tv Street Signs CNBC August 20, 2019 4:00am-5:00am EDT
above it's all time high after last week's major sell off. >> falls to the bottom as th world's largest miner delivers a strong full year profit and dividends but warns the u.s.-china trade war is a major threat to growth and facebook and twitter call out china. the social media firm take action to block accounts they claim are being used in a beijing backed propaganda campaign against hong kong protestors well, our top story today, italian prime minister is to address the senate later in a speech that could spell the end of his government. the far right party is looking to table a no confidence motion in an attempt to bring an end to
its coalition in the movement and force a snap election. meanwhile, the leader says a 50 billion euro budget is necessary next year to bring about a quote, shock fiscal stimulus so that seems to be the operative word over the last couple of sessions modest in italy and germany and in the context of the u.s. overnight as well. but let's focus on what's happening with the italian indices. italy is coming under a little bit of pressure. and it's trading in negative territory. so it is a heavy day in the first hour of trading for italian indices. a little bit of cautiousness as far as investments are concerned as we head to this big day for italian politics
we are seeing italian yields come off a little bit to the tune of about three basis points we're at 146 three months ago we were 100 basis points higher at 2.5%. this means a theme of continued money pouring into the italian market despite what's been happening with the politics but speaking of which, i guess the big question for investors is are we likely to see a no confidence vote in the next 24 hours. >> there's no guarantees but what i would say is if we don't get a no confidence vote that's most likely because the prime minister offered his resignation to do that what we do know is that the man that runs one of the mayor parties here in italy and member
of the government coalition, he has previously demanded an end to the coalition of which he is part of and essentially called for mr. conte's political head over the last few days he slightly backtracked on that and left open some possibility that he would continue working with the five star movement with which he has been in power since last may in terms of the five star movement their reaction said essentially, you are a traitor, you have betrayed our trust. you are no longer trustworthy. this is a quote, shameful u-turn to then say you'd be prepared to work with us the other part in all of this is they have not performed very well in either the european parliamentary elections or elections last year. of course they were in government before those elections and some of their senior members has talked about the idea of working with the five star movement to try to block a push for power in terms of the confidence vote
if it does go ahead, it is essentially voted out of office that doesn't guarantee a fresh election it would be incumbent on him to either try to form a new majority government using it in some point at late october and early november. >> you raise a very interesting point here and that is this technical alliance taking place. is this you think the beginning of a reshaping political dynamics or is it one of tactical motivation to keep him in check >> it could be both and that's not a very clear answer for you, i appreciate but essentially these two parties have been very, very critical of one another for the last few years for many, many months after the formation of this new government. it was common place for members to blame all of these problems
on the party and even over the last week or so, someone that runs the five-star movement, he would never sit at the table there's other senior figures he's not prepared to work with but of course there's self-interest at stake here. he would not be able to offer a fresh election in theory under five star rules as a parliamentary candidate. and also the senate not far from where we are would lose their seats in any fresh election and lose the job security that comes to that. something they might have heard of it's to stay in government potentially and also inside the parliament of course even under that new government the relationship with brussels will remain incredibly important for italy because of this and because of the restrictions that brussels had
tried to place on the italian government when it comes to deficit spending. >> excellent break down. the takeaway is that all other parties involved are at this point trying to avoid having a snap election at this side of the year let's bring in the senior comments good to have you with us the big story for italy is despite again the political developments coming out of italy, the story has been one of continued influence into yields and it's also as though investors have brushed up political concerns over the expectations is that a fair assessment? >> absolutely. this has a lot to do with the fact that most around the world are negative and italy and europe have some good
opportunity and investment opportunity, there's these kind of instruments it's quite the global factor it will probably be something where ecb will lift the threshold increasing it to 33% while we do think that we maintain a competition between sovereign and corporate without ending any new asset class the more dovish stance is
motivated by the fact that as you know very well, we had data on economic side in europe and they're very negative. >> that's the big question for investors is whatever the ecb brings in september will it be enough will it be enough to stop this decline in momentum? will it be enough to release it and get people believing in the eu again >> meaning not only monetary policy but fiscal policy too to address the negative momentum in the economy that's why it's important even coming back to italy and we decide that we do with the budget low that actually is
