tv Street Signs CNBC March 30, 2016 4:00am-5:01am EDT
monetary policy will, as always, respond to the economy's twists and turns. >> a twist of janet yellen sparks a global rally after the fed chair says she will proceed with caution on rate hikes. the dollar taking a dive. shares in metro spike after the german retailer announces it will split into two separate companies, separating food and wholesale businesses. third time lucky. well, mccormick sweetens its offer for the cakes maker following two unsuccessful bids.
shares trading sharply higher. and foxconn reaches the finish line, closing the deal to buy japanese electronics maker sharp after a lengthy delay. good morning and welcome to street signs. the janet yellen post-fed statement rally continuing here in europe. the stoxx europe 600 moving sharply higher as we got those comments yesterday, really trigger a rally stateside as well. moves lower for the dollar. also moves in u.s. treasuries. we also have some key movers here in europe. want to get to those in a second. first of all, here's the picture one by one. the ftse 100 up by about 1.4%. similar story for the german main market. and let's view some of the
individual stock movers. premier foods is moving sharply higher after mccormick sweetened its bid. they had previously rejected an offer of 60 pence. premier foods says it has, quote, seen the increased proposal and noted it. premier came under a lot of criticism for not engaging with mccormick immediately. meanwhile, metro is trading sharply higher after it announced plans to split into two independently listed companies. the merger will create a wholesale and food specialist group and a consumer electronics group. the german company aims to complete the separation process by mid-2017. joining us now for more on this announcement is richard clark. thank you for joining us. we've just been dissecting news from metro. we did hear the ceo saying this was the logical next step.
do you agree? >> absolutely. i think we've long before pushing for this move to happen. metro has long traded at what we call a conglomerate discount where it's got a group of companies together. result they equal less than the sum of their parts. last year they sold off the department store business. now we're seeing the consumer electronics business being spun off as well. measure tran pa-- more transpard it is a logical next step. >> so you think it makes sense for the two parts to be separated. more transparency, better from the management side of things. also, we're hearing potential acquisitions that could come under this new structure. do you think that's a real possibility? >> yeah, metro before this transition had announced it was undergoing an m&a program to
find small innovative companies. b i think that will continue under this, and actually it will be easier to see the transparency of how these businesses are affect manager the individual parts of the company while they do that. so yes, i think they'll continue to do acquisitions for the individual parts. so therefore, that will help there as well. >> after this demerger, which becomes the more valuable component, would you say? >> because there's a minority shareholder in media, all the debt will have to remain within the cash and carry, the wholesale food specialist business. in terms of market cap, that means they're probably reasonably close to each other. cash and carry will probably be the larger part of the 5.5 billion. the total value, the revenues will be much higher within the food wholesale business.
that will be the side that will get the most investor attention. not least because that will be the new entity. that will be the one that will be looking for new investors in, whereas the existing metro shareholders will be left with the consumer electronics shares. >> and investors are cheering the announcement we just saw there the stock popping nearly 8% today. do you think there's further upside before we get the completion of this demerger? we're expecting it to be completed not until mid-2017. >> i think we'll hear more about it. there's a conference call in ten minutes. i think we'll hear more about the rationale that's happening today. there's a long lead-in time. i suspect it will depend what happens in that. so there are possibilities they may look for a trade buyer off the business. they may look to sell the market business. if they make anymore of those transitions, any more of those transactions during that time period, i think they could
potentially be further upside. it would depend on what happens in the next year. >> and just ahead of that conference call, which is set to get under way, what is the key thing investors will be looking out for? is it a leadership question? >> i think that people will be looking for what's impressed them about today, anything coming from the media minority shareholder. what happens to the tax optimization plan. there's 7 billion euros of tax losses sitting within that wholesale group. that will be a question i think that we have asked on the conference call. then what happens with media now with the minority shareholder now having a bigger part of a smaller part, if you like. >> all right, richard. thank you for bringing your perspective. we'll keep an eye on the conference call. that's richard clark from bernstein.
