tv Street Signs CNBC November 15, 2019 4:00am-5:00am EST
and only i see her my angel of light. [music playing] >> good morning and welcome to "street signs. i'm joumanna bercetche >> and i'm willem marx >> the end is nigh european stocks go higher after striking a positive tone on a u.s./china trade deal. >> hong kong dives into the first recession in a quarter after crippling anti-government protests and ongoing trade war
>> mixed signals france's orange jumps as it plans to split the tour unit >> fed chair jerome powell tells congress there is no reason growth can't continue but warns that risks remain. >> look at today's economy there is nothing really booming that would want to bust. there is a pretty sustainable picture. i pointed out the risks. those are in manufacturing >> welcome to the show some breaking news for you the health of the global economy is a concern left its oil estimate goal unchanged for 2020 at 1.2 million barrels a day
this report released they see non-opec supply rising by 2.3 million barrels a day, up from 1.8 million in 2018 opec plus countries face major challenges as demand is expected to fall sharply. that does not bode well. we have that vienna opec meeting coming they had talked about saudi arabia and said that the recovery contributed 1.4 million barrels a day. with the production back 0en line that gave a bit of a boost for the out look for the month of october in total oil supply rose 1.5 million barrels a day. we'll discuss that further in
about half hour's time >> the u.s. and china are, quote, getting close to a trade deal according to larry kudlow he said that, quote, that mood music is pretty good and that president trump, quote, likes what he sees but cautioned that trump is not ready to sign off on a deal. the u.s. left all tariffs on chinese goods and the u.s. would prefer a step-by-step process to tariff relief. saying beijing wants to strike a deal with the u.s. as soon as possible >> we are open minded. we always want to resolve this problem than later because we believe it is in the interest not only of china but of the united states but also in the
world. the trade war between china and united states really created a lot of uncertainties and predictabilities i think the world is watching. the negotiators of the two countries have a big duty on their shoulder i don't think it is the intention to wait and see. we want to clinch the agreement as soon as possible. the ambassador claiming tariffs must be canceled before. >> i think the tariffs might be one of the very important issue based on my understanding of the negotiations the trade war started with tariffs and should be ended with the removing of all tariffs imposed by the other side because it is not in the spirit of free trade.
we hope we can clinch the phase one sooner and move on to phase two and three. >> the mood music is good which is what larry kudlow said. the hand over is positive. you can see european markets for the most part trading in green ftse 100 up about 10 points higher today one of the mamgjor stories is te plans of broadband dax is up about aquarter of a percentage point only skirting by a quart some people took that negatively because it lowered the prospect.
cac up almost .6 and ftse mib up around 10 points to china, the export centers are doing well basic resources up 1.4%. te technology up, chemicals, tell comes also having a good session. at the bottom, we've got utilities flattish household sector continue to get hit by the unrest in hong kong there is positivity in the air riotinto up, and more up about 1.3 pes. less on internal domestic news
and more on the sound of the trade talks. >> portfolio manager is here with us in the studio. no end in sight or are there reasons people should be more caution? >> we think the economic cycle continues to go forward. the manufacturing numbers are at the bottom we are seeing the reported growth coming down if you see the manufacturing orders coming out of asia, you can see we are seeing signs of stablization >> you feel like a floor has been reached at this point >> we think we are there barring an escalation of trade if you look at things like new orders, there are only so many
things you can run down your in v inventories. >> do you think the fed cuts have just prolonged the cycle a little longer? >> we think it continues >> the cycle continues with this upswing, the fed feels like they've done enough people have been talking about this for a long time people tend to see that as a signal that the cycle is coming to an end. it tends to lead by a few quarters it will be the third one in this cycle after we saw some of the previous ones. >> i feel like we spent the most part of the year worrying about the trade tariffs. markets have done extremely well comparing to 2018. mirror image
all of the asset classes trading very, very positive. not least u.s. equity markets. does that continue in 2020 in this slow growth but no recession continues. in the beginning of the year in the monetary policy driven by the fed. they've cut interest rates that helps through august to drive up asset prices. we can see the bottoming and growth that would help to drive asset prices higher and taken into the cyclical regions >> do you think that is possible is. >> a lot of this slow down is due to uncertainty with trade. you've got a reason for that to be trade previously, it has been the oil
