Transcripts For CNBC Street Signs 20240712

Deal dependsen the eu and refinitiv take over. A 4. 3 billion take over with caixa bank creating 7 billion in assets. Tiktok could go for a u. S. Ipo. The deal with oracle and walmart. Its fate could be decided in the next 24 to 36 hours. A very warm welcome to street signs. Weve got a flurry of m a deals to kick off this morning the company has denied reports it is in investigations over a proposed take over bid bloomberg had reported more in recent weeks and that negotiations are in the early stage. Euronext in discussions with lse. Adding any potential sale depends on eu approval of the planned take over of refinitiv the deal news doesnt stop there. Caixabank and bankia have agreed to a deal of 4. 3 billion euros a 20 prem yium will create spains largest bank relieving costs around 77 Million Euros. So many things we could talk about. We could kick off with this banking deal, weve been waiting for more consolidation in european banking a lot of chiefs have said cross border m a has come into question this deal is a domestic deal is in spain looking to create spains largest lender it looks like this is the kind of deal we could expect in europe right up front, talking about this important moment and change that was taking place. The low profitability and the Banking Sector the covid gdp. The fall out and Technology Revolution and the amount of money they were trying to invest they were taking on that operational in the key progression of this merger of the companies, they are chasing scale. They are hoping they would have larger market share. They are talking income diversification. Looking at the size of the overall market 25 market share in cost for loans at 25 of the markets. Bringing them up for their peers. Their syergies were staggering at 77 Million Euros when you hit numbers like that, you think that this is fantastic. Just digging a little deeper and thinking about cross selling a lot of products. How much of that upside is solid synergies at this side and watch out for the synergies over the next couple of years adding to that organic sales profile with many major banks that would have a deposit and they want to show you some advisory effort to play in the future lets see how that plays out for the two banks. You mention the market share banks that would come from this deal on that front, youve got fresh comments now saying hes reasonably comfortable the deal with caixabank will get approval they seem to ignite market share concerns earlier, he made seen in the prove in the banks in recent years. A lot of them have been down siding to cut costs. Now you are hearing that they are getting bigger and you need to cut market share and not concerned that antitrust will be an issue karen. Lets look at the markets. Clearly m a is moving a lot of the market trade youve seen it elsewhere around the news that is having an impact on the markets. Lets get to the Overall Industries we have a slightly weaker trade, the ftse, the cac and the dax. Those traveling a little weaker today. If i can bring up some boards to illustrate what it looks like. The ftse traveling weaker. These markets had been soft in the section yesterday but holding on to gains for the week it does destroy any small gains that these markets were holding on to. You can see across the charts that these markets are stronger talking about the chemical stories if we can push on this board. Travel and leisure a little disappointing around vaccines and suffering in the fridays session. Banks and we talk about a lot of the activity that has moved the Banking Sector for today this has been a big week that has filled for the action a lot of jaw boning and comments around the market you can see that in the Banking Sector today around autos and media lets push on to the corporate story. Grenke has been put on market watch. The founder and deputy chair hit back and insisted the groups franchise model is key to its success what did he say in reaction to some of those claims they are defending themselves vig russly saying we have the cash it is existing and sitting at bundesbank that is one of the biggest allocations that was a bit like wire card. In this case, that is sitting with the account and the founder went out saying how the french is working also saying that the franchise model is there to actually hide certain things the model is key because it enables them to grow. They issue franchise for new countries where they are not yet present and are helping to set up companies they are maintaining the right to then purchase them. Of course we dont know whether this is true or not. We had a lot of defense coming from wire card we need to have a solid testified opinion from an ordered company that really looks into the matter and is sort of reassuring investors that the revenue which has been booked is actually really there. For now, weve got to hear more from grenke. At 4 00 local time, the Management Board and chairman of the Advisory Board will take questions and address every single question. Of course to actually convince investors that there is no truth in that report for more news during this afternoon. For now, the shares are really flat lining. We wait for detail later today. As many as 250 wirecard employees are believed to have knowledge of the banking