Transcripts For CNBC Street Signs 20240712

Takeover by veolia brexit back lash nancy pelosi says there is no chance of u. S. uk trade deal warning britten ain to break the divorce treaty a warm welcome. Lets kick off the show with a look at the markets. Extending gains after the rally. We have turned negative. You can see all four of the Major Regions are trading lower. The ftse down a half a percentage point the dax has turned negative now. The big event for european investors, no doubt that ecb meeting coming out later today and reacting to the turn around we saw in the u. S. Markets yesterday. We did see major indices recoup the selloff. The positive momentum not enough to continue to todays session looking to the break down and the best performing parts. Food and beverage and travel and leisure also rebounding. Noting every sector et cetera travel and leisure advanced. Now one of the better performing parts of the market. Chemical, utilities and auto the worst in contrast are the Banking Sector down about 1 down sharply in focus with the ecb meeting. Weak inflation will be a part of that meeting, looking to hear how madam lagarde looks to frame. Oil and gas down, basic resources and telecoms. Looking at the u. S. Futures after the rebound on wall street nasdaq with the best day since may boosted by microsoft the dow looks to drop about 100 points and the nasdaq to pull back about 90 basis points speaking to cnbc, druckenmiller issued a stark warning over market volatility. Right now, we are in a ragingmania. We have commentators on your network Encouraging Companies to do stock splits and going up 30 and 40 . I think the merging of the fed and treasury, which is effectively what is happening during covid sets a precedent we have never seen since the fed got their independence it is creating a raging rainia and has not spilled over to main street the ecb council will hold a policy meeting amid concerns a stronger euro could pull into a deeper territory madam lagarde expected to keep rates steady instead getting out to annette with a special guest to set us up for todays meeting. Thank you it is a bit of a tricky situation right now. We have more disinflationary pressure that means, thats the only mandate they have to act at one point. This today remains to be scene joined by the head of macro research, thank you very much. We are just saying there is a lot of pressure on the ecb to act today. I dont think we want to do anything today i still love to digest or assess what does the new fed strategy mean and how significant it is to drop it more factors are behind it let me ask you why you think the inflation rating was so low . Thats part of the story. Summer sales and more volatility and coinflation over the next couple of months this is indeed part of the environment. We are in the midst of a big recession recovering the level is slow. We could see more pressure coming through that would imply the inflation changes for the ecb. Lets talk about when will the ecb react. Given what weve heard might be quite clear, right we think in december, theyll announce an increase of purchases again. To make sure everybody understands they are ready and willing to stand in space for the governments to do the heavy lifting. It is much more effective to sustain growth december, they get new numbers and projections and it is a good time to announce that. Speaking of the stimulus, we have to talk italy clearly that debt will skyrocket at some time with a looming Credit Rating downgrade, how much of a concern is it to ecb it is never going to be a concern, of course it is important there is not a spread widening that would impulse to every country at the same rate. I do think it is important to signal to the market even though italian debt will go up 20 or 30 . We stand ready to refinance and make sure any issuances ready, well absorb so probably yields are not going to rise even though there will be more debt coming. Youll see a risk with that all of these to go up and to happen if inflation goes lower, it is hard to see how Interest Rates will rise anytime soon do you think youll do more for the Banking Industry now the second part of the corona crisis coming with more might get a problem. The governments need to respond to that but the ecb should respond to that. It is part of the menu in this banking crisis as it was in 2008, 2009 theyll play its part there do you think that tried to influence the market no. Weve seen interventions in the past it was a concerted effort she will try to talk down later today. Sound dovish and make sure they have met us for the inflationout look if you were to keep rising at another rate cut will be seen to stop the momentum there. Another way to go forward with part of the strategy here but then covid happened. The discussion restarted but it is still in the early phase of the discussion it will be interesting to see whether she shows some sympathy and if this could be something as well. The French Central Bank governor has already said he would be in favor which would be like the new fed strategy, right . The fed has a new make up strategy if it had in the past in the principal, they already have the target that had been made clear you could have an inflation target around 1. 9 or 1. 