tv Street Signs CNBC February 24, 2016 4:00am-5:01am EST
hi, everybody. good morning. you're now watching "street signs." i'm louisa bojesen. >> and i'm nancy hulgrave. these are your headlines. >> shares in europe drifting lower with energy stocks leading the declines. crude gets hit hard after another build in inventories. and comments from the saudi oil minister dashing hopes for an output cut. >> not many countries are going to deliver, even if they say they will cut production. they will not deliver. >> peugeot accelerates to the top of the cac as sales shift up a gear here in europe.
>> well, smooth landing. airbus delivering a 15% rise in full-year profits, and it's projecting higher orders for its a-330 model. we'll be speaking to the ceo of the plane maker at 13:00 at cte. >> and the sterling slide continues, hitting a fresh seven-year low on brexit fears. hi, everybody. good morning and welcome to "street signs." good morning, nancy. >> good morning. >> how are you? >> very well, except these markets. can't keep the momentum to the upside. >> we're flip-flopping quite a bit this morning. quite a bit of red on the european markets. all of europe trading in negative territory at the moment. our main you're mean markets, as seen here, also trading lower by
somewhere in the region of 0.5% to 1%. let's get to one of the bigger asset classes out there and some of the bigger moves. we're looking especially at the price of oil. you have wti crude trading off by some 2.5% almost you have brent lower by 1.25%. over the last three month, down by close to 30% or so. and you have to look at this inventory data that came out yesterday. although we had the politics of what's going on from within the producers, you had the inventory data hitting first yet. you saw the api showing us u.s. crude stocks rose by more than 7 million barrels. they're ruling out -- or we're seeing a ruling out of these stockpiles falling essentially. we saw a big move on the back of that inventory data. then of course you had the other side of the story as well in oil. >> that's right. the data of course really raising fears on the supply side
again. the crude diplomacy, as we call it, because we had straight words from the oil minister yesterday. he told executives in houston that they should, quote, lower their costs, borrow cash, or liquidate. that's right. he also said output cuts were not up for consideration. this comes despite talk of a meeting of over ten oil producing nations in march. >> not many countries are going to deliver, even if they say they will cut production, they will not deliver. so there's no sense in wasting our time seeking production cuts. they will not happen. >> there you have it, louisa. not mincing words there. putting the onus on the shale producers in the united states to really shape up, saying we can't do much. he's saying there's not a cut even on the cards, and don't get your hopes up that talks of a freeze could lead to a production cut. >> they're supposed to be exporting. they lifted the rule that they
said u.s. oil couldn't be exported. but because of everything happening, they're not really exporting. let's face it. but you've got some very different dynamics at play as well with the u.s. oil producers. i don't ever think that any of us, i didn't at least anticipate, that just because they're looking at freezing oil output at these january levels that it would lead to a cut in production. >> no, absolutely. and even if we were to come to some moment over production cuts, how are you to believe anyone will follow it? this is the thing. people want to get the oil out of the ground, especially when we talk about iran coming back on to production. not even really mentioning the subject of iran yesterday. of course that's a major concern as supply is still building up in the u.s. >> definitely. speaking at the same energy event that took place in texas, you also were looking at the same time at the fed vice
chairman, mr. stanley fischer. he was saying the slump in the price of oil would be keeping inflation lower for longer. he also blamed the commodity for some of the recent market moves. >> the large movements in asset prices likely reflect increase concern about the global outlook, particularly ongoing developments in china, and the effects of the declines in the prices of oil and other commodities on commodity exporting nations. >> stanley fischer there weighing in, making comments. everybody who's following the markets or central banks have to follow oil as well. >> absolutely. they definitely can't ignore the energy space, especially when you look at the pressure on inflation. fischer also went on to say it's too early to assess the economic impact of the recent market volatility. he also said there are no plans to move to negative rates in the u.s. >> now, at the same time, when looking at some of the other
players out there, jpmorgan, they're feeling the heat from the crude collapse itself. they're saying that they're now setting aside $600 million for losses related to energy loans. jpmorgan also revealed in an investor day presentation they were giving that the investment banking fee revenues are down by 25% year on year from income from trading, also falling by double digits as well. now let's put oil to one side for a second. let's check in on what markets in asia have been doing during their session. sri is in singapore. >> hello, lou. as you've been saying, oil continues to call the shots in the equities markets in our region as well. we're broadly lower with a few exceptions. the china markets on the mainland, yes, they started the day down by, let's call it, more than 1%. they reversed those losses in the around session. largely down to some interest in
