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tv   Street Signs  CNBC  February 14, 2020 4:00am-5:00am EST

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i'll never be the same after this. welcome to "street signs." i'm joumanna bercetche these are your headlines germany grinds to a halt germany's biggest economy stag nates with no growth and increasing worries that the coronavirus could send the country into recession a rough road for renault slashing its car making for 2020 and posts its biggest loss in a decade we hear from the acting ceo
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later on cnbc. rbs posts a forecast meeting profit the british lender dials down the return target for the medium term >> looking for the market and what feels like a good return. we believe 9% to 11% represents a good share for shareholders. and a concern the results from the coronavirus will be felt for mores we'll talk to the ceo later on cnbc the story that has been gripping markets, chinese officials say over 63,000 people have now contracted the coronavirus,
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while 1,383 people have died japan has confirmed the first fatality and over 200 people on board a cruise ship have been infected let's get out live to hong kong with all the action. emily, give us the latest on what is now known as covid-19, coronavirus. >> that's right. we are keeping track of the developments of the virus. here with the latest tally of over 64,000. as far as that cruise liner in japan, they are still in the process of testing 3,700 on board. for the first time in four days, they are going to start letting people off those that tested negative for covid-19 and those over 80 years
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old. they have been cooped up there are eight hong kong people on that ship and they are infected a daily press conference held here in hong kong. world health organization, final members of a team are headed to the epicenter this weekend and continue this investigation there. the w.h.o. saying how big is the iceberg? they are looking at the new way china is tallying the numbers including those clinically diagnosed into the confirmed case only for the area live pictures from the
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government offices and department of health chief executive will come out to meet the press we'll be listening to see what she announces there. last time she came out, she announced a mandatory quarantining from anyone coming from the main land, the bay and the bridge any new measures could be announced as soon as her next press conference less than one hour from now. looking at the reaction here wrapping up the week, for china, the first positive week in four weeks. the positive gains up almost a half a percent we were rallying something like 200 points and looking at strong resist tense of 28,000 a good gauge of consumer
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spending proxy is alibaba and commentary on the impact of the coronavirus outbreak saying that china he's economy will be impacted we are looking at companies as well, that is sa sa that is announcing layoffs and cutting pay between 10% to 40% profits up 2.7% at 1.50. happy valentines day back to you guys >> thank you for the break down and update for more on the financial impact, s&p global has warned china could see its credit rating downgraded.
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it could come if beijing pursues heavy stimulus measures. injecting $173 billion in liquidity, cut rates and issued special loans to companies fighting the virus the ims has welcomed china's effort the fund also says they are confident the chinese economy will hold up in the long term despite taking a hit in the short term as the disease has forced the company to be halted or reduced explaining beijing has resources to, quote, meet this challenge for more, we'll speak with the imf managing director around 11:40 cet. tune in to that as well. a heavy interview morning for us
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here recently revising predictions. the economic damage is likely to be larger than sars. analysts have revised the first quarter forecast to 3.6% that is down from about 6% before coronavirus jp morgan is revising the forecast over the past two weeks. capital economics is cutting fraction to 2% 2% since there is signs the activity will drag on a couple more weeks how about germany? >> deutsche bank warns the coronavirus could send them into recession this year. hopes rest on a bounce back in the economy. disruptions to global supply
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chains will significantly dent output in the world. it could shave one percentage point. damage to worsen as it extends to march mission estimates of a 0.1% rise weaker private consumption on the economy already under pressure from the fallout of the u.s./china trade war in the recession as the survey does not fully take into account the impact from the coronavirus. happy to take that in. talking about your piece now, great to have you with us on the show let's talk about the german gdp numbers. not a really great number. >> not a happy valentines day. >> no. >> stagnation in q4. the economy is still split
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between a relatively robust demand consumption and spending added a little bit they were kind of resilient. you've got that drag from the net trade and stock. >> something that emerged and has become a bit of a problem in germany. this is something that is expected to happen we see weakness and demand drop off as well. is this not the sign of weakness that would spill over to these areas too. >> we've seen the spill overs. if you take the december data for retail, they were dropping by 3% year over year, we've seen some of that weakness from the external factors spilling over to domestic services
