Skip to main content

tv   Worldwide Exchange  CNBC  August 5, 2015 4:00am-5:01am EDT

4:00 am
good morning. this is is worldwide exchange. >> these are your headlines from around the world. >> forget the fed. the european markets shrug off a weak session state side yesterday after anxiety of a rate hike on the sidelines. >> investors cheer better than expected herbings sending the stock higher. attention now turns to standard charter that reports it's first numbers in around 50 minutes time. >> going global. the london stock exchange group reports a 21% jump in profit in
4:01 am
the first half of the year and hikes it's dividend. the ceo says the move is driven through growth in the global indices. >> our financial performance warrants returning a little more money to shareholders as we now have the financial strength of a company operating across all the major continents generating a lot of cash. >> and shares tumble as the cable business sheds customer. this despite hits like the avengers. welcome everyone to the show i'm seema mody with euro zone manufacturing and services numbers. data breaking right now. july final euro zone composite at 53.9. services number coming in at 54 versus the forecast of 53.8. we have been hearing from various countries across the
4:02 am
euro zone. mixed data so far. that service is coming in at 53.8 while in italy their services sector is slowing down in the month of july. french services manufacturing activity in july hitting a three month low. what does this mean for the currency market? well, you can see the euro trading at 108 against the u.s. dollar. down just slightly at around 10862. let's get a look at european markets. >> yes now yesterday european markets were only slightly negative and then we had quite a big sell off in the u.s. some people expected we would have a following sell off today in european equity markets. that has not happened. the stoxx 600 up strongly. largely because of a descent set of earnings results coming up this morning as opposed to the pmi which have been largely in line. ftse 100 up 0.4%. that's being lead by the mining
4:03 am
sector. they said it was a reluctant upgrade because the fupdndamentals are still poor but they have been down about 20% yet. germany up 1% and france up 1% and the third day of trade for athens after the five week closure. losses again but losses much more muted than on monday. let's look at bond rates. july was a risk on month for equities but risk off for bonds. we have seen bond buying of the safe havens compressing yields to the likes of 2.2, 3 in the u.s. and 0.67 in germany but that's just unwinding a little bit today as you can see with a little bit of selling. allowing yields to tick up but we're still down from where we were at the start of july. u.k. yield on the ten year 1.92. the euro which is not doing too much today, 108.6. the yen which weakened significantly during july's 124.
4:04 am
sterling we'll be looking at closely storm withwith the bank of england decision. oil prices sold off sharply. monday they stabilize a little bit. today 46.0 on wti. brent, 50.4. carolyn. >> activity in china services sector rose to an 11 month high in july according to the latest private survey driven by an improvement in new business. the pmi figure jumped from 51.8 in the previous month marking it's 12th straight month of expansion. this contrasts with china's manufacturing pmi which sharply missed expectations earlier this week. let's get out to sri in singapore. some good news for the economy. doesn't seem to be translating to the markets today. >> it's not. it does cushion the blow for all the disappointment we have seen with the factory activity data
4:05 am
but it's not enough to pick up the slack from manufacturing. you can bear that in mind. as for the market despite the fact that july services pmi as you mentioned was strong and 11 month high we also heard from the pboc reiterating that commitment to stabilize the market. we continue to see sentiment remain quite fragile. deleveraging process continues. we settle down by 1.6% for the shanghai composite. i wanted to highlight the markets in indonesia especially. up by 1.2%. resilience in the stock market and resilience in the currency as well despite the fact that q-2 gdp came in below 5% as widely expected but it did beat the consensus expectations by a narrow margins. so it does suggest a degree of stability. still looks very vulnerable though and i'd add malaysia to that group as well just ahead of
4:06 am