markets and the eurozone crisis. this time as the trade starts to filter out, it does need to belong lasting deal but needs to be a truce you should see companies start to invest again. >> do you think 2020 will be a year people will trade on fiscal stimulus a little bit of losening could do no harm >> yes, entirely agree you can look in the uk probably signs japan will go in that route at the same time, the up swing could help with that and you could get a boost. the problem for central banks is reaching the limit that is something that we need
to pick up >> recent data has confirmed hong kong has fallen into recession on the back of the process. quarterly gdp shrunk marking the year year on year decline. the full impact is dilfficult to assess as there is no end in sight for the unrest the chinese president xi jinping has spoken for the first time publicly and said the goal is to end the vie laens and backed the use and the city is bracing for another weekend of planned protest. we have this report on the latest developments. >> reporter: road blocks remain in place as the territory has
been gripped by five days of protests roads leading to hong kong university are blocked after demonstrators cemented bricks to the ground there was talk about a occur view which has been dismissed bio officials. president xi jinping spoke for the first time and said gaining order is among the highest priority he urges police to take forceful action in law enforcement as there seems to be no end in sight. back to you. >> coming up next, fed chair jerome powell says the economy is on the right path but he is concerned about the rising government debt. we'll have more after this break.
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orange plans to spin off mobil towers unit to a separate business it could boost the valuation by more than 10 billion euros sticking with telecom's, britain's labor party free across the entire uk this could require the nationalization of the party's bt the plans to upgrade would cost around 20 billion pounds would raise some funds from taxes on tech giants like facebook, amazon and more. nationalization would not be straight forward the requirements of share holders and pensioners would be
respected. >> prime minister boris johnson said he will not guarantee no brexit delay he added there is a huge amount of investment on the sidelines waiting for the uk to exit the eu former lands down chairman told me he sees the opportunity in the uk after brexit >> sometimes you think the expected return risk will be very high. it seems the uk the market hates uncertainty. you've had within the economy.
possibly the airlines but there are places and nobody is willing to commit. >> you expect that to clear up in the next six to eight weeks do you expect a wall of cash to flood in >> it never happens like that. i expect it to become investable by then. i expect it now to become investable >> this is con continuent on a deal that the election will lead to an outcome? >> that would be my assumption
now. if it goes the other way, people will turn around and ay, that is very good news. it is very hard to come up with something that is very bad compared to where we are today >> activist listed several factors that attracted him to the uk at the moment >> here in the uk, i see valuations around the world and because of the brexit uncertainty. valuations here are really attractive the ftse stands out and you add that pound is down a lot relative to the dollar i'm here looking at the value. equally, the uk market has been achieved why are you here at this point
in time. >> i was i had been i ama accelerating the record you are starting to see the m&a. i think coca-cola's purchase of costa coffee speaks to the very beginning of what i think is about to occur you look at the value of the ftse today and some certainty of what will happen with brexit i know that u.s. companies and other global companies are looking to the uk to figure out how to grow their own businesses inside >> we'll have some views on this side of the atlantic the fed chair once more talked about the u.s. economy saying there on a steady path despite risks from trade economy and the
slow of global growth ands it not in danger of going, quote, boast. >> this expansion is on a sustainable footing and we don't see the kind of warnings signs that appear in other cycles, yet, of course you never really know. but i would say we watch these things very carefully and that's what we are seeing now >> powell did express concern about the rising debt. >> the high federal debt can strain investment and reduce productivity aiding the long-term vigor of the u.s. economy and make sure policymakers have the space to assist in stabilizing the economy if it weakens. >> let's bring our guest back to the conversation talking about the cyclical
upswing in 2020. where do you think that leaves the fed? >> as they see growth coming through, that's the reason they are paz pausing. >> what would tip the u.s. into a down turn again? if it does happen, then the coast is clear for 2020? if that starts to roll over, that would be a really good sign for us that makes it more difficult for companies to hire creating more in the u.s. economy.
