tv Street Signs CNBC April 20, 2017 4:00am-5:01am EDT
welcome. you're watching "street signs." i'm carolin roth. these are your headlines. oil prices rebound after their worst session in six weeks. saudi's oil minister says an output cut extension is still on the cards, while his uae counterpart tells cnbc prices are still far too low. >> as an average, i think it's tough to go to 60, as an average. but in a single day can we see 60 or a little bit above 60? yes, we can. publicis reports better than expected first quarter underlying sales sending the
shares higher, as the ceo tells cnbc he's optimistic about the outcome of the french election. >> the worst nightmare you can imagine is a second round where you have marine le pen and jean-luc melenchon. that's the worst case scenario. i still believe reason will prevail. shares of man group moving higher after a 10% rise in funds under management in the first quarter. orders under pressure as large contracts remain elusive for abb, but the swiss industrial titan says it sees the first signals of stabilization in some markets. good morning, everyone. it's thursday, you're watching "street signs." we have another jam-packed show for you. let's look at the equity markets in europe. the stoxx 600 is close to the
flat line, just inching higher to the tune of 0.1%. let's show you the markets one by one. a bit of underperformance in the german equity market, only off by six or seven points. the ftse 100 off fractionally. the cac 40 off by a half percent. that's due to some of the earnings we got. we'll get to that in a second. looking at the sectors, household goods are outperforming, same as food and beverages, that's earnings related. we had updates from debenhams and publicis. i want to draw your attention to the fact that oil and gas are underperforming despite the fact we have seen a rebound in oil prices. brent crude up by 0.4%. wti crude up by a half percent after the worst day in six weeks for these prices in yesterday's trading session as a result of that surprise build in gasoline
inventories. seeing more speculation about an extension of the production cut, that's boosting oil prices. it is a busy day when it comes to the corporate front. let's get back to publicis, shares have hit a three-month high after the french advertising group's first quarter sales top expectations. nancy is in paris. the company had issue with large orders or large accounts in the u.s. is the outlook looking any better there? >> as you point out, a lot of the bad news around the accounts losses are old news as far as investors are concerned, that's why you're seeing the stock move higher. analysts saying they there were hardly any new incremental negatives, and sales growth were better than expectations. that is helping optimism. i had a chance to speak to the ceo and asked him whether or not
this would return to positive organic growth in the second half of the year. he is convinced they're on a positive that jerajectory towar achieving more normalization in sales. when you look at north america, the sore point on the quarter, negative growth of 5%, that was far worse than the home market in europe. i did ask the ceo about north america, what the big drag was here and whether or not it was a lingering concern. >> most of our issues are coming from the u.s. this is the mast problis the pat we call the media pollution. when it comes to the trump administration, you have a disconnect. you have on one hand euphoria in the markets, where everyone is happy and the market is going very high. while at the same time the growth, the underlying growth is still quite low.
2% growth in america, in the usa in the first quarter is very low. so, people expect that the two fronts will join, we'll see growth picking up in the second quarter of the year. we are still expecting this. regarding ourselves, we believe we'll have strong growth in the u.s. starting in the third quarter of the year, and mostly in the beginning of 2018. >> the ceo of publicis saying he expects growth in the u.s. to pick up. but drawing an interesting distinction between some enthusiasm surrounding president trump's pro business reforms that he hopes to get in place and the disconnect between the actual growth. they expect that disconnect to narrow and that should support growth. you can't ignore the changing habits in u.s. media buying. that's why some analysts are holding out hope that the overall environment will improve
in north america. right here in europe, a bright spot, especially when you look at the organic sales growth in france. that may strike some as rather curious part of these results given the great uncertainty that hangs over french businesses as we get closer, just days now for the first round of the election. i had a chance to speak to maurice levy about those uncertainties and whether or not he was concerned that a french election surprise when you look at the polls today could rock sentiment going forward. >> the situation in france is pair paradoxical. normally in an election there is a wait and see situation where most advertisers are retaining a kind of retention of the investment, and there is a slowdown of all investment. for the time being we are in a strange situation where we see that ceos are confident despite the fact that we are vowed to
enter an unknown world. there is for the first time four candidates which are in the same spot. same ballpark. we don't know who will be the true winners for the second round. >> so, maurice levy there hitting on the great uncertainty that hangs over the french elections. despite that he's not seeing big advertisers clinch on to spending. he's saying business confidence is resilient so far. but that's precisely why the results of this first round on sunday will be crucial. when you look at the polls, four candidates still very close when you look at the margin of error. later i spoke to mr. levy talking about the various scenarios. he pointed out clearly if you were to get a surprise in the form of a mr. melenchon and marine le pen making it to the final round that would be a nightmare scenario. but mr. levy, like many business
