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tv   Street Signs  CNBC  May 26, 2016 4:00am-5:01am EDT

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good morning everyone. >> brent crude surpasses 30 dollars a barrett. can the banco popular announces a sale. >> bad news for daily male after their worst day in nearly a decade. >> new reports a private equity firm is mulling a 60% stake in
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embattled air bag maker takata sending shares higher. >> and japanese prime minister shinzo abe reportedly suggests we could be heading for another lehman moment. as g7 leaders fret about the severe slowdown1 in merging markets. in merging markets. hi everybody. welcome. good morning. >> how are you? >> i just had a vile glass of supplements mixed in water. and it's really -- >> you're always doing that. the green juice effect. >> i know. i know but the one now has like no sugar not. sweetener and it's just disgusting. so i need a cup of coffee after the show. >> -- studio point, right? >> exactly. european equities though were trading a little higher. we're up about -- i say that. we're actually flat. completely flat. we were called a little lower.
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bouncing a little but very little. stox europe 600. and main markets also reflecting precisely this the ftsi mib underperforming a at the down .3% a moment. still attention on the periphery banks. >> and you have to keep the movement in perpetrative with the stellar run reef had. the best gains since mid april so seeing modest increases today is not that bad in the scheme of things here but today we are keeping a closer look on the spanish banks. banco plunging after announcing a 2.5 billion euro cash call. the firm says allianz will control a 3% stake in the bank. and let's look at a how this was effecting others. banco popular up 21.2%.
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and of course when we talk about the big gains we saw in wall street and the european equities over the last few day, investors keeping an eye o to the gains we've been watching in oil prices. crucial here when we talk about psychological levels of course. we saw brent cross above $50 a barrel for first time in quite a while. so a lot of people wondering is this it? are we full-time going to get a prolonged rally here. still questions. the supply, the fundamentals, yes there was a surprise draw down in u.s. stocks. others saying we've been here before. this has happened. we know non opec supply has been declining but there are still demand questions. nevertheless psychological impacts are crucial and as we see here. brent crude up just above that
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$50 barrel level. and wti extremely close now. >> so if oil stays above 50 does that mean necessarily that some producers are going to be increasing supply? because they want to make money off the high oil. >> and a lot of people say the break even is still well above the 50. needs to no even further. >> great write up this morning on the price of oil. they recapped some of the bigger things that have takenis place. and one things that we're reminded of is what happened last year. oil jumped in the first half and then all turned. because now a lot of it not only supply disruptions but also the motor heads, they are having a whale of a time in the u.s. because of the petrol prices and a lot more people on jobs. people have driving more and the
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u.s. summer driving season. the wedding season if you are in india and looking at gold and travel season season in the u.s. for oil. >> right. and of course we're keeping can eye on the meetings this week too with the g7 and japanese prime minister shinzo abe has reportedly compared the current malaise to the lehman crisis. this as officials say the g7 leaders are econ sernd about the clear slowdown in emerging markets. >> these were comments that prime minister abe made during the first session today, essentially saying we could be heading for another lehman moment. specifically because the slowdown that he is seeing in emerging market. of course the backdrop of this as well is that japan is facing that sales tax increase. they have to decide whether to
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put off or not. and prime minister abe has said before that unless there is a liam rn like event he will continue through with it. this could be an indication of him setting the scene here basically warning the markets of that delay. we'll continue to watch that as well the comments in the first session. looking at the larger picture in terms of what is on the agenda, china a big part of those discussion, specifically as it relates to the global economy, slowdown in china, a big concern about how they could effect other g7 countries and japan looking for a commitment in terms of coordinated fiscal policy to counter that slowdown. the other issue with china of course the territorial disputes. they are now locked in with about half a dozen asian countries. the hag set to decide on a case brought forward by the philippines in their issue or dibts with chinebits with china.