>> what could weaken the resist tense as you think we've seen that to pushup because the trades would go through. weakening in the global economy again. >> forgive me. i want to talk about the uk and politics we've got a few weeks before december 12. there seems to be a lot of optimism around the pricing of sterling do you think that optimism is warranted. is there anyway to say a conservative win is definitely net positive for the currency? >> it is slightly positive thinking the conservatives get a majority then you do see
probably starting to go higher that would take out the discount we've seen in the last couple of years. once that does go through, we think uncertainty does assert itself and we go lower from there. >> you want to buy fixed income here you want to buy guild. the move irrespective of the election outcome is one towards more fiscal spending why would you buy guilds >> one part is that the expectation is very high because of the move we have seen in the currency if that comes down, that should support gilts. as they are worried about the uncertainty, they should weigh on growth. you've got two points.
you saw the bank with cut points as in may. you would certainly see a rally in gilts or certainly against u.s. treasuries. >> good tip there. multiasset pm from janus henderson. coming up, find out why nancy pelosi thinks the impeachment hearings are already producing evidence of bribery. about that one 'a-ha' moment. science is a process. it takes time, dedication. it's a journey. we're constantly asking ourselves, 'how can we do things better and better?' what we make has to work. we strive to protect you. at 3m, we're in pursuit of solutions that make people's lives better.
france's orange jump after a report that they plan to spin off the towers unit. >> shares rise after the global shipping giant beat expectation but a slow down in container traffic. you had the s&p yesterday just about another record high. positive comments coming from larry kudlow suggesting that mood music is positive about the prospects of a trade deal. all eyes on that phase one and where that would occur if the two sides would meet and get the trade deal over the line the hand over is positive. you can see things trading in the green. ftse 100 about .3% up.
glen core up about 2%. at the bottom, bt, telecoms not doing so well after the proposed plans of broadband cac up .7 and the ftse mib up about half a percentage point. orange is leading things higher. positive comments coming out of that operator. let's talk about foreign exchange euro trading slightly on the back foot, about that 1.10 mark. cable about 1.29 looking at sterling versus euro, we are at a six-month high sterling is back at levels not seen since the beginning of may,
so definitely the sterling strength is being expressed versus the dollar. a quick look today, the end about .2 percentage point softer on the day as well we had some what of a lack luster session at the end of the day with the session ending flat today, it looks a bit more positive we have the s&p up about 10 points and nasdaq up about 35. a good test for how u.s. consumer spending is going it has been one of the bright spots of the u.s. economy. >> the devastating testimony corroborated evidence of bribery, that was the first public comments of house speaker nancy pelosi we have more from washington
>> the first round of public impeachment hearings is in the books but who won the day depends on how you ask >> the devastating testimony corroborated evidence of bribery. >> there is nothing compelling >> ambassador william taylor testified a staff member overheard president trump pushing for ukraine to investigate joe biden during a phone call to gordon and he said president trump cares more about the investigations of biden. further shows what the president wanted above all else was getting the investigation. >> the ambassador will face question about that call and whether military aid to ukraine was delayed. answering republican complaints that other witnesses didn't
speak directly >> hearsay seems to be the base of most of these >> politicians and the public will hear tomorrow from the ousted u.s. am bass door to ukraine that testified she believes she was the target of a smear campaign by the president'sallies and felt threatened by the president's comments of her. president trump tweeting today that regular people watching this won't see a reason to impeach him. >> also the staff member who overheard that call is scheduled for a closed-door deposition tomorrow the health of the global economy remains uncertainty despite recent news of the u.s. trade talks. that has left the estimate for
oil demand growth unchanged at 1.2 million barrels a day. noting a rising disparity between the calm oil bearing today and during the third quarter, global oil rose at a faster face. >> just down the road from us, he made the long journey over here i want to talk about the iea economy. they did note a big up tick in demand for the third quarter frmt is this just seasonal or are we on to something here? >> you had weather events at the start of the year that depress demand the data that come out of china was stellar. the u.s. numbers were relatively strong europe and india were much
lower. the demand picture is relatively benign the real issue is really what is going on on supply the numbers that came out suggested a 2.3 million barrel a day increase out of non-opec now that would be relatively bearish but let's bring in saudi arabia to the mix. saudi arabia has given the market a free foot that is kind of the way the market is treating that. that is the real issue that big increase is from investment going back to 2014 in places like norway, canada and brazil >> is this because they are coming out with aramco and they have to keep production at a stable level >> that's the way the market is treating it.