the infrastructure and the industrial stocks as well. i wanted to highlight our own market. still trading down by 2% despite the fact we had a solid q-4 gdp number. so an expansion at a faster rate than expected. i think the number was about 6.2%. you've got to ask yourself, given the fact that we are a very open, trade-reliant economy and given the fact we are seeing very challenging externt head winds, you've got to ask yourself, can this rate of growth on a quarter lly basis really be sustained? and at some point are we going to see a trade-induced slowdown here in singapore? another loser on the negative side of the ledger is australia, off by 2.1%. that's the biggest one-day loss in almost two weeks. again, it comes down to oil and
resources. nikkei off by almost 1%. the culprit there is the stronger yen. we're trading at around 1.12 for dollar-yen. the japanese currency is stronger. pressure on the exporters. so it comes down to oil, comes down to risk on, risk off. reminds me of "karate kid." that's where we stand now. >> i love "karate kid." what happened to him? >> there's been several remakes now. >> he must be like 45 now. >> that's a scary thought. >> very scary. we all used to want to marry him. >> yeah, heartthrob. >> e-mail the show. the address is firstname.lastname@example.org. you can get involved. we're also on twitter as usual. you can find us either on the show e-mail or show twitter address, which i is @streetsignscnbc. >> i'm at nancycnbc. >> and i'm @louisa bojesen. >> meanwhile, some of the top
earnings movers today. peugeot shares moving higher after posting profits of 899 million euros. on the top line, 2015 net revenue rose by 6%. that's thanks to better productivity and cost cutting. the company said it will unveil a new strategic plan on the 5th of april. joining us for reaction of these results, let's go to arnd arndt ellinghorst. pleasure to have you with us, digging through the results from peugeot this morning. you've characterized it as a major beat. we know that they are beating on the earnings front. i'm wondering if the goal in achieving this operating margin is the bigger success story here. >> well, it really is. and good morning. peugeot delivered a 5% margin in its auto division for the full year. they've already done their first half, which was a major, major surprise. i really have to say, i mean, this company is currently showing what's possible with a
lot of self-help, focus on pricing, efficiency, and how even they can deliver very, very respectable earnings. free cash flow, which was huge last year. >> and looking at these results, they have mentioned that they could potentially start looking at a dividend next year. do you think that's a real possibility just based on the earnings and cash flow you touched on? >> well, look, they generated a free cash flow of 3.8 billion euros last year. they have a net financial position now of 4.5 billion. so clearly they should generate further free cash this year and peugeot will then be in a position to pay dividend again, yes. >> and what happens to all of the costs? are they going to have to pull back on them? >> no, look, i think it's an ongoing achievement. they made it very, very clear in the analyst call this morning
that efficiency and -- you know, this is the new peugeot. i think it's an ongoing story. of course, in the first years, you can always take out more costs than in the subsequent years. but this just one part of the story. the other part of the story is really controlling your inventory, moving away from the traditional push business model, and fixing your pricing. >> did they give us anything at all to go on in terms of outlook for the coming quarter? that's often kind of how investors end up trading essentially. >> no, not really. i mean, they have a capital market today on the 5th of april. they will update the market. they were previously planning to reach a 5% margin from 2019. so they've already done that now. i think that's now the basis that we should take. i wouldn't be surprised if a 5% margin, more sustainable, maybe 5% to 7%, is what they're setting themselves up for. clearly -- i mean, the french now days are showing the germans
how to run a mass market car business. >> and arndt, a huge success story when you talk about the cost cuts and what the ceo has accomplished. looking at the macro picture, they've ridden the wave of a recovery in europe. but some suggestions when we look at european car sales, this could be as good as it gets. do you think that's accurate? >> i think we're still roughly 20% below a normal level in europe. unemployment is down, disposable income is up. i don't really get the point why people are arguing europe should be over. there's so much market pessimism now. china was the big gloom story. the market recovered in the second half. everyone is calling for the u.s. market to peak. it doesn't. europe will continue to move higher. the consumer, we believe, is in much better shape than some people describe it. >> all right. well, thank you. that's arndt ellinghorst joining us. meanwhile, we've also been
