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tv   Street Signs  CNBC  November 4, 2019 4:00am-5:00am EST

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♪ good morning and welcome to "street signs" i'm joumanna bercetche and these your headlines. the euro dips as pmi data confirms a sharp slow down in manufacturing across europe, but stocks hold on to a rally. auto makers drive the gains after wilbur ross suggests they may not need to slap tariffs on european cars. ryan air beats profit
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expectations in the second quarter but in an interview the ceo confirms when the troubled boeing 737 max will be delivered. >> we can't finalize what our costs have been as a result of these delays it's a dialogue that continues with boeing. and saudi aramco finally launches its highly anticipated ipo with a domestic listing set with december but offers little detail of what may become the world's biggest ipo. >> the percentage of investors, international ones versus domestic ones is still yet to be determined after we do the show, the book building and after that the price range and fixing the price. good morning and welcome to the show, "street signs" is back after being off air for a week kicking off the show today, we are getting some manufacturing
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data out of the eurozone to give you the october final numbers for the eurozone as a whole 46.6 that's a little higher of the flash estimate of 46.2 and higher than the september reading of 46.1. so manufacturing still moving in the right direction but crucially below that 50 line which tends to be a contractionary level for pmi reading. so still at 46.6 points to a lower reading still but at least improving from the numbers we had back in september. earlier on we had the breakdown of germany and france. worth pointing out that germany's manufacturing sector still remains stuck in that recessionary contractionary territory with the reading of 42.1 versus 41.9 in september where as in france the numbers have come in a little higher than expectations at 50.7 versus 50.5 in september. so germany continues to be the weak spot in the eurozone, but
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at least things are moving in the right direction. i have an expert with me, andrew, chief european economist capital economists to discuss more would you agree with me assess that time the pmi numbers are moving in the right direction? >> well, they edged up very slightly but it's clutching at straws to say this is necessarily a turning point. as you said, the german number is still exceptionally low, and that's the most important manufacturing economy and most important economy in the eurozone we have seen some of the sub components have been very weak suggest that employment growth will continue to slow and probably feed over to the rest of the economy and cause the macro economy as a whole to slow next year. >> but looking at the fiscal outlook, obviously there's been a lot of talk about eurozone economies not doing enough in terms of the fiscal side of things but actually in aggregate
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you look at all the job spending plans it does point to fiscal easing of half percentage point in 2020. even from that perspective, things are moving in the right direction as well. what type of tail winds does that give to the eurozone when you think about your outlook for next year? >> so the fiscal position is likely to be a slight loosening this year, again, next year as it will have been this year. that half percentage of gdi half pinch of salt it includes a rather large stimulus from germany which is rarely talked about because they're running a surplus but they're planning to reduce the surplus but year after year they actually do less than they promise. and we suspect that that will happen again next year so maybe you'll get a .3% loosening which in terms of impact on the economy is .2 or so. >> to go back to what you said right at the beginning, you want
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to watch out for the employment situation in germany because my understanding is the german fiscal spending is very closely linked to these automatic stabilizers which kick in once the unemployment rate starts to tick up again. is that really what we should be looking at to determine the trajectory of fiscal spending out of europe? >> the thing to look for is an actual additional fiscal boost through policy to affect the structural balance regardless of the employment rate. i don't think we'll get a big stimulus from germany unless the unemployment rate will rise. they have very little unemployment from a domestic perspective, there's not really that same imperative to do so. >> all right so there's not a lot that can be expected to happen on the fiscal side of things monetary policy has been trying to pick up the slack there we have new president coming in le guard gives her first speech tonight at 7:30 p.m. eastern
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time what do you expect -- how do you expect the ecb to be different with christina lagarde's leadership very ses versus draghi. >> she is a very different person from mario draghi less into the details of monetary policy and the consummate politician. i'm no doubt she'll be putting a lot of effort on trying to persuade germany in particular to loosen policy as we were just discussing, but we don't think she'll have a huge amount of success at least in the near-term. >> indeed she fired some shots to that effect last week in netherlands in germany andrew cunningham from capital economics. now, auto stocks are trading higher in europe with the sector strongly outperforming the rest of the european ek witty
