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tv   Street Signs  CNBC  July 5, 2021 4:00am-5:00am EDT

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i often think, if you were to ask him, he would probably rather have a rival put a bullet in his head, than to be sitting where he is now and that part makes me feel good. ♪♪ -- captions by vitac -- welcome to street signs. i'm in for joumanna bercetche. the uae pushes back on the saudi agreement. the country backs the supply increase, but not the bad deal >> we are increasing the production uae is not pushing conditions to increase production.
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we need to do it for august. private equity pressure. raises the prospect of the more s bidding war. europe services set to continue the rebound with the french data beating expectations and italian activity posting the strongest growth since 2018. france's recovery is set take hold. next year's election is still wide open. >> what we see one year before the presidential election never happened i think a new scenario will happen next year and we will see which one it will be
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good morning welcome to "street signs busy show to get through today before we kick things off, i want to bring the final pmi numbers for june out of eurozone to break them down, the final composite numbers have come in at 59.5. this is the initial may reading of 57.1. this is the higher than the flash of 59.2. coming in higher in terms of the breakdown of services and manufacturing, you had the final services pmi at 58 58.3 you can see the services continuing to pick up speeds within the eurozone. if you have been talking about manufacturing strength in the
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first couple months of the year as vaccination rollouts continued and the lockdowns eased, we have seen a pick up in services activity which has been the theme across the eurozone. in about a half hour, we will get the uk numbers which are looking strong not too much of a difference versus flash encouraging numbers coming from the eurozone this morning. >> let's get to the chief eco eco economist? >> the data is encouraging again. we are even in services. we are at the best level since
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2007 we need to watch the risks from delta. for now, the evidence shows as it did last summer once there is reopening of the economies, ak trysts switch back fast. economies are rebounding risks are there. so far, they are not materializing to the extent to thwart the rapid recovery. >> when with we get the stronger data, it is provoking concerns with the hawks we had the central bank talking inflation is not dead. and commenting about the numbers. you are looking for stronger signals to come through on pricing pressure in europe what is the relevance for the
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united states here if you look at the data points, the second time cars and trucks, you are seeing that increase at a slower pace. could the united states give us comfort later on this year >> the u.s. have been a significant concern so far this year and they remain a significant concern. markets have noticed that there are inflation issues in the united states. i consider it fairly likely that the inflation issues in the u.s. for markets are now by and large priced not fully, but to such an extent that modest reprieve and headline inflation may decline a little that may add up to the following view central banks will have to react to growth and inflation beating their early expectations they are unlikely to react to
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such an extent to derail the recovery if they will tell us step by step, they will take the foot off the accelerator as the economy has accelerated and this is something that should not despite irritations be bad by and large, the central banks probably taper a bit earlier i don't think this is negative for the overall direction of ma markets. inflation is discussed a lot it is good it has been discussed so the numbers are not coming as a surprise >> holger, to follow-up on what was raised earlier, the debate raised in the ecb. we heard about the last couple of weeks a hawkish push for them to scale back the pandemic emergency response when in your view do you think
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it is the right time for the ecb to start scaling back and tilt more toward traditional asset purchase program >> i think say by august late august. we will know what the delta wave is doing to the european recovery come the september ecb meeting, we should have a good picture as is the case in the uk. the surge is among people who do not develop serious medical complica complications. by september, we can conclude the situation is no longer severe as in march the ecb should and could scale back the asset purchases where it raised the pace in march in response to the winter i think the ecb debate will tilt
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toward that. scaling back the program as of september and next year, once it expires at march and scaling up the asset purchases for a while so all in all we get a gradually tapers from late this year until probably late 2023 ahead of the first rate hike in 2022 >> very clear on the outlook i want to ask about the business manufacturing outlook for the second half of the year. we talked about the supply chain pressures particularly in germany. what does that do to the overall production levels for the second half >> this is a significant risk to our near-term forecast that supply may mean output in manufacturing and construction
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does not rise as much as the demand has risen if so, it will merely shift production into the future once the car companies have the supplies they are looking for, be it semi conductors and they will raise output to put out the orders the near term output may be on the down side by the shortages of supplies. >> holger, thank you so much for joining us today on "street signs. the chief economist. we have a couple of other data points to look at from over the weekend and also overnight starting with china. pmi fell to 50.3 in june that is a 14-month low businesses in the sector cut staff for the first time in four months a sub index also declined.