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they have already met on this and condemning unilateral actions though did not mention china exactly. and while the u.s. has never officially taken a stance on it president obama did discuss the issue of a bilateral meeting with primus abe yesterday. >> our goal with respect to our own interests in the south china sea is simply to maintain freedom of navigation. freedom of over flight and the maintenance of international rules and international rules and norms because we think that benefits everybody. including china. >> the minute that statement came out last month china came out with thinker own push, urging them not to make this a key issue of the summit. also chinese and russian foreign ministers held a joint press conference declaring shared
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oppositions from third parties meddling in other affairs attempts to international iez the dispute. russia is also on the agenda. not at the top but russia used to be part of the g8. japan has led the push to try and bring them back. other g7 countries have strongly condemned russia for the annexation of the crimea and called on russia to honor the teerms of the minsk agreement but prime minister abe has pushed for dialogue, meeting with president vladimir putin last month against the wishes of the u.s. he's opted for dialogue and laid out a plan to boost bilateral trade and investments there. so we are seeing a bit of a rift here between where japan stands and other g7 issues. that is the focus today. tomorrow it will shift to hiroshima where president obama becomes the first sitting u.s. president to visit the site of
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the attack. >> we look forward to the developments coming out tomorrow as well. thank you for joining us. well daily mail shares have been plummeting towards the bottom of the stox 600. after a slump saw first half profits fall 11%. the newspaper group downgraded following a 3% cut in operating margins. media analyst at peel hunt is with us. what's going on? i look at the group. profits falling 11%. downgraded the outlook as well. never a good thing for investors. a 3% cut is anticipated. what are some of the hot spots if for group? what do they need to do in order to stop this? >> so print advertising is falling, for everybody. and that is not really a new story. and they do have good off setting growth from mail online which we all know. and i'm sure use. the side bar of shame.
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that is delivering good growth but it is not of an offset for the plint print declines. i think they are just taking opportunity to pair back expectations to a less ambitious level and also transitioning that mix between print and digital. >> and they have new management as well. is he going to be able to do anything different than the past manager? it is a tough spot for everybody. it is not like they are the only ones suffering with drops inned a revs. >> the big story on this name in the last three months has been speculation linking them to yahoo in the u.s. or bits of yahoo in the u.s. so with the new guy coming, in market will be very interested to see whether or not there is anything more to that speculation. the sense is it needs to scale up in the u.s. >> when you consider a potential
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yahoo bid here. and also heard speculation that daily mail may split here. and if they were able to get an asset like yahoo would that further the case for that split? >> the business to business assets are in good shape. they own 30% of zupla. that's powering away. on the consumer side. mail online is doing well but it can do better still, specifically in the u.s. and they are looking to scale up there. that is where yahoo could make a difference. >> do they have the fire power to go after yahoo. they are going against verizon. >> on their own, probably not. in partnership with a third party, probably yes and they do have some fantastic connections in the vc world but as a stand lone probably noalone probably . other companies that would wake
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sense to do some activity with? >> the names that emerged the last few years. huffington post and buzz feed. both doing very well in terms of site traffic and have scale in the u.s. i wouldn't discount either o of those. the marketplace is changing. >> you have already mentioned yes there was some strength but not enough to offset the weakness in print. the other players in this space, who is really winning? >> very good question. i think stul actually some of the names we just mentioned. the likes of a buzz feed and huffington post. who are online only. don't have to deal with these legacy issues in print. there are winners. there are losers. and i i should flag this morning that the mobile network are intending to implement a ad blocking trial in the uk. and i think that will really bring to bear analysis on how old media company wills deal with this age of ad blocking.