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markets. this after wilbur ross says may not be possible to raise tariffs. ross said the trump administration has had, quote, very good conversations with the eu the u.s. must decide whether to impose or delay the tariffs by november the 14th. you can see that broadly speaking the names are very, very green today we have psa up 5%. fiat 4.7%, porsche up 3% very strong rebound in the auto sector. chancellor angela merkel says she wants germany to have 1 million charging stations by 2030 for electric car makers volkswagen is in the midst of a major strategy shift to focus on electric and today it's rolling out an all electric model at a plant that's been converting away from combustion energy
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production since 2018. julianna, one of the criticisms levelled at the german auto maker industry is they have been dragging their feet a little bit away combustion engines to electric car vehicles. how is today's announcement out of volkswagen going to change the landscape? >> reporter: what volkswagen is a major shift in terms of they approach and push into electric vehicles this plant is being converted from a 100% internal combustion engine plant to 100% e mobility plant. this is a huge investment 1.2 billion euros to carry through this conversion. they're making a really big bet on electric vehicle technology on an electric vehicle architecture today in particular is special for volkswagen this is the first model within
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their series of new generation electric vehicles to reach series production. now, in terms of the challenges facing the electric vehicle market, simple way to look at it is threefold one, challenge around price, two around range, and three around infrastructure today's launch of the production of these new id3s ticks the price box. start under 30,000 euros per car. three different battery sizes the biggest could offer over 500 kilometers of range and the third is around infrastructure you mentioned angela merkel's comments this weekend for the push for germany to implement 1 million charging stations by 2030 you can see an example of one of the charging stations here on the volkswagen site. the infrastructure question is really pertinent to the auto industry, should it onus fall on the government or auto makers. in addition to speaking to the ceo of volkswagon later on today
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at 1:15 cet, angela merkel also going to make an appearance here and later on today, angela merkel will meet with auto makers in germany for a summit where they're going to discuss, among other things, autonomous driving, jobs, infrastructure. so this is a huge question and even if we see the production ramp up on schedule here at the site, the big question is will the infrastructure be available in time to support the demand for these electric vehicles. be sure to catch the interview with the ceoof volkswagon at 1:15 cet and look out for comments from angela merkel and the summit later on today. joumanna >> a lot of them are trading up in the day because of the positive comments from the u.s julianna, we look forward to your interview at 1:15 cet. volkswagon truck unit is warning it faces a difficult 2020 after it saw orders slump
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6% in the first nine months of the year they said orders from the uk and germany were hit by pull forward effects of brexit. it did, however, confirm its targets for 2019 that's one sub sector of volkswagon let's bring back in andrew cunningham, the chief european economists from capital economics. it feels like one of the clouds of uncertainty this morning is being lifted that of the threat of the auto tariffs. those big clouds hanging over european markets in general over the course of the summer with that threat out of the way, do you think that there could be potential to see significant up sides in european equity markets particularly the cyclical sectors that are tied to that particular aspect of the relationship between europe and u.s. >> yeah, i would think that's certainly one of the concerns has been lifted. tariffs, we thought they were unlikely to implement tariffs. the u.s. was very much focussed on the china trade war and i
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imagine that most investors had a low herb probability of it happening and i don't imagine they removed that probability given the u.s. track record of switching policies on these things yes, it's definitely a positive. however the cyclical problems in the european manufacturing sector are not going to be resolved by this and run well into next year i do think the electric car issue which your feature was about is extremely interesting and that could well be positive in the long run. >> it's interesting if you look at germany in the last couple months they have been making strides towards forward-looking ways to increase investment and productivity and rolled out this while limited in size green package about a month ago about 50 million euros in size, a step in the right direction trying to move towards zero emission targets in align with the paris accords and big push in the auto industry, an industry that has been flagging for the past 12
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months or so what do you make of all these initiatives put forward by the chancellor at the end of her term >> you can see where the next wave of strong productivity growth could come from in germany, certainly in the green sector it's not an accident that the green party is, of course, polling very well. all the other major parties are trying to appeal on the same grounds. on the electric car thing, it's clear that there is going to be a compete revolution in the way that we drive the cars we drive and that will involve massive investment and no doubt that german car makers will be at the forefront of that. it's a different question how quickly it will happen talking about million charging points by 2030 that's probably the sort of time frame that you're looking at it's not something that will kick in on a big scale next year electric vehicles are still only 2% of the german market. even if they're going really, really quickly they'll have a modest impact in the short-term.