looking at airbus results this morning. the ceo says that more a-380 plane orders are needed. within the results, we did get good news when it comes to a-330 production. they've now said they're going to create about seven per month. that was revised a bit higher but still lower than the original target of ten. still questions over what the a-380 program looks like. demand weaker than expected for this very expensive jumbo jet. the ceo said the a-380 deliveries are to remain at break even. the program did break even this year as well. on the macro front, we're getting comments on the low oil prices. they're saying low oil prices are good for us. that's a line airbus has been touting for quite some time. still, on the flip side, people wonder that the incentives are not there. >> but the a-330 production, that's going to be key for them. as you say, they initially had quite a high target, ten per
month they were going to produce. they lowered that to nine, then to six. now they're saying they're going to be making seven per month. and iran also having put through a very large order after those sanctions were lifted. they're buying 45. >> 45 of the a-330s, a dozen a-380s. that of course is boosting the outlook. but sometimes with these orders, we see cancellations later. there's still significant paperwork to be carried out. a bit of uncertainty there. i think the a-380 uncertainty is what's driving some investor concerns, especially when you look at the huge bulk of their demand coming from asia pacific. concerns over whether or not demand will stay not just because of passenger trends, but also their ability to purchase in dollars with the currency. >> a slowdown is a slowdown. they have to generate more cash somehow. but you're going to be speaking to them. >> yes, hearing from the ceo of airbus himself, some enders,
from 13:00 cte. you don't want to miss that one. >> coming up here on "street signs," an exchange of exchanges. looking to link arms with the lse. will it be third time lucky? they've tried this in the past, right? >> that's right. and we're keeping an eye on the political action stateside with trump thumping in nevada in his third straight victory. so how did the controversial candidate manage to seduce the silver state? we'll find out in a little bit. >> and a new world of negative rates. a lot of central banks dealing with that now. don't miss our first on cnbc interview with the ecb member jens weidman. more to come here on "street signs." find us on twitter and facebook. see you after the break.
fitch ratings expects default ratings to remain low in europe this year. ed is at the super return international event taking place in berlin. good to have you with us. credit quality in europe, on european leverage loan borrowers is going to continue to be weak. why? >> well, largely because financial sponsors have been taking advantage of the low cost of debt that the european central bank has helped generate over the last three years. to the extent that financial sponsors were buying assets with expensive debt in 2011, 2012, they actively refinanced and often did dividend recapitalizations. so the quality of the companies is roughly the same, but their liabilities and capital structures have weakened
materially as they've releveraged those credits. so they're risky in the sense they have more debt on them, but default rates are likely to stay low because that debt is the long term and it's largely inexpensive. so to the extent we're concerned about uncertainty and volatility in the capital markets, that's not a concern for borrowers that have long-term cheap debt in place. it may become a concern in a few years and they have to refinance in a more expensive debt market. >> so what does this mean in terms of ratings? are ratings going to come down? >> so ratings are until the leverage loan space kind of single b category. we've witnessed more upgrades than downgrades over the last 18 month, largely because of ipos and deleveraging via ipos. to the extent that these transactions that have been relevered with more aggressive debt capital structures, we think that we've discounted the
rating to capture that. so it's going to take material credit deterioration in the form of operating performance. so deteriorating operating performance to raise the leverage levels toward the c category. as i think your guest just alluded to, the european economy and consumer are showing adequate legs at the moment. so we just don't see that yet for 2016. >> and ed, how does the sector compare to what we're seeing in the u.s.? do you think there's less risk currently here in europe? >> so we don't have the exposure to commodities the way that the u.s. leverage loan market does. then we don't have the exposure to volatile fund flow from etfs and retail funds. most of the funding in european leverage loans comes from banks who are providing long-term funding and from what we call institutional investors. so clos and segregated managed
accounts. again, they have long-term fu funding. so this is the kind of environment where they get to take market share from the capital markets. one of the things being discussed here at super returned is how private debts is an alternative. >> can you give us a better idea of what that exposure is to commodities, energy, and gas? here we are once again, another trading day, where fears are surrounding the low oil price. >> if you look at the u.s. high yield bond market, it's about 18% oil and gas. you could add another 7% of commodities like coal. then you add the capital goods companies that support those industries, and you're talking about a pretty significant portion of speculative credit exposed to that sector. in u.s. leverage loans, i think the number is much smaller, more like 5%. the concern is banks might hold a lot of that. you see the pressure on u.s.
