tv Street Signs CNBC April 26, 2019 4:00am-5:00am EDT
zplafrmts shares seem to be bottom of the stock 6 had been as the swedish group shows a surprise drop in first quarter profit it's a full-year outlook zpliefrmts a bit of drama. super sfri is as european earnings are concerned some of the names worry looking at today that have reported. we have big movers here. just looking at the board. deutsche bank down 3.5%. rbs down 5%, and then samsung 5.5% as well.
income growth will be more challenging in the near term >> the british lender reported better than expected first quarter profit to resign the reaction is not pretty down more than 5% now already. 5.1 measures another stock that we're looking at today, shares of the swedish building group skanska it posted a surprise drop in first quarter profits. the company also cut its outlook for nonresidential.
>> first quarter net profit, deutsche bank rose 68% compared to last year that was despite the fact that the bottom trading unit fell 19%. 2019 revenues as a whole will not improve for 2018 our colleague joins us with more details. what could be next for the bank? discussions with commerzbank have fallen apart. >> yeah. i think it's kind of interesting point in time for deutsche bank. that's at least what you could when talking to the executives that they were not so much it was kind of a bad idea to start those polls. it was more or less initiated a bit from the political side of things
it i guess they've had a little bit. at least that's what is rumored. the political pressure the cfo of deutsche, whether this was true, whether this was, like, completely only politically motivated. take a listen. >> we've bin consistent we've never -- our to enter the discussions and also to collectively together to discontinue the discussions was a private sector commercial decision i can't really comment on them the political reaction or thoughts about the possibility of market consolidation in germany. >> what's the future what we have in part -- what we have for potential new strategy
or like some convincing new steps were necessary >> first of all, we're focused on executing our existing strategy we think that continuing to make progress on that we've set up milestones and achieved those milestones over the course of the past year. we intend to continue doing that as we said, though, in our announcement, we have reviewed and we will continue to review alternatives to both accelerate the improved returns to shareholders, and examine alternatives to improve on the path that we have in the stand-alone basis.
another point is that they will accelerate their cost-cutting program, and then also probably shrink some of their businesses even further the loss on revenues can also be, like, not for 200%, but partially explained by exiting certain business lines especially also in investment banking here we can see clearly that equity -- the equity desk was not half, but clearly the lessons are small.
>> overall the number said it's not too bad, but clearly, what it's lacking is a clear wish for the lender how they want to go to go back to really being profitable and tractive for investors. that's back to you. >> that is the number one big story the last 24 hours. obviously, the stocks between commerzbank and deutsche have been called off. some reports now commerzbank is the bank that initiates from deutsche bank in the first place. yeah so those are the comments that have just come out
interesting. today you can see the respective reaction in the stock. deutsche bank is trading down 3.7% today we had obviously the report card from deutsche bank showing results. net income showed a big dump year-on-year, but still a lot of questions about the privacy of their investment banking units and also the cost prepping trajectories commerzbank, however, has been up it% trading up almost 2%. remember, commerzbank is a name that other banks have been -- perhaps that is one of the reasons why that stock is doing well okay i want to bring in an expert from the topic owe just wonder looking at deutsche bank, the development over the last 24 hours, i mean, how do you see deutsche bank's options from here? >> well, we have a negative
trend on the write rating, but from our point of view, the merger could have been a driver. further negative rating action. >> i mean, you saw in the first quarter that the results weren't bad for dooub bank they weren't good in absolute terms. it was a difficult quarter anyway for investment banks globally i mean, they've made a start by bringing the costs down in line with their plans it's a tough revenue environment. even, you know, they were hoping to make a 4% return on equity this year p. >> that's the big issue, right again, i want to ask you from a rating agency standpoint, one of
the options that have been discussed, and this is also reported in the media the last couple of weeks, is selling off or merging parts of their asset management business, dws reportedly, there are talks with ubs. i spoke yesterday to the ceo of ubs and didn't comment on it, but, i mean, how would you view that from a rating agency perspective? particularly because dws is evidently the crown jewel in deutsche bank's portfolio? >> it's a good statement they've already floated a part of it. it is a business asset management that generally requires scale we can see that the advantages for the players to join together with other players in that business it's tough for the margins because they're very slow on that business scale.