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on friday, the u.s. labor market added 850,000 workers in june above estimates and reducing the total number of jobs lost since the start of the pandemic. the unemployment rate rose to 5.9% and average hourly earnings increased by 0.3%. karen, by the look of things, it appears markets are starting off the week with the risk >> i don't think we got the u.s. markets out of action for the fourth of july we had strong reaction state side on friday as the jobs report on records of the u.s. ind in indices. the market pulling back by .25%. if you look at the individual markets, deeper falls on the continent despite the recovery coming through in the pmi.
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we don't have that reflation trade. let's look at the movers we had a bit of a stop/start trade in the friday session. cautious on the friday trade not playing catch up to the united states today. the ftse trading down .30% particularly on the german dax str trading off .16% we were handing some of that back for the monday trade. you can see a mild retreat for italian stocks down 2% across the board, the tone for the monday session is negative the individual sectors with patches of green basic resources is a standout trade to the up side and banks also moving into positive territory
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along with real estate and financials from there, we are mostly in the red from insurance and retail, despite the deal we will tell you about the retail space auto stocks with the second worst performer. despite what we saw with wall street where technology stocks are beat up with the nasdaq. it is a deeper start with europe let's look at the deal dominating the retail space. morrison's with a 6.3 billion pound takeover with the fortress investment group that beats the group from cdnr the new deal recognizes the future prospects and represents a fair price for shareholders. you can see the stock trading above that given that apollo global entered the fray. the u.s. private equity giant
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saying it is in the works of evaluating a deal for morrison's the stock up 49.9% on the call we will discuss the global deal making with managing editor at 10:30. it has put a bit of the market here on notice in the uk joumanna let's turn to the energy space. the energy minister told cnbc it has a sovereign right to negotiate a better deal with opec plus. this after the blocked proposed deal saying it wasn't a good deal for us. meanwhile, the saudi counterpart is calling for compromise and rationality. we have been following this conference with hadley what is the issue with the projected increase in output
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that opec plus seem to agree on? what is the issue with what they are asking for at this point >> the issue for the uae is economics. last year, 2020, the economy contracted by 6.1% this year, growth is expected at 2.5% they are tied into the opec plus agreement is to continue to a baseline that they had back in 2018 they are taking a hit as much as 18%. that is 13% more than the saudis they say it is not fair. i asked the energy minister what happens next do you feel the russians and saudis are getting a move up on you? >> when we did that agreement, we knew that the agreement that uae positioned in that agreement is the worst in term of comparing our current capacity with the level of production that goes back to 2018 which was
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given. agreement is an agreement. when we signed it, we knew the sacrifice and we have accepted it that's why we are for that agreement until it ends. >> was it a bad deal in retrospect >> for us in uae, it wasn't a good deal. it wasn't a fair deal. it was a must deal we had to do it and we think it was a courageous decision by the member countries everyone sacrificed. unfortunately, uae sacrificed the most making one-third of the production idle for two years. we did that for the sake of the group and sake of correcting the market and for the sake of the world economy. >> this raises questions of end of opec if the uae would leave
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the organization my conversation with him said we are supportive of opec plus supplying the market we want the oil out in the market as soon as possible when we think about the broader deal, we have eight months we should get negotiating as soon as possible as he said, it is unfair guys >> it will be interesting to see what happens as the talks continue today hadley, thank you for bringing us what is going on with the resistance. coming up on "street signs." charlotte speaks about the post-covid recovery and what it means for president macron's chances ahead of next year's election we'll be right back.
