tv Street Signs CNBC July 17, 2017 4:00am-5:00am EDT
here's my monday morning question for you viewers of cnbc is there anything economically that polarized more opinion than china. on one hand, a debt explosion waiting to happen. debt to gdp nearly 300 on the other side, $12 billion completely and utterly expanded at a rate that's impossible on an annual basis. i am steve sedgwick these are your headlines.
european equities are better and earnings season gets into full swing the real brexit talks begin. meeting in brussels, promising to go beyond the pleasantries and get into the top issues. and corporate planes and telenor beats expectations as it launches a share buy back and we will speak to the ceo of telenor. let's look at things out of china. they are beating expectations. this is polarizing
they have taken 16 days to come up with 7% growth rate for an economy worth $12 trillion i had a look at the bureau of economic analysis, they're not getting the first quarter estimate because they had many revisions of second quarter gdp until 28th of july the chinese did it in 16 days. that's something that bites a lot of you thinking are they accurate statistics 6.9% higher second quarter gdp, beating expectations, very strong figure. retail sales up 11%. but the outperformers on industrial output as well. both sides of the economy add into that fixed investment pretty strong stuff. look at the chinese markets. they haven't enjoyed it. shanghai composite down 1.4% are they worried they'll get tightening measures? we will discuss with our guest in a few moments time.
sophia yang has more. >> china posted 6.9%, year higher than expected at 6.8% that's a stable first half of the year first year saw 6.9% growth fairly strong for the chinese economy. the challenges are still here. a lot of concerns over property sector, over growing debt. these are issues that certainly aren't going way any time soon analysts have estimated 6.6% growth for the full year of 2012 and while that's in line and a hair better than what the gho government set for a goal of 6.5%, again, the challenges are still here to stay the government has made it clear it is interested in trying to deal with this financial sector risk that's posing challenges to growth over the weekend, the government did conclude a major work conference, happens once every
five years at the end of it, the government has a committee to oversee growing financial sector risk and help with regulation, to give more oversite it is possible that investors were spooked by that, in closing meeting notes out of that conference the words risk and regulation each appeared 30 times each markets did move in did i ver generals to positive data we saw out today. that could be one reason why certainly an issue that the government continues to need to topple, despite all of this emphasis on trying to keep stability ahead of a leadership shuffle in fall. back to you. let's get more analysis. senior analyst joins us. miranda, am i over egging the story to say the debate over china statistics is so heated, it has been heated my entire career i understand the nay sayer, how can you come up with those numbers so quickly and affirmatively.
yet, on the other hand on a regular basis, meeting expectations. >> headline gdp number, you have to take that as a real number that is more of a signal not advisable. looking at the underlying data, there's reason for optimism on the underlying economy you have the consumers doing well auto sales are going well. export numbers were much better than expected last week as well. actually there's a few reasons for underlying optimism. this is bumping into ai sectors and ramping it up that way, but there's not. at the moment underlying it, you have a reasonable economy. whereas real risk, the financial work conference is basically bhaepg in the financial sector this is where you get into things where you go debt is too
much, local government -- all of that is where the main issues are. >> i hear the nay sayers saying why should i trust that. what's your answer to them >> the other thing, you can check against private sector data, so the gdp number you take it as a head line number do what you want with that but with the other data, you look at the consumption, that stuff or auto sales themselves from company data, and that's what we've done. we sort of looked at things like airline passenger data and that comes from companies themselves. you can see some resilience in those from companies or private sector data as well. >> let's move on to the second part of the nay sayer's argument one, they don't trust the data two, they say if i do trust it,