that's on the premise that you believe in the bank strategy >> how can they deliver on what they're aiming to do >> i think what they set themselves to do so far is not unrealistic. to that extent you can see what they've done so far. they've executed on it they still suffered far enough at the moment to be able to say that that will work for the long-term. even at 4% return on equity is not a long-term goal i think we can see that, you
know -- i mean, mergers, why the merger didn't seem like a good idea was because you had two players that were both having challenging situations you see those kind of mergers that have a better outlook it doesn't seem like a big merger is the solution to their problems it's kind of delivering quarter-on-quarter on strategy, and getting out of the circle of cost-cutting, revenues going down, and as you said yourself, you know, getting to the position where you have actually got revenues growing and a better return. >> what could derail that effort to deliver on quarter-on-quarter strategy >> i mean, you know, a large part of their business is dependent on market conditions and the capital market that's important >> i just want to broaden this
out one big question i think covering the european banks earnings the last couple of days right at the beginning of it, but the message from all of these banks seem to be the same, and that they are pushing on with cost cuts in order to compensate for the lack of revenue. >> there's a lot that can probably still be done as far as european banks >> page-up in gdc growth to build the revenues again >> elizabeth, we're going to leave it there thanks for coming on our show. elizabeth ruddman, head of
european fixed financial institutions group at vbrs let's look at how broader markets are doing. >> getting into the full swing of things. the mood board is mixed today for trading about 60% in the red. 40% green. you can see that the overall stock euro 600 is trading around flat it's slightlynegative on the session pulling on from a weaker overnight trading session for asian equities as well, and even for u.s. stocks,only one endin up in the green was the nasdaq boosted by stronger earnings well, after the close from amazon and intel that are in the run-up to it also tech was leading the charge there. switching on, you can see the breakdown amongst the individual indexes.
health care at the top boosted by stronger earnings out ofas are a zen ka that's that segment of the market also up in the green as well right at the bottom you have basic reports. .9 the% weaker oil and gas also trading down in the red as well. still to come, spain is set to hold a general election this weekend. we'll take a look at the latest polls and hear from a member of the governing party after this break. i know that every single time that i suit up, there is a chance that's the last time. 300 miles per hour, that's where i feel normal. i might be crazy but i'm not stupid.
like never before store. the xfinity store is here. and it's simple, easy, awesome. welcome back to street signs. president emmanuel macron has promised to cut taxes for the middle class as he defended his agenda for france's economy. macron gave his first ever press conference that night and promised to significantly reduce income tax he also outlined plans aimed at the country's pension system and said he would preeft any further closures of hospitals.
>> i want to explain what i have gathered from the great debate should we stop everything we've done the says last two years have we taken a wrong turn i think quite the opposite transformation is underway, and the transformations which are unavoidable in our country as they provide us with the aspirations of our fellow citizens. >> you can see sanchez 29% according to that poll on april
22nd candidates have clashed over a range of topics, including taxation and unsurprisingly, catalan independence secretary of european fairs and who represents the catalan partners thanks for joining us on the phone from, i believe, brussels. i wanted to get on to a question about monday morning if you are an investor looking at spain right now, will you have any certainty by monday morning? >> well, now in the european elections and all the national european elections, it's so difficult to be certain about this, but the reality is that we are leading the polls, and it will be -- it will be -- we will have a risk on sunday to have majority of the three parties exist.
