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tv   Street Signs  CNBC  August 16, 2016 4:00am-5:01am EDT

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welcome to "street signs." i'm julia chattily and these are your headlines. bt posts largest ever loss. remains positive on outlook. be speaking to ceo later today. 2016 highs on report rival to acquire firm. creating number one gas player. big money moves. doubles down on the bearish position on the s&p 500.
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while warren buffett takes another bite out of apple. sterling suffering longest run of losses since february falling to a three-year low against the euro. inflation data in just 30 minutes time. >> welcome once again to "street signs." i'm chieted about today's show. we'll be talking russia. uk inflation data. let's start with a look at the european market this is morning. it's a bit soggy. the xetra dax off .80%. the ftse 100 down .30%. let me give you a look at individual sectors as well. on the downside you have the likes of the autos, the banks, the oil and gas sector now setting there almost unchanged.
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we did see oil touch lower earlier on in the session obviously after the 2.8% gains we saw yesterday that helped lift the session. we just tilted now back into positive territory. we'll watch that sector. the big one is the basic resources. i'm going to update you on what we've seen in that sector so far this morning. 2.3% rise in first half profits boosted bid intensifying cost cutting measures. the chill yan. being hit by record $6.4 billion annualloss. wider than experting. blames the 81% broft drop on the commodity slump. a dam disaster in brazil and a losing bid on bp shell.
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mechanics kensi saying trading conditions were tough, the long-term outlook for commodities were bright. analyst joins us now to dig through the numbers. nick, what do you make of them. >> i think they're fine, actually. >> do you? >> yes. i think that's the focus on cash flow and cost cutting, really the investment case for the minors is all the balance sheets now fixed, what can they deliver in terms of free cash flow. so it was okay. that debt was flat. obviously the large headline loss was really obviously driven by shell as you said and by some marco provisions and damages last year so i don't think anyone was -- everyone was expecting a provision of some point from some market whether it was this half or next half, doesn't matter too much.
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the shares are down slightly versus the sector today. the main reason for that is a slight miss on the cost cutting guidance. they had a $600 million cost cutting guidance for the year. it was slightly before that because in the first half, saw a decline held back the cost cutting. over 2 years i think that's sti broadly on track although it's not so good this year. >> that's a lot o pull out there. if we look at the underlying profits of the business, they were better than expected. a third of the cash generation of this company comes from iron ore. we saw a 40% rally. suggested there's downside for potential. >> the market is still in surplus so the main reason for the rally in iron ore prices was
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a very weak seasonal first quarter driven by weather. shipments were down 11% quarter on quarter. in a commodity market is a really huge number. to have now broadly recovered and most people in the market companies alike expect low commodity prices in the near term because we're back into sublet territory now. there's projects coming on. these are uncontroversial. they're funded. >> it's shielded the business to some extent, the rally we have seen. when you say look, it's okay. is it okay? >> they still earn some cash flow and pay some dividends and it's flat. >> you're not worried. >> the balance sheet risk is now extremely low after post dividends, change of dividend policy. so obviously in the last 12 months, bhp has come from a dividend to a payout rh owe.
