that's all for this edition of "dateline." i'm craig melvin. thank you for watching. ♪ good morning welcome to "street signs." i'm joumanna bercetche >> i'm julianna tatelbaum. these are your headlines >> u.s. president joe biden arrives in hiroshima for the g7 where talks are set for the world's richest countries. and the u.s. inches closer to a deal ahead of a june 1st deadline house speaker kevin mccarthy says the debt ceiling can no longer be ignored. >> how much is too much?

$32 trillion debt. you will pay more in interest in the next ten years in the last 80 years we can no longer ignore the problem. european stocks echoing gains. and out of passion burberry warns after the rebound in the luxury group revenue. warm welcome to "street signs. the end of the week and we are looking forward to the g7 leaders meeting in hiroshima this morning, leaders are arriving we are looking at canadian prime minister justin trudeau who is arriving a few moments ago, joe biden made his way over.

rishi sunak in focus and drawing up an agreement with semiconductors with japan. we will discuss later in the program. we want you to see the look at the prime minister's airplane. we will bring you any further arrivals as they come through on "street signs. as i mentioned, u.s. president joe biden arrived in hiroshima amid growing concerns over the u.s. debt ceiling biden greeted people ahead of the proceedings which are expected to be cdominated by political risks. biden is set to head back to washington on sunday and will give a press conference later today. you got a glimpse of the markets with joumanna. julianna, the stoxx 600 is up from the price action

yesterday. julianna said a lot of focus on the debt ceiling discussions joe biden will head back to washington, but it does feel the daylight between the two sides is beginning to narrow optimism coming through. the u.s. focus ed on the result on the retail names. ta target reported yesterday. we saw the rally with the u.s. names and kbw bouncing we had good results from western alliance with the increase of deposits which is a welcome development given the focus on u.s. regionals here in europe, we are focused on individual company earnings let's get to the indiviex all names trade in the green dax up 1.3%. we are seeing auto names like

mercedes and volkswagen. and then the jeffrey epstein case brought to the jpmorgan chase bank and that being settled. cac 40 is up 1%. we are seeing the likes of renault at the top of the index. ftse 100 is up .50%. a couple of names like burberry. that is dragging the ftse 100 on back of disappointing sales growth in the u.s. bt with not a couple of good days that name is down 7 points this morning. in terms of sectors, this is the breakdown. autos up 1.6%. tech is up 1.2% real estate is down. heading to the u.s. session, we are looking like another

positive session is in the cards. moderately so. s&p down and nasdaq is opening in positive territory. it is thursday, which means it is jobless claims day, so keep an eye on that and existing home sales data. global debt rose to a near record $305 trillion in the first quarter according to the institute of international finance. this was driven by corporates. aging pop rations and healthcare costs are putting pressure on costs. bank of england governor andrew bailey admitted the uk economy is dealing with a wage price spiral in his speech, he said the uk economy is dealing with second trend inflation and it is unlikely to go away as quickly as appeared. they will continue to lift rates

as far as necessary to fight price pressure we have rob dishner who is joining. good morning >> good morning. >> let me kickoff by asking about the debt ceiling and what is priced in to fixed income markets here what is your sense of how markets would react if we get a resolution with the debt ceiling before june 1st? >> yesterday was a great example that we did get relief in markets as we got closer to a resolution given the sides -- it is catastrophic for the u.s. to default on its debt, and have carr carryover impact we think as you move from the bad outcomes to less bad outcomes, the markets would respond favorably to that. >> the flip side is if we don't see resolution, how much is

already priced in? >> we are in for a rude awakening should the bad outcomes happen. the u.s. defaulting on its debt would be substantial it would not default immediately, but steps to impact the economy. if the u.s. keeps paying interest, it has to keep paying social security and other checks out. >> can i ask beyond the debt ceiling, julianna and i have been piecing the tea leaves with the data from the u.s. the u.s. retail sales numbers and specific company earnings and what it tells you about consumer spending. one of my takes is despite the macro headwinds, consumer spending is holding up >> it is difficult to get the u.s. consumer to stop spending they will spend.

