tv Street Signs CNBC May 18, 2016 4:00am-5:01am EDT
♪ good morning, and welcome to "street signs." i'm nancy hulgrave and these are your headlines. investors, fluster over the fed. european equities on the back of the april minutes meanwhile commodity stocks are leading the way lower. sizing down over at burbury, announcing 100 million pounds of cost-cuts along with the share of the buyback program. and the race is ahead on the report of a possible bid for
automaker gac. leaving yesterday's 6% climb in the dust. the strong blind clients of miller, with an 8% drop in revenue. good morning and welcome to "street signs." well, let's give you a view of the trading picture here just an hour into the session in europe. we are seeing softness across the board with the stoxx 600 up about less than 0.2% now. the big mover of course, overnight, was the dip on wall street with all major indices closing down at 1% with additional fed speak. we'll get into that in more detail in just a minute. let's get a look at how these are playing out one by one. you can see the ftse 100 is up 0.4%. the ftse 100 bucks the trend
with an otherwise down session yesterday, now on the back foot leading lower. the dax off by 0.24%. and the cac as well. and the ftse mib holding flat at this stage. the clear under performer off 1.7%. metal prices off in tneighborhod of 1%. auto is off 0.6% despite fiat chrysler that we'll get to in a few minutes and retail up about 0.4% despite burbury's earn agency. goldman sachs has downgraded equities to neutral. that view over the next 12 month. they're citing growth and valuation concerns. goldman said equities will not
look attractive without sustained earnings growth adding that it expects, quote, particularly poor returns in dollar terms, due to the forecast in the strong dollar. and the higher volatility is based on risks including china growth and the increased political risks and fed cycle. and commodity price declines particularly for metal, the trend we're seeing this morning. the big question, how good goldman recommend playing a market it calls fat and flat. the big thing is to focus on cross asset opportunities particularly when it comes to emerging markets. goldman was front and center yesterday because fed officials have been talking up a storm ahead of today's affluence
minutes. and john williams agreed up to three hikes seemed reasonable. dallas president robert kaplan said he would call for a rise in june or july. meanwhile, a lot of corporates here in focus in europe as we look at earnings, burbury among the big names reporting they've announced to slash 100 million in costs by 2019. this comes as they report a 10% fall in profits. joining us for their own perspective is director of research at thompson reuters. thank you for joining us, despite the buyback and good news when it comes to cost cutting initiatives, the stock is still lower. what is the big disappointment from your view? >> well, it's interesting because they slightly beat on
revenue, but net income still missed expectations and came out very weak. right off the bat they blamed the weak luxury environment, but they also said they were doing aggressive changes to the brand because they know there are some company specific issues, number one being the merchandise. yes, burbury is a well liked luxury brand among chinese consumers but it hasn't been as resilient as others like gucci where it's resonated very well. the strength came in on accessories. in general, there's still a lot of weakness with the brand itself. >> a big part of this weakness for quite some time has been coming from warnings from the chinese consumers saying, yeah, china holding up okay, but it's hong kong specifically that they're worried about. how bad is the picture there?
>> the picture is really bad there. just to explain how big the difference is, sales come in at negative 1%. and if exclude only colin mccow, that is say significant increase to 3%. hong kong used to be the jet setter destination for the sharsharp shoppers who buy luxury expensive bags. they're no longer going to hong kong. steld, they're going to korea and japan. and they're going to open flagships in seoul and also tokyo which is a smart move. but it's not only burbury who is suffering from the hong kong exposure. hong kong is a big market for the luxury names. also the realistic costs are significantly higher. and the massive amounts of
luxury locations of these stores in hong kong, definitely cost effective, very, very high. at the time when burbury is saying they're doing massive cuts and on behalf of that they're going to be investing in the omni channel. that's a little bit of a contradiction and where analysts believe it's a little cautious. >> so when you talk about these cost cuts, additional investment, that's more of the company's specific investments we're looking at. christopher bailey, do you think he survives in this world if the company does not substantially improve here. >> all of us at thomson route gers are very, very bearish. it's expected to be flat, we do not expect to see growth in the near future.
