tv Street Signs CNBC June 9, 2016 4:00am-5:01am EDT
welcome to "street signs" i'm julia chatterly and these are your headlines. the bears are back with european shares in the red for a second day in a row. amid reports that george soros is out of hibernation and selling stocks. >> very few good economic reasons to reform can the cost of delay simply too high.
>> mario draghi issues a warning that inaction threatens the potential for growth. and the ipo market's largest listing of the year. climate regulation changes were crucial to the listing. >> this is that we're sbild building on. pushing forward, continuing to ininnovate the technology and making it even more cost efficient and we believe we have an technology to offer to governments around the world. >> trad$2.4 billion deal with s new zealand. >>. jam packed show today.
stoxx 6 thousand down just over 1%. just give you sense of what's driving this. have a look at the individual market performers here. the ftsi 100 is outperforming only dow by 1%. that's outperformed for the last couple of sessions the oil and gas and basic resources sector actually outperforming if you look what's driving today not one sector in the green the likes of healthcare, food and beverages outperforming on the downside so -- the basic resources. just to give you sense we've seen gains for the last two sessions for basic resources. even with the losses we're is it seeing today still up more than 4% on the week. oil and gas higher more than 3% as well despite louses we're seeing today. we did see gains yesterday in the session o 1.7%. that helped the u.s. session and energy in particular. but we're just taking back some
of those gains we've seen for the last couple of sessions. still above $52 a barrel. billionaire investor george soros is returning to trading and taking a bearish stance on the global economy. soros told a newspaper that china is of particular concern. soros also warned on the possibility of brexit saying he believes it could unleash a general exodus in the disintegration of the european union. so china in focus for george soros. also a host of data and action in the asia session overnight. dan murray is in singapore to give us the run down. >> chooerl china are a major focus. china --. clearly as you can see broadly asian equity markets trading firmly in the red.
as the focus here really shifted to key data in the region as you mentioned as well as two central bank moves. first and foremost we actually saw a pretty muted reaction on the cost beat down 1.4% with the bok deciding to slash interest rates by 25 points bringing to 1.25% cash rate. some saying it happened sooner than expected and one analyst i've spoken to today has actually said korea was really behind the curve and needed to act. and he suggested it may also need to act again this year. central bank also admitting the downside risks have expanded. the other central bank move we've been watching was in new zealand. no real prizes here. also we're tracking data out of japan.
the nikkei down around 1%. we've broken two consecutive sessions of gains because of a margically stronger yen. investors also reacting to a big drop in core machinery orders coming in minus 11%. the market expectation was for a drop of 3.7%. just before we wrap up in china today's inflation data saying the cpi up about 2% in may. a miss on expectation. but the ppi surprised to the upside. >> well, thanks dan. back to europe now because we have had mario draghi speaking this morning. he's called for immediate structure reforms to limit the debt and duration of shocks facing the euro zone. making monetary stimulus more effective and help the suffering economy rebound. he called on governments to act now. >> there are many understandable
political reasons to delay structural reforms but there are few, very few good economic ones. and the cost of delay simply too high. given the interactions between policies that i've described, it is in everyone's interest that the various trends of policy buttress each other if only because it will shorten the time it takes to produce its effects. >> the timing of this obviously interesting. they started buying bonds in the market yesterday. in two weeks time they have the long term. reports suggest the ecb is bracing for weak bank up take of its round of four year loans. that according to reuters. the claims the bank s as are do
stuff. the long time financing operation policy was produced by dag in march to boost the euro zone's credit recovery. commerce bank is reportedly stashing billions of euros in vaults in a bid to avoid storing cash with the ecb. lenders are paying to deposit their money. according to several media reports. commerce bank spoke to authorities about the potential plan but no decision has net been made. nick, good morning. and this is conundrum. the ecb's potentially concerned about the take down of their long-term money and at the same time you have comments back saying effectively why would i take down more money when i'm talking about stashing what i
have in vaults rather than posting it with the ecb. >> that's fair. and when you listened to draghi he hit the nail on the head. there is a limit to what monetary policy can do. what actually has to happen now is you get structural reforms when you look at economies. and that is the bottom line. when you look at bank, they don't need the cash. when you look at a lot of corporates. they don't need the cash particularly when they are charged to hold that cash. >> companies need money in order to invest, in order to grow. so a problem still with the transition mechanism. are you concerned? when you look at actually the cash these banks are already taken down. >> and there is a the key isn't it. this transition mechanism. and that is what needs to be unblocked. and if you think what the ecb are doing one of those tools is buying corporate bonds.