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>> underweight after the 35% rally we've seen year to date. >> exactly. >> kind of the bounce of what we've seen. >> if you look at the longer term, the picture is determined what cash can they generate in the long-term and what cash can they make. that's driven by the iron ore price in two to ten years. that's what investors are foc focused on right now. what's the long-term earning potential of these companies. with a company like bhp in the whole sector is in the past whenever price haves rallied and will they've made more money, they've gone out and done big acquisitions. right down as commodity prices turn. that's really happened every cycle in the last three or four
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cycles. if you believe that b hp is going to be capital discipline for the next 20 years. maybe it's good value. given the last two, three, four cycles. that's hard to -- a rational investor would question that. >> do you think this is a turning point for them? >> i don't think there's anything different today than has been the case in the past. >> three year process, moving on: nick, great to chat with you. equity analyst at brun dolphin. i'll be speaking to ceo to talk through all of the points later on today. george sar ris has become more bearish on equity markets. nearly doubling short bet in the s&p 500. he now holds put options on roughly ll lly 4 million shares etf. the man known for breaking the
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bank of england and making a fortune betting against sterling has also sharply lowered gold holdings. another big name, another big bet, warren buffett shows he's taken a large bite out of apple, raising his stake in the stock by 55%. bank of america sher hath way was first we veerevealed in may the move contrasts with other famed investors, who both sold apple entirely. sage of omaha has take an dimmer view of walmart. cutting stake by 27%. now perhaps the most interesting disclosure from that 13-f filing is the activist value fund act has taken a $1.1 billion stake in morgan stainly. the san francisco base fund, investors are too focused on the bank's income trading business
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and not valuing the wall street players tran formation to a fee based wealth business. morning stanley shares rose in after hours. sterling has slumped to lowest level against the euro in over three years. investors are looking to inflation and sales data due in less than 30 minutes. the clues into the resilience of the british economy post-brexit. early days, though, guys. we'll see. chief investment officer at seven investment management joins us now. chris, great to have you on the show. do you get rational exsooub rens going on in markets here. >> there is definitely some. we had an incredibly good round. we've had reasonable earnings, not amazing earnings, and we've had some pretty good macro economic data coming out of the u.s. and a little bit out of
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asia. so equity markets continue on up over the last few days, but not the support we would like to see. >> yes, there is. the central banks. >> that's the bond market for me. you talk about sterling this morning. we've got the bank of england keeping the bond yields suppressed. at the same time pumping up the economy. at the same time raising inflation forecast to more above the target. >> so the point i would make here is the differentiation. if you look at what the german markets have done and we're fighting to get back into positive territory here. investors are still differentiating and that's important when you're talking about some level of ir racial exsooub rens. >> that's a fair point. europe and japan have been knocked back this year. they're having a good round, but the numbers aren't there on a year-to-year basis. the ftse is not quite as strong.
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if you're a dollar based investor you haven't had the positive performance. it's a global index, not all sterling investors playground anymore. and then if you look at the real winners this year have been s&p to some degree, but really emerging markets have been the big winners this year. >> we're talking about this a bit later on, but russia at record highs. quite fascinating one here in particular. you're actually trimming your asian; it equity exposure and trimming u.s. equities. two trades at once. >> why would you sell your most risky and your least risky. the most risky has done well. we would like to see a bit better trade data or better economic data coming out of china. we're still overweight. we still like asia. there's a good theme there with china not having a hard landing. as regards trimming treasuries,
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that's really just a valuation play. we don't think they are the least risky things in the portfolio anymore. in fact we think they are possibly among the most risky. i would call them a time bomb waiting to blow. >> surely they're only a time bomb waiting to happen in inflation sur prices us. what's the risk of that. >> i agree inflation is somewhat subdued, but it's creep creeping up and creeping up in the basket of goods and services and the problem isn't so much that inflation surges unexpectedly, it's the market is pricing at zero inflation. that's the problem for me. >> does it make youer inhou nern you see the volatility in the index being on an 11 handle. >> yes. >> does that concern you? there's a measure of concern out there in the equity market in the u.s. >> it's a bit like mashlgts over the last year. they've plunged and risen.
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we did buy a put spread on the s&p recently just because it looked so temps and that's partly why we sould our pressureryes. you can get better value protection through a derivative, frankly. >> so you have protected your equity positions in the u.s. here. >> yes, a little bit, yes. >> how much? >> we bought that put option on the s&p 500 covered 5% of our balanced portfolio. >> very quickly, cash, how much cash are you holding. >> quite a lot because we look -- because we're selling equities and bonds at the same time we do need to redeploy. >> great to chat with you. get your e-mails into the show. address is streetsignseurope@cnbc.com. you can tweet us @cnbc or me directly. rushing to the break. coming up on the show, germany
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meet with korea. plus more to come on "street signs." don't go anywhere. we're back in two.
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central bankers and governments must pursue new policies to plekt the economy from side effects of ongoing interest rates. that according to san francisco fed president john williams who warns recessions will become deeper and more inevitable. williams advocates ideas such as setting higher inflation targets and linking nicinitiatives to t economic cycle. share is decision to cut interest rates to the record low of 1.5% was geared towards
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boasting growth and staving off deflation. shri is in singapore. >> reporter: here eninlies the problem. we've seen the flows and is zero rate environment. the yield is out here. 1.5% for the base rate. still comparatively aussie dollars are looking quite tasty. the currencies are a really big headache and head wind for the policymakers right now. despite the rate cut, this is where we stand for the aussie dollar. above .17 handle against the green back. looking at three-month highs there. implications for the terms of trade. here inlies the other problem. dollar yen once again knocking on the door of 100 that is a big
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psychological level. always got time for very colorful commentary. the boj is paying the price for being timid he says speaking to this move lower in dollar yen and unless the u.s. data come to the rescue, dollar yen dancing on the edge of a cliff like a lemon, love the analogy, at 120 right now. will slip over it. yes, 100 seems to be the line in the sand in terms of intervention territory. it's really the rate of this decent in the cross. the rate of appreciation in the japanese yen. so watch that implied volatility. i think that's going to be the important factor here. the currencies once again are the center of the negative feedback loop out here in asia. >> share trading at the top of the stock 600.
