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tv   Street Signs  CNBC  February 22, 2018 4:00am-5:00am EST

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welcome to "street signs." i'm joumanna bercetche these are your headlines investors buy into barclays dividend plan. the stock rallies despite a full-year pretax profit miss as jeff staley tells cnbc why the bank has been able to raise shareholder payouts. >> as recognition of our confidence about where we are with capital and our ability to generate earnings we are more than doubles our planned dividend for 2018 versus 2017. deutsche telekom investors
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sell down on a slight earnings miss despite the dividend hike a better connection for bouygues and the fed sparks a fresh bond market selloff with janet yellen's final minutes pointing to a more hawkish rate hike approach, amid an improved economic outlook we are just getting the german ifo data out. expectations came in at 105.4 in february versus the consensus forecast of 11 110. -- 107.9
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the business climate index came in at 115.4 versus a forecast of 117. all of the components of the ifo seemed to have dropped here. that's coming off very, very high levels back in january. we had high levels back in januariment ty men january. the manufacturing component rose to a new high. i'm curious to see where the capacity utilization number came in it's up at 87.9% versus an average of 87.3% still above the long-term average. that capacity utilization number is crucial when you think about some of the inflationary pressures that could emerge in germany. also switching to the construction, i would like to -- i want to look and see what the construction side of things is doing. again, that number came in slightly weaker back in january as the business sentiment edged
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down a bit all in all the number is weaker, but still coming off very, very strong levels. you can see euro/dollar has not done much on the news. as we saw the pmi numbers yesterday, it appears everything is starting off from such a high level, that we will start seeing increasingly more misses going forward but overall the picture is one of positivity and optimism there's been very little reaction in foreign exchange then again the big focus has been on bunds, what fixed income has been doing yesterday after the pmi numbers we saw fixed income rally back three basis points that's in direct contrast to what's happened with u.s. yields following the more hawkish fomc minutes yesterday. at this point i'd like to bring in timo wollmershaeuser from the ifo institute for economic research
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sir, can you talk me through some of the major changes through this ifo number that just came out and the last month's number >> yes good morning this was quite significant decline of the ifo business climate index that we saw today. it was a decline by more than two index points, from 117.6 in january down to 115.4. this decline was very broad. it was not only in manufacturing but also in trade and services and in the building sector so in most of the sectors of the german economy >> sir, would you say the german economy is thus slowing down or are we reading too much into this >> well, it's important to see that the level of the business climate index that we still have is very, very high it's more or less still a record level. so we had to look into our archives the last time the business climate index was at that level was 50 years ago so at the end of 1960.
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by this sentiment among german firms, it's still brilliant, but we have to take this decline serious, so the outlook for the upcoming month has, because of this result, deteriorated a bit. >> how do you think the political situation is playing into peoples assessment of the business climate here? >> i think this is one of the major reasons for why the business climate index went down i think german firms have been quite disappointed about the coalition agreement, particularly there was no -- not even discussed tax relief for firms. there's no idea among german politicians about how to react to u.s. tax policy the only thing that is at least for firms positive is that in this agreement, if there is a decision to increase spending. but this is not coming as a surprise
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spending and infrastructure and digitalization, this was expected i think one of the reasons is this disappointing coalition agreement. >> when you talk about the government and its plans to increase spending, does ta make you concerned about the inflationary outlook in germany? >> inflation is germany is still low. we had some wage negotiations at the beginning of this year indicating that wages are going to accelerate this year and still inflation is well below 2% clearly -- if the government is spending more, this has an impact and if the german economy is probably overheating, we are not yet in that situation, german economy is doing well, inflation is still low so spending would, of course, be something that would increase inflation. as i said, at the moment we're far away from a boom inflation
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with 1.5, 1.7% sill very low. >> on a forward looking basis there's been talk about the wage negotiations and that going forward from april onwards many participants in the unit will start seeing wage increases of 4.5% does that not affect your inflation forecast view? >> yes definitely this is something that will lead to higher inflation. if you look back at resent years, wage increases were on the mac tgnitude of 2.5% or so, despite the good economic situation in germany now we have higher wage increases. and i think this is something that -- well, it reflects the strong german economy. but as i said there's no danger of an overheating so far
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even though we have wage increases of 3%, 4% on a year-on-year basis this does not mean inflation will not accelerate to more than 2.5%, 3% or so >> you said there is no danger of germany overheating would you say that the ecb policy at the moment is appropriate? >> well, this is something that we could say if the economy is not overheating, there's no inflationary pressures, this is indicating that policy is not too expansionary for an economy like german or for the euro area >> thank you very much for your time that's the head of business cycle indicators and macro economic forecasts at the ifo institute for economic research. we had those numbers slightly lower than expectations.