8 it is not the same of what the fed has done. Do you think the 2 is at question here . Within quite a few that would impose that significantly. How do you think that came out recently, right . I think hes not the same but doesnt see the need at this stage. If the recovery were to falter or change dramatically, they would offer support or it would be a different kind of view. Thank you for your time today. It will be an Interesting Press conference even though it might be ecb talking the talk and not walking the walk as of now december might see more action thank you for bringing us that interview make sure to join us for special coverage offed toos meeting beginning with the ecb set to begin its update at 13 45. Can you follow us on twitter and tweet me directly cnbc julianna coming up, the eu threatens legal action after a british lawmaker admits to intentionally overriding and breaking international law. Offers investors a broader view. We see companies protecting the bottom line by putting people first. We see a bright future, still hungry for the ingenuity of those ready for the next challenge. Today, we are translating decades of experience into strategies for the road ahead. We are morgan stanley. If i could, baby id how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with xfinity mobile. Welcome back local lockdowns cannot be ruled out in france as over 8,500 new cases were revealed on wednesday. The second highest daily number since the pandemic began the eu is considering legal action against the uk for violation of the brexit agreement. The block said it would have clear justification and could bring a case even before it is passed by the parliament the Prime Minister said it is a priority to find a legal safety net. My job is to uphold the interrogate of the uk and also to projekd ttect the northern i peace process. We need a safety net to protect our country against extreme or irrational protocol which could lead to a border down the irish sea which i believe and i believe members would agree would be prejudicial to the goo friday agreement nancy pelosi has made a statement. Going to our reporter. The withdraw agreement, where do we go from here knowing how the uk commission has responded and how they feel about it the tensions between both sides have escalated over the last 48 hours or so. Boris johnson has to answer questions with this internal market as you mentioned, the trade negotiations with the eu are currently at risk. We look at the details made by the government yesterday in that bill, there is a clear override of the withdrawal agreement. Agreeing and legislated the agreement that would allow to pave the way from the eu it says that the data given by the uk government above the threshold that would impact the goods against Northern Ireland and the rest of the eu would have to give approval by the commission this market overrides that and gives the uk government the power to decide not to apply that specific article of the withdraw agreement thats why different lawyers, policymakers as well as the actual government have said that this market will breach international law. In this context, analysts have already changed the forecast and are now expecting the no trade deal lets see what will come out of these negotiations here in london tomorrow, we are expecting to hear from both sides lets see what theyll say today, it is the short term to monitor the emergency meeting happening at lunch time to see where do we go from here thank you for breaking it down do stay with us. First, lets look at the ftse 100 stocks the index down 0. 7 . Right in line with the broader market, which is retreating after the gains we saw yesterday. Great to have you, henry to help us try to make sense of what these brexit headlines mean for the uk markets Boris Johnson altering the agreement with the commission which would violate the law. Youve got nancy pelosi weighing in saying you could say goodbye to a u. S. uk trade deal. How significant are these for the uk hugely significant. I think youve seen brexit as the only issue for the uk now. The asset class has been the most redeemed of the Asset Classes with regard to the under admitting. Id say recent headlines are very easy to make them override the rule of law. Speaking very, very well saying our rule of law and our word are critically important as we go further into this conversation this week, it will be clear that our demands being in and around will make a change to issues that could cause disruptions for the united kingdom. With regard to the trade talks, we could thrust our mind back to the other parties. The best perspective i have for today is when you look back at 2016 wra eu and canada talked about the trade deal then it was all over by the end of the month, it was a signed deal. That will give us reasonably good insight well speculate that this deem is 100 off. That is actually reasonably close to 100 as well. A large few weeks and as active managers, we need to be on top of and ready to look to opportunities. Good morning. You mention that episode from back in 2016 if what we are watching here is just negotiating tactics, what does that mean for the near future i think youve seen it unfold weve had a very difficult back drop there is a makeup that has worked against it via oil and markets. These are uncyclical things. Some of the fantastic market franchises we have listed here in the uk in financials and Consumer Staples are unusually cheap. Youve seen the discount baked in you can compare it with international and our guys just trade really, really cheap by the middle of october, you could have open clarity. It comes in two forms. If you need to move on, you must move on. Either way, they would enjoy the certainty. The valuation of the uk equities goes back 100 you have to go back to find equities this cheap. To say those