started yesterday and we'll see the extent to which that works. the reality is when you look at yields they were already low. the corporate bond index yield 95 basis point at the moment. how much lower can that go? >> how much lower can it go. >> the reality is probably lower than people think. and it starts with a reference point. that's deposit rates of minus 40 basis points. >> if we look at the sovereign bond market we've got 40% of euros and bonds trading in negative territory. how much lower can bond yields go? what about the sovereign bond market too? you have done work at japan and the impact that had on bond yields. >> very much so. so when you look at european bond markets there is a very very clear road map. that road map for europe is actually what happened in japan. and european bonds are following that. so at the moment you have got, say, 40% of bonds with a
negative yield. that will be 50%. it will be 60%. and effectively what you get is more and more bonds coptured in that negative yield net.aptured that negative yield net. assuming you have that deposit rate at minus 40. >> what is the priority if you are looking at this and investing? do you shift away from bonds? or if yields are going lower, prices are going higher so does owning them still make sense? >> even within europe when you look behind bond indices there were some real gems there. for those that are less risk averse. places like spain and italy. for those a little braver the standout is european high yield. when you look at european high yield yields you are around 4% with a backdrop where you have got a very accommodative ecb and you have got economic recovery.
so looks a steal actually. >> -- quite dangerous. >> when you look at the bond world pass sieve a little tricky. if you think what happens in the bond world a bond investor is a money lender. you are then lending more to those indebted and when you look at the bond world active makes a lot more sense. lot more difference between good and bad credit looking forward. >> we're going to come back to this nick. we have to take a break. you have any questions for nick, e-mail "street signs" europe at cnbc.com. or tweet me directly a at @jchatterly. coming up on the show louisa is toying around in monaco. >> toying around.
i hear what you just did there. listen, if you've got kids at home or if you are watching or if your kids are at work with you bring them out. i have a super star up next for the kids. the chairman of moose toys. this is a company that in 15 years increased sales 7200% and almost went under as well in the last ten years. we'll talk the turnaround and how much success they are having now. after the break.
10% to the initial price. performing well so far in the market today. now voter phone shares trading lower after announcing a merger. vodafone will effectively take control of the new group. fit goes through the entity will become one of the biggest companies on the new zealand stock exchange. shareholders will vote next month. and essentra shares up. they have cited challenging market conditions and delays in launches for the gloomy outlook. that stock down 27% in trieding today over the last three months 28%. basically accounting for all of the moves you are seeing today. auto trader is racing to the dop of the stoxx 600 after a sizable rise in pre tax profits thanks
to a dominate performance in online car sales. the company said that strong figures will enable it to start its own share buy back program. and remi cointreau set up to its dividend after a 6% jump in operating profits. cost initiatives and rise in demand for cognac in china. less than 10 years ago moose toys was in danger of going into administration. but now the australian toy company has begun racing ahead of ma tell and lego. and louisa in monaco is going to tell us exactly how they have done it. >> while we're waiting for the studio to come us which they have just done now. manny still chairman of moose toys. tell us what what shopkins.
because many of us who don't have children or if you don't have a clue what children are playing with we don't know what they are. >> you will know what shopkins because your house is probably full of them. small characters. fruit. fashion. but they have got endearing faces on them and we've just built this monstrous brand that is now the number ones girl brand in the world. >> plastic figures based on groceries. >> initially. and then we went into fashion and a variety of different aspects. anything that can have a character and a face on it. we do it. >> okay. and you have outsold in some metrics, the likes of my little pony, barbie, things like that. but at a lower price point per unit. >> we were the number one girls product in the united states last year and this year based on data and we're outselling barbie and my little pony etc.