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elsewhere, shares in barclays have surged towards the top of the stoxx 600 investors are cheering the restored dividend choosing to focus on the payout rather than any miss on full-year pretax profits. the british bank aims to pay 6.5 pence per share, which mirrors the level at which the firm decided to freeze the payout this despite a weaker than expected 10% rise in annual profit, which was weighed down by an underwhelming performance in the investment bank and a u.s. tax related charge. the ceo, jeff staley, said credit markets are the ones to watch. >> it's the market's business overall. it's trading rates, currencies, equities as all the banks face the fourth quart quarter weakness, on a dollar basis we were down about 10% the u.s. banks were down about 20%. so we gained some share in the fourth quarter but i think the industry feels
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the impact of volatility when you have normalized volatility, that's a positive for the markets business >> we talked to you in davos, you said i'm nervous about the markets. the volatility numbers don't feel right i think we're do yue a shakeoutn we had a shakeout. if you could do us a favor, rub your crystal paball what happens with the markets next >> i think the markets to watch are the credit markets there's good signs and some negative signs there clearly interest rates are going up in the u.s. and in the uk what's disconcerting is credit spreads have widened concurrent with the risk rate going up. that generally doesn't happen. that being said, economic growth
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is robust. the tax cut in the united states will lead to a lot of stimulus globally you have very strong growth all the way around the world so there are some signs to look for, volatility was one of them. hopefully the economic growth continues robust and strong and is good for all of us. >> joining me is simon gargel of uk equities at allianz global investors. picking up on these barclays results, it appears many investors were encouraged by they lifted the dividend payments if you look into the nitty gritty of the businesses, is the picture still positive >> we're coming out of the wilderness for many uk banks, there were a lot of legacy issues, and we're coming through that yes, underlying the business is starting to perform better 10% increase in pretax profits
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is encouraging. >> when you look at the competition of barclays as a bank, many people point to the fact that it is still investment banking heavy compared to competitors in the uk does that make you concerned about the outlook for this year? >> it's clearly different from a bank like lloyds, but it has a strong position in credit cards, a strong uk franchising, and a strong investment bank it would benefit more from volatility in markets, activity in markets, probably from rising interest rates when you look at barclays, it's not right to compare it with lloyds you have to take it as a different company. >> when you think of barclays in terms of outstanding litigation risks, is that something that concerns you as an investment prospect when thinking about putting cash into the company? >> yes when you look at barclays you have to view some of the outstanding litigation issues. our view is they're generally coming towards an end.
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the end is in sight. you're seeing underlying profitability come through that's behind the dividend increase they announced for 2018 there's confidence you're getting through that process >> so in line with jeff staley's restructuring plan you would expect that stock to do well. what's interesting is that barclays has reacted well to its earnings results despite the disappointing numbers we saw hsbc doubled profits last year but the markets did not take that well. why is that? >> hsbc has come from a dividend yield of 8% down to 5% or so so the market has come to terms with the recovering bank so it's much more -- there's much more attention on the numbers. for barclays, we're still at a situation where the market is skeptical or has been of the company. the fact that the board have come out with a much stronger dividend commitment is
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reassuring investors >> you can see that difference in the price to book valuations. barclays trades at a discount there. would you say hsbc has become more of an emerging markets play as opposed to a uk domestic play >> i think it's always been more of an emerging market play it should have stronger growth because of its position in asia and china and hong kong. i don't think that's something new. i think sthat should allow it t have liar grow higher growth >> we had lloyds reporting earlier this week. we saw positive reaction and surprisingly the domestic business has been holding up well what is your view on the domestic banks over the next 12, 18 months? >> i think that the key risk is the economic risk.