i'm not going to go out as far as a free put. they'll try to stabilize the market when we think about their ability to do that they are looking at declining cap ex in shale and an increase in back in 2014 in the long cycle production that hey, they can cut it and it begins to fade out when looking at 2021, 2022 which is why we see more stable oil prices further out >> you are expecting the growth in supply and we've seen high levels of stockpiling in the u.s. very interesting comment talking about that he had heard there would be quote, fast deceleration if that turns out to be true what does that mean for the investment or the global market
next year? >> i would argue what is going on in shale is more reflective of what is going on in manufacturing globally they built too much and they were overlevered what we have seen is that they've been shut down in their access to capital. the equity markets have shut them down. that is part of the reason that cap ex is shut down like that. what does that leave us? overweight to commodity, neutral to debt. you have to rebalance that mix going forward. let's put that in the context of the comments that the sharp declines in shale. you grew 2.1 million barrels per day in 2018. our forecast going forward is
for 550,000 barrels a day. that's a huge drop that's what they are reflecting and banking on in terms of making these cuts. >> a quick question about balancing. is it the politics around trade or what the distinction would be >> our oil market is sensitive to that point. >> i'm going to throw a third one around there i put that one as driving a lot of that lack of access to investment i put all three of these as being part of the mix. there is a lot of focus on trade. i talk to a lot of clients and go, we'll get the trade deal i go back with how do we ever get the pop. in terms of thinking about the impact there
the trade is still relatively isolated the goods are still a small part of the economy the geopolitical risk are impossible the one risk is impacting the flow of capital into the manufacturing sectors, oil being the largest. >> quick question on the upcoming opec meeting, are you expecting cuts to continue >> the base case is rolling over going back to the idea that saudi arabia has given the market a free put. the view that they could identify any type of surplus >> in terms of your oil forecast, where is it? >> i want to emphasize, even though we are $60 a barrel the front of that curve is
backward this thing being flat, 17.5% return we want to belong on oil >> so you can roll up nicely on that curve great. thank you for being on the show. >> coming up, the battle of the bats and faangs and key issues as we get ready for cnbc's east chest. sfx: upbeat music a lot of clothes you normally
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joined by two guests how do you think 5g will be changing our lives >> there is big focus on quality video. interaction in personal communication and commercial enter prizes as well health, public trading >> this is fuelling the development of iot, the internet of things. 5g has an opportunity to add significantly to the dig call economies of all nations it is even more important that nations when they consider going down the 5g path, that it has to be a collaborative effort. >> the use of 5g for augmented reality, the shopping experience to get people off buying on line and into the shopping centers.