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the tie would make the world east largest industrial supplier. it's understood the deal is still a few weeks away and will likely face heavy inspection from the competition authorities. volkswagon and the u.s. department of justice have held preliminary settlement talks. according to "the wall street journal" the german auto maker could be under $1.2 billion to resol resolve emissions scandal. tell con company spark new zealand has opposed the merger. spark told competition authorities it doesn't believe the kiwi is in best interests raising concerns about sky's monopoly on premium sports. the deal was announced in june and remains subject to
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regulatory approval. let's move on and talk about the commodities market. i did mention we see oil, wti popping. we're up now a quarter of a percent. that's adding to gains of 2.8% we saw yesterday. remember that speculation, the suggestion that the russian energy minister is now talking with the saudis and other countries about possibly doing something to shore up stability in the oil markets. i expressed some element of september schi skepticism in yesterday's show and i'll continue to do that. we believe it when we see it. also seeing gains for gold and silver here. a dollar weakness supporting the precious metals. closed at a record high yesterday. i mentioned this earlier on in the show. investors have been buying back into the benchmark index since the massive selloff following the invasion. and, of course, the prolonged fall in oil prices.
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russia's defense minister said the country is working on coordinating joint military operations with the u.s. in syria aleppo. speaking to russian media, they were moving closer to a plan that would bring peace to this troubled land. the four-year fight for aleppo between government and rebel forces has been described by the red cross as one of the most devastating humanitarian disasters in modern times. russian foreign minister said international talks could resume given the recent escalation of tensions in eastern crew cranuk he was meeting with counter part who urged to take steps to resolve the situation. also discussed the situation in syria saying russia has a, quote, special responsibility to end the conflict. last week russian president vladimir putin accused ukraine
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of using terrorist tactics to promote conflict. ukraine denied. assistant director at straus fied berg joins us now. can we be cautiously optimistic here. we have the russian foreign minister and german foreign minister talking. >> any escalation is a cause for concern. particularly in a olympic year. in the last couple of olympics, russia has had -- the medal hall has been more modest than the land grabs. there is reason for cautious optimism this time. the most important reason for this is that russia and germany are talking. this takes away a crucial element, the element of surprise which is what russia has
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previously shown in military adventures in the past. >> we always see when russia faces conflict is the domestic support rallies and we know with have the election coming up in september. i wonder if this impostering in a sense is to do with that more than anything else. >> the p domestic element should not be underestimated. there are elections coming up. also negotiating. russia is known to be an aggressive negotiator. this may be a tactic ahead of resuming talks. syria, the situation in aleppo right now. obviously the ongoing crisis when it comes to sanctions, but usually when russia negotiates it wants to take a hard line position first and maybe use that to whittle away and give things away for mutual
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concessions. >> a lot of skepticism about whether mince two is relevant anymore. neither side is complying. we have a check mate situation. you're arguing actually that russia is taking this offensive stance to have a strong position to be able to give concessions in future negotiations with ukraine in particular. >> i think maybe stalemate is a better word than check mate. obviously things could go wrong. nst pat russia has shown aggressive maneuver was a precedent for something softer skpchlt the cost of the war in 2000 when they shockingly took over the airport and we thought it was going to be world war three. in fact, it was a way to say we want to be admitted to the table and be part of the broader
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discussion. >> the talks over syria and working with air is are more important than the tensions with ukraine to the national community? >> in what sense. >> do you think the negotiation that russia is having with the west in regards to attacking syria and the islamic state is more important than the threatening action with regards to you crane. >> absolutely. there's a lot of synergies outside of the approach. in the talks with the counter part, if you listen to what he said, there's a lot of positives. reaffirms the commitment to the processing and said we would like to fight together with america in aleppo against the islamic state. >> listen to him rather than put nn this sense. assistant director at frauz stride berg. ba baa ham ma sprinter.