fed normalization. all the markets looking resilient ahead of pay rolls and what that's going to tell us about the fed hike timetable. >> thank you so much for that. let's stay with china. china's government must move quickly to liberalize markets if it is to become a reserve currency. that's the warning from the imf which thinks it is yet freely usable -- is not yet frueely usable. >> it was another down day on wall street. the dow in the red for the fourth consecutive session. apple losing more than 3% on tuesday to close below $115 a share. the company still wallowing in correction territory down about 14% from its april highs. now apple suppliers also getting hit. we're looking at western digital and some of the worst performers amid concerns about future iphone sales in china and the u.s. >> also tempering sentiment state side hawkish comments from
4:07 am
dennis lockhart speaking to the wall street journal. it would take a significant change in the picture for him to support delays past september. the two year yield ending at the third highest close. we're back at 73 basis points. also sending the dollar higher. the dollar index at a four month high. >> someone that isn't worried about the fed souring the mood is laslo birinyi. he came out with a bold call saying it could hit 3,200 by 2017. >> people don't realize we're in the second greatest s&p rally in history and we're ahead of the 1990 rally and if the market continues to gain 11 basis points a day as it has the last six years, two years out or so we'll be over 3,000. >> joining us now is federal market strategist at jp morgan
4:08 am
asset management. david, good morning to you. >> good morning. >> all three major indices finished july in negative territory. were the markets due a bit of a correction? were they too buoyant over the last month or so? >> a little bit but the bigger picture is markets are going sideways for most of this year. as they absorb the hit to earnings from two major factors. one was a big decline in oil. waiting there on u.s. stocks was important and then of course the very very sharp rise in the u.s. dollar which overwhelmed company's hedges. we think oil is going to end weak and trend higher. companies can take that waunsd i think that washes out of the earnings they will continue to trend higher. the market will move higher over the next 18 months. >> yesterday one of the factors being renewed focus on when the fed might hike rates. what's your latest expectation of that? and in the short-term the moment
4:09 am
we get the rate hike will that have a bit of a correction for equities? >> usually when we start a hiking campaign you get a bit because people worry and then of course the market usually rises with it because the fed is hiking rates because of the strength of the economy. are they going to go in september? these comments suggest that's still very much a possible. my own personal belief is all the data -- we have been in a place where all the data have to go right for september to make sense. it hasn't gone right. the cost index being the major miss. gdp growth is only okay. we need two very strong payroll reports. the one we're going to get on friday and the one just before the meeting to justify a fed rate hike. >> what does very strong mean? is it upwards of 230,000? this is something the city is pointing out. is there a magic line in the sand if you will? >> i don't think in term of the actual payroll growth but
4:10 am
earnings. you'd like to see earnings pick up solidly to try to reassure people on that side after the eci miss which of course suggested there isn't this wage growth that everyone has been waiting and focussing on for so long but look you need a combination of things. well over 200,000 both times. unemployment rate ticking down a couple of basis points. that would be good and then some solid earnings growth as well. >> what happens to commodities if we see the first rate hike in september because we have seen huge sell off for the month of july and previous months. a little bit of a recovery over the last two trading days. it's not a huge bounce back. a lot of people argue because that signals better economic growth commodities would also bounce back. do you think that's wishful thinking? >> yes, i do. the decline has little to do with monetary policy now. there's systematic oversupply in some parts of the commodity space.
4:11 am
things like iron ore and copper and oil. major industrial metals coming out of china. now how much it effects that is by the dollar. if the dollar continues to rise stronger we all know they can get that effect. i don't think what's going on in america is a big story for commodities right now. hasn't been and i don't think it's going to be. >> david you're going to stick around. seema. >> coming up on the show putting your money where your mouth is. a leading investor from index ventures explained why food delivery apps made for a tasty investment. disney shares tumble on declining cable subscriptions but will the force save the magic kingdom? new standard charter boss bill winters take bold moves to plug an estimated $10 million capital hole at the bank? we break down the numbers coming up.