moving on, we want to look at some of the other top movers in europe. we were just talking at the top of the show about this post-federally spilling into the european markets. miners are on the up after the dip we saw over the last few days. a lot of this has to do with the dollar moves. of course, the dollar moving to its lowest level in nearly two weeks. that's good news for commodities pricers and miners as well. all moving up nearly 6% in london. and this comes after janet yellen really surprised the marks with her dovish speech. the fed chair said the u.s. central bank would need to proceed cautiously, noting global risks to the domestic economy. >> given the risk to the outlook, i consider it appropriate for the committee to proceed cautiously in adjusting policy. this caution is especially warranted because with the federal funds rate so low, the
fomc's ability to use conventional monetary policy to respond to economic disturbances is asymmetric. if economic conditions were to strengthen considerably more than currently expected, the fomc could readily raise its target range for the federal funds rate to stabilize the economy. by contrast, if the expansion were to falter or if inflation were to remain stubbornly low, the fomc would be able to provide only a modest degree of additional stimulus by cutting the federal funds rate back to near zero. >> well, yellen's tone contrasted with that of several fomc colleagues who have taken a more hawkish stance in recent weeks with several suggesting that an april rate hike could still be on the table. that did not appear to be yellen's message yesterday. all of this as the dollar index saw its worst performance in nearly two weeks while u.s.
treasury yields were hitting their lowest level in four weeks. meantime, citi economists reacted by lowering their rate hike forecast to just one in 2016. joining us now, richard, great to see you this morning. another central bank surprise here with yant yellen coming out even more dovish than many expected. you could say more dovish than we thought after the last fomc meeting. were you surprised, and where does this put you before the nonfarms payroll report? >> i think we had expected some dovishness, but really what came out of this is the amount of dovishness we saw from yellen. absolutely it was a surprise. you can see it in price action. you can see it in the euro-dollar move, the aussie-dollar move. while we fully still wouldn't write off, you know, potentially
looking at june and still having some fx or market risks, it definitely down plays the risk to this over the short term. yes, we are looking at the dollar as weakening through quarter end and even the beginning part of april as well. >> next up here will be that nonfarms jobs report due on friday. a lot of people are somewhat cautious because they're waiting to see if that read will have any impact on the fed's perspecti perspective. do you they will have a lot of weight here? >> we look at it as the risk is asymmetrical. even if you get a very strong labor report, you have to go back to that speech. one of the things she emphasized was the labor market and why she continues to see slack within it. so even under a strong nfp, we think the reaction isn't going to be all that different from what we got yesterday. we're tending to look through nonfarm payrolls -- i don't want
to say it's a nonevent, but it would just have less risk than it would normally otherwise. >> part-this, you could say, is she continues to put the emphasis on global risk. so looking outside the domestic data, she highlighted concerns over china. really, we have this central bank divergence problem. when you look at the ecb, a lot of other central banks, bank of japan getting into negative territory. how much is that driving their voou point at this stage? >> when we look at the dollar, that's a key point. they emphasize basically concerns about trends in core inflation, wether or not they remain robust and concerns over china. the chinese data, all the domestic data isn't released until the 15th of april. you have at least a fortnight where this dollar, this weak dollar view tends to support emerging markets and aggregate. when it comes to the major economic data, you know, the fed is going to wait and see and want to see some stabilization globally before their language
changes. so at least for us on the dollar side, that gives us at least two weeks of dollar weakness. >> we want to look at the euro here. about 113.26 at the moment. got to think the ecb is scratching their head, wishing the fed would be less dovish. we already had the ecb really throwing out the big bazooka. what else can they do to bring down this euro level? >> you have to remember, the ecb, the additional 20 billion of qe kicks can in on april 1st. that's friday. so you have this central bank buying, which is going to hit fixed income markets. that should help to limit some of the euro/dollar strength. while we expect euro/dollar can push up, it's creating additional upward pressure. come next week when the ecb purchases kick in, that should limit some of the euro/dollar strength. again, i would expect it to trade up, but certainly be
