Transcripts For CNBC Street Signs 20240713

Iran president said armed forces admitting their mistake is a good first step and that all involved in the accident will be punished renault denies reports of a possible split with nissan and france finance minister calls the rumors malicious welcome to the show. One of the main stories moving markets overnight, chinas yuan strengthened to the highest level after the Treasury Department removed the label of the country as a currency manipulator. Steven mnuchin said the country made moves they first attached the label when they accused them of using the yuan to get an unfair trade voontage the first rise in export since july signaling a recovery in demand following a preliminary trade agreement. Imports rose while the countrys trade surplus increased. An on annual basis Interest Rates rose 0. 5 . Chinese vice premier liu he a arrived in washington. Reporter two days ahead of the signing of the phase one trade deal in washington, d. C. The news has to did with china trade numbers for december imports and exports improved in the january data, weve got the beginnings of a trend. Maybe troughing out or bottoming. We may have signs of a rebound under way. The second bound is the Treasury Department in the u. S. A decision confirming it is going to remove the currency manipulator label in the semiannual report on currency manipulation this comes as a surprise if you take a look back and ask how significant the move is, the putting on and lifting off, okay lets talk about august when they first put that label on how significant was that as a threat not very much so why, because when the Treasury Department names a currency manipulator, that ultimately could lead to terrorists the u. S. And china at that point was already engaged in a trade war and tariffs were already on. What about now, with the label about to be lifted off the u. S. Is likely going to leave the screws on china because there is going to be a currency clause in the u. S. china phase one trade deal that permits china not to seek its currency and commits china to be more transparent in terms of external balances as Foreign Exchange net net, it doesnt make that much difference. The headline could be seen as basically an sweetener or olive branch to the United States or china. Dont expect any positive move from beijing it is going to come down to the details of the deal. Well only know on wednesday, u. S. Treasury secretary promising, yes, there has been a lot of owe passity and not a lot of transparency in the content but the scrubbing the text, all will be known and made public come the day itself. Reporting for cnbc, beijing. Lets see how markets are reacting to all of this news to digest in the next 24 hours. That is the signing ceremony set to take place between u. S. And china tomorrow hopefully well get a little more detail and what they have agreed to on this agreement. We did see a positive hand overfr overfrover from overnight removing the label of being a currency manipulator the mood in europe is slightly luke warm. Ftse 100 and uk down about four points almost a tenth a percentage point weaker. Back on some positivity and some dovishness the central dax in germany, the only splash of green, mildly up about seven points or some of these sectors that have exposure we are seeing chemicals massively underperform we have a number of those good names. Cac down about 0. 4 and ftse mib down a similar amount. The mood is more cautious than in u. S. Equities, the dow close to that 29,000 mark. I mentioned chemicals, you can see most of the sectors are actually trading in green territory. We have banks down 0. 4 in europe the u. S. Banks reporting season does kick off today. Weve got city, wells fargo and jp morgan trading in defense food and beverage down about 0. 4 in the green up 0. 2 percentage point. We have the renault chairman denying that they are moving towards a break up of the alliance with Nissan Renault is up on the news. A stock weve been watching closely in europe. Basic resources up about a tenth a percentage point no surprise. Any positivity around the trade deal is positive for basic resources. Lets turn and talk about chips and autos in more details. These were the autos this is one of the sector weve been watching closely. Can you see that psa, puth owe is down. One automaker they own is nouane they are losing jobs renault back in the news as well down five tenths of a percentage point. We started off positive but back in negative territory. Both renault and nissan have massively underperforms. Both of down as investors still grapple with questions about what exactly is going to happen. That is the picture for autos this morning generally speaking, european equities are off to a luke warm, if not negative start to the session. Thank you for the equities picture. Lets talk fx now with our strategist picking up, i would say, on the biggest fx story in the last 24 hours. Soaring to the height in the recent hour, how significant is this label we think trading right now is a tricky one we know taking away that currency manipulator label increases chinese authorities to strength ent strengthen the yuan. We are thinking around the 6. 9 level, we could see some profit taking coming through. Putting this in the context of the trade negotiation, do you see this as an off ill branch that u. S. Is offering to beijing . It suggests that there is something in there regarding commitments to make their currency more market friendly. The market will be watching for fx and what they will be doing in terms of flexibility and making their currency more flexibility. Question on the details, how do they actually matter at this point. We know the full details in theory will be posted once the signing ceremony takes place does it actually matter for markets . Do you see disappointing trade on the back of that or the fact that the two sides will be enough to keep the markets going . The fact that they have reached a compromise is probably enough to get another rally in asia affects i think the market will focus on the details and will be the initial reaction those cultural purchases in terms of currency evaluation really the fact that we have a short term turn. We think that will be enough to keep that going. The trade data we had overnight, export data is showing an improvement this is the best number weve seen since july. We have gdp data coming up if the data is stronger than expected do you not think that will be stronger on the impact are you still cautious how much the currency can go from here . We think it is kind of priced in with the trade data, we have a low base and some frontrunning effects ahead of the Chinese New Year there are signs of stablization but i dont think we are forecasting, run away or reacceleration of growth i think the currency markets will play it in terms of the broader complex. The yuan or the rand are risks and well see positive numbers reflected there. One of the other moves we saw announced is the yen we saw the dollar rise above 1. 