from 35% hopefully down to 15%. which would take us from the highest tax nation virtually in the world, terrible for business, to one of the lower tax. not the lowest kreyet, but one the lowest. >> and in ohio, he announced james mattis as a cabinet pick.
4:38 am
he said he would nominate the retired marine corps general as secretary of defense. tracie potts joining us from washington. looking back at mr. mattis and what he's known for, it's a very kind of split opinion that he seems to hold. he talks quite negatively about the iranian regime, he's persuaded mr. trump to reconsider his support for torture, he's a strong krit tig of the critic of the israeli go. and saying apartheid palestinians kbts vocan't vote, been outspoken of the treatment of the mill tar units in afghanistan and iraq. what are people making of this nomination? >> reporter: besides all of that, one of the issues in the u.s., he's only been a civilian for three years. the u.s. congress requires retired military leaders to be
4:39 am
offer the job for seven years before they can serve as a civilian. in this case the civilian leader of the military. and some democrats are very adamant about that and while congress is controlled by republicans now, democrats will come into play here because they need at least eight to confirm him in the senate because that vote will require 60 urks not a simple majority because they need a special waiver because he has not been a civilian long enough. so that is going to a bit of an uphill battle. we're already hearing some democrats weigh in, at least one saying that he thinks that this is an excellent choice and he will support him despite concerns about his civilian status and the length of it. we've seen another democrat say, yeah, we think he's a great pick, but he should not be the civilian leader because he just retired three years ago. so getting and i height democra board be will be the challenge. >> tracie, thank you so much. let's continue that discussion about donald trump and his
4:40 am
policies with fellow in compare ton politics at london school of politics. brian, thank you so much. i want to come back for the warning spoken by donald trump yesterday. he warned u.s. companies of consequences if they move jobs abroad. what sort of message does that send to u.s. businesses? i guess they won't be making their business decisions based on economic rationale but really a fear of punitive actions from the government. is this what a democracy should look like? >> well, it's not necessarily the fear of punitive actions that i'm worried about because i think that there are fewer action that's can he take. what i'm worried about is companies nettening to move jobs overseas simply because now they have clear evidence that the go. will cave and gave them tax breaks. at some point there is economic in-feasibility that is at play here and if the jobs were going to leave, it's great that some are staying being but keep in mind many are still leaving, but the government caved. and now how many companies will consider threatening leaving jobs or eliminating jobs simply
4:41 am
because they believe they might get a tax break. >> there was some animal gi alo report that the companies will be trick and treaters who will come to the white house steps and say either you give us a tax credit something to make us stay here or we're going it leave. so basically he will be held hostage. so was it just a pr exercise on his part yesterday what he did in indiana, that's not a vital strategy going forward when it comes to keeping jobs in america? does he have a plan for that? >> i think this was well timed for him in terms of public relations simply because it came at the same time that he's under a lot of fire correctly i think for the fact that his major appointments have been -- or major have been wall street finan financi financiers. and he championed himself as friend of the little guy. so this is not really the type of person that you're expecting to elect or have in the cabinet when you are a west virginia
4:42 am
coalminer who positions that trump brings change and is going to bring your jobs back. >> but does that matter really is this because we keep hearing that people voted to trump and not for his policies necessarily. and if you look also at some of the research that has been done on the people that actually voted for trump, they changed their minds as well on who they used to like in temps of the cabinet picks and who they like now. and so people are changing their minds basically and does it really matter? >> there is a strong partisan effect in american politics will people see things through the prism of their partisanship. so a lot will give him the benefit of the doubt for a long time. the question is for how long. support could erode and that could be a major crisis going forward. >> you say that it's clear that russia meddled to some extent in
4:43 am
the voting in the u.s. >> i don't think that the voter machines were are hacked. i think that the russian government likely meddled to the extent that they were probably involved in some of the wic wikileaks hacks. we don't have a smoking gun, we don't know for sure, but the signs seem to point that there was some sort of state involvement in putting their finger on the scale so to speak in a way that shown a light on to hillary clinton's dirty laundry but not donald trump's. and that probably affected some voter's decisions in the final days glp is the trump effect being exported to europe? is the italian constitutional referendum a vote against the establishment or no, what we're seeing in france, will le pen surge, is that a trump like vote? because a lot of people say toes are completely different issues. >> there are two things to think about. let's remember that trump barely won. so before we decide politics as you're is completely gop, if 0,000 people had voted differently, this conversation
4:44 am
would be extremely different. the second thing is that a lot of people now have a playbook for how to run trump style politics. so whether these votes go the same way or not, there will be more people who try to mimic trump and his tactics going forward and we smoo expect to s should expect to see populism not going away anytime soon. >> in the case of greece, we saw the populist prime minister has really failed to turn the country around. >> this is the big question for 2017. i would say that in the history books 2016 will be the year that the populist broke the establishment. 2017 will be the year that they have to deliver on breaking the establishment and actually fwofrning. and the question is they whichever. because if populists have the message that the system is broken, we can fix it, if the only thing they deliver on is the system is broken but they don't fix it, people might gravitate towards politics as usual with a hope that we actually take the concerns seriously. but with thoughtful reasoned proposals as opposed to just anger and throwaway perform r lines that run campaigns.