it is terrifying it is terrifying on expansion of the size of debt at municipal and corporate level and ultimately state level 277 debt to gdp, it is there or thereabouts as well. what is response to that >> the thing is you get the same criticism of that figure, the 270% in economies particular china and political circles. you can pretty much match. if you take those examples and put it next to stuff that comes out, they both say this is a problem. so at the weekend it was all about every five years they have this work conference, and the previous ones have been significant in terms of changing the overall direction. this is a long term change in direction, very significant. things like icbc, bank of china,
privatitization came out of the last one, setting up the regulator, so this is a big issue. >> this new financial stability committee is overseeing the other committeesout there, yeah >> basically you have the banking regulator, insurance regulator, securities regulator and pboc, they all govern different bits of the market that's why when you see this explosion in all of the different forms of finance in china, the asset manager companies have been issuing new products, and the insurance companies which is a massive issue in terms of causing instability in the system, and then even banks themselves are raising more money in wholesale markets than before. suddenly the risks -- >> this committee does what, it
pulls in the best of the others or still looks at the others and say you need to come down harder on this area and this area and this area. >> the details are thin on the ground because there's a changeover the fact that they put it out there, this is going to be a super regulator over the top of all the other ones, basically means you have a higher level and more significant one that's going to piece together the risk and all the different bits of the financial system, and that's what we are entering now the financial sector tightening. >> one more for me that's looking at the one, economy stats, and two, the concerns over debts and explosion there and financial stability. what about external factors. the one i am looking at, willie geist bure-- wilbur -- will he t
point the finger so they can sort out something over north korea. >> that's a million dollar question i think there's a certain underestimation of risk associated with the whole political system and particularly with north korea threat that it is likely, external threats have always been if you like this year, china itself is keeping itself quite stable, cracking down, regulating, many different levels but if you have something coming out of the u.s., that's the destabilizing factor big risk. >> the market is underestimating. >> i think it could be, yeah seems to be a remarkable level of normal concern about it >> i mentioned at the top they're all down is that because they fear a greater crackdown, is that why they're down >> better than expected gdp data, western markets go up, domestically they go hang on, we have a new super regulator
coming in, everything will be squeezed in the financial markets, even if the economy is doing okay >> glad we have you onto explain. thank you very much. nice to see you. miranda car pointing out the data is great, you have a tighter crackdown from authorities in beijing, that's why the shen zen is down keep in touch at street signs cnbc or tweet me directly. plenty more coming up. carolin mccaul takes off, how investors react to change after a short break.
just drawing on the story we started in the first ten minutes of "street signs," you would think with better gdp and economic growth, less concern at the tail end of last week about inflation needing higher rates thought we would get better performance from european markets at the start of trading. what we are seeing is an absolutely flat market as many stocks in negative territory, five rows down, five rows up. about 300 each you can see the market which started off in decent form has come off pretty aggressively in the last few minutes take a look at individual indexes. the ftse 100 topping 7400. elsewhere, the daks losing three-tenlts of 1% ftse in positive territory over in italy look at the sectors.
see if that's the case and it is. feeding on the back of that data out of china, 6.9% again, i think we had a healthy debate about why those concerns are there, where the other concerns are coming from miranda, they were excellent. and it is not about the data today, it is actually about the change to who is overseeing markets. telenol, one of the top gainers in the stock 600 let's look at the u.s. markets, how they performed friday. did see more record gains. i looked at the sector rotation. some of the sector rotation stories are extraordinary. what do you think the worst sector of the year performance is telco down 15% best performance health care at 11%. it, technology companies 20%