10 yen for the First Time Since may. How much are you looking at this or how much of an opportunity is there in this cross . Weve seen a lot of demand in terms of geopolitical risk we should get a move higher in the dollar yen going into a more positive environment there will be that proxy trade, so you are taking on that global geopolitical risk. One thing that came out of the currency manipulator treasury list, the report continued to say the strength of the u. S. Dollar was concerning also the imf has judged that the dollar is trading too strong as well do you think this will be the year the a u. S. Administration gets more active on the currency front . It is within the treasurys agreement. It is their decision to make we implemented by the new york fed, it is something that will be central everyone will be watching that rhetoric we think for a number of reasons, that the tide is kurning against the dollar where we see more growth we that fed has ammunition to cut rates and we suggest the lower dollar you dont expect a higher dollar for 2020 then no. Just to round out the conversation about the trade war. Clearly this is not the end of the relationship between u. S. And china, this is just phase one. Assuming we do get the signing of the deal this week, how are we going to phase two agreement . Well ask when will they next meet what are the tangible things, the next big issues to tackle . Just stopping the escalation right now. The bar to phase two is presumably higher. I think all the market needs is to see some kind of deescalation and some sort of rebound in trade volumes. That is quite low from a market perspective. Well leave the conversation there and pick it up in a little while. Keeping with the theme of u. S. china a prom neinent chinese linked social media account notes posted that the trade war is not over and that there is still many uncertainties down the road it could be madness to use Huawei Technology in 5g networks that is the warning from the u. S. To their british counterparts washington Deputy National security advisor reportedly laid out the technical evidence of the risk the uk is set to decide later whether to include huawei in the 5g roll out. The u. S. Secretary of state likened the integration of technology with china to the u. S. Using soviet tech go to their countries, they are keenly aware of the need to protect their information. Yet, they are prepared to allow that information to transit across chinese infrastructure. I remind them. This is an imperfect analogy none of us would have installed soviet technology. We would have never allowed our private citizens to work across. This is technology that the chinese will have access to this information. How they get it. We can all debate. Make no mistake, theyll have capacity to get this deeply personal information it makes it harder as someone who ran the Central Intelligence agency for 18 months if it is not done properly, the Close Relationships we have are potentially at risk. Coming up on the show, a rising tide. The u. S. Budget deficit tops the 1 trillion mark and global debt heads towards a new alltime high we break down all the numbers. See what your customers need, even before they need it. With esri location technology, you can see what others cant. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Running to meetings, errands. Now im running for me. Ive always dreamed of seeing the world. But im not chasing my dream anymore. I made a Financial Plan to live it. Every day. At Northwestern Mutual, our version of Financial Planning helps you live your dreams today. Find a Northwestern Mutual advisor at nm dot com. Welcome back i want to bring you some fresh commentary out of iran saying some 30 people have been arrested in protests over the plane crash. This is being broadcast through a state aligned television network. We also heard the judiciary saying they have tolerance towards peaceful protests after rallies erupted over the passenger plane incident across iran so 30 people arrested. There is a protest tolerance accepted just a reminder that a few months ago, they killed several people over an issue to renault, both companies denied reports that they may be headed towards a break up, iran released a statement saying they in no way will discuss the alliance adding that they are expected to name a new ceo carmaker opel plans to cut 4,100 jobs the car market experiences a slow down and technical eruption the switch to election mean opel and other german brands will require less parts and labor to build newer models the Uk Gambling Commission will restrict consumers to use credit cards to gamble applying to all on line and off Line Products and come into effect on april 14 it is u. S. Earning season, the big banks are first out the gate reporting results before the u. S. Opening bell today. Well hear from bank of america and goldman sach on wednesday. We highlight key thoughts to look out for today reporter the main challenge for banks from a year ago are significantly lower rates. Guidance for net income for the year ahead is there for the most important part of reporting this week the extent to which strong loan growth will be watched trading revenue will be under pressure offset by decent fee income for those with high exposure to Asset Management the Wealth Management margins will be pressured. Advisory revenue will be strong and offset by Capital Markets as ip os dropped off revenues may well be flat year over year. There will be cost control and branch to digital distribution ranks rallied last year in the final four months. Overall of 2019, bank stocks rose 38 awful which were more declined by 6 . Of all the banks reporting this year, probably the most individual reportings are charlie shaw first reporting and Goldman Sachs first Earnings Report in the new structure giving them 5 outperformance. Reporting for cnbc Business News the bank season is kicking off with u. S. Banks. Lets look at how some of the currency markets one that has been in the spotlight the last couple of days is the pound. You can see we are still trading slightly weaker, 1. 