i think the majority of the -- they'll -- >> how important is it for the federalists to get enough support from other parties, particularly maybe for them. >> it will be the question it's clear that we will have the position with the ballot boxes -- with the ballots, but we will see if we have enough support to have the stability for the next four years. as you know, sanchez arrived today at government months ago
like we need room as a governme government for this reason government of sanchez is trying to build a strong majority. this is directly playing into the hands of pt and the box. do you think that he has been moving to stocks when it comes to dealing with the catalonia situation? >> clearly not says, because we have elections we have the snap elections because the party decides to dawn support of the national budget the message of the socialist
party in space extremely clear about the catalan issue. it's with political dialogue at the same time all the political dialogue has to be out of the rule of law out of respect for the framework. it's so rare we are trying to do that our proposal is to have reform of the institutional framework to have more federal view of why they are trying to send this toxic message, this kind of message because it's so polarizing, and it's something also the party will try to understand how important do you think these elections are for spain's place
in europe? >> we will need this party the first commitment of the sanchez government is a yourp even project it's a european project that values the european integration. not always that. also, they cannot -- and it's social justice it's important because we will have european elections, and now taking into account the government that italy has, we are -- i think we are playing a leading role as actor of the south of europe, and this will
continue in the sanchez government wrshs. >> one of the other big topics of debate right now in spain is that is the unemployment rates, and we just got the unemployment numbers very close to 16%. in fact, the second highest unemployment rate across all of euro zone. psoe introduced a higher minimum wanl for workers earlier on. the spanish central bank has warned that these could distort around 100,000 jobs. do you bear responsibility somehow for not doing much to bring down that unemployment rate >> yeah. we don't share this view >> we are talking about this number after that we havepoint in tim
p at the same time this has to be for social justice, better salaries, and for this reason we will continue in this path >> all right sir, we'll leave it there then, and we look forward to the results on sunday as -- who are currently leading in the polls now, speaking of other countries, the spread between italian and german bond yields have hit the widest level in two months as equities continue the review of the credit rating later today. it has a triple b rating on italy that is two notches bottom of junk. analysts si uni-credit saz they expect that s&p will keep its
rating on change, while it waits for greater clarity on its own political and fiscal outlook another country that is coming under a lot of pressure argentina, and financial markets there are buckling a little bit under pressure fresh pulls to just present -- is losing ground ahead of an election later this year the arnl tien weakened as much as 5% at one point yesterday before strengthening again the government is battling with record high inflation and the weakening currency. termites.
well, european markets have been open for about an hur and a half, and it was a much weaker start. things are beginning to pair up some of the loss that is we saw earlier on in the session. you can see right now we have central dax and cac trading slightly in the green. of course, this is one day after president macron addressed the public about the results of
his -- he has been touring the country over the last couple of months in response to the yellow vest demonstrations. they have announced that they will be undertaking new measures and introducing an income tax to help relieve some of the pressure and some of the anger that's been directed at the government time will tell how this is going to play in into his overall popularity today we're seeing a bit of the positive reaction in cac to develop .1%. we also have the french consumer confidence numbers come out about two hours ago. pretty much in line with expectations.
>> you can see fitsy 100 it's one of earnings we had rds and glen corps really dragging down the index. beth are down 4% to 5% that is the picture for european indexes today. let's move on and talk about and see what the picture is like there. euro, we have trading slightly in the green up at -- .1% firmer. >> bear in mind, the japanese plarkts are about to be closed for an extended period of time we will expect a lot more volatile trading there due to illij widty in those markets in cable the sterling pound is also hanging in below 130, 129 is the level it's dropped below this in the
last couple of sessions. that is a dollar story and also now with new brexit developments as well. no real breakthrough when it comes to cross-party talks that is the picture for fx let's switch on and talk about u.s. futures. we did have amazon amazon was well received until not so well received, and we also have equities being down four points. the big thing that everyone wants to watch out for today, though, in the u.s. is that gdp currency first quarter gdp will be announced at 1:30 p.m. london time economists are expecting a 2.1% figure russia's largest retailer
x-5 is posted stronger than expected first quarter earnings amid higher sales and continued expansion. net income also grew 65% during the period. >> just for numbers here, just on those figures, just the kind of numbers that retailers in europe would die for if you look at the $8 billion market cap, they put the business on an enterprise value of more like $10 billion and still sees up side in the share price from here. with a 2019 price earnings multiple of something like 13. there are a lot of good things to be said about x-5 at this stage. let's find out a few more.