you know, one of the things we have seen with bank of america with good data and how they see credit card spending which is a bit less on high-end fashion goods and those things we are seeing the consumer continue to spend. one of the reasons why is the consumer feels if they have a job, they will continue to spend. you need to see that change in joblessness to get a bigger change in spending. >> do you see signs we are heading in that direction? we have been talking about a recession for so long and many people saying there are indicators flashing red. yet, we are still not there. >> right. -- >> right a lot of those indicators are based on the old industrial. the u.s. economy is not that way any more if you think, 35% of employees were industrial in 1969. that is 15% today. that is a little bit different

in that regard we do see the employment situation as declining, although, still healthy. >> markets are pricing in rate cuts by the end of the year. some of that has been taken out of last couple days. do you think the fed may start cutting rates by the end of the year >> we view that as a low likelihood if you see what the markets are pricing in is the fed on hold or if the fed cuts rates, it is not 25 basis points it is 50 or 100. if you average those ougt, it could happen so far this year, the fed rehe m -- remains on hold. >> if the fed cuts, it is not 25 points, but larger they are binary scenarios. my question is if we see the fed pause and eventually cut rates, what does that mean for the dollar

is that going to cause depreciation in the greenback? >> the dollar over time will continue to get weaker we had periods of time where the dollar strengthens sure we have negative rates in the 2010s and as that money comes back, rate differentials may not be tough to support the dollar if we get the rate cuts, the dollar could go lower. we saw -- the name is escaping me -- he came out -- druckenmiller, he came out with a charshortfall. >> i wonder how you were thinking of u.s. fixed income over the european fixed income christine lagarde has more way to go. >> that is why you don't have

the same type of cuts in the european curve as in the u.s. curve. you still have hikes look, it is a relative game. the u.s. is likely on hold the ecb likely has more to do. the bank of dpengland has more do we are seeing that wage price spiral happen. you know, we will see, you know, some of that we think about it. yes, there is the interest rate difference, but the flows. >> just to wrap up the currency conversation we have been watching the japanese market this week and the japanese equity market is strong nikkei up 17% year to date six positive sessions in a row what do you make of the outlook for the yen and do you buy into the economic data in the last week >> i think one of the things we are seeing in japanese equities is a potential growth area people are putting money into that get a bit wary of the

chinese reopening trade. the steam coming out of the reopening trade and into the japanese market. pan will likely yield exit control this year and that would be positive for the yen. we have seen people acting appropriately. >> before we let you go, what is the top call on fixed income >> mortgages u.s. mortgages we saw, you know, the fdic, auction securities from the failed banks and got better prices than they thought that is the focus that we had. >> fortune favors the brave, always thank you so much for coming on the show rob dishner. also coming up on "street signs," uk and g7 look to global

atndndce th a more after the break.

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the subway series is taking your favorites to the next level. hold on, chuck! you can't beat the italian bmt. uh you can with double cheese and mvp vinaigrette. double cheese?!? yes and yes! man, you crazy. try the refreshed favorites at subway today. welcome back to the show we will take you back to some live pictures from hiroshima

we just in the last few minutes, saw justin trudeau's plane landing and before that, we saw the u.s. president joe biden also touch ground in firmhirosh. as you see, that is a flag of germany. we expect chancellor olof scholz on that airplane and should be stepping off as well all of the leaders are landing in japan for the g7 summit set to take place at the end of the week a lot of issues to be discussed there. namely you would expect the russia/ukraine war to be atop of the agenda as well as china and the growing tensions with the large economies and china. >> it is an incredible spot for the summit at hiroshima. i was there in january it is incredible incredible sight over the damage with the nuclear weapons

the threat of war on the front of people's minds. >> big moment for japan as well. we will keep an eye out for other leaders who may be touching ground as well. as we said, chancellor olof scholz is said to be arriving right now to japan. ukraine's black sea grain deal extended by two months it allows grain to be delivered by ports was to be expired today. the growing talks we know russia and turkey with recep tayyip erdogan, julianna, with the elections how and this is critical some of this is him playing the geopolitical game and reminder that turkey do play a very, very pivotal role in connecting the west allies with russia and china at this point in time.