practices. Further reports suggest ey had raised suspicions around wirecard around federal order supervisory. The case was dismissed around the companys asia accounts. And jobs are down and the question is raised of how long will thitrs end continue well be right back. The number of americans seeking jobless benefits came in at 860,000 amid viruss ricising across the u. S continuing claims fell the beat of expectations. Getting to megan green, senior fellow joining us from the Harvard Kennedy school nice to have you on board. Well talk about the momentum from the job lost series showing that the market is struggling to get jobs back in the economy it is worth keeping in mind that jobless claims have been higher the last six months than they ever were during the last crisis it was hard to oversee weve brought a lot of people back to work that would suggest that the fiscal performers would lose their jobs Small Companies got loans to keep people on way roll and that expired in august. We wait for the new package. There doesnt seem to be much there and i think the labor market would deteriorate from there. Now there are Big Questions whether there will be any stimulus what do you think would likely play out in the economy that will play off in the stimulus soon at some point, if the data gets strong enough, at that point, it will get too late. The hope is that congress will get it together before then. On a daytoday basis, the rumor will totally change. What i havent understood is that the Administration May have provided the big stimulus. The run up to the election it does seem like the republicans, in particular should have incentive to do a deal there is a lot of water between the parties. I think there is a chance we wont get the stimulus before the election it might be too late the support expired at the end of july beginning of august already. At the end of the report, i was stunned because the commentary would begin bringing jobs back home you can see the rational at this point where revenue has fallen off the cliff. They want to keep options alive down the track this was really flagged up in assistance that really softened the blow the numbers showed us that workers were identical from last time jobs creating even more permanent scars on the u. S. Economy . We can assume that u. S. Trade policy hasnt brought back all the manufacturing jobs in the u. S. That is really clear in the data there is also a question where we are off shoring too seeing the regional supply chain. There is offshoring now through mexico and the u. S. And in east asia weve seen as a result of the situation, supply chain has been vulnerable and as an extension of the trade policy. I want to push on from the supply and push onto the feds. A big ticket item closely watching what jay powell had to say. The market was disappointed. I dont know what more they wanted given how dovish the fed has been the market was wanting more ammunition to keep driving stocks higher. What did you make of that discussion i dont think the market should have been disappointed by the message. It is an incredibly certain future rates will stay low for the foreseeable. I see the markets as a child in this case that through their toys out of the stroller they wanted more nor is there more than the fed can do even in terms of generating demand or making seed where they can now come up with a 2 average over a period of time i think the markets wanted more. I dont think they expected more thats where the disappointment came from. I know you are jooverhearingn london what is playing out in response in new york and uk in response to covid19 . I see that they are quite different. At the beginning, the uk had a joined up response between the Treasury Department and the central bank the uk started out as a real winner particularly since a lot of the fiscal measures and the furlough that is set to expire now. Looking to the u. S. And in terms of the virus management which there are pretty significant spike in cases the Economic Policy has been more supportive. The uk is beginning to look more like the u. S. In terms of support. Concerns about the deficit and debt burdens where governments get paid to borrow looking more like the u. S. Than the continent at this point. That said, the discussion made us feel a bit more european as the door opened to the negative rates that is always the concern leading to the central bank and the ecb. Do you think theyll ultimately avoid going negative it depends on which rates will go negative if the regular deposit rate will go negative, we have evidence from japan and the eurozone but that is not particularly effective. If you were to introduce the other rates, than you are introducing those rates from borrowers and savers not punishing savers and banks the uk has done this a little bit. The funding for lending scheme there is presedence for this in the uk cutting the regulation will probably help. It might come earlier next year when the uk needs ichnternationl investment it could be counterproductive. At the very least, it may not be helping very much. Thank you senior fellow. Bytedance has proposed a u. S. Ipo for tiktok to avoid a Trump Administration ban on sunday the social media giant has also signed a deal that would see oracle take a minority state alongside of walmart President Trump will