2970. Post the election, we brofiefly got to 1. 35. Lets back to that fx strategist your thoughts on the pound and how they have been propelled to dovish members i think there is lower to go and that is the way to play the shift towards the dovish side from the bank of england we saw a really sharp move the rates market really pricing in is almost one and done. Very little price. January is almost 50 prices for a rate cut it is about right but i dont think there is that much move to price in more. That survey data could push any kind of rate further out if you look at the pound, people were very much longer pound at the start of the year after the general Election Results there is a lot more constraint in terms of monitoring for example swiss frank and the euro is a better way to play this the feeling i got in december is that a lot of people were wrong footed by the collapse of the pound in the last couple of weeks. It took a lot of people off guard. Hitting 140 in december to 130 on the down side the feeling is that the accounts got long real money is very much under weight does that tally up with what you are saying as well the interesting thing is that people were quite long and we saw people profit making ahead of the winter break within that start of the year where people really wanted to get back into sterling you look back to the data, it does look like the market was very much long and we are seeing that being washed out. There is an optimism focused back between the march trade between the eu and the uk and where that could be. We are going to see that risk priced out thank you for joining us on the show our fx strategist. Coming up, arrests are made after the iranian president calls the downing of the foivleian airline unrgab well have more after the break. Welcome back to street signs. Im Julianna Tatelbaum and im joumanna bercetche. These are your headlines losing the label positive sentiment faeds as the u. S. Drops its branding of beijing as a currency manipulator. U. S. Futures point to a lower open with the big banks in the spotlight as they get ready to kick off earnings season an unforgivable error irans president says armed forces admit to the mistake is a good first step and that all involved in the accident will be punished renault denies reports of a possible spliet with partner nissan and frances finance minister calls the rumors malicious. European markets have now been open about 1. 5 hours. We are seeing them pair backerlier steeper losses essentially teetering around the flat line across all regions in europe the modest being the ftse 100. Sterling has been one of the key stories over the last week dropping below the 1. 30 mark on the back of dovish commentary out of the boe the run upto the phase one agreement, the sieng of that deal the big news overnight that the u. S. Has decided to drop its label as currency manipulator for beijing. The yuan being major reaction. Not seeing it here but we did seethe yuan soar to the highes level since july on the back of this news. So markets react to that we did see major news around the 110. This is big news that they have seen the biggest move since july sterling trading about 12 basis points light at 1. 2972 lets look at u. S. Futures a big day for u. S. Bank earnings set to kick off the broader q 4 earnings season. We are looking like we are in for a modestly negative start as investors await the details as well as those earnings from jp morgan, wells fargo and citigroup. Some inflation data to watch out for. Elsewhere, investors can aim for new highs on their own supply. The first etf for the Legal Marijuana industry is running. Charging 80 cents for every 100 euros committed. Opening the door for participation which has seen major head way across the pond bringing in the managing partner. Great to have you with us. I want to ask you about the timing of this looking at the results of the two largest funds, they were respectively down 28 and 34 for the year the annual year in 2019. It has been a bit of a torrid run performance wise what do you point that down to what we are seeing in the market and in the past 12 months is a correction. Previously, everybody was very sold on the growth of the industry and the secular demand. But that led to a lot of skub rans and unprofessional people operating in the sector. We are seeing that correction and analysts finally being able to distinguish the wheat from the chafe in terms of good company. I think the time of of this is right. I think it is a good time to start with this type of product. The number one question i think is what happens with the legalization there is a big difference of legalization for medicine and for recreation purposes. In the uk, they have legalized for medicinal purposes but it has a lot of conditions attached to see another leg up, would you like to see a relaxation of those conditions i think in most medical markets, when they start, there is normally a period when they announced and a couple of years when they point out what that market will look like. In terms of the mechanisms and the distribution methods what you see the birth of what should be a multibillion market. The latest say it could be between 2 two or three billion pounds recreational legislation is quite different. People need to understand the