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>> still only 2% we shouldn't get overly excited at this point in time. do you think german will is the sick man of europe next year >> we do we have a mild recession in germany. we think they avoided it in q3 widely expected but the data suggests it's not going to happen then but we do think it will be stagnant more or less until around the middle of next year. >> so not a lot of positive signs yet for germany. we'll leave it there thank you very much for joining me andrew cunningham, the chief european economist from capital economists we had a strong start to the month on friday the first day of the trading month that was november 1st obviously today we are doing quite well as well you can see the heat map is mostly trading up in the green stock 600 up about .6 percentage point. the handover from wall street and asia was pretty positive as
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well so this is really translating into where european equities are trading. a couple corporate stories and then also general optimism around the state of u.s. china talks. there's some optimism there about the possibility of getting phase one negotiations signed and agreed on as well as talks of the potential progress as well between the u.s. and eu when it comes to those auto tariffs. let's talk about the european markets and how they're individually faring today. the ftse 100 in the uk up half a percentage point doing quite well on this monday morning. in germany, the numbers seem to be stabilizing somewhat, so just shy of -- well, just through that 13,000 mark when it comes to the dax the cac at the highest level it's been in 12 years now. we are seeing a decent rebound in european equities we have the italian index also up 1.2% as well. string in the step this november
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morning. individual breakdown, cyclicals right at the top, autos all morning, up 3% today in europe basic resources up 1.9%. they were up about 3% on friday as well. so couple very good sessions for basic resources. banks as well, cyclical sector doing quite well performance in line with other cyclicals. the downside, food and beverage again some of the defensive underperforming utilities down .4 percentage point as well so that is the picture for european equity markets. definitely quite a strong start to the session but if you want to get involved in the conversation, we're back now at street signs cnbc is our tweet handle or tweet me directly also coming up on our show, ryan air pushes back delivery expectations of the troubled boeing 737 max hear from the ceo michael o'leary that's coming up in just a few moments.
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♪ welcome back to the show ryan air has topped earnings estimate in the second quarter after seeing traffic grow 11% in the first half of the year, but
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the low cost carrier issued a cautious outlook flagging concerns over a no deal brexit and the airline says it dint expect delivery of the troubled 737 max plane until march or april of 2020. the ceo michael o'leary said the delivery delays will impact costs. >> the challenge for us and bowing is to determine when is this aircraft going to go back into service boeing keeps missing their delivery dates we're now not expecting until march or april of next year which means we're tight for summer of 2020, less capacity next year, stronger yield performance as a result. we can't finalize what our costs have been as a result of these delays it's a dialogue that continues with boeing, but i think we in ryan air who are the largest 737 customer in europe and boeing are focussed on working hard to get this aircraft back flying back in north america probably first hopefully this side of
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christmas more likely january and february and flying in europe by march or april. another group we're looking at the german health group which beat fourth quarter expectations on the top and bottom line the net profit increased 36% during the quarter while hospital equipment sales came in stronger than forecast however, the ceo cautioned there could be further margin pressure for the remainder of 2019 and into 2020. still the stock is up 6 1/4 percentage points today. wire card announced they will buy back 200 million euros of shares the stock had a volatile 2019 follows an allegations of a false accounting scandal made by the financial times. the german payment company denies the allegations and says it has been a victim of a short selling scheme. and saudi arabia officially launched the long awaited ipo of state-owned oil giant saudi aramco following a number of