higher and similar to each other. let's look at the week ahead as well the earnings side of the ledger is interesting you have black rock reporting later today, bank of america and goldman, sachs, jp citi, and morgan stanley wednesday. what extraordinary comment from jamie dimon last week. i think you might be interested in import data tomorrow. wednesday, housing starts, job list claims on thursday, it is not the biggest week of data, especially after we saw a huge amount last week in retail sales and cpi. there's a wrap up of market action state side as inflation and retail sales are in the spotlight. record closes for the dow and s&p 500 friday with each gaining the most for the week since may 26th the nasdaq saw its best week of
the year prospect is dim for a rate hike. u.s. consumer prices barely ticked higher in june, retail sales fella second month both came in below expectations. labor department says the consumer price index which does not include food and energy costs increased 0.1% separate report by commerce department showed retail sales declining .2% last month s&p 500 gained 4.7% friday, the dow was up 3.9%. nasdaq gained 2.59% for the week real estate was the best performing sector, and financials lagged after several disappointing sets of bank earnings leslie picker, cnbc business news. moving to european corporates, look at one or two big stories of the day, dame carolin mccaul, outgoing ceo of
easy jet is new chief executive of itv she previously led guardian media group. change in leadership comes at a very difficult time for easy jet in the midst of repositioning business in the wake of the brexit vote. speaking to cnbc in may, answering questions, sought to play down reports she had fallen out with largest shareholder and founder of easy group. >> we believe in a constructive dialogue with all shareholders we will be seeing all of them for the road show in the next couple weeks after these results. >> these are the three issues i pulled out of things to talk about in terms of itv. basically the roller coaster on market revenues is
extraordinary. very short they rose 4% for april and down in may. very difficult to quantify it. these shares are enormous movers march, 2009. i will show you what they're trading at now, 179 pounds what do you think they were in march? 18 now about 179. but adam kroez erin since january, 2010, high was 280 as well up to 280, back to 179 keeping momentum going another part of the challenge. the performance after m mr. crozier who quadrupled share price. amazon, netflix, all these companies are getting into production, open the revenue side and production setting
programs of traditional producers like itv aswell. a lot of work to be done for dame carolin mccaul. another big story, valuation of consumer goods groups what have we got yearly trading we have record trading they're bidding for food business according to sunday times, predicts a host of other companies are likely to submit rival offers let's take a look at what's going on in this sector. i can tell you, valuations come in at 21 times that beats the market. that's nasdaq territory in many ways
everyone wants stable growth that the industry brings whether nestle, doesn't matter who you are, you're getting the attention of bigger other players, activists are prowling. we saw that aborted bid for uni labor from kraft heinz led to people say i know you're saving the world on sustainable point. but companies are trying to buy growth and take out costs, hence interest in wreck it they're trying to buy, and looking at nestle. that's keeping valuations at 21 or in nestle 23 as well. the basic growth of companies is quite low. i can tell you uni lever has first quarter at 2.9%, beat expectations, reckitt still think they can make 3% in terms of annualized figure
performance wise, the difference is 26.7 year to date for unilever, and they got interest. rocket up 12%. market capital, big. 147 billion bounds for unilever. you have concerns over valuations if there wasn't so much money pumped in the market, might think they're right. you have activists helping the valuations deep down, you have companies which are struggling to grow business we can answer a few questions and make point to paul polman when we speak to him about the company's latest set of earnings that's coming up on thursday okay mixed reaction on wall street to the big bank earnings of friday.
we mentioned citi, wells fargo, jpmorgan releasing second quarter results. investors put numbers in the spotlight. that's the latest. >> making headlines is jamie dimon's rant on u.s. economic policy, though this was about the last decade broadly, not today's washington and growth has been resilient. >> since the great recession which is now 8 years old, we have been growing at 1.5 to 2% in spite of stupidity and political gridlock american business sector is powerful and strong will grow, i am saying it will be stronger growth having made intelligent decisions. >> certainly fair to say he is envious of other nations like france, israel, ireland, china, who are more proactive changing laws and regulations to benefit economic growth.
