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tv   Street Signs  CNBC  May 10, 2016 4:00am-5:01am EDT

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♪ good morning, everybody. welcome on "street signs." i'm louisa bojesen. and i'm nancy hulgrave. these are your headlines. credit suisse soaring after quarter profits a big sigh of relief for ceo thiam. >> clearly, we've had a loss this quarter. but to be able to keep us stable, we want to make sure that loss for the other teams and is a very pleasing result.
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luxury stocks perk up after pandora's shimmering success. lifting its four-year guidance. and thissenkrupp. >> and european finance ministers open the door with an attempt to break the dent in the bailout over athens. hello, everybody, good morning. glad that you're with us. >> that's right. >> second day of gains for european stocks so far. >> second day of gains. on european equity markets this morning. we're climbed a couple points higher. we just held on to that flat line after just an hour into the
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actual trading session. maybe we could show viewers as well what our european equity markets have been doing in general. because we've been hanging on to the gains this morning, also on the back of two-month lows in asia. and also a mixed session out of wall street yesterday as well. a pretty mixed dade. >> mixed in while she said the second highest volume day of the year. so traders were getting back. >> is it really? >> second highest volume day of the year so far. >> that's interesting. i think wonder why they're choosing to get that there. >> season fundamentals. we'll have guests coming up. the price of oil also definitely worth keeping an eye on at the moment. i don't know if you saw goldman's commentary out but they now anticipate in the longer term in the rege of $50 to $60 a barrel. we're currently around $43.50 on wti. the canadian wildfires that have
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taken out more than a billion barrels of capacity. they seem to be moved away from production facilities as i understand, so that may bring a switch in trade. >> this, of course, after we saw the big dip overnight in wti prices down some 2%. >> yeah. >> a little bit of a rebound there, influence. and still concerns with supplies, we'll get to that with the guests as well. >> concerns in supplies. and concerns also not just about supplies but also about the global economic health. china's consumer price index rising 2.3% in april. narrowly missing expectations. the food prices were the largest contributors to inflation rising 7.4% higher. sri is in singapore. we're looking at your mixed state out of asia? >> yeah, i've got to tell you
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the mainland china markets were pretty agnostic about it. yes, it gives them scope to ease further but i think what's wrangled china, that article in the front page of the people daily newspaper suggesting an l-shaped economy. that is really beijing managing expectations. and the jen against the dollar, hobbling around two-week lows for the japanese currency. with that intervention, it's important because it doesn't cost the authorities anything. it doesn't really get them into trouble arguably. and they don't want to get in trouble. they don't want to directly intervene on the market. they're already on that u.s. watch list. and they don't want to be in the naughty corner, so to speak, as we get closer to g-7, remember, japan is hosting g-7 later on
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this month. really, not a great deal of conviction. for me, it's really the bad debt situation in china. that is the big, big risk. and we got a read on that from moodies. that tally is up 280%. stick that in your pipe and smoke it. something to chew over, ladies. back to you. >> i know it's a busy week for japanese earnings as well we'll see if the gains can hold. meanwhile in the earnings front right here in europe we're taking a look at credit suisse as you can see, shares higher than 5% this after posting a smaller than expected net loss in the first quarter. the bank says its demands are increasing. but low price productivity is about to exist. jeff, got to wonder if this is a case of expectations were set so low it was only upside here.
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or people are impressed in the structure? >> i think it's a little bit of both, nancy. in terms of the real headline numbers maybe the bar was set very low and they stepped over them. so, in terms of the net loss and the revenue line, a little better than the expectations, but obviously, not great. as raw numbers. but i think where the market may be is more encouraged. it's at the pace with which the restructuring program is pushing ahead. now, they've announced 6,000 job cuts for 2016. and already they're ahead of the pace here, i think they've taken out 3,500 positions and other parts of the restructuring program like reducing the risk-weighted assets are ahead of expectations here and the program has been accelerated. so, i think if we got the share price higher today, it's probably a combination of both
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of those factors that's lifted the price. now, i spoke to tidjane thiam, let's here what he had to say about the positive points in the earnings mix. >> first, it's growth. profitable growth, in the areas we targeted for growth, asia pacific, switzerland, we had higher margins, quality frozen, that's very important. the execution of the program. the cost cutting program is progressing well. we gave a target of 6,000 reductions for 2016. we've done 3500. so we are 58% into it for april, first quarter. that's progressing. i think that's really important for the delivery of the numbers. and finally, capital, 11.4% for us is satisfactory.