4:12 am
4:13 am
4:14 am
welcome back. we are just awaiting results from standard charter. in the meantime let's remind you of what's happening in european equity markets this morning. we saw the u.s. yesterday and ftse 100 up about 0.3%. that's been lead high today after an upgrade. they're down some 20% since the first of may. perhaps due a little bit of a
4:15 am
bounce back. germany is up nicely 0.9%. france up 0.8% and remind you that this is showing quite a shrug off from the declines we saw yesterday. so standard charter has been up sharply in expectation of these result which is are due any minute now up 2.4% during the sessions. of course these are the first half results with the new ceo in place, bill winters. so we'll be expecting him to give some clarity of course of where he wants to take the bank in the coming weeks and months. so 2.3% well ahead of the plus 0.3% ahead of these results. >> we got the numbers. profit before tax of $1.8 billion. down 44% from the first half of 2014. operating income of
4:16 am
$8.49 billion. first half net profit of 1.51 billion. of course that profit of 2.1 billion. this is what a lot of people are focussing on. 11.5%. that is 10.7% that was the number a lot of people are expecting. now shares are dropping heavily. so huge swing just in the last few seconds when the numbers have been trickling through. >> i would mention this dividend announcement quite surprising here. reduced by 50% to 14.4 cents per share. that's why we're reacting negatively. after being up around 2.5% after earnings. >> let's get to the commentary. the group has some very real challenges but they're fixable and it's important to remember that there is a strong business at the heart of the group. they're well on track to deliver cost savings in excess of $400
4:17 am
million in 2014 and 225 to 30 billion in lower turning by 2016. 11.5% that is stronger than many people have anticipated but it to point your attention to the fact that shares turned lower after the results. now they're down 0.7% almost. a lot of people were wondering whether this was a kitchen sinking exercise. they say the impact or reduction with the new corporation task surcharge, it will have material and positive impact. >> we're looking at an over 3% swing in the share price over the last five minutes since the results came out. particularly due to the cut. net profit also disappointing some what coming in at 1.51 billion. >> we should point out financials in the sector have been out performing.
4:18 am
a couple of reasons here in europe. banks are looking well. recapitalized. ecb policy with the lending environment. morgan margins are also improving. something that you were covering carolyn when looking at the swiss banks, trading revenues getting a boost from the volatility in equity markets. not just when it pertains to greece but the china story for well. >> but there's one very specific issue. they have such a big exposure to asia and you have all the asian loans and many are commodity loans in effect. so that is a big problem for the company. are they going to be lowering their exposure to commodities? that's the big question. and an increase in the nonperforming loans and there are so signs of these reversing. that is a very important comment coming out this morning.
4:19 am
i know you can't talk specific stocks but these loan impairments in asia that's a big problem. >> sure but you see a pattern in what they just announced. the capital at the moment is fine. higher than people thought. but the ratio was already quite high and they see the nonperforming loans on the horizon. you want to protect your capital in the future. you do that by cutting your dividend. that's what they have done. that's why the market is off. if you have a ceo that wanted to take dramatic action and point the company away from where it was. you can understand why and the concern about the nonperforming loans is probably at the heart of it. >> we were talking before the break you like financials in general. do you like financials with big exposures to asia or other reasons they're more attractive? >> other reasons certainly. there's something unique going on in the european financial space right now. you have the combination of the pick up in the economy and that
4:20 am
lifted a cloud from the sector and restructuring the banks and financial system in europe country by country, jerlny spain and italy seeing significant things. so a lot of things going on in europe. in america a slight overweight there. obviously it's a hedge against higher interest rates. we think underlying is fine but generally it's fine and the banks are well capitalized as well. i think it's focused more there than asia. >> at the end of the day, is it the dividend? because this is a concern. reducing their dividend by 50%. should we not care by the dividend being offered by the banks and focus more on the improving lending environment. >> i think the improving lending environment in europe is a big
4:21 am