>> become one of the most bureaucratic, will he continuing coverage us societies on the planet it's almost embarrassing, listening to the stupid [bleep] we have to listen to in this country. >> bottom line on the u.s. economy, he was upbeat saying if gridlock goes away, we will grow faster, if it continues we won't grow slower. jpmorgan and citi saw share prices decline despite beating estimates. jpmorgan net interest income underwhemed, wells fargo, loan growth disappointed, and the others shares ran up too much. >> shares went up compared to european banks do a little analysis on the likes of jpmorgan. it trades 12.7 that's in line with average of its peers in the united states, but compared with
you can see mildly positive from where we left it at record u.s. market levels led by it on friday looking mildly positive. in terms of european indexes, they're understandably on the ftse 100, propelling themselves to the top of the stocks 7411 is where it is trading. on the down side, trading lower. look at the major crosses in the market 131 currently trading, 131 despite concerns of brexit elsewhere, euro versus u.s. dollar trading near recent levels u.s. dollar under a lot of pressure has been hitting multi year
lows approval ratings for the u.s. president, mr. trump, at historic lows. a new "the washington post," abc news poll has him at just 36%. this is the lowest six month approval rating of any president going back 70 years. elsewhere, a vote on republican replacement for obamacare has been postponed after a health emergency for a top senator. john mccain is recovering at home after surgery to remove a blood clot with two republican senators already saying they won't support the bill they need to have everyone else healthy enough, everyone else has to be healthy enough to show up to get this vote passed nbc's kelly o'donnell reports. >> reporter: for a second day, the president played host to world class golf at his bed minister club. but his shot at repealing the health care law is on hold, and
delivering on his pledge, uncertain. that's a boost to protesters near the president's property. the delay follows unexpected surgery for senator john mccain who had a blood clot removed he is doing well, but must remain in arizona this week. >> i believe as soon as we have a full contingent of senators that we'll have that vote. it is important we do so. >> senate republicans are struggling among themselves. divided over scope of insurance reforms and proposed medicaid cuts. >> they're about 8 to 10 republican senators that have serious concerns about this bill, so at the end of the day i don't know whether it will pass. >> reporter: new abc "the washington post" poll out today shows president trump with the lowest approval rating at si months of any president in 70 years. at 36% on twitter, the president
rounded that up, claiming almost 40% is not bad at this time. one drag on his standing, russian election interference probe. today, the president could watch his defense times five on morning tv. >> the meeting and what took place at the meeting, based on all the information you said is not a violation of any law, statute or code. >> reporter: his personal attorney jay sekulow argued the campaign broke no laws when donald trump jr. and others met with russian lawyer and lobbyist who offered information against clinton. >> i wonder why the secret service if this was nefarious, why the secret service allowed these people in. >> reporter: senate intelligence committee wants to know if the latest smoke leads to fire. >> i want to hear from everyone in that meeting and get their version of the story as well as i think we may find out there may have been other meetings as well we don't know that yet >> let's get the view of the
global intelligence unit mike, good to see you. i've always had this concern as a lot of people that the president is getting distracted by russia, by his own popularity ratings, by stuff that america doesn't care about in terms of ultimately, cares about economic growth, regulation, infrastructure spending, changing the way financials are looked at. is the president despite this noise getting on with things and making progress? >> the thing for trump, what he is most valuable is his signature signing into law trouble is he hasn't got many across his desk to put his signature on and send it on. he is desperate to get the health care bill signed, but it isn't in front of him yet, so he can't do anything. >> is the health care bill as has been portrayed the key to unlocking greater battles on the budget, on tax cuts and
reinvigorating u.s. taxes, is it that key can the other things happen without a health care bill >> they can't, but that's because of the way the republicans chose to go about it they picked health care as the first battle to fight. this is where it gets technical. they need in the senate to get legislation through, normally need 60 votes. otherwise they can't get it without some democrats' help then you can use reconciliation, you can pass with simple majority trouble is you can only do that twice in a year. they decide to use it on health care and the tax bill. for the mexic they're not getting anywhere with health care this is stopping so much. >> without too much detail about senator mccain's health, he is a major critic of the president as well when he is back to fighting fitness and wish him speedy
recovery, is he going to be supporting the president on this >> we don't know what mccain will do on the senate bill yet but the trouble is that mitch mcconnell, senate leader, can't get it through until mccain signs on the assumption he is going to it could potentially work to mcconnell's benefit, he can do frantic lobbying of other senators, others with doubts about how it will work. >> how is the withdraw to medicaid with trump supporters work, one thing we pondered on this side of the atlantic. you would think core voters think he can do no wrong, but many votes for that medical support, i wonder how it plays out. >> it is a paradox also depends on the extent you think it has been properly explained to americans who stand to lose. >> they're not brexit.