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clearly, we've had the loss in this quarter. but to be able to keep us stable and ensure that loss is taking from the teams and is a very stable result. >> and i just want to make a point about return on capital here. because, as we know, we're in a very difficult environment for the banks. a near zero interest rate policy and negative rate. and it's really not helping the banks. the yield curve is really the wrong shape here. and the net interest margins are really not supporting bank profitability. but if you look at the return on capital for the three business units, the asia bank. the international wealth management operation, and of course the swiss bank, they are in the range of 16% to 24%. and i think that is something that tidjane thiam is very
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pleased with. because in a negative deposit rate, very encouraging to see that money can still be made in basic banking operations. and to be honest, the markets have not been helping, and that's another point that i put to tidjane thiam, is there going to be any improvements in the markets? >> february 4th, last time we spoke was a scary time. january was the worst january in the history of markets. i was speaking after four weeks of that. since then, february was bad. march was better than february, april was better than march, so we're clearly on an improving trend on a relative basis but we are still below prior levels. so, i think that's how we'd characterize it. so improvement, but below. there's some bright spots if you take ibcm with the back load of
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53%. and it's more than doubled, so that's really a bright spot. that's gone very well. and very strong. >> so bearing in mind that the share price of this bank over the last 12 months or so has declined, what, 45%, 50%, shareholders will be pleased today, i think, to be able to claw a little bit of that back on some green chutes indicating that the restructuring program may be just starting to deliver here. back to you guys. >> jeff, good to see you this morning. thank you very much. meanwhile, i want to bring you some breaking flashes from the japanese finance minister, we were just talking about comments coming from the bank of japan. now, the finance minister saying of course there's always some tension over 4x over that.
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and the g-7 due at the end of may held in japan. we know ahead of this meeting we've heard about angela merkel saying, look, we're not sure if it's officially on the agenda. >> he's been very adamant both into today's session and yesterday's session as well. they do stand to intervene if need be if the yen continues tow i've heard exporters. and sri's point is very well taken. verbalization can do a lot, too. >> it's what can we do from the finance minute sister sidister . >> we've got an fx coming up after the break. get involved as well.
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you can find us on e-mail. what's your handle again? >> @nancy @cnbc. >> and i'm @louisabojesen on twitter. shares of pandora topping the stoxx 600 right now. the company increased four years sales guidance to more than 20 billion crowns that was better than the forecast of 16 billion crowns. thiessenkrupp cuts it's forecast. >> it was more than we expected when we gave out the guidance in november. and now it's starting later and lower levels. nevertheless, we've seen recoveries, it comes a bit later and therefore have to reduce our
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four-year guidance. >> and meanwhile, munich re lowers its guidance after reporting a 45% net profit. and munich re now expects a profit of 2.3 billion uros this year. ing reports a first quarter fall in profits. dutch learned is blaming the drop in higher regulatory costs in europe and weakness in the financial markets unit. and the shares have fallen by around 28% or so. and it's been 25%, 26% over the last 12 months. and the british airlines easyjet has reported a first hit loss. but telling cnbc, there's also good news for investors. >> the payout going up to 50% is
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a very strong sign of confidence for the airlines and the future. now, adecco has delivered modest growth in the first quarter. this happening as net profit of the giant fell by 10% to 240 million uros. it's been down by 17% over the last 12 months. and nokia has reported a bigger than expected fall in telecom equipment sales in the first quarter. in its first earnings report nokia raised the sales of the merger to 900 million uros. and still to come here on "street signs," up in the air, d del ma rousseff's future hanging
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in the balance. we'll have more after the short break.