we had a b.a.t. high at the beginning of the year. is that making russians reluctant to the current spending carousel and some of your other supermarkets? >> overall we still see that the macroenvironment is challenging for the consumer statement we do have some positive trends. for example, the consumer confidence is improving, slightly improving we'll see that, you know, the traffic and outsource, for example, includes this year is much stronger than we had in the first quarter of last year
>> we see the increase in v.a.t., and full inflation is picking up we don't think it would be appreciating anymore we think it will stabilize in the second quarter overall for the year, it's a positive environment easy environment for the retailer, and i don't think that's stressful for the consumer i will say it's rather stable. we had 1.4% of retail market growth in real terms last year, and i would say that we would expect, you know, from 1% to 2% growth this year >> this looks ike i marketplace that's ripe for consolidation. we see it coming into the market buying a significant chunk one of your rivals are you going to get involved in m&a in this space to try and make sure that you hold to your
market share >> you can go -- it was the way for gaining market share it's quite expensive, and then for us i would say we do see opportunities for organic consolidation of the markets where we just have been more efficient operationally and being a economy of scale, we can open our locations, new locations, substituting some -- at this location that's actually what we see in the cases when we open new source >> so in terms of how you expand from here, it will be organic. it won't be m&a. >> well, each year we do have some regional m&as, and in the
share of 10% to 18% of our overall development. i wouldn't probably expect that we'll have some targets. >> we think hyper-markets are under pressure, so i think for -- it could be a good synergy and opportunity, but for us i think we can develop our own line proposition in our supermarket and, of course, our driver of development opportunity is still growing and the highest returns. >> you are, i guess, a little bit high in smfrt western supermarkets in terms of introducing technology into the stores, but i know you're catching up very quickly you have started to introduce t
the. >> do you think that the e-retail business is going to start making money any time soon >> well, we certainly expect that, and in our model we do want our on-line proposition to become profitable within a couple of years. of course, it all depends on the market conditions, but we think that with our bargaining power, with our huge operations, with our efficiency in logistics, and with our customer base, and understanding of customers through our loyalty cards and analyzing data from loyalty cards we could be comfortable, and we could be a leader in food and line retail in russia. >> it's been a real pleasure catching up. we'll wrap it up on this just a reminder, we are here in russia on a critical week as always the central bank is due in very
short time to give us an announcement on interest rates i think the market expectation is that we won't see a move here necessarily, in part, perhaps because some of the inflationary pressure out of that v.a.t. move here at the beginning of the year it will be interesting to find out from governor naviolina whether she thinks those effects are starting to fade out and whether she will signal to the market that there may be room at the next meeting.
our colleague spoke with a few moments ago. she asked him what happens now the talks between deutsche and commerzbank have failed and what does it mean for germany banking industry take a listen to his -- >> those things are important elements of the german banking system deutsche bank -- they have examined the possibility to join forces and go to conclusion. they are not sufficient arguments for this.