>> i am not sure that level of detail wins out. most of us reading the senate -- understanding what that is for the health insurance. >> political calendar moves on pace, and everyone is thinking mid terms next year. in terms of that, is this the time when they start distancing from trump it is tricky and say i have taken one of your benefits but you should vote for me. >> we're going to see a range of different strategies from different congressmen depending where their state is on americans using medicaid, on the assumption the health care bill
goes through, i am not sure it will be. we will see lots of congressmen and states where trump is unpopular, distancing and trying to focus on local issues trump will insist he is making america great again. >> very complicated situation, lots of moving parts as well going to have a chat about brexit meantime, story with mr. tillerson, working hard behind the scenes, the spat between saudi, uae, bahrain, and egypt, and qatar as well uae minister has said the ua was not responsible for alleged hack of qatar ee websites this is the minister of state foreign affairs said today, speaking at a forum in london.
he said the uae would not escalate boycott by asking companies to choose between business with it and qatar if you didn't see the extraordinary comments from the former deputy prime minister with me in istanbul about what he sees behind this, very outspoken man. not part of the government so he can speak up a little bit. he says utter hypocrisy going on uk brexit david davis arrived in brussels for round two. alongside the chief negotiator he says discussions focus on issue of finance and northern ireland. speaking to the bbc, mr. philip hammond warned that brexit uncertainty was putting off businesses in investing in the
uk >> it is absolutely clear that businesses where they have discretion over investment, where they can hold off are doing so you can understand why they're waiting for more clarity about what the future relationship with europe will look like. and the way to get the economy moving, the way to restore business confidence and then consumer confidence is to give as much clarity as possible as early as possible, which is why i have been talking over the last four or five weeks about the importance of a transition arrangement. and i believe the great majority of my colleagues now recognize that that is the right and sensible way to go >> i don't know whether most in the uk are -- i am open on this, i see it on both sides the uk government is an absolute mess at the moment, isn't it you have mr. hammond there being briefed against by his cabinet colleagues big headlines about what he may
or may not have said about the private sector, and the mess in terms of cohesion of policy and lack of it, just seems to me mrs. may's government is dysfunctional. >> i think it is also that dysfunction -- the eu negotiators have been clear on principles and stood up neatly behind him and basically that spectacle, ball is in your court and the clock is ticking we are a little over a year away having to have this all agreed we are so far from that. it is extraordinary. >> are we? are we not going to have a few wins this week of course i don't think there seems any contention everybody wants open border between northern ireland and the republic we all want europeans in britain, no brainers as far as i
can see, in terms of commitment, some british government members say we recognize there are commitments which need to be financial fairly with our share of it. are we far from some agreement this week? >> this is baby steps. to me, this is the easy stuff. >> there are three brought forward for today. >> right we may see progress. i think ireland will be tricky but this is the easy stuff haven't gotten onto brexit bill, to sector specific arrangements for different sectors of the uk economy. things that will matter to the economy are a long way from settled. this is just the exit side then the whole deal about what's going to happen to trade between the uk and eu after that while there's lack of unity among uk ministers what we are arguing for -- >> what about if it gets worse things are bad at the moment what if it gets worse. what if you get a situation we go to the polls because mrs. may
cannot command enough support in the house, is that likely in 2017 or not a scenario and the second question, likely to see a leadership change, prime minister change. >> i think the election is less likely what would be the trigger for that >> if i was jeremy corbyn, i would be happy to continue as it is going, lack of unity there. i am not sure i want to inherit talks with a year to go and nothing achieved zblt prospect of transition deal seems most likely a long transition period rather than short one. is that how you see it
>> transition would be required and everything so far suggests that it is necessary very little agreed by the two year threshold going to need a lot more time. >> mike jam en, global analyst from the global intelligence unit. coming up, robocop, warns u.s. lawmakers that artificial intelligence is more dangerous than they think. going to bring you the details. and in a few minutes' time, we speak to the ceo of elenor