>> finally because we're seeing retailers disappointing in the u. u.s., what do you see here? >> well, for burbury, they haven't been as resilient. there's definite brad specific issues for burbury. burbury, if they can improve the merchandise, the brand winners, they can actually do better. although analysts are negative on the stock. in terms. united states, the dollar is very strong. the tourists coming to the united states -- the number of tourists have dropped but when they come to the united states, they're not spending as much because the dollars have made these items more expensive. >> thank you for joining us, jaronne martis. i want to bring you breaking
news we're getting of an earthquake in ecuador. the magnitude 6.7 earthquake has struck in western ecuador and reportedly has a depth of 28. a magnitude 6.7 earthquake striking western akwbou ecuador. shares in fiat are driving higher, in fact, at the top of the stoxx 600 at the early trade. and it's climbing back to the losses we saw from yesterday's session. but today, investors focusing on news of the potential tieup with g.a.s. reports that g.a.s. could be looking at an interest in stoxx. so investors digesting this report from the italian newspaper. again, we'll be watching developments on that throughout the morning. meanwhile taking a look at
mitsubishi, the president needs to step down amidst the fuel scandal. that's according to the nikkei that says he's taking responsibility for the exaggerated data. the scandal has wiped $3 billion dollars off mitsubishi's cap already. and suzuki and sri jegarajah is in singapore. he's been watching the press conference we had just a few minutes ago. sri, bring us up to speed here. >> i think julia is still out on whether these is egregious or not, nancy. i think you hit the nail on the head. suzuki saying they used an improper testing method. what this means used emission fuel efficiency testing methods that were different from the japanese regulations. 16 models are affected. we're talking about 2.1 million vehicles. the problem seems to be limited
to minute japan. it doesn't seem to be affecting any suzuki badged models outside of the country. still, the damage is self-evident on suzuki motor shares. more around 15%, still deeply in negative territory after the close. the markets didn't like the fact the u.s. markets were down overnight and the whole tilt from federal fed officials. so it really looks as if the market is trying to price in the risk of rate hike on the table. that's where we satand, back to you now. >> and the fed could give clues on exactly what that rate hike time line looks like. well, still to come on "street signs," you may realize we're missing louisa today. she's at the pub where she
good morning, and welcome to "street signs." we've been taking a look at the stronger dollar this morning after more hawkish comments from fed speaks overnight. today, the dollar is souring the punch for s.b. miller. it's posted an 8% decline in four-year revenue. now the maker of miller lite and castle lager saw bill sales rise 2%. joining us now for more analysis is andrew holland, european
beverage research. andrew, pleasure to have you with us this morning. looking at the results, fx volume difficult seems to be the take away here. when you look at share price reaction, it's all about the pending merger, would you agree? >> i would, little relevance to the share price. 44 pounds a share, that's what shareholders will get when the deal completes, regardless of whether the trading performance is good, bad or indifferent. >> and you say when the deal completes. there are still some skeptics out there when they say they're no longer interested in buying miller. do you think it gets done? >> i think it doesn't, one of the key considerations abi has said if the deal doesn't go through, they will pay $3
billion to sab. they will do whatever it it takes to get the deal through. >> where does that leave the company? we talk about fx and emerging markets are they better together? >> from an abi point of view, absolutely. the u.s. market is structurally mature. very difficult to see mainstream growing in that market, the brazilian market the second biggest profit center is obviously very volatile and suffering enormously from the moment. so i think they need to diversify and the bits of sab that they're going to keep in africa and latin america are both showing very strong organic growth in these results and i think that will encourage abi. >> the brazil weakness was quite prominent in the latest results. do you think this is a temporary thing, will it improve thery. >> i think it will, brazil is
going through issues. with sab, with the largest markets in colombia and peru, they're not having anything like the same problems. >> and how about pricing maneuver, room to maneuver, here, if will you. margins obviously miss you and we talk about fx impacts and everything else. where do you see the pricing power once the deal goes through? >> i think abi has shown itself very willing to push prices up. that's a key part of their strategy, i think obviously the limitations on that in some markets in europe and north america where background information is very low. and those emerging markets particularly in africa, we're seeing much higher price increases. but of course, a lot of those price increase, not even enough to offset the negative currency impact. >> and what about the disposal of sab miller do you expect that to come in and get the comfortable price for the company?