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delays it's domestic listing is set for december with percentage of shares to be sold due to be announced at the end of the book building period. hadley is in dubai and following this story extremely closely, over the last couple years people have been anticipating this ipo we don't have a lot of details about the pricing or how much they're looking to ipo, but i guess let me take it to a different side of the equation and that is that there are a lot of skeptics out there who say that maybe they've been rushing this, especially given it hasn't been two months since those attacks on the aramco facilities >> reporter: a lot of skeptics out there, a lot of people questioning how this was handled from beginning to end and certainly the fact that you had an arabic only press conference held last minute on sunday which thankfully, thanks to our amazing producer we were very much able to cover for you guys, i thought it was interesting as you say there, not just skeptics
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externally but internally as well another question that wasn't answered was the hard date for this listing whether or not they would as many have anticipated list only or less than 3% of the company when that happens in december on the saudi stock exchange and also questions still about whether there will be a secondary listing whether we'll be seeing this ipo in new york or japan or wherever. what's really interesting the one thing they did address was the security following those attacks we saw thousands of u.s. troops deployed to the region to protect not just the installations but what that really means is the security of the saudi economy and the security of the region listen in to what the chairman of aramco had to say yesterday. >> it is very safe and if you want to have a full proof to that you see the oil prices. oil prices went up the first two days about 20%, then it came
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down by 10% and all the future traders saw this as a non-event. we have one eighth of the oil production in the world. and the oil traders they saw this as an unevent and that means it is really safe. that's what the money is saying. so the safety, i think, the whole wide world, not only saudi arabia, will be looking after the safety of this region and this company >> reporter: you may also remember just a month or so ago when i spoke to these two gentlemen and asked them about the security of the fields, u.s. troops to the region, when they would move forward with this ipo, essentially they're going to be doing that, fast tracking, moving forward even more quickly just to demonstrate the company could get back on track quickly and one of the things they really wanted to do was to be
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able to show investors that not only had they come back you might say in terms of production in terms of those numbers but also be able to take the results and hand those out and say, hey, listen, this is what the company is worth we haven't taken a major hit from the terror attacks and the security of the company is paramount. at the same point, so many questions remain over the valuation and widespread what various banks are anticipating will be worth. a lot of eyes on saudi arabia at this moment. i think certainly some internal conversations may be happening, joumanna, about what exactly this means for the future. >> what is the significance of them only listing on the domestic stock exchange at this point? there have been conversations in the past about a potential listing in new york, london, hong kong. what happened to those plans >> reporter: i think that they are still percolating. you have to remember particularly when it comes to the united states listing a company like saudi aramco could open up the kingdom to a lot of
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new things and lot more issues surrounding transparency of the company and this also has to do with charges from 9/11, terror financing whether the government needs to be held accountable for certain things via the u.s. court system it's a much bigger and broader company that's been the foundation of a country's economy, saudi aramco is for the saudi economy and listing it elsewhere. it all looked bright and sparkly in the beginning but certainly people have become much more grounded over the last couple years what is possible and what's desirable >> yeah. definitely hadley, looks as though they are making baby steps in that respect starting with domestic listing, seeing how it's received by the market and potentially transitioning to international markets. i'm sure we'll be discussing this more with you in the coming weeks. thank you for the coverage for now. hadley in dubai covering the latest aramco news as well. stay with us we'll be back in just a couple
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minutes and we'll talk trade u.s. secretary wilbur ross raises hopes of trade deal with china. and we head to shanghai in an effort to boost ties