4:45 am
and that's what you're seeing with donald trump. the lines that he delivered in the campaign to rapturous applause are the thing that's is running away from because he realizes they're impossible to deliver. >> tell us about your book. who is the accomplice? >> my book argues that democracy has been declining around the world since 2006. regimes have become more authoritarian. and my argument is also that western governments are konl police it in this decline. and if you think about this as referees in the gain, the way they call the game affects how the players play it. so how aggressive the western partners are in condemning authoritarianism really matters to how authorize tear kran regimes behavior. and we're already seeing signs that trump giving a free pass to those who in the past were very much condemned by the west. and this could be a serious problem going forward in terms
4:46 am
of incentivizing nepotism in places where it was previously retreating. >> i'm thinking what is wrong with putting your own country first necessarily. and that's what many trump supporters would say. beer too global, we're too enter linked, i don't have to be in contact on twitter with somebody in china necessarily. might be fix your problems at home first and then make ties again to even on the outside. >> the problem with that logic is it's extremely short sighted. we have the genie out of the bottle. we live in a global world now. so imagining that we can put ourselves first and not the deal with any consequences or simply build walls and imagine the problems outside the walls don't exist doesn't work. so as long as we have the idea of returning home, the longer those problems build up and become catastrophic. so it's about having a situation where you think long term and that's where provide moting
4:47 am
democracy really pays off. over the long run, democratic partners are much more lucrative markets for western governments. but short term, we believe this mirage of authoritarian stability. and the problem is it's a mirage that looks good until it dissip patients. that's what happens with the arab spring where we thought the bastions of stanbility and then they broke apart. every benevolent dictatorship starts benevolence and then becomes nonbenevolent. and then there is nothing to fix it. >> we have to go. your book is out wherever books are sold? >> indeed. >> so take a look at that as democracy under threat. meanwhile in the uk, liberal
4:48 am
democratic hit has beat out incumbents at goldsmith by election. only a pro eu candidate has promised to vote against. goldschmidt r smith ran as an independent. let's have a look at the ten year bond yields. they're set for the biggest p g weekly fall. some are taking the premium out of the market that they have taeched to. and coming up, lavish lingerie? this looks really you been comfortable by the way. but what is the price tag of the 450 carat fan takes is i bra that lit up this year's factor i can't victoria secret fashion
4:49 am
show? i'm sures ehuure it's not a bar. looks scratchy. eforyx
4:50 am
4:51 am
4:52 am
welcome back. starbucks stocks fumbled more than 10% after news broke that the company's ceo howard schultz is stepping down. however says have since recovered some of those losses. the current president and coo of starbucks will replace schultz as head of the company. and howard schultz and incoming
4:53 am
ceo kevin johnson will be live on "squawk box" in a first on cnbc interview. don't want to miss that. as u.s. markets continue to hit new high and top line growth revenues increase, is trading on trump the best strategy or is it maybe time for some money to do out of the markets? bob pa is an any filed that report. >> reporter: market trading high by historic standards. so with stock prices heating up, is it worth buying at these kinds of levels? key factor is what earnings will be like in the near future within the next year. so the bulls are arguing that president-elect donald trump's policies will lead to stronger economic growth with more fiscal stimulus, tax cuts, reduced regulation. all right. all that sounds great, but it's all a little vague and we need to put a little more flesh on the bones here. it's so vague analysts haven't rushed to raise their estimates
4:54 am
yet because they have no clue how to model tax cuts, stimulus programs and fewer regulations without a lot more specifics. so can the bulls pull this off? well, maybe, but again, we just need more information. earnings have already been improving. third quarter earning grew for the first time in four quarters. that is really good news. so we're already on the right path. and most importantly top line growth, revenue, they have been growing, as well. that is the most important thing and that is a good sign. but the markets have come so far so fast that some are saying that everybody ought to calm down. want to see a good example? today caterpillar came out saying analysts estimates for 2017 are too optimistic considering the expected headwinds. too optimistic. most likely any infrastructure gains for caterpillar and other industrials will an 2018 year
4:55 am
event at best. i'm bob poe is an any, cnbc business news. the first u.s. nonfarm payrolls report is due.poe is a business news. the first u.s. nonfarm payrolls report is due. dow jones forecasting 180,000 jobs added in november. goldman sachs, morgan stanley more bullish forecasting an addition of 200,000 positions. and that is after the lower than expected figure as said in october with hiring easing ahead of the vote. returning weath hurricane weather also weighing in. and european markets lower across the board. ftse down 1%, italian market off by a little more than 1%. some pessimism coming back into the market about the telling referendum, some caution ahead of the nonfarm payrolls report. worth noting that the italian markets were high for the last
4:56 am
three trading sessions, drought performing t outperforming the european markets. >> and pushing yields lower despite the uncertainty. but maybe long term they're thinking italy won't leave the eu tomorrow. but maybe long term they're thinking its e's intact. >> and political instability wouldn't be news for italy. wi we've seen that the last 40 years. >> we have 4 1/2 hours before the open state side and we're just being called a little bit lower off the back of record closes on the dow yesterday. s&p and nasdaq both seeing some losses. financials leading the gains in yesterday's session. that's that's it for today's show.
4:57 am
wouldn't be news for italy. yesterday's session.
4:58 am
4:59 am
5:00 am
good morning. it's jobs friday. we'll talk expectations and what the report could mean. >> and the president-elect has another cabinet announcement. and starbucks shares slide after schultz announces he will take on a new role. "worldwide exchange" begins right now. good morning and a we warm friday. welcome to


info Stream Only

Uploaded by TV Archive on