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they're quite hard to call that's a risk factor but the underlying performance of the businesses are good with interest rates gradually rising in the uk and rising faster than that in america. the outlook for banking profitability fundamentally is sound. the valuations of banks are modest the big change between now and five or six years ago is the banks rebuilt capital since the financial crisis they're much better capitalized. much better closely supervised and there's an argument they should have a higher earnings multiple >> does that make you more inclined to be overweight uk banks versus european banks? >> i'm only invested in the uk i don't have a view on european banks, but i think the uk banks look undervalued compared to the rest of the world. >> simon, thank you for joining
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"street signs" today for more on barclays latest results and how they're managing their legacy issues, go to if you want to get involved in the conversation, the address is streetsignseurope@cnbc, or you can tweet me at @streetsignscnbc. coming up, we'll hear from the ceo of anglo after this break. it naturally begins to c, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember.
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welcome back to "street signs. let's check in on how markets are doing. we had a bit of a wild ride in u.s. equities around the fed minutes that came out last night. dow obviously did end the session weaker that continued with all of the markets trading with a softer tone we're an hour or so into the european trading session the broader composite index, stoxx 600 is down 1% so it is a pick cture of red.
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let's get into the individual markets and see what picture is like ftse 100 down more than 1% it's a big day as far as uk politics are concerned with the cabinet subcommittee meeting regarding brexit and the next steps there. we get the second estimate for gdp coming up in about 15 minutes time xetra also having a weak day today we get on the macro economic side, ecb minutes. the market reacted quite negatively to the hawkic fomc minutes. let's see if the ecb minutes will be as hawkish perhaps we'll get clues on forward guidance there we had a bunch of earnings the only sector really just in the green is utilities, just above the flat line. a defensive play here.
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on the down side basic resources are down more than 2%. household goods are shy of 2%. that is is in line with some of the activity that we saw in u.s. trading in yesterday's session switching to one of the top stories, anglo american reported a 45% surge in underlying ebita to 8.$8.8 billion ahead of expectations it also cut its net debt in half, nearly doubled its free cash flow. the miner is boosting its dividend and said it achieved cost and volume improvement above targets. speaking to the ceo earlier, he outlined the company's focus >> we want to start our dividend payments, which started in the last half. this is our second payment this is the best dividend we paid in a decade to make it clear we're committed to paying
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dividends and returns to stockholders we don't need to blow our brains out on big projects in terms of other things we got. in terms of the greenfields project, we are talking about syndicating. those lessons have been learned. from our point of view we have great opportunities inside the portfolio. >> wrus finally you're leaning into some of the new trends around self driving, autonomous cars what growth and demand are you seeing from that part of the market >> we're seeing 5%, 10% growth in new electric vehicles it will take time for that to come through in the market we're profiting from the overall growth in automobile sales there is some switching out of diesels. for us long-term fuel cells, the use of platinum in those industries is very important in the short-term, we think things are good. longer term we're excited about
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the possibilities. british american tobacco has reported higher full-year sales and profits for 2017 boosted by the acquisition of reynolds american and market share gains. they saw revenue grow 37.6% on the year to 20.2 billion pounds. adjusted organ iic revenue rose 2.9. >> bae posted an 8% rise in annual earnings supported by growing demand for its advanced precision rockets. the british defense company expects earnings to be flat for 2018 due to organization changes and the adoption of a new accounting standard. the guidance represents a slight downgrade to expectations. axa has aexpe expected net profit. they also proposed a 9% dividend, topping analysts forecasts. axa said it was not hit as hard
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as rivals by natural disaster costs thanks to its reinsurance contracts. it plans to list its american life insurance in the second quarter of this year rsa has raised its shareholder payouts on the back of better than expected full-year operating results. speaking on "squawk box" earlier, the cfo told us about his plans to digitize the business >> would be wrong to assume that everyone wants to go digital and transact on a digital basis. many people still want to transact on a face-to-face basis. for more complex risks it's important that that happens. it's important advice and interaction that continues by the fact we're a sleepy company, and we're investing heavily in digital right across the organization, i think i said on here before we are now one of the market leaders in the young
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driver space, telemarket, that's digitalization at the leading edge >> full-year revenues have increased at prosibens and henkel saw both sales and adjusted earnings before interest and taxes miss expectations in the fourth quarter amid a decline in the european laundry market and increased competition in the beauty sector. henkel has been cautious in its guidance but dividend and the munich prosecutors office says they are searching private homes and an office in connection with the diesel issue related to audi engines.