banks as well as european banks because of potential exposure to u.s. leveraged loans in the commodity space. in europe, again, the commodity space is dollar denominated, so we don't have a lot of european exposure to the issues in the commodity space. we might be suffering a bit from the rising cost of debt. i mean, if you're an investor and you see that you can get a higher return from a single b asset in the u.s., why would you pay lower for a single b asset in europe? so you're seeing the cost of debt rise, but that's primarily for primary market borrowers, new market borrowers. so that's the real difference. >> so you have the strong appetite for low risk at the moment, which doesn't necessarily bring high yield. where would you say the opportunities are? >> so i think the opportunities are certainly for private debt. you have the regulatory support
for private debt from basal three. most of the leverage buyouts we're seeing in europe tend to be in the midmarket space. the private debt market is willing to fill that void. on the bond side, you see the fallen angels and crossover credits. names like casino. you're getting, you know, kind of single b or triple c type of yields there for companies that have assets they can sell. casino just sold an asset. they're using that to deleverage. so the kind of special opportunities type of funds that are going to take advantage of the volatility, you're hearing a lot about that here at super returns as well. >> ed, thank you very much for being with us. managing director and head of european leverage finance at fitch ratings. thank you. >> well, we're trading sharply higher after its minerals
division outpaced expectations, but the stock has pared some initial gains. this after the group swung to a full-year loss of almost 200 million pounds. the scottish engineering firm said it's forecasting a further reduction in earnings, which is largely due to oil and gas market weakness. we spoke to the weir group ceo in a first on cnbc interview and got his outlook for the coming year. >> we are expecting another very challenging year. we've seen further declines in the early part of this year, but this is all part of the market getting itself into balance. certainly from our perspective, we continue to believe that u.s. shale is a fixture now in the global energy mix, and that market will come back at some point. the big challenge that everybody has is none of us can be sure when that may arise. >> hugo boss shares have been trading slightly out of fashion. the german clothing brand warned
that operating profits would drop to low double digits this year. they're low eer by 6.5% now. adding it's adjusting prices in asia, also scaling back distribution in the u.s. the group will release its full-year results on the 10th of march. >> and the main u.k. and german stock exchanges are in advanced talks to create a combined company that would be valued at around $28 billion. this would be at least the third attempt by the two exchanges to tie up. it would be structured as an all share merger of equals. if you look at shares now, deutsche boerse off by 1.7%. lse trading higher by 0.6%. >> the spanish utility company are saying they're committed to raising their dividend to 28 cents per share. we spoke to the chairman and the ceo and asked him how much the
commodity price was impacting his business. >> i think most of our production is clean. almost 90% of all our total production is hydro or nuclear. we have already 2% of coal. so these prices are not much affecting us. if we take out this situation of taxation, i think prices are as competitive as the rest of europe. >> shares in man group are plunging after 2015 pretext profits fell by more than expected to $400 million. the hedge fund saw performance revenues and margins drop over that period as well. the ceo blamed the ongoing market volatility on the results. shares off about 7%.
>> well, shares in fresenius have been boosted by strengthening growth in their hospital chain. the german health care group enjoyed a 6% rise in organic sale. targeting 8% to 12% growth in their 2016 net income. >> and french conglomerate bouygues beating full-year profit expectations on the back of its strengthening telecoms unit. this comes despite a weakening french construction sector. they also said talks with rival orange over a 10 billion euro merger are ongoing. just how well are the talks progressing? we'll find out when we speak with orange's deputy ceo later in the show. >> we were talking about negative interest rates and potential for that becoming even
more widespread than what it is now. one of the guests on our programs quite often, he's now left that company and he's going to be joining a group launching a fund designed for the world of negative interest rates. >> not going away any time soon. >> exactly. but that just links in. we're going to be hearing more from them later on. anyway, that's going on. feel free to spend us through any tweets or any comments you might have to the show on e-mail or on twitter. in terms of the fx markets, sterling hitting this seven-year low. the euro-dollar around 1.09. we'll be back just on the other side of the break with more for you here on "street signs."