due in terms of draft. how will the european union address the fiscal policy together with the monetary policy stimulus coming from ecb. this is necessary to address it. >> the market broadly shifted it's focus away from expectations of what central banks can do to what governments can do on friday this story came out suggesting that germany had 60 billion euros worth of spending power. we want to spend 50 billion euros as well. but both of these economies are staring at a etechnical recession. >> conditions are very
different. so i think that generally speaking, it would be very welcome. so the nuisances will be different. >> we'll leave it there and pick it up in our next conversation our senior columnist, i want to take you to some of the market price action we also fully regained the loss we had last wednesday. for the s&p we're a couple of points away from where we were last wednesday the nasdaq through 8,000 again so really risk on is the theme you can see that the stoxx 600 is trading slightly in the green this morning some of the banks and specifically within italy, those are the underperforming names today that are weighing on the stoxx 600 as well as disappointing results out of
bhb. the market did not take kindly to them. let's talk about the individual indices. ftse 100 is up a third of a percentage point we know that the prime minister now sent a letter to the eu demanding it and replacing it with alternative arrangements and the prime minister is still saying that they're inclined to getting a deal signed so that is a positive signal on the margin for u.k. markets you can see the ftse 100 is trading up a percentage point. we have the ftse index in the red. as i mentioned italy under pressure today to the tune of about .3%. i should tell you that the italian index has almost fully recovered the losses we had last wednesday. so even though today it's under pressure, for the last week it's been a pretty positive move for italian assets now the u.s. has granted another 90 days for huawei to do business with u.s. companies the commerce secretary said it
would help american consumers and firms to transition away from the chinese tech giant products at the same time, the commerce department added more than 40 affiliates to its blacklist. they called the decision, quote, unjust and politically motivated. the u.k. foreign office has said it is quote, extremely concerned by reports one of its hong kong staffers has been detained trying to return to the city from the mainland. a spokesperson told cnbc that the office was providing support to the man's family while seeking further information from authorities. now hong kong's leader says she hopes the peaceful weekend will be a turning point for demonstrations in the chinese city she announced further investigations into police brutality complaints and reiterated there were no plans to revise the extradition bill that sparked the unrest 11 weeks ago. now further protests are planned
this week. the chinese state newspaper blocked the u.s. interference in hong kong. a editorial called out unnamed high ranking u.s. officials. it said they were pushed by the media into making, quote, meaningless threats around trade talks. the article stressed beijing did not need to consider washington's opinion in his decision around hong kong. so many developments there if you want to get involved in the discussion, you can tweet us directly but speaking of twitter, twitter and facebook has suspended hundreds of accounts after revealing what they say was a beijing backed social media campaign aimed at spreading this information about hong kong. sherry filed this report from hong kong. >> twitter and facebook say china has been spreading disinformation about hong kong protests and that they're fighting the campaign. twitter says it's found some 200,000 accounts and it's
suspending more than 900 of them that are the most active the social media company says, quote, these accounts were deliberately and specifically attempting to sow political discord in hong kong including undermining the legitimacy and political positions of the protest movement it has evidence to support this is a coordinated operation facebook followed suit by taking down several accounts after getting a tip by twitter and echoed twitters findings it's found links to individuals associated with the chinese government twitter added that it's decided to ban media entities editorially or naturally controlled by the state from advertising on the platform. it says in the past week, china's state run media were y
saying hong kong residents wanted the demonstrations to end. cnbc hong kong. >> meanwhile, shares in hong kong's ck asset hit their highest level since august 1st this after they agreed to a 4.6 billion pound takeover offer from the developer shares grow more than 50% in yesterday's trade and as i mentioned we have been talking about twitter but you can also tweet us directly if you want to get involved in the conversation the rebound that we're seeing tweet us or me directly. also coming up on our show, president trump called on the fed to make further rate cuts. more on that after this break. g. there's an easier way.
try mr. clean magic eraser. just wet, squeeze and erase tough messes like bathtub soap scum and caked-on grease from oven doors. now mr. clean magic eraser comes in disposable sheets. they're perfect for icky messes on stovetops in microwaves and all over the house. for an amazing clean, try mr. clean magic eraser, and now, new mr. clean magic eraser sheets.