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what we've seen is for example retail space that has been revised significantly up we need to take the data for december which dragged lower the data for the whole quarter with a pinch of salt because we've seen those revisions before. not a kuwait -- quarter we've seen the globe al cycal c going to turn up >> it was on that path before the coronavirus hit. >> we were talking about the research piece saying that you expected to shave off 0.1% of german gdp it doesn't sound like a lot. it is quite significant. how quickly can the economy
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recover that loss if things were to pick up and the coronavirus were to subside? >> pretty quickly. the actual drag we see currently is not 1% but 0.1% so a little smaller than that number it depends on whether that is contained. we could see that snap back in the second quarter you could imagine if there is a strike in a country and all the factories are shut, you could imagine in that quarter that follows, you have a snap back and it depends on where you are heading with that virus. >> you have to associate with that impact. there seems to be a bit of a difference between hard data and soft data in germany pmi numbers are pointing to some soft signs do you place more weight on the
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gdp data at this point >> i wouldn't say more but in terms of what is going on currently, you have to take the data a little bit more closely than the hard data as you say, yes, pmi numbers have been better of course, we still see that drag from the manufacturing sector that drag is getting less and less and also auto data over the quarters has been a lower drag so it seems like we might be getting closer to that point where we actually get a bit of pickup of course, under the condition that the coronavirus doesn't get seriously worse than the sars. >> what have you pencilled in for german growth this year? >> 1.6, 1.7, that's becausicly becau
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basically because we have a very bad quarter. we expect growth to return to trend. >> at one point, 1.6, 1.7% for germany. let's talk about one of the corporates there industrial gas giant linde, first full year of earnings after a major merger targeting further expansion. it aims to boost efficiency and increase prices. linde ceo spoke to cnbc in an exclusive interview. >> you mentioned one number, the german production number is worrisome. i think things like trade disputes did not help. you can look at china where
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industrial production was already decelerating they used to run higher midsingle digits it is slowing. coronavirus will have some effect on that number as well. i can't think of a country as i go around the world where the rates are actually higher going into 2020 than 2019. what that means is we have to find growth where we can more resilient market. i think decarbonization. we have more self-help from our merger where we are able to combine technology and engineering capabilities and leverage that across the global foot print >> visibility is clouded through a couple of things like the coronavirus and trade disputes
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can you tell us how much trade momentum you've had since the beginning of the year? >> i can't tell you much momentum since the beginning of the year you mentioned coronavirus. many people are talking about that we have about 2,600 people working in china fortunately, none of those people have been infected. about 1% of those people are in wuhan which was the initial flash point for the disease. we have seen growth slow considerably we have seen prioritizing to areas of need like hospitals and oxygen for hospitals it is unpredictable how soon they'll return to a normal state of affairs in china. it is something we are watching ever day as of today, they are coming back very slowly from the lunar
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new year >> earlier speaking to linde, one of the german company that had reported in the last 24 hours. if you want to get involved in anything, tweet us @streetsignscnbc or directly. we'll talk about no love lost on this valentines day. we'll tell you more about who is filling his shoes after the break. beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network. because beyond technology... there is human ingenuity. every day, comcast business is helping businesses
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welcome back to "street signs. european markets are sort of flat lining around zero. not a lot of movement in either direction. worth pointing out the stoxx 600 as a whole continues to make fresh record highs while we are trading on the back foot, we are performing quite well a positive week. i want to turn your attention to
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sectors as well. we've had a bunch of different earnings out of banks and pharma rbs, astrazeneca chemicals down 0.4%. luxury getting hit tech down about 0.3% that is the picture but a positive week for european indices. as tr-- astrazeneca warns te outlook will be felt for months. t we'll speak to the ceo today at
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11:10 cet. credit agri has posted a profit. france's second largest bank was up 10% off a strong performance. the bond underwriting business did particularly well. however the lender has slightly downgraded remember the investment banker that left ubs was going to take on a job at santander. that fell through. he submitted a lawsuit we are getting news saying that he has rejected the lawsuit against santander.