welcome back to "street signs," everyone. i'm nancy hulgrave. >> i'm louisa bojesen. these are your headlines this morning. >> shares in europe drifting lower once again with energy stocks leading the declines. crude gets hit hard after another buildup in inventories. and comments from the audi oil minister that are dashing hopes for an output cut. >> not many countries are going to deliver, even if they say they will cut production. they will not deliver. >> peugeot has been accelerating to the top of the cac as sales shift up a gear in europe. >> smooth landing for airbus, which has delivered a 15% rise in full-year profits and projected higher orders for its a-330 model. we'll speak with the plane maker's ceo. >> and the sterling slide continues, falling below 1.40 against the dollar.
>> good morning, everyone. welcome back to "street signs." there was a lot of optimism yesterday when we got the dow and s&p out of correction territory, but it didn't last long. the major markets now negative again for the month. the major markets called lower once again today. the dow jones called lower by about 90 points. the s&p lower by 11. the nasdaq off by just 29 points. if we can take a look at how the global markets are faring, particularly here in europe, we're seeing an increasing amount of red across the board. and this comes for a second straight day of losses in the neighborhood of more than 1%. at the moment, the ftse 100 is off about 1.4%, despite ongoing sterling weakness. a lot of concerns about brexit, forcing the sterling to a seven hch year low against the dollar. sometimes that can be a positive boost for the u.k. equities. at the moment, the index off about 1.4%.
the french cac 40 and ftse mib off by more than 1% as well. earnings continue to be in focus, but a lot of investors keeping an eye on the decline in oil prices. louisa? >> well, peugeot says that talks are continuing with orange over the 10 billion euro sale of its telecoms unit. the french conglomerate has stressed it's working hard to make sure the interest of its employees and customers will be met. karen is at the mobile world congress still in barcelona and joins us once again. hi, karen. >> reporter: hi, louisa. let's talk about this consolidation that's been taking place in the industry because i've got the ceo, the deputy ceo and cfo with me from orange. nice to see you today. we've all been watching from the
sideli sidelines. the ceo of peugeot has just come out saying they'll be happy with a 10% to 15% stake in orange. would you be happy with that as well? >> this is a little premature. we are engaged in discussions with peugeot. we said this was an opportunity for us. orange is doing great. we had a great 2015. growth in revenues and margins. fantastic commercial experience. we'll go long with these talks if we can control execution risks, if socially we can do it in a nice way. it will take a few weeks. >> the boardroom discussions must be rather fascinating because peugeot is saying that they'd like to have some board seats if they get this significant stake. a whole bunch of different interests on that board. >> well, you know, it would be
good to have this type of evolution. there is no problem about this. but the issue once again is of substance. can we find the good price, good conditions, face execution risks? we will see. this is yet to be confirmed. >> you said a couple weeks ago it would take several more weeks. peugeot is saying by the end of the quarter. basically march. is that the same time frame you see it? >> i think by march we need to know if we do or if we don't. so march is the right time to decide go or no go. >> and is price still the dominant issue? >> many issues. >> okay. let's move on to what you're doing here at the mobile world congress. there's a lot of discussion taking place. i think the consolidation is really important because it's about competition that you're facing in this sector, how you're positioned for the future with these huge investment needs. 5g, for instance. how do you transition for the
future? >> you're right. the challenge in terms of investment is huge. we're investing more than 16% of our total revenues. this is 6.5 billion. so 4g is one, but we are investing heavily on fiber. so this is a time of extraordinary investment for european telecom operators. we're building a new network. this is once every 30 years. >> what does virtual reality mean for those plans? the thinking in the industry is it really really be done properly without 5g because of the streaming requirements. >> we'll see 5g coming around. you're right to say this is a hot topic here as well as the internet of things, virtual reality. so we need to be in a position to offer networks which will support this type of new services. this is a challenge for us, to build these networks.