they announced the second phase of the plan will be defeated by the end of the first quarter in 2021 now casino previously said it will sell off 2.5 million euros of assets as it aims to slash it's bulging debt pile and improve financial deployments. they have global growth concerns the world's largest miner reported it's biggest annual profit in five years but missed expectations they also announced a full year dividend as the company is boosting the sale of its business the company is great. >> you have to be concerned about some of the trends in the underlying economy in the rest of the world but again, with sets for those
circumstances. with the settings we have underway in the organization are good in the longer term you have to be aware the strength of the organization is awesome assets. fundamental changes underway in the moment and we must respond to those and we must respond intelligently and proactively. >> well, it's day one for china's rate and it's 10 basis points lower than the existing benchmark. that will use a rate of 4.25%. the central bank's vice governor said it will focus on the advanced lpr and there's still room to cut both the rrr and lending rates. and speaking of cutting rates a 100 basis points
but the fed president isn't on board. he says there's no evidence of the u.s. slow down yet calling the economy pretty good during an interview on bloomberg. now cnbc will be speaking to a number of fed presidents and for the jackson hole symposium plus we have an exclusive interview with mark carney stay tuned for that at the end of the week. a white house official denied the trump administration is looking at payroll tax cuts. in a statement, the official said more tax cuts for the american people are circling on the table but cutting payroll taxes is not something under consideration at this time it comes after the washington post reported the measure was being discussed to stem a possible downturn in the economy. so a lot to unpack there and namely the response to the on going trade war.
let's bring him in great to have you with us. again, coming back to your emerging markets lenses, the past couple of weeks have not been a positive august for emerging markets how much of that do you think could be pointed back to this trade war between china and the u.s. >> the trade war driver is one of the most important for emerging markets and it's still very much dependent. and trade war and all the protection is measured it's implemented so far. in terms of openness that the countries have in terms of integration even with china and the u.s.
the recent market by the new announcement of the 10% of ties to the u.s. administration together with that there's been some noise that's coming from argentina where the election outcome has been surprising for the market >> let me ask you about argentina, if we have that huge sell off last week and yesterday wasn't a good day for argentina either or is the view that this is an argentina specific problem this time around? >> it's clearly an important factor because argentinian assets in particular on the fixed income side are in the markets. so we have to extinguish between
sustaining risk. argentina's economy is a closed economy and the main item exp t exporting the soybean is much more impacting between the u.s. and china than by argentina. it will be relatively low but this is important and this has to be put in a context where actually, around the world, we are still seeing, witnessing, major adoptions by the central banks and this is the dominant factor it's much more than what's happening in argentina. >> that's really interesting so it's about the likely response out of central banks but then also we're getting fiscal response out of china do you think this stimulus or monetary stimulus response is
enough to alleviate investors concerns about the emerging market growth utlook i believe it's different from country to country so always keep in mind the emerging markets to understand who can afford more and conditions are much different. so we have russia on one side. very good fiscal position. and in argentina, it's much higher so we have always to distinguish among the countries. >> and the takeaway seems you always have to look at their external debt position because that's going to be a key
determine nance for how much pressure these countries have come under we'll leave it there thank you for joining us today also coming up on street signs, america's tech leaders will sit down with the u.s. trade representative to discuss what to do about the new digital levey. we'll look at the potential fall out that's coming up next. ♪ ♪ applebee's handcrafted burgers now with endless fries starting at $7.99. and get more bites for your buck with late night half-priced apps. now that's eatin' good in the neighborhood. ♪ think you need to pay prestige prices for better skin results? try olay regenerist. the rich, hydrating cream is formulated with vitamin b3 and peptides
to plump skin cells, brighten, and visibly smooth wrinkles. in fact, just 1 jar has the hydrating power of 5 jars of the prestige cream. for visible results without prestige prices, try olay regenerist with a money back guarantee. and complete your routine with the olay eye collection. brand power. helping you buy better.