>> it's a tricky one for abi, because there's no obvious single buyer. the obvious buyer, heineken all have businesses in europe which would give antitrust problems. i think a buyer is more like or else they would have to be sold off. >> thank you for joining us, andrew holland, european beverage research at socialial natural. >> staying on the topic of beer our very own louisa has been speaking to tim martin as the chairman of the largest pub j.b. wetherspoon. >> it it may be that we have less say at the table.
like australia, like south korea, singapore, north america. the most successful countries are democratic, it's the european countries that are starting to to get into trouble like greece, portugal. italy has had no growth in 15 years. >> i look at the list of people coming out arguing for britain staying in the eu. the list includes prime minister cameron talk about how leaving the eu would leave it significantly poor. and mark carney saying a brexit is denial. you've got the economic risks. president obama speaking about how we'd be in the back of the queue with regards to trade. surely they're not all wrong. these are smart global leaders. >> i think there's an element of group think from all of this. there are different motivations.
the head of the mif christine lagarde, they're in the euro. when we were contemplating the euro a dozen years ago. it was the same call. the department of ministry was in favor. the financial times completely in favor. most economists completely in favor. the prime minister, in favor. it was the same thing, the euro doesn't work. but so cost sophisticated, people couldn't see for a currency, you need a government. and look what's happening now. real trouble. so, this group think amongst and the great and the good is very dangerous. democracy works. what mark carney thinks, he thought that when unemployment in britain got down to 7%, interest rates go up. it's 5% and they still haven't
gone up. he won't get a job as a clairvoyant. >> what better place to discuss the brexit today than at the bar there. that was louisa talking getting another view on brexit. but we are serving on one more pint today. you can head to our website to find out if craft beer has lost its flavor to globalization. that's on our website on cnbc.com. taking a look at global activity, volume at its lowest year-to-date level since 2009. that's according to data to d l dealogic. joining us is the ceo, your company has listed. the question here why now? why do you put off market
volatility and what made you decide to ipo now? >> we found it easy to raise money. institutional investors saw the value in that and we progressed. >> why go to public markets than perhaps map more private investors? >> we looked at our options with the occur shareholders and moving forward as we grow. >> let's talk about your company specifically. you do early cancer detection however there are a lot of players. what sets you apart from other experts? >> so, we detect your immune response cancer. you get a very early signal. we can actually detect it considerably early as to any other technology. up to four years before you can see it. the other advantage we have,
it's our platform, or the test runs on a platform that's already deployed from throughout the world originally on infectious diseases we can have a very effective screening test that will identify cancer early. >> is this all different kinds of cancers. i know one of your product is focused on lung cancer specifically. >> the first cancer is lung cancer. and we're validating it now with a big trial, the largest trial ever conducted in lung cancer which has had encouraging results initially. >> and this raises the question of ma you intend to do eye were the fund raised at ipo. i understand you're hoping to raise about 11 million pounds which gives you valuation around 60 million. what do you plan to do with the funds? >> well, the first thing we have to do to convert our tests to a kit so it can be deployed around the world. that takes some money.