story. absolutely. i think the deterioration or slow down of the key asian markets is where they will struggle. across all equities not just financials our work clearly shows it's not just today's dividend, it's the stability of that dividend as partly down to the pay out ratio. how much you're already giving out but it's the quality of your business plan and the environment you're operating in. a lot of the head winds are now disapating. we had the regulatory response. most of it is behind us. we had issues in the past. most of that is demand us. you can understand the play on the trends. >> i want to get back to the commentary we're getting from standard chatterrtered. if we decide we need capital for the long-term benefit of the group we will raise capital. so no firm commitment on whether the firm is going to raise capital or not and there is a
4:22 am
50/50% chance they will do that. if they won't do that there will have to be higher savings from the run off business to justify the fact that they wouldn't be raising capital. their cost savings of over $400 million in 2015 and they're making progress on simplifying the group. once again, first half impairment losses of loans $1.65 billion and expect to cut the final dividend by 50%. that's the big news coming out of standard chartered. >> let's wrap things up in terms of markets. overall are you heavily overweight equities still? this year we've seen people buying he equities for relative reasons. they look more attractive than other assets. have they overrun? are they attractive in absolute terms? >> i think so yes. the bigger picture is progress on both side of the atlantic in
4:23 am
general you put those things together and corporate earnings should trend higher and that's where the equity markets should go and relative to other sectors i don't think we'll see a turn around in the commodity space and reveals low and fixed income. >> pleasure having you around the desk once again. global market strategist at jp morgan asset management. >> let's have a look at the other big stock movers today. standard chartered falling after it's earnings. stock gen is boosting higher. a tick up in loan demand and improved capital position. also cheering the higher trading revenue from the equities division so we asked the deputy ceo whether he was concerned about china's market melt down. >> the situation in china in one of the biggest uncertainty.
4:24 am
the question is what would be the real chinese gdp growth and what will be their adjustment of the policy? we'll remain between 5 and 7%. but the uncertainty coming from china's economy are probably one of the main concerns. >> so up about 8%. let's move from france to holland ing down about 3.3%. shares trading lower after the largest bank missed forecast on weaker margins and elevated costs. speaking to cnbc earlier patrick flynn explained why he is looking to emerging europe for other growth opportunities. >> the loan growth is coming from markets such as holland and markets such as turkey and germany as well as our commercial global franchise and the growth reflects our global
4:25 am
diversification so we're not reliant on the core euro zone area northern europe in particular where we are not expecting growth and we're leveraging the diversification that we have. so that's our core strategy is to get growth from our challenger in growth markets and that's what is coming through. >> shares up 2.8% after a near 80% spike in fourth quarter net profit. high interest incomes and fees helping overcome challenging conditions in it's home market. many are also announcing it's set to buy a majority stake. taking all of that very well inteed. lse group up 1.5%. it's among the top gainers. it's acquisition paying off with first nonprofits void by it's global index business. our colleagues on squawk box europe spoke to the ceo earlier who explained why the company was also raising it's dividend.
4:26 am
>> our financial performance warrants returning more money to shareholders as we have the financial strength of the company operating across all the major continents generating a lot of cash. >> shares paired losses of a sharp fall yesterday after they went hostile for a bid for the u.s. firm. it was spun off less than a year ago and rejected the offer saying it undervalues the firm. catherine that was a surprise bid. >> absolutely. came out of nowhere. a lot of people have been expecting them to do something investing given that it's a lot of cash. it's balance sheet has been doing successfully recently and it was to do something in the red. this could be something seriously transformational that brings them up into the big
4:27 am
leagues after years of being a mid cap to bottom of the large cap failed. so it's a really really interesting deal but of course there's still plenty to play for here and looks like it could be a really long drawn out battle. quite a complicated structure here. there's a poison pill defense in play already which means that it would be very difficult to kind of build up shares in the company. they're only allowed to build up to 10% and get together with other shareholders to build more of a defense too so looks like it could be really really long battle here. >> great stuff. thank you for that update and do head online to read a great piece from catherine on the lawn of innovation in the pharma sector. >> still to come posting it's first ever quarterly profit and it's got a new deal with facebook but is the frremium business model sustainable?
4:28 am
we'll speak to the president of the website builder coming up next.