i think this is a reminder to key allies that the significance that turkey can play >> he came out in a televised message yesterday. i want to give news. he wants to take credit for this good news. >> i had a quick look at where wheat prices are trading we are actually sitting at a two-year low $6.20 per bushel you covered this in the past post the ukraine war, the russian invasion of ukraine, we saw a spike in wheat prices. it has come down a lot if you look at the macro food prices and persistently high food prices continues to be a sticking point for countries >> the reason they have come down is precisely because of the corridor. g7 leaders are meeting were japan. on the agenda is the issues with china and russia and ahead of the meeting with the prime minister which called for

greater efforts to stabilize supply chains. our sister channel sky news spoke out with rishi sunak >> this will be increasingly important to our prospects at home economically. if you look at global growth and the indo-pacific region is important. that is why we joined the tpp. the land mamark agreement that means more jobs for people at home. we are also strengthening security and alliance with japan. >> the uk and japan will launch a partnership on defense chip supplies today as prime minister rishi sunak looks to diversify his semi kco rishi sunak looks to diversify his semi kductor supplies. sky news filed this report >> reporter: the prime minister is here in tokyo to amplify the

hiroshima accord this is the agreement with japan and uk to strengthen ties in technology and economy and defense and security now when it comes to technology, the two countries are signing a deal to try and research and development semiconductors this is all about trying to reduce reliance on the handful of countries for the crucial bit that is used in all sorts of things we need in every day lives from mobile phones to computers to medical equipment the u.s. is warned that literally every country on worth be affected if china invaded taiwan because of our reliance on taiwanese semiconductors. these two countries, uk and japan, are trying to reduce that reliance in the semiconductor deal china aggression and how to contain that is a key feature of this g7.

the japanese prime minister warned that ukraine could be east asia tomorrow if the west do not grasp p the threat of russia can they agree on the approach to china, ukraine and the economy and big issues on the agenda here. >> that was our sister channel sky news on that report. talking about the significance of the deal that is going to be inked with the uk and japan. for new information on the hiroshima accord, we have the associate professor. just listening to the report there. the aim of the hiroshima accord is to reduce the innocence on taiwan where most countries get the chips fabricated

to what extent is a deal like this successful in achieving that aim >> right i think this deal actually won't achieve that aim, but luckily it won't matter because other moves by countries, including japan, u.s. and eu member states are busy subsidizing the semiconductor sector there will be a move away from reliance on taiwan the problem with the pact with the uk and japan is it doesn't seem it is well funded compared to the other initiatives going on, it is really not going to have much of an impact. >> let's talk about that the numbers that are being floated around is 1 billion pounds of government spending of the medium term in the uk. compare to the u.s. chips act which involves $52 billion of

subsidies and the european is 43 billion. $1 billion doesn't cut it? >> right the uk chip act outside of any sort of kocooperation with japa $1 billion doesn't amount to much if the uk focuses on advanced packaging, it will require more money than that. i imagine once the full details of where the money in the u.s. is going, then we will see several times that going into advanced packagipackaging. >> douglas, i want to talk about the comments of the u.s. and eu is doing with the agreement with the uk

is your implication or your suggestion that uk will get its chips from the eu and the u.s. in the future and that is where it will matter >> right it will mean in the future there will be these other supply sources other than taiwan. that doesn't mean, though, in the short-to-medium term that if taiwan were to be invaded or somehow impacted in terms of the chip production, the uk won't suffer the global economy would suffer because even in the medium term, there is a lot of production of advanced chips done in taiwan. >> when it comes to taiwan, the country produces over 90% of the advanced chips by tmmc

the bottleneck or problem is the advanced chip and this particular semiconductor market. what are the chances that other countries are going to be able to do and replicate what tsmc does >> i think they are actually quite high i know many assume that, it smc has the z -- that tsmc has an insurmountable lead. i know years ago, tsmc wasn't in the lead i know firms who use the customers use tsmc and will resource to other providers like intel or samsung i don't imagine we will have this position of tsmc being a monopoly at the cutting edge for a long time. >> sounds to me it will be

difficult for the uk to compete with the huge economic blocks like the eu and the u.s. we spoke about the dollar funding and subsidies available. i wonder if brexit platyed a roe in this and if it complicates the path forward with the chip making facilities. >> yes, that is a good point i think being outside of the eu does negatively impact the uk's industrial policy in this area the uk does have sort of critical comepcompetency those competencies would mesh well with european wide industrial policy and semiconductors of course, because of brexit, britain is on outside looking in >> all right we will leave it there

professor, thank you for joining us on the show douglas fuller from the business school we hinted it would be the chancellor of germany arriving in hiroshima there he is. he is walking down the steps of the airplane it appears to be raining he has an umbrella up to face the elements this is him on the heels of other leaders arriving in hiroshima. we spoke about joe biden landing as well as justin trudeau, the president of the united states and canadian prime minister. and coming up, zac brown will step away to focus on ra osuairace a cefusustainabilityi we will have more after the break.