we're halfway through the program. the extra money will help. we can also launch new tests to other cancers with this money. >> you're here listed in london but you have global ambitions, of course. where is the highest growth? we hear a lot about tapping into the market in asia. is that a market for you? >> yeah, we're very focused on that. as i say, we already have the infrastructure. every hospital can run our tests with the current machines they've got online. we think we've got a great opportunity. >> as a uk-based company with quite ambitious global broadcasts here, do you worry about the brexit debate do you worry about what will happen to businesses like yourself if in fact britain leaves the european union? >> not greatly because long-term, there's going to be a need to detect cancer cost effectively, no matter where we are around the world we will
have a role to play. >> does that suggest, when you talk about r & d and the innovation do you think that will be hindered in any way way? >> possibly, there's a lot of stuff going on with liquid biopsy, genetics and they do require greater investment so the economic climate may affect the speed at which they progress. >> how do you do the u.s. market as well, i understand your product volume difficult currently. >> we've already seen 140,000, we see that growing, it's been adoptinged on an increasing basis. and we think it will be a good market for us with the new test. >> thank you so much. talking to us that is jeffrey hamilton fehrly. we want to hear from you get in touch by e-mail, "street signs"
europe @cnbc.com. the show handle is @streetsigns cnbc. get in touch with me directly. we want to hear your thoughts on brexit. louisa's interview there. we also want to hear your thoughts on the fed, is it dead or alive? that is the question. we want to give you a look at how european markets are faring after the drop on wall street. holding lower by 0.2% now. a lot of corporates in focused after earnings here. but again we will keep an eye on the investors as the feds look at the minutes. and the dow jones lower, as well as the nasdaq, remember, all three markets came off the neighborhood of around 1% yesterday. meanwhile, we're also watching the political race state side and the beaver state
good morning and back to "street signs." i'm nancy hulgrave and these are your headlines. flustering over the fed. european on the back foot. commodity stocks leading wait lower. sizing down, burbury issues gloomy guidance announcing 100 million pounds in cost cuts along with the share buyback program. fiat racing ahead on the possible report. and hillary clinton is the apparent winner of the kentucky
primary. that's only by a narrow margin, as she loses out to bernie sanders in oregon. >> good morning, and welcome back to "street signs." let's just give you a view of the sterling dollar as we get uk unemployment data in here. the uk ilo job list was down about 2,000 spaces. that was down 1.692 million. that unemployment rate was holding steady at 5.1%. holding steady at 5.1% for the overall rate. that is in line with the forecast when you look at the actual unemployment rate. let's give you a view of weekly earnings. of course, this is something that bank of england continues to watch. you look at earnings, up 2% on a yearly basis. back to march, of course, that was slightly higher than a poll
forecasted in rierts of a 1.7 increase of weekly earnings. overall, the jobless picture holding steady. and we look at the ilo march unemployment, as i mentioned holding at 5.1%. and of course, let's give you another check of how sterling has reacted to that because sterling has been impacted this week for the ongoing debate over brexit. just weeks away now. we have sterling at about 1.4451. a bit of a tear in one poll suggested that the remaining campaign was gaining ground but the data picture remains top and center on minds there. let's give you a look at how european equities are trading about 90 minutes into the session. basic resources leading the way as we watch metal price move down in the neighborhood of 1% for copper, iron ore. overall, the stoxx 600 down by
0.3% this of course following a day on wall street when they saw auto makes all down by 3%. and expected strong data out of the u.s. and comments that suggested a more hawkish tone out of the fic. let's give you a view of how the european markets are playing out one by one. the ftse 100 off by 0.7%. and the zashgs off by 0.45. and the ftse mib off 0.37%. the big eye on the fed today, let's give you an eye at how futures are pointing. modest for s&p 500 and dow jones and nasdaq. investers will be in wait and see mode. times out whether the minutes
will be more hawkish. we heard them yesterday say look we may still have june as a live event. it could be a more dovish statement although we've heard analysts saying we're seeing more hawkish comments coming from those outside of the chairmen. we'll have to see if the minutes she is shed any light on that. a reminder on how the markets actually closed. the dow jones up up a lauldsoli. the nasdaq by lower by $1.25. s&p and nasdaq both saw their negative session in five. and the nasdaq actually saw its worst session since im7th. and this is interest when you go talk about wti seeing it's highest settle since october 2015. despite the move in energy going higher for one, we're seeing a break in equities and energy.
earnings also in folk can you a bit of a surprise here. first from home depot came out the earnings looked stronger than forecasted. in fact, it was guidance, some of the comments on sales on the conference sale that moved home depot's stock yesterday. home depot's saw its worse daily performance in three months. courtney reagan took a closer look at the results and filed this report. >> if you listen closely you'll hear sighs of relief. home depot sailing past sales and raising its forecast. up 7.4% in the u.s. on the call, home depole said transactions of $900 was 9.5%. spring marks the start of the housing market high season and
demand for outdoor merchandise. weather can impact demand. still home depot acknowledged inconsistent weather and growth decelerated likely due atypically for april. and analysts say buying home depot is buying into a sustaining core of trend. he's just one who says home depot who is one. greatest retailers out and has a great online platform as well. tjx which owns t.j. maxx and homegoods posted a solid first quarter. like home depot, tjx comped sales of a strong 7%. the one weak spot is the four year earnings forecast below the street due to negative drags on weight increases and currency.