4:29 am
4:30 am
>> standard chattered in laugh of profits nose dive. it will remain cool and collective as the global banking giant promises to simplify the business going forward. >> sending the stock over 8%
4:31 am
higher. the french bank benefitting from higher trading revenues and stronger loan growth. >> forget the fed, european markets shrug off a weak session stateside as they put anxiety of rate hike to the sidelines. >> a connection at disney it's cable business sheds customers this despite a blockbuster performance with hits like the avengers. >> we just got the u.k. numbers for july which came in at 57.4. that's quite far below 58.2 and the june 58.5 and here it is a five month low for u.k. services
4:32 am
services. all of this points to growth of 0.6% but that service pmi which is important for u.k. economies, disappointing. sterling rallying off the back of this 1558. it's up about 10 basis points. >> sticking with economic data across the euro zone that's having an impact on the equity strad. stocks higher across the board. german private sector expanding at a moderate pace in july. services pmi coming in at 53.8. higher than what the street was expecting. you can see the german markets very close to session highs up by around 1%. this after gaining in yesterday's session as well. >> basic resources are leading the way higher. they upgraded to hold pointing to potential upside and will be priced in. leading the gains of they
4:33 am
upgraded those stocks. they described it as a reluctant upgrade. fundamentals not looking good but those stocks down some 20% since the first of may and you can see all the stocks responding today in trade in london. >> let's revisit numbers from the banking giant standard chartered. very much an asian focus bank. but the focus of course less on the numbers and quite a swing in the share price. wow, we're up by 4.3%. we were high by roughly 2% and when the numbers came out and standard chartered announced a 50% cut to its dividend and payments for bad debts that more than doubled we saw the share price plunge by 2 or 3% but now we're seeing the wild swings once again. so now up by more than 5%. so they cut the dividend by 50%
4:34 am
to roughly 14 and that is a big cut but many were expecting the big cut. this firm needs to preserve capital. there's no decision on whether they need to raise more capital according to the new ceo bill winters but if we decide we need capital we will raise capital. meantime, the capital ratio, that's a little bit more than expected. 11.5%. >> interesting how strong this performance is now. the initial reaction negative. that came as we announced that the dividend was being cut 50% and in the lead up to this people were saying there's a 50/50 chance of capital being raised today. now that the new ceo has clarified that's on the cards for the future but not happening for today without allowing some recovery in the share price. an interestingly volatile last 15 minutes of course. 5.7% of gains at the moment. >> but the strategy overall
4:35 am
won't be unveiled until later this year. so today we knew we weren't going to get the entire new strategy so that will come sometime in the fall and we want to know what the size of the business is how big will it be. >> the nasdaq delivering it's first profitability quarter in it's history. the israeli tech company reporting $3.5 million. so let's talk to the president and coo of the company. a pleasure to have you on the show. help us understand what helped your company achieve profitability this quarter? >> well it's a great testament to the fact that our model is working and it has better leverage than expected.
4:36 am
we originally went public in 2013. that will come around in 2016. last year we saw better results coming in and we actually thought it's going to be the second half of this year and, in fact, we managed to even make it happen faster in this quarter and we actually do compare if you look at the q-2 and couple it with q-1 we're profitable for the first half of 15. >> you have been seen as one of the poster childs of the start up ecosystem. how much is your success attributed to your new partnership with the likes of facebook? >> obviously it's great for our technology and better value for our customers but if you look at the business it's more than anything, it's our own organic
4:37 am
growth and the value that our product is giving to our customers. the fact that they're building more websites. converting faster to people yul and obviously are happy with what they're getting. >> you started with that concept but now as you pointed out you're seeing more and more customers in the previous sector. what's the mix there. >> we don't disclose the exact numbers in terms of conversion rates but i can say that definitely if you look at the registered users overtime it is an on going improvement all the tile because people will take the time to play with the platform. they'll form the relationship with the company, with the product and when the real need arises for a website they'll come back to us and build their own website which will in-turn become a subscription.