the number one girls brand. >> before shopkins the company almost went over. and it was advised you do a voluntary closure after you had this recall. how did you turn it around? >> depends how long we've got. >> about 15 seconds. >> ovjt just through tenacity. we had to overcome seven impossible hurdles. each was designated impossible and then you combine the perm t permutations are horrific. but yes we overcame. i can go into the detail but 15 seconds basically not enough. >> basically a chinese manufacturer who switched one of the chemicals they used and it became dangerous for children basically. >> correct. >> how did you decide to stay with the company and take on
that personal responsibility? >> we called in a up group and did an analysis same as the bank would do. and they told us to close up shop. they said we had no chance of getting out of it given all the circumstances. but again i can go into the details. we had to convince all the distributorers to signed up not to send us under. we had to convince the authorities to allow the product back on the market. a number of things. we did. >> and to look at the company and to see between 10 and 15 years but you have increased sales some 7,200%. how do you maintain that top spot? i spoke to the ceo of lego and they ventured off about ten years ago and tried to do a bunch of other things with lego and actually found out what kids want is the block more or less. are you going to stay with shopkins? >> we've got a different model
as the company. innovator and disrupter. so we create new trends, we create new phenomenas. 60% of our head office is dedicated to simply creating new product, in innovation. and we look for niches in the market. shopkins was a niche that didn't exist before and there are others we're going to be launching on the same philosophy. >> trying to disrupt the company from within? or sending people out and then come back with ideas? >> all of the above. we know what's going on in the marketplace. we -- if we don't disrupt it somebody is going to do it for us. so we are constantly lifting our game in every aspect of the company. including product. technology. we are probably now close to being on the leading company in percent in terms of viral marketing. youtube etc.ette. everyone is now starting to copy us and now we're going to tart moving ahead.
>> the number one character that i have should be buying. what is that? >> well that is a good question. if you look on ebay. and type in shopkins and look at sold product. we have real ones and some sold between --. if you wanted one, ideally you would get one of the rare ones. >> little tip for you there julia. so this is manny stul, the chairman of moose toys. i have that panel now. and we'll be back with more tomorrow. >> looking it up right now. toy purchases immediately. for myself of course. i don't have any children. next we're going back to fixed income talking of investment opportunities. we were talking about the fact that 40% of euro zone sovereign bonds now are in negative territory. the potential is that corporate bonds are going to follow too. a look at u.s. yields at the
moment. and 10 year at 1.67. u.s. 5 year at 120. relative basis actually they look good value. >> they do. when you look at u.s. treasuries it surprises many americans but they are a high yield asset. take every government bond in the world and rank them from high to low yield. and 85% yield less than that 10 year treasury. so you are seeing shift from negative yield in government bonds, in japan, in germany, into things like u.s. treasuries. >> so what are clients doing here? how active are they? >> clients are very active now. so there are a few ways to think of that. first is there is a great rotation going on and that great rotation is in to fixed income. and that is for a few reasons. you have negative yields around the world. and let's face it. a fixed income investor has two enemies. those are growth and inflation. and when you look at those those
are absent. at the end of the credit cycle than at the start so -- >> element of the capitulation here. where investors are going, you know, we're hoping to see this out of bonds into the equities. growth is disappointing and actually you have people at the world bank revising growth lower and they aregoing actually an income here of like 2% is actually not bad. beggars can't be choosers. >> -- from this case u.s. treasuries but if you think more brdly we talked about european high yield. yield is 4. u.s. high yield is an index that yields around 7 and a quarter percent. so when you scratch beneath the surface in fixed income there are areas with very attractive yields in a zero and negative yield environment. >> if we look at the u.s. here. we've got the fed next week and seen a shift in the market in terms of relative pricing as well.