difference between the two i want to ask you the question that runs the risk of conflating a couple of issues. In the u. S. Over the last year, there has been a huge focus on vaping with regulators under a huge amount of pressure to crack down under a number of illnesses were experienced on the back of vaping now marijuana is clearly its own beast but do you think this is a glimps of how regulators will turn and look at the cannabis industry yes i think it is equal to the alcohol equivalent and when moon shine was legalized in the u. S everything that weve seen in the vaping market and regulation is, in my view, a necessary thing that will lead to a stronger, more wellfunctioning Market Going Forward with any new market, there is a challenge on how to appropriately value these companies. If we look from a valuation stand point to clearly weve seen a devaluing and reduction of those losses that the major etf in the u. S. Faced. What is the appropriate valuation that investors in europe should be thinking about Cannabis Companies the valuation should focus on a more fundamental basis you look at the profitability. Weve seen irrational skuberance as people have bought into overvalued stocks. They make this equal to earnings it should focus like any other industry on a more fundamentals basis given to girls like ip or strong brands. What about the compounds arrived. So cbd, you can just get the cbd oil over the counter, how much of that is a risk given that you can obtain something derived from the same plant but doesnt necessarily run in the same regulation it depends on the market. If you were to make medical claims about cbd, that would be an issue there is not enough evidence to support. Cbd marketed as a food is allowed. It is worth pointing out that cbd is a natural product derived from cannabis so it does have basic safety properties. We set up a company researching the anticancer affects and antiinflammatory nature of cbd. It is only when you have proper Scientific Data that the industry can move forward. It certainly seems to be an industry this is taking off. You said in the uk, you think it will reach two to three Million Pounds where are we now bow l we low 100 million. Interesting to see that growth unforgivable is how irans president described the militarys shooting down of the ukraine polite killing all 176 people on board. Saying that the government is accountable for everyone who lost their life on the plane protests continued last night over the accident. Videos showing hundreds of demonstrators. Some students can be heard clanting, clerics get lost it has been reported some 30 people have been reported. We have this report after gaining access to one of the air bases in iraq, one of the two targeted last week new demonstrations in iran. Outrage over the admission it accidentally shot down a ukrainian plane after days of denials. Some saying they were fired upon by Security Forces which the police chief die nies. This as we were granted access to the western base in iraq struck by missiles some with direct hits where u. S. Troops were living and working this shows how close the u. S. Came war with iran this was one of the main housing units. It is so badly burned and damaged. You only know people were living here because there was a burned out bed, a bicycle had soldiers still been inside, there would have been man casualties the soldiers did have about two hours of warring from u. S. Intelligence some kind of attack would be coming. Many stayed out of bunkers to guard the base captain Jeffery Hanson had the wind knocked out of him by one of the first missiles . I did i knew whatever was coming was worse than we thought. A ran said it did not want to kill u. S. Troops you say this was lethal yes a lot of people would have died if we hadnt moved 39 soldiers were living in these quarters dozens more were posted by we were lucky the u. S. Took precautions but also a degree of luck. Those soldiers out of bunkers faced an enormous amount of risk telling us after, they fully expected there would be american fatalities reporting for nbc news in iraq france, germany and britain are set to tricker a defense mechanism. The move could lead to un sanctions if the issue cant be resolved uk Prime Minister Boris Johnson called on President Trump to replace the deal with one of his own and added that this would be a, quote, great way forward. Very pleased to bring in kay lynn birch france, germany and britain are looking to trigger a dispute mechanism. Im curious what you think the implications are with the u. S. And longterm implication . The u. S. Has been putting a lot of pressure on traditional allies and i think the u. S. Has been moving apart from western europe we saw significant pressure to not renew that trade deal that never really gained any traction when we saw the efforts to maintain the lifeline to continue in some modest exports that wouldnt allow any questionable activities on the part of europe that has now ended with the latest iran is on risky ground now acting as an aggressor in the region with the attacks on the American Assets in iraq prior to the latest questions in december that started the chain of events that trump escalated in a shocking way with the response of the downing of the plane especially all of these things have ee loom nated any area of understanding. It looks as if they have their backs against the wall now they had the drone attacks there were little provocation and the policy for most of 2019 was hands off approach in the least. It was not something donald trump wanted to get involved in and then soleimani happened. How does that change the whole calculus and does that mean the u. S. Will have to have a more active role now in combatting some of the language coming out of iran . I think potentially thats what the soleimani strike was intended to do as you mentioned, trump campaigned in 2016 to not drag u. S. Into these unpopular wars not wanting to be the one responsible for the rest of the world. I think probably this enormous escalation is really a pivotal event of the air strike was a way for the u. S. To draw a line in the sand to say essentially