4:38 am
>> you say you're the largest platform for mobile websites. talk us through the trends there. are people now mainly designing their websites for people to look at them on their smartphone rather than on a pc and do they not dual prefer these platforms or is it solely for mobile use? >> that's a very interesting question because, you know back in 2013 we expected a world of website in aspects. having a mobile presence is extremely important. you cannot have your online presence without the mobile aspect of it but at the end of the day most people will start with the website. they then have to find the right version and to represent themselves on mobile. it's a very very fast growing
4:39 am
segment but it's still very strongly attached to the website version as well. >> taking a step back we're seeing the highest levels of m&a in history for the tech sector. a lot of the larger tech names like google and amazon buying out some of the smaller companies. your company has been seen as a speculative target. would you ever sell your company to one of these larger companies at some point? >> never say never to anything but i love what they're doing. a huge goal and we believe that we can build a huge company and it's a global market that just keeps on growing. that's our goal. that's what we set out to do and that's what we'll hopefully achieve. >> we'll leave it there. >> now investors appear less than animated by disney. shares fell more than 6% in
4:40 am
extended trade state side after the firm cut it's income forecast. julia breaks down the numbers for us. >> disney reporting a record quarter. it's fiscal 3rd quarter earnings grew 13% to $1.45 a share. 3 cents better than expected. revenue grew 5% to $13.1 billion. that fell short of analyst projections by about $100 million. shares moved lower in after hours trading on the lower outlook. the company's cfo saying that the strength of the u.s. dollar is expected to adverse ri imly impact operating income by about $500 million. that combined with modest subscriber losses for espn means the company expects it's domestic cable affiliate revenue to fall shorter of expectations. operating income guidance from the high single digits to mid single digits. on the earnings call talking about the change in cable landscape and consumer trends
4:41 am
driving modest subscriber losses though he says he's still quite bullish on espn. >> overall though we believe that the expanded basic package will be the dominant package of choice for some years to come because of the quality and variety it represents for a price that is generally considered fair and appropriate. we also see the continued development of new platforms with smaller channel offerings. >> also talked about the opportunity in selling digital content calling netflix more friend than foe. but that didn't help the after hours slide. dreamworks animation stock also tumbling in after hours trading. the studio beat analyst projections on the top line but the loss more than doubled from a year ago. this quarter includes a $21 million pretax restructuring charge. back to you. >> this is such an interesting story because there's been an active discussion around espn which has been the cash machine behind disney but now we're
4:42 am
seeing a change in the way consumers consume sports content and that puts espn in a challenging situation. the big question out there at some point does disney spin off espn. >> or do they take it ott, over the top as other companies have done and bob saying yesterday there are no plans to do that. so i wonder whether he's catapulting himself behind the curve automatically by not going with the disruptive trends. >> i do think that's what happens is really interesting and is a lesson perhaps for sky in the u.k. that just paid up massively to get the premiere league soccer rights. because the way is changing how we consume television content but sports was thought to be one of the ones that you would continue to watch in a normal way, a traditional way. because it's live you don't need to pause it and watch it on demand and because this is also hurting espn is a bad, bad news for broadcasters globally. >> but you would have to react to that no? >> of course you have to but
4:43 am
it's an interesting trend to be watching because so far broadcasters hoped if they owned the rights to exclusive live sports content then consumers will come watch it in a traditional way. >> digital world created a very tough environment for some of the traditional media players including television players for news as well. so the question is how do the media companies respond to the digital players. yahoo! a couple of weeks ago streaming the first ever nfl game and that could be a trend that continues and what does that mean for the sports world as well. >> espn only about 25% of disney's businesses and they're bullish about the films coming out and the like and particularly the star wars and purchase of lucas films. at the moment the flavor of the month is to have these franchises franchises. >> they have done incredibly well. frozen is a one time thing. >> i don't know if it's a one
4:44 am
time thing but it's a stand out success. quick boost attorneyings and continues to do now in the home market as well. on going sales. but do stay tuned to cnpc because disney's ceo will be speaking to the squawk on the street team in the u.s. that interview coming up at 15:00 cet. >> another slew of earnings today. second quarter results for discovery communications followed by 24th century fox and cbs at 21:00 cet. >> another hollywood power couple is calling it quits. kermit the frog and miss piggy announced their separation on tuesday saying they'll continue to work together on television making sure they're professional about their separation i suppose. the muppet's franchise is being rebooted on abc in the u.s. this fall. kermit says it can be tough to work for your ex but he has
4:45 am
moved on. his new girlfriend is a pig that works for abc. have our producers made up some of this or is it a fact? >> no it's a fact. i wonder if they put out a statement as to whether they were consciously decoupling. >> who knows what the settlement looks like. >> a divorce lawyer has made a lot of money off of that. a powerful couple of people. >> absolutely. >> still to come on worldwide exchange, fairweather shopping how much can one degree swing sales numbers for the retail players? we'll break it down right after this break.