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hi, everybody. welcome back. four people have been seriously in a knife in a train station outside of munich train platform this morning. the attack which happened just after 5:00 a.m. local time was carried out by one man. german police say that they have arrested the perpetrator and are investigating whether there was a religious motive for the attack. meanwhile, another brazil, it was a stormy 24 hours for one of the world's largest economies. the brazilian senate is now planning to push ahead against the impeachment process dense dilma rousseff. the vote took place in his chamber back in april. now, he argue that's procedural flaws made the proceedings
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invalid. but the turn of events weigheded on brazilian down by 5% in the comes days. it might be just time to take a look at how we got to this point because by all means it hasn't been a straight path for the brazilian government. they launched national proceedings back in december and they were accusing rousseff about tampering with her election. rousseff then decided to maimer in predecessor chief of staff granting him immunity from prosecution. so, quite a lot going on in the beginning of the year. rousseff's largest party leaving her politically isolated at that
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stage. then the lower house voted overwhelming to impeach rousseff. the speaker following allegations of corruption was replaced by the acting speaker. and the senate committee voted last week to move ahead with the impeachment. a full senate was then going to decide whether or not to but rousseff on trial wednesday then we had yesterday's surprise annulment. a lot has been going on in developments in brazil. keep in mind the country dealing with, what, it's worse recession in 25 years, nancy? >> that's right, louisa. it's getting difficult to keep charge on what is going on. you can read what's next on brazil as the political drama unfolds. joining us here on the set is steven saywell from bnp paribas. thank you for joining us.
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we did see a big move when the news first came out about the lower house and the impeachment process. and then a bit of reversal as people said, look, this news it could mean a delay in rousseff, but doesn't mean it's off the table. do you agree? >> well, i think the key here is the uncertainty in the market. i think the key point we would highlight here is that it's doing very well. mainly for two reasons. one, less expectations of the fed tightening, but also big improvement in terms of brazil's trade, commodity price s drivin that. they're going to try to engineer a move and move higher. i think uncertainty can expect that, some weakening of brazil. the key thing we can say we may have seen a drop for brazil for the long term.
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>> we've also seen expectations, if you will, that if a new prime minister comes in, if the story has anything to prove, it's that this transition is not going to be easy? >> i think this is the point. i think the market had been looking for an easy transition and certainly that would calm things down. what's happened over the last week that's thrown that into civil coerce and concerns. yes, you'll want to focus on that. it's not going to be easy. and if there is instability there, we could see accelerated weakness. >> what do you think is the worst case scenario or the best case scenario looking at it from our angle? >> i think a smooth transition from the new government is likely to be the indication and of course that reduces the uncertainty. remember, the key point with the central bank, we've got them on the other side of this.
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they think it's probably gone too far. and they'd probe like to see it weaken a bit. particularly, remember, agency the dollar has weakened generally across the board. >> if mr. timet does end up taking over, he's got a huge job ahead of him. not only on the political front and the mess we've seen there and winning confidence back from people by what's invested in brazil but also because the overall economy is faring so poorly. do we need to see more from government? what has to happen to stop a recession that's the worst we've seen in 25 years? >> well, mexico has been the darling. and brazil is the one that people want to sell. i think what's helped brazil is the issue with the commodity process so we've seen a real recovery here in q1 to really help brazil's terms of trade. so, i think they have been thrown a little bit of an olive
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branch here from that perspective. but it doesn't take away from the fact that there's work to be done. >> that olive branch is extended to other currencies. you're a bit wary of the gains. talk us through the specific gains. >> sure, the two we'd like to focus on are the australian dollar and the canadian dollar. because both of these have rallied dramatically this year. australia has been the case with iron ore rising. the market is now long on these currencies. and what we've seen a pushback from the central bank. we saw the reserve bank of australia cut rates recently. this could be the catalyst that turns the aussie dollar and probe the canadian dollar
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around. >> and inflation costs, the rbi, too, right? >> yes, that low inflation rating has prompted them to ease. we think we'll continue to see more easing. >> the bank of canada is obviously keeping an eye on the devastating wildfires, what that means to the oil supplies there, do you think this will lead to more devili -- dovish there. >> this again could prove the catalyst that could shift to be slightly more dovish. particularly against the backdrop that the fed is less inclined to hike. >> steven, you're staying with us. send your e-mails, your tweets through. "street signs" @cnbc. that's where we are on e-mail. nancy and i are on twitter.