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♪ welcome to "street signs" i'm joumanna bercetche and these your headlines the euro dips as pmi day ta confirms a sharp slow down in manufacturing across europe, but stocks hold on to a rally with france's cac hitting the highest level in nearly 12 years auto makers drive the gains f u.s. commerce secretary wilbur ross suggests washington may not need to slap tariffs on european cars saying it could bear fruit with foreign exporters mcdonald's fires ceo after he breaks company rules by dating an employee in what the fast food giant called poor judgment and saudi aramco finally launches italian anticipated ipo with a domestic listing set for
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december but offers little detail about what may become the world's largest ipo. >> the percentage of investors international ones versus the domestic ones is still yet to be determined after we do the road show, the book building and after that the price range and fixing the price ♪ well, we've got more data for you, this time on the uk construction pmi and that has come in at 44.2 versus 43.3 in september so again, somewhat of an improvement, but still crucially below that 50 mark and the construction numbers in the uk have been a weak spot for quite a while now. it's a small part of the uk economy but still worth bearing in mind. also worth bearing in mind that the trajectory is positive and tend to be moving in the right direction. so we are seeing very limited
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reaction on the pound trading around 129.30, shy of the 130 mark, but still if you look at the pound in the grand scheme of things we have come a very long way the last month up a full 10 points from the 119 lows. let's talk about european markets, equity markets as a whole. it's a strong start to the week and month. ftse 100 up .6 percentage point. we're getting numbers out today across from different corporates, cyclicals are leading the charge dax up .9 percentage point we talked a lot about the rebound in autos that sector is up 3% giving the german index a bit of a boost. cac in france up .3 percentage points and italy strong day in europe up 1.1% talking about foreign exchange, the pound, just shy of the 130 level. 129.30 the euro is pretty flat, trading slightly on the back foot at
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111.60 christine lagarde will be giving a speech tonight at 7:30 p.m. eastern time so you want to watch out for that as well, any clues on well anything, any insight on how she may be thinking about her tenure will be closely watched by the investment community and elsewhere, let's look how u.s. markets are shaping up after a strong end to the session on friday, this after better than expected nonpharm payroll numbers we saw the wall street indexes end up in the green. picture is pretty positive dow seen opening up about 84 points as well so positive session across the board for u.s. and europe and asia as well very strong start to this week meanwhile, china is welcoming emmanuel macron will attend a trade fair in shanghai. he is expected to urge china to
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allow increased trade in terms of agriculture, aerospace and finance. charlotte joins us around the desk i remember back in march i was in paris covering the time when president xi was visiting paris on the heels of his italian trip they signed a few deals back then with respect to the airbus. can we expect anything tangible out of this visit from macron to china or is it just repaying the visit that president xi gave to europe earlier in the year >> we don't expect megadeals we had the megadeals when president xi jinping came to france in march. ordered 300 airbus planes, 30 billion euro we don't expect a massive order this time. in spite of on going strategy president macron had, he said he would go to china every year that's his second visit. january, 2018 and chinese
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president came to france and macron is spending two days in shanghai and going to beijing for one on one with president xi jinping. >> is he doing this in capacity of french president looking to sign deals potentially with france or is this taking on perhaps more of a leadership role representing the eu as a whole? >> there's a bit of both wanting to fly the french flag, obviously, there's a lot of interest there a lot of french companies, 15 cac struggling with the president. so, of course, they want to do deals with french companies, but it's also a wider european perspective here on reestablishing the relationship between europe and china of course, don't waste a good crisis with tensions between china and the u.s., europe feels there's a window of opportunity to rebuild and strengthen relationships and so for example, phillip hogan, is also a part of the delegation traveling with president macron. yeah, there's a wider message.