it's called excellent and shopper traffic strong. even went on to say in a release, he's confident that he's growing customer base and gaining market share. on the conference call, management acknowledges comfortable willits inventory level southeast they can take advantage of buying material from retailers who have too much to get rid of. i'm courtney reagan cnbc business news. let's give you another check for the race for the white house, two democratic primaries overnight with bernie sanders still nipping at hillary clinton's heels. let's get out to nbc's tracie potts who joins us like from washington with all the details. hi, tracie. >> we got the results overnight. let's start with oregon which was an easy one for bernie sanders with an eight-point win over hillary clinton there. a lot closer in kentucky we knew
it would be clinton's but a long time with of the results in, it looks like she narrowly eked out a win over bernie sanders. a lot of miners had been concerned about her plans affecting their jobs. and the sanders team is saying they will look at those results and decide today whether or not to call for a recount in kentucky. so that's the democrats. the republicans where donald trump was on the ballot in oregon. the only candidate still actually running for the republicans. but the other news about him this morning is that he's gaining forces with the republican party to do some joint fund-raising. it looks like they're about to sign is an agreement where trump at the top of his ticket will split his fund-raising with some of those down ballot candidate it's. this has been a concern for some candidates who fear that trump was controversial at the top of the ticket and could affect their races.
now it looks like he's send something money their way. >> that's tracie potts live in washington with nbc news. i want to bring you some breaking news coming out mitsubishi. we're just hearing from the company that mitsubishi has said that president ikawa will step down. they did admit to cheating on fuel economy efficiency. that at the time wiped off some 40% of mitsubishi's market value. that stock is lower by 35%. the word from mitsubishi motors is that the president is due to accept down in june. there had been a reuters report that he was going to be replaced by the chairman. we're awaiting the details that have come out from that brief and it's said that mitsubishi said that the manager organized manipulation on the data to
maduro. protesters took to the streets of hong kong for the figure sign of the chinese. the demonstrators stressed a lack of reform. and a massive wildfire near fort mcmurray in canada has forced the evacuation of thousands of oil workers and prolonged the squeeze on canadian oil output. with and high temperatures have hampered firefighters efforts and put oil operations in danger. and you've got to see these pictures. a meteor burning up in the atmosphere as it striked across the sky if the united states. that flash was visible in several northeastern states and canada. well, taking a view here back to the equity markets here this morning. we are seeing red arrows here that europe. this after weakness of wall street overnight and a view of
goldman sachs this morning. investors view they have downgraded a neutral over the next few months citing evaluation concerns. in a statement wednesday, goldman has said they will not look attractive amid sustained growth. this due to the forecast of a stronger dollar. joining us now for another view is nick nelson held of european equity strategy at ubs. nick, when you talk about the points that goldman has in mind for downgrading equities, do you agree? >> well, look, i think the valuations certainly for the u.s. are neutral to fullish. i would certainly agree that earnings need to turn up, we've had five years of zero earnings in europe. and the valuations aren't attractive if there are any earnings growth. we've taken the opposite side of that and seen that there's earnings recovering and
stabilizing. >> in europe, when you look at earnings overall, the revenue continues to disappoint? >> exactly. it was a very mixed season. you had the worst on ten courses. but the actual mes beat for six years. to be fair, these are downgraded expectation. we had a huge downgrade going into the season. >> so a case of setting the bar so low you can only impress with the upside there. >> yeah. >> when you talk about opportunities there in the u.s., specifically which sectors are you interested in? >> i think the cyclicals are attractive. we are getting valuations. they're pretty close to where they were with the lows of '08 and '09. so industrials for example were overweight, and the domestic stories like the banks we think actually look attractively valued. >> when you look at the banks double digit percentages year to
date, you're saying there's buying opportunity there. any specific banks or countries? >> i think more broadly, the domestic banks as opposed to pickup in the eurozone. we've actually outgrown the eurozone gdp members from 1.4 to 1.6 this year. if you can get a bang with a domestic recovery growth that should be better. >> for those highly expose to the u.s. market, are you concerned about strength in the dollar? >> well, look, the dollar has calm off a 12-year high back in november. so we are seeing a little bit of leaf from ma perspective, as it were from the u.s. side of things. and the other things the europeans have got is a lot of exposure to emerging markets. that's been a big drag. for the last three or four years that was a huge drag on. and we're starting to see that relief coming through, emerging marketing being better and the currencies having gone down 4%.