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france's national stats institute says the economy could grow by 6% this year surpassing the official forecast by a pull percentage point
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this as france continues to return to pre-pandemic levels. charlotte has been talking to policymakers at the economic summit about how the growth prospects would play into the presidential election. charlotte, i remember last year with the projections coming out, they seemed to get worse as the finance minister was forced to report what he year as we countdown to the elections for macron >> there would be at the moment. you see the positive feeling and he reflects the polls for emmanuel macron is 50% opinion that is positivity there as the economy is reopening in all of the french countryside there is positive sentiment. however, there is still
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uncertainty. the rise of the delta variant is 30% of cases and government and health minister warning that it could be a fourth wave this summer already there is some uncertainty. all of this with the talk of the recovery for next year the key is what does it mean for the election i caught up with the chairman and asked him his view on the months coming ahead. >> at the moment, there is a huge energy that we see since the end of the lockdown. a huge energy and at the same time, a lot of the divide that existed in the french society is still there. the generational divide and the very low percentage of people voting in the last election is a continue
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syndrome of that it is clear. we are in transition that is the best way to crackdown on the territorial divide it is putting more emphasis on the youth education. the question is how we do that in france, the state overall, is too big. not efficient enough my main point is that we need to change the management of the public area and i think like we have done in many companies on the method, i think we need a big movement toward decentralization and giving more importance to what is going in territories. that is what we need the state is too big we cannot have more taxes. there is agreement on that
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if you want to reduce the deficit, you also need to have it that is not easy at the same time we need that, we need to put money into the system to get rid of it. >> i had the chance to catch up with the mp and president of the socialist group of the national assembly we talked about the last election it was low turnout also the scentrist party i asked if there was a recomposition of the big banks take a listen. >> i hope this is a recomposition. i always believed that french people have organized the democratic with the left and the
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right. i'm happy that the original elections have put this split with the right and left back to the democracy. i'm from a region where the left made it's highest result with 58% of people voting for us. i hope this is a new start you have a political life in france which is clear. people need to know the chap for which they work. >> it looks like according to polls, the situation is emmanuel macron and marie le pen. >> what we see in the polls one year before the presidential
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election, never happened i think a new scenario will happen next year we will see which one it will be >> so will we see the french committee bounce back? the community will bounce back 6% this year the question is what now and will macron pick up the former agenda because of the pandemic he will meet with some unions to revive the pension reforms we will see what it means ten months before the election guys. >> charlotte, thank you for the coverage to your last point, it is interesting to see where the polls are right now and how far ahead president macron is and whether or not he can hold on to that interesting year coming up in french politics. for more coverage from the summit and the election, head
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online to also coming up on "street signs. morrison's agrees to 6.3 billion pound takeover by fortress potentially triggering a bidding war for the supermarket chain. we'll discuss more after the break.
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welcome back to "street signs. i'm joumanna bercetche with karen cho. these are the headlines. the uae pushes back on the saudi and russian agreement. the country backs the supply increase, but not a bad deal >> we are for increasing the production uae is not pushing conditions to increase the production. we think we need to do it and do it for august. private equity pressure
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raises the morrison's bidding war after a takeover by fortress investment group. eurozone business activity rises at fastest pace in 15 years after a boost of sector growth in france and italy and didi suspended in china as beijing opens an investigation over data privacy four days after the company's u.s. ipo more pmi numbers coming out from the uk. we have the final composite number for june higher than flash estimate of 61.2
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and services pmi is 62.4 there is a definitive theme here we saw it in the eurozone a half hour ago we are seeing it in the uk now business activity continues to pick up. a lot of that driven by a strong rebound in the services space. this, of course, going hand-in-hand with the vaccine rollout and easing of lockdown restrictions and general return to life which helped boost services and industries. particularly hospitality and retail very strong numbers coming from the uk today especially given how well the uk is doing with the rollout and the various stages of the lockdown and the numbers from a half hour ago, karen, both pmis are pointing to a promising recovery in the second half of the year
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the ceo of french waste management group has opened up to cnbc about the company's months long takeover by veo lia. the best possible deal for suez and employees. >> it has been a very long battle ten months now busy clear with the transactions started wasn't fair. it was under valuing suez. it was for one challenge with the inequality of treatment. being a competitor, we knew veolia would have to come back
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it was not acceptable for clients with the mass destruction of jobs. we decided to fight back and first of all, try to preserve the independence of suez a group which has been successful for a long time and implementing the new strategy. we tried to find a way to escape and find a better alternative for shareholders and our clients and our people at last, we were in a situation where we wanted to negotiate in 2021 on the more balanced situation. this is what we were able to achieve last week after ten months of struggle i think finding a fairer agreement in the context, we