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welcome back to "street signs. i'm julianna tatelbaum. >> i'm joumanna bercetche. these are your headlines.

>> u.s. president joe biden arriving in hiroshima for the g7 where china is expected to be atop of the agenda. and the u.s. inch closer to the deal before the house deadline kevin mccarthy says the issue can no longer be ignored. >> you are at $32 trillion debt. you will pay more in interest in the next ten years than the last 80 we can no longer ignore the problem. the optimism makes its way into the global equities with stocks with gains in the u.s. markets. and out of fashion burberry is out in america as it spikes a rebound in other areas of luxury revenue. we are an hour and a half

into the trading session we are off to a strong start cac 40 up 1% dax up a strong 1.5% siemens energy trading firmly in the green this morning ftse 100 is up .70%. lagging is the swiss market. down .7% we will get into the big movers on the single tstock basis in a moment in the fx markets, sterling is down $124.37 euro is down against the greenback. 108.16 there is skepticism with the federal reserve cutting rates. we are due to hear from a number of fed speakers. comments will be closely watched to impact the dollar trade with u.s. futures, similar to europe with green arrows

this is as risk appetite continues to wall street all three of the major indices gained nasdaq up 1% 1.2% gain for the dow and s&p. tesla was the big mover gaining 4.4% after the shareholder meeting. back in europe, easy jet reconfirmed the 2024 targets despite posting the first tax loss of 1 million pounds the airline will see a boost from the summer bookings capacity in the fourth quarter returning to around pre-pandemic levels burberry had a rebound in the market in whichina. it has seen key leather goods and coats performing well. the company remains confident

about the targets, but concerned with the americas. that is why burberry down 6% this morning bt planning to layoff 40% of the work force by the end of the decade that is equal to 55,000 positions. it looks to cut costs with the pre-tax profit of $1.37 billion pounds it expects revenue growth on the year ahead on the pro-forma bus basis. >> we had vodafone announcing it would reduce jobs by 11,000. now bt reducing 40% of the work force. it reflects how challenging it is for the telco sector. they have to fund the tech

spending something to keep in mind. switching to u.s. retail target shares rose after 2% of the -- target rose over 2% after the u.s. retailer beat on the top and bottom line in the first quarter. the retailer issued lower died an -- guidance for the second quarter. telling executives inflation is weighing on the consumer the ceo warned that organized retail crime will see inventory losses increase by $500 million to surpass $1 billion this year. courtney reagan filed this report >> reporter: target is exp expressing concern after the first quarter. earnings were stronger, but sales were flat for the quarter and digital sales were negative for the second straight quarter. target said inventory loss is more than $500 million more this year than last year. making loss more than $1

panhbillio in two years it is impacted by organized crime theft. target is reaffirming the full year guidance as sales weakened. beauty, food and beverage and household essentials sold better than discretionary the chief growth officer told reporters that the con pkconsum under pressure and run out of savings and this is having an impact on choices and trading off. courtney reagan, cnbc business news >> target comes on hot numbers from home depot with the worst a revenue miss in years. walmart is reporting today just to pick up on the discussion yesterday we had home depot results, but

not target target, i guess, on the margin is better than what the market had been anticipating. if you go by the reaction of the u.s. retail stocks yesterday, i wanted to pick up on something that jim cramer said inventory. it is impressive to see them expand sales, but significantly reduce the amount of inventory in the warehouses. that actually is a positive development for them >> it was also the biggest problem for target inventory management was woeful in the wake of the pandemic. 2022 was turbulent for the target inventory they are making progress and that is encouraging. i would flag one thing the trends are in line with expectation. discretionary spending coming d down consumers are opting for grocery