warning regarding artificial intelligence, poses a fundamental risk to the existence of human civilization. fundamental risk to the existence of human civilization. i don't want to hear that when i am watching movies like "planet of the apes. speaking to a gathering of u.s. governors, he outlined need for greater regulation of a.i. >> on the intelligence front, i have exposure to the most cutting edge a.i.and i think people should be concerned about it i keep sounding the alarm bell until people see robots going down the street killing people, they don't know how to react because it seemsetherial
i think we should be concerned about ai. a tell nor raised outlook for fall revenue off by 2%. earnings hit an all-time high in norwegian telecom company, announced a share buy back program after receiving proceeds from recent di investment. sigve, thank you for joining us. the markets are applauding your numbers or the buy back today? >> well, we are delivering a very strong quarter, no doubt about that, both on the top line for a long time, 40% and our focus is on continuing to do that in third and fourth quarter. >> i'm sure we had this
conversation before, wouldn't you prefer as ceo to go out and buy stuff rather than giving money to shareholders. the ceo on the hunt to improve the portfolio, why not emanate instead of buy back? >> i don't think it is either or, i think it is both we need shareholders that see that we are what do i call it -- we want to be sure we have increasing dividend year by year, and delivering on that in the last 12 months, we realized 18 billion. i think it is fair to give some back to shareholders at the same time, we are a growth company >> in terms of where you have taken a step back, overseeing indian assets, you have growing businesses from bangladesh to thailand
where is the focus is it near home, europe, or in the emerging markets >> we are in investing in networks and see we are able to meet increasing demand they're increasing now the user. we are seeing tremendous in countries like bangladesh and thailand it is different than european appears because we have this in the portfolio. >> it is great you want to grow european and scandinavian markets. we had in depth conversation about regulatory environment,
whether it is broader european commission looking at broadband spectrum do you feel with regulation it is one step forward and two steps back and your hands are tied behind your back? >> we are dealing with all the markets in asia and europe, would like to be less regulated. at the same time, i think it is having a roll. biggest headache in europe on regulation is on daily market where we are not allowed to consolidate, and the very top -- >> do you think regulators are looking backwards at what telecom companies used to be, rather than the wealth of competition you get from all kinds of players from the tech industry rather than traditional telecom? >> yeah. i would like european regulations more forward looking. you're right when you say we competed with lawyers that are
not ready at all the discussion in the european union now, taking steps with regulation >> always a great time speaking to you thank you very much. inside your company and industry today. ceo of telenor i will give you insight. there was tour de france, wimbledon, british grand prix. what did i choose? roger federer has 8 wimbledon titles he defeated cilic in a match that finished in under two hours. it was so one sided. federer, 36 and 36 in a few weeks time, the oldest men's singles champion and lewis hamilton won british grand prix fourth year in a row. he stands one point behind
ferrari sebastian vettel he battled throughout the race two laps before the end, finished after an emergency pit stop. tell you what's trending out there as well. we look at what's currently trending and what we think will be the next big thing. one is the majority of brexit supporters would be happy to accept free movement across europe in exchange for single market access, according to a poll the survey commissioned by best for britain, a pressure group which is opposed to hard brexit. they got what they wanted from that story it is pushing back on notion that brexit means they want to ban free movement regardless of the cost spanish police arrested dozens of people as part of an investigation into, wait for it, a horse meat scam. authorities in spain collaborated with police across europe, horses deemed unfit for
humans to eat are said to have been slaughtered and fraudulently sold. it's trending. coming up, we are looking at incline. maybe see some record highs, or record closes again. the sector leading us higher has been it. telecom has been the biggest performer. that's it for today's show i am steve sedgwick. that's it for "street signs. "worldwide exchange" is up next. have a good day.
a new week with the dow and s&p 500 with all-time highs. trade day setting up. hitting the pause button on the plan to dismantle obamacare. the latest from washington coming up. watch out blue apron amazon made a big move on the meal kit space "worldwide exchange" begins right now. ♪ welcome to my house ♪