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have a good variation for shareholders and commitment from veol ve veolia and the new company we set up at the end of the year. >> that was the suez ceo speaking to charlotte. veolia deal started with a hostile takeover approach. in the end, they managed to work out the differences. that is one major deal that has gone on. another potential deal in the uk that we are watching closely is uk supermarket chain morrison's agreed to $6.3 billion takeover deal with fortress morrison's says the deal
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recognizes the prospects and the fair price for shareholders. apollo global entered into the fray with the u.s. equity giant saying it is in the early stages for morrison's, but not approached the board karen, so much dealmaking going on what is interesting is we are seeing more and more private equity terms muscle in to the particular area. i was reading and just in the last 18 months alone, we have seen more takeovers by u.s. private equity firms of uk companies than at any other point since the financial crisis. >> that says something about the pricing and inherent value of the assets if you consider the deal we have three private equity
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companies involved it feels a deal will be done at some point the question is what the price is you see the anticipation of the bid for the stocks on the market what is also relevant here is what happens to the chain down the track and the fear that the private equity is embarking because it wants to take over the portfolio and sell it and lease it back and unlock the value. achieve 85% of the portfolio is owned by the company from the 500 stores it has. there is assurance from fortress that it doesn't anticipate carrying out any material sellback of the stores is that assurance one that shareholders bank on down the track? the other point here is how much property do you need in a portfolio when you see a pivot to online? the other point and this is a
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controversial point. is the portfolio valuable in a different sense? one recent trend you witnessed in the grocery market business has been to use the stores closed to consumers and create dark supermarkets? you don't have shoppers going in, but use it for distribution and fulfill more delivery orders it may be a remaking is where private equity sees the up side. five years to execute performance model for shareholders would be easier to sell or lease back the properties than change the portfolio. i would say that it is telling us something about what is trapped in the area of the market that did not get a lot of cover for the last number of years. it was the pandemic where the investors were eyeing that sector
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>> i mean, speaking of share price, you see shareholders are happy with the announcement. particularly apollo weighing in as well with the share price up 11% an you have to see how the story plays out. it fits in the larger picture of the busy year. global m & a hit a high in the first half with deals near $3 trillion the surge in activity comes amid low interest rates in a pri brightening post pandemic. john joins us on the show. john, let's start out with a broad question on the extent of how much activity has taken place in the first half of the year and what is the main driver is it just bounce back from the pandemic lows and activity from
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last year and the fact that interest rates are low many companies are looking to take advantage before we start hear about tightening or tapering withdraw of monetary policy at this point >> good morning. clearly those factors are important. pent-up demand from the depressed first half of 2020 we are still seeing that play out. the $3 trillion figure for the first half of 2021 that you mentioned. to put that in some perspective, in the second quarter alone, of 2021, you had $1.6 trillion. let's look at the dry poured available. we are still seeing $2.5 trillion of private equity and venture capital drive out which
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is sitting there $1 trillion in spac, not just the equity on that, but leverage put together that $4 trillion. that is a lot of money that has to be put to work. speaking of leverage, the financing environment remains benign a lot has been talked about in terms of the inflation risks from various government spending measures particularly in the u.s. and europe it has to be said that the financing environment remains be benign if we look at the big man of mondetary policy, it is too earl to worry about, but the only observable risk. get the deals done now before the tide turns. >> $4 trillion on the sidelines is astonishing amount of money
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karen and i were talking about this potential morrisones morril this is one case in point. many other cases of bidding wars going on what is happening to the clearing price are you seeing a trend higher associated with the deals going through because there is so much demand at this point >> it goes without saying. if you look at the premium and valuations as well, it is going up you have overseas interest in morrisons. if you look at europe overall in the first half of 2021, the inbound investor wave has enjoyed a remarkable run six of the top ten deals in
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europe so far this year, have involved overseas investors. inbound is the high of $182 billion versus $87 billion in the first half of 2020 as i say, the demand is incredible i think it is particularly of interest if you look at the huge capital that i was talking about p, a lot of it has been u.s. focused. it is news to no one that most of the spac raising activity is taking place in the united states that's getting a crowded market. the increasingly u.s. capital is looking across pond to europe. it particularly has to be said in terms of tech, data e encryption companies taken out by spac. similarly the uk company it is very clear the private way
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is going one way you look at morrisons and you see why. >> john, we've had lower interest rates before and for a long time if you look at history. it doesn't feel like this is the only catalyst. what jumps out to me is market perfo performance, but pent-up demand and esg. we have seen them spinning off assets to unlock value it is different this time around it is a fight for survival to remake companies so they are fit for the next decade. >> the fight for survival. i think also the identification of the opportunity every single panel that i chair in the last 18 months or so has turned into the panel about esg. regardless of whether it is
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about private equity or ipo market every single panel eventually becomes about esg. obviously we are hoping that the conference will still take place at the end areof the year in the uk it is the case that companies have to reorient with a view to that changing. not just the changing regulations, but the market expectation and customer expectation as well. it is a risk, but an opportunity. >> john, can i ask about big s tech we have u.s. congress going after faang stocks could we see those particular names look offshore for be out of the market all together as they do with regulatory hurdles?