are discounted in the market is wrong. I think they probably will i expect a little volatility and those to go higher and be felt most acutely with regard to shares as we sit here today. How do we extinguish between brexit and the policy perspective when you talk about the discount when we trade against the rest of the world . We look to compare each and every company with the closest peer we could find in europe or asia we compare that with Financial Performance in like for like sales in revenue, profit, et cetera with that, you can get a clear score card those are things we are trying to value i think history would say that you cant just keep selling an asset class forever. When the fund starts to come back, well pick off the best values that are cheer versus international peers. If we go back to a possibility of a notrade agreement with the eu and uk, could there be some sort of upside for the major uk companies . Absolutely. The history less on would say you expect steriling to be weak. It has been weak persistently since 2016 clearly, i would expect in the short term, a modest amount of weakness that you would talk to at all looking overseas like glacxko which are usually cheap. That is in tratd one, those would be the benefits. Those would be domestically with the deal or no deal. Weve had an unbelievable period of companies brexit was the end of 2018 2019e another. Then they can play either way, we get certainty by the end of october it will bet also write off even in the event of no deal you talk about what if we start to see the funds flow through the uk we are monitoring this selloff taking place in the u. S. In the tech selloff here. Are we at the beginning of the major rotation out of some of those winners that have ridden the rally higher or driven higher could that be the focus if investors sierkle some of those gains into the market . That relative valuation has only been here two or three times before mid70s or 80s with a big snap back in the World Markets and u. S. Market. Weve seen the value makers and the absurd names that asset class could be behind us through october. Then it is so, so important for us to feel the money behind us if you can get asset flows in, that really helps. We are just starting to see the emerge ens of the m a as well i think that shift is incredibly vital it is important for the mind shift that are borlsz. In that shift, that is hugely welcome as well. Coming into this crisis a clear message thank you for joining us this morning. Coming up, well look at two asian debuts as hong kong and south korea see new listings with different outcomes. More when we come back welcome back to street signs. These are your headlines european stocks turn negative despite a threeday losing streak the nasdaq posted the best session since april. The ecb expected to hit further stimulus brexit backlash, House Speaker pelosi said there is no chance of a u. S. uk agreement if the good friday agreement is undermines and warns against plans to break the divorce treaty President Trump says he intentionally played down the virus. Joe biden accusing him of derliction of a new book lets get a check on european markets things have quickly turned negative weve got red across the board so under performing broader europe the dax losing a bit of steam down 0. 15 and the ftse mib does follow pressure. The main benchmark rallied 1. 6 , every sector participating in that rally we are seeing a little profit taking after yesterday we are not seeing positive momentum fx markets, we are seeing a bit of strength trading up nearly zero percent sharply in focus ahead of the ecb meeting today well see how madam lagarde frames the euro strength and how theyve spoken aboutthe strength in recent weeks weve got red on the board for wall street. Fairly modest compared to the magnitude of these if losses hold shares in yum china are lower on debut trading the company which operates kfc and pizza hut raised over 2 billion after going public in new york in 2016 shares in south korea as kakao games more than doubled. The group, which is a spinoff of mobil messaging operator has benefitted from increased demand from lockdown. Lets get shery to join us two different stories here yum china essentially struggling but different story for this Gaming Company out of south korea. What more can you tell us . So my observation at least coming from these two listings ive watched today, perhaps Growth Stocks are getting more love than value stocks that was really how our information and using this platform of kakao mobil messaging chat they are duping themselves as the tencent, which is the daily limit of the markets that is a smaller ipo compared to the ones we would see in recent months in hong kong but did raise 323 million u. S. Dollars. The valuation close to 3 billion u. S. For this game developer. Well see how this goes. A lot of the covid lifestyle is something people are talking about to explain this price action when it comes to this yum china, its an Old Fashioned household name its number one in china 675 billion u. S. But a fragmented market. When it comes to this year, its really about Going Digital i think thats the reason why theyll use the net proceeds for the net shell secondary listing in hong kong to expand their network of restaurants and go more digital even with their supply chain as well when it comes to this price action and closing down more than 5 , something we are not used to seeing on the day of in hong kong because we are used to seeing the listings here at least on the first day a couple