>> on the developing market area, i notice your growth numbers. one of the strongest areas of growth was africa and the middle east. you're doing a deal with google to develop 3g packed with google services. tell us about that opportunity, and is the growth rate still much stronger in that part of the world? >> yes, it is. we have 5% growth in africa and the middle east. we have 110 million clients there. we're active in more than 25 countries. as you say, we have a partnership with google in order to, you know, sell 3g smartphones. around $40, $50. it's critical because smartphones represent roughly 10% penetration in africa. so there's a huge market for us to develop and to give access to services to the people there. >> seems as though there's a
natural challenge because affordability is such a big issue. so while you have rolled out a cheap smartphone and cheap data package, the usage requirements are going up. but the affordability, you're staying stationary for a lot of customers. what do you do on that side when you want to grow profits? >> we provide more services at prices which are attractive. we have sold 1 million smartphones in africa last year. >> i'm going to ask you about privacy. the industry is concerned about what's happening with apple and whether authorities get access to the back door encryption of apple iphones. how do you view this? >> well, there's a balance to be reached. you know, confidential security for our customers is obviously a
key asset. we need to build trust. but on the other hand, you need to be, you know, respectful of the law, regulations, and to know there are some national security concerns which need to be addressed. so we need to find the right balance. encryption at some point, you know, can be an issue. >> you've worked for the french government. there's a feeling that if the u.s. government gets access to this, the chinese government, then everyone else will want access. do you think the french government would be interested in getting into smartphones to access data? >> once again, i think it's an issue of security. i think operators, all the actors of the digital world need to be aware that you need to find the right balance. i'm repeating myself, but you need to find a better way. >> we've got a little extra time. i want to ask you about the headsets from virtual reality.
everyone around here has been wearing them, testing them out. i've got to wonder whether that's going to be another big issue for the industry. you've just come out of an era of trying to minimize the profitability of that. we're about to enter a whole new world of device subsidies with virtual reality headsets. >> you're right. we're spending a lot in subsidizing hand sets, but for high-level customers. we have stopped subsidizing the entry point of our base. so vr is going to be the issue of tomorrow. we will be in a position, you know, to participate and make these tools available to our customers. it's going to be very interesting. >> do you think there's a challenge around industry profits this year? your numbers came out, and it showed that you're fairly stable on revenues. but if you look across the sphere, do you think it's a year of difficult returns? >> no, i think we are at a turning point.
as you said, revenues for us were nearly stable. we have more than 40 billion euro revenues. we lost just 47 million last year. so we are now looking for growth. this is the best news we had as a european global telecom operator for quite a while. we hadn't seen growth since 2009. >> how much growth is there in digital technologies that you're investing in? is this just purely experimental? do you think it's going to be a larger impact on revenues down the track? >> no, it will. including, for instance, when we want to become very strong on mobile banking. we will do this through direct investment, but also investing in start-ups. we have a corporate fund, orange digital ventures. we have increased the level of investments we do. so we have, you know, open innovation is going to be part of our story also. >> so orange is becoming a bank is what you're telling me. >> orange is also going to become a bank. >> fantastic.
thank you for taking my questions here. the deputy ceo and cfo of orange joining us here on "street signs." and that's it from us in terms of our coverage live on the ground from mobile world congress. but our colleagues have been out there very busy on the ground finding the weird and wonderful in terms of devices and future trends in the industry. make sure you go to cnbc.com to check out what orange have been up to. plenty of information there for you to read. also, back to you in the studio. >> so what's kind of the device that stands out the most that you've seen this year, karen? >> it's virtual reality, louisa. i mean, i haven't been sold on this in the past. i had tried an oculus device. it is compelling. i think what's been very, very interesting was the headline on sunday night with mark zuckerberg taking the stage and showcasing the samsung range. it's $100. it's not expensive.
that's that entry level point for the industry. how it's done is if you make a purchase for a smartphone from samsung, some of these headsets will be shipped for free. so the entry point has already begun for the early adopters. very fascinating. >> karen, thank you very much. karen joining us live out of barcelona. i saw "zoolander," the comedy about kind of male fashion models. it's a kick back to things from a couple years ago that were really popular versus now. he uses this phone, and it's about this big. he has this tiny little phone, which is what we used to have with the nokias. now the phones are like that. they do that kind of through the movie. very clever. >> have you done virtual reality? >> no, i haven't. have you? >> not oculus. i've tried other versions. it's not for me. a bit anti-social, really. >> i'm a bit afraid of it as well. >> makes me feel a bit car sick. >> it's very real.