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>> @nancycnbc. now, greek officials saying they're confident they can unlock the next transition of the economic bailout, this happens after the finance ministers meeting taking place yesterday. they discussed debt relief. speaking in brussels, the greek finance minister spoke an optimistic tone. >> our expectation is by the 24th of may, given that we've now agreed on the program and the prior action that's have to be implemented thatby have an agreement to fine-tune the mechanism, that those two pieces of the jigsaw will be final -- will be completed by the 24th of may. and there is some expectation that the third piece of the jigsaw, in other words, the debt, will also come together, for a complete picture. that is what greece needs. i think it's what our credit ors
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need. >> at the same time, finland's finance minister alexander stubbs said they will not come cut back. >> no one is backtracking about haircuts. we can also on a principal level discuss maturities. we can discuss the timing of which -- in which the payments are being paid back and we can discuss other things but not about haircuts. >> all right. well, julia joins us on set. we were talking to you yesterday, julia. >> yes. >> before the ministers have met. they've met now. surprising developments in terms of the germans maybe? >> well, i don't know. i think you have to be careful in the details on this in particular. i think the good news is we've got the suggestion that they've agreed to 3%. that was what was passed in parliament.
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a 3% adjustment to keep usf on track for a few years. they also agreed a 2% adjustment which is what the imf is asking for. if they do have to use that adjustment period, they get three to four months to renegotiate just how to cut or introduce measures. what those measures are. that's a get out of jail free card for the greeks to some extent. and the talk about debt is pivotal. this is the first time that something has been presented to the finance ministers and they can look at it. and the president of the euro group was talking about the short term, the medium term and the long term, about how the debt profile can be adjusted. and he wouldn't really decipher the short term or medium term or longer term. day greece gets under the
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program will be a miracle. >> i think if we go back to the markets on this, we've been here before, and as recently last summer, i think the key point to focus on here and what's interesting here the market has moved away from a concern, stressing greece is bearish. in fact, quite the opposite, remember, last summer when we had a potential greek exit, the euro rallied. i think the reason for this is the euro has seen as risk on currency. on bad news, the euro actually rallies. >> what's the target? >> a high of 1.16. >> steven, thank you for now. more to come from steven from bnp paribas. >> julia, thank you. coming up, isolation means trouble for the uk? from the former ceo there, we'll tell you more of what he has to
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say coming up after the short break.
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good morning, and welcome back to "street signs." i'm nancy hulgrave. >> hi, everybody, i'm louisa bojesen. credit suisse after a big sigh of relief for ceo tidjane thiam. >> clearly, we've had a loss in the fourth quarter. but to be able to keep a stable cet 1 ratio and to absorb that loss is a very pleasing result. >> luxury stocks perking up after pandora's shimmering success. the danish jewelry maker is
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lifting its four-year guidance. but thyssenkrupp, say double-digit drop in second quarter profit. and a developing story out of munich. a man with a knife kills one person and wounds three others at a train station outside of the german city. >> good morning, and welcome back to "street signs." well, we're seeing green arrows across the board here in europe. let's give you a view of how u.s. markets are set to open. we've seen strength across board there with the dow jones climbing higher by 100 points. keep in mind the dow was in negative territory yesterday. but 28 points of that 35-point fall. really a heavy weight to that downside there. it was the second highest volume
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day of 2016 thus far. >> some of the jump might have do with the drop in oil. >> absolutely. because we did see the paring back of the gains. overall, of course, fears of supplies and inventory is building up. and a drop over 2%. >> here in europe, investors also keeping an eye to energies but also to earnings. were you can see the ftse 100 up 0.8 higher. the dax up by 0.7 and cac higher. and the mib up. the clash over the intensifying party flash. johnson accused cameron of undermining the public's interest on immigration. speaking on "squawk box"