capped by 115. >> and richard, before we, go i have to get your thoughts on the yen. the dollar is paring back some of its strength we saw overnight against the japanese currency, but a lot of analysts are concerned the japanese currency could strengthen even more. do you agree? >> i think in the short term, we've had two drivers. one has been the dollar side. the other has been the yen side. now, on the yen side, the quarter end, fiscal year end tends to be very strong for the yen. that's passing through the markets, and investors know that. what really is going to cause people to actually buy a lot of yen from here going forward is whether or not you get into a risk-off scenario in terms of emerging market data. if china data ends up being weaker, the yen is the best defensive kurnsz. that's not the environment we're expecting for the next couple weeks here going forward. so although we are seeing this knee-jerk reaction post-yellen yesterday, we would expect actually dollar/yen to stabilize
and trade a little higher over the month of april. >> all right. richard, we'll check back with you next month and see if that position holds. thanks for joining us this morning. meanwhile, as we continue to read the fed tea leaves here, tune in later to cnbc because our colleagues stateside will be speaking exclusively to chicago fed president charles evans at 14:30 cte. you don't want to miss that one. meanwhile, foxconn has approved plans to buy japanese consumer electronics giant sharp. this comes after months of negotiations. let's get to akiko fujita who's in stoingapore. a lot of expectations the bid would be reduced significantly. >> exactly. and it looks like it's going to be just that. we're getting the details out of the press conference happening right now. coming at a $2 billion discount. when this deal was scheduled to be signed last month, it was estimated to be around $6
billion. now coming in at $3.5 billion. so a significant discount for foxconn. this marks the end of a five-year pursuit. looking at the details of this deal, foxconn announcing they would by common shares after sharp at a 32% discount to tuesday's close. that would be about 88 yen a share. they would by shares of sharp to be swapped into common shares in july of next year. when you combine all of that, foxconn would have a 72% stake in the company. this really is a reversal from what we were expecting last month with that initial deal scheduled to be signed. we saw the stock of sharp move today on speculation that this deal was imminent. sharp coming in around 6:00% higher not only on the deal but also on reports that foxconn
will likely overall sharp's management, including removing ceo. quite deficient than what was initially said when they were wooing sharp, saying they would keep all the management in place, keep all the employees in place. he even offered to take on the debt load. keep in mind sharp has a $4 billion debt still there. what does this all mean for foxconn? well, foxconn certainly looking to position themselves in a stronger place against asian rivals like sam sung. foxconn has said with sharp, they plan to begin producing those oled screens by 2018 when apple plans to start using those in iphones. so it looks like it's been a bumpy road, certainly, but that deal finalized. it will be interesting to see. this is really significant for japan. this is the largest acquisition by a foreign company for in a
japanese tech industry. this is a company that's been around for 100 years. keep in mind the larger picture here. prime minister abe has really been pushing for a change in corporate governance in japan, telling japanese corporations they need to open up their boards, need to open up to foreign investment. this specific deal was seen as a test. nancy, it'll be interesting to see how other companies assess this, whether they will follow. while this deal has been signed today, it was a bit of a bumpy road getting to this point. >> that's right. and some significant political implications there as well. certainly we'll be watching the stock reaction. thanks for joining us. and you can e-mail the show, get in touch with us nice and early so we can get your comments in. our address is email@example.com. and you can always follow us on twitter @streetsignscnbc. and get in touch with me directly @nancycnbc. coming up, we tell you why
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good morning and welcome back to "street signs." well, the legal headache for volkswagen seems to be getting worse by the day with the federal trade commission suing volkswagen. the u.s. watchdog claims customers in the states suffered billions of dollars in injury as a result of that campaign. now, according to "the financial times," consumer compensation could rise beyond $15 billion. the move is just the latest blow
to volkswagen, which faces hundreds of class-action suits and more than $20 billion in potential fines. tata has con officifirmed i considering selling its u.k. business. they are holding talks with the u.k. government about possible support. this amid concerns that no private sector buyer may emerge for its u.k. steel assets. we want to bring you some breaking news on bank earnings out of china. icbc reporting that net profit stands at 277.1 billion yuan. overall looking at the fourth quarter net profit of about 54.5 billion yuan according to reuters. that's comparing to a forecast of 53.8 billion yuan. on a quarterly basis, we are seeing earnings come in just ahead of the reuters forecasts there. this comes after yesterday bank of communications got the ball
