Ricardo rakes it in. Helping the luxury group burbery grow and missing estimates in october as cnbc learns trade talks with the u. S. Has hit a snag and learning that canceling tariffs is an important preseason. Good morning and welcome to the show daimler has warned earnings in 2020 and 2021 will be negatively impacted by cost cutting plans a new strategy to stream line business and improve efficiency. It needs to, quote, significantly increase its financial strength at Mercedes Benz it plans to cut workers. Daimler is down 3. 3 volkswagen down, bmw down 0. 1 in france, renault down almost twothirds a percent and ferrari also performing negatively why do you think daimler is doing this looking around, all of the shares, they are all facing a lot of challenges. I dont think it is anything specific to daimler. I think they are all facing global trade uncertainty and steel factories where they might be underusing their capacity they have put a lot of money into r d for future technologies have they said, we need to make a lot of money andmajor changes. One of the reasons why we see chrysler looking to tie up with renault. Looking for ways to maximize their efficiencies their bottom line being hit while they are spending a lot of time on r d. Will it leave them much stronger to talk about their need to increase in strength what does that mean xactly i believe companies learned a lot with what happened to gm and the crisis and they came back into much better positions and challenges i think companies have taken that more proactive stance rather than a point where they are better theyve narrowly avoided a session. This has been helped by Consumer Spending presumably buying cars has not been that much of an uplift up until now, the doe mass tick markets have been keeping people going they hang in the balance today. Investors closely watching an internal deadline for the Trump Administration based on National Security grounds overnight, President Trump said hed been briefed on this matter and make a decision, quote, fairly soon. Here to tell us more about the deadline and what we can expect from the European Union and response mentioning he would take a decision soon that could happen today. We can expect one of two things from the european side on the one hand, President Trump will try to delay and that is the decision on this side of the atlantic, the European Union is likely to work with this decision if President Trump announces tariffs on european carmakers that could go as high as 25 likely to renounce retaliatory measures this could be significant step in the u. S. Trade relationship weve talked about steel and tariffs from theu. S. And the European Union weve talked about the airbus and boeing cases this would be another layer on this very tense relationship between the u. S. And the eu. Lets not forget carmakers are important for the key figure last year, the total exports from the European Union to u. S. From germany counted for 56 of total export so significant we heard the big picture, this is an escalation of what weve already seen, whether we see these tariffs this week or six months, what has been the impact on the sector in europe really it is the intensifying of uncertainty youve still got the u. S. And china there is uncertainty around brexit and uncertainty. Even if it was delayed another six months they could carry on as they are it really impacts that strategy. That threat is the sector which they encourage in the production facilities is there a production you can see there . Not clear depending on cost infrastructure you could see carmakers have some wiggle room you couldnt see that around models theyve been talking quite a lot. Im wondering based on conversations youve had with people in the c suite, how concerned does it become a bargaining chip between these two economic powers . It is an unspoken realization it is part of a much bigger deal i think you can use this as leverage one final question, we talked about daimler. One other piece of news that tesla is opening this plant near berlin what does that mean for the german auto sector it is some serious competition. Tesla already has the best selling ev model the german carmakers are considered to be a step minder behind tesla has the best share of the market and bringing the market should threaten the market as well thank you germanys economy managed to dodge a recession despite expectations of a contraction. Higher spending, they helped the German Economy minister said although the country did avoid a recession, the numbers are still, quote, too weak key readings of Chinese Health as investors once more raise concerns about global tensions and a slow down. Annual growth slowed to 4. 7 and retail sales also missed forecast separately fixed asset saw the lowest growth since back in 1996 u. S. china trade talks in a stalemate. A month ago, the two sides insisted they had an agreement in principal but now the u. S. Is pushing for Even Stronger chinese concessions on intellectual technology in exchange of relaxing tariffs the agricultural goods were supposed to be the low hanging fruit. They appear to have hit a snag on purchases such as soy beans china wants to avoid looking like it agrees to a deal too onesided. When President Trump first announced a deal, hes repeated china agreed to buy as much as 50 billion worth of u. S. Crops. The two are also not in agreement of how much tariffs will be rolled back and by how much the phase one agreement is supposed to address purchases. If the negotiators are unable to agree to easier points like soy beans, that doesnt bode well for future agreements such as the first one. Youll hear from plenty analysts that the impact are felt here in europe. Looking at the markets today so far, youve got a pretty picture. Dragged down by the autos trading. Similar story here in london more than a tenth percent lower trading around a fifth of a percent lower. You can see there down 1. 