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>> that's a good point you make. we see the tech rivalry with u.s. and china they the two titans in the space. that rivalry is playing out in east asia. if you look at president xi's initiative we are seeing chinese groups clearly with the approval and lobbying of the chinese communist party. alibaba and bytedance setting up firms. the bellwether is if the south korean semiconductor player is the subject of $1.4 billion takeover by chinese company. it remains to be seen given the pressure on south korea regulators from the u.s. indeed, the pressure from the
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administration is whether that deal with progress it is something of a proxy battle in southeast asia. >> john, thank you for joining us managing editor in merger markets. also coming up on the show, wimbledon at full capacity and hamburg is hosting the first covid events we speak to andrea petkovic who is competing in both tournaments after the break.
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and ask how you can add comcast business securityedge. plus, for a limited time, ask how to get a $500 prepaid card when you upgrade. call today. you are watching "street signs. chinese cyberspace regulators ordered to remove the didi app saying they violated laws on collecting and using personal information. didi listed on the new york stock exchange last week >> the cyberspace regulators in
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chinese forced didi to remove the app. they did not specify what issues they had when we check the app stores, didi is nowhere to be found. pledging to fix the issues current customers can continue to use it, but no new users. didi said there would be an adverse impact on china revenue. when the company went public a few days ago, the regulatory risk was flagged in the ipo. we spoke about it on cnbc and we are seeing that now play out there is more going in the background with the regulatory environment. they have gone after certain areas. fintech. anti-trust regulation and now turning to data regulation in june, the legislation was
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passed that goes into effect later this year. another personal information law to protect data. that is in the works as well regulators are concerned with how tech companies are collecting and processing and using the data they are looking to clean that up china has moved to the unregulated market with technology to one of the most regulated. when it comes to data, you can expect more in the months and years ahead. wimbledon will be the first british competition to host capacity crowds tomorrow planning to do so only for the finals this is the grand slam which is set for a big day of matches with novak djokovic and roger federer set to play on scentre
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court. and germany's andrea p petrovic will join us from hamburg and she will be involved in the hamburg event you have a busy schedule with wimbledon and now the hamburg event. i want to talk about the stadiums returning to full capacity how much does that come into your performance with the capacity >> hello to london and hello from hamburg we are lucky with the weather here today i hope you are, too. it is a huge difference, i have to say we are all competitive it doesn't matter in practice or
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matches. i always am giving my all. when you have the audience and crowd cheering you on, you can give a little bit more than just your all that is impossible without the audience to cheer you on and go to the limits you wouldn't cross if you were without the au audience the whole season, i have to say, felt on hold now crowds are alllowed back in and it feels like tennis again sdpagain. >> andrea, sponsorship is a big part of the business how was the response from the business partners ahead of the hamburg tournament >> i think it is really important that the crowds are back in. obviously partners are by our side no matter what.
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the goal of sponsors is to be seen if there is no audience to view anything, it is obviously making the partnership very hard. now audiences are allowed back in slowly and building from day-to-day and more with tests or proof of vaccination, i think this will strengthen the partnership. although, i have to say we were lucky with how loyal our partners are >> let me ask about the concept to have full capacity back in hamburg. how you are yensuring people ar safe >> we are not full capacity yet. we are playing in half stadium for social distancdistancing the people who are coming and people who are sitting and social distancing have to have tests or proof of vaccination. that is all city of hamburg
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practicing this right now. in restaurants f, if you want to sit inside, you have to show a negative antigen test or vaccination. i'm not sure if we can within the next two weeks go back to full capacity. we will look forward to maybe next year back to full capacity. >> andrea, turning to a topic in sports, particularly in tennis that is one of mental health not only osaka came under criticism for pulling out of rolan roland-garros. do you think now with the proper
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l proliferation of social media, that it is difficult for the youngsters to continue to perform or is she asking for a privilege that other players are not getting >> i think she has grown to stardom in such a short amount of time. she is, in general, i don't know her well, but i have seen her in locker rooms and we talked briefly. she is just shy and introvert. she has wrrisen to stardom quickly. you can see with the small usual yous there are tons of players. -- h i'm sorry weave to go. thank you for joining us that is all for today's show
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narrator: in this episode of "american greed"... the hunt for a high-flying businessman playing a very dangerous game. he did have, uh, a wild couple of years. narrator: t.r. wright iii presents himself as a globe-trotting dealmaker with style to burn... being on fire, uh, th-there's nothing like that. ...frequently posing for photos with his sports cars, yachts, and jets. it was almost like made for instagram. narrator: but something odd keeps happening to all his fancy toys -- they tend to crash, sink, even blow right up. reed: everybody who watched this video
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