less than 5% on the intraday all time high after last week's major sell off it stands on the brink of collapse as the prime minister braces for a make or break senate seat. they fall to the bottom of the stock 600 as the world's largest miner delivers a strong full year profit but warns the u.s.-china trade war is a major
threat to growth facebook and twitter call out china, the social media firms take action to block accounts they claim are being used in a beijing backed propaganda campaign against hong kong protestors dow is through 26,000. the s&p a couple of points away from where we were last wednesday. they almost retrace the day we had last wednesday some positive momentum in the air here and that is on potential fiscal stimulus coming out of europe. when it comes to china-u.s. discussions as well as the president announcing that they're pushing back tariffs on some of the extra $300 billion
worth of chinese goods so all of that lead to a turn around in sentiment for u.s. markets and asian markets as well and the theme for european markets is one of slightly positive moves so this is the third consecutive session that we're seeing positive momentums in european stocks but today we are up about 4.5% you can see that it's the only one coming under pressure. a big day for italian politics as we have been discussing potentially some reports could lead to the resignation of the prime minister so we're keeping a close eye on that. let's talk about foreign exchange because dollar is yet again back near a three week peak and that's having a effect and you can see actually all of these, but the euro trading weaker versus the dollar today
and and the theme is of $1 yen we're seeing again and cable actually trading on the back foot 3% weaker on the second. so the ftse 100, cable is coming under pressure as that correlation sends to hold up you can tend to see 5,100. that is the picture across currency markets today let's see how the u.s. session is going to pair up. and up about 20 points or so a lot of data to watch out for as we get to the end of the week and remember, we do have that as well as the closing coming up toward the end of the week so a lot of things to watch out for there but i want to take us back to what we have been discussing in the u.k
and the british prime minister has spoken with president trump on the phone both leaders saw trade and brexit trump later tweeted that both men talked about how to move rapidly on a free trade agreement. meanwhile, johnson has called on the european union to replace with a commitment to implemented alternative arrangements within the transition period. and they're ready to look constructively at the issue. he said he hoped it would be open to compromise >> they're showing a little bit of reluctance to take their
position we're ready to work to get a deal but if you wanted a good deal for the u.k., you must get ready. >> let's bring in the discussion some investments in the last 24 hours. you just heard from the prime minister there saying he wants a deal now over to the eu are you optimistic that this time the strategy against the corner will actually work. >> well, it's hard to say. at least we know the initial response came before it was even published. johnson spoke to the irish prime minister for an hour before he published the letter and still, the irish along with the eu say they're not going to open the withdrawal agreement but it's very early days. as it stands, he's slightly toothless in his approach. he has an election overhanging and threaten to bring him down
and wants to suggest to the eu that it's a hard brexit or renegotiation and doesn't sit well with the eu it's either boris is out and won't really make any progress and we'll have to wait until they come back which is the third of september. >> you're very good. and it seems to me now that we have the no deal brexit scenario and an orderly brexit with some form of a deal and extending the deadline of october 31 >> it's a good question. >> so october 31st, we see a 30% chance of an orderly brexit. that will leave you with 40% that we have an xtension we see chaos at the end of
october and a lot has to go right for an orderly brexit and extension where as nothing has to change for hard brexit. and it's actually a right thing. >> it's been pretty stable if you look at it over the last couple of weeks. actually there was a headline last week saying it's bounced. is that really what the market wants to see here? does the market want to see a government lead by corbyn? >> i hope the market doesn't think a corbyn government would be good for the u.k. they're similar species. they have supply side shocks to the economy. things that could weigh on long-term growth potential i don't think it's very sensible in context of the pound, keep in mind, it's down 20% since the
prereferendum high and that's all to do with the risk of a hard brexit. so it's hard to see the pound going much further than this so the market is pricing in a lot of hard brexit risk. >> you think it's pricing in for that 70% that you just gave us. >> it's pricing in a lot of that risk and sure, initially, if there was a hard brexit, sterling would sell off but then probably rebound pending an election the market physics is actually very complicated it's hard to make any conviction about the u.k. in terms of trade in if we have an orderly brexit you would buy the u.k. if there's another extension you hold off in case of a hard brexit so hard brexit october 31st and you know corbyn will be prime minister you have a hard brexit with deregulation and fiscal spending and hope of a trade deal so after an initial market sell off you might expect the market
to go long after a hard brexit. >> the sequence and timing is everything let's take it back to the data last week we had data come out pointing to pretty robust consumers. retail sales, pretty strong wage growth still strong cpi under control so the backdrop to all of this is actually there isn't it >> they're actually in good shape. leading to brexit and lead to global worries and mainly trade wars the domestic side of the economy is fine. wages are growing nicely a near record high if the u.k. can get out of this without a hard brexit and initial economic shock, it will be very optimistic, mainly driven by the consumer and helped along by the promise of a fiscal stimulus. >> do you think if on october 21st we do end up with an orderly brexit that would
incentivize the bank of england? but then the global environment changed over the last couple of months do you think they would still be working to start given how the global economy is changing now >> as long as the global economy won't tip into recession, yes because the domestic factors that created the inflation risk over the last three years exceed the global factors which would have a disinflationry effect market expectation is close to 3.5% so wages in altitude, 4% the bank of england needs to do something about this in case of an orderly brexit so i'd probably look for two next year with upside risk if we get tax cuts. >> now let's talk about, you know, central bank response and what they have in the tool box the bank of england have been pretty clear that they don't have a set response.