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earlier, the ceo steven hester made an argument. >> for us being part of the european union something like 50% of rsa are trading with single passports and so on. but also insurers, as a group, hold a very large part of the uk savings. and one of the things that is clear is if there was an exit from the eu, the value of uk assets goes down. and that the not good for schooners. and it's not good for people who have they're savings with ensurers. that's why i say we're better off from a business perspective, economic perspective in the uk. it seems to me that the lesson for tens of thousands of years is you come together to achieve more. it seems to me, whether societies economically or any
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other ways rule themselves off, it's trouble. it could be inflation, political or public, warning yourself off from the rest of the world is not a recipe for success. >> thbrexit continues to have a effect. let's get back to steven saywell from bnp paribas. you were just listening to steven healthster there. and with the repercussions if the uk leaves. if we do get more momentum, does that suggest to you that sterling is oversold at this stage? >> very much so. the way we would look at this. two points stand out clearly. firstly, the market is very short sterling. it's the largest short out there in currencies. and it's the largest sterling short since 2008. the second point i would highlight is that's pushed sterling to very undervalued
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levels both against the euro and against the dollar. the good easy way of looking at this, currently u.s. sterling is trading around 79 or 80. what the fair models are telling us, it should be around 70. that's a huge undervaluation at sterling. if we see a reduction in uncertainty, then the suggestion we would make at bnp paribas is that sterling could actually rally quite significantly. >> you've got it in the one hand but recent data has raised a whole lot of fear in terms of the central banks of thailand cut instead of tightening. >> you could argue the link of uncertainty with the referendum vote coming up could have led to that. there are a lot of similarities between the uk and u.s., both have seen unemployment down.
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and also the start of wage inflation. i think the key point we would say, if that uncertainty goes away, you may actually see more momentum in the uk economy coming back as well. >> which do you think has more of an impact on sterling, the uncertainty or the back of new england? >> i think at the moment, the uncertainty. >> right after, if we stay, there's still going to be a lot of figuring out, in terms of our goals. >> and how long it takes glp yeah, how long it takes. >> i think this is a key point. again, what the market is nervous about is what the future holds. so, if we know with a strong degree of certainty what that future holds, i think you could see sterling do pretty well. another way again to look at this is in the slovolatility. sterling volatility is with that highlight has that uncertainty
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out there. >> what do we get the first break? >> well, our view is still sometime though not until 2017. way ahead of what the market thinks. we've got a lot of steps to get there first. >> steven saywell, head of global fx strategy from bnp paribas. the arsian markets in a session overnight for us, we've seen a lot of us markets flirting with two-month lows. we saw the hang seng lower by half a point. mitsubishi motors deciding to compensate. >> last month, the automaker
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talked about compensating. the cars told to the carmakers amount to more than 600,000 units. the cars were subject to government tax incentives for vehicles with good fuel economy which will likely need to be paid back. mitsubishi has plans to compensate customers for all of the lower than reported efficiency of the cars. and costing fuel expenses and higher tax on vehicles that will no longer qualify for brakes. now, the amount paid will depend on the results of efficiency testing from japan that will likely come out in june. the news gave boost to mitsubishi motor shares which finished 2% higher but it's far from over. sales have been suspended since the scandal broke but most of
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mitsubishi and sales of new mini vehicles since those affected in appropriate plunged to around half of what it was last year. mitsubishi motors has been falsifying fuel economy data for 25 years. it's likely to come out in a report submitted to the transport agency by wednesday. >> thank you very much. now, canadian officials, they say that their encouraged by how much ft. mcmurray has escaped destruction from the massive wildfire laying siege to the oil town. but they as warned there could be plenty of heart braisbreaks. >> reporter: cooler weather and light rain for what has been nicknamed simply the beast. that wildfire blazes on, and officials don't yet know the extent of the damage. >> we're waiting for information from the province. so they're in there right now.