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beat for gold by a fraction of a second. most decorated woman in u.s. track history. wow. some relief there. kenya's david rudisha retained title outsprinting in the final lap, but finished two seconds closer in london 2012 where he set the world record. clayton murphy surged in the last 100 meters of the race to take bronze. u.s. gymnast simone biles fell short to win a gold after falling from the beam. first gymnastics metal for the netherlands. meanwhile laurie hernandez took silver and biles grabbed bronze,
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her fourth metal in rio. let's look at the metal tally. u.s. is top of the leaderboard. yesterday was the first day of the olympic competition since 2008 that american athletes to failed to win gold in a single event. wow. that's pretty incredible. we have to take a quick break once again. check out world markets live, our blog that runs throughout the trading day. we'll be back in two. narrator: adventure can be found anywhere but the best place to start is in the forest. kubo: i spy something beginning with..."s" beetle: snow. kubo: no. beetle: snow covered trees. monkey: nothing to do with snow. narrator: head outside to discover incredible animals and beautiful plants that come together to create an unforgettable adventure. kubo: wow! narrator: so grab your loved ones monkey: don't even. narrator: and explore a world of possibilities. kubo: come on, this way. narrator: visit discovertheforest.org to find the closest forest or park to you.
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back to "street signs." i'm julia chattily and these are your headlines. bhp posts largest lost and cuts dividend, but remains positive on long-term commodity outlook. be speaking to ceo andrew mckenzie later today.
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shares hit highs in lind. big money moves, george sarris doubling down on bearish position on s&p 500. while warren buffett takes another bite out of apple. sterling suffers its longest run of losses since february falling to a three-year low against the euro ahead of highly watched uk inflation data just moments away. >> so we've got uk inflation data for july just crossing the wires here. it's coming in down 0.1% month on month. that's plus 0 .6% year on year for the month of july. now the expectations on that were 0 .5% so a touch higher than expected thchlt is the biggest year on year rise since november of 2014. we are in a low inflation world. we know that. this of course according to the ons in terms of core cpis
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stripping out the likes of energy, food, alcohol and tobacco. we have a 1.3% year on year rise. we also have producer price inflation data coming in. that's positive. also 0.3 month on month. if we look at the core figures, we've got a 1% rise on the year. just looking at some of the others. the rpi numbers coming in at plus.9 for the year. that a touch higher for the year also. we can argue some of the rise we've seen in oil prices filtering in, i would argue it's a bit early to see the impact of inflationary impact of the weakness in sterling kicking in here, but we're going to be watching this very closely over the next couple of months. let me give you a look at european markets as well. it was a touch lower than we
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were 30 minutes ago for the noots and the dax here. in terms of the sector this morning. i'll give them to you. the basic resources from the results of bhp higher 2% now, but sit the likes of the autos and the banks and oil and gas sector as well that are some of the biggest draggers on the performance of these markets this morning. let's talk private equity now as investors are searching around looking for alternative investments in the a low interest rate world. what's going on with private equity particularly as we hear more and more reports that they have the cash to put to work, but are they doing it? partner at graham and company. good to have you on the show. funds are raising cash hand over fist here. that's outpacing the number of deals we'll seeing hence dry powder, but high asset prices are a problem here. so how do they find opportunities? it's certainly an issue for the industry. you're absolutely right.