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angela merkel was also guest when xi jinping came to paris. mr. macron invited herd. so they want to show an exercise of strength from europe, this is wider european voice coming and macron comes as the strong man of europe. uk is courting brexit, angela merkel is on her way out, spain and italy with weaker governments, emmanuel macron is the strong man of europe >> what's interesting is the eu published a paper labeling china systemic rival and so, how do you square the circle here in that clearly the eu look at china and its growing power with some trepidation but equally respect because they realize this is the trajectory it's going for but at the same time are also trying to foster these relations. how do you draw the line between the two? >> as you said, it's a crucial relationship there's a lot of deals a lot of potential money, growing middle
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class there. a lot of money that can be done for european companies of course, it's a rival. but they're main trade partners. europe is a main trade partner of china and they have to build this relationship. president macron said it's time for europe to stop being naive roads go both ways, not only about china buying european access we want access to the chinese market as well rather than have joint ventures have greater access. that's the message let's make it go both ways and of course it's a challenge especially given the wider environment with u.s. and china trade tensions and also other further issues like the hong kong protests makes it a difficult diplomatic so we'll watch for potential comments but difficult line. >> delicate line and climate change another topic that comes up quite a lot
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charlotte reed our french correspondent there. now, china has won a wto case that allows it to impose tariffs worth $3.6 billion on american goods and marks the end of a six-year dispute over anti-dumping duties and the u.s. said it was disappointed with the decision, criticizing the wto 's approach as having, quote, no foundation in economic analysis meanwhile, u.s. commerce secretary wilbur ross struck an optimistic note on trade talks with china in an interview with bloomberg, there's no natural reason why a deal could not be signed this month. ross added that special licenses to sale american-made parts to huawei will be issued, quote, very shortly and revealed the government has received 206 requests from u.s. companies, more than originally expected. well, speaking of europe and china inking deals, i want to bring your attention to a deal that's just been signed between china and a german hospitality
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group. the huazhu group from china announced their acquisition of deutsche hospitality this is a group in german the deutsche hospitality group that own a brand which is one of the luxury hotel brands within germany. and this deal has just been announced right now. very interesting from the perspective of a chinese company making some in roads into germany, particularly in the hospitality space. i'm very happy to say that we've got the ceo of huazhu group to talk us through the deal and the rational of the deal jenny, i want to start off by asking you what sort of opportunities does this deal present to you >> well, you know, huazhu has a vision to build a global hotel network. and we have been very successful in ramping up into 5,000 hotels
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in china we also have started our business in singapore and japan. and to get into, you know, the european market, we have just completed this acquisition and this is quite important acquisition for us first off, we really admire the brand as well as inner city and other brands the dh, dutch hospitality has built over the years. we believe, first off, this is a good company portfolio of brands that will increase our coverage in our grand portfolio, especially strengthening us in the upscale and luxury segment and of course, this also is part of our effort to build a global network. >> right so let's just pick up on that point in this effort to build a global network you say it's your first in roads into europe into germany in
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particular this is a deal announced with the german hospitality group do you have aspirations to move into different markets as well, or are you very much focussed on this deal to begin with? >> we believe deutsche hospitality has a lot of potential to grow and has already got into 14 countries with a pipeline deutsche hospitals cover 19 countries we definitely would support dutch hospitality to fulfill its growth plan and we will also bring their brands to asia, especially leverage our strength in china to accelerate its growth. >> do you see this as the beginning of a new trend out of china's companies, such as yourselves, to look towards markets within europe away from, say, traditional investment markets in the u.s. given the tensions between the united states and china that have existed over the last 18 months?
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>> well, from the hospitality market perspective, europe is actually a very attractive market the consolidation level today in europe is only 40% versus in the united states is already around 70%. so, we see, you know, by bringing you know more innovation into this market, we potentially can accelerate deutsche hospitality growth in its existing markets >> and so when you hear that the eu as a whole have started labeling china as a systemic rival when it comes to economic opportunities, does it concern you that perhaps in the future it may be increasingly more difficult for you to get exposure to european companies, especially if the europeans start to put up perhaps soft
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barriers >> well, when hotel business is very different from other business it's a service business. it creates lots of jobs in the countries it operates. so by supporting dutch hospitality to grow and foster in europe, we believe, you know, we are helping creating more jobs in eu i don't see any reason why the government is against it >> the final quick question from you, when can we expect this acquisition to close when is the timing >> we're expecting it to close at the beginning of next year. >> great jenny zhang, thank you very much for taking the time to chat to us today on "street signs. that was jen zhang on the news of their acquisition of deutsche hospitality group in germany today. now moving to the u.s., berkshire hathaway has amassed a record $128.2 billion cash pile.