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the last i heard, a lot of the infrastructure is still being looked at. and apparently the going grinte good. >> reporter: one thing is certain, the wildfire is said to be the largest in history. four the nearly 100,000 evacuees uncertainty is building into frustration. and they're already meeting with insurance companies who are trying to expedite claims. >> the industry is deployed. they're active. every insurance company has their own catastrophic response plan. >> reporter: uncertainty as vowed four canada's oil industry. one-third of the country's crude output has been taken offline due to the wildfire. the question now is when can production be brought back online? they just don't know. sun corp. canada's biggest oil producer says in a statement we will begin to return to
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operations when the infrastructure in the region can support our startup and we are confident it is safe to do so. right now, we don't know how long that will be." today, officials got the first good look in ft. mcmurray. and hopefully answers for people in evacuation centers like the one behind me. cnbc business news, edmonton, alberta. well, crude prices, they've been getting a bit of a boost. oil supply disruptions both that canada, as you just heard, and nigeria have taken on 2.5 million barrels of production off the table. good morning. >> good morning. >> a little boost coming through. how much of it is from now knowing that the wildfires do look like they're under control at the moment. and that it might not continue to impact the extent that we've feared? >> see, the canadian one is the large one, but it's the one that will get resolved a lot quicker than the nigerian one because
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the nigerian one is with people. we could see the canadian supply, with the analysis coming back. you know, over the end of this month if not the next. it's the nigerian one that's spooking markets. that's close to 400 barrels a day which is only expected after july now. >> goldman, though, some commentary earlier talking about $50, $60 per barrel, in the longer term. even with the outages that we've just witnessed, even with that is there some type of a floor now found? >> yeah, one would have thought, it's a sizable output. yeah, supply is still high. it is adjusting. it's finally adjusting after eight quarters of growth. one would have thought with these sizable outages that we could have seen the momentum going.
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>> exactly. >> because it's been stretched going into this there are a few investors looking at this moment to exit. we're seeing that in data as well. it's a good opportunity for them to do so, because in terms of further momentum, especially when demands is not that strong say bit risky. we risk what happened last year. >> it came back down. because you mentioned that the monotech supply, and then the opec side, we've heard companies say we want it to be at record levels, isn't that right? >> yes, and we heard news this morning that they've hinted of possibly increased production in saudi arabia. that's something to watch out for, saudi arabia could increase production if they want to, 10.5 million more than that. the current at at this time, 100
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million a day. >> why the increased production at this stage? >> because they see iran's export numbers looking stronger. suggesting that iran is close to $1.6 million for exports. >> now, we hear with the possible reshuffle not only in the that, but the oil industry. >> yes. you know, the more commercial side of the role, as a political power that came through from riyadh. and then we're following now what is given directly by the new regime that's a lot more in
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sync. >> do you anticipate any further movements with the u.s. crude inventories being published? we're expecting, what, a jump for the fifth straight week? >> i think it might get impacted with the wildfires because the canadian supply may have gotten impacted. and potentially, if the imports from elsewhere having to sort of balance we could be in for a surprise. >> what's your view on the dollar impacts because it's now been five straight gains for the dollar. analysts suggesting if that trend ends we may see a major impact on oils and other commodities as well. >> yes. last year, we saw -- the dollar as a headwind. this time around, because of uncertainty, it's subtly become a tailwind. and speaking to emerging markets they are saying that the weakness is of great interest.
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>> what's the end of year target for oil prices? >> we think we'll gravitate to the $60 a barrel level. but we have a weakness before we get there. >> thank you, oil only lift at barclays. still to come here on "street signs," is l'oreal really worth it? join us after the break when we will find out which companies provide the best and worst returns relative to ceo pay. you don't want to miss this one.
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hi, everybody. welcome back to "street signs." u.s. markets -- well, they start
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trading in 4 1/2 hours. slightly higher on the right side of your screen. the initial calls a little on the upside. same here in europe as well. >> this is after mix dads with the dow up from negative territory. and the nasdaq moved higher. and keeping an eye on oil prices. caterpillar and chevron. for once, we're paying less attention to the fed. and mia cash carky speaks msnbc. saying that the kashkari said he believes the fed is on the right path. >> i think the fed is doing what they can do.