make a decision in the next 24 hours. Oracle now finding another partner. Walmart was on the back drop initially and seemingly switching to oracle that would suggest the retail giant was on the back of the scenes looking at the microsoft deal saying it was more disappointing than walmart there had been last minute actions trying to get the retail play into the game i guess we know what wed want to do in the platform against tiktok im curious, i know youve been pouring through the details for weeks now. How would walmart work in a partnership with oracle versus microsoft. Do you have any insight to how that relationship might work youve got a Technology Player and retail that wants to become a bit more like amazon. Keep in mind, this is not a retail player stuck with bricks and mortar it has been very aggressive player in getting online which helped it do very well through covid19 it will look for the likes of oracle and microsoft looking for those algorithms looking for walmart to maximize some of the information it cleans from users. You think of a platform like facebook how it was working with some advertisers where you get between what walmart would like to sell. This is a big question and a lot of the interesting part from here we keep talking about this from what the americans are demanding. The chinese could have an issue here any deal must be presented to china. What is being discussed with oracle and walmart that majority ownership would be with the americans and that beijing would be happy with that it also remains to be seen whether the u. S. Is going to be happy with a lot of the data is this a repackaging of the structure that exists with the chinese or is this enough for President Trump to actually feel comfortable that the National Security concerns are addressed. Does any of this change with a biden presidency it was interesting, the politics hind this there has been polling as to how it has been clicking as many as 40 of americans back trumps plan to ban tiktok if you just look at americans among trumps party, 69 support the orderer but only 32 know anything about this app. Some of still supportive it tells you weve moved on from the rust belt and jobs being lost to the stronger terms of the chinese. It is an election issue as we count down to november on both sides of the aisle have expressed taking a harder stance on china. Most people will think the tactics will change in terms of the u. S. But the overall attention from both is to take a harder line against china. Italys ruling parties face their first popularity test with several regions heading to the polls on sunday. Well have more in a few nusime. Creating spains biggest bank with over 700 billion euros in assets. Tiktok could go for a u. S. Ipo if President Trump signs off on a bid between oracle and walmart. The fate could be decided in the next 24 to 36 hours. There has been a flurry of m a moves to digest. The stoxx 600 hovering around the flat line just a touch above that mark. The dax, the german index is trading in positive territory. A move there expect reports that apollo is interested in a take over of that company theyve denied that they are in take over talks. It looks like that possibility sector wise, we are seeing a strong bid for technology. Banks are coming under a bit of selling pressure down by about 1 travel and leisure also taking a hit down 1. 26 seeing a bit of firmness in the euro versus the dollar a big week with the bank of england with rates more firmly on the table the euro is trading around 1. 1850 trading below the 130 mark wall street, lets look at u. S. Futures we have a mixed start to trade but very muted levels. We did see stocks sell off the lows of the day. The nasdaq led by declines in amazon the number of global coronavirus cases has risen above 30 million the u. S. , india and brazil have been hit hardest by the outbreak the uks Health Minister hancock refuses to rule out a second lockdown. The virus is accelerating through the country and that lockdown would be the last line of defense millions are in current lockdown as the number of hospitalization doubles every eight days i dont know what you you are planning for next month but it is half time for us. It is so hard to plan a lot of places have been generous it is hard to plan a week in advance let alone a few weeks in advance. We have news in the pharma space, roche has announced its Rheumatoid Arthritis drug reducing the need for coronavirus to need use of a ventilator the company said it will share the results of the treatment with health authorities. Shares of moderna fell after they released a slower than expected timeline for the vaccine trials it may have to wait until december despite calls from the Trump Administration saying theyll be ready for approval as scoop as next month they said the speed depends on the infection rates in the u. S we have to plan for the first rolling out to be in november. The best plan is october, it is unlikely but possible. If the infection rate in the country was to slow down in the next weeks, it could be pushed out as a worst Case Scenario in december another update from a company in the vaccine space telling us when we can expect trial readouts it is important to remember that this is incredibly accelerated to how this process usually works. These are still