leaders, are optimistic that that will not prevail. >> nancy, sterling work as always. thank you very much for that. speaking of sterling, let's look at what the pound is doing against the u.s. dollar. we saw that big spike two days ago on the back of the unexpected announcement of the snap elections june 8th. james andrews is the head of investment management and joins us now. you said you thought that move in the pound sterling was counter intuitive. a lot of people thought the snap elections will lead to a softer brexit. you don't think so. why is that? >> i guess i'm coming from a slightly different perspective in terms of we're headquartered in leeds rather than london. there are a few more brexiters up there than here. and we have to look at manifesto. but clearly there are people who
voted for brexit, they're expecting a hard brexit. a stiff line on immigration, for example. therefore can she really get away with softer brexit? therefore is this actually just strengthening her hand in terms of -- and timeline more specifically so that when hard brexit potentially comes, she's free and clear for another two, three years before having to go to election again and the economy turns around. i guess i'm not as confident as the markets seem to be in terms of a soft brexit being done and dusted now, given how many voted for brexit, given the sentiment behind that brexit vote. >> look, maybe you're right. because we're just sitting in our london bubble, you're outside that bubble. maybe that's a good perspective. do you think that this pendulum could actually swing for people to actually realize maybe this will be a harder than expected
brexit post the snap elections and that would lead to selloff in the pound sterling? >> quite possibly. there's been a short squeeze here. people short sterling, any kind of potential softening, you will see people get out of that position. so obviously we've seen that quick rally in sterling. yes, it does come down to what's in that manifesto. it will be interesting reading. whether we get detail on immigration lines, on trade, potential trade, and really it's the concessions that will be the talking points. >> do you still want to be invested in the ftse given that it's given up year-to-date gains? we know about this relationship between the ftse and the pound sterling. is there a case for investing in it? >> it's a currency play in the short-term. that makes me nervous. i'd rather invest on fundamentals than on calling
sterling's move, calling the political ramifications playing out. this could get a little messy if people don't feel like the mandate comes through. so sh so, long answer/short answer i would be nervous of being overweight on the ftse 100 right now. we had a good run up, i guess i see better value elsewhere. >> how do you feel about french equities and european equities given this political risk? it seems like the first round of the french elections is wide open with the potential of four candidates making it to the second round versus two previously. do you feel that there is not enough volatility and enough uncertainty reflected in market pricing right now? >> there's not been enough volatility for some time now in general terms. certainly europe looks reasonable value. fundamentals have been good. but there's a cloud hanging over
europe with this political uncertainty. so seeing how that plays out, actually, you know we have binary events getting some conclusions to those binary events. all of a sudden we could get quite positive behind europe. right now we've been nervous about europe and been underweight europe. that could change quite quickly. we're trying to position ourselves ready should we get the sort of more market positive reaction from the politics side. therefore we can get back to those fundamentals which us investors would very much rather talk about, but this year it seems like politics are driving markets. >> james, thank you very much for that. james andrews. let's get back to oil prices. wti and brent cruise are rebounding after falling nearly
4% in wednesday's trade, the worst day in six weeks. the recovery has been aided by comments from asaudi energy minister who said a preliminary agreement has been reached to support output cuts. hadley gamble spoke to suha suhail al mazroui and asked him his thoughts. >> on an average i think it's tough to go to 60, but on a given day, can we see 60 other above 60? yes, we can. we don't want to see shocks in the prices. we would like to see steady growth and correction. what is the right price? no one will tell you what is the right price. we're not concerned about the price. we're concerned as an industry about the level of price that is adequate. all of us benefited from this downturn, increasing efficiency,
reducing operating costs, and it's not only the shale oil producers who have reduced costs. we have reduced costs significantly. what's important is the net margin i think for most of the companies. and i am sure that going out of this cycle, we will be stronger as an industry. >> the imf expects nigeria to edge out of recession this year. the fund forecast africa's biggest economy to grow by 0.8% in 2017, thanks to increased public investment growth in agriculture and a rebound in oil output. geoff spoke to nigeria's finance minister and asked how grateful the government was to opec for helping the oil price recovery. >> not sure grateful would be our sentiment at the moment when we very much are benefiting from the improved oil prices, went as low as 28.