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i said in my speech i think the current stand for monetary policy is appropriate because we're coming up short on both inflation and i think there's still slack in the labor market. you look at what's happening in productivity. the job market is creating jobs, that suggests that productivity is slow. we don't fully understand why that's taking place. my message to the markets, investors and the country, let's focus on the issues that can really drive long-term performance. it's not going to be the fed. >> now, completely separate from the fed, in other news, krispy kreme is going private. jlb holding, the german family have agreed to paid $1.4 billion for the doughnut maker. shares in the doughnuts and coffee company jumped by almost 25% after the deal was announced. it's a big deal. >> it is. i just hope they go back to the
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original. it was that simple glazed doughnut when you get it hot, there's nothing better. >> which flavor, glazed with what? >> it's a simple glazed doughnut. they diversified into too many chocolates and sprinkles. >> if you go online and we did in the past covering other stories, they've got green doughnuts. >> stuffed with bacon, just in case you're hungry. meanwhile, another very different story, shares in gap falling almost 14 as in after hours trade. this comes as the clothing retailer posted weaker than expected sales in the first quarter. on poor performance, banana republic and old navy stores. the fashion brands like h & h and zahra. goldman sachs cut its price on the stock this morning. disney getting on the scorecard will it bring magic to
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investors. wilfred is bringing his magic. >> we'll, he's going to do his best. disney expecting earnings of $1.40. revenue to $13.2 billion. and the ceo tom staggs who many thought as heir apparent. second, espn, the trend, keep an eye on espn. last year, the report from the cable net york overshadowed results. and look at the blockbusters, the street expects that the force is still with disney thanks to studio mega hits like "star wars" and "zootopia." and they claimed the top two spots in the box office with new
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releases of "captain america." and the yesterday, we saw the s&p flat, the dow slightly down. and the nasdaq slightly up. and at the moment, .05%, .6% higher in the indoo cease. guys. >> wilfred, good to see you. now, are investors getting less bang for their buck? new research has identified the best and worst companies relative to ceo pay. how does that work, robert val smyth joins us. good morning. >> good morning. >> what exactly is to be done, what are the metrics that you're comparing? >> so, what we've tried to do is take analysis of ceo compensation, long term incentives in terms of annual bonuses and figure out what that
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is with a standardization across an annual basis. we've taken that and measured that against the total shareholder return. we measure that from market cap from beginning. year, plus dividends and any buybacks which may occur. what we found is that large cap companies actually give a really poor performance relative to the ceo pay. it's not that the stocks didn't go up. it's just that the amount that the ceos were paid is very significant. for example, flo l'oreal ceo wad 5.4 uros each year. >> so the l'oreal ceo has been receiving the highest pay. in comparison to -- >> so, if you look at it, the l'oreal ceo was paid 24.5 million euros on average over the last three years. and we got about a 56% return on the tsr basis over that time
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frame. that's pretty much middle of the road. if you look at by contrast, kerry group. and foods. much better returns. >> how should investor s respon to this, do you think the average investors are aware. do they know what the bang for the buck if you will? >> i think investors are increasingly starting to look at this. in meetings i've had with investors they're saying i'm too busy. increasingly, they're looking for help from ourselves or other outside sources to do the analysis. i think they're increasingly irate about the amounts being paid relative to the performance. hey, it's great if they're being paid when things are going well, when things go wrong, people really start to look at it. >> what about across the board,
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is that perhaps that person jumping to arrival that's so great that they justify it, what do you think the rationale is? >> there's a lot of rationale that's tied to others. in terms of the baseline. inflation pay tends to happen every year. everyone is benchmarking that against everybody else. there's a risk of a flight to another competitor. i think there's also sometimes a backward looking effect. people are being againcompensatr years gone. >> the best performer being on h tech. thank you very much. >> i'm louisa bojesen. >> i'm nancy hulgrave. "worldwide exchange" is next.
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good morning. ready for a rally. stocks trading higher around the world right now. we'll tell you what's behind the optimism. new this morning, credit suisse shares popping. the ceo speaks to cnbc. we'll bring it straight ahead. and will the force be with disney? reporting quarterly results this afternoon. we have three key things investors should watch out for. it's tuesday, may 10th, 2016, "worldwide exchange" begins right now. ♪ good morning, and welcome to


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