talking about terminal rates now at this stage for around 2%. what you would normally see is a curving version. so the front end in terms of yield would be bigger than the back end of the curve. if i'm looking at 10 year rates at this level and going actually if that is the case they are not going move that much. >> i think that is fair. a 2% terminal fed funds rate looks to me like very very courageous forecast you have made there. the reality is it's probably more like a 1% handle and even that may be aggressive. so you are right. what ultimately happens is you get to that terminal fed funds rate. the yield curve inverts. 10 year yield curve goes beneath it. that means it goes lower. >> in december we saw actually the knock on effect of the time equated to a tightening of around 150 basis points, not 25.
so if you are doing that far fewer number of rate hikes, actually are the spillover effects, the impact of those rate hikes far greater. >> the key variable always to keep in mind the dollar as well. the federal reserve can tighten rates t s two weighways. they can live the fed funds rate but the dollar has a big impact. interesting lately is of course the dollar has weakened. so that's a kept financial conditions in the u.s. fairly accommodative. >> what is the big risk here? >> and this sound odd and weird. the big risk is that growth is super strong. risk is not priced and lower growth is priced. you talked about the oecd reducing that -- >> high inflation as well. there are those who say look at the services sector in the u.s. wages start to rise. we could get an inflation surprise particularly given the base effect of the oil price shifts that we've seen.
>> we may. that is also a risk. but we need more evidence of that. so wage growth in the sus about 2.5%. it's still historically at anemic levels. >> great to chat to you. we're going to take another break. but who gets the last laugh? >> president obama says the presidential race is not reality tv but goes on jimmy fallon show to give his views on trump. >> do you think that republicans are happy with their choice? >> umm. we are. but i don't know how that feels. [ applause ] actually -- that was too easy. but the truth is actually i am worried about the republican party.
welcome back to "street signs." the bears are back in the red for the second day in a row amid reports george soros is out of hibernation and selling stocks. >> there are many understandable political reasons to delay structural reforms. but there are few, very few economic ones and the cost of delay simply too high. >> in a plea for help mario draghi issues a stark warning to law makesers that their inaction threatens the potential for growth. >> and the largest listing of the year ipo market so far. climate regulation changes were crucial to the listing. >> this is the derivation that we are build -- transformation we are building on. now pushing forward on off shore
wind. innovating the technology, even more cost efficient, scaling it up and we believe we have a technology to offer to governments around the world. >> and vodafone announces a merger with sky new zealand in a $2.4 billion deal. welcome back to "street signs." we've got uk trade data for april out this morning. the adjusted noneu trade deficit in at 2.6 billion sterling. the adjusted global goods trade deficit standing at 10.5 billion sterling. uk trade data. the global export volumes up 4.3% that is on the three month basis versus march. down 0.1% for the month prior. the biggest rise actually since
june 2015. export data coming in strong there. the import volume data higher also by 4.6%. that is the biggest rise since february of 2015. so on a global basis in terms of exports and import data, a significantly higher versus the month of march. and quite interesting rises actually. the best since february and june of 2015 respectfully. let me give you a look at u.s. futures this morning too. weakness in the europe rn markets and feeding into sentemmesen sentiment for the u.s. markets.