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they said the searches are related to three new suspects in the audi investigation, two of which are former audi executive board members. they have also clarified that current members of the audi executive board are not among the suspects latvia's largest bank asked for a loan of up to 480 million euros after the u.s. accused it of breaching sanctions against north korea. latvia's government insisted on the stability of its financial system saying the central bank is working effectively earlier this week the country's central bank governor was released from police custody as prosecutors determine whether he solicited a bribe. the latvian finance minister earlier today said despite accusations of russian interference the situation had illustrated latvia's strong rule of law >> it may be true, since we have experienced a lot of european
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countries have faced the active hybrid warfares carried out during their years of elections coming, but i would also stress that the fact that it happened with the governor of the central bank and the ablv are nothing to do with the hybrid offer i think the fact that tit shows latvia is a strong strong rcounh a strong rule of law coming up, president trump wades further into the u.s. gun debate suggesting the solution may be allowing teachers to bring guns into schools. [fbi agent] you're a brave man, mr. stevens. your testimony will save lives. mr. stevens?
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welcome to "street signs." investors buy into barclays dividend plan. the stock rallies despite a full-year pretax profit miss as jeff staley tells cnbc why the
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bank has been able to raise shareholder payouts. >> as recognition of our confidence about where we are with capital and our ability to generate earnings we are more than doubling our planne dividend for 2018 versus 2017. deutsche telekom investors focus on the negatives selling down the shares on a slight earnings miss despite a dividend hike anglo american earnings jump but the dividend and profit failed to impress investors as the currency faces headwinds the ceo tells as soon s cnbc as to shareholders. >> this is the best dividend we paid in a decade just to make it clear we're committed to paying dividends and returns to shareholders and the fed sparks a fresh bond market selloff with janet yellen's final minutes pointing
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to a more hawkish rate hike approach, amid an improved economic outlook >> we just got the second estimate for uk gdp data of the fourth quarter of last year. it was actually revised down the fourth quarter gd it was revised to 1.4% from 1.5% in the first reading. also worth pointing out that the third quarter gdp was also revised down to 1.8% from 1.9% so third quarter and fourth quarter gdps have been revised down the currency has come off here, trading a bit weaker today down 0.3% or so speaking of foreign exchange, the dollar has got a bid again after more hawkish minutes coming out of the fomc yesterday. you can see that the euro/dollar
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has not done much today. dollar/yen is standing out it continues that performance, and rebounded from three-year lows switching to european markets, the picture is not that pretty in european equities trading ftse 100 is down 1%. similar picture for xetra dax, cac is down 0.66%. the ftse mib down 0.50%. we had a weaker session overnight. speaking of the u.s., let's look at what the picture looks like this morning looks as though dow will open up about 100 points or so lower s&p is seen opening up nine
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basis points lower a lot of this can be attributed back to the rise in fixed income yields we saw the ten-year yield sell off five basis points. the fixed income space understood the minutes to be slightly more hawkish. and inflationary a little bit more positive on the inflationary outlook we've seen the ten-year yield is almost back to its recent highs of 2.94, hovering around the 2.93 level speaking of the minutes, mixed signals from janet yellen's final set of fed minutes caused confusion. policymakers noted a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate however a lengthy discussion gave a more dovish impression of
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the minutes on the trade kayla tausche has a full run down. >> reporter: the january meeting was the first since tax reform passed that's one big reason the fed pointed to a stronger yoet gr e outlook than before. companies are still deciding how to ail gate thellocate savings. kevin hassett, the white house chief economist, doesn't expect the economy to overheat. >> we have a supply side stimulus which will allow us to grow without getting inflation out of control >> reporter: the federal reserves plans to raise interest rates gradually for this year and next the markets treating the minutes from this fed meeting, the first of eight this year, as tea leaves for the new fed's direction. investors will get more information next week. jay powell will be testifying in front of congress twice. >> i think jay powell will have to establish his credentials as a new fed chair.