extraordinary time frames to look at to rei had rate what the moderna ceo said, they are expecting a bestcased read out in october the base case is november. There is a strong possibility we dont get the read out until December Moderna will struggle to get anything through before the election it comes just four days after we heard from pfizer who is conducting phase three trials. Saying they are looking at november they are trialing a similar vaccine. There are only so many times i can look at those pictures of people being injected. Weve come a long way. The market was clearly incredibly enthusiastic. That was welcomed by assets across the board i think there has been disappointment among travel stocks and around what we saw with astrazeneca we saw a disappointment in one of the trials with issues in one patient. I still feel like we havent received full clarity on that. Roche is working on another antibody test. They want to test whether the vaccines are effective one way of doing that is to test for antibodies they want to see just how many they actually have they need to test after they have the vaccine as well to see how efficient that has been. It is fascinating that this whole industry of creating the antibody tests and treatments has exploded, hasnt it . It is no doubt very, very helpful to see how many diagnostic tests are available roche with the 11th dying not tick test. It doesnt help in terms of how long this immunity will last still Big Questions as to how long it will stick around. Lets leave the health care story. Voters from several italian regions head to the polls on sunday amid the pandemic tuesd tuscany is in focus. It has been a party strong hold since world war ii good morning. Of course, all eyes are on italy and these elections over this weekend. So 7 out of 20 regions are electing the president lets start with the referendum, which as often happens ends up being more of a political vote than one on the matter at hand what is being voted for is a reduction in number that would reduce costs for italy and bringing them back to the levels where the rest of europe is. The cost they have for politics is up there for germany. It is double frances and threetimes higher than spain. On a content level would make sense. The idea that this would have brought forward from the movement and ends up being a political vote well see if it goes ahead or not. That is something that the fivestar movement could consider a clear victory and would be beneficial to them going forward. The regions is the big issue here they are trying in particular in tuscany to take hold there that is where the pd could lose. The fivestar movement has also put out a candidate. This is making it so that what could happen is that for the First Time Since world war ii, this region could be led by a right wing party which would be the lega that would be beneficial for the leader of the lega he took a hit a year ago when he lost control of the government the consequences of these votes overall shouldnt create too much in the longterm effects. In the short term, each party would be waving their flag of victory. It shouldnt impact the markets or the government. This government has too much to lose so this coalition between the fivestar movement and the pd will go forward. We have the next generation eu they want to make it to 2022 when they could together nominate the new president when the mandate expires. There is too much on the table for this coalition to fall through. Again, it is definitely going to be something it tells us it will be a political test for italy. Well all be watching this closely. Back to you in london. Thank you for helping us to understand what we are looking out for. Lets consider the conversation with the copresident thank you for joining us what is your take of what is at stake here we have several regions looking at the votes and also the constitutional referendum . In terms of the referendum, it is a bit of a side show i disagree a bit in terms of savings. The savings will be roughly300 Million Euros over the period of five years that is 0. 0017 of a percent of the Public Expenditure in italy. It will likely pass. Most critically leaving aside the money issue, it will certainly not make the world policy making process in Italian Parliament more efficient. Something five star can flag on monday in another round, the five star will get the severe beating like in every single election since 2018 the first test for the government since the pandemic in seven regions out of 20. Who is going to lose here likely is the leader of the pd. The pd are running four of these regions. Four of the seven. The pd could potentially lose them the most important one is tuscany. A very poor performance that would make of their leadership of the party hes already under pressure. This could have an impact on the government still, the election in italy remains very low we know with the covid1919 pandemic, when it first hit italy, it hit different regions. As a result, several regional president s have required a Real National profile could that change the out come of some of these elections with the hard hit parts of the country that had stepped up and gained more notoriety. The chairman was already doing fairly well ahead of the pandemic may have managed now to increase the support to go to