>> yeah, too much. >> anyway, let's talk about politics. nbc news, they've called donald trump the winner of the nevada caucus with around 45% of the vote. look at that. top line. massively outpacing everybody else. this is his largest margin of victory so far. the florida senator marco rubio continues to rebound from his disappointing new hampshire result, capturing second place in nevada now with the texas senator ted cruz finishing third. >> and those percentages matter since delegates are awarded proportionately. the big question now is just how did trump do so well in the silver state? according to the results of the nbc news entrance poll p donald trump performed best among voters looking for a candidate who tells it like it is. that's something trump does. let's get outside to tracie potts from nbc, who's following
the very latest. tracie, we have donald trump here winning among very different classes of voters and going into super tuesday. just how worried should the other candidates be now? >> reporter: well, they might be worried because there's a clear path to nomination for donald trump now when you take a look at what could happen in those super tuesday states. we still don't have a lot of delegates out there yet. donald trump has 79 delegates by our count. you need more than 1,200 to win. more than half of those will be awarded on super tuesday. those dozen states that will be voting all together in that one day, including huge states like texas. that's good for ted cruz. that's his home state. he's hoping to do well there. it's the first time that we'll see someone -- some candidates being voted on in the midwest. minnesota, they're going to be voting. a lot of these states also are southern states. while there had been big questions, south carolina proved that donald trump can do very well in southern states.
so while there's a clear path to nomination for him, it's not so clear for ted cruz and marco rubio. by the way, those numbers that you were looking at, our folks actually went home this morning, the gop out in nevada, they were still counting some of those second place numbers. not completely clear yet if that's going to be rubio or cruz. but as we look ahead to super tuesday, that is really going to be a marriajor turning point. a couple weeks after that, ohio and florida together on the same day. the reason those two are so big is because of the number of delegates they award. and those are winner take all states. whoever wins, if it's by 51%, if it's by just a small amount, they get all of the delegates from those two huge states. so the next couple weeks are going to have a huge impact on who gets this nomination. >> all right. a lot riding on super tuesday. tracie, pleasure to have you with us again this early hour. thank you. and we're asking our viewers on
twitter, do you think donald trump is already a lock in to be the gop nominee? do the competition still stand a chance? you can cast your vote on our twitter page. louisa? >> we're talking a lot about the potential of a brexit, right. what happens if britain votes to leave the european union? we have this referendum coming up on the 23rd of june. we've had surprising split from within the conservative party here in the u.k. with the mayor of london just over the weekend saying he now backs an exit. so that's a big blow for david cameron, the prime minister, who's very vehemently arguing we should stay in the eu with these reformed measures now. hsbc, they've been taking a closer look at what a brexit could mean for various as set classes. they say sterling could fall 15% to 20%. you could see a move towards parody against the euro. the gdp levels could be 1% to 1.5% lower. inflation and labor costs rising sharply. and there could be implications for a whole bunch of sectors it
out there. the bank of england rates might stay lower for longer at 0.5%. or they might cut rates in order to shore up confidence. so does that mean you should be going out and buying flats at the moment or big houses? not sure. there would be a limited impact on gills, they say, because you've had this safe haven flow. it would be negative for credit. the list continues. i want to look at banks for a second. this is an area where we've seen a lot of volatility. they think there would be more of a selloff taking place from within the european financials, despite them being well placed. medium term regulatory risks would remain, they say. but very interesting to see what it potentially could look like if the u.k. leaves the eu. let's face it, not a lot of people know what the implications would be.
something that we'd never to take step by step if that were to happen. but still, nevertheless, an interesting note from hsbc, nancy. >> that's right. the bank of england certainly keeping an eye on those sterling moves. it's not just the bank of england. i assume the european central bank is watching the euro area as well. year now just two weeks away from the next ecb meeting. speculation is rife that the central bank might announce further measures. let's get to the julia chatterley. pleasure to see you there in frankfu frankfurt. we know mr. weidman has been a critic of the central bank easing so far. any reason to expect he'll be changing his tune? >> reporter: this is the question because if we look at the data coming out of germany, there are reasons to be concerned. look at the manufacturing pmis. look at some of the business confidence as well. the ifo survey numbers we got out, down for the third consecutive month. the sharpest decline we've seen since 2008.