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>> do you have a sense how many new companies that start actually go down the print route at all? or are the majority starting online? >> it is asset light. why would you go down the print route? not many go down that route. that said when you --. it is not totally one way. but why would you start with the legacy? >> going back to the ad blockers. do we have any information data showi ining what the impact has been. >> we have speculative analysis and the numbers are big and not necessarily always from a truly independent source. think it is a real issue. i think it will become more of an issue and i think it targets some demographics and some verticals more than others. so, for example, young males more likely to ad block than a slightly different demographic. we think it will be an issue. and i think people are getting fed up of looking at data costs
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on mobile bills and wondering where it all goes. some goes towards spirit advertising i'm afraid. >> might be a different mark. launch a magazine on photography or -- >> [ inaudible ]. >> yeah. exactly. >> there has been a head long splurge towards digit 8. we're entering a period of analysis of does it make sense and i do think ad blocking -- will have to deal with this themselves. >> alex, thank you very much. media analyst at peel hunt. now daying in media, lions gate, which is the studio that produces hunger games. have you seen that? >> no i haven't. i feel i'm the only one. >>u uajulia boorsen has the details. >> revenue of $791 million
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beating expectations while earnings of 7 cents per share were a big surprise. analysts had been expecting a loss of 2 cents per share. driving that big upside surprise? lions gate television business which has had a record year benefitting from the explosion of digital content and also produces "orange is the new black" and "casual and deadbeat." and although last years film slate didn't match the performance of previous years, this year's slate is bigger, more balanced and expected to generate greater profitability. also an optimistic note saying we alexpect to continue deepeni long-term value and solidifying status as the preferred partner to owners of intellectual
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property. third period the distributors and digit conference platforms worldwide. lions gait holds their conference call on monday. >> what if you could copy the most successful trades as they are made in real time. we'll be talking to a company where trade sharing isn't just the norm. it is the actual business model. we'll tell you more after this break.
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good morning and welcome back to "street signs." we want to give you a check on the latest oil trade. without a doubt it's ban big mover of equity momentum. wti up ever so close to that 50 dollar barrel level. of course after brent cross-ed $50 a barrel last night.
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coming after a surprise draw down and we are seeing a pair back on the dollar. meanwhile, staff in 19 french nuclear power plants have joined countrywide strike action again today. nuclear provides up to 75% of france's electricity with grid operator rte warning the disruption could lead to a 4 gig watt cut to power. in response to proposed labor reforms by the government which gives greater freedoms to reduce pay and higher and fire workers more easily. >> apparently 40% of petrol stations in pairs are struggling to get fuel. 40%. >> unbelievable. >> e-mail the show. the e-mail address is "street signs" europe cnbc.com. we're also on twitter. >> i'm@nancycnbc. >> and i'm at louisa bojesen.
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>> etoro. joining us to explain is ceo. great to see you. we've been talking about your platform. you are now offering commissions to the traders on the platform. walk us through a bit more how this works and really how you are getting regulators on board because they are so sensitive about financial advice and here you have any trader willing to come on your platform
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effectively offering advice to other people wanting to get involved. >> etoro the largest social --. basically trade either virtual money or portfolios and everybody is actually sharing their trading stats and portfolios in real time so everybody in the network can see, follow and copy top traders from all around the world. now this is basically a big part of fin tech and the future of money management. this enables more people to access the global markets directo directorily. if you think about the sharing economy like uber and airbnb where people with host if their apartment or become a driver so easily. any smart person who has some available money needs to learn how to manage his funds. other people with see his performance. see his trading stats. his historical pnl and then have
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other people start copying him. and when people actually start copying him, he can actually eastern a commission by having other people copy him. >> you make an interesting point comparing to airbnb or uber but in this case you have real money involved here. ase opposed to if you say in airbnb you might give a bad review and then leave. but if you are following a trader who has a really great track record. all of a sudden that track record turns you are talking about people potentially losing lots of money here. >> sure. first of all we have very numerous discussions with regulators around the world. they are excited about the revolution and excited about new tools enabling more people basically access to more innovation and more platforms over the internet. we have been looking at the popular investor program, which is our top traders people are copying and we have a team of
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professional money managers that curate the platform and make sure people follow a specific strategy, etc. so i think it is really about opening the markets. it is about showing something that previously was sort of secret. there are thousands upon thousands of traders here in the city of london, hiding inside the big banks walls. this is the same just showing it to everybody else and enabling open communication between people. >> so if i want to copy somebody's trade, do you have any idea how many of your clients that make money off of copies trades? >> we've seen we've zone some research with professor from mit that showed statistically that actually people who copy other people always do better than people trading on their own. which makes sense you are using the wisdom of the crowd and diversifying your portfolio. when you are copying someone on
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etoro, you see someone trading let's say uk stocks for the past three years, gaining 10% a year. when you copy him you select let's say an amount of a thousand dollars and it almost copies his entire portfolio into your portfolio. and every time he trades, it trades in your account in real time at the same price, proportionally on your thousand. so i he generates another 10% this year, then you would make a hundred dollars on those thousand dollars. >> how do you make money and how does it compare to other brokers. >> we're actually very similar to oh brokers. we regulated by the same. every trade you make on etoro we charge just the spread. the beautiful thing about the model is there is no minimum per trade at all. so suddenly you can copy somebody with a thousand dollars. he can open up a hundred different trades on his account and you will just pay a dollar
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on those hundred trades. >> you talk about virtual assets. >> real money. >> but you mention virtdal as well. >> any person who opens an etoro account can easily open and get a hundred thousand dollars of virtual money to test the platform. we've had users. >> and also do bit coin, right? >> also do bit coin. we basically offer people to trade on stocks, commodities. etfs. digital currencies. a wide variety of stocks from seven different exchanges around the world. and whenever you feel comfortable that you have learned enough, understood the platform. you are able to deposit funds into your real trading account and start doing wit it with real money. >> interesting. >> ceo of etoro.