and food target is vulnerable when it comes to economic downturn because it doesn't have a big grocery businessike like walmar. tjx is a discount retailer, i suppose, in the k2007 to 2009 price. >> it is telling it is reflective of investor sentiment toward the stocks. i think the expectations were so low. it was a low bar to see a positive surprise yesterday and wraps into the macro and despite the headwinds and rising interest rates and cost of living and higher food prices, et cetera, consumer spending on some part of the retail sector is still resilient that is impressive. >> as our first guest, it takes

a lot to get americans to stop spending that is true. let's look at tencent which posted the fastest jump in revenue in more than a year. jumped 11% in the first quarter with the rebound of payment volumes. the results mark a strong bounce back of growth after negative and flat quarters. alibaba will report before the shell. it is expected to benefit from the post covid reopening, but will take a hit from spending. emily tan filed this report. >> reporter: alibaba expected $1.36 per share on sales of $36 billion. marking another quarter of contraction. the business will be in focus with a contribution to the top

line and the strength of the con sierm -- consumer. the market is also waiting are details of the plan to split for six businesses to go public and it comes t-- moves to the holdin company and it is said to be the most mature to be spun off first. and then if ant group to revive the plans, we get numbers due out before the u.s. market opens. i'm emily tan in hong kong back to you. cisco shares are lower after a huge backlog of products in the third quarter. the company posted a decline in orders and it has been impacted by supply chain. it beat for the third quarter earnings posting $35 billion.

and mclaren is calling for greater sustainability efforts it should have more investment as well as adoption of set criteria in the paddocks and motorhomes arabile is the local motor racing correspondent is here >> i'll take it. >> it is great to have you with us on the show this obviously is a huge discussion and debate in the industries particularly to formula 1 and on the heels of the formula 1 grand prix called off due to flooding. >> that was called off as we talked to zach brown yesterday that is giving us a clear sense of why he thought it happened the way it did everyone agreeing that is right

way to go. the report is significant because mclaren was the first racing toeam to release that report last year it marked four area where is they felt it matches up to the sustainability goals really it highlights the key ways to really get better as an entity and be a lot better as well in terms of net zero, reducing the net emissions over 2019 by 22%. 19% redukction of waste 33% of the new starters coming from under represented backgrounds. health and well being. 17% of the team trained and mental health aiders we got to speak about profitability and sustainability

as two parts of the conversation the difficulty and investing in your business and making sure you become profitable with a good racing team and being sustainable as well with while profitability and sustainability are two difficult things, they believe they have the ability. this is what he had to say >> it is a challenge you can clearly accomplish two because of our sauce custainabis pushing forward fast and pulling a profit our formula 1 team and racing teams are here to entertain the world, but also here to take technology and know how and how to make the world a better place. we have fascinating technology and know how that we work with a lot of sponsor partners and governments and a good example during covid with the ventilator

uk challenge where a handful of teams and leaders came together and made ten years of ventilators in ten weeks i'm proud to say i'm sure those efforts saved lives. >> how much harder does the job come or does it make it easier to focus spending? >> i think from the cost cap standpoint, we are a big advocate with that in place because it levels the playing field from the sporting standpoint now with new financial or sporting regulations before the digital sage, we had an issue that was unknown now there are things in the va various regulations that need to be modified to embrace and not put teams in a situation where do i invest in sustainability or

performance of the race car? that is a tricky choice when you are in the business of performing race cars i think we need regulations to allow us to do both. >> very significant conversation there. also to speak around how f1 moved away from the carbon intensive and money intensive industry from 1990 to 2000 zak brown believes me moved from the cost cap era and they can do things to improve. this is what he had to say. >> i think we are just getting started in the journey i think sustainability can be led by technology and innovation that is something that is the world we live in and we continue to innovate. i think it is early days i think it is a race we are all in together. it is not us versus them we should do this together there is enthusiasm for that i think it is a journey where you might see the light at the end of the tunnel, but never get

to the end of the ten you will because we will always need to do better. >> investing in the e-team, is that something you look to as a way to lead into the sustainability >> i think it is why we got involved in formula-e and extreme-e. we highlight climate change and you have a male and female driver racing equally. this is very important to us under the sustainability umbrella is safety and well being and, of course, the carbon element. all of them are equally as important. our racing platforms give us a great area to dive into and sustainable fuels.