in the region it's in at the moment it gives us ability to plan. we didn't need volatility. we need much more stability, which the opec deal has given us. the real impact is not price, it's quantity. we had challenges in the nigeria delta which halved almost production. production is getting back up so that is giving us more fiscal space. >> how critical then the opec deal gets extended for six months? >> i think there's general consensus that we need stability around the $60 mark. i'm confident all the players involved know we need stability around price. 110 was great, 28 was not. just some stability allows us from the finance and macro perspective to plan. so i think the oil minister, i know, is working very closely with his colleagues in the opec family to ensure that we attain stability. that's the objective. >> what kind of planning are you making? it seems to me you have to have
two sets of economic forecasts. one that is dependent on the opec deal being extended. one that says it is not and now we have to halve some projects. >> we put out a budget that's deficit financed. to supplement any short falls, we are borrowing. we are borrowing to fund infrastructure projects in nigeria, oil is only 10% of gdp. one thing we're trying to correct is the over 90% of the economy, getting to contribute more to government revenues, that's aided by our ease of doing business. in the short-term, we continue with implementing our plan, which is around improving infrastructure so that we can enable particularly the non-oil economy. >> as always, we love hearing from you. do e-mail the show. the address is firstname.lastname@example.org. you can find us on twitter,
we are very busy when it comes to the reporting season. man group reported a 10% rise in funds under management in the first quarter totalling 88$88.7 billion in the first quarter. the firm's long-only funds and its fund to funds business brought in the majority of the quarter's new assets, and said a weaker dollar helped boost inflows as well. shares up by 3.4%. unileave ser raiver is rais
dividend as it attempts to defend itself from takeover attempts. they affirmed they're on track to meet sales growth targets for 2017. unilever is in the midst of a strategy overhaul after a failed takeover bid from kraft heinz. nestle reported organic sales growth of 2.3% in the first quarter narrowly beating expectations. sales 20weighed down by weaknes in china and negative pricing in western europe. nestle confirmed full-year growth targets saying it aims to grow underlying sales by 2% to 4% this year. sky broadcaster said customer turnover was steady in the third quarter despite communication of a price increase. earnings fell to just over 1 billion pounds due to a weaker advertising market and higher
costs for football broadcasts. sky signed a 2$250 million production deal with hbo. want to talk more about sky's results with richard hunter from wilson king investment management. also joining is gemma acton who has been on the call of sky this morning. richard, how reassuring is it that the turn rate at sky is stabilizing? >> it's one of the main things for analysts, they have been concerned over that and as has the net debt figure which improved slightly if we go back to the initial launch of the german and atoitalian units, they're making their own contribution in terms of revenue and profits. even though it is not just about the results today, the numbers that we've seen so far are pretty robust, strong set of numbers. >> gemma what did you learn from the call? i guess a lot of talk about how challenging the uk market is