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well global ipo issuance has fallen and is currently at the lowest level since 2009. the average market cap of these offerings has also fallen down 32% year to date. >> against this backdrop we're looking ahead to phillips lighting which is set to go to market. listing a 25% stake, in a bid to focus on its healthcare operations. phillips helps to raise almost 700 memo euros through the sail which values the unit around 3 billion euros. reports suggest the price range has been narrowed around patchy demand. >> denmark's dong energy has set a ipo price range implying 12.6 to $16 billion. the state controlled utility will set the offer price via a book-building process and plans
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to launch on copenhagen stock exchange the 9th of june selling up to 7.4% of its shares at the ipo. >> and raising just over $1 billion in the second largest ipo this year. the food distributor is the thoird have a raised more than a billion dollars since the start of last year. >> and titleist. >> titleist. >> you're not a golfer. [ laughter ] >> no i'm not a golfer. i just invented a word. the golf brand is reportedly working with a number of banks to drive a u.s. listing which could value the company at around $2 billion. >> you help me with the danish words. i'll help you with the sports. some of them at least. >> my golf ball knowledge is not where it should be maybe. but anyway.
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check out the world markets live. it is a blog of course which runs throughout the european trading day. lots more on there online and top trending stories too.
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spanish lenders gains after banco popular announces 2.5 billion dollar share sale. >> worst day in a decade after the publisher cuts its full year outlook. >> kkv reportedly mauling a 60%
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share stake in takata sending stakes higher. >> and severe slowdown in emerging markets. good morning. and welcome back to "street signs." we have some uk gdp breaking we want to bring you. it is a revision for the first quarter. and that growth figure on the quarter is holding at an increase of 0.4%. that is unchanged from the first estimate. and annually we're looking at gdp growing by 2% year over year and that compares to the last estimate of 2.1%. down slightly on a yearly basis but holding steady for the quarterly period and looking at sterling stronger against the green back. more closely tied to the brexit fears. the polls over there with the bookie shortening their odds on the situation but this is the
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picture for sterling as we get the first quarter gdp holding with the previous estimate. meanwhile let's bring you a look at how equities are trading this morning about 90 minutes into the session. a mixed picture in europe but this is the picture for the u.s. today. with have futures point modest games. two straight days of sharp gains on wall street. a lot of investors keeping eyes on oil. so let's give you a check on what woil's doing now. >> we've seen a balance in the price of oil. wti just under 50 and brent was above 50 a minute ago. it is currently just shy of 50 as well. a lot of stuff going on when looking at price of oil and sharp drop in the crude stocks, the inventories yesterday.
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an increase in petrol demand. and the wild fires in canada having had an impact on output as well as military activity in nigeria. and in deed on that note we're just seeing via reuters this morning that chevron nieng ra, have been grounded by ab attack. and i seems that that is coming from the niger delta, that group once again they tend to strike on these oil stations. >> the big named oil firms and of course from tineo our guest was saying the big concern for the government is make sure this doesn't spread so the fact this continues to be a threat there could continue to have an impact on oil prices as well. a lot of dollar strength and oil continue to push higher despite the moves. dollars lower on the yen by about 0.12% at this stage.