>> and of course, the emerging market picture closely tied to what's going on in energy markets. we have seen this relief in commodities. >> i think it's undoubtedly very important. if you look at the story on the oil price, we're up to roughly 50 bucks. the low was $27 in january. and what happened is the earnings estimates tend to lag the oil by two or three months. so we expect to see upgrades in concerns expectations for oil earnings. that's a huge drag for europe. 9% of earnings loss there. >> nick, stay with us, we'll come back to you. first, we want to take a look at data out of japan this morning. japan's economy managing to avoid a recession after expanding at its fastest pace in a year. this thanks to private consumption and exports which helped to fuel better than expected first quarter growth. now, that news briefly strengthened the yep against the dollar before retreating on
calls for extra stimulus to keep growth on track. joining us now is adam cole, global head of fx strategy capital markets. adam, thank you for joining us, it was a rocky ride for the yen as people try to digest the data and exactly what it means for government stimulus going forward. what is your view? >> so i think they technically can't, japan, avoid a recession by the skin of its teeth, you take into account factors that in particular the figure was very positive. and the broad trends taking the last three or four quarters is that it was potentially flat, almost to the main components. so the race for additional stimulus is still quite compelling i think. and the question really then with the timing of when the boj concedes to it that. and we get another track of qqe. >> and the other question here is the retail sales hike that's pending. we heard once again from the
government that say they still intend to keep that hike on track. is this a major concern for growth? >> i think it happens and the experience of the previous hike, of course, was that activity took a very severe hit in the near term and never fully recovered. i think if the economy looks as fragile going forward as it does at the moment then there's a very likelihood, though it's the government backs out of the next group of consumption hikes for fear of doing damage to other hikes. >> adam i have to ask you, we do have the dollar making a impact on the yen bhuchlt look at the trading at 1.09, at this level, is that still a real concern for the corporates here? >> i think it is, with anything in the context of the last week or two, it's appreciating very quickly. the outright level is not the issue for japan.
looked back on broad competitive measures, the yen is still competitive in the japanese industry to still have completed these levels. the much bigger concern if we go back to where we were two weeks ago with the yen appreciating rapidly and in a not very orderly fashion then that's more concern for the corporate sector. >> and adam, some expectations that the yen could get a bit of abreak when it it come to the fed limits due later perhaps a more hawkish tone that many are expecting. is that your expectation? >> i think that's the risk at the moment. the yen is as much dollar as it is yen. but what we've seen over the last two or three days is fairly shifting fed rhetoric to bring some balance back to interest rates and given that we're still priced for less than a full hike by the end of the year, if anything, we see more scope continuing in the market, reprising towards a slightly more hawkish channel for the fed
if they reinforce that view which is against rinks then the dollar can keep dialing back some strength from here. >> adam, pleasure to have you with us. adam cole, global head of fx strategy over at rbc capital markets. thanks for joining us. we were just talk about say potential reprising of fed risk. this comes as analysts have been talking up a storm. wilfred frost is at cnbc and joins us with the latest. good morning, nancy. yes, indeed, we could get more clues on the thinking. the fmc will release that report at 2:00 p.m. household spending was moderated. the big question, will today's minutes be more hawkish than the post fomc statement.