of the commentaries i got. First of all, the global restaurant sector is under pressure with covid19 highly leveraged Retail Investors could freak out. They wanted to dump their shares in order to protect their capital. And in the resent sellout of the show and in hong kong as well as in shanghai. And perhaps some liquidity distortion going on as well. Thank you for the latest in breaking those day for us. Cnbc has learned bytedance is in talks with the u. S. Government over ways to avoid a sale of tiktok sources say bytedance is ready to hand over control but wants to maintain ownership of certain assets it remains unclear whether washington or beijing will back such an agreement. They have until september 20 or face a possible shutdown there netflix coceo addressed uncertainty around tiktok and his own strategy with china. Tiktok has done a phenomenal job on short form entertainment. There is always room for innovation i would never count anybody out. It is a wide open market you mentioned tiktok, there is a real question about the future of tiktok and more the relationship between United States and china and a market youve tried to get in im curious the implications of what is happening with tiktok may or may not be your ability, netflixs ability to enter that market we got turned down by the Chinese Government several years ago. We have not been spending any time on china in the last couple of years there is so much opportunity for us in asia, the rest of asia, i india, korea and latin america so we are focused on that. It is a pity from a longterm perspective of the u. S. chinese disengagement. We are focusing on entertaining everybody else ive got fresh comments i think everybody will be interested in listening to these are from astrazeneca ceo after news that the vaccine maker halted the trials of the vaccine after a patient fell ill. We are hearing officially, firstly, he said it is very common for a trial to be paused. The difference now is that the world is watching. The company does not know the diagnosis for the volunteer that has fallen ill tests are ongoing as to whether the illness is transverse myelitis this is a disease of the spinal chord and potential illness, a suspected diagnosis. They cannot say when the trial will start the decision is in the hands of an independent safety committee. We should know before year end whether the potential vaccine will protect people. Given reassurance on the timeline, we dont have a diagnosis for sure about the patient who had taken ill. They are testing on 50,000 to 60,000 people and typically thats enough. Very common for a vaccine to be paused the difference now is that the world is watching. Well bring you any further comments if they come through. Now back to the markets, one m a deal, tiffany has sued lvmh after saying it could not complete the 16 billion take overof the jeweller. The government of france requested it to postpone the completion beyond the november deadline suez has slammed the takeover attempt as hostile and op tunistic. They offered to buy the company for 3 billion euros we already knew suez was confident in its own strategy in pushing back from this take overattempt from veolia. These words harsher than before . Caller s that right this is a doubling down of comments saying it proposes to post that damage on the front. On top of the offer made is that the main overlap is that French Business that has been an issue in the past in 2012, the two companies tried to get closer. With that issue, why they preempted in august and said they had a buyer to buy that business already and said it would bring them 4 billion to 5 billion saying they would bring the business in france interesting comments there in the past few days, saying that everybody need to calm down and time is of essence in this negotiation here hes speaking continuously with the ceo and listening to the strategy of what they want to go ahead with another key element is the french government being the main share holder the french finance minister will meet soon to go over this. He has said in the past he would look over the offer with fairness hes saed the main concern was jobs and there should be no job cuts in france as part of this deal we know they like this and that m a would be the best one and would be better for this as we know the french government has a lot of spending in this crisis theyve been involved in the past few days preventing workers from the pressure here so some interesting elements those shares would trade down about 0. 8 on the french market. Thank you for that report lets look at u. S. Futures a bit of red on the board for wall street after the strong day we saw yesterday the best day since may for the s p 500. We are looking for a modest pull back this morning. Well be right back. Give you my world how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with xfinity mobile. Welcome back President Trump admitted he wanted to publicly down play the virus in the early days. According to a new book by bob woodward which alleges he knew the severity of the virus weeks before it began. The bombshell allegations come from a new book in which President Trump said he intentionally down played the virus to avoid a panic he writes on january 28, the National Security advisor warned him the virusout break was the biggest National Security threat youll face in your presidency in audio ex erpts, the president revealing a surprising level of detail it goes through the air, thats a tricky one. A delicate one it is also more deadly than even your stren