now. what color did they provide? >> they mentioned the headwinds in terms of the consumer and how difficult it is to operate there. they mentioned inflation slowing down, consumer confidence weakening. they didn't refer to the jobs market which is fairly robust. the broader point was they are doing what they can. what's nice about sky, they are always on the front foot trying to get ahead of difficult environments, ahead of consumer trends. so a lot of conversation led to the deal with hbo, which is worth a mention. what really hit the first half results in there were costs spiraling, and broadcast costs across the industry. the hbo deal is a way for sky to get on the front foot and control those costs and another source of revenue in terms of teaming up with someone they say is a strong provider of potential high-quality dramas
going forward. >> that's the content. let's talk about the revenue. ad revenues usually fall in times of uncertainty. we have brexit and the uk general election. richard, do you feel that sky is someone who would suffer as a result of this uncertainty or a flight to safety play? >> i think increasingly it's more of a flight to safety play. i think it's also reasonable to point out that it is such an innovative company. quite apart from the investment in the business. you also had sky mobile, sky q, mysky recently, and now the hbo deal on top. so, without the distraction of the fox takeover, it's clear that the operational evolution of the company is continuing at a pace. >> do you think the fox deal will go through this time? last time we heard all these concerns about the cma, the competition authority about media plurality. do you think that will be addressed by the company
sufficiently this time? >> has to be. we'll know by the 16th of may. what's particularly interesting on this occasion is that in normal circumstances, when a bid is made and the bid here we're talking about from fox is a 10.75 pounds a share, you expect the share price to be close to that. as opposed to being one pound away. so there are clearly big question marks in the minds of investors as to whether the concerns over media plurality and influence will win out and the deal will be scuttled. >> is that something that was discussed on the call? how much confidence was there? >> it wasn't discussed on the call. it's interesting to see if the deal does fall apart why. are investors concerned over the regulatory inquiry the european commission passed without problem whatsoever. the uk one will be trickier. actually just the mer duurdoche themselves. the deal fell apart in 2011. the fox issues in the u.s. right
now with bill o'reilly leaving yesterday, roger ailes leaving last year has a nasty reminiscent tone. so we wonder whether that will derail the deal at any point here. >> you don't think it would derail a deal? >> who knows. let's hope not. the company has changed a lot since the 2011 deal. they changed corporate structure to be more amenable to having this past, in terms of the way the murdoches are approaching the deal it is in a much more conciliatory, less arrogant fashion than before. but it's one pound difference which is tremendous. we have not seen the stock price go above 10 pounds, this is a 10.75 offer. a lot of caution there. >> richard, what do you do with the stock now? most analysts have a hold on the stock because of uncertainty. >> which makes sense. should the deal go through, the share price will go up a pound overnight. if the deal doesn't go through,
any premium that it might have had over the last six months or so when it was first announced will be wiped out. that doesn't change the fact that sky's underlying business is a strong one. the fact that the market consensus is ahold at this time makes sense. >> richard, thank you very much for that. richard hunter head of research from wilson king management and thank you, gemma acton. we will go for a quick break. check out world markets live, our blog which runs throughout the european trading day. we'll talk more about the imf meeting after this short break. become o a professional soccer player, but i never imagined that i'd be playing in kansas city. when i was first elected mayor, they would talk about kansas city, kansas like... i can't wait to get out of here. through the years we lost over 30,000 people. we turned that obstacle into an opportunity.