started and also came in just ahead of forecasts as well. what investors will focus in here on icbc will be the nonperforming loans ratio. that is at 1.5%, ticking slightly higher to the 1.44% that was reported at the end of september. meanwhile, china was just one of the concerns that janet yellen flagged yesterday, which continued to weigh on the fed. in her speech at the economic club of new york, janet yellen warned about at uncertainty surrounding china's economic transition. as you can see here, she said there is much uncertainty about how smoothly the transition will proceed and the policy framework in place to manage any financial disruptions that might accompany it. well, joining us now is miranda carr, head of china thematic research. thank you for joining us here around the set. we have been talking about janet yellen all morning. while in some ways, she's saying, look, the domestic picture in the u.s. is just fine, they continue to be worried about what's going on abroad, specifically with china. when we talk about this transition to a more
consumer-driven, services-led economy, based on the data and patterns you've been watching, do you think the government has a proper handle on that transition? >> actually, on an underlying basis, china's economy is improving as we come into q-2. a lot of the problems we saw in q-1 are moderating. a key part of that is the property market is beginning to stabilize. this has been the longest awaited recovery in china's history. we started seeing the market pick up in q-2 last year. didn't really feed into much activity, but in q-2, now we're beginning to see some of the real activity in terms of actually people putting construction stocks on the ground, excavator sales going up. that's beginning to kick in at the same time. but the key problem really, even if china's economy recovers, it's not -- you know, the economy can do well, but at the same time, the real problem that yellen is highlighting is with
the currency. if the dollar appreciates, this has a massive knock-on effect on the outflows from china. that's what caused problems in august. that's what caused problems in january. if we saw a strong rise in the u.s. dollar, money coming out of china again, that would cause much bigger disruptions. i think this is one of the reasons why she was much more dovish than expected. >> how likely do you think that scenario is that we'll continue to see volatility or a return of volatility in the yuan? >> well, you're still seeing it weaken on a trade-weighted basis. it's been weakening against the euro and the yen. it's not a strong -- you're talking about reversing what has been a 15-year undervaluation. it's now arguably overvalued. it should be trending downwards. it's been kept upwards. that means the pboc has to act.
the u.s. dollar weakness gives it this sort of wiggle room. the pressure is now diminished. so that means we can have a more sort of stable time going forward. >> i want to get to your thoughts on the property market you just mentioned. signs of stabilization. does this prove true across the country, or is it limited more to the central cities, the larger cities? >> no, it's a very mixed picture. in tier one, you have a bubble developing. shenzhen prices over 70%. measures have been taken to calm those down. meanwhile in tier four, the ministry of housing highlighted over five years inventory in some of these cities. so you've got a bubble in one place and then a five-year supply in others. but the really interesting thing is what's happening in the tier two cities, where prices are beginning to rise again. construction activity is beginning to pick up. >> miranda, thank you for that view.
monetary policy will, as always, respond to the economy's twists and turns. >> a twist of fate. janet yellen sparks a global rally after the fed chair says she will proceed with caution on rate hikes. the dollar taking a dive. shares in metro spike after the german retailer announces plans to split into two separate companies, carving out its food and wholesale business. third time lucky. mccormick sweetens its offer for premier foods, following two unsuccessful bids.
shares trading sharply higher. and foxconn reaches the finish line, closing the deal to buy japanese electronics maker sharp after lengthy delays. good morning and welcome back to "street signs" where we've been watching the post-federpost-fe post-fed rally after janet yellen had more dovish statements than expected. u.s. markets set to open higher. this a day after the dow jones clawed back into positive territory for the year. this global rally is spilling into the european market as well. the xetra dax higher.
let's take a look at some of those miners that are on the move. as we've been watching the dollar move to the downside, that's been supportive of the dollar denominated currencies. let's get in more to what exactly janet yellen had to say that surprised informers yesterday with a more dovish speech at the economic club of new york. the fed chair said the u.s. central bank would need to proceed cautiously, noting the global risks to the domestic economy. steve liesman filed this report. >> the question being asked, has the federal ri serve quietly retreated from raising rates after launching what it dubbed rate more to magization in december with that first quarter point rate hike. markets reacting with unanimity that janet yellen laid out a dovish look for rates. she suggested, quote, greater gradualism is warranted.