4:46 am
i hate cleaning the gutters. have you touched the stuff? it's evil. and ladders. sfx: [screams] they have all those warnings on 'em. might as well say... 'you're gonna die, jeff.' you hired someone to clean the gutters. not just someone. angie's list helped me find a highly rated service provider to do the work at a fair price. ♪ everyone can shop, but members get more with reviews, live customer support, and better pricing. visit angieslist.com today.
4:47 am
4:48 am
welcome back. let's talk earnings. etsy's second quarter loss doubles due to higher marketing costs. it's partly because of spending on product listing ads. the stronger dollar could hurt demand for goods this quarter which could slow the pace of gross merchandise. sales falling in after hours trade and it is down about 36% since going public. you and i had an active discussion around this company. what the future is of these arts and crafts he-commerce player. you have been a little bearish. >> i was at the open.
4:49 am
when this came to market it was at a point where these companies were getting extraordinary valuations. fair play to them. they raised money at a wonderful price but it seemed very rich at the point of ipo with a market offering that doesn't seem that defensible. at the time i thought the likes of amazon it will be so easy to step into their market and i didn't see how that valuation was justified but i'm sure it can recover. facebook had a fall after it's ipo but it doesn't surprise me that we're seeing this fall back. it was a very rich valuation. >> that's one concern but in terms of this earnings report with a big jump in marketing cost this is a high growth e-commerce company they need to spend on marketing or grow and get their products in front of more customers. what else are they supposed to spend money on. >> amazon can blow them out of the market. that comes back to the defensible position. they're not strong enough yet and if amazon wants to launch their own arts and crafts online
4:50 am
marketing place or ebay does they can't fight back on it. >> they still report a net loss and it widened. revenues are higher and 31.6% jump in active buyers which is good but i probably side with you -- >> yes. >> facebook has been criticized so heavily for its higher cost and higher spending and higher head count. same story with linked in. why do all these companies get punished when they're in the growth phase? analyst investors can't have it both ways. you have to spend to grow. >> yeah but we always come back to netflix, they're crucial when your valuation is so incredibly high that the multiple on earnings if you have negative earnings in this case clearly the market is going to react heavily on that day because small things can make a big difference and this is disappointing. >> i just think if you were invested in these names you should understand there are times when profits are going to be impacted by higher expenses
4:51 am
because they're in growth phase. give them a break. >> yeah. >> there we go. done. >> moving on, shall we? let's talk more about retail but a different subject here. california's biggest wildfire of 2015 continues to grow after jumping a highway north of napa valley. this has nothing to do with retail. excuse me. the fire burned over 67,000 acres and displaced thousands of residents since it began last week. 3200 firefighters have been assigned to battle this fire and they report that the blaze is about 20% contained. a typhoon continues to gain strength as it surges toward japan and china. it has wind gusts up to 220 miles per hour and is now the equivalent of a category 5 hurricane. no deaths have been attributed to the typhoon but a state of emergency was declared after the storl storm left a trail of destruction over the weekend. >> prices fall and the brc
4:52 am
director says discounts on clothes played a large role in the drop as retailers sought to shift their summer stock. however food prices rose in the u.k. for the first time in seven months. >> weather is often blamed by weak earnings or a sluggish economy. a new report from the weather channel says severe or extreme weather has less impact on retail sales than long periods of bad weather. great to have you on the show. in the u.s. we're used to very extreme weather and snow and that impacts gdp and spending in a big way. here in the u.k. we have more moderate weather. is the sensitivity in retail sales equally moderate? >> so the extreme weather that we experience sometimes in the u.k. snow or extreme highs, the weather we have in july that will grab the headlines and that will be social feeds and et cetera but where the difference
4:53 am