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welcome back. you're still watching "street signs." i'm carolin roth. these are your headlines. oil prices rebound after their worst session in six weeks. saudi's oil minister says an output cut extension is still on the cards, while his uae counterpart tells cnbc prices are still far too low. >> as an average, i think it's tough to go to 60, as an average. but in a single day can we see 60 or a little bit above 60? yes, we can. publicis reports better than expected first quarter underlying sales sending the shares higher, as the ceo tells cnbc he's optimistic about the outcome of the french election. >> the worst nightmare you can
imagine is a second round where you have marine le pen and jean-luc melenchon. that's the worst case scenario. i still believe reason will prevail. shares of man group moving higher after the investment manager reports a 10% rise in funds under management in the first quarter. orders under pressure as large contracts remain elusive for abb, but the swiss industrial titan says it sees the first signals of stabilization in some markets. let's have a quick look at how u.s. futures are shaping up. the s&p 500 seen up by 5 points. the dow jones set to add 36 points. the nasdaq higher by 15 points after stocks in the u.s. closed lower yesterday. the dow posting a two-day drop
of more than 200 points. the reason why was ibm and oil prices weighing on the dow as well with the dow off 120 points. let's show you what's happening in europe this morning. here's the picture. it's a fairly mixed one. xetra dax is underperforming, the ftse 100 off. but we are busy when it comes to corporate updates for the first quarter. you have unilever and man group outperforming. that's the key catalyst now. when it comes to the currency markets what we're seeing is an increasingly robust euro/dollar pair, up by a half of a percent on the day. that's quite astonishing given that we're a few days away from an uncertain first round of the french elections. also the dollar coming back off three-week lows we hit earlier this week. that's because treasury yields are moving higher on the back of the beige book. i want to come back to oil prices. they are rebounding after the
big selloff we saw in yesterday's trading session. the worst day in six weeks on the surprise build in gasoline inventories. brent krut up crude up by 0.3%. wti up by 0.3%. it's also boosted by the fact that there is more and more talk about an extension of the oil price cuts. ♪ let's get back to the election season. french far-right candidate, marine le pen, focused on security and immigration in the last rally ahead of the first round in sunday's presidential election. speaking in marseille, le pen said she is the only candidate that can bring change to france and pledged to return the country to its people. centrist candidate, emanuel macron cautioned against the rise of nationalism saying he aims to rebuild europe. claire is in paris. what is the mood given that
we're just a few days away from the fist round? >> the mood is very much a mood of uncertainty. the whole country is holding its breath. to be impatience that the first round is over. you were talking about marine le pen, what she's doing is going back to the roots in her last rallies and meeting. she's appealing to the anti-immigration, anti europe cord when her electorate. a couple weeks ago a political scientist said even a goat would defeat marine le pen. he's still with us. would you say the same thing today? >> yes, i would. yes, even a goat would beat marine le pen in the second round of the presidential election. for your audience, you have to understand in france, we have a first round then the two best candidates at the end of the first round get to the -- become
finalists for the second round. the second round there are so many voters who would vote for anything against far-right that, yes, indeed, even a goat or a duck, a lame one, would beat marine le pen. >> so we have seen the rise of the extremes, national front with marine le pen, but also gene luc melench jean luc melen left. can the center win? >> in fact, it already happened. it already happened a long time ago, in 1974. it was for the same key reason. a centrist candidate has a shot when the right-wing candidate does collapse during the campaign. at that time the candidate of the right wing was particularly lame during the campaign. that's why there was a shot for the centrist candidate to become
a substitute candidate, if i may, for the moderate right wing and the centrist voters. that's happening now. if fillon was not overwhelmed by accusations of nepotism and corruption, emanuel macron would not have a shot. that's the weakness of the right-wing candidate that makes it possible for the centrist candidate to have a shot. >> what's also interesting in this company is that all of the candidates have said they are anti-system. is it true? >> anti-system is a concept in political science. it's by an italian political scientist. anti-system party is a party that wants a different political regime, and a different economic system. so, you have only two anti-system candidates. you have marine le pen who is the racist and nationalist candidate, and jean-luc melench melenchon, anti globalization
candidate. marine le pen would be the french version of you keep donald rumsfel-day-ol donald trump and melenchon is the version of corbyn. >> we have these candidates from different backgrounds. are these two here to stay? there's talk that we have the four main parties, but are the extremes here to stay and continue to grow? >> that's funny because for the past decade there was never bipartisan, there was two mainstream governing parties, but we always had anti-system parties in addition. during a certain period of time, it was the communist party. at a certain time after the second world war and for several decades after that, we had the communist party around 20 or 25% of the vote.