4 . Basic resources down more than four fifths of a percent real estate up half a percent. Burberrys start in the market the brit irk Luxury Company sited double digit growth compared to store sales around 4 warning that disruption in hong kong will put pressure on that highend market. Rwe rose its out look after brussels gave a green light for a british scene that pays for backup energy. Expecting earnings to come in near 1. 8 to 2. 1 billion euros. Well be talking to them at 11 15 cet. Henkel posted sales out look the adhesive unit sales fell and negative impacts to its beauty division. Bouygues reity greated the 2019 guidance and expects profitability to rise and Free Cash Flow to improve in that unit coming up, fed chair flagged a new normal for the u. S. Economy for the first two days on capitol hill well have more of that te isreakafr but carson is alive today thanks to a breakthrough treatment pioneered at st. Jude. One that we shared freely to help save kids near you. St. Jude is on a mission to cure childhood cancer. Four. Ever. High five give thanks for the healthy kids in your life, and give to those who are not. Donate now at st. Jude dot org or shop wherever you see the st. Jude logo. Did you know that feeling sluggish or weighed down could be signs that your digestive system isnt working at its best . Taking metamucil every day can help. Metamucil supports your daily Digestive Health using a special plantbased fiber called psyllium. Psyllium works by forming a gel in your digestive system to trap and remove the waste that weighs you down. Metamucils gelling action also helps to lower cholesterol and slows sugar absorption to promote healthy blood sugar levels. So, start feeling lighter and more energetic by taking metamucil every day. What are you doing back there, junior . Since were obviously lost, im rescheduling my Xfinity Customer Service appointment. Ah, relax. I got this. Which gps are you using anyway . A Little Something called instinct. Been using it for years. Yeah, thats what im afraid of. He knows exactly where were going. My whole body is a compass. Oh boy. The my account app makes todays Xfinity Customer Service simple, easy, awesome. Not my thing. Welcome back. The Federal Reserve chair Jerome Powell suggested that u. S. Interest rates will be kept at current levels now he rejected that rates could be lowered after three rate cuts this year and expects the u. S. Will see sustained economic expansion and that rates will state appropriate so long as economic out looks stay with that well be watching very carefully incoming data. If developments emerge that cause a reassessment of the outlook, well act appropriately. Powell flagged several risks. I think the new normal now is lower Interest Rates, lower inflation, probably lower growth and you are seeing that all over the world, a much greater extent than we are seeing here. And he mentioned the use of negative rates negative Interest Rates would certainly not be appropriate in our envirnment we have growth, we have a strong consumer sector. The very, very low and even negative rates we see around the world would not be appropriate for our economy. The new ecb president Christine Lagarde has taken members on private retreat germany, netherlands and austria have voiced criticism of the policy a spokesmen said members discussed a running of the Council Going forward. Former economist told us discord among members was estimate after the last meeting it was the measures were supported but the communication after, there was a lot of disowe nens its related to an uneasy feeling that the policy cannot really offset that joumanna carried out that interview. Given the criticism there by a former insider, what are investors saying about this . Thats a very valid point if you go back to the reason why there was so much discord, a lot was to do with the openended quantityive easing program it is a topic well be discussing right now, i have the ciowith me to recap what your fund does you are a European Value fund that invests in all parts of the structure, that is credit and equity to tie it back, you would think in an environment that the ecb are out there buying vast amount of funds does that mean it is offering more value at this point if you look at central bank intervention, clearly we are living in an alice and wonderland world where we have a large watch of rate markets. Clearly looking for value and fixed income is challenging across the board you have to dig deep and turn a lot of stones. There are fewer and further in between. Having said that, quite significant disperisan anything deemed to be high quality credit whether try or not trades at ridiculously tight yields whereas something with a little more hair on it, people wont touch. You say the actions having been quite distortion arie for the industry that is hard to argue that point. Coming back to what you are saying about having exposure about credit you said you tend to increase exposure in times of stress. Do you see in hints of that looking out at the landscape for sure. It is hard to predict when the cycle as a whole will turn forecasting is a treacherous art. They said it best, the forecasters dont know they dont know. If you are in the former, im not going to try to predict when the cycle will turn but we are going to see when companies have hit the wall that will be the short side for us in the credit given that this joongoing bid h joined the club because bonds are so tight there is a domino effect if you are short, you are sitting there waiting for a catalyst whether a macroeconomic or something specific to the company. Youve got to have a long time you do, indeed. It is challenging sitting on the other side with the deepest pockets in the world, so you have to be patient it is interesting you ask that because this year, a company weve been short five years finally hit the wall a Company Called rally, Holding Company of casino, which is a french super market. We started looking at that in 2014, 2015 it was a structure that looked like house of cards. The loan to value