with the runup to the release of the minutes that's what the focus has been on. just yesterday, dennis lock hart and john williams appeared yesterday. rob kaplan said he could call for a rate rise in june or july. as you discussed throughout the show, yesterday's stocks state side had a bit of a wobble because of possible hikes this year or more hikes this year than expected that, though, really off the back of better data than specifically the fed speak. interesting to see the rubble manifesting itself in the stock market and bond market than the dollar. the dollar didn't move too much yesterday. by the way, the minutes certainly more interesting than we would have expected. as we look at the markets right now, futures are down about 21 points on the dow. so only about 0.10%. 10 basis points.
the other markets slightly lower but nothing compared to yesterday's declines. nancy, back to you. >> a really good point you make on the bond market, that two year getting to its highest level in two weeks. certainly keeping an eye out for that. now for other stocks we're keeping an eye on state side, let's get a look at google they are expected to enter the voice-activated market with the advance of google home. it kicks off its annual development conference called input, output google and oracle continue their $9 billion battle over android software. ceo has a huge stealing software. according to reports, they told shareholders that they are
always considering new opportunities to reach shoppers and that amazon, quote, was certainly one. he went on to say it would be delusional not to consider amazon. and has lebron james' manager dropped the biggest hint yet that the nike deal was worth $1 billion. the basketball star settled the deal in december for undisclosed fee. kanye west in a song said lebron netted a billion bucks. and mark zuckerberg is celebrating a four-year anniversary today. sri jegarajah has been looking back at social media giant's shares. >> reporter: remember this? it was four years ago that facebook shares got off to a rocky trading stocks. the most heavily traded ipo at that time was marred by a series
of technical glitches at the nasdaq. foreshadowed what would be a rough week for the company. it saw its value drop more than 13% in its first five days of trading. the worst first week performance of any ipo in a decade. even though it had over 900 million acts wall street was wary. >> we have to figure out if facebook can grow as fast agency the size of its offering. >> reporter: for good reason, the company admitted that the user shift of smart phones and tablets was biting into it's ability to make money for advertising. and the hoodie stir. being called quote a mark of immaturity. for four years on the mood couldn't be any more difficult. zuckerberg has raided hood dis for a more streamline t-shirt. facebook shares hitting an all-time high on the back of its
stellar earnings numbers. mobile advertising accounts for 82% of total ad revenue and analysts agree there's still room to grow. >> facebook still accounts for 3% of ads globally is there a coach that suggests it could rise? yeah, it's google. google is 11%, 12% of all ads globally. it's a big if, if facebook continues to increase at this level, you could see a tripling of the growth rate. >> reporter: even with all the success, the company still faces bumps ahead. younger uses seem to prefer niche offers like snapchat and vine. precisely why facebook has snapped up services like instagram and whatsapp. shares that viewed at 38 bucks a piece. if you had bought facebook four years ago and hold it you would be sitting on a return of -- get this -- more than 200%.
even with an uncertain future, that's something to like. sri jegarajah, cnbc. >> hard to believe that's been four years. shifting the picture back here to the european trading day. nick nelson of ubs is still with us. nick, investors are waiting on the fed today. but here we're still waiting on the ecb waiting for action to take effect. one of the big one corporate bonds in a few weeks here. how is that going to impact trade? >> well that's a good question. we've seen spreads tighten dramatically so. an aggressive program given the parameters they're suggesting we would highlight this massive gap in dividends and corporate credit yields. equities have got dividend deals of 3.5%. the dividend is more attractive than the corporate credit.
>> and just before we go, any favorite sector at the moment? >> well, i think cap goods industrials are pretty right especially domestically exposed. >> that is the word of nick nelson head of european strategy at ubs. a real pleasure to have you with us today. thank you. that is it for today's show. i'm nancy hulgrave. "worldwide exchange" is coming up next.
good morning, breaking overnight, japan gdp growth surprises the markets. new this market, goldman sachs threw up a caution flag. we'll tell you why. and decision 2016, hillary clinton moves closer to her party's presidential nomination. it's wednesday, may the 18th, 2016. "worldwide exchange" begins now. ♪ good morning and welcome to "worldwide exchange," on cnbc. i'm sara eisen. >> and i'm wilfred frost. a very good morning from us as well. >> they're killing