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part of that is to say something pretty negative about the amount of fiscal expansion here and express worries about the rise in the federal budget deficit. >> reporter: the january meeting took place before a bipartisan budget deal expanded spending and before a january jobs report with wage growth so strong it spooked the market, spurring a sharp drop in stocks days earlier fed members found signs of broad wage growth to be absent, keeping the wait and see approach to inflation intact >> inflation is rising gradually. lower dollar and higher oil prices are pushing inflation up a bit. there's a bit of wage inflation. overall the modern american economy is not that prone to basic consumer inflation the federal reserve is becoming more worried about asset prices. >> one worry raised by more fed members in january, imbalances in the market thanks to high evaluations and high levels of corporate debt kayla tausche, cnbc business
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news, washington kevin bosher joins us on the set this morning good morning to you. let's talk about the minutes here do you get the impression that the fed are going to start sending more hawkish signals to the market, prepare them for a faster hiking cycle? >> that's not our view at the moment we think the u.s. economy is certainly growing at a decent rate clearly tax cuts, spending increases are likely to ensure that the cycle is prolonged and that growth can continue however everything that we look at tells us that inflationary pressures in the u.s. should remain well controlled, well anchored it's a positive that inflation is rising towards a fed target of 2%. that's a good thing. i think the fed will see it that way. so at the moment we don't see any reason why the fed should be overly hawkish or do anything too different to what they are clearly fwguiding markets.
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that's three, possibly four rate rises this year, maybe another two or three next year what could change things more is if they start to indicate the terminal rate, where rates end this cycle at a higher rate in the future, but at this point that is not a likely proposition. what is more important for equity markets the terminal rates, the rate at which the fed hikes up to or the ten-year yield there's been so much focus on that 3% level on the tecn-year yiel yield. >> we believe in the secular disinflationary arguments backed by high debt legals, high savings ratings, poor demographics, low productivity we don't believe inflation is going to be the problem. however the yield, ten-year yield or 30-year yield may be more problematic because there
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are technical factors at play. it could be that the tax cuts in the u.s. prove to be ill-timed at a late point in the cycle where growth is already strong and where inflation is starting to pick up that could force yields to rise for technical reasons because investors become concerned about that, particularly at a time where liquidity is becoming te tighter, not just because of stronger growth and higher commodity prices but because central banks are significantlie put into the system for this year and onwards that lack of liquidity, stronger growth, a modest move up in inflation could put pressure on yields at a time where u.s. fiscal deficit will increase >> equally if you were a fundamental equities investor, if you look at the growth outlook, earnings outlook, all those signals are positive are you suggesting that equity
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investors should keep an eyeon what's going on in yields, particularly real yields in this environment? >> i think so. the growth and earnings outlook is strong. it has been a major support for equities and should continue to be a major support for equities moving forward as long as the current volatility and as long as any rise in yields remains controlled, our base case, that strong growth, strong earnings, not just earnings, it's revenues and margins, as long as that ba backdrop for equities continues, we think equity markets can find the bottom in this current correction and probably go on to make new highs later in the year >> so long equities but you want to protect against the risks what are the types of trades you're looking at to protect against that >> it depends where you think the key risks are. for us there are three one is that bond yields move materially higher in the u.s., not necessarily for inflation
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reasons but for technical reasons. the second risk is that liquidity is getting tighter last several years central banks have pumped $2 trillion a year into the system that will drop to a low level second half of the year and turn negative next year none of us quite know what happens when this liquidity environment dries up we haven't been here before. the third key risk is global growth could well be peaking and slow as the year goes on there is a risk that the u.s. starts to -- the markets think about a u.s. recession towards 2019/20 because we are late cycle. and the fiscal and spending increase could actually lead to the fed having to become more hawkish at some point in the next 12, 18 months we also see global trade peaking at the moment. we see china slightly softer second half of the year as well as the increase in bond yields, which we will take as some tightening as well those are the three key risks.