>> given the risk to the outlook, i consider it appropriate for the committee to proceed cautiously in adjusting policy. >> one fed observer said, quote, the fed chair is clearly in no hurry to undertake the next rate hike. and dana saporta said, curiously, for a central bank presumably in the middle of a tightening cycle, yellen's speech focused more on downside risks than those to the upside. there has been some deceleration, certainly in first quarter expected growth, but yellen offered little possibility of a rate hike next month or even suggested when the next hike would come. she also questioned the one obvious reason for hiking rates now, rising core inflation. she suggested she had her doubts that the inflation gains would
couldn't. it's another way of saying yellen is fine with where bond yields are priced now. read that as an implicit acknowledge that of what the market has priced in for the fed, and that is not too many rate hikes this year. for cnbc business news, i'm steve liesman. >> as the fed keeps an eye on global risks to growth, standard & poor's downgrades the eurozone growth forecast. in its latest report, the ratings agency said central bank actions were having a, quote, diminishing impact on inflation and growth prospects. joining us now for more on that report is the chief ema economist at standard & poor's rating services. we've been looking through the report, the various elements going into your growth forecast. why the decision to trim the forecast? >> clearly at the end of last year we had some weakness due
essentially to emerging markets going through a soft spot. the fresh fall sm commodity prices also led us to revise our inflation forecast down quite significantly. so december, january, february, certainly three months that were not very strong or certainly weaker than was expected. at the same time, we are now seeing a bit of a pickup in the growth momentum across the region. >> when we talk about that growth momentum, though, you say a large part of it is being driven by the consumer, consumer spending. is that right? >> absolutely. it's a one engine recovery, puck say that. the consumer certainly still -- consumer demand has fundamentals that are still fairly robust in our opinion. we're seeing for the first time in quite a few quarters a decline in unemployment rates across the eurozone. that's very positive for
consumer demand. we are seeing real wages growing a little bit faster. that's good for purchasing power. and finally but not least, we are also seeing the effects of the monetary multipliers. the fact that interest rates are so low is good for consumers. they obviously incorrectly via the housing markets have reduced the debt service, refinanced their mortgages indirectly because they can borrow again. consumer credit is actually quite buoyant at the moment. >> so theose are the good sides. when you saw a one-engine recovery that, raises concern here. what if that engine goes out? so i want to ask you about the export picture. you already mentioned concerns about emerging markets. when we think about emerging market demand for european goods, with the euro at this level, currently standing 113.28 after the fed statements yesterday, does that concern you when it comes to improving the export picture? >> it concerns me in two ways.
first of all on the inflation side, it is a concern because obviously until recently, the euro was used by the european central bank to try and lift important inflation. a weaker currency means important inflation is higher. that's no longer happening. and the second concern is indeed export competitiveness. the yaur row we are looking at today is expensive. it's strong. it's probably too strong. >> too strong probably for the ecb's comfort here. and you mentioned just the last ecb decision. we heard so much more focus on the credit markets away from the fx lines we had heard mr. draghi previously state. this coming after the g-20 meeting in shanghai. do you think there was some sort of implicit agreement to the to get involved in some sort of currency war here? >> i think we have every reason to believe there was indeed some form of agreement among the major central banks in developed markets. one thing that strikes me is the
fact that the ecb did not follow suit on the bank of japan's two-tier scheme for negative deposit rates as announced by the boj in february. that at the time was perceived as a fairly aggressive move on the part of the japanese central bank. the ecb did not use the same tool in mitts marat its march m. if you read the publication, they formally confirmed that they will not pursue competitive devaluations with of their currencies. so we are now in a new situation. expect the euro to stay around its current levels. i don't think the euro will go much further down for the remaining of this year. >> you could argue that's not very good news for the ecb. we have to talk about their other measures to boo s ts to b
here. what's left on the table? do you have concerns their powers are diminishing? >> the central bank's powers are diminishing in the sense they're using a larger and larger set of tools. let's see what happens with this new purchasing program for assets and especially corporate bonds as what is now going to be the case as of june. it needs time. if you look at the experience of qe in britain and in the u.s., these programs take time before you can really jump to a conclusion and say, well, it worked or it didn't work. i think the jury is still out. >> of course, the ecb has been struggling for quite some time to shift some of the burden over to the policymakers on the structural side, on the fiscal side of things. yet, we still see reluctance to do that. do you think this comes down to a lack of political capital within various countries here in
europe? >> yes, that's a very good point. the european union as a whole, brussels to make it short, is obviously very focused at this point on short-term, dramatic issues. the refugee crisis, terrorism. but that of course has a big prize in terms of not being able to dedicate more resources on economic and long-term issues. that's ones a pe s aspect. the second is you have elections in a number of countries. you had elections in spain or portugal. you're going to have elections. obviously that distracts attention. if you look at fiscal policies, that was actually something i should have mentioned on the consumer. fiscal policies this year across the eurozone are, at best, neutral, if not accommodative. that's good for the consumers and the taxpayers obviously. probably less good for public finance in those countries.