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that is the news that has just come out in the bid to file a lawsuit against santander for the discussions when he was up for the ceo role rbs posts a profit rise beating expectations the majority state-owned lender plans to scale back its investment bank having a number of risk weighted assets. rbs announced, it will rename itself as a fresh strategy under the new ceo. i spoke to the cfo and asked her how the loan growth landscape has evolved and increased certainty around brexit. >> it is interesting it is a story of many parts. if i look at the mart story, we
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look at 10.2 million in mortgage loans, 15% market share. huge growth in that business strong story within commercial and lending businesses as you look to the smaller, midcap level, you know it grew over the year as well what we are seeing now, the election is behind us. there is a little more activity and interest mortgages remain very strong that was a very nice start of the year of financing, they are coming out to get their financing started. >> so there are signs of this brexit bounce? >> there are signs it is one of those, we like to call them green shoots but the mortgage business remains very strong. >> but the mortgage business also is a competitive business >> eating into our margins has
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for others what we can see is large volumes we start to generate that is a result in technology and our people making it really simple for our customers to switch to us or renew our mortgages with us. we need good growth and that volume, income from that volume growth offsets that margin >> you pencilled in growth of 1.6% but also a rate cut out of the bank of england? >> it will peel back a little more in terms of giving the guidance it is 170 million pounds on the
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income we'll see how time progresses but we feel like there is more likelihood of a rate cut >> worth pointing out that rbs shares are right at one, down 6% switching now. a row erupted between his predecessor. javid resigned after he announced replacing all of his board. he later announced a decision to step down. getting back out to the european analysis looking at the political ins and outs but i'm interested in how you see the fiscal news.
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when the news came out, the knee jerk reaction was to sell off for investors accounting for a larger fiscal boost whether the chancellor was on board or not >> exactly that's what we understand as well they want to take full control of whitehall and javid was one of the last that was standing up to them and saying, we want it from a different way the second message is of course because as they want to throw money at the economy with the brexit election now behind and so many promises involved in this election. basically what they will do is ramp up fiscal spending even more if javid will stay in
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place. >> the trajectory is still one of a deficit that is financed by a wider deficit. do you think that is a tricky predicament? >> for the short term, this is kind of positive kind of like trump did a couple of years ago you think there is idle resources level you've got about $100 billion spending. most of that will turn out into high inflation at the same time, if you raise that to 3%
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at some time, it is going to happen probably heading back to 2007 when that deficit was rising short term, that should lose growth short term, a little bit worry some what type of impulse should we turn >> probably bigger than one we turn to suppliers. of course that depends very much between the deal struck between the uk and the eu at the end of this year. the multiplier, probably plus one. i would have expected higher taxes.
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they wouldn't have such a big multiplier to offset it it doesn't seem that they want to go in that direction >> we have to see what is in store for march now. thank you for joining me today european economist also coming up on "street signs. a troubled alliance. slumping sales we'll cross live to charlotte in just a few moments
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welcome back to "street signs. i'm joumanna bercetche these are your valentines day headlines. germany comes to a halt. reporting no growth and increasing worries that the coronavirus could send the country into a recession a rough road for renault slashing profits for 2020 and
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dividends as nissan posts its biggest lost we'll hear from the acting ceo rbs posting profit for 2019. the shares see red as the british lender is buying down its target >> looking at what we are doing for the market and transition for that we believe 9% to 11% will lead to a return. the british drug maker issues a cautious forecast. we'll speak to the ceo later on cnbc >> let's see if investors are showing love for the markets
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today. they seem to be pretty mixed trading in the red as we have been talking about two names. rbs shares down more than 6% others down 2.5 percentage points stay tuned for hearing from the ceo. adding to the uncertainty with the chancellor resigning yesterday. questions about what the fiscal policy will look like going forward. trading slightly positive. german numbers coming in a little earlier a tad before the forecast. germany has skirted the recession coming in at zero percent growth with some weakness this timearound
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it has been one of a stronger dollar the pound is right above 130 that is the picture for the pound. how about u.s. futures we are shaping up for a positive session. s&p 500 seen opening in the green. again, going from fresh record close, to fresh record close nissan shares fell after the japanese carmaker slashed annual profit guidance by 43% in its second profit warning in three
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months the stock hit its lowest level after the group posted its biggest quarterly loss in a decade the new boss said that a proper recovery was unlikely this year. the company looks to rebuild in the aftermath of the carlos ghosn affair renault has posted its first annual loss in a decade and cut its 2020 margin goal as the french carmaker struggles to come to terms with a slump in demand reporting an annual lost of 140 million euros. charlotte is live from the renault headquarters with a special guest. a quick one, investors are not taking today's results well at all. can you give us more detail? >> good morning. yes, the shares in the red this