the nasdaq looking to open 16 points lower. after a rally of around 10% across the board in the session yesterday. oil up 1.7 sprkt helping the ener energy sector as well. and in europe this morning, you can see we are lower more than 1% for the french, german and italian markets. not one sector in the green. the real gainers on the likes of the basic resources, the oil and gas sector are the strongest movers to the down side. we are pulling back here slightly. just to give you a sense of the gains that we've already seen, we are still higher by some 4.5% on the week. let's take quick look as well at the fx markets. we're seeing the euro hit a 3
year low versus the yen. down over 1% on the day so yeonyeon yen's strength fed into the performance as well. and obviously you would expect to see strength in the yen on the broader risk aversion that we are seeing. moving on to our top stories today. dong energy has opened higher on the copenhagen market. speaking to cnbc earlier, ceo henrick paulson told us how the company had evolved to overcome head winds. >> -- major transformation over the past six or seven years and we've been accelerating that over the past two or three years. moving from fossil fuel energy to green energy and today the company is a global leader in
wind. and -- a high growth industry where we managed to create a very strong position and essentially what's driving our growth and what has turned us into one of the fastest growing energy groups in europe. >> one of the big challenges for investors is the continual competitive threat from low cost energy providers out of china and elsewhere. what are you doing to negate that threat and actually conquer those competitors? >> this is really a matter for us of innovating and pioneering a new technology in the form of off shore wind. we've seen of shore wind becoming a very competitive technology the last few years and put a lot into making more cost competitive. scaling the technology. which means we've made a lot of progress in terms of electricity reductions for off shore win and
seen the technology mature. and this is really why we see such a significant global growth potential for the technology over the coming decades. this has really been a matter of innovating and pioneering a new technology in the form of off shore wind. we've seen it becoming a very competitive technology over the few years. and put a lot of efforts and investments into the making it more cost competitive. scaling the technology, which means today that we've made a lot of progress in terms of cost of electricity reductions for off shore wind and we've also seen the technology mature and we can now move to a large scale. this is why we see such a significant global growth potential for the technology over the coming decades. >> translator: it's been a slow start to the year for the global ipo market in europe, the middle east and africa. no ipo worth more than $1
billion before june. -- not even half what was raised in the same period last year. however there are signs the tide may be beginning to turn with a number of i pos now being marketed by issuers. at european data. we've got three one billion dollar plus i pos in the works. >> it was going to be a window of risk in june where you were going to have an opportunity for
deals to price. and secondly larger transactions allow you do address the biggest pool of capital globally and therefore tend to be a little easier to get done. >> you said there is going to be a window of opportunity. what are you expecting for the second half of this year? >> i think there is a healthy pipeline. if we look forward the next six months versus perhaps the last 18 months we probably see a transition away from assets monetized through the ipo market and more towards corporate restructuring. >> i always get skeptical when i hear people say there is a healthy pipeline. getting that from healthy pipeline to out there is the tough part. >> we are always dependent on the secondary market been healthy and functioning and that price discovery and price point has proven to be the case. and as long as we get through events upcoming in june and go
into the second half of the year with a more stable environment and some unknowns become knowns, then there is a functions market. >> the global basis actually the market cap of the i post. >> i think it is skewed by small sample set so it is difficult to extrapolate. >> about the tech sector? unicorn valuations and many of them going into the private equity rather than ipo. i think the obvious would be square. it had a valuation of $15 a share and when it went public it was like $9 billion. not per share. for the value of the company. >> -- one, private equity in a place where they have large cash positions.
and then secondly tech has probably been underrepresented in europe in the pipeline. and much more in the cable and telecom space. >> i guess to me the valuation of innovation is volatile and also skepticism around it. when does that change? >> i think a lot of that actually is maturity of the story. i think the ipo market really is set up for the more mature part of that. and actually what we've seen i think is a very healthy market in the private equity or pre ipo space where investors i think have rather owned those assets of the public market where you haven't got the -- >> -- ipo basically. >> -- earlier stage in your development and i think later as you get to a greater scale would be the right time. >> now ed sheeran is facing $20
million copy right lawsuit. being sued by two song writers in california who claim his hit single "photograph" is a copy of their song amazing. sheeran's song has sold over three and a half million copies. ♪ ♪ ♪ you won't ever be alone ♪ >> i can't compare. amazing. do -- looking at me blankly. why would i ask you that question? nope. i don't. moving on. barack obama will appear on "the tonight show" with jimmy fallon later but if you can't wait that long -- >> is bernie going to endorse
hillary? >> i can't -- >> is he ever going to drop out? >> i'm going to be talking o him tomorrow. he's going to be coming to the white house. and the main role i'm going to be playing in this process so to remind the american people that this is a serious job. this is not reality tv. i've seen the decisions that have to be made and the work that has to be done. and i have a lot of confidence that if the american people are reminded of what's at stake and all the incredibly important issues that we've got to get right that they are going to make a good choice. that is what they usually do. >> speaking of reality tv. i don't know if you saw celebrity apprentice. >> -- >> great show, yeah. [ laughter ] has donald trump called you for advice or talked to you? at all? and first of all. you have given him some pretty good advice so far -- has he called is it. >> no he hasn't.