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the g seven meeting also 7 meet. let's give you another picture on corporate movers. --. sri jegarajah joins us live from sing spore. >> you take great interest in the automotive sector. and i just wanted to talk to you about the price --. shares takata limit up today on this nikkei report. i must stress as the report. there is no official confirmation as of yet but let's take the nikkei report at face value. kkr are interested in taking 60%
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stake in takata. that is subjective to approval from takata's auto maker clients. remember this is important because only a handful of other companies aside from takata are involved in the air bag manufacture i manufacturi manufacturing stuff. so takata is in dire straits. having a lot of problems and it's been plagued by the defects with the air bag since 2008. 11 deaths at least and more than 100 injuries so there is a backlash from the public and auto pagers. including honda which was its biggest client. it's now walked away from supply deals and they have been hit by mounting recalls costs.
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and really not enough to account for to compensate for this mounting legal bill it is facing so short-term it needs a cash injection. longer term it needs to restructure. we need details of a road map. lasard apparently are going to help on both fronts. so we need to see what kkr and private equity can really bring to the table in terms of turning this company around. worst case scenario, takata's steering committee have not ruled out a bankruptcy filing if the restructuring fails. so all eyes on what kkr and has address can bring to the table right now.lazard can bring to t right now. >> thank you sri. to continue about investing in asia, mark tinker joins us. welcome back mark. so we've seen, starting with
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japan we've seen the falling exports continuing fall on fact orders are as well. the stronger yen. the headaches are just mounting for mr. abe. >> absolutely. one of the big issues we have to understand when we're watching the japanese market is a lot of people had bought into the idea of abenomics and had done it hedging the yen. when the yen rallied the beginning of this year it caused a enormous unwooind and huge loss of confidence. q1 everybody is panicking about asia and then stopped and then about europe and then the presidential election. so ironically we've moved on in asia but of course there is no buyer for the japanese market at the moment because the people who have bought into it have backed away, worried more about the gen than anything else and they need some evidence to go back in. they need confidence at the company level ghord back in i
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believe. >> this which come in the fompl of whether? >> one of the things about abenomics there is a shift to be more shareholder responsibility and delivering and focusing return on equity and so on. but this for us is the whole story. you can't just go and buy an index anymore. you can't just buy a benchmark that reflects guys that did well out of the last wave. you have to buy the guys doing well out of the new wave. and particularly with china. all about how china is shifting its economic model and the impact. >> mr. abe saying there could be another lehman style crisis. we previously heard them say we won't delay the sales tax hike. >> i think this has always been the dilemma within japan.
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on the one hand the ministry wants to sort out its finances and on the other hand they realize if you do than on tox con consumption it hits -- this has been a game all along. absolutely. i don't think he's got some crisis in mind. ed. >> going back to what you were touching with the chinese market. saying fears abading on the chinese situation. when we look at the shanghai composite it's not been a very good month. 41% down month to indicate. what is going on? >> one thing to remember about the shanghai, even though it appears to outsiders an enormous
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market, it is the whole story that market going up and down isn't telling us anything about china. china almost everything still goes through the big banks and as a result they are building a the financial infrastructure in real time. and that is what we're watching. i'm not saying ig flor the shanghai composite but it is not giving signals about what is really going on in the economy just big positions going on at the margin for these very active retail players. >> so you are saying watch the chinese banks closer. >> a big flow southbound from china into hong kong buying the chinese banks in hong kong because there is a huge differential gap. i think there is a lot of positioning. people say i'm going to sell some of the as and by the hs and that is the stuff if we don't connect the dots it looks like a different story. >> tell us about chinese bonds,
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sovereign bonds you mention it in your notes it is quite interesting. >> we've had a symposium this week. and we're talking to a lot of investors in europe about china. one of the things is they are building this infrastructure. so there is a couple of the chinese policy banks. they have been out doing a road show. and they are raising dollar. dollar borrowing. and they are probably going to pay 140 to 170 basis point spread over u.s. treasuries. so my point is here is china is making pretty much the same thing if not slightly better for hoof the price. and i believe going forward the products out of china we're going to be interested are going to be infrastructure bonds, corporate bonds and these regions are bigger than european countries. and gong dong province has a gdp bigger than australia, bigger