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morning. i'm joined by the managing director to discuss all of this. the results this morning, the market a little disappointing there. are the results reflecting specific wren at or the car industry more widely >> it is a general industry problem. there are a number of issues with renault some of the compliance on co 2 for renewal are more critical. this makes the emerging market exposure that did not help >> you wither in a meeting a bit earlier. coming into place in july. the acting ceo we mentioned higher restructuring cost. do you think they are taking the right steps to address the issues that they face. >> they should have started
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earlier. it could have been done in a different way. when you see the right dictions being taken now, it will take some time. >> is 2020 the year of make or break. can they a survive without the architect and creator? >> in 2020, you need to have the two sides really want to work together we saw a lot of reluctance in the past in scale and size, they have to work together in nissan and renault side with just a willingness to work. that is the challenge. >> one of those is the participation in the french stake with 15% for renault >> it is that issue of governance at nissan had been some what
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addressed by management at both sides. part of it is the overbearing influence of the french state. that is not changing as far as i can see. >> if we look at 2020, there is a potential of the coronavirus renault said it is not taking that into account in the target. how much concern do you have for renault and talking about potential effects on smaller suppliers that could collapse. >> most are not a moving target. within the alliance at nissan, they depend more on the earnings i think it is another issue that is more difficult to appreciate in terms of the components made in china sometim
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sometimes with the suppliers that found their way to the vehicles trying to figure out whether it is supply production >> they announced a sense from analysts that the free cash flow guidance is too high do you share that view >> it is not too high. there is a caveat. they are trying to generate free cash but that is before restructuring outflow. it would suggest it would be negative which shouldn't be a huge surprise. that is the moving part. always difficult the drivers of cash flow of earnings and if managed aggressively if you put all of these together, it looks like they would be negative. >> would you buy auto stocks or
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are there others you refer >> it is difficult to actually build today. we tend to have a preference for the merger that in many ways addresses issues for the industry as far as european coverage is concerned, we focus on those things >> thank you i'm pleased to say we'll be joined by acting ceo we'll throw you to this interview at 12:15 cet, so stay with us. >> thank you very interesting day to be interviewing the acting ceo of renault. the force is with amazon for now. the tech giant scored a temporary victory after a u.s. judge told microsoft to halt all work both microsoft and amazon were
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competing on the contract joan as the jedi. amazon was seen as the front runner but the defense department went with microsoft amazon says that president trump, quote, is trying to screw over the company because of a tiff with own ever bezos shares in microsoft fell on the news but starting from a very, very strong and solid performance for the year impossible for me to do my job. those were the words u.s. attorney general said president trump's tweeting impacts his work and said that the president should stop tweeting about the department of justice. this comes amid fierce scrutiny.
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>> attorney general barr telling president trump to back off. >> public statements and tweets made about the department, about cas cases pending and about judges for whom we have cases make it impossible for me to do my job >> barr speaking out after the justice department overruled its career prosecutors to push for a lighter sentence for the president's convicted friend roger stone. saying he made that decision before the president's tweet attacking the original sentencing recommendation of 7 to 9 years >> i will make those decisions based on what i think is the right thing to do. i'm not go to be bullied or influenced >> barr saying he never discussed sentencing with the president. later president trump praised
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barr >> bill barr is a very good man doing a good job >> post impeachment, the president remains concern. >> this is serving his political interest >> also feuding with his former chief of staff john kelly saying decorated veteran did exactly what we teach soldiers to do before being pushed out of his post adding, we teach them don't follow an illegal order, if you are ever given one, you raise it to whoever gives it to you and then to your boss. trump firing back that kelly missed the action and just can't keep his mouth shut. the u.s. has accused huawei of stealing trade secrets and
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conspires with iran. federal prosecutors announce charges against them and two subsidiaries and says the charges were without merits and an attempt to damage their reputation arjun is here with more. this story rumbles on. >> this is really an expansion of the indictment the doj filed last year against huawei in which it accused against the company and its ceo of bank fraud. they've expanded now to include moral gagss of intellectual profit theft they say has happened over a decades long effort they say the company has engaged in the terms and they've had
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access according to doj to things such as interpreter net root source code and the department of justice argues that this is allowing huawei to cut costs and leap frog to become the big player it is today. the other allegations is that huawei has managed to use subsidiaries to evade iran and north korea. huawei has denied all of these and says this is u.s.'s attempt to irrevocably damage their representation and recycled dispute over the past 20 years in cases that have been litigated and settled. that is their argument >> this has been an ongoing issue. the way u.s. is treating huawei is very different from european
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allies a story emerged that the u.s. encouraged investing in competitors of huawei as a means of getting into that space is it the fundamental issue that u.s. doesn't have their own 5g capabilities and why don't they? >> it is made up of a lot of different parts. we are talking providers, knowing that call to the parts and the radio access network allowing us to get to the 5g technology nokia and ericcson have been dominant seeing them in safe. they haven't had the network apart from the very tiny amount.