so, now we have far-right at about 20, 25%. but it was already at 15% during the end of the '80s. so we always had anti-system parties outside of the mainstream spectrum. what's new is the collapse of the mainstream parties because they're overwhelmed by new fresh ideological competition. far-right, radical left, and extreme center, if i may. because macron is radically pro finance, he would be the equivalent of hillary clinton in the united states and nick clegg in the united kingdom. >> one other key in the election is the abstention rate and the indecision among voters who are the swing voters? can they change the outcome of this election? >> the funny thing is we have had for several weeks a theme in mainstream media, which was there are so many undecided voters first. that's not undecided, that's
voters who are still thinking. they are not unable to make a decision, they're just still thinking, which is good before you choose a leader. it's positive. it's mature. also those voters, in fact, the rate of voters still thinking, it's at around 38%. but last time at the same time, it was 32%. so, it's a usual rate. it's not an issue. no. what's new is not the level of indecision. no. what's new is the level of suspense. it's the first time we have four candidates that can potentially be finalists. and if you take into account of margin of error of opinion polls, all four are about 20%. we don't know who the finalists will be, macron, fillon, le pen
and melenchon, we don't know which two will be finalists. all of them are around 20. >> thank you very much. for all these undecided people, they still have time to make up their mind, they will do so with the last tv event of this campaign until the first round tonight, all 11 candidates for the presidential election will have 15 minutes to convince the remaining voters, who maybe have not made their mind up yet. >> what's your best bet on how long that debate will be? the last one, if i remember correctly, was 3 1/2 hours. >> yes. 3 1/2 hours. well, you know, you take the 11 candidates, and multiply by 15 minutes, they also will have three minutes to answer any sort of question that may rise during the show, probably something around three hours, four hours. >> all right. we'll stay tuned. for another really exciting show, join us on sunday as we
keep you up to date with all the latest from the first round of the french presidential elections live on cnbc. i promise you, this may not be three to four hours, depending on the outcome. who knows at this point. let's stay with politics. german politics. the afd co-leader said she will not lead her party's campaign in jermt germany's general elections in september. this following a slide for the party. in a video message, petry said she would not take part in the campaign and that the afd should find a largely symbolic candidate to lead the party. cnbc has an exclusive live interview with the german finance minister, wolfgang schauble from the imf meetings. the european union says it will begin brexit negotiations with the uk after the snap
elections. this as prime minister theresa may kicked off her campaign to return to downing street after securing parliament's backing for an early election. speaking in bolton, may reaffirmed her decision to call the vote saying the country needed strong and stable leadership. >> it's the right decision. it's in the national interest. that's what this election is about. it's about providing the strong and stable leadership that this country needs to take britain through brexit and beyond. it's about strengthening our hand in the negotiations that lie ahead. and it's about sticking to our plan for a stronger britain that will enable us to secure that more stable and secure future for this country and take the right long-term decisions for the future. opposition labour leader jeremy corbin revealed his
party's plans and tax cuts for business. >> we will have a labour government that will invest in our economy through a national investment bank. that bank will loan to companies, will build railways, will improve hospitals. that bank will improve the living standards of the whole country. what's the alternative? to give away 70 billion pounds in tax cuts to the rich and to big business and to corporations between now and 2020. we are taking this message out to the whole country. this election is about the future of all of us. the future of our children. the future of social justice. the future of our services. the future of our jobs. >> the u.s. doubles down on its veshlt verbal attack on iran. we bring you the latest news from washington after this short break.
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welcome back. u.s. president donald trump may add saudi arabia to his european trip in may. the trip, which includes the nato summit in brussels and the g-7 leader meeting in sicily will be his first overseas trip since taking office. rex tillerson doubled down on tougher rhetoric on iran on wednesday accusing the country of alarming ongoing provocations. the statement following tuesday's announcement that the u.s. will review the 2015 nuclear deal to see whether the removal of sanctions against iran was working against america's national security interests. andrea mitchell has more. >> reporter: tonight secretary of state rex tillerson denouncing the obama administration's landmark nuclear deal and declaring that iran is a threat to the u.s. and the world. >> an unchecked iran has the