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if you're hedging against higher bond yields or higher inflation, clearly bonds won't be the hedge. you need cash, you need real assets, gold maybe, some equity sectors would do okay. if you're hedging against weaker growth, longer bonds are looking more attractive and you look at more defensive equities. >> one has to pick their poison there. thank you very much for joining the show the fed conversation will continue later on cnbc when our colleagues are joined by a full hour by st. louis fed president james bullard. bank of england chief economist andy heldane thinks sbrets ra interest rates need to rise faster than many expect. he said jobs have been killed in the past by central banks stepping on the brakes too late. sterling seemed to like those
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hawkish tones before returning to weekly lows president trump says arming teachers could be a solution to the problem of school shootings. speaking at a white house meeting with survivors and parents of school shooting victims, he also said he would consider some stronger gun regulations. this follows the florida school shooting that killed 17 people peter alexander reports on the emotional meeting. >> reporter: tonight at the white house, before an audience of one, pain and anger >> i'm [ bleep ] my daughter i'm not going to se again. she's not here king david cemetery. that's where i go to see my kid now. >> reporter: andrew pollack's daughter, meadow, was killed in parkland last week. >> how many schools, how many children have to get shot? it stops here with this administration and me. >> reporter: sam zeif lost his best friend. >> let's be strong for the
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fallen who don't have a voice to speak anymore. and let's never let this happen again. please please >> reporter: nicole hockley's 6-year-old son, dylan, was murdered at sandy hook. >> you don't want to be me no parent does you have the ability to make a difference and save lives today. please don't waste this. >> reporter: president trump vowing action. >> it's not going to be talk like it has been in the past it's been going on too long. too many instances and we're going to get it done. >> reporter: the president with talking points in his hands including one reading "i hear you. outside, loud protests, hundreds of high school students demanding something be done. worried they could be next >> it's a sincere fear am i next? could a school shooter be walking into my school, could i be sitting at my table trying to learn and i get shot >> reporter: president trump a fierce advocate for the second amendment. >> to the nra, i can proudly say, i will never, ever let you down
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>> reporter: now appearing open to modest changes like strengthening background checks. and imposing new regulations on bump stocks. still neither of those moves would have prevented last week's tragedy. >> if he's not old enough to buy a drink, to go and buy a beer, he should is not be able to buy a gun at 18 years old. >> reporter: as for a new bipartisan push to raise the minimum age to 21 to buy the gun used in parkland, president trump says that's now on the table, too peter alexander, nbc news, the white house. >> switching to italy where political violence is rising in the final days before the general elections. several people were arrested for attacking a candidate of the far-right party in palermo earlier this month six my grants were shot by a far-right extremists don't miss our coverage of the italian elections. we will be live from february 28th we had an action packed show
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today. there's lots of earnings, a lot of macro data that came out. get involved in the conversation and you can follow us on twitte twitter, @streetsignscnbc. coming up, another price surge sees amazon shares smashing through a key level, but can it keep rising find out after the break
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welcome back to "street signs. shares in amazon have hit a new all-time high breaching $1,500 for the first time they ended the session up 1% having fallen back slightly from a record of $1,503.49. shares have surged in the last year rising over 70% wednesday's trade added more hahn 1$1.4 billion in value to jeff bezos' holdings uk lawmakers are investigating cryptocurrencies britain's treasury select
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committee says it is launching an inquiry into bitcoin and other digital currencies as well as the blockchain technology that powers them the committee will look at whether new regulations are needed and make recommendations to the government. telefonica full year net profit rises 32%. they saw net debt decrease by nearly 3 billion euros on the quarter to 44 billion euros. the company announced an accord with france's orange for a fiber optic network. shares in bouygues has risen. and deutsche telecom is proposing a third dividend hike.