they don't know. the overwhelming view is that they would have to ease up in the case of a hard brexit. this is the bigger question of what monetary policy can achieve. i'm also talking about the fed as well. have investors lost faith in what central banks can do to stimulate and actually work on the demand side of the equation. i still think central banks can nullify markets when things are uncertain. i would split the monetary stimulus versus the economic effect can they stimulate domestic demand through monetary stimulus no what central banks can do is absent of a major inflation risk promise the market it will provide the liquidity it needs to reprice the new scenario. that has a consequence if you have a problem in the real economy that spreads to the financial sector it can stop the problem there and then we don't have to worry
about repercussions for the real economy. so the intertwinedness can be stopped. the central bank can provide the backstop but it can't stimulate the real economy. >> it's more like a safety blanket rather than an injection. >> it's a soft safety blanket. >> a soft safety blanket we'll leave it there thank you for joining me on the show now, joseph simmons has told the financial times that facebook's integration of whatsapp and instagram could prevent any attempt by regulators to break up the social media group. it's been launched and they have that position in whether they eliminate competition. it recently claimed facebook will add it's name to instagram and what's app the investigation into the mark zuckerberg lead company will be completed before the 20 election
now, big tech firms could be facing pressure on another front. the wall street journal reports a number of state attorneys are considering bringing forward a joint anti-trust probe against the biggest tech platform. it's not clear which companies could be investigated as part of the inquiry. the wall street journal says it could be launched as early as next month and could work along side the department of justice and u.s. technology leaders have denounced new digital tax saying it undermines attempts to reform the global tax system. france has approved a 3% levey on revenues earned in the country by tech firms that have income over 760 million euros globally amid stalled attempts to agree on worldwide tax reform you have been following this story and we discussed it a couple of times on the show. france has introduced this 3% digital tax but you wrote a story yesterday suggesting that amazon are passing that on to vendors on their website.
>> so one of the things that the tech companies and economists have warned about because of this tax is that ultimately consumers and smaller businesses might bear out some of the costs versus the big tech companies that it's intended for the french government passed this tax with the goal of leveling without the playing field among big tech companies, amazon, google, facebook, apple saying they need to pay their fair share of taxes. so it applies to this threshold from digital activities and it really targets a select group of big tech ultimately though, what has happened is at least what we heard in the amazon testimony yesterday in washington is that companies said we can't bear this on our own so we're going to increase our seller fees by 3% one of those sellers said any change in our fees squeezes margins. we're already trying to sell our
platforms on ult m marketplaces. amazon is a necessary platform for many of these sellers but ultimately amazon said if it wants to continue making the investments in it's sellers it has to start passing some of the costs on. >> this is really interesting because if you have other national governments thinking about introducing their form of the digital task, it will be like that wasn't very efficient. and passing the big tech companies. so what type of implications does this have for the landscape. >> there's a lot of discussion about how this isn't the right strategy and it really breaks from the president in that ultimately to make something so target and discriminatory at a select group doesn't go with a lot of the standards that have been set now the oecd is looking closely at this issue. they support a broader oecd
effort to address taxation in the digital economy. we need to think about how they pay taxes given that it's not a traditional brick and mortar business but ultimately going ahead with the uni lateral approach and it's easier to do it on their own and what's really worrying the tech companies is that more co ahead with their own efforts. >> thank you elizabeth has been following that closely the service will go live in the next two months as the company looks to preempt the launch of disney's own streaming platform. apple announced tv shows featuring jason mamoa and
jennifer aniston and reese witherspoon. and they have asked several banks for roles in the potential ipo. that's according to sources that add that saudi flishls believe the flotation could happen as soon as 2020 and it would be the world's biggest public offering. amarmco has declined comment also coming up, our week long look continues we'll discuss the role of artificial intelligence and the future of the job market that's coming up next.