china will continue economic reform while avoiding trade tactics. xi jing ping has told world leaders to gather in the road forum -- the chinese president devoted a large portion of his opening speech to trade tensions and domestic reform along side details of his signature infrastructure investment program. >> this is now to be
impolicemened. there are obstacles. >> unilateral measures should not be adopted, and in this context europe is prepared to work constructively and, of course, to grant the same and the same opportunities for chinese companies and investors and then granted for european companies in china >> it sounds like it's a good first step, but you want to see more what more would you want to see? >> speaking of president xi was encouraging because it offers a holistic approach. it offered a series of measures that had been discussed for so many countries over the last
couple of months. >> it's not only the american and chinese conflict, but we can also build constructive and fair international trade order. if there is no hard rexit. the firm still backs its 2019 -- >> sticking with autos, daimler has reported a 16% slump in first quarter operating profits and a slowdown in sales in china
and higher raw material costs. the german carmaker saw sales of its key mercedes benz brand fall 9% compared to the previous year also, amazon slashes first quarter profit estimates it underdelivers with its second quarter guidance the numbers are coming up next stay with us you need to buy a car and you want to get an excellent price you'd think with all these options it would be easy. but with terms like msrp, invoice, list price, things get confusing pretty fast. you just want to get a real price and that's where true car comes in. only with true car can you see what other people paid for the car you want
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>> the offering is said to be the second biggest ever u.s. debut after alibaba in 2014. uber is expected to publicly file later today before listing on the new york stock exchange early next month no doubt that they're taking into consideration the price action of lyft as secondary trading action after that ipo. revenues matched estimates our colleague joins us live around the desk here in london, and we'll break down some of the numbers, hopefully >> that's right. amazon's profit nearly doubling in the first quarter 3.56 billion dollars ubs came in at $7.09 on revenues
up 17% to $59.7 billion. these are strong metrics from amazon currently the largest tech company. we'll see where the shares go today. if you look at the net sales by segment, you can see that aws continues to be a source of growth up 41% year-on-year. where we saw lower growth was in physical stores, which was 1% growth, and that's primarily amazon, whole foods business a little bit of concern going forward. about some costs that amazon is going to incur, and that relates to announcements that it will be rolling out one day delivery for its prime members. it's good news for customers amazon did say it will invest about $800 million in the second quarter. maybe we won't get bad margins next quarter, but overall a very strong first quarter >> again, looking at the after
hours activity, again, the market has been underwhelmed do you think it's because of the guidance and that they will be spending a little less and end into the bottom line >> most analysts pointing to that guidance and some of the muted reaction we're seeing. in general also, some of the higher margin businesses, particularly that advertising segment, has been growing at super, super fast rates. last part about 97%. have i noticed dynamics between local and international markets here they're still growing quite strong domestically, but the international markets not only grew at 9% this is lower than expectations. >> that's right. compared to 34% in same quarter versus last year for amazon it's always important to be looking at where the
growth is coming from comparatively with its own metrics, considering it's really in its own league in a lot of these markets. it hopes to expand in its traditional on-line marketplaces and with its prime membership zbloor for amazon it is important for them to be seeing that growth in those businesses, and we're seeing a lot of other tech companies trying to go that way, too apple reports its earnings next week, and we know apple is now trying to be a services company. at the end of the day it's much easier to make money on businesses like that than on maybe hardware or amazon's case physical store presence. >> all right we're going to leave it there. thank you very much for breaking
down the earnings for us it's interesting to see how -- >> shares in world wrestling entertainment have tumbled after reporting weaker than expected earnings wwe hosted an operating loss of $6.8 million in the first quarter as revenue fell 2.6% year-on-year. i really should start watching wwe, but i'm not --
>> separately, the arizona cardinals have a new quarterback on their roster. they selected 21-year-old kyler murray as the first pick of the nfl draft. that took place overnight in nashville. what an mazing piece of information by this young man. he had already been drafrted by a major league baseball team, oakland raiders, ask that was worth $4.66 million. he now has to give that money back >> maybe we have have an alternative career >> unlikely. >> something watching out for today. the u.s. is the advanced read of u.s. first quarter gdp top analysts with moody's had a forecast of 2.4% growth. it's a sharp upgrade from early expectations of nearly zero, but all eyes really on the rcteaion in u.s. stocks later today
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it is 5:00 a.m here's your top five at 5:00 amazon smashes earnings expectations we'll dig in on the monster quarter straight ahead what happened at intel ouch shares are sagging right now why the chipmaker may have raised the big red flag on the future uber, it may need a lift company investors likely frustrated by another drop in value ahead of its ipo speaking of cars, we've got a pump price alert as we head into the weekend, and former white house strategist steve bannon blasting wall street and china in an exclusive sitdown.