uous flus this is deadly stuff three days later. In theory, when it gets warmer, it goes away i hopes that true. And on february 26. You do certain things view this the same as the flu. In march saying he is deliberately down playing. To be honest with you i wanted to always play it down. I still like playing it down because i dont want to create a panic. The president by his own admission acknowledged the depth of the crisis and yet told the American People something very different how is that not a betrayal of the public trust the president has always been clear with the American People the president defending his comments we dont want to instill panic and start shouting we have a problem that is a tremendous problem, scare everybody ill tell you the other thing. We immediately started buying all over the world masks and gowns. We dont want to cause pricing to go up this afternoon, dr. Fouchi saying the president was not misleading when we would get up in front of the press conferences which were common, he didnt really say anything different than we discussed when with him. Joe biden blasting his comments as a derliction of duty he knew how deadly it was he failed to do his job on purpose. It was a life and document betrayal of the American People. Managing partner of Hamilton Place strategies joins us now. Great to have you with us. Great to have you up with us remarkable we have all these comments from President Trump on the record why would President Trump give bob woodward all this action ces especially after he published this book . Is. It is a great question. I wonder what they were thinking and how they thought this book might come out the dangerous thing with trump is always the things he says himself. There have been a lot of books of people saying negative things about him. He gets in the most trouble when hes allowed to just talk more think back to the access Hollywood Tape in 2016 that came out very offensive, vulgar remarks by the president but they explained that away as sort of locker room talk by two guys and swapping stories. Again, still offensive this case, there is no way to rationalize it away. On tape, in his own words in a very serious discussion with a serious journalist i think theyll have a hard time trying to pass that off as something different. What does this mean for President Trumps election chances. The fact that hes come out and said he knew the virus was deadly and played down the crisis trying to control the public reaction and avoid a panic situation. What does that mean for the way voters think about voting for him or not so look, there are a set of voters then candidate trump said, i could shoot someone in the middle of fifth avenue and these voters arent going to leave me he was apparently right about that there is lily couttle he could drive away his voters. His floor is very solid. The challenge is that he is clearly behind in this race to joe biden. Not just nationally in california and new york but in the battleground states. His challenge with the last seven weeks or so with this campaign is to try to pick up voters who havent made up their mind about him this is a hardened race right now. When news like this comes out, not only does it occupy time and a tension he could be using to make the case to those undecided voters it is another reason why they want to remain, hang in the middle or even migrate thats a big challenge as he appears to be behind in so many states right now what are you hearing around voter turn out this is thought to be one of the potentially crucial factors with results. People are feeling more isolated than ever as a result of coronavirus. How should we think about the voter turn out how is that likely to play out it is the great unknown a lot of voters to be sure, they are going to go out and vote we do see enthusiasm on both sides. From core trump voters, there is enthusiasm and also on the option side to move away from trump. The polarizing factor here will elevate turn out the question is in what form will those votes be. In person votes will be there. The mailin votes, i dont have a lot of question. Im hearing, they are very confident in their ability to get their votes and collect them the question will be on the counting how long will it take to accumulate all of those, add them up and report them publicly if that takes day or weeks, you create instability in our political system and maybe our markets with how the president treats that intervening period tony, thank you for joining us always great to have you on the program. Talking all things washington. Lets look at u. S. Futures after the rally we saw yesterday with u. S. Markets recouping much of the losses from the previous days session. U. S. Tech outperforming with the nasdaq advancing 2. 7 . We are looking at red across the market the nasdaq looking at about a 65 point drop the dow looking at a 75point drop and the s p looking to a muted start to trade here, all eyes on the ecb. You can join us for special coverage beginning at 13 30 cet with an update set for 13 45 one of the Big Questions for today, euro strength how do they want to frame the moves weve seen for the currency thats it for Worldwide Exchange. Im Julianna Tatelbaum Worldwide Exchange is cong nt. Mi look here, its your very own allinone Entertainment Experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. It is 5 00 and here is your top five 5. A bounce back and the shous voting on a slim aid package. The president stepping in. And astrazeneca responds on the patient that forced them to stall th