no more small provocations this is where we absolutely draw the line the problem now is iran is absolutely up against the wall it has a shattered economy their oil exports we measure how much oil it is exporting we think it is about 500,000 barrels a day. Thats exactly onethird of what the government said is necessary to preserve its economy. It has a few tools now they have very few opportunities that means we probably wont see another massive provocation from iran and fits from the calculated response from those attacks on the air base but i wouldnt think it is over now. All right well pick up the conversation the Economist Intelligence unit. A quick look at how European Forces are heading to break. You can see in the last half an hour, a turnaround we started out negative just 45 minutes ago when the show started. You can see all of the majors are in green well be right back. And truecar shows the range of prices people in my area actually paid for the same car so i know if im getting a great price. This is how car buying was always meant to be. This is truecar. But how do i know if im im getting a good deal . I tell truecar my zip and which car i want and truecar shows the range of prices people in my area actually paid for the same car so i know if im getting a great price. This is how car buying was always meant to be. This is truecar. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Welcome back to the show, the uk company at the center of the donald trump imimpeach trial was hacked by the military since early november the timing of the reported hack suggests it could have been aiming to find damaging information on hunter biden who served on the companys board. No details were disclosed although it says it was, quote, successful cory booker has announced he is dropping out of the race. In a message, the senator from new jersey said his campaign did not have the money to fund a Winning Campaign booker had been polling an average of just 2 and was not scheduled to be a part of tonights debate in iowa which only allows candidates which received 225,000 unique donations. You guys have just freshly published your democratic 2020 update this has been an incredibly crowded field for candidates for the democratic nomination. What have you learned who stands in the best position as we head into the democratic, the first democratic primary if you were to look at National Level polling averages, so not state by state or democratic voters, you can get the polling, it still looks like it is bidens brace to lose. Hes still got about a ninepoint lead on the rest of the field and has had that it is really interesting to see where biden and sanders have been really since may of last year they havent budged. It has been a remarkable flat line that would appear to be in his left hand. If we look back, trump was going into the season with very few endorsements by this time last year, he had more than 13point lead and was pulling even higher than that on the National Level. That goes to show how unique and crowded the field is biden a contender but sanders has a chance to pull through here the four february primaries we have coming up, the first two, sanders is looking quite strong. Iowa and New Hampshire this race is really about momentum sanders could do very well in the first two and that could bring in support from voters, endorsers and fundraisers would help him get the edge over biden. A lot of momentum but in terms of the potential winning candidate. Electability is huge here. What is the best way to measure and who stands out on that metric this race will be decided on two things the issues and the democratic voters and the signs and how these candidates show in the primaries and their chance when they are fighting against trump at the National Level. Theyll be looking for voters in the suburb yan areas showing us half of the picture that doesnt necessarily give us a clear picture of general swing centrist voters. If we have strong turn out and for what candidates. A lot of suburban areas are areas that voted for trump in 2016 and the moving away and seeing the midterms of a strong vote that voted for trump at the National Level in 2016 looking at voter activity will be a sense of the new ground the other big question is how united the Democratic Party is if you look back to that prior election, only 7 of the candidates ended up voting for clinton. Do you think the whole Democratic Party will rall together in support of the candidate. Whether it is joe biden or somebody on the left like bernie sanders. Do you think that will be an easier hurdle to pass this time around it is not very clear cut still . It is not a perfect carbon copy that one candidate stuck out it is not quite that clear sanders is in a unique position. Hes very progressive on the left wing of the party trump has already branded him a socialist. That will be part of the conversation at a National Level. I think there wouldnt be a perfect swing if warren would drop out of the race or sanders that their candidate would flow to each other. There would be a lot of unique and defining factors there one last question, how important will the choice of vp be very important. It can really change the momentum that is so critical it depends on who will end up being the nominee. For biden, it would be a stronger lead. They would need to choose a more centrist vp that would have the poll able to work with congress and to win over states that might not be as comfortable with the leftleading candidate something to watch out for. Thank you for joining us great to have you with us. Quick look at u. S. Futures before we head out all pointed to open in the green. Watch out for bank earnings. Thats it for street signs. Worldwide exchange is up next. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. It is 5 00 at kns and here is your five at 5 00 tensions cooling ahead of tomorrows big phase one trade deal signing those headlines putting wall street back on record watch as the nasdaq and s p 500 look to build. Move over apple and microsoft. There may be a new member of the 1 trillion market cap club. More backlash for boeing as new text