exceeded the value of the bonds we ended up shortening it took until this year for the company to file for credit protection soft guard in france. You saw the bonds trade down from 70, 80 cents on the dollar. You wait five years and eventually it does happen. On the long side, where are you seeing value now we are vesting in distress. There is a handful of companies the debt is trading at 50 cents on the dollar. You are effectively making binary bet on the underlying business thats on the credit side. On the equity side, we are seeing most value in Higher Quality businesses, primarily in the infrastructure and to a certain extent, the real estate space. A large portion of the pnl has come from this year, it has been high quality infrastructure and most listed in europe and as a result have been overlooked by the market speaking of areas overlooked by the market. Tip you cannily, this is the market both being underowned and undervalued. The uk is a perfect value you look at any investor survey, its underowned and valuations are low. People like to focus on political events over which they have no control or predig tiff such as brexit people have not vested and we have found there have been quite good value in the uk weve been vesting selectively in the uk and found companies that are the proverbial baby thrown out with the bath water and one Company Trading at almost a low valuation we are quite excited about some of the investments we have that is yet to be seen cool heads prevail then ill leave it there. Thank you for joining us the founder and cio talking through his investment thesis. Especially interesting opportunities in the uk if you strip out brexit, if you can day one of impeachment proceedings bring fresh revelations as the u. S. Leader brands the hearings a, quote, joke reliable partner. We Keep Companies ready for whats next. man we weave security into their business. Virtualize their operations. woman and build ai customer experiences. We also keep them ready for the next big opportunity. Like 5g. Almost all the fortune 500 partner with us. woman when it comes to digital transformation. Verizon keeps business ready. Rowithout the Commission Fees and account minimums. So, you can start investing today, wherever you are even on the bus. Ooh, like this guy. Yeah, i bet hes investing right now. Hes taking charge. Hes grabbing the bull by the horns and he just missed his stop, yeah. Its time to do money, so what are you waiting for. Download now and get your first stock on us. Robinhood. Introducing a razor that works differently. The Gillette Skinguard has a guard between the blades that helps protect skin. The Gillette Skinguard. Welcome back to street signs. Daimler shares veer off road and drag the auto sector lower warning cost cutting plans will negatively impact earnings down turn avoided. Germany just manages to dodge a technical recession. The economy minister there says the numbers are still too weak and ricardo rakes it in. Luxury Group Burberry despite disruptions. Chinese industrial output and retail sales miss outlook after a warning trade talks with the u. S. Have hit a snag trade talks is an important preseason. We have some new uk retail data in the month of october, retail sales were down 0. 1 on september. That is worse than the expectation of 0. 2 . Positive, the uk october retail sales were up 3. 1 year on year versus september 3. 1 . Lower than the expectation of 3. 7 for october. If you strip out fuel, you can see for the year on year numbers for october, they came in at 2. 7 against the september number of 2. 9 lower than the expectation of 3. 4 if you look at the threemonth periods. The 0. 2 rer sustain september 0. 6 that is the weakest for that metric since april 2018. Ahead of these numbers, we did hear from analysts as they were expecting to see improvement we saw the impact that had before the march 31st brexit deadline now ahead of the 31st deadline, it doesnt seem to have had all that impact. Looking at how the markets are fairing now. Clawed background and the ftse 100 trading around. 2 lower. And around a fifth percent lower and milan trading off about around. 1 you can see the pound trading very, very slightly stronger against the u. S. Dollar. Thats often been a baro meter of politics and the risk serving a bit better than it was because of the profile giving a boost to the currency the dollar weaker against the yen and the frank. Another very positive day looking lower today as was the case with he saw another interday high there and looking to open slightly weaker. The nasdaq sticking with the u. S. , impeachment hearings began yesterday. Two career diplomats William Taylor and george kent gave opening testimonies and described irregular and informal channels of communicationing joined by our guest, professor at the university of london. Impeachment offenses are hard to nail down. These are ultimately not political trials when you look at the allegations. On one hand, youve got the idea of the kwquid pro quo and then h idea of a coverup. I think they are both going to be very damaging. One is the set of actions carried out that are deemed to be illegal what you are asking someone to do in another country to do something likely to yield a result for you back home in an election that in it self is an offense. The ways you try to obstruct the investigation. So both of those will likely be unified together that is among the three things that adam schiff pointed out at the beginning. They combine to show that wrongdoing was done. If you take a step back there was walltowall coverage of this yesterday. What do these proceedings mean for the ability of legislatures to actually pass laws over the next few months, do you think . This whole presidency has been bound up with investigation after investigation. If you like the distraction of intense investigation has been there throughout on the other hand, this has carried out very large scale and high implication legislation as well the corporate deregulation, the