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the industry has been piling up the money. the money coming in from investors has been out stripping the rates of new investments being made by about 2-1 so 16% growth in funds raising in about 8% growth over the last five years in new investments. finding new investments has been a problem. supply is the issue. part of that has been competition coming from corporate acquirers and from the public markets, from ipos. so actually there could be a little bit of a silver lining on the whole brexit piece for the private equity industry there if some corporate acquirers play a smaller role in doing deals over the next few months or year to two. >> that's where i was going next. what exact has brexit had on the private equity community in term os of what they're saying to you about how they perceive the uk market and europe, i guess, too. >> there's really a couple of camps out there. there's the investors who have to be investing in the uk and/or
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europe and sterling and euro. this is their backyard. it's business as usual. they may be asking some different questions about the businesses they're looking at. they're certainly looking at what is the recession case. will i be able to finance it. what should my value creation plan for this business be. then there are the dollar investors who make up a fairly large part of the market. they fall into two groups. half of the investors looking at europe and saying this could be a problem. is this brexit piece a prelude to further europe destabilization and difficulties and a beating bit of a retreat. they're crossing mid atlantic with those saying actually europe and uk in particular looks cheap right now. there are opportunities that come you during this sort of dislocation and indeed some businesses are being oversold by their current owners by the pluck markets. >> what's the split? you saying some are actually
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looking at this as an opportunity. others are saying let's run for the doors because the place looks like a basket case, maybe not that bad, but what's the split? is it outweighed, but those seeing opportunity or is there more people running for the exit. >> the immediate effect is more people taking a step back so processes that were underway saw some investors put a pause back and say we're not sure how this is going to turn out. there could be a domino effect here within europe. let's be careful. i think as the weeks have gone by and people see there hasn't been anything too calamitous happening, probably the second group is growing and the first group is declining. >> what does this mean for exits as well. you could have a company that's costs in sterling revenues alternative currency, dollars for example, in the short-term they're benefitting as well. how does that change the mind set in terms of your timing here?
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>> you're absolutely right. private equities firms are looking at portfolios and fall into two groups here. whole set looking quite good right now. those earning a lot of their income in dollars, but have a lot of cost in sterling. actually they're getting a bit of a windfall so people are thinking about selling those assets earlier. the assets that maybe the other away around actually getting the wrongs end of that particular happen to think about how to manage through a longer hold period. >> i want to close the circle as well. i wanted to talk to you about fund raising and what the outlook is here if we break it down to short-term. i guess investors are okay with a fund holding cash in the short-term deciding what they're going to do, but at some point, you want your money to be put to work. how long before they get frustrated with the record dry powder. >> so it's very interesting. we had record levels of commitments into private equity largely driven by the amounts of exits that have been going on from that huge activity that took place way back in 2006,
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2007. it was an enormous amount of investing activity. putting huge amounts of cash back into the investors hands been recommitting to the industry. so we've seen a period of very good fund raising. that will come to an end though. as that big lump of cash that was invested in those six, seven comes through the system, we then got a lower investing period from 2010 to 15. that's going to see lower exits actually over the next few years. which means a reduced amount of cash coming back into investors hands which actually means fund raising is going to get more difficult. irrespective of brexit, it's not a brexit effect. it's the dynamics of industry. the money comes out and goes back in then. >> it's going to increase the pressure. >> it certainly will. >> graham, great to talk to you. now, the fbi is plans to release to congress interview
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records of the probe of hillary clinton's e-mails. along with notes. the fbi will hand over reports of interviews with other clinton aides. a summary of the broader investigation and copies of the key classified e-mails. now republican presidential nominee, donald trump has outlined his vision to defeat isis, calling for a multifront military cyber and financial war against the terrorist group. trump backed away from previous threats to break with nato saying the organization's new approach to fighting terrorism had made him change his mind. speaking in the swing state of ohio, he also detailed his plan for screening immigrants. >> the time is overdue to develop a new screening test for the threats we face today. i call it extreme vetting. i call it extreme, extreme