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they recommend an annual payout of 65 cents a share up from 50 cents. fourth quarter ebita missed forecasts, but the company expects earnings to beat in 2018 and grow by 4% i'm pleased to say christopher nicholson head of research at oraca is joining us on the show. the numbers were a bit underwhelming, but they seem positive they can grow 4% in 2018 >> good morning. i think they can probably achieve it if you compare them to orange, they have both delivered top line growth. they're both making the point that's the first time that's been done. what they claim is a consistent increase in some time. because they have taken two different strategies, we have two different views on whether this is consistent in deutsche telecom's case,
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we're not clear whether they can continue to grow the top line. they have a story of buying things, cutting costs. orange, as we now know it, has taken a slightly different strategy they continue to invest if their fiber infrastructure fiber to the home. they claim they're about 25% penetration to french homes. they're top line growth may be more sustainable than deutsche telecoms >> results earlier this week reported that they grew in france for the first time in ten years. it does appear that heavy spending on high speed broadband is paying off in their case. is that what you recommend deutsche telecom needs to do as well >> they said that's something along the lines of what they
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want to do, but they face opposition from their regulator and from the european regulator and that it would stifle competition in the german market i think penetration there is 3%. clearly it's a popular solution for customers. they're prepared to pay a premium. telecoms are under constant pressure you have 5g now and fiber to the home >> let's talk about the telecom sector as a whole. if you go back versus ten years or so, we're seeing less m&a going on in europe capex builds are going up, but net debt is increasing where is the value proposition coming from? >> it's interesting. you have this situation where a capex cycle is contracting, they still are businesses that generate huge amounts of cash at
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certain points in the cycle. but the debt level is an issue you have the five main incumbents and then data pay the five main incumbents are all probably too highly indebted deutsche telekom has a 1 to 1 debt to equity ratio, which is probably okay. vodafone is way under. >> with interest rates rising, is that going to be a dangerous thing for the sector >> that's a good point if you go back 20 years to 2000, the price spikes, and it doesn't recover for telcos the nasdaq and ftse all fall but recover and go up. vodafone merges with liberty,
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that will be much bigger than all of them and the better value proposition. >> christopher, thank you very much for that. we'll speak to the ceo of deutsche telecom later today we go telco crazy next week at the mobile world congress. that starts next monday on "squawk box." quick olympic news, norway's domination of the olympics continues with the men speed skaters winning the team pursuit. it's the first time the team has taken gold in the event beating south korea in a tight final split. the dutch took the bronze medal. germany kept the heat up on the norwegians with germany winning the women's bobsled event. the u.s. finished second canada took the bronze
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those olympic wins for norway and germany consolidated their place in the top two canada is in third with 21 the u.s. has surged back into the top five the netherlands completes the top five let's look at u.s. futures just before we hand over to our colleagues in the u.s. who are actually in the uk today dow seen opening up about 100 points lower s&p about 7 points lower there was a lot of volatility on the back of those minutes. we'll see how thing also evolve in the next couple of hours. that's it for today's show "worldwide exchange" is up next. wilfred will be live in london for your heart... your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain.
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stocks under pressure after the fomc gave the green light for more rate hikes to come. barclay's ceo on the record. jeff staley talking earnings and the overall markets. plus unstoppable amazon. the stock soaring to an all-time high we'll get an analyst's take on this latest leg higher it's thursday, february 22, 2018 "worldwide exchange" begins now. ♪ good morning a warm welcome t


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