>> some of those benefits we're seeing on the consumer side could be limited. >> that's true. exactly. >> thank you so much for joining us. a real pleasure. meanwhile, the embattled brazilian president has been dealt another blow as the country's largest party has quit the ruling coalition. the move increases chances of impeachment over the coming weeks, which would lead the pmdb's vice president in lean for the presidency. the party's first vice president announced the party's decision to rule out rousseff's government. >> translator: starting today in this historic meeting for the pmdb, the pmdb removes itself. >> investigators probing last week's terrorist attacks in brussels say a second assailant likely took part in the attack at the metro station. dow jones has cited a person
briefed on the investigation as saying, quote, law enforcement believes it is very likely there was a second person there. this comes as belgian authorities revise the death toll to 32, down from 35. officials say they double counted three victims. well, donald trump says he will stay loyal to his campaign manager, who has been charged with battery in an alleged altercation with a female reporter. nbc's edward lawrence is in washington, d.c. with the latest. another twist in what is continuing to be quite a problem for donald trump here on the campaign trail when we talk about accusations of violence off the stage. now this impacting his campaign manager. how does this play out going forward? >> reporter: for the other candidates, they want to really capitalize on this. there was a town hall meeting last night that became very heated. there were accusations and explanations during that town hall as the republican candidates are trying to convince wisconsin voters to
choose them. they put their best foot forward during that town hall meeting in wisconsin. they were trying to show it was a very important race coming up next tuesday. donald trump was defiant during that town hall, defending his campaign manager after battery charges were filed by the police against him. this was an incident that happened on march 8th where trump says he will not fire his campaign manager, but security video shows that the campaign manager grabbed a reporter and pulled her back from donald trump during an event in southern florida. still, the other candidates weighed in on this. senator ted cruz says that this is indicative of a bigger problem within the trump campaign. senator cruz saying that there's an aggressive nature inside that trump campaign. even democratic hopeful hillary clinton weighed in on this, saying that she applauds the reporter for following up on this incident, saying that that
reporter did the right thing in filing the police report and getting police to charge the campaign manager. again, trump says he will not fire his campaign manager. wisconsin has 42 delegates. now, trump needs those delegates. it's a winner take all primary. trump needs 500 more delegates to reach the republican nomination, and polls in wisconsin show that trump and senator ted cruz are in a dead heat. nancy? >> of course, this raises the issue of whether or not we're get to a contested convention. we're now hearing reports that the top three remaining candidates for the gop have said they will not give their support to the other candidate. another sign of just how the anger, the tension is growing among this race here. how important will that be when it comes to the convention, if it is contested? >> reporter: and that was a surprise from donald trump, who has up to now said he would support the nominee. in that town hall, he said he could not anymore support the gop nominee if it is not him.
senator ted cruz has already laid the groundwork for a contested convention. if donald trump does not reach the 1237 delegates that he needs to win the republican nomination outright, then it goes to a contested convention. senator ted cruz has his people in place. he has a war room dedicated just to try and get those delegates who are now in trump's corner to vote for him if there is a contested convention going on. donald trump is now this week just starting to get into this process to try and combat a contested convention. it really could be a mess when cleveland comes around, which is where the convention is. >> all right, ed. thank you so much for walking us through that. ed lawrence of nbc news. still to come here, this one is for all you gaming lovering. we're making a play for video game stocks. we'll tell you how after this short break.