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vetting. >> nbc tracie potts is in washington. a huge u-turn on foreign policy, trac tracie. nato is okay. >> reporter: yes, it's not quite the muslim ban that he had talked about for so long. the way donald trump explains this, he says we've got too many people coming into this country to really screen out those who may want to do the united states harm so one of the things he wants to do is get with the state department if he's elected and say okay, where are the terrorist hot spots. let's not let any of those people in temporarily for now. that lowers the numbers so they can rejig the system and try to streen people better. that's his plan. what he just described as extreme vetting. once they are here or trying to get in, what do you do when you ask them. he wants to do essentially a belief test. do you believe in char yacht law. what do you believe in? is it consistent and kpat wbl the united states. if not, he would kick people
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out. practically how you do that can be a challenge. number one with the millions of people who will still be eligible to come into this country. they do some of tt screening now. it's on a limit id basis. targeted people who they think might be a problem. if you try to do it with everyone, do we really have a resources to do that? that's the question that's left after he's laid out this new plan. >> tracie, great to chat with you. thank you. milwaukee appears to be okay after rights broke out after a shooting of a black suspect. tensions eased in the city by 10:00 p.m. last night. told reporters although there had been several arrests earlier in the evening. at least 7 people have died in the record louisiana flooding with 12,000 others living in shelters. emergency services have rescued
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more than 20,000 people t. disaster highlights the challenges of government communication during a crisis and the need for state of the art public safety broad band networks. ceo atry vad da networks joins us on the phone. great to have you on the show. good morning. as we pointed out in the crisis moments whether hurricane katrina or what we're seeing in louisiana actually communications between victims emergency services is pivotal and often networks let them down whachlt do you do to help. >> well, as we've seen again and pointed out in louisiana, we saw one of the major cellular networks go down affecting the ability of first responders to do their jobs. we saw the same thing in the boston bombing where cellular networks failed. we saw it in paris, we saw it in brussels. this is a constant
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jor jordydy sas terse. public safety emergency services have ruthless preemption to that radio resource thachlt is to say that as soon as emergency certifies key up, those networksinetworks i s work. they're built to a much higher standard and have battery backup to deal with power outages. they have deployable systems to get it up and running in the case it gets physically destroyed. that public safety when they key up can get immediate access to that radio resource, but for the rest of the time, the public safety are not using those networks. that is available for commercial wholesale terestingly, the beneo
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economy and to the society is that you have more robust broad band wireless networks. you have better price discovery for the resource band width that 2:00 a.m. is not the same as band withat 9:30 a.m. for example. in addition to having a network that serves public safety much more officially and is reliable to public safety, you have a resource that's available on a wholesale basis for internet of things, other usage, which is going to make broad band more accessible on a wholesale basis for the economy to be able to useless. >> i get this because for a government to invest this this kind of broad band network would be financially prohibited i guess. if you can create a market where
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they buy it if they need it then they get access. how much buying are you seeing from governments here. i know the u.s. government has looked at this in particular. >> a lot. so in the u.s., u.s. set aside -- established something called first net to oversee and make sure this job gets done. they've allocated 20 megahurts of the 700 megahurts. 20 would be the same as verizon network. billions and billions of dollars worth of spectrum. they set that aside for this purpose. on the first of november, the u.s. will award a nationwide contract for a franchise if you will for the buildout of this emergency network nationwide, but the way it gets paid for and this is the clever space that sur palace capacity that is always there on this network
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across the whole country is available in this wholesale marketplace. we call it dynamic spectrum. dsa spent years developing the technolo and integrating it with the major equipment manufacturers. tell come equipment manufacturers. that band width is made available in the open access wireless markets. that marketplace acts like the electricity markets or the oil or gas markets and it makes the band width available on a time location and volume specific basis. so you could have, you know, a particular intersection of a street at a specific window of time during the day for a specific volume of band width and the barrel is to oil, that unit of time. >> i just actually want to pick up on the point you made about oil. you mentioned commodities, like fast forward five ten years, do
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you see this actually being trade instead a similar way to something like oil or gas as a commodity. >> certainly. it will be sooner than that. you'll see it in two years or less. the platforms have already been built. revooifr networks, my company is already entered into a partnership with one of the major commodity exchanges. we haven't publicly announced which one it is yet. that platform is built t. spectrum allocation will be made on the first of november in u.s. and mexico is allocating a 90 megahurts, 35% of all the commercial radio station in mexico. they're allocating it on november the 17th. canada has also allocated 20 megahurts. they should be awarding that next year. so band width has a commodity yu will see traded extensively. it's going to be global.