no. >> no? >> not that i know of. >> do you think the republicans are happy with their choice? >> we are. but i don't know how -- [ laughter ] i don't know that -- [inaudible] >> keep going. do exactly what you are doing. now as mentioned set to meet today. nbc's tracie potts joins us live from washington as always. tracie good morning. thank you for joining us. what do you think comes out of this meeting and do you think there will be any kind of pressure on obama to back clinton or after the speech yesterday, do you think that is needed? >> well it may be needed some people think. because what we're hearing from bernie sanders is that he is in it through at least the next week. we wants to see it all the way
through the last primary and then going to the convention. he's not saying he's going to a convention as the candidate. yes some are seeing this meeting today as the gentle nudge to exit from the race. however the thing you have to remember is he wasn't hauled into the white house after losing california. he asked for this meeting with president obama. the thing that seems to be very important to bernie sanders and his millions of followers right now is the issues. if he's not going to be the candidate they want to make sure hillary clinton and the democratic party have very strong positions on social justice, wall street and cracking down on wall street which is an area she's been criticized on both sides. and now the platform committee is meeting and today's meeting with the president may be the beginning of a transition into giving bernie sanders and his
followers a bigger voice when it comes to those issues. >> how does hillary clinton adopt that kind of movement? i also want to ask about elizabeth warren and plans for her to endorse hillary clinton and talk that she could potentially be a running mate here for hillary clinton. what do you think of that and the prospect of two women then taking on trump? >> well we just broke history. and to some degree the glass ceiling by hillary clinton winning enough delegates for this nomination. it is certainly possible. her name has been out there a long time. she's got a speaking engagement with vice president biden today. the thing about elizabeth warren is she not afraid to be very outspoken and very critical. the thing she could bring to a clinton candidacy is the crack down on wall street. she's built a reputation for tough on the financial markets and that is an area clinton has been criticized because she's spent so much time workeding with them and taking money from
them speaking to wall street. so certainly she could help. >> see you tomorrow. we're going to be coming up after the break but still to come on the show, the bears come out of hibernation. we tell you which high profile investor is opening up his trading book again when we return. we're back in two. wearing powerful sunscreen? yes! neutrogena® ultra sheer. unbeatable protection helps prevent early skin aging and skin cancer
kentucky. what can we expect today? i guess it is going to be a who is who of the political, entertainment and global stars. >> that is correct jewulijulia. two days of services honoring mohamed ali. a service is being held at the site of his last fight in louisville. and tomorrow a procession will drive through the city. and the funeral itself will be held in this 22,000 seat basketball arena. lennox lewis, will smith. and others will be among those who deliver eulogies. you mentioned thousands of free tickets handed out to admirers.