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welcome back to "street signs." an israeli forensics technology company helped the fbi crack into the iphone of san bernardino shooter. that's according to nbc sources. now, authorities themselves have declined to name the third party or outline the steps that were actually taken to access the data. nbc reports that the technology has been used to retrieve data in other sensitive cases, including the boston marathon bombings. music streaming service spotify has raised $1 billion in convertible debt, according to "the wall street journal." private equity firm tpg and hedge fund dragonier led the way. in conversion, the shares will carry a discount to the ipo price, one that increases the longer it takes spotify to reach
equity markets. and meanwhile, peer funds' andrew shannon joins us now. tech was just one of the big beneficiaries, actually leading the rally stateside. you're looking at quite niche corners within tech, specifically let's talk about your gaming etf and what you like within that space. >> certainly. so what we've noticed is that video games are now something that are now almost in front of everyone. more people have access to cell phones, to games than ever before. this fun doesn't just focus on the entertainment side of video games. certainly there are the entertainment video game companies, software companies, the console makers, the pc
gaming, the mobile gaming companies. at the same time, this is something that is now expanding into education, simulation, and training. we see these themes as growing ones into the future. >> and education, simulation, we naturally think of the world of virtual reality. there's so much hype in this space but still some questions over exactly how you monetize it and how you invest in it. what are your top pick when is it comes to the vr space sm. >> i think it's very difficult to choose who the winner is going to be. that's exactly why we bring these thematic funds. it's because people want to invest in these themes. but some of these parts of virtual reality, augmented reality, are trends that are still fairly early. being able to invest in an etf with exposure to many companies, you get large cap, midcap, doing all different things within the video game industry. >> we think of vr with a lot of excitement, all these headsets.
the other one generates excitement is the area of drones. however, investors trying to map out the best way to invest here. and you've really designed your etf to tap into not just the commercial uses, the every day household uses of drones. you're looking at more business uses. can you explain that? >> right. so this fund, the index was developed by a company called reality shares. they developed a proprior tear drone score, which looks at the impact each company in the industry has relative to what they're doing in the drone space. if you look at some of the top holdings, you'll see more pure play companies. we also have the chip makers and sensors, aerospace companies, defense companies, the ones that are locking in some of these very larng contracts. yet, this is another industry still in its early stages. because we don't know where the industry may go, we think this proprietary drone score is an interesting way of categorizing companies as actual drone companies.
as we see more companies expand into it, the fund can certainly bring more companies into the basket but always shifting toward more of a pure play exposure within drones. >> right, because we should point out there as we were visualizing, you have boeing, a lot of big heavy weights here. honeywell as well. you just touched on the sensors, the parts component suppliers of drones. does this offer investment opportunities beyond the pure play drones when we talk about medical advancements as well? >> this fund wasn't really developed to give the medical exposure, but to the extent medical companies become more active in the drone space. we're already hearing about the manufacturing of drone ambulances. we just saw a drone delivery happen in the u.s. earlier this month where they tested drone delivery and dropped off water and medical supplies. so kind of seeing the good side of drones as well. you can see this major beneficial impact in society. >> and andrew, we've been following the debate around
apple and the fbi case for quite a few weeks now. of course, we know the case has been settled, but it's reigniting a whole debate about cybersecurity, hacking. you actually provide a fund for cybersecurity as well. what are the top holdings within that one? >> right. so that's the first cybersecurity etf. probably holds many of the companies that people are familiar with in the cybersecurity space. cyber arc, barracuda. we also have a lot of smaller companies as well that you might not be familiar with, but they're publicly traded pure play cybersecurity companies from around the world. it's not just a u.s. fund because we're listed in the u.s. there are u.s. companies, canadian, israeli, south korean companies to give this global exposure to what this industry truly is. >> how much of the breakdown within the etf are firms based abroad? >> it's tough to say. i'd say it's a little below 80% currently in the u.s. if you look at our website, we update all of our holdings as of
the previous night's close. you can see that for all of our funds. >> all right. thank you so much for bringing us that perspective. ceo of pure funz. let's get you up to date on one of our top stories this morning. foxconn has finally approved plans to buy japanese electronics maker sharp after months of negotiations. akiko fujita is in singapore. the deal is finally done. walk us through some of the details. >> yeah, nancy, after a one-month delay, finally done is right. the deal valued at $3.5 billion. that's a significant discount from that initial deal that was scheduled to be signed last month. estimated to be roughly $6 billion. specific details here. foxconn would buy common shares at 32% discount from tuesday's close. foxconn would have a roughly two-thirds stake in the company. as you mentioned, this is a deal that almost wasn't signed. keep in mind they've been wooing sharp for many, many years.