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than russia. shenzhen zi city has a gdp bigger than ireland or portugal or greece. when we talk about local governments and those issues we have to remember this is an enormous country with enormous gdp and we have to think like an continent. as big and as varied as europe. and for us that is part of the message. the shanghai composite doesn't represent the opportunity set for investors and the threat for investors that is coming out of china. >> really interesting. just to mention i tweeted some of those facts. they are just mind boggling. it is worth going back and looking once again. >> a lot of big numbers out there. >> mark, thank you for joining us. mark tinker. speaking of the big race for the kbhous. a new report by the u.s. state department's inspector general says hillary clinton never asked
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for permission to use a private e-mail server and it would not have been approved. joining us now is nbc's tracie potts in washington. >> hey there. the question now is what impact is this going to have on clinton's campaign. she responds saying it is the same old story and doesn't think it will hurt her in a general election. the report taking a look at what happened in the state department when hillary clinton left without turning over all those personal e-mails and e-mails that had been stored on her personal server. first of all they note she violated the federal records act by not turning over all her e-mail before she left office. she has now said she's turned over everything that's been on her personal server. but according to this report she should have done that before she left office as secretary of state. also the report slams for her
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for even using the personal server without getting permission up front because the secretary general said she would not have been granted to use that serve ner her own home to store e-mails from a personal email account regarding state department business. now what impact is this going to have on the campaign? it certainly gives bernie sanders and to a larger degree donald trump a lot to talk about when it comes to hillary clinton and the e-mails. in the past our polling has shown that people are not overly concerned about the e-mail issue. it doesn't seem to have hurt her in terms of the polls. and finally hillary clinton was not interviewed for this inspector generals report. she refused because her team said they wanted her to talk about the fbi first. because there are separate investigations going on. the fbi is looking at whether there was any criminal act
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involved in not turning over those e-mails. >> we'll see how this plays out. and donald trump of course chomping at the bit. thank you tracie potts in washington. police arrested eight people outside of a donald trump rally in california. the demonstration was not characterized by the same violent scene outside of a trump rally in new mexico earlier in the week. the eight protesters detained were arrested on charges, including selling tee shirts without a permit and unlawful assembly. >> meanwhile donald trump has parted ways with national political director rick wiley after only six weeks on the job. trump told staffers wednesday that wiley should be fired for his handling of an rnc fundraising deal and that is according to a reuters report. this says a trump campaign source told nbc news that wiley was largely uncommunicative with field staff that were in place long before he was hired. >> and trump appeared on jimmy
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kimmel live wednesday night where he admitted to using multiple al yass over the years. adding the pseudonym baron for his youngest sown's name. he said also he would be willing to debate democratic candidate bernie sanders if the proceeds went to charity. moments later sanders tweeted game on. i look forward to debating donald donald trump before the june 7 primary. >> just a bit bizarre. >> he's denying he ever pretended to be a publicist saying he called up people and pretended to be his own publicist. i guess i'm missing a trick. >> stim coming up, smart phones
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smart cars. the latest apple endeavors after the break.
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welcome back to "street signs." shares in hp slipping afterhours after revenues came in below expectations. >> a mixed report from hp, inc. but investors putting pressure on shares in after hours trade. likely because not much has changed since last quarter. hp, inc.'s main business remained weak and revenue fell in both categories.
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a challenge deon wise ler acknowledged on the earnings call. >> we said the markets were going to be tough for at least several quarters. we are on track to reduce cost structure by more than $1 billion in fy 16 through productivity initiatives and acceleration of our restructuring plan into this year. >> i also spoke to him and he said that the up tick of microsoft's windows 10 is important for them and the industry and will help boost pc sales going forward. hp, inc. after splitting with its enterprise last year was left with the consumer-oriented side of the company and since undertook restructuring process and betting on new categories to drive growth like 3-d printing and a smart phone laptop desk top hybrid. hp q's stock price has gone nowhere since the split.