tax cuts, immigration policies which have been carried out. It is going to wobble a bit because there is an Election Year in any case, i think that will be a big problem for a lot of people. When they are watching these impeachment hearings, youve got a lot of claims made fairly clear. On the other hand, the republican strategy is to reflect. Ive got a life to live and jobs to do. On that, you are talking about the political status what does this mean for the average view of the american political elite. What does that mean for elections going forward. I want to talk about the impact that has on how people vote. Very difficult to say there are big blocks President Trump personally has a solid block within the republican electorate. The polls have showed that it is cracking some what there are more questions being asked. The university of maryland poll showed that those voters regardless of party are looking at facts they are actually beginning to see problems for President Trump. Whether they believe there for he should be impeached is a different question but they are seeing that. If you step back outside in kansas or anywhere else, you are seeing your life carries on, politics carries on. There is a narrow issue of Foreign Policy which to a lot of people are very obscure. They care about a lot of things at home, particularly health care, for example. During the nixon impeachment, the public broadcasting did help to shape public opinion. Whether talking about mr. Trump is impeached or voted out of Office Next Year is two negative impacts. In terms of how this shapes public opinion, how does that shape the Decision Making process of the senators that youd need to switch and vote in favor of impeachment they are waiting to see if there is a bell weather moment where something really big is revealed for that to happen Mick Mulvaney and john bolton will have to appear. Otherwise, its really difficult to say unless there is a secret ballot in the senate for that to happen requires only a simple majority. Then that would have a tone implication. The issue about russia and ukraine is bipartisan issue. They agree that russia is a problem. But the party is holding back. They want to control President Trump. He controls the party. He has huge support in the electorate things will turn out very differently but theyll still have to answer everybody will know back home where you voted and that could damage the Republican Party deeply. Talking about doe memestic pi opinion. How do these hearings shape the feelings of enemies andallies . Is. We are looking to see what they can do to health against america on the other hand, they are stuck with this process. Thank you for joining us now. Professor City University of london President Trump has intended to persuade turkish counter part to the purchase of system also discussing the conflict in syria. The president claimed the crease fire in the country should continue the cease fire should continue to hold and i want to thank the president as we build a more peaceful middle east. Weve assured each other that it urky will continue to uphold what it is supposed to uphold. Im a big fan of the president to tell you that i know the cease fire while complicated is moving forward at a very rapid clip. My colleague joins me now with an interesting guest talking about these topics hadley reporter thats right, i am joined by general david pat rayious, former u. S. Attorney general. I want to ask you about what weve seen from the white house. President trump meeting with president erdogan giving him 15 minutes of free air time to speak to the International Audience and there are such serious questions about the u. S. Relationship today with turkey you and i both know it is difficult to the system with the f45s is the strategy here endangering the relationship it is an obvious time not only with turkey and the United States and turkey at large precluding turkey from receiving the f35 is not welcome. Theyve tried to find a path forward so that system is not operating at the same time of the f35 if it is allowed to be sold to turkey now having been halted, that that could go forward. I hope that is the case. Turkey is a very important country to nato. Its very geostrategicly important in positioning and played an Important Role as a base for our aircraft and other assets in the region i hope that this can be resolved and also the issue of where turkeys buffer zone into syria is also mapped out so we can then determine where our forces will be located in support of the syrian kurds who will continue to get the proceeds of the Oil Production in another eastern syria. The president has gotten a lot of flack for his decision regarding the kurds and protecting even the oil as well. You said that was a good decision i said it was a good decision to go back i agree strongly with senator mcconnell at the time who judged that this is a grave strategic mistake. It was equal part abandoning the kurds, handing the victory to iran and russia rendering a Large Population homeless and the refugees taking our eye off the Islamic State. The mission there is not just to eliminate the Islamic State established. It is to achieve the enduring defeat of the Islamic State. There is still some 20, 25,000 fighters in that region. The way we have done this is with a very small sized force enabling our kurd partners as we do the same with iraqic forces from the east. A couple of weeks away from the nato summit. The question is how would you advise the nato allies what weve seen from turkey is deeply concerning in terms of their Foreign Policy it is deeply concerning and we have to be very forthright about that what does a firm hand look like there it has been established you will not have the f5 35 if the Russian Defense is operating in your country. I wonder if deep down, they wil say we didnt make the patriot available enough you have to have a degree of strategic patience it is vitally important to keep turkey as a member, not to allow an issue that