period happens, where we have increase or decrease over a longer period of time and that's where we have a big impact. we saw that last autumn when we had an indian summer which is only about 1 degree higher than average, we saw the clothing retail sales lost about 700 million pounds of sales over that period. huge discounting into the autumn. >> but that's the point i don't necessarily get. isn't there always a substitution effect? so if the weather is warmer you'll buy more summer clothing. so the retailer shouldn't necessarily suffer. >> retailers have to manage their stock. to what we saw last year we saw it with things like black friday in the u.k. because they have to shift stock at certain times. so therefore they have difficulty managing that sort of supply flow. >> how can businesses protect from this sort of volatility? >> so weather has come a long long way recently and had a bad rep in the past with uncontrol
4:54 am
uncontrolability but it's a huge data set that can be mixed with other data sets to make actual insights. there's two ways the retailers can use it. one is looking at more long-term forecasts to understand how people are going to buy stuff and when they're going to buy it and how they're going to buy it online, mobile et cetera and the second one is actually pitting consumer with the propensity to buy so humans when weather changes we change our behavior. so therefore retailers make sure that they're advertising the right product at the right time to the right people. >> and ross it's the start of august. are we going to have a nice rest of august and summer. >> we'll be drier than average we think which will be great for retailers and then probably into the autumn we probably think slightly drier but colder which will be great for shifting winter coats into the autumn. >> thank you for joining us.
4:55 am
>> netflix is letting new parents take off as much time as they need during the first time of their child's birth or adoption. they're also allowing them to return on a full or part time basis. google which ranks among the best places to work offers 18 weeks of paid maternity leave and up to 12 weeks of baby bonding time during the child's first year. >> so we want to know from you, what's the best perk of your job? if you want to join the conversation here on worldwide exchange get in touch with us by e-mail at worldwide@cnbc.com and our personal handles are at the bottom of the screen. i put this question out on twitter and one very loyal viewer already responded. he said wearing sandals and drinking margaritas every day after lunch. i know what company but i can't say but how great. >> that's fantastic. >> it's the live newsroom environment. it's exciting. >> working with us. >> i was going to come to that. that kind of aspect but in
4:56 am
general i don't know if our bosses and producers are watching but the rest of the office floor -- it's not the most there's not a big free food room or anything like that. maybe they can bring that in. >> we need a games room. allows for innovation. >> table tennis that would be fun. >> absolutely. >> playstation room. i like that but we don't get it. >> maybe a tv that streams netflix throughout the day. >> there's one thing a friend of mine has at his job, a 5:00 p.m. drinks trolly that comes around and on a friday that gets brought forward to 3:00 p.m. apparently. that sounds great. >> is that a friend in the u. k.? because that would never happen -- >> we're long gone by 5:00 p.m.. maybe we could get three drinks brought in quarter to 11:00 in the last break before the final section of the show. just where we could keep it down here. no? you don't like that idea?
4:57 am
>> i like that idea. 21 employee perks that attract the last talent, unlimited paid time off, gym membership extra time off throughout the holiday. free on site spa services. we don't have that either. >> i think we should get all of these things and much more if you're watching our botszsses. do continue to get in touch with us. >> here's what's coming up on worldwide exchange. going with the flow. why more investors are ditching hedge funds for etfs. that's next. don't go away.
4:58 am
4:59 am
5:00 am
this is the second hour of worldwide exchange. i'm seema mody. >> i'm wilfred frost. here are your headlines from around the world. >> despite a blockbuster performance from its movie division with hits hike the avengers. >> pretax profits nose dive. investors remain cool and collected as the global banking giant promises to simplify the business. >> there's no stopping the dollar. the green back scaling the heights not seen in three months after the fed president says the central bank is on c

31 Views

info Stream Only

Uploaded by TV Archive on