potential to travel the same path as north korea. and take the world along with it. >> reporter: the nuclear deal a long-time target of president trump. >> the iran deal made by the previous administration is one of the worst deals i have ever witnessed and i've witnessed some beauties. >> reporter: one day after acknowledging that iran is compiling with the nuclear agreement, iran showed off its military might. tillerson accused iran of sponsoring terrorism in syria, iraq, lebanon and israel. testing and using weapons in defiance of the u.n. and arresting u.s. citizens. the obama white house sanctioned iran for the abuses but with five other world powers decided the nuclear deal was still worth doing. >> to tear up the iran deal in my view would mean that we would be giving iran a license to go and get a nuclear weapon. >> reporter: tonight, tillerson rejected that. >> if you break out of that deal, won't that send a signal to north korea and other rogue
nations, that the u.s. can't be trusted to keep its end of the bargain? >> we buy them off for a short period of time and someone has to deal with it later. we don't see that's a prudent way to deal with iran. exxonmobil has applied for a waive tor to circumvent itself sanctions and continue working with rosneft. the talks continued after rex tillerson was sworn in as secretary of state earlier this year. the waiver was not discussed during tillerson's senate confirmation hearings and he has recused himself from any matters relating exxon for two years. a russian think tank controlled by vladimir putin developed a plan to influence the 2016 u.s. elections in donald trump's favor, that's according to a reuters report. citing a number of sources, the news agency says confidential documents show the framework for
what u.s. intelligence agencies have said was a concerted effort by russia to undermine the presidential election. let's turn to washington. the imf has upgraded brazil's growth forecast to 1.7% next year as structural reforms gather pace and political uncertainty begins to ease. the news comes as the brazilian government lowered the age for police officers retirements. the global growth outlook was questioned. >> i think it's a balanced scenario, probably tilted towards positive one in the
sense that i think the global outlook at this point is a good one. i don't see crisis looming ahead, or any kind of bigger problem. at least for a while. >> what about the headwinds that we see economists worry about. like donald trump and protectionism or chinese debt and excessive leverage in the corporate sektd nctor in the ec. do any of these things keep you awake? this leveraging question in china is something which dates already for several years. the economists who are expecting to have some hard landing or something of that sort in maybe three, four, five years. all that didn't happen.
the high thechinese apparently controlling that process. it's difficult to understand exactly that is going to proceed from the outside. my assumption is that we don't -- we will not be seeing something along the lines of a hard-landing china any time soon. on the other hand, this question of protectionism with trump that remains to be seen. we have to watch exactly what kind of specific measures he could take and how problematic that would be. what i'm saying is that on the other hand, in general our economy is recovering, emerging markets are recovering. >> geoff spoke with the director of the imf's monetary and
capital monetary department and ask the for his market outlook under a trump presidency. >> markets took an optimistic view of policies going forward. following the election in the u.s., equity markets rallied, bond market yields increased. the dollar increased. some of those trades have reverted somewhat. as market participants realized there are many hurdles in the policy process on the way, but the market overall is still taking an optimistic view. hence getting the policy mix right is crucial for financial stability going forward. >> you don't see this as a canary in a coal mine telling us there is either a recession coming or, in fact there will be a policy mistake by the federal vef, p reserve? >> there's always room for policy mistakes. which is why we point to the importance of getting all of the
policies right. policymakers are aware of that. but it's difficult to make all the right choices, all the right mentions. in the golden financial stability report, we knfocus on those policy areas that are critical for financial stability. so those include the corporate tax reform in the u.s., for example, and it also includes monetary policy in the u.s., and a host of policies in europe including regulatory and more broad banking sector reforms. >> on that balance sheet issue of the federal vef, are yreserv concerned that there may be an attempt to wind down that balance sheet with undue haste and that may have systemic consequences? >> the federal reserve has, in addition to policy tools, which is the size of the balance sheet, and it can use that policy tool to impact longer-term yields.
we feel it should use that tool in the predictable manner so that it doesn't generate surprises in the marketplace, but even when it does use the size of its balance sheet as a policy tool in the predictable manner, can it have an impact on longer-term yields? >> that sounds like a long way of saying, no, i'm not worried. >> i am not worried. of course there can always be policy mistakes. the report focuses on the scope for potential mistake. >> that wraps up this edition of "street signs." that's it for today's show. i'm carolin roth. "worldwide exchange" is coming up next. we'll see you tomorrow.
good morning. crude new realities. futures holding strong despite oil threatening to break below $50 a barrel. france front and center. live on the ground in paris with just three days to go before the french presidential election. and the snap that got the sports world buzzing today. it's thursday, april 20, 2017, "worldwide exchange" begins right now. ♪ good morning. welcome to "worldwide exchange." i'm s