>> thank you very much >> there will be plenty of discussion on the ground at this year's east west itself. >> for more on the investment outlook, i'm joined by julian rogers and neil robson the technology story has been fascinating. it feels as though this year, we've begun to see real discertainment >> it is a symptom of risk off that those running naked get discovered wework is an example of that those with the lesser capabilities might be able to
hide that for a while. it is in effect, you'll find those business that would never make money will fail >> you are seeing some degree of competitive advantage for the business that they could gain market share and thrive. >> have you observed any change in the way the chinese community thinks about the outside world because of that experience of the trade debacle with the united states. >> they have a history of acquiring businesses but now actually coming and buying businesses what they are doing here is saying we can develop this ourselves and take time but why reinvent the wheel >> do you get the feeling that
europe has the opportunity here to attract that money while there is this ongoing disagreement >> we are vesting here because mr. trump is being difficult >> i'd like to thank our guests and for those of you attending east tech west, i'll see you there. >> let's take a look at the bats and faangs with big stories from china and the u.s. let's start in china, ali baba's chairman said the chinese territory future remains bright. this comes five years after the 2014 ipo in new york the largest ipo of all times so why are they coming back to the market now >> there is a number of reasons,
they came back to hong kong. the reason they didn't list in hong kong is because the stock exchange would not allow the share class. that's why they went over to new york those reforms did allow that to happen they are coming back to fund strategies and drive growth of users and drive technologies that would help businesses undergo. that means the company will continue to invest in areas from the core commerce to food deliveries they'll be investing in the cloud computing business which has seen tremendous growth now making ali baba one. cloud computing trades ali baba is going to issue 500 million shares with an
overallotment of green shoe option 12.5 million will be reserved for retail. they do have the option for 50 million to investors as well the retail pricing will be 188 hong kong dollars just over 24 u.s. dollars the pricing for that will happen by the 20th of november with trading expected to start on november 26. it is an interesting time. we'll give a boost for the hong kong market which will come under pressure given the protest there. a ali baba doesn't need the cash but perhaps this is the right time to do it. it has come off the back of a record single's day shopping event. the cloud is firing on all sill anders back to you. >> thank you for bringing us the
latest an ipo we'll be watching closely. huge ramifications on the tech space. >> a probe into google's business is being expanded to search and android 50 state attorneys general the texas attorney general is leading that investigation backed the idea at a recent meeting with several of his counterparts a spokesman made a statement that read in part, at this point, the multistate investigation is focused sowlely on on line activity. and here to fill us in on some details. how does the defendant of defense respond to this filing
>> interesting we know that microsoft was awarded this jedi microsoft cloud. this morning, in the statement we got, they accused the department of defense of bias. that alludes that president trump has alluded to being against amazon because of jeff bezos. he wasn't actually involved in the decision this is really what we are seeing about how political decisions of ceos being involved in tech and the cross over
between tech and government. this will be an ongoing debate between microsoft and amazon they want the government's business >> we won't see this from you because this is your last day in london you are going to washington. we are really going to miss you and having our air time talking about tech with you. >> it is the best. >> it is hard to go. >> you are still part of the family we'll be watching you from abroad >> i'll be watching from abroad too. >> if you are up that early at 4:00 in the morning watching "street signs. thank you for everything you've done here. >> more from china and trade and tech from next week at our very
own east tech west starting on monday and an up tick of global ocean tanker demand and posted better than expected third quarter profit the u.s. and china are, quote, getting close to a trade deal according to larry kudlow. he told the audience in new york that, quote, the mood music is pretty good and that president trump, quote, likes what he sees he cautions that president trump is not yet ready to sign off on a deal we are joined now by the trade war containers don't lie >> i want to ask you about the way that the administration has talked about trade and how it has been reflected in the ports you have visited >> there is so much going on
from both sides. you really have to drill down on the containers actions speak louder than words. it is about the containers when you are looking at the commitment from china, they are not buying as what we've been promised as what we are winning. are we winning this trade war. >> what patterns or change in patterns are you seeing? let's not forget there has been a tit for tat there on the aluminum steel tariff. it is all about supply and demand what we are seeing it is quite amazing. recent data came out that if you look at the chinese imports, they are going down. where are they going to go
well they are going to europe. when you see the prices versus the rates you are seeing from china to the u.s., it's an expect inverse that's what we are seeing. that's the tea leaf of the trade war. >> do you get the sense that the actions of the trump administration designed to the trade balance could end up by forcing them to intensify efforts in new markets >> exactly, you hit the nail right on the head. president xi has been laser focused. standing and going forward with the belt road initiative with china 2025 they have been expanding with other countries and been able to expand other deals whereas with the united states, the bucket china contains for us is very
large. it takes about seven vietnams to equal one china. it is a long-term commitment even if a trade deal was in fact signed tom >> our colleague, the author of trade war, containers do not lie. >> saying no simple solution despite the mood music the three majors are going to open up the territory. that is it for ourho sw today. i'm joumanna bercetche >> and i'm willem marx "worldwide exchange" is up next. into their business. virtualize their operations. (woman) and build ai customer experiences.
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