the polls almost 70 to 75 will be interesting to see the polls are confirmed of the vote on sunday and monday why you should keep an eye is that you should be seeing the lead hes been struggling over the past month in terms of leadership hes seen as a contender i dont think it is a case right now. But certainly, something to keep an eye on for the future the other interesting person in play. A fairly controversial figure. The pd was forced to support him because they were lacking any other accountable contact. If he loses, someone like former Prime Minister will lead the party. In terms of personality, i would focus there in a cross way where we sat for 15 minutes on a very old train they are voting for many jobs the network of the suppliers. The fate is still unclear. Also the Environmental Issues connected to the plan. Employment are big factors here still the race is tight. Plenty needs to be done on the economic front, no doubt about that what jumps out at me is the demanding more spending wanting to breach the rules. He was arguing and with discipline, this crisis has brought an extraordinary crisis. Theyve come around to italys way of thinking allowing the governments to drive the economic growth. Do you think thats missing and italians are hearing that message anymore that they are becoming a little more italian in terms of their thinking i dont think on sunday and monday will vote thinking about what they have in mind much more about economy and the handling of the pandemic here. I hope brussels has not come around to the minds of the government what has been done in italy is done with not much sense and no plans. My concern here looking further ahead is that this government will struggle to put together plans to make the most of the new recovery fund. The signals seen from rome are fairly concerning. A poor performance will make even harder for this government to focus on what is now the main priority for italy we appreciate your analysis the copresident. Coming up on the show, joe biden takes aim on President Trumps handling of the pandemic as rhetoric between the two candidates heats up. Well be right back. Sales were up almost 3 during the same period a few people during the holiday abroad analysts are warning they could span sharply as expected once the government unwinds its furlough scheme. London fashion week kicked off. Times have forced designers new ways to show case their collections and tap into alternative Sales Channels telling cnbc that the Coronavirus Crisis has hurt the luxury industry. There is a lot of challenges finding their way and are we going to go back into another lockdown so planning for that and making sure everyone is safe and well as leaders are doing enough. It is on the Public Sector and the private sector it would be led and they can do a lot im sure there can be more and that is not my preference. Where they are choosing those supply chains. Encouraging people to get going in the priority. I think one of the things that will be amazing is to have the transparent si of system something that signals the response there is a lot we can do and well pull together to make those things happen. During now, the president ial nominee has rejected claims by President Trump that a Coronavirus Vaccine will soon be available. Trumps handling of the pandemic has become a key issue in the run up to novembers elections lets go now to tracie potts in washington, d. C. We hear day in and day out from Public Health and medical experts that there are dangers to politic sizing this vaccine process but it sounds like more and more that is what joe biden and President Trump are doing . No question, coronavirus is the big issue right now on the campaign trail well likely hear more about it today. One of the issues is the timing of this vaccine. The president has said well see a vaccine approved by next month and delivered by the end of the year that is not what the Public Health experts are saying, or more notably what the three drug makers are saying. They may have results from the trials by the end of the year but they dont even expect to finish analysis until next spring the head of the centers of Disease Control says it will be next summer before a vaccine is widely available so there is a big disconnect joe biden jumping into this talking not only about the vaccine but wearing of masks we saw again, the president with a big political crowd of supporters, all crowded together, no social distancing and very few Wearing Masks at all. Biden says if he is elected, he will make a National Mask mandate but would also impose fines on people who dont wear masks in it federal buildings. Tracy, thank you for joining us lets take a look at wall street we saw the dow with a win streak and investors taking a pause of what we heard are for the general support. This was always the risk we ran out of steam on. Thats it for the show. Have a great weekend Worldwide Exchange is coming next 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. The tech wreck, no signs of stability as the nasdaq tries to avoid its second down day in a row. Tiktok goes to the clock. The embattled chineseowned video sharing app. Deals on the table and accused of spying. One Facebook User claims facebook did with her camera has them on defense. You are watching Worldwide Exchange on cnbc