to do to protect humans in the context of benefitting humans. and one of the reasons i made this large donation to oxford is because oxford is rated number one in the world in humanities and number one in philosophy we'll have to take in those accounts of western civilization as we try to figure out how to bring government and how to bring the media into the dialogue to control how fast we allow certain types of technology to impact the world that we live in.
>> it's great to have you with us on the show. >> thank you for having us. >> you're an expert in the law and ethics of artificial intelligence we're talking about how technology is throughout the education. but your angle is mainly artificial intelligence. >> yeah, i think the difference is its just on a larger scale. we have the printing press, we had cars disrupting the transport industry obviously but with ai it's very different because it's so agile. it's a good decision making tool that can be used for very, very different purposes and it's disrupting several sectors at the same time. a bigger scale and much faster than these two. >> to his point here, not all
technology is the same partially one of the reasons he made this investment is that people have a more active role in decoding and putting together the actual systems that will determine this machine learning and artificial intelligence because at the end of the day they're programmed by humans but it's machines making the decision how important is that in your view we are actually allowing those decisions. they're being used to make long decisions and decide who should go to university and life changing decisions making sure that the technology works as intended is understandable, explainable, is very, very important from an ethical and societal perspective. >> one other impact is the loss of jobs because you're looking at perhaps widespread replacement for people by machines which sectors in your view are most exposed
what does that mean for the future of work and people in more high risk areas. >> it's a very good question it's in every political agenda to figure that out it's very hard because we don't have a chris cal ball that tells us what the future is going to be like. we're going to see change in the manufacturing industry and service industry and some new jobs might actually emerge so it's not just about replacement but actually creating new roles and some jobs are just being augmented in a certain way >> and bringing it back to education, i'm guessing that the use of artificial intelligence is probably going to be more widespread in quan lavontitative subjects like mathematics and science. not really in literature subjects that will need qualitative analysis than quantitative analysis. is that the right interpretation in your view as well
>> it's both that's a large investment in stem subjects going on that's a promising area but also traditional sectors. i deal with those issues as well so i think every aspect, every job will have a tech component that's likely to involve ai. >> do you think that there's a down side to these efficiency games and one of the reasons why universities are looking to invest in technology is the efficiency games it's more efficient to have a computer direct your homework or algorithm respond to your homework than it is for a person to do it manually but do you think it's us using the ability to interact with one another, empathy and communication skills and things like that >> the important question is why are we doing this in the first place. efficien efficiency gains and cost cuts is important but also it's about augmenting your own abilities. all technology is better at
something than i am now. it doesn't mean that i am not valuable anymore it's just helping do it better and more efficient. >> there's no substitute for human empathy. >> i don't think so. >> we'll leave it there. thank you for joining me on street signs so now let's take a quick look at how markets are shaping up. u.s. futures all pointing to open up. a better session after yesterday's sessioion for europ well that is it for today's show, however. worldwide exchange is coming up next thanks for watching.
these folks, they don't have time to go to the post office they have businesses to grow customers to care for lives to get home to they use stamps.com print discounted postage for any letter any package any time right from your computer all the amazing services of the post office only cheaper get our special tv offer a 4-week trial plus postage and a digital scale go to stamps.com/tv and never go to the post office again! a lot of folks ask me why their dishwasher doesn't get everything clean. i tell them, it may be your detergent... that's why more dishwasher brands recommend cascade platinum. it's specially-designed with the soaking, scrubbing and rinsing built right in. cascade platinum's unique actionpacs dissolve quickly...
it's 5:00 a.m. at cnbc global headquaters here is your 5 at 5:00 now just points away from recooping all of their losses from their big wednesday loss. the tech nigh janet taking on the house of mouse putting a huge chuck of its cash there new economic reforms in china taking hold today as it's batoning down the hatches for extended