is tactical almost in a sense with consequences but surely should not be that which forces us to remove turkey from the alliance. We are going to work this out. Weve got to be patient with Strategic Dialogue that is what i hope can be pursued and working out where is it turkey can be located within syria noting they have had legitimate concerns with syria as they do have a relationship with the group pkk you want to ask us about the Business Opportunities as well theyve got a lot of speculation. It is clear they are not going to get the two trillion valuation they were hoping for how closely tied do you believe is the success of aramco to his l legi legit massy of his leadership he is the driving force as crowned prince doing this for his father, the king it is a fact that saudi arabia is gradually running out of money. Theyll be the first to acknowledge. The Sovereign Wealth Fund is lower than 5 now. The crude can be lower than 40 to 60 billion. The bottom line again is they need the money they need that outside investment that is crucial to delivering vision 2030 which can not be realized without outside investment this is just one component of a number of different initiatives that they are doing. You said in the past that you believe the security of the region is underpinned by the security of saudi Arabia Joe Biden recently said, quote, he sees very little socially redeeming valley in Mohammad Salman do you agree with that statement . It is in everyones interest to see saudi arabia succeed and to see it mod rate a number of its practices. Certainly, there have been some issues and step back the horrific murder being foremost among those we all want saudi arabia to succeed. Some members of congress that seem to be on board with that. I dont think a member of Congress Wants to see saudi arabia fail. They want to see some changes. Leadership changes. Our focus should be is the country moving in the direction that most believe is necessary for saudi arabia to be a success in the long run and to contribute to the region and the world in a way that is positive rather than destructive. Would you advice kkr to put money into saudi arabia . We have looked at deals in the past i did pull out of davos in the desert last year we have put money in the region as i think you know. We put 2 billion into Abu Dhabi National oil along with black rock that is the first direct investment by kkr in this region money into uae but not saudi. We trust the government we know the crowned prince very well we know the ceo very well. We have a lot of confidence. It was a complex deal but thats what we do we think this is a Great Partnership and hope it will lead to more we are looking elsewhere in the region as we do that, we evaluate not just the economic aspects, the geopolitical issues what saudi arabia has to do is regain confidence of all of the investors of the world so that it can attract the investors so much more to talk about willem, ill hand it back over to you coming up, dont mess with the mouse. Disney cheers with 10 million sign ups on the first day of its new streaming service. More details after this break. A lot of folks ask me why their dishwasher doesnt get everything clean. I tell them, it may be your detergent. Thats why more dishwasher brands recommend cascade platinum. Its speciallydesigned with the soaking, scrubbing and rinsing built right in. Cascade platinums unique actionpacs dissolve quickly. To remove stuckon food. For sparklingclean dishes, the first time. Choose the detergent that lets your dishwasher do the dishes cascade platinum. The number one recommended brand in north america. Disney shares close more than 7 higher after the new streaming service hit 10 million subscribers on launch day. Here to explain how does this stack up against the streaming 7 gain accounting for about thee quarters of the dows trading. 10 million sign ups within the first 24 hours first of all, a lot of people are getting a free oneweek subscription verizon is also offering free for the unlimited plan but 10 million good. Netflix 157 million global subscribers. What i want to understand, how soon do we find out what these numbers mean for the bottom line for disney there are also costs for these platforms. We saw this with technical glitches along with the subscribers and ads, we are continuing to see investments being made that wont show up until earnings in the next quarter so staying slightly mum until then interesting developments in the streaming space. A lot of competition between disney and other players out there. You can see a bit of a soft start expected for the market there. We saw the record highs on the dow. Looking to open around 23, 24 points lower right now dont forget to join us at 11 15 cet. Well be speaking to the cfo of rwe. Interesting conversation that is it for street signs today in london. Im willem marxs well be back with worldwide exchange. Stay with cnbc vo the moth without hope, struggles in the spiders web. With every attempt to free itself, it only becomes more entangled. Unaware that an exhilarating escape is just within reach. Defy the laws of human nature. At the season of audi sales event. Think you need to buy expensive skincare products to see dramatic results . Try olay skin care. Just one jar of microsculpting cream has the hydrating power of 5 jars of a prestige cream, which helps plump skin cells and visibly smooth wrinkles. While new olay retinol24 provides visibly smoother, brighter skin. For dramatic skincare results, try olay. And complete your routine with the olay eye collection. Brand power. Helping you buy better. It is 5 00 here here is the top five at 5 00 another day, another record. Can jay powell and trade talks keep the rally going speaking of trade, new hang ups keeping investors on edge. The unrest continues, now four Straight Days of escalating unrest in hong kong. City leaders consider unrest the unrest may be starting to hit the Banking System new
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