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warren buffetts firm reported third quarter operating profit ahead of forecasts supporting by consumer resilience which helped offset the impact of trade tensions it's been nearly four years since berkshire hathaway last made an acquisition which the stock blames on rising prices. underarmour is under investigation over claims it shifted sales reports from quarter to quarter to boost results. the sports ware company said it is fully cooperating with the probes but still believes it's accounting practices and disclosures were appropriate ceo and founder kevin plaipg announced surprise resignation just two weeks ago under armour reports third quarter earnings today. mcdonald's fired its ceo steve easterbrook following an investigation over a consensual relationship he had with an employee he said it was a mistake and given the values of the company he agreed with the board that it was time to move on.
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mcdonald's usa president will take over as the ceo and for more on this story and what it means for mcdonald's, head to our website, and get little more detail on the mcdonald's story and how things can evolve for that fast food chain from here. commiserations in england and more on the rugby world cup final in a few minutes (vo) the flock blindly falls into formation. flying south for the winter. they never stray from their predetermined path. but this season, a more thrilling journey is calling. defy the laws of human nature. at the season of audi sales event.
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♪ well, in sports news, south africa beat england 32 points to 12 in a dominant display to win the world cup final on saturday. cnbc africa is in johannesburg i have to ask you, we have seen those scenes of celebrations, of course, widespread across south africa but does this win have more significance to the country given the economic state and also the political state that the country is in right now? >> reporter: well, joumanna, you are correct to pose the question
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and following moody's downgrading of the country's credit outlook to negative from stable on friday, you wouldn't tell that on saturday, sunday or in the ensuing days. south africans are riding high and they seem positive considering the feat that was achieved by the springboks on saturday you asked the question, could this be more important there's a sense that it may need to be. definitely needs good news story. this is one brand the springboks that we are hoping as a country to just turn around the negative flow of news that have been on the world stage about south africa plus, shortly expecting to use this win more to propel his message of trying to get investors to south rf aka. now we're coming to you from the nelson mandela square, this is
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generally where fans gather behind me here on saturday, there were thousands of people who gathered to watch the game here and of course you remember the association of nelson mandel will and the springboks and we're hoping for a repeat of that chapter. >> lot of optimism in the air most definitely in south africa, not so much the case for england where people are still licking their wounds from that saturday match. thank you for the latest from johannesburg despite england's loss, our next guest says the early start in daytime celebrations has been a well needed shot haven't quite recovered from the defeat on saturday. >> i still haven't recovered, i have to say. nice to see south africans celebrating. >> let's talk about the impact on the drinks industry rewind to one year ago was the
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football cup and gave a big boost to the uk economy. are we seeing something similar happen this time around? >> probably not quite as much, but it's great timing. normally after the summer and before the christmas time, it's not a great time for pubs. it's quite, quite quiet, so suddenly rugby has given people a real reason to go to pubs and go to pubs early in the morning. so england won in the quarterfinal and semifinal, very good excuse to stay on and celebrate and buy a lot of alcohol. so it's been a real shot in the arm definitely for the industry. >> when people go to the pub that early, i know the answer to this question, many people out there will drink beer 8, 9 in the morning, but i'm expecting a good chunk of the people also ended up drinking coffee as well would that give somewhat of a tail wind to the coffee sector as well in addition to beer? >> a lot of pubs are investing in coffee and the reason is because the nation loves coffee. coffee is on its way to
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replacing beer as the most popular drink in the nation. so i think coffee will have done very well. we have seen from our data that a third of uk people are trying to limit or reduce their alcohol consumption. it's a lot of people so not everyone would have been drinking alcohol in the morning. but i think the beer sector will have benefitted as well because i think when people are drinking all day, they like something that's not too strong and beer fits that category better than spirits and wine. >> if you start drinking vodka 8:00 a.m. in the morning, it's going down pretty quickly. beer, you have the longevity but again, just talking about the industry as a whole, you mentioned changing consumer tastes and people are attempting to be healthier, the younger generation are drinking less and less many millennials don't drink at all. how is that affecting the pub landscape? >> it's an opportunity for pubs to move more into sophisticated nonalcohol drinks. we have seen the rise of nonalcoholic beers in the uk, nonalcoholic spirits.