he really threw everything at this deal initially, saying he would keep the management in place, keep the current employees intact, and even shoulder the $4 billion debt that sharp had. but everything came to a halt last month after foxconn said they found $3 billion in contingent liabilities that they were not made aware of by sharp before. now, since then, foxconn has sent hundreds of people over to japan really to take stock of everything within sharp before they reach that deal. the larger picture here, this has significant implications for corporate japan. prime minister shinzo abe has really been pushing aggressively to change the corporate governance code in japan, encouraging corporations there to open up their boards, open themselves up to foreign investments. this specific deal was really seen as a test of that. what does this all mean for foxconn? well, foxconn, of course, known as the assembler of those iphones, would be in a stronger
position to compete with rivals like samsung, especially in producing the oled screens. they've said that they want to start producing these with sharp by 2018 when apple plans to start using them in iphones. we should note that the companies plan to hold a joint press conference this saturday, april 2nd. shares of sharp were up about 4%, but they were up as much as 6% in trading today on speculation of this deal. so it'll be interesting to see, nancy, how they move tomorrow now that this deal has been signed and we're learning about all the specifics after a one-month delay. >> that's right, akiko. it will be interesting to see how sharp shares open, considering it was at quite a discount. i'm also wondering, do you expect this to have moves elsewhere in the space, specifically when we talk about who they may be supplying those screens to? >> well, that's certainly something to look into.
we should mention that even though foxconn is now better positioned to compete with a company like samsung, samsung has been producing these oled screens for some time. so a lot of analysts looking at this saying that foxconn coming out and saying that they're better positioned to compete among all the apple suppliers is really an optimistic view. even if they start producing soon, they still can't compete with a company like samsung that's been producing these display screens for some time. it's interesting to note that, you know, they've been wooing sharp for some time. sharp, a company that doesn't just do lelectronics, but so may other areas. their lcd screens have been the biggest loss in the company. it will be interesting to see how that partnership shapes up and whether this moves other suppliers within the region tomorrow. >> all right, akiko. thank you for joining us. well, let's give you a check on how u.s. markets are set to
open today as this federally continues after janet yellen struck a decisively more dovish tone than many expected. you can see here u.s. markets called higher for a second straight day. the dow jones did get back into positive territory yesterday on those moves as equities moved higher. the dollar moving significantly lower and the yield on u.s. treasuries moving lower as well, as many economists rush to push out their projections for the next fed rate hike. let's get a view on how this is carrying over into the european trading day. just over two hours into the session, we're up by a solid 1% on the stoxx europe 600. we're seeing strength in the ftse 100 on the back of gains for the commodities players and the energy space as well as those dollar denominated commodities are getting a boost. metro obviously one of the big movers in the german trading session. they've been moving sharply
higher after announcing plans to split into two independently listed companies. the demerger will create a wholesale and food specialist group and a consumer electronics group. the german company aims to complete the separation process by mid-2017. another stock soaring today is premier foods over in the u.k. this comes after the u.s. company mccormick sweetened its bid to 65 pence per share. t they had previously rejected an offer of 60 pence. they've seen the increased proposal and noted it. that's it for today's show. i'm nancy hulgrave. "worldwide exchange" is coming up next. ♪ before the band separated over unknown creative differences. [ crash ] and reunited three decades later for a tour that sold out in three minutes. and your cisco hybrid cloud handled millions of ticket orders without breaking a sweat.
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i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. good morning. a fed divided. yellen's comments solidify the division between fed members, but the markets don't seem confused. 2016 high stocks at home and abroad rallying as janet yellen strikes a cautious tone. impeachment nears. the head of brazil, the world east seventh largest economy, is one step closer to being ousted. it's wednesday, march 30th, 2016. "worldwide exchange" begins right now. good morning and welcome to "worldwide exchange" on cnbc.