>> that was an all encompassing interview there. also speaking of the f1 season ahead. they started slowly, but hoping to get better and under way with more upgrades. we golmont to speak about brexi. that follows on from stellantis. he said the uk is the place for them and they believe they have the way of doing things better and they believe they will maintain things in the uk doing very well. they want a circuit in china to come back after covid regulations eased and hopefully a race in africa specifically south africa. you cannot have a world champion without south africa. >> so you and i can go over and cover it. >> absolutely. >> arabile, thank you.

we have to move on we have fresh news from credit suisse at-1 bond holders will not receive a payment after the bonds were wiped up in the failed bank. in the ruling against the payout, the derivatives committee said the takeover was not a credit default event this is another twist for credit suisse after hedge funds would hope the panel would rule the other way. >> there is a movement in the spreads last week in anticipation of hedge funds that it could be triggered. the committee determined this was not a trigger event. that one has been resolved. qatar funds sought redress after the lender's implosion that is according to reuters where it stands to lose $330 million in the equity stake in

the bank. it is that time. they talk the talk, but will they walk the walk we will have more on the disastrous debt defuault discussions after the break.

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welcome back to "street signs. u.s. president joe biden and house speaker kevin mccarthy appear to be closer to a deal. they agreed to negotiate directly with one another. we have brie jackson live from washington, d.c. brie, do we have more details on the concessions we could see if they come to agreement >> reporter: joumanna, the two sides are expressing optimism with the debt ceiling talks. president biden is in japan focusing on foreign affairs issues, but his team back home is continuing to talk with republican negotiators trying to avoid a default.

before leaving for japan, president biden said he is confident they will reach a deal there is a sticking point. that is the talk over the republican demand to have work requirements when it comes to receiving government programs or aid from the federal government. some democrats do appear frustrated with negotiations overall and wrote a letter to president biden urging him to invoke the 14th amendment to allow him to lift the debt ceiling on his own without congressional authorization. experts say doing so would cause a bitter legal battle and the treasury secretary janet yellen has said it could spark a constitutional crisis. both sides remain committed to hammer things out at the negotiating table. the clock is ticking with the june 1st deadline approaching. >> brie, what is in the back of

everyone's minds is how this will impact the 2024 elections wall street journal points out that ron desantis is planning to announce his presidential bid. what more can you tell us? >> reporter: well, julianna, desantis is expected to publicly announce his run for president in the coming weeks. we have seen several actions that he has taken hinting he would do so. over the weekend, he was in iowa of th iowa that is a key state. his staff moved into a tallahassee office this week another key thing is ron desantis continues to take jabs at the frontrunner on the republican side which is donald tr trump. he took a jab at him with the issue of abortion. desantis has taken a hard stance

on the issue of abortion which is dividing republicans. he is backing a six-week ban some said that is too harsh. the former president said that is too harsh, but desantis stood firm on that all of the signs that he is expected to make his unofficial announcement in the coming weeks. >> thank you for that report we will keep monitoring the situation as it unfolds. we will take you back to some live pictures of what would appear to be a hallway in hiroshima. as julianna and i have been talking about, many of the g7 leaders in the last hour or so landed in japan in hiroshima for the historic summit. we, of course, spoke about the significance of holding this summit in hiroshima. >> this was decimated by the u.s. nuclear weapons during world war ii and now a massive

memorial dedicated to reminding the world of the dangers of nuclear war. it is fascinating and appropriate we are looking at the g7 where the invasion of ukraine from russia and the lingering threat of nuclear war in the back of everyone's minds. >> they will discuss china andl nations of the g7. we will continue to monitor what comes out of the summit. that is it for our show. i'm joumanna bercetche. >> i'm julianna tatelbaum. thank you for watching "street signs. "worldwide exchange" is coming up next. d selling my health products online our shipping process was painfully slow. then we found shipstation. now we're shipping out orders 5 times faster and we're saving a ton. go to shipstation.com /tv and get 2 months free.

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it is 5:00 a.m. here at cnbc global headquarters. here is your "five@5." we begin with wall street and stocks coming off the best day in weeks futures getting a boost. and front and center is retail after target's cautious outlook which casts a cloud. this morning, it is walmart's turn. overseas, a split decision for chinese equities as alibaba gets set to report its results for the bull and bear case. preparing for an m&a boom. a look at the names that should be on the radar