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they have to adapt it's not all bad news for the pubs a catering sober, younger generation. >> yeah, but they can't fully compensate for the loss of margins of alcoholic drinks by replacing with nonalcoholics the industry is still under pressure and because rent costs are so high. beating the high streets in retail as well. >> let's not forget that alcohol is very, very expensive on trade to alcohol there's a huge difference. so actually it's most forcing a lot of people to drink inhome. and actually there's great reasons to stay in home. people have netflix and spotify and game stations. going out was more exciting. now for the younger generation often staying in is more exciting. >> you can even order alcohol online. >> absolutely, yeah. >> you can order alcohol to your house. you have it all there. what does that mean for the pub industry as a whole? do you fpt to see more consolidation, more shutdowns,
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bankruptcies in the next year? >> i think we're definitely going to see more pubs closing i think consolidations makes a lot of sense the industry will be under a lot of pressure. i think it's been in a holding pattern the last couple years, but brexit is going to happen at some point probably next year that is going to have a major hit on pubs. pubs is going to be one of the first things that consumers look to reign back when they have to tighten their belts as they probably will do so i think the rugby world cup has been a real good shot in the arm before that happens. >> are you actually seeing the decreased football in pubs, though the reason i ask, you look at the uk economy, the services sector held up pretty well throughout this period since the referendum and whether or not, what type of deal passes eventually is surprising that uk services held up as much people are still spending. are you not seeing that in terms of actual visits and football to the pubs >> people are still going to pubs they're almost ignoring what's happening politically but they can't ignore it forever. and if we do leave, will have
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economic impact. some people won't be able to ignore it like they are at the moment. >> would you say that the industry as a whole has made some form of preparations for brexit they certainly had time for it now. >> yeah. >> we had a couple of deadlines shifted and do have some form of a potential deal that could come to fruition depending on the results of election obviously in december do you think that gives the industry a bit of comfort that it's not going to be a cliff edge brexit, no deal brexit, perhaps looking at a deal brexit with not frictionless trade but close to frictionless trade with the e snurks. >> i think so. i think some of the most proactive pubs will be looking to shift their model a lot more towards a more expeer ren shall experience really making sure they got a lot of quality, non-alcoholic drinks not just alcoholic. the ones that are proactive will be fine, but the rest will struggle
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>> all right we'll keep an eye on that. always great to talk beer at 9:00 a.m. on a monday morning. johnny, thanks for coming in associate director of global drinks from men tell but we head out, quick look at u.s. futures how u.s. markets are shaping up for today there's another day of the green s&p seen opening up about 11 points higher, dow 80 points higher, nasdaq 36 higher this after a positive close for wall street on friday after a better than expected nonpharm payroll prints this is how the week is shaping up positive start for all equity majors today with the asia, europe and u.s. all in the green. that is it for our show. i'm joumanna bercetche stay tuned because "worldwide exchange" is coming up next. as of 12pm today, i am debt free. ♪ ♪
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♪ it is 5:00 a.m. at cnbc global head quarters here is your 5 at five mcdonald's ceo out over what the company calls an inappropriate relationship with an employee. investor optimism is riding high following a better than expected jobs report from friday now earnings once again take center stage. saudi arabia formally announcing what could be a record-setting initial public offering for its state-owned oil company. under investigation, under armour finds itself the focus of a federal probe over its accounting


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