there's a number of elements here. then look at the growth. ultimately strong domestic demand, construction strong, government spending. so to what extent does the domestic economy offset some of the concerns more broadly about the external environment? i think this is the crucial question for the bank president here. how concerned is he about the volatility we've seen, the impact it's having now in the german corporate boardrooms as well. more broadly, does it change the stance we saw back in december when ecb president mario draghi announced that stimulus. the bank came out afterwards and said we were dead against this. for me, the big question is to what extent has sentiment shifted and will they be on board? go back to the minutes we got from the last meeting. there was a unanimous agreement to reflect on the outlook for the eurozone economy to perhaps calibrate, adjust policy as it stands. the question is, is the bank ready or not to allow them to push forward with more stimulus,
or are we going to be behind the curve yet again it seems. i'll grill him, as always. he only tells you what he wants you to hear. >> looking forward to that one. we will be breaking into u.s. programming for that special interview first on cnbc around 13:00 cte. >> meanwhile, tackling the finances. >> not an easy task. >> no, it isn't. sponsors giving a red card to fifa. the company stuck with heavy debts. is it time to stop playing fantasy football? more on that in a second. rth hot empowering people making a difference to change climate change with passion and excitement earth hour is about inspiring climate action celebrating a global movement and impact ♪
next four years to be $560 million. criminal investigations into officials have hurt attempts to replace sponsors while legal fees have also continued to rise. an election is to be held this friday. >> a lot of people writing in this morning. a lot of you out there finding us on twitter. many of you just questioning kind of where value is at the moment. a lot of you also questioning what's going on in the u.s. political sphere, which of course is hugely interesting right now. you've got super tuesday coming up. >> super tuesday is the big one, next step. of course, donald trump really catching some by surprise, not just for winning nevada, but that percentage. 45% of the vote there. >> he's so far ahead in the polls. there's a great piece in the ft this morning if you want to read more about the splits happening from within the republican party.
if you look at some of his comments, he's actually, according to the article, he's even further left than the democrats in terms of the foreign policy stance and that the u.s. should take less of a role in being involved outside the u.s. in war zones, for example. >> let's shift gears and talk about a really big industry out there. we're talking specifically here in the u.k. the cosmetic executive women, or cew as it's called, is a not-for-profit organization with over 1,000 members from the u.k.'s beauty industry. last night was important because the 2016 cew product demonstration evening was held in london.
lipsticks, blushers, a whole bunch of other products were showcased in front of hundreds of experts out there. caroline neville joins us here this morning. >> good morning. finally got here. >> i know. the traffic can be a bit bad. you have got to get into the studio. this is a huge industry. i know some people might think it's just about lipsticks. >> and lycra. >> it's 17 billion pounds in the u.k. >> it is. and globally, it's over 300 milli billion pounds. it's a hugely important industry. last night we were showcasing the talent and creativity very much on the british side. we have a great deal of creativity here. i think it's driven by women entrepreneurs. of course, we have the super huge classic brands there.
unilever, l'oreal, you name them. >> we've spoken in the past about where the growth opportunities are. are the growth opportunities -- are they going to be equally strong from within women's beauty as men's beauty, for example, where we're seeing huge inflows? >> i think last time i told you it was the 50 pluses, the silver foxes that were really growing the industry. and that has affected the premium end of the market. that's still growing. the interesting things are the men's business. that's hugely successful right now. i think it's because we have young men who are more athletic and healthy. >> taking care of themselves. caroline, we've got to go, unfortunately. thank you so much for coming in. caroline neville, the president of cew. that's it for today. see you tomorrow. bye.
good morning. a crude fight. >> negative rates, new this morning, stanley fischer says the u.s. central bank is looking at the idea but has no plans to use it. >> and breaking overnight, donald trump wins the nevada gop caucuses. it's wednesday, february 24th, 2016. "worldwide exchange" begins right now. good morning. welcome to "worldwide exchange" here on cnbc. i'm sara eisen. >> and i'm wilfred frost. that was a