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the u.s. was blindsided by the rise of huawei so quickly and in the sense that it relied on the technology and that it derails that play. >> if you look at the likes of intel, qualcomm and nvidia and companies like cisco as well play in the 5g space the u.s. doesn't have someone that can provide that critical networking infrastructure. that's why you are seeing these calls for investing. how that happens right now is extremely unclear. whether that even gets past the european commission. this no doubt will go to the european level commission and scrutiny if it ever did happen >> we heard yesterday, the cisco ceo ruled out the possibility. one company saying this is a no go for us. >> it is not viable. >> very interesting story. no doubt we'll be talking about
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huawei in coming months as well. if you want to get involved in the conversation, anything we have discussed today on the show, bank, earnings, gdp, tweet us @streetsignscnbc. or tweet myself or arjun coming up, an exclusive interview with the director of energy at e s.thu. tech summit stay with us ♪ ♪ ♪
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♪ ♪ don't just plan to retire. plan to live. an annuity helps cover your essential monthly expenses, so you're free to live the life you want. find out how an annuity can give you lifetime income
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welcome back to the show the u.s. secretary says the coronavirus is unlikely to drive oil prices up further but warned that there are signs the impact is increasing. oil not immune big decline in the price of oil. what did the energy secretary have to tell you
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>> that's right. more significant decline than any geopolitical event we've seen to this point i had a chance to sit down with an exclusive interview i asked him how he feels this is going to impact global markets and u.s. production. he said, i can't speak for opec but they are going to continue those conversations. we understand they are not as relevant as they once more he spoke on the subject of russia and whether or not that agreement is going to continue to remain in force as a result of everything we are seeing. i did have a chance to ask him specifically about u.s. production this is in no way going to damp enour production he said that number could go up in 2021. specifically to what is happening in europe.
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the l&g market, the u.s. has been trying to offset l&g. one of the subjects is defense a european defense and whether that should be taken more seriously given what many folks consider to be a threat from russia i asked about a disconnect there. there is some sort of a disconnect there >> we have heard energy security is national security the two go hand in hand. we have argued with the supply i was down in portugal and we looked at a beautiful port there. we looked for a gateway to come into the southern part of
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europe it is important that countries build out infrastructure that is what is really lacking today. we need a pipeline that runs from portugal into southern europe that allows this diversity of supply to come into europe if we are able to convince them that this is an important project, you will see true security for all of europe >> so 56 years of the conference i've been attending. certainly reflecting on in his comments saying we'll continue to support the market in asian markets and european markets can you really say you need traditional military responses to a potential threat like russia when you are also opening the door to russian entities
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another big part of the conversation we'll speak exclusively to the imf managing director. we'll be speaking about the coronavirus, the situation in lebanon and much more. >> looking forward to that one that is hadley live in meunich >> that's it for the show. i'm joumanna bercetche "worldwide exchange" is coming up in a few moments.
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it is 5:00 here is your "five@5." wall street looking to end the week on the note of another holiday weekend. and massive uptick of the number of coronavirus cases and deaths. and trying to get back to business on the retail front no laughing matter, an investigation into smile direct club has shares sinking. the top love songs of all time ranked on this valentines day, february


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