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radio frequency is a finite resource. we are not going to discover anymore frequency under the arctic. we know exactly how much frequency is there. we have to get better at using it. >> thank you for coming and chatting with us. now coming up on the show, how a startup is tackling cyber threats. building immune system. find out what that is after the break. for xrcç&éíuv8f95]dxw[í[b4t!v[rb>
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. so china has approved the hong kong stock connect scheme. that's according to the cabinet. there are a lot of ss and cs in there. give you a quick look at how the china markets are moving this
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morning. see the shanghai comp was higher .60 of 1%. let move on. it will be six months today since the bank of japan introduced negative rates. joins us from tokyo. >> reporter: the policy was introduced in january and it did cause market interest rates to fall immediately from ten-year government bonds to fix rate mortgage loans. the boj hoped that would lead to more household spending and increased corporate investments, but it hasn't gone quite as scheduled. the housing sector gained as rental apartments grew in the first six months and firms such as toyota and central japan rail way issued long-term corporate bonds. such moves were set off by negative interest rates, but effect on the real economy are limited. consumer prices show no sign assen upturn. one reason is that the policy
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failed to trigger back to a cycle of a weaker yen and stronger stock. it had worked back in 2013 when the boj's massive monetary easing measures led to a plunge in the yen and soaring stock prices, but this time markets overseas, especially china, were khloeing down t. easing had no impact the only stock and currency markets. household and firms are holding back spending and investments for banks, this has meant less demand for loans. japan's top three banks say negative rates will cost them a combined 300 billion yen. a central banker said it will review the effect of the policies at a board meeting in september and the focus will be whether it will keep the negative interest rates intact or amend the policy targets. that's all from the nikkei. back to you. >> thanks so much. as i mentioned just before, china's cabinet has approved the
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hong kong shenzhen stock connect scheme. this is a scheme that would allow foreign investors to asia. originally only chinese investors could invest in. this is trying to open up the capital markets. the hope was imminent and dmou the cabinet has approved it. this is allowing foreign investors to invest this asia. does that take some of the volatility that we saw last year of course out of the market. if you can broaden the investor base. let's move on. google has released a new video calling app available only android and ios called duo. video calling only and simply requires a phone number to sign up. let's move on. cyber attacks become more sophisticated. digital businesses need to be better equipped to protect businesses. one such solution is cambridge
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base start up dock trace backed by investment giants kkr. summit partners and samsung. using new machine learning techniques based on the human immune system, attempts to detect unidentified cyber threats irrespective of their origin. dave, great to have you on. that sounds incredibly exciting. can you put it into english what your company does. >> absolutely. we're used to the idea of immune systems in our bodies, things that can learn what's normal within our bodies and detect what's unusual. and it's all about using advanced mathematics and machine learning to da that inside of businesses. learn how everyone works. learn how the technology works. spot the unusual activity. >> so you're saying if a hacker comes in, it will get to the point using artificial
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intelligence where a business or operating system could react to the threat without even, you know, needing to be controlled in a sense. it will learn. >> that's exactly right. not only can we detect the unusual dvt when hackers are inside your networks, when they're accessing your data, changing your systems or manipulating your customers services and data, we can start to react to that so the machine can fight back against the attackers. they can interrupt what the attacker is trying to do. slow them down and give the human defenders in the business a chance to respond and decide what they want to do about it. >> the hackers using artificial intelligence as well, though. >> there aren't many signs of it yet, but we should definitely anticipate it. a really good example i would expect to come along, imagine your co-workers gets hacked and reads all the e-mails, reads the
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calendar, they start sending taylored ems that use the right language. when you receive that, you trust it because it seems like them. no doubt you open that attachment and suddenly you're hacked too and the malicious software can start to spread through your e-mails and calendars too. it's coming and we need to start getting ready for that. >> i've seen more and more awareness of the threat of cyber issues, cyber terrorism over the last two to three years. then you look at the pace of digitization and just think actually we can't keep pace with the kind of threats that are out there. do you think there's still a significant lack of awareness of what you're doing and what businesses need to do in order to address these risks. >> i think that's fair. i think it's really common that businesses are still trying to rely on experts to guess everything that might go wrong. and understand every unique person and technology in that business. we know that doesn't scale to
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massive businesses and not really to small businesses. machine learning and advanced mathematics, they're the only tools that will handle that complexity. >> i spoke to eric schmidt. he told me we're ten years away from having a javis. from iron man. >> i think thafair. it's difficult today to solve what we would consider common sense problems that even children can resolve. something as identifying cats and dogs in pictures turns out hard for computers. doesn't mean we can't use these in very specific ways. ideas like the immune system and other applications like self driving cars, they're much sooner. >> very quickly because we're running out of time.
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google bought for 400 million pounds, didn't they. >> that's right. >> are you available? is dark trace available at some price to be sold. >> we're doing very well as we are at the moment and we've got a lot of investors. i'm not sure i'm the best person to talk about that. there's no doubt we are doing incredibly well so let see what happens. >> cofounder of direct technology at dark trace. that's it for today's show. thank you for joining us. i'm back here tomorrow. don't move, "world wide exchange" in just a few moments.
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. >> good morning. breaking economic news. uk inflation sees biggest rise since november 2014. the global market reaction including a move in the pound straight ahead. dropping story. shares of hai initiation plunging. >> your money, your vote. mark cuban taking to twitter to talk about. >> good morning

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