those were gone in a matter of hours yesterday. this funeral service will also be streamed online. this is all in keeping with ali's own wishes for his funeral. he had a ten year plan for these events. it is a final message to fans and admirers who looked up to him so much. >> it is quarter to five in the morning there. appreciate you getting up for us. apple is revamping its app store. amid concerns the model might be out dated. josh lipton has the story. >> big changes coming to apple's app store. really two big changes coming. first a new revenue sharing model with developers. for the first year of a subscription apple is saying it is going to maintain the traditional 70/30 split with develope
developers. but now if developers can may not a subscription for longer than 12 months apple's cut will drop to 15% and apple spokesperson saying this is more fair revenue split. of course you could also argue the subscription model is more reliable, dependable and sticky. very important now especially when the iphone franchise is facing near term pressures. apple will introduce search ads in its app store. the ads will launch in beta next monday. apple quick to point out yes it is introducing search ads but the emphasis on privacy remains. the company it says will not create search profiles of users and no user data will be shared with developers. apple saying with this move it is responding to demands of developers and it will be especially for any developers stand out in a crowded marketplace. i'm josh lipton in san francisco. >> looking to one up apple's new
revenue sharing model. google is also planning to revamp its app store. google will give developers more money when users subscribe to a service according to a report by re/co re/code. google plans to make the deal immediately available upon subscription. and nest is not for sale. google investigating a sale last year but is now committed in investing in the company. verizon cfo at the seven week strike could cost up to 7 cents per share in second quarter earnings. a tentative deal reached last month is set to add 1400 new jobs and pay increase o over 10%. shares in verizon down over 2% the last three months. and citi could redeploy around europe if it voted to leaf the
eu. in the memo to employees citi officers said we would need to rebalance operations in order to access markets through the european passporting regime. and amazon has launched its online super market service in the uk called amazon fresh. allowing those to order groceries online for same day deliveriry. they plan to roll out the service across the uk at a later day. now a legendary bear has emerged from hibernation. wilfred fox has the details. all i can say is i'm glad he's not eyeing the pound. >> well firstly i'd like to clarify that i am not the legendary bear as well. despite the name that followed your tease of that term. we are talking about george soros. he's trading again. the investor billionaire getting
back into the game. soros recently directed a series of big bearish investments selling stocks and buying shares of gold miners. remaining skeptical of the chinese economy. he warns the fall out of any chinese investments likely will have global implications. soros is worried continued weakness in china will assert pressures on the economy. and soros says there is a good chance the european union will collapse from the weight of stuff. soros tells the journal if britain leaves it could unleash a general exodus and the disintegration will be unvoidable. strong words but he suggests recent strength in sterling suggests there is a sign that the exit vote is less likely. as you suggested just there julie. the bet against the british pound in 1992 in a trade that
led to one billion of profits. overall he suggests the pound isn't suggesting it is going to happen at the moment. that is the story from george soros. the only other question i've got for you is some come sarah dal lof gets accommodation for getting up so early and i don't. >> --. >> pleasure to see you as always. >> -- largest generation in the u.s. so how can you take advantage of the millennial mind. great to have you on the show. thank you to you too for getting up this morning while we're at it. just talk about the millennial etf. i think the clue is in the name
here. >> we're very bullish on the millennial generation. 90 million strong in the u.s. aged 16 to 36. right now the spending power is pretty low. but it is expected to quadruple over the next decade and expected to inherit 40 trillion dollars from the baby boomer generation. we believe this is increasingly a story about the consumer. millennials. >> if i look at the constituents. you have the likes of facebook. linkedin. amazon in particular. as you have pulled these stocks together, what is the historical performance over the last three years? and what kind of upside are we looking at here? >> so this falls in the rem of thematic investing and it differs from the rest of traditional investing which is
more fundamental base. fundamental base investing. earnings per share. how companies have performed. the best themes are those that haven't been priced in by the market yet. in this case historical performance doesn't really matter. we're trying to play a theme that hasn't emerged yesterday because most millennials are just entering the workforce or just starting to graduate college. >> what is the historical performance? do you have the data? >> we only launched the fund about a month ago. we've seen fairly high correlation with the retail segment. so it is performs in line with internet retail and other consumer staple companies. but over the long run we think this will decouple from the traditional consumer story and be more about absolute return, long-term growth story riding on the tails of the millennial generation. the other thing is it is going to be dynamic over time. you were showing the holdings
earlier. holdings are the internet retail space. education companies in there as well. but millennials are 16-36 in 20 years that going change. so the holdings are more likely to dynamically change to perhaps be more about renovating homes. more of the spending pattern of an older generation. >> point about divergence very important here. very interesting. jay jacobs. director of research at global x. that is it for today's show. "worldwide exchange" is up next. we'll see you tomorrow.
good morning. oil prices near 2016 highs. the calais catalyst and global market ripple effects coming up. >> stern words from draghi. warns the euro zone is at risk of suffering damage. >> and george soros is trading again. and he likes gold. it is thursday june 9, 2016. "worldwide exchange" begins right now. ♪ good morning. a very