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back to you guys. apple is exploring electronic car charging stations. they appear to be laying the groundwork for the infrastructure to power an elect electric car. >> and shares in alibaba plunged. china's biggest e-commerce company said the sec was looking into low it filed accounts for its logistics network and for the largest online stopping day of the year is of course singles day. suggested a buying due to its increased transparence. and joining us is christian. great to have you on the program this morning. we know amplify has an atf
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looking strictly at online retailers. your thoughts on this alibaba story. morg morgan stanley says it is a buying opportunity. you do agree? >> i agree. alibaba needs to have greater transparence. so i think this examination will bring to light any issues that they have. you have to be transparent if you are going to be a global leader in any industry, particularly online retail commerce area. >> let's talk alibaba's competitors. your etf has been a bright spot when we look at brick and mortar retailers disappoint okay earnings of late. but is there room fur all of these players when we talk about how powerful and dominate amazon is? are they going to be engaged in a bit of a price war themselves is this. >> i think that is the case. like any emerging industry.
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initially many players start out and try to compete with unique brands and unique niches. but over time there becomes a consolidation. we've seen it in the automobile industry. in the personal computer industry. so i think the approach to online retail investing is to not make a bet on one or two companies but instead own a basket. >> tell us more about how you choose the companies that go into this etf. what is the criteria? >> well the main criteria is a company has to have 70% or more of their revenue coming from online retail sales. so we're trying to have a pure play etf. one that is clicks not bricks. and we've seen unbelievable difference in the performance of online retailers very traditional retailers. even in the last month. around 600 basis points of outperformance for companies that have the majority of revenue from sales.
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so it is a global based etf. it tracks a rules-based index. the majority of the holdings, about 75% of the company, are u.s. based. 25% outside the u.s. >> why 25%? and how did you decide well we only want that much exposure to, for example, a very large european or asian retailer. >> being a u.s.-based fund or u.s.-listed on the nasdaq, many of the existing consumer and retail etfs are almost exclusively domestic only. however online retail is a business without borders. so even though exposure is limited to 25% of the companies domiciled outside of the u.s., you see companies lake amazon or ebay that are big players in e-commerce outside of the u.s. as well. so the true exposure is probably closer to 60/40, 5050 when you
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look at all the kprpt exposure from u.s. companies doing business outside of the u.s. in the e-commerce space. >> the traditional players really boost their presence. draw back the mall presence and twheern talking about more of an online world altogether here. >> yes. now i think that is a great question and observation. even somebody like macy's who had poor financial this is quarter, the one bright spot of their business was online retail sales. that was up double digits. best buy of electronics reported dismal results. on. so i think you are exactly right. traditional retailers are going to have to disrupt their business. the two challenges though are
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real estate costs and labor costs. labor costs are certainly going up. especially with the election going up. both candidates seem to be for increased minimum wages and that is going to make it harder for traditional retailers to compete on the service side. no question about it. traditional retailers are going to have to consolidate. we believe we are going to see a record amount of retail company consolidati consolidations. merger and acquisition activities. even bankruptcies in the u.s. on top of the store closes that we've already seen to begin the year. >> christian, thank you very much. ceo at amplify etfs. thank you for your tweets and e-mails you have been writing. we've got purple line says g7 is not a lehman crisis, more of a deutsche european banking crisis. zombie banks on ecb life supports. loads of other questions coming
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through. whether or not if you are a u.s. investor in japan do you invest hedged or unhedged against the yen. and we'll talk about that tomorrow. >> and the markets a little in negative at a timery. that's it for today it's nancy hull graves. >> i'm louisa bojesen. and we'll see you tomorrow. wearing powerful sunscreen? yes! neutrogena® ultra sheer. unbeatable protection helps prevent early skin aging and skin cancer with a clean feel. the best for your skin. ultra sheer®. neutrogena®.
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good morning. >> new this morning. world leaders in japan kicking off a two day g7 summit. we'll talk about the key economic issues. >> and paypal peter thiel breaks his silence admitting he did finance. and you won't believe how long he's been plotting his revenge. it's